UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 __________________________________________________________________________________________
FORM 10-Q
 __________________________________________________________________________________________
(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DecemberMarch 31, 20172021
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         
Commission File Number 001-36092
 __________________________________________________________________________________________
Premier, Inc.
(Exact name of registrant as specified in its charter)
 ___________________________________________________________________________________________
Delaware35-2477140
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
13034 Ballantyne Corporate Place
Charlotte, North Carolina
28277
Charlotte,North Carolina28277
(Address of principal executive offices)(Zip Code)
(704) 357-0022
(Registrant'sRegistrant’s telephone number, including area code)
 __________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 Par ValuePINCNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒     No   o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x ☒ No  o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company,"” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx☒Accelerated filero☐Non-accelerated filero☐
Smaller reporting companyo☐Emerging growth companyo☐(Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   o ☐ No   x☒
As of February 2, 2018,April 29, 2021, there were 54,713,852122,269,491 shares of the registrant'sregistrant’s Class A common stock, par value $0.01 per share and 80,978,267 shares of the registrant's Class B common stock, par value $0.000001 per share, outstanding.





TABLE OF CONTENTS
Page
6
6
Condensed Consolidated Balance Sheets as of DecemberMarch 31, 20172021 and June 30, 20172020 (Unaudited)
6
Condensed Consolidated Statements of Income and Comprehensive Income for the three and sixnine months ended DecemberMarch 31, 20172021 and 20162020 (Unaudited)
8
Condensed Consolidated Statements of Comprehensive IncomeStockholders' Equity (Deficit) for the three and sixnine months ended DecemberMarch 31, 20172021 and 20162020 (Unaudited)
910
Condensed Consolidated Statement of Stockholders' Deficit for the six months ended December 31, 2017 (Unaudited)
10
Condensed Consolidated Statements of Cash FlowFlows for the sixnine months ended DecemberMarch 31, 20172021 and 20162020 (Unaudited)
1112
Notes to Condensed Consolidated Financial Statements (Unaudited)
13
35
5658
5758
5859
5859
5859
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds5.
59
Exhibits
Exhibits60
59
6061





CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements made in this Quarterly Report that are not statements of historical or current facts, such as those under the heading "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations,"” are "forward-looking statements"“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in conditional or future tenses or that include terms such as "believes," "belief," "expects," "estimates," "intends," "anticipates"“believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or "plans"“plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to our beliefs and expectations regarding future events and trends affecting our business and are necessarily subject to uncertainties, many of which are outside our control. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:
•the impact of the continuing financial and operational uncertainty due to the coronavirus pandemic or other pandemics;
•competition which could limit our ability to maintain or expand market share within our industry;
•consolidation in the healthcare industry;
•potential delays recognizing or increasing revenue if the sales cycle or implementation period takes longer than expected;
•the terminabilityimpact on us if members of member participation in our group purchasing organization ("GPO"(“GPO”) programs with limitedreduce activity levels or no notice,terminate or the failure of a significant number of memberselect not to renew their GPO participation agreements;contracts on substantially similar terms or at all;
•the rate at which the markets for our non-GPOsoftware as a service (“SaaS”) or licensed-based clinical analytics products and services and products develop;
•the dependency of our members on payments from third-party payers;
•our reliance on administrative fees that we receive from GPO suppliers;
•our ability to maintain third-party provider and strategic alliances or enter into new alliances;
•our ability to timely offer new and innovative products and services;
•the portion of revenues we receive from our largest members;
•risks and expenses related to future acquisition opportunities and integration of acquisitions;
•financial and operational risks associated with non-controlling investments in other businesses or partnerships orother joint ventures with, other businesses, particularly those that we do not control;control, particularly early-stage companies;
•potential litigation;
•our reliance on Internet infrastructure, bandwidth providers, data center providers and other third parties and our own systems for providing services to our users;
•data loss or corruption due to failures or errors in our systems and service disruptions at our data centers, or breaches or failures of our security measures;
•the financial, operational and reputational consequences of cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our members or other third parties;
•our ability to use, disclose, de-identify or license data and to integrate third-party technologies;
•our use of "open source"“open source” software;
changes in industry pricing benchmarks;
our inability to grow our integrated pharmacy business or maintain current patients due to increases in the safety risk profiles of prescription drugs or the withdrawal of prescription drugs from the market, or our inability to maintain and expand our existing base of drugs in our integrated pharmacies;
•our dependency on contract manufacturing facilities located in various parts of the world;
•inventory risk we face in the event of a potential material price decline for the personal protective equipment products we may have purchased at elevated market prices;
•our ability to attract, hire, integrate and retain key personnel;

3


•adequate protection of our intellectual property and potential claims against our use of the intellectual property of third parties;
•potential sales and use tax liability in certain jurisdictions;
•changes in tax laws that materially impact our tax rate, income tax expense, anticipated tax benefits, deferred tax assets, cash flows or tax receivable agreement ("TRA") liabilities;and profitability;
•our indebtedness and our ability to obtain additional financing on favorable terms;terms, including our ability to renew or replace our existing long-term credit facility at maturity;
•fluctuation of our quarterly cash flows, revenues and results of operations;
•changes and uncertainty in the political, economic or regulatory environment affecting healthcare organizations, including with respect to the status of the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010, collectively referred to as the "ACA";2010;
•our compliance with complex international, federal and state laws governing financial relationships among healthcare providers and the submission of false or fraudulent healthcare claims;
•interpretation and enforcement of current or future antitrust laws and regulations;
•compliance with complex federal and state privacy, security and breach notification laws;
•compliance with current or future laws, rules or regulations adopted by the Food & Drug Administration ("FDA") applicable to our software applications that may be considered medical devices;
compliance with, and potential changes to, extensive federal, state and local laws, regulations and procedures governing our integrated pharmacy operations;
risks inherent in the filling, packaging and distribution of pharmaceuticals, including the counseling required to be provided by our pharmacists for dispensing of products;
•our holding company structure and dependence on distributions from Premier Healthcare Alliance, L.P. ("(“Premier LP"LP”);
•different interests among our member ownersmembers or between us and our member owners;members;
•the ability of our member ownersmembers to exercise significant controlinfluence over us, including through the election of all of our directors;us;
exemption from certain corporate governance requirements due to our status as a "controlled company" within the meaning of the NASDAQ rules;
•the terms of agreements between us and our member owners;members;
•the impact of payments maderequired under the TRAs to Premier LP's limited partnersUnit Exchange and Tax Receivable Acceleration Agreements (the “Unit Exchange Agreements”) on our overall cash flow and our ability to fully realize the expected tax benefits related to match such fixed payment obligations under the acquisition of Class B common units from Premier LP's limited partners;Unit Exchange Agreements;
changes to Premier LP's allocation methods or examinations or changes in interpretation of applicable tax laws and regulations by various taxing authorities that may increase a tax-exempt limited partner's risk that some allocated income is unrelated business taxable income;
•provisions in our certificate of incorporation and bylaws and the Amended and Restated Limited Partnership Agreement of Premier LP (as amended, the "LP Agreement") and provisions of Delaware law that discourage or prevent strategic transactions, including a takeover of us;
•failure to maintain an effective system of internal controls;controls over financial reporting or an inability to remediate any weaknesses identified and the related costs of remediation;
•the impact to us or the price of our Class A common stock if we cease paying dividends or reduce dividend payments from current levels;
•the number of shares of Class A common stock that will be eligible for sale or exchange in the near future and the dilutive effect of such issuances;
our intention notrepurchased by us pursuant to pay cash dividends on our Class A common stock;
whether we complete our recently announcedany Class A common stock repurchase program and the timing of any such repurchases;
•the number and per share price of shares of Class A common stock ultimately purchased undereligible for sale after the program;
possible future issuancesissuance of Class A common stock preferred stock, limited partnership units or debt securitiesin our August 2020 restructuring and the dilutive effectpotential impact of such issuances;sales; and


•the risk factors discussed under the heading "Risk Factors" in Item 1A of Part II herein and“Risk Factors” under Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 20172020 (the "2017“2020 Annual Report"Report”), filed with the Securities and Exchange Commission ("SEC"(“SEC”).
More information on potential factors that could affect our financial results is included from time to time in the "Cautionary“Cautionary Note Regarding Forward-Looking Statements," "Risk Factors"” “Risk Factors” and "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” or similarly captioned sections of this Quarterly Report and our other periodic and current filings made from time to time with the SEC, which are available on our website at http://investors.premierinc.com.investors.premierinc.com/ (the contents of which are not part of this Quarterly Report). You should not place undue reliance on any of our forward-looking statements which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or otherwise. Furthermore, we cannot guarantee future results, events, levels of activity, performance or achievements.

4


Certain Definitions
For periods prior to August 11, 2020, references in this Quarterly Report to “member owners” are to the participants in our GPO program that were also limited partners of Premier LP that held Class B common units of Premier LP and shares of our Class B common stock. For periods on or after August 11, 2020, references in this Quarterly Report to “members” are to healthcare provider participants that participate in our GPO program or utilize any of our programs or services, some of which were formerly referred to as member owners.

5

PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PREMIER, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
March 31, 2021June 30, 2020
Assets
Cash and cash equivalents$132,584 $99,304 
Accounts receivable (net of $2,137 and $731 allowance for doubtful accounts, respectively)188,519 135,063 
Contract assets259,331 215,660 
Inventory225,231 70,997 
Prepaid expenses and other current assets83,527 97,338 
Total current assets889,192 618,362 
Property and equipment (net of $503,189 and $452,609 accumulated depreciation, respectively)223,689 206,728 
Intangible assets (net of $279,023 and $245,160 accumulated amortization, respectively)407,531 417,422 
Goodwill999,777 941,965 
Deferred income tax assets821,439 430,025 
Deferred compensation plan assets55,952 49,175 
Investments in unconsolidated affiliates153,747 133,335 
Operating lease right-of-use assets50,556 57,823 
Other assets80,082 93,680 
Total assets$3,681,965 $2,948,515 
Liabilities, redeemable limited partners' capital and stockholders' equity
Accounts payable$100,348 $54,841 
Accrued expenses64,255 53,500 
Revenue share obligations216,054 145,777 
Limited partners' distribution payable0 8,012 
Accrued compensation and benefits80,234 73,262 
Deferred revenue35,933 35,446 
Current portion of tax receivable agreements0 13,689 
Current portion of notes payable to members95,483 0 
Line of credit and current portion of long-term debt203,964 79,560 
Other liabilities56,574 31,987 
Total current liabilities852,845 496,074 
Long-term debt, less current portion5,333 4,640 
Tax receivable agreements, less current portion0 279,981 
Notes payable to members, less current portion323,156 0 
Deferred compensation plan obligations55,952 49,175 
Deferred tax liabilities0 17,508 
Deferred consideration, less current portion83,700 112,917 
Operating lease liabilities, less current portion45,654 52,990 
Other liabilities100,758 75,658 
Total liabilities1,467,398 1,088,943 
Commitments and contingencies (Note 16)00
Redeemable limited partners' capital0 1,720,309 
6

 December 31, 2017June 30, 2017
Assets  
Cash and cash equivalents$163,014
$156,735
Accounts receivable (net of $2,384 and $1,812 allowance for doubtful accounts, respectively)171,354
159,745
Inventory62,067
50,426
Prepaid expenses and other current assets24,021
35,164
Due from related parties381
6,742
Total current assets420,837
408,812
Property and equipment (net of $264,173 and $236,460 accumulated depreciation, respectively)190,815
187,365
Intangible assets (net of $125,903 and $99,198 accumulated amortization, respectively)349,847
377,962
Goodwill906,545
906,545
Deferred income tax assets305,549
482,484
Deferred compensation plan assets42,779
41,518
Investments in unconsolidated affiliates98,388
92,879
Other assets5,403
10,271
Total assets$2,320,163
$2,507,836
   
Liabilities, redeemable limited partners' capital and stockholders' deficit  
Accounts payable$49,626
$42,815
Accrued expenses46,090
55,857
Revenue share obligations74,651
72,078
Limited partners' distribution payable20,396
24,951
Accrued compensation and benefits41,725
53,506
Deferred revenue45,699
44,443
Current portion of tax receivable agreements17,925
17,925
Current portion of long-term debt201,139
227,993
Other liabilities9,106
32,019
Total current liabilities506,357
571,587
Long-term debt, less current portion6,544
6,279
Tax receivable agreements, less current portion229,291
321,796
Deferred compensation plan obligations42,779
41,518
Deferred tax liabilities30,942
48,227
Other liabilities55,183
42,099
Total liabilities871,096
1,031,506
 





 December 31, 2017June 30, 2017
Redeemable limited partners' capital2,398,640
3,138,583
Stockholders' deficit:  
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 57,263,627 shares issued and 54,685,668 shares outstanding at December 31, 2017 and 51,943,281 shares issued and outstanding at June 30, 2017573
519
Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 82,282,748 and 87,298,888 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively—
—
Treasury stock, at cost; 2,577,959 shares(74,698)—
Additional paid-in-capital—
—
Accumulated deficit(875,448)(1,662,772)
Accumulated other comprehensive loss—
—
Total stockholders' deficit(949,573)(1,662,253)
Total liabilities, redeemable limited partners' capital and stockholders' deficit$2,320,163
$2,507,836
March 31, 2021June 30, 2020
Stockholders' equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 122,268,758 shares issued and outstanding at March 31, 2021 and 71,627,462 shares issued and outstanding at June 30, 20201,223 716 
Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 0 and 50,213,098 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively0 0 
Additional paid-in-capital2,046,836 138,547 
Retained earnings166,508 0 
Total stockholders' equity2,214,567 139,263 
Total liabilities, redeemable limited partners' capital and stockholders' equity$3,681,965 $2,948,515 
See accompanying notes to the unaudited condensed consolidated financial statements.

7


PREMIER, INC.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
(In thousands, except per share data)
Three Months EndedNine Months Ended
March 31,March 31,
2021202020212020
Net revenue:
Net administrative fees$146,553 $174,049 $424,537 $518,566 
Other services and support107,375 99,591 304,020 270,929 
Services253,928 273,640 728,557 789,495 
Products215,995 61,183 511,080 167,344 
Net revenue469,923 334,823 1,239,637 956,839 
Cost of revenue:
Services46,980 49,007 125,852 143,965 
Products211,136 54,121 496,286 150,415 
Cost of revenue258,116 103,128 622,138 294,380 
Gross profit211,807 231,695 617,499 662,459 
Operating expenses:
Selling, general and administrative134,502 115,289 388,453 315,311 
Research and development715 628 2,013 1,808 
Amortization of purchased intangible assets10,400 13,966 33,864 38,948 
Operating expenses145,617 129,883 424,330 356,067 
Operating income66,190 101,812 193,169 306,392 
Equity in net income of unconsolidated affiliates5,524 4,442 16,023 11,038 
Interest and investment loss, net(3,225)(9,966)(8,742)(9,849)
(Loss) gain on FFF put and call rights(5,195)(13,906)(21,621)8,477 
Other income (expense), net1,594 (5,005)10,167 (1,996)
Other (expense) income, net(1,302)(24,435)(4,173)7,670 
Income before income taxes64,888 77,377 188,996 314,062 
Income tax expense (benefit)13,444 4,165 (88,037)78,336 
Net income from continuing operations51,444 73,212 277,033 235,726 
Income from discontinued operations, net of tax0 5 0 1,009 
Net income51,444 73,217 277,033 236,735 
Net income from continuing operations attributable to non-controlling interest(3,123)(35,055)(15,903)(132,189)
Net income from discontinued operations attributable to non-controlling interest0 (3)0 (480)
Net income attributable to non-controlling interest(3,123)(35,058)(15,903)(132,669)
Adjustment of redeemable limited partners' capital to redemption amount0 302,569 (26,685)516,725 
Net income attributable to stockholders$48,321 $340,728 $234,445 $620,791 
Comprehensive income:
Net income51,444 73,217 277,033 236,735 
Less: comprehensive income attributable to non-controlling interest(3,123)(35,058)(15,903)(132,669)
Comprehensive income attributable to stockholders$48,321 $38,159 $261,130 $104,066 
Weighted average shares outstanding:
Basic122,254 69,451 114,596 65,582 
Diluted123,116 122,470 115,365 124,030 
8

 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Net revenue:    
Net administrative fees$159,343
$129,071
$310,334
$255,047
Other services and support89,953
87,051
176,864
168,218
Services249,296
216,122
487,198
423,265
Products162,102
142,378
314,764
248,507
Net revenue411,398
358,500
801,962
671,772
Cost of revenue:    
Services47,255
44,856
94,191
87,546
Products153,272
131,158
297,712
226,971
Cost of revenue200,527
176,014
391,903
314,517
Gross profit210,871
182,486
410,059
357,255
Other operating income:    
Remeasurement of tax receivable agreement liabilities177,174
—
177,174
5,722
Other operating income177,174
—
177,174
5,722
Operating expenses:    
Selling, general and administrative108,620
95,927
222,941
193,887
Research and development324
767
813
1,573
Amortization of purchased intangible assets13,817
11,151
27,715
20,360
Operating expenses122,761
107,845
251,469
215,820
Operating income265,284
74,641
335,764
147,157
Remeasurement gain attributable to acquisition of Innovatix, LLC—
204,833
—
204,833
Equity in net income of unconsolidated affiliates1,257
5,127
5,509
14,706
Interest and investment loss, net(1,508)(857)(3,003)(1,009)
Loss on disposal of long-lived assets(400)—
(1,720)(1,518)
Other income (expense)(13,356)(131)(11,893)875
Other income (expense), net(14,007)208,972
(11,107)217,887
Income before income taxes251,277
283,613
324,657
365,044
Income tax expense231,508
37,429
244,272
60,765
Net income19,769
246,184
80,385
304,279
Net income attributable to non-controlling interest in Premier LP(56,485)(181,173)(101,095)(230,774)
Adjustment of redeemable limited partners' capital to redemption amount317,916
335,264
638,340
397,072
Net income attributable to stockholders$281,200
$400,275
$617,630
$470,577
     
Weighted average shares outstanding:    
Basic55,209
49,445
54,059
48,330
Diluted139,237
141,308
139,641
142,133
     
Earnings (loss) per share attributable to stockholders:    
Basic$5.09
$8.10
$11.43
$9.74
Diluted$(1.66)$1.50
$(1.30)$1.75
Three Months EndedNine Months Ended
March 31,March 31,
2021202020212020
Earnings per share attributable to stockholders:
Basic earnings per share attributable to stockholders$0.40 $4.91 $2.05 $9.47 
Diluted earnings per share attributable to stockholders$0.39 $0.54 $2.03 $1.66 
See accompanying notes to the unaudited condensed consolidated financial statements.

9


PREMIER, INC.
Condensed Consolidated Statements of Comprehensive IncomeStockholders' Equity (Deficit)
Nine Months Ended March 31, 2021 and 2020
(Unaudited)
(In thousands)
Class A
Common Stock		Class B
Common Stock		Treasury StockAdditional Paid-In CapitalRetained Earnings / (Accumulated Deficit)Total Stockholders' Equity
SharesAmountSharesAmountSharesAmount
Balance at June 30, 202071,627 $716 50,213 $0 0 $0 $138,547 $0 $139,263 
Balance at July 1, 202071,627 716 50,213 0 0 0 138,547 0 139,263 
Impact of change in accounting principle— — — — — — — (1,228)(1,228)
Adjusted balance at July 1, 202071,627 716 50,213 0 0 0 138,547 (1,228)138,035 
Exchange of Class B common units for Class A common stock by member owners70 1 (70)— — — 2,436 — 2,437 
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation— — — — — — 37,319 — 37,319 
Increase in additional paid-in capital related to final exchange by member owners, including TRA termination— — — — — — 517,526 — 517,526 
Issuance of Class A common stock under equity incentive plan241 2 — — — — 642 — 644 
Stock-based compensation expense— — — — — — 7,229 — 7,229 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (3,023)— (3,023)
Net income— — — — — — — 180,685 180,685 
Net income attributable to non-controlling interest— — — — — — — (11,845)(11,845)
Adjustment of redeemable limited partners' capital to redemption amount— — — — — — — (26,685)(26,685)
Reclassification of redeemable limited partners' capital to permanent equity— — — — — — 1,750,840 3,767 1,754,607 
Final exchange of Class B common units for Class A common stock by member owners50,143 502 (50,143)— — — (502)— 0 
Early Termination Payments to members— — — — — — (438,967)— (438,967)
Dividends ($0.19 per share)— — — — — — — (23,381)(23,381)
Balance at September 30, 2020122,081 1,221 0 0 0 0 2,012,047 121,313 2,134,581 
Issuance of Class A common stock under equity incentive plan102 1 — — — — 1,770 — 1,771 
Issuance of Class A common stock under employee stock purchase plan45 0 — — — — 1,597 — 1,597 
Stock-based compensation expense— — — — — — 7,316 — 7,316 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (28)— (28)
Net income— — — — — — — 44,904 44,904 
Net income attributable to non-controlling interest— — — — — — 935 (935)0 
Dividends ($0.19 per share)— — — — — — — (23,374)(23,374)
Adjustment in additional paid-in capital related to consolidated investment— — — — — — 318 (318)0 
Capital Contributions— — — — — — 1,959 — 1,959 
Non-controlling interest in consolidated investments— — — — — — 3,690 — 3,690 
Balance at December 31, 2020122,228 1,222 0 0 0 0 2,029,604 141,590 2,172,416 
Issuance of Class A common stock under equity incentive plan40 1 — — — — 1,101 — 1,102 
Stock-based compensation expense— — — — — — 13,056 — 13,056 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (48)— (48)
Net income— — — — — — — 51,444 51,444 
Net income attributable to non-controlling interest— — — — — — 3,123 (3,123)0 
Dividends ($0.19 per share)— — — — — — — (23,403)(23,403)
Balance at March 31, 2021122,268 $1,223 0 $0 0 $0 $2,046,836 $166,508 $2,214,567 

10

 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Net income$19,769
$246,184
$80,385
$304,279
Net unrealized gain on marketable securities—
—
—
128
Total comprehensive income19,769
246,184
80,385
304,407
Less: comprehensive income attributable to non-controlling interest(56,485)(181,173)(101,095)(230,859)
Comprehensive income attributable to stockholders$(36,716)$65,011
$(20,710)$73,548
Class A
Common Stock		Class B
Common Stock		Treasury StockAdditional Paid-In CapitalAccumulated DeficitTotal Stockholders’ Equity (Deficit)
SharesAmountSharesAmountSharesAmount
Balance at June 30, 201961,938 $644 64,548 $0 2,419 $(87,220)$0 $(775,674)$(862,250)
Balance at July 1, 201961,938 644 64,548 0 2,419 (87,220)0 (775,674)(862,250)
Impact of change in accounting principle— — — — — — — (899)(899)
Adjusted balance at July 1, 201961,938 644 64,548 0 2,419 (87,220)0 (776,573)(863,149)
Exchange of Class B common units for Class A common stock by member owners1,311 — (1,311)— (1,311)47,258 3,534 — 50,792 
Redemption of limited partners— — (782)— — — — — 0 
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation— — — — — — 12,272 — 12,272 
Issuance of Class A common stock under equity incentive plan485 5 — — — — 1,749 — 1,754 
Treasury stock(1,055)— — — 1,055 (35,649)— — (35,649)
Stock-based compensation expense— — — — — — 3,704 — 3,704 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (8,311)— (8,311)
Net income— — — — — — — 71,329 71,329 
Net income attributable to non-controlling interest in Premier LP— — — — — — — (41,907)(41,907)
Adjustment of redeemable limited partners' capital to redemption amount— — — — — — (12,948)707,257 694,309 
Balance at September 30, 201962,679 649 62,455 0 2,163 (75,611)0 (39,894)(114,856)
Exchange of Class B units for Class A common stock by member owners6,873 19 (6,873)— (5,031)164,810 59,117 — 223,946 
Increase in additional paid-in capital related to departure and quarterly exchange by member owners, including associated TRA revaluation— — — — — — 1,103 — 1,103 
Issuance of Class A common stock under equity incentive plan146 1 — — — — 4,243 — 4,244 
Issuance of Class A common stock under employee stock purchase plan40 0 — — — — 1,540 — 1,540 
Treasury stock(3,549)— — — 3,549 (112,917)— — (112,917)
Stock-based compensation expense— — — — — — 7,775 — 7,775 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (47)— (47)
Net income— — — — — — — 92,189 92,189 
Net income attributable to non-controlling interest in Premier LP— — — — — — — (55,704)(55,704)
Adjustment of redeemable limited partner's capital to redemption amount— — — — — — (73,731)(406,422)(480,153)
Balance at December 31, 201966,189 669 55,582 0 681 (23,718)0 (409,831)(432,880)
Exchange of Class B units for Class A common stock by member owners4,866 41 (4,866)— (723)25,245 143,908 — 169,194 
Increase in additional paid-in capital related to departure and quarterly exchange by member owners, including associated TRA revaluation— — — — — — 58,193 — 58,193 
Issuance of Class A common stock under equity incentive plan58 1 — — — — 308 — 309 
Treasury stock(42)— — — 42 (1,527)— — (1,527)
Stock-based compensation expense— — — — — — 7,568 — 7,568 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (123)— (123)
Net income— — — — — — — 73,217 73,217 
Net income attributable to non-controlling interest in Premier LP— — — — — — — (35,058)(35,058)
Adjustment of redeemable limited partner's capital to redemption amount— — — — — — (69,103)371,672 302,569 
Balance at March 31, 202071,071 $711 50,716 $0 0 $0 $140,751 $0 $141,462 
See accompanying notes to the unaudited condensed consolidated financial statements.


PREMIER, INC.
Condensed Consolidated Statement of Stockholders' Deficit
Six Months Ended December 31, 2017
(Unaudited)
(In thousands)
11
 Class A
Common Stock		Class B
Common Stock		Treasury StockAdditional Paid-In CapitalAccumulated DeficitTotal Stockholders' Deficit
 SharesAmountSharesAmountSharesAmount
Balance at June 30, 201751,943
$519
87,299
$—
—
$—
$—
$(1,662,772)$(1,662,253)
Exchange of Class B units for Class A common stock by member owners4,883
50
(4,883)—
—
—
162,215
—
162,265
Redemption of limited partners—
—
(133)—
—
—
—
—
—
Decrease in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation—
—
—
—
—
—
(8,669)—
(8,669)
Issuance of Class A common stock under equity incentive plan390
4
—
—
—
—
2,804
—
2,808
Issuance of Class A common stock under employee stock purchase plan48
—
—
—
—
—
1,388
—
1,388
Treasury stock(2,578)—
—
—
2,578
(74,698)—
—
(74,698)
Stock-based compensation expense—
—
—
—
—
—
17,699
—
17,699
Repurchase of vested restricted units for employee tax-withholding—
—
—
—
—
—
(5,743)—
(5,743)
Net income—
—
—
—
—
—
—
80,385
80,385
Net income attributable to non-controlling interest in Premier LP—
—
—
—
—
—
—
(101,095)(101,095)
Adjustment of redeemable limited partners' capital to redemption amount—
—
—
—
—
—
(169,694)808,034
638,340
Balance at December 31, 201754,686
$573
82,283
$—
2,578
$(74,698)$—
$(875,448)$(949,573)
See accompanying notes to the unaudited condensed consolidated financial statements.



PREMIER, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
 Six Months Ended December 31,
 20172016
Operating activities  
Net income$80,385
$304,279
Adjustments to reconcile net income to net cash provided by operating activities:  
Depreciation and amortization61,532
48,576
Equity in net income of unconsolidated affiliates(5,509)(14,706)
Deferred income taxes235,648
48,705
Stock-based compensation17,699
12,066
Remeasurement of tax receivable agreement liabilities(177,174)(5,722)
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(204,833)
Loss on disposal of long-lived assets1,720
1,518
Changes in operating assets and liabilities:  
Accounts receivable, prepaid expenses and other current assets(467)(11,888)
Other assets1,060
274
Inventories(11,641)(31,832)
Accounts payable, accrued expenses and other current liabilities(20,238)(4,136)
Long-term liabilities1,287
(4,100)
Loss on FFF put and call rights15,607
174
Other operating activities6,606
(11)
Net cash provided by operating activities206,515
138,364
Investing activities  
Purchases of property and equipment(38,622)(34,325)
Proceeds from sale of marketable securities—
48,013
Acquisition of Innovatix, LLC and Essensa Ventures, LLC, net of cash acquired—
(222,217)
Acquisition of Acro Pharmaceuticals, net of cash acquired—
(68,745)
Investments in unconsolidated affiliates—
(65,660)
Distributions received on equity investments in unconsolidated affiliates—
6,550
Other investing activities—
26
Net cash used in investing activities(38,622)(336,358)
Financing activities  
Payments made on notes payable(6,858)(1,338)
Proceeds from credit facility30,000
327,500
Payments on credit facility(50,000)—
Proceeds from exercise of stock options under equity incentive plan2,808
2,909
Proceeds from issuance of Class A common stock under stock purchase plan1,388
1,256
Repurchase of vested restricted units for employee tax-withholding(5,743)(17,629)
Settlement of exchange of Class B units by member owners—
(99,999)
Distributions to limited partners of Premier LP(45,703)(44,630)
Repurchase of Class A common stock (held as treasury stock)(70,844)—
Earn-out liability payment to GNYHA Holdings(16,662)—
Net cash provided by (used in) financing activities(161,614)168,069
Net increase (decrease) in cash and cash equivalents6,279
(29,925)
Cash and cash equivalents at beginning of year156,735
248,817
Cash and cash equivalents at end of period$163,014
$218,892


 Six Months Ended December 31,
 20172016
   
Supplemental schedule of non-cash investing and financing activities:  
Decrease in redeemable limited partners' capital for adjustment to fair value, with offsetting increases in additional paid-in-capital and accumulated deficit$638,340
$397,072
Reduction in redeemable limited partners' capital, with offsetting increases in common stock and additional paid-in capital related to quarterly exchanges by member owners$162,265
$107,213
Reduction in redeemable limited partners' capital for limited partners' distribution payable$41,148
$44,870
Distributions utilized to reduce subscriptions, notes, interest and accounts receivable from member owners$984
$1,074
Net increase in deferred tax assets related to quarterly exchanges by member owners and other adjustments$75,998
$77,638
Net increase in tax receivable agreement liabilities related to quarterly exchanges by member owners and other adjustments$84,667
$49,352
Net increase (decrease) in additional paid-in capital related to quarterly exchanges by member owners and other adjustments$(8,669)$28,286
Increase in treasury stock related to a forward purchase commitment as a result of applying trade date accounting when recording the repurchase of Class A common stock$3,854
$—
Nine Months Ended March 31,
20212020
Operating activities
Net income$277,033 $236,735 
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations, net of tax0 (1,009)
Depreciation and amortization89,768 114,638 
Equity in net income of unconsolidated affiliates(16,023)(11,038)
Deferred income taxes(123,307)60,394 
Stock-based compensation27,601 19,048 
Remeasurement of tax receivable agreement liabilities0 (24,584)
Impairment of held to maturity investments0 8,500 
Loss (gain) on FFF put and call rights21,621 (8,477)
Other537 2,078 
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, inventories, prepaid expenses and other assets(181,263)(95,953)
Contract assets(43,733)(28,909)
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities140,131 (23,341)
Net cash provided by operating activities from continuing operations192,365 248,082 
Net cash provided by operating activities from discontinued operations0 9,338 
Net cash provided by operating activities192,365 257,420 
Investing activities
Purchases of property and equipment(66,911)(69,326)
Acquisition of businesses, net of cash acquired(81,152)(96,346)
Investments in unconsolidated affiliates0 (10,165)
Other(1,228)3,883 
Net cash used in investing activities(149,291)(171,954)
Financing activities
Payments made on notes payable(31,692)(2,046)
Proceeds from credit facility225,000 375,000 
Payments on credit facility(100,000)(150,000)
Distributions to limited partners of Premier LP(9,949)(39,590)
Payments to limited partners of Premier LP related to tax receivable agreements(24,218)(17,425)
Cash dividends paid(69,647)0 
Repurchase of Class A common stock (held as treasury stock)0 (150,093)
Other712 (633)
Net cash (used in) provided by financing activities(9,794)15,213 
Net increase in cash and cash equivalents33,280 100,679 
Cash and cash equivalents at beginning of year99,304 141,055 
Cash and cash equivalents at end of period$132,584 $241,734 
See accompanying notes to the unaudited condensed consolidated financial statements.

12


PREMIER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(1) ORGANIZATION AND BASIS OF PRESENTATION
Organization
Premier, Inc. ("Premier"(“Premier” or the "Company"“Company”) is a publicly-held,publicly held, for-profit Delaware corporation owned by hospitals, health systems and other healthcare organizations (such owners of Premier are referred to herein as "member owners") located in the United StatesStates. The Company is a holding company with no material business operations of its own. The Company’s primary asset is its equity interest in its wholly owned subsidiary Premier Services, LLC, a Delaware limited liability company (“Premier GP”). Premier GP is the sole general partner of Premier Healthcare Alliance, L.P. (“Premier LP”), a California limited partnership. The Company conducts substantially all of its business operations through Premier LP and by public stockholders.its other consolidated subsidiaries. The Company, together with its subsidiaries and affiliates, is a leading healthcare performance improvement company that unites hospitals, health systems, physicians and other healthcare providers to improve and innovate in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry. The Company also provides services to non-healthcare businesses.
The Company'sCompany’s business model and solutions are designed to provide its members and other customers access to scale efficiencies, spread the cost of their development, provide actionable intelligence derived from anonymized data in the Company'sCompany’s enterprise data warehouse, mitigate the risk of innovation and disseminate best practices that willto help the Company'sCompany’s member organizations and other customers succeed in their transformation to higher quality and more cost-effective healthcare.
The Company, together with its subsidiaries and affiliates, delivers its integrated platform of solutions through two2 business segments: Supply Chain Services and Performance Services. See Note 1617 - Segments for further information related to the Company'sCompany’s reportable business segments. The Supply Chain Services segment includes one of the largest healthcare group purchasing organization ("GPO"(“GPO”) programs in the United States, and integrated pharmacysupply chain co-management and direct sourcing activities. The Performance Services segment, through its development, integration and delivery of technology with wrap-around service offerings, includes one of the largest informaticsclinical and advisorycost analytics and consulting services businesses in the United States focused on healthcare providers. The Company'sCompany is also expanding its capabilities to more fully address and coordinate care improvement and standardization in the employer, payor and life sciences markets. The Company’s software as a service ("SaaS"(“SaaS”) informaticsand licensed-based clinical analytics products utilize the Company'sCompany’s comprehensive data set to provide actionable intelligence to its members and other customers, enabling them to benchmark, analyze and identify areas of improvement across the three3 main categories of cost management, quality and safety, and population health management.value-based care. While leveraging these tools, the Company also combines its consulting services and technology-enabled performance improvement collaboratives to provide a more comprehensive and holistic customer value proposition and overall experience. The Performance Services segment also includes the Company's technology-enabled performance improvement collaboratives, advisory services, government servicesCompany’s direct-to-employer initiative and insurance management services.
Acquisitions and Divestitures
Acquisition of Invoice Delivery Services, LP Assets
On March 1, 2021, the Company, through a newly formed consolidated subsidiary, Premier IDS, LLC (“Premier IDS”), acquired substantially all the assets and assumed certain liabilities of Invoice Delivery Services, LP (“IDS”) for an adjusted purchase price of $80.4 million, subject to certain adjustments, of which $80.0 million was paid at closing with borrowings under the Company’s Credit Facility (as defined below).
IDS offers digitization technologies that convert paper and portable document format (“PDF”) invoices to an electronic format to automate, streamline and simplify accounts payable processes in healthcare. IDS’ solutions include those for electronic invoicing and tracking, as well as digital payments. IDS will be integrated within Premier under the brand name RemitraTM and reported as part of the Performance Services segment. See Note 3 - Business Acquisitions for further information.
Company Structure and Restructuring
The Company, through its wholly-owned subsidiary,Premier GP and Premier Services II, LLC, ("a Delaware limited liability company that is a wholly owned subsidiary of the Company and the sole limited partner of Premier GP"),LP, held an approximate 40% and 37%a 100% interest in Premier LP at March 31, 2021. At June 30, 2020, the Company held a 59% sole general partner interest in our main operating company, Premier Healthcare Alliance, L.P. ("Premier LP"), at DecemberLP. At March 31, 20172021 and June 30, 2017, respectively. In addition to their ownership interest in Premier, our member owners2020, members held an approximate 60%a 0% and 63%41% limited partner interest in Premier LP, respectively. On July 31, 2020, after the resignation of 3 directors affiliated with the Company’s members, the Board of Directors consisted of 15 (15) directors, comprised of 8 (8) independent directors, 6 (6) member-directors and the Company’s Chief Executive Officer, thus having a majority of independent directors on the Board of Directors. Since the member-directors no longer comprised a majority of the Board of Directors as of July 31, 2020, the limited partner’s redemption feature was under the control of the Company (not the holders of
13

Class B common units). As a result, $1.8 billion representing the fair value of redeemable limited partners’ capital at DecemberJuly 31, 20172020 was reclassified from temporary equity in the mezzanine section of the Condensed Consolidated Balance Sheets to additional paid in capital as a component of permanent equity.
On August 11, 2020, the Company entered into an Agreement and June 30, 2017, respectively.Plan of Merger dated as of August 11, 2020 (the “Merger Agreement”), by and among the Company, Premier LP and BridgeCo, LLC (“BridgeCo”), a wholly owned subsidiary of Premier Services, LLC formed for the sole purpose of merging with and into Premier LP. Pursuant to the Merger Agreement, effective August 11, 2020, (i) BridgeCo merged with and into Premier LP, with Premier LP being the surviving entity (the “Merger”), and (ii) each of the issued and outstanding Class B common units of Premier LP was canceled and converted automatically into a right to receive 1 share of the Company’s Class A common stock. In conjunction with the Merger, all of the issued and outstanding shares of Class B common stock of the Company beneficially held by the former limited partners of Premier LP (individually a “LP” and collectively, the “LPs”) were canceled in accordance with the Company’s Certificate of Incorporation. The exchange agreement (“Exchange Agreement”), which allowed the Company to settle Class B common units submitted for exchange by LPs for cash, Class A common stock or a combination thereof at its discretion, was terminated in connection with the restructuring activity discussed above.
Furthermore, on August 10, 2020, the Company exercised its right to terminate the Tax Receivable Agreement (“TRA”). See Note 9 - Debt and Notes Payable and Note 14 - Income Taxes for further information.
Basis of Presentation and Consolidation
Basis of Presentation
TheAt March 31, 2021, the Company was wholly owned by public investors, which included member owners'owners that received shares of Class A common stock in connection with the aforementioned restructuring as well as previous exchanges of Class B common units and associated Class B common stock.
At June 30, 2020, the member owners’ interest in Premier LP iswas reflected as redeemable limited partners'partners’ capital in the Company'sCompany’s accompanying Condensed Consolidated Balance Sheets, and the limited partners'partners’ proportionate share of income in Premier LP iswas reflected within net income attributable to non-controlling interest in Premier LP in the Company's accompanying Condensed Consolidated Statements of Income and within comprehensive income attributable to non-controlling interest in Premier LP in the Company'sCompany’s accompanying Condensed Consolidated Statements of Income and Comprehensive Income.
At December 31, 2017 and June 30, 2017, the member owners owned approximately 60% and 63%, respectively, of the Company's combined Class A and Class B common stock through their ownership of Class B common stock. During the six months ended December 31, 2017, the member owners exchanged 4.9 million Class B common units and associated Class B common shares for an equal number of Class A common shares pursuant to an exchange agreement (the "Exchange Agreement") entered into by the member owners in connection with the completion of our initial public offering on October 1, 2013. The Exchange Agreement provides each member owner the cumulative right to exchange up to one-seventh of its initial allocation of Class B common units, as well as any additional Class B common units purchased by such member owner pursuant to certain rights of first refusal, for shares of Class A common stock (on a one-for-one basis subject to customary adjustments for subdivisions or combinations by split, reverse split, distribution, reclassification, recapitalization or otherwise), cash or a combination of both, the form of consideration to be at the discretion of the Company's independent Audit and Compliance Committee of the Board of Directors (the "Audit and Compliance Committee"). In connection with Class B common units exchanged for Class A common shares during the six months ended December 31, 2017, approximately 4.9 million Class B common units were contributed to Premier LP and converted to Class A common units, which remain outstanding.
Refer to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2017 (the "2017 Annual Report") filed with the Securities and Exchange Commission ("SEC") on August 23, 2017 for further discussion of the Exchange Agreement. At December 31, 2017 and June 30, 2017, the2020, public investors, which may includeincluded member owners that have received shares of


Class A common stock in connection with previous exchanges of their Class B common units and associated Class B common shares, for an equal number of Class A common shares, owned approximately 40% and 37%, respectively,59% of the Company'sCompany’s outstanding common stock through their ownership of Class A common stock. The member owners owned 41% of the Company’s combined Class A and Class B common stock through their ownership of Class B common stock.
Principles of Consolidation
The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC and in accordance with U.S. generally accepted accounting principles ("GAAP"(“GAAP”) for interim financial information and pursuant toinclude the rulesassets, liabilities, revenues and regulationsexpenses of all majority-owned subsidiaries over which the SEC.Company exercised control and when applicable, entities for which the Company had a controlling financial interest or was the primary beneficiary. All intercompany transactions have been eliminated upon consolidation. Accordingly, certain information and disclosures normally included in annual financial statements have been condensed or omitted. The accompanying condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, including normal recurring adjustments. The Company believes that the disclosures are adequate to make the information presented not misleading and should be read in conjunction with the audited consolidated financial statements and related footnotes contained in the 20172020 Annual Report.
We have reclassified $5.7 million from selling, general and administrative expenses to the remeasurement of tax receivable agreement liabilities
14

Supplementary Cash Flows Information
The following table presents supplementary cash flows information for the sixnine months ended DecemberMarch 31, 2016 within the Condensed Consolidated Statements of Income in order to conform with the current period presentation.2021 and 2020 (in thousands):
Nine Months Ended March 31,
20212020
Supplemental schedule of non-cash investing and financing activities:
Increase (decrease) in redeemable limited partners' capital for adjustment to fair value, with offsetting decrease (increase) in stockholders' equity$26,685 $(516,725)
Decrease in redeemable limited partners' capital, with offsetting increase in stockholders' equity related to quarterly exchanges by member owners(2,437)(443,931)
Net increase in deferred tax assets related to departures and quarterly exchanges by member owners and other adjustments331 63,958 
Net increase in deferred tax assets related to final exchange by member owners284,852 0 
Reclassification of redeemable limited partners' capital to additional paid in capital1,754,607 0 
Decrease in additional paid-in capital related to notes payable to members, net of discounts438,967 0 
Net increase in additional paid-in capital related to departures and quarterly exchanges by member owners and other adjustments37,319 71,568 
Increase in additional paid-in capital related to final exchange by member owners517,526 0 
Accrued dividend equivalents513 0 
Variable Interest Entities
At March 31, 2021, as a result of the aforementioned restructuring, Premier LP isno longer meets the definition of a variable interest entity ("VIE"(“VIE”), as defined in Accounting Standards Codification (“ASC”) Topic 810. The results of operations of Premier LP are included in the condensed consolidated financial statements.
At June 30, 2020, Premier LP was a VIE as the limited partners dodid not have the ability to exercise a substantive removal right with respect to the general partner. The Company, does not hold a majority interest but, through Premier GP, hashad the exclusive power and authority to manage the business and affairs of Premier LP, to make all decisions with respect to driving the economic performance of Premier LP, and hashad both an obligation to absorb losses and a right to receive benefits. As such, the Company iswas the primary beneficiary of the VIE and consolidatesconsolidated the operations of Premier LP under the Variable Interest Model.
The assets and liabilities of Premier LP at December 31, 2017 and June 30, 20172020, including assets and liabilities of discontinued operations, consisted of the following (in thousands):
 December 31, 2017June 30, 2017
Assets  
Current$378,412
$385,477
Noncurrent1,593,777
1,616,539
Total assets of Premier LP$1,972,189
$2,002,016
   
Liabilities  
Current$493,462
$560,582
Noncurrent131,154
134,635
Total liabilities of Premier LP$624,616
$695,217
June 30, 2020
Assets
Current$610,990 
Noncurrent1,900,137 
Total assets of Premier LP$2,511,127
Liabilities
Current$580,430 
Noncurrent296,801 
Total liabilities of Premier LP$877,231
Net income attributable to Premier LP, including income and expense that has been classified as discontinued operations, during the three and sixnine months ended DecemberMarch 31, 2017 and 20162020 was as follows (in thousands):
Three Months Ended March 31, 2020Nine Months Ended March 31, 2020
Premier LP net income$84,185 $290,430 
15
 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Premier LP net income$94,838
$281,629
$167,129
$355,974



Premier LP'sLP’s cash flows, including cash flows attributable to discontinued operations, for the sixnine months ended DecemberMarch 31, 2017 and 20162020 consisted of the following (in thousands):
 Six Months Ended December 31,
 20172016
Net cash provided by (used in):  
Operating activities$207,514
$121,731
Investing activities(38,622)(336,358)
Financing activities(180,600)159,533
Net decrease in cash and cash equivalents(11,708)(55,094)
Cash and cash equivalents at beginning of year133,451
210,048
Cash and cash equivalents at end of period$121,743
$154,954
Nine Months Ended March 31, 2020
Net cash provided by (used in):
Operating activities$252,566 
Investing activities(171,954)
Financing activities24,790 
Net increase in cash and cash equivalents105,402 
Cash and cash equivalents at beginning of year131,210 
Cash and cash equivalents at end of period$236,612
Use of Estimates in the Preparation of Financial Statements
The preparation of the Company'sCompany’s condensed consolidated financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Significant estimates are evaluated on an ongoing basis, including estimates for net administrative fees revenue, other services and support revenue, contract assets, deferred revenue, contract costs, allowances for doubtful accounts, useful lives of property and equipment, stock-based compensation, payables under tax receivable agreements ("TRAs"), deferred tax balances including valuation allowances on deferred tax assets, uncertain tax positions, values of investments not publicly traded, deferred revenue,projected future cash flows associated withused in the evaluation of asset impairments, values of put and call rights, values of earn-out liabilities and the allocation of purchase prices. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Given the Company's use of estimates referenced above, it is important to highlight that on December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act ("TCJA"). The TCJA includes significant changes to the U.S. corporate income tax system, specifically reducing the U.S. federal corporate income tax rate from 35% to 21%. As changes under the TCJA are broad and complex, the Company continues to interpret the breadth of its immediate and long-term impacts. The Company notes that concurrent with the enactment of the TCJA, the SEC issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the TCJA.
SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting required under the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company's accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional amount on its financial statements. If a company cannot determine a provisional estimate to be included on its financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately prior to the enactment of the TCJA. With this in mind, the Company has prescribed such provisional relief via SAB 118 by incorporating various estimates regarding timing and determination of temporary difference recognition when calculating components of its deferred tax balances. While the Company is able to provide reasonable estimates of the impacts related to the TCJA, the final impact may differ from these estimates, due to, among other things, changes in interpretations, assumptions, additional guidance that may be released by the I.R.S. and other actions that we may take that are yet to be determined.
(2) SIGNIFICANT ACCOUNTING POLICIES
There have been no material changes to the Company'sCompany’s significant accounting policies as described in the 20172020 Annual Report.Report, except as described below.
Recently Adopted Accounting StandardsAccounts Receivable
In July 2015,Financial instruments, other than marketable securities, that subject the FASB issued Accounting Standards Update ("ASU") 2015-11, Inventory (Topic 330): SimplifyingCompany to potential concentrations of credit risk consist primarily of the MeasurementCompany's receivables. Receivables consist primarily of Inventory, which requires entities to measure most inventory "at the lower of costamounts due from hospital and net realizable value," thereby simplifying the guidance under which an entity must measure inventory at the lower of cost or market. This guidance does not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method.healthcare system members for services and products. The Company adopted this standard effective July 1, 2017 using the prospective approach. The implementation of this ASU did not have a material effect on the Company's condensed consolidated financial statements.


In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting, whichclarifies when changes to the terms or conditions of a share-based payment award must be accountedmaintains an allowance for as modifications. The new guidance will reduce diversity in practiceexpected credit losses. This allowance is an estimate and result in fewer changes to the terms of an award being accounted for as modifications. The Company adopted this standard effective October 1, 2017 using the prospective approach. The implementation of this ASU did not have a material effect on the Company's condensed consolidated financial statements.
Recently Issued Accounting Standards Not Yet Adopted
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 from the goodwill impairment test. The guidance requires an entity to perform its annual, or interim, goodwill impairment testis regularly evaluated by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. In addition, the guidance eliminates the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The new standard will be effective for the Company for the fiscal year beginning July 1, 2020. Early adoption is permitted for interim and annual goodwill impairment tests performed after January 1, 2017. The Company is currently evaluating the impactadequacy by taking into consideration factors such as past experience, credit quality of the adoptionmember and other customer base and age of the new standardreceivable balances, both individually and in the aggregate. As receivables are generally due within one year, changes to economic conditions are not expected to have a significant impact on its consolidated financial statements and related disclosures.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfersour estimate of Assets Other Than Inventory, which removes the prohibition in ASC 740 against the immediate recognition of the current and deferred income tax effects of intra-entity transfers of assets other than inventory. The guidance is intendedexpected credit losses. However, we will monitor economic conditions on a quarterly basis to reduce the complexity of GAAP and diversity in practice related to the tax consequences of certain types of intra-entity asset transfers, particularly those involving intellectual property. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new standard will be effectivedetermine if any adjustments are deemed necessary. Provisions for the Companyallowance for the fiscal year beginning July 1, 2018. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of the new standard on its consolidated financial statements and related disclosures.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which amends the guidance in ASC 230 on the classification of certain cash receipts and payments in the statement of cash flows. The primary purpose of the ASU isexpected credit losses attributable to reduce the diversity in practice that has resulted from the lack of consistent principles on this topic. The ASU amendments add or clarify guidance on eight cash flow issues. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new standard will be effective for the Company for the fiscal year beginning July 1, 2018. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of the new standard on its consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which is intended to increase transparency and comparability among organizations of accounting for leasing arrangements. This guidance establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for all leases with terms longer than twelve months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement. Entities will be required to recognize and measure leases as of the earliest period presented using a modified retrospective approach. The standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The new standard will be effective for the Company for the fiscal year beginning July 1, 2019. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of the new standard on its consolidated financial statements and related disclosures.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities, which is intended to provide users of financial statements with more useful information on the recognition, measurement, presentation, and disclosure of financial instruments. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The new standard will be effective for the Company for the fiscal year beginning July 1, 2018. Early adoption is permitted for certain amendments. The Company is currently evaluating the impact of the adoption of the new standard on its consolidated financial statements and related disclosures.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which will supersede nearly all existing revenue recognition guidance. The new standard requires revenue to be recognized when promised goods or servicesbad debt are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard also requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. The new standard allows for either full retrospective or modified retrospective adoption.


The FASB subsequently issued an amendment in ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, in August 2015 to defer the effective date of the new standard for all entities by one year. The new standard, as amended, will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption as of the original effective date for public entities will be permitted.
The FASB issued another amendment in ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations, in March 2016 related to a third party providing goods or services to a customer. When another party is involved in providing goods or services to a customer, an entity is required to determine whether the nature of its promise is to provide the specified good or service itself or to arrange for the good or service to be provided by a third party. If the entity provides the specific good or service itself, the entity acts as a principal. If an entity arranges for the good or service to be provided by a third party, the entity acts as an agent. The standard requires the principal to recognize revenue for the gross amount and the agent to recognize revenue for the amount of any fee or commission for which it expects to be entitled in exchange for arranging for the specified good or service to be provided. The new standard will be effective with ASU 2014-09.
In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing, which amends specific aspects of ASU 2014-09, including how to identify performance obligations and guidance related to licensing implementation. This amendment provides guidance on determining whether an entity's promise to grant a license provides a customer with either a right to use the entity's intellectual property or a right to access the entity's intellectual property. The amendment will be effective with ASU 2014-09.
In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, which clarifies specific aspects of ASU 2014-09, clarifying how to identify performance obligations and guidance related to its promise in granting a license of intellectual property. This new standard provides guidance to allow entities to disregard items that are immaterial in the context of the contract, clarify when a promised good or service is separately identifiable and allow an entity to elect to account for the cost of shipping and handling performed after control of a good has been transferred to the customer as a fulfillment cost. The new standard also clarifies how an entity should evaluate the nature of its promise in granting a license of intellectual property to help determine whether it recognizes revenue over time or at a point in time and addresses how entities should consider license renewals and restrictions. The new standard will be effective with ASU 2014-09.
In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606: Revenue from Contracts with Customers, which clarifies specific aspects of ASU 2014-09, including allowing entities not to make quantitative disclosures about remaining performance obligations in certain cases and requiring entities that use any of the new or previously existing optional exemptions to expand their qualitative disclosures. The new standard also makes twelve other technical corrections and modifications to ASU 2014-09. The new standard will be effective with ASU 2014-09.
The new revenue recognition standards related to Topic 606 discussed above, as amended, will be effective for the Company for the fiscal year beginning July 1, 2018, at which time we plan to adopt the standard using the modified retrospective approach. To-date, the Company has identified the following preliminary impact of adopting the new standards on various revenue streams across its operating segments.
Within the Supply Chain Services segment, the Company is continuing to assess the impact of adopting the new standards on its various revenue streams. Under the new standard, the Company expects to recognize administrative fee revenue upon the occurrence of a sale by suppliers to the Company’s members. This differs from the current treatment in which the Company recognizes revenue in the period that the respective supplier reports member purchasing data, which is usually a month or a quarter in arrears of the actual member purchase activity. This change is expected to result in the Company recognizing revenue sooner in the revenue cycle than under the Company's current revenue recognition policy and the creation of a contract asset associated with this shift in revenue recognition timing. The Company is continuing to assess the impact of these changes on the financial statements and disclosures.
Within the Performance Services segment, the Company is continuing to assess the impact of adopting the new standards on its various revenue streams. Under the new standard, the Company will be required to capitalize the incremental costs of obtaining a contract, which the Company has preliminarily identified as sales commissions and costs associated with implementing our SaaS informatics tools, and to amortize these costs in a manner that reflects the transfer of services to the customer. These costs are expensed as incurred under the Company's current revenue recognition policy. The Company is continuing to assess the impact of these changes on the financial statements and disclosures.
Additionally, the Company is evaluating the potential impact of adopting the new standards on its business processes, systems and controls necessary to support revenue recognition and disclosure requirements under the new standard.
(3) BUSINESS ACQUISITIONS
Acquisition of Innovatix and Essensa
Innovatix, LLC ("Innovatix") and Essensa Ventures, LLC ("Essensa") are GPOs focused on serving alternate site healthcare providers and other organizations throughout the United States. Prior to December 2, 2016, the Company, through its consolidated subsidiary, Premier Supply Chain Improvement ("PSCI"), held 50% of the membership interests in Innovatix (see Note 4 - Investments). On December 2, 2016, the Company, through PSCI, acquired from GNYHA Holdings, LLC ("GNYHA Holdings") (see Note 14 - Related Party Transactions) the remaining 50% ownership interest of Innovatix and 100% of the ownership interest in Essensa for $325.0 million, of which $227.5 million in cash was paid at closing and $97.5 million in cash was paid on January 10, 2017. As a result of certain purchase price adjustments provided for in the purchase agreement, the adjusted purchase price was $336.0 million.
In connection with the acquisition, the Company utilized its credit facility dated June 24, 2014, as amended on June 4, 2015 (the "Credit Facility") to fund the $325.0 million purchase price (see Note 8 - Debt), the outstanding portion of which is reflected within current portion of long-term debt in the Condensed Consolidated Balance Sheets at December 31, 2017. The Company incurred transaction costs related to this acquisition of $1.6 million and $4.4 million during the three months ended December 31, 2017 and 2016, respectively, and $3.4 million and $4.7 million during the six months ended December 31, 2017 and 2016, respectively. These transaction costs were includedrecorded in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income. Accounts deemed uncollectible are written off, net of actual recoveries. If circumstances related to specific customers change, the Company's estimate of the recoverability of receivables could be further adjusted.

Contract Assets

Supply Chain Services contract assets represents estimated member and other customer purchases on supplier contracts for which administrative fees have been earned, but not collected. Performance Services contract assets represents revenue earned for services provided but which the company is not contractually able to bill as of the end of the respective reporting period. Historically, we have not recognized a provision for contract assets. Under ASC Topic 326, we include Performance Services’ contract assets in our reserving process and assess the risk of loss similar to our methodology of the Company’s receivables, since the contract assets are reclassified to receivables when we become entitled to payment. Accordingly, a reserve is applied upon recognition of the contract asset.
Recently Adopted Accounting Standards
In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, (“ASU 2016-13”), which modifies the measurement of expected credit losses on certain financial
16

instruments and the timing of when such losses are recorded. The Company adopted ASU 2016-13 effective July 1, 2020 on a modified retrospective basis which resulted in a reduction to retained earnings of $1.2 million.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement, (“ASU 2018-13”), which improves the effectiveness of fair value measurement disclosures by eliminating, adding and modifying certain disclosure requirements for fair value measurements as part of its disclosure framework project. Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The Company adopted ASU 2018-13 effective July 1, 2020 and has updated the financial statements accordingly to reflect the updates in the disclosure requirements (see Note 6 - Fair Value Measurements). The implementation of ASU 2018-13 did not have a material effect on the Company’s condensed consolidated financial statements.
In August 2018, the FASB issued ASU 2018-15, Intangibles- Goodwill and Other-Internal Use Software (Topic 350): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract,(“ASU 2018-15”), which requires customers in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal use software guidance in ASC 350-40 to determine which implementation costs to capitalize or expense. The Company adopted ASU 2018-15 effective July 1, 2020 on a prospective basis. The implementation of ASU 2018-15 did not have a material effect on the Company’s condensed consolidated financial statements.
(3) BUSINESS ACQUISITIONS
Acquisition of Invoice Delivery Services, LP Assets
On March 1, 2021, the Company, through Premier IDS, acquired substantially all the assets and assumed certain liabilities of IDS for an adjusted purchase price of $80.4 million, subject to certain adjustments, of which $80.0 million was paid at closing with borrowings under the Company’s Credit Facility (the “IDS Acquisition”).
The Company has accounted for the Innovatix and Essensa acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired (see Note 6 - Intangible Assets, Net) and liabilities assumed based on their fair values. The acquisition resulted in the recognition of approximately $334.7 million of goodwill (see Note 7 - Goodwill) attributable to the anticipated profitability of Innovatix and Essensa. The acquisition was considered an asset acquisition for tax purposes, and accordingly, the Company expects the goodwill to be deductible for tax purposes.
The fair values assigned to the net assets acquired and the liabilities assumed as of the acquisition date were as follows (in thousands):
 Acquisition Date Fair Value
Cash paid at closing$227,500
Cash paid on January 10, 201797,500
Purchase price325,000
Additional cash paid at closing10,984
Adjusted purchase price335,984
Earn-out liability16,662
Receivable from GNYHA Holdings, LLC(3,000)
Total consideration paid349,646
Cash acquired(16,267)
Net consideration333,379
50% ownership interest in Innovatix218,356
Payable to Innovatix and Essensa(5,765)
Enterprise value545,970
  
Accounts receivable21,242
Prepaid expenses and other current assets686
Fixed assets, net3,476
Intangible assets241,494
Total assets acquired266,898
Accrued expenses5,264
Revenue share obligations7,011
Other current liabilities694
Total liabilities assumed12,969
Deferred tax liability42,636
Goodwill$334,677
The acquisition provides the seller an earn-out opportunity of up to $43.0 million based on Innovatix's and Essensa's Adjusted EBITDA (as defined in the purchase agreement) for the fiscal year ending June 30, 2017, which is still in the process of being finalized. The Company paid the seller $18.5 million of the earn-out opportunity during the current period. As of December 31, 2017, the fair value of the earn-out liability was $2.6 million (see Note 5 - Fair Value Measurements).
Certain executive officers of Innovatix and Essensa executed employment agreements that became effective upon the closing of the acquisition. The purchase agreement provides that in the event that Innovatix's and Essensa's Adjusted EBITDA exceeds agreed upon amounts, certain of those executive officers are entitled to receive a retention bonus payment of up to $3.0 million in the aggregate, for which the Company will be reimbursed by GNYHA Holdings, LLC, of which $1.5 million was paid and reimbursed during the current period.
The Company's 50% ownership interest in Innovatix prior to the acquisition was accounted for under the equity method and had a carrying value of $13.3 million (see Note 4 - Investments). In connection with the acquisition, the Company's investment was remeasured under business combination accounting rules to a fair value of $218.4 million, resulting in a one-time gain of $205.1 million which was recorded as other income.


Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to our historic consolidated financial statements. The Company reports Innovatix and Essensa as part of its Supply Chain Services segment.
IDS Acquisition of Acro Pharmaceuticals
Acro Pharmaceutical Services LLC ("Acro") and Community Pharmacy Services, LLC (collectively with Acro, "Acro Pharmaceuticals") are specialty pharmacy businesses that provide customized healthcare management solutions to members. On August 23, 2016, the Company, through its consolidated subsidiary, NS3 Health, LLC, acquired 100% of the membership interests of Acro Pharmaceuticals for $75.0 million in cash. As a result of certain purchase price adjustments provided for in the purchase agreement, the adjusted purchase price was $62.9 million. The acquisition was funded with available cash on hand.
The Company has accounted for the Acro Pharmaceuticals acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values. The Acro Pharmaceuticals acquisitiontotal fair value assigned to intangible assets acquired was $22.4 million, consisting primarily of developed technology.
The IDS Acquisition resulted in the recognition of approximately $33.9$57.5 million of goodwill (see Note 78 - Goodwill)Goodwill and Intangible Assets) attributable to the anticipated profitability of Acro Pharmaceuticals.IDS. The Acro Pharmaceuticals acquisitionIDS Acquisition was considered an asset acquisition for income tax purposes and accordingly,purposes. Accordingly, the Company expects thetax goodwill to be deductible for tax purposes.
Pro forma results of operations The initial purchase price allocation for the acquisition have not been presented becauseIDS Acquisition is preliminary and subject to changes in fair value of working capital and valuation of the effects on revenueassets acquired. IDS will be integrated within Premier under the brand name RemitraTM and net income were not material to our historic consolidated financial statements. The Company reports Acro Pharmaceuticalsreported as part of the Performance Services segment.
Acquisition of Health Design Plus, LLC
On May 4, 2020, the Company, through its consolidated subsidiary Premier Healthcare Solutions, Inc. (“PHSI”), acquired 97% of the equity of Health Design Plus, LLC (“HDP”) for an adjusted purchase price of $23.8 million, giving effect to certain purchase price adjustments provided for in the purchase agreement. The transaction was funded with borrowings under the Company’s Credit Facility.
The purchase price allocation was finalized during the three months ended December 31, 2020.
Acquisition of Acurity and Nexera Assets
On February 28, 2020, the Company acquired substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc. (the “Acurity and Nexera asset acquisition”). The Company agreed to pay an aggregate amount of $291.5 million, of which $166.1 million was paid at closing with borrowings under the Credit Facility. An additional $120.0 million will be paid in 4 equal annual installments of $30.0 million on or about June 30, 2021, 2022, 2023 and 2024. An additional $4.7 million was paid to GNYHA during the three months ended September 30, 2020.
In addition, the asset purchase agreement provides an earn-out opportunity for Acurity, Inc. of up to $30.0 million based upon the Company’s achievement of a range of member renewals on terms to be agreed to by the Company and GNYHA based on prevailing market conditions in December 2023. As of March 31, 2021, the fair value of the earn-out liability was $24.0 million (see Note 6 - Fair Value Measurements).
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Prior to entering into the purchase agreement, Acurity, Inc. agreed to provide one-time rebates of $93.8 million to certain of its then members based on their pre-closing purchasing volume. The Company concluded that these one-time rebates should be excluded from the purchase price and capitalized as prepaid contract administrative fee share at closing. As a result, the total fair value of consideration paid as part of the acquisition totaled $202.6 million.
The purchase price allocation was finalized during the three months ended September 30, 2020.
Acquisition of Medpricer
On October 28, 2019, the Company, through its consolidated subsidiary Premier Supply Chain Improvement, Inc. (“PSCI”), acquired all of the outstanding capital stock in Medpricer.com, Inc. (“Medpricer”) for an adjusted purchase price of $38.5 million. The transaction was funded with borrowings under the Credit Facility.
The acquisition provides the sellers an earn-out opportunity of up to $5.0 million based on Medpricer’s achievement of a revenue target for the calendar year ended December 31, 2020. As of March 31, 2021, the value of the earn-out liability was $4.8 million.
The purchase price allocation was finalized during the three months ended September 30, 2020.
(4) DISCONTINUED OPERATIONS AND EXIT ACTIVITIES
In connection with the sale of certain assets and wind down and exit from the specialty pharmacy business, the Company met the criteria for classifying certain assets and liabilities of its specialty pharmacy business as a discontinued operation as of June 30, 2019. Prior to its classification as a discontinued operation, the specialty pharmacy business was included as part of the Supply Chain Services segment.
As of June 30, 2020, the Company had completed the wind down and exit from the specialty pharmacy business and had 0 net income or loss from discontinued operations for the three and nine months ended March 31, 2021.
(4)The following table summarizes the major components of net income from discontinued operations (in thousands):
Three Months Ended March 31, 2020Nine Months Ended March 31, 2020
Operating gain from discontinued operations$0 $0 
Net gain on disposal of assets24 1,399 
Income from discontinued operations before income taxes24 1,399 
Income tax expense19 390 
Income from discontinued operations, net of tax5 1,009 
Net income from discontinued operations attributable to non-controlling interest in Premier LP(3)(480)
Net income from discontinued operations attributable to stockholders$2 $529 
(5) INVESTMENTS
Investments in Unconsolidated Affiliates
The Company'sCompany’s investments in unconsolidated affiliates consisted of the following (in thousands):
Carrying ValueEquity in Net Income
Three Months EndedNine Months Ended
March 31,March 31,
March 31, 2021June 30, 20202021202020212020
FFF$117,591 $109,204 $806 $4,340 $8,387 $10,830 
Prestige18,276 11,194 4,436 0 7,082 0 
Other investments17,880 12,937 282 102 554 208 
Total investments$153,747 $133,335 $5,524 $4,442 $16,023 $11,038 
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 Carrying Value Equity in Net Income (Loss)
    Three Months Ended December 31,Six Months Ended December 31,
 December 31, 2017June 30, 2017 2017201620172016
FFF$91,125
$85,520
 $1,268
$1,119
$5,605
$4,177
Bloodbuy2,001
2,066
 (31)(34)(65)(52)
PharmaPoint4,074
4,232
 (107)(85)(158)(162)
Innovatix—
—
 —
4,127
—
10,743
Other investments1,188
1,061
 127
—
127
—
Total investments$98,388
$92,879
 $1,257
$5,127
$5,509
$14,706
On July 26, 2016, theThe Company, through PSCI, held a 49% interest in FFF Enterprises, Inc. (“FFF”) through its consolidated subsidiary, PSCI, acquired 49%ownership of the issued and outstanding stock of FFF Enterprises, Inc. ("FFF") for $65.7 million in cash plus consideration in the form of the FFF putat March 31, 2021 and call rights.June 30, 2020. The Company recordedrecords the initial investment in FFF in the accompanying Condensed Consolidated Balance Sheets at $81.1 million, of which $65.7 million was in cash and $15.4 million was consideration in the form of the initial net fair value of the FFF put and call rights in the accompanying Condensed Consolidated Balance Sheets (see Note 56 - Fair Value Measurements for additional information related to the fair values of the FFF put and call rights)information). The Company accounts for its investment in FFF using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.
The Company, through its consolidated subsidiary, PSCI,PRAM Holdings, LLC (“PRAM”), held a 15% ownershipan approximate 20% interest in BloodSolutions, LLC ("Bloodbuy"Prestige Ameritech Ltd. (“Prestige”) through its 5.3 millionownership of Prestige limited partnership units at March 31, 2021. The Company owns approximately 26% of Class B Membership Interests at December 31, 2017 and June 30, 2017.the membership interest of PRAM, with the remainder of the membership interests held by 16 member health systems. The Company accounts for its investment in Bloodbuy using the equity method of accounting as the Company has rights to appoint a Board member, and includes the investment as part of the Supply Chain Services segment.
The Company, through its consolidated subsidiary, PSCI, held a 28% ownership interest in PharmaPoint, LLC ("PharmaPoint") through its 5.0 million units of Class B Membership Interests at December 31, 2017 and June 30, 2017. The Company accounts for its investment in PharmaPointPrestige using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.


The Company, through its consolidated subsidiary, PSCI, held 50% of the membership interests in Innovatix until December 2, 2016, at which time it acquired the remaining 50% membership interests (see Note 3 - Business Acquisitions and Note 14 - Related Party Transactions). Prior to the acquisition, the Company accounted for its investment in Innovatix using the equity method of accounting and included the investment as part of the Supply Chain Services segment.
Marketable Securities
The Company has historically invested its excess cash in commercial paper, U.S. government debt securities, corporate debt securities and other securities with maturities generally ranging from three months to five years from the date of purchase. The Company uses the specific-identification method to determine the cost of securities sold. At December 31, 2017 and June 30, 2017, the Company had no marketable securities other than those included in deferred compensation plan assets (see Note 5 - Fair Value Measurements).
(5)(6) FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The following table providestables provide for the periods presented a summary of the Company'sCompany’s financial assets and liabilities which are measured at fair value on a recurring basis (in thousands):
March 31, 2021Fair Value of Financial Assets and LiabilitiesQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs
(Level 3)
Cash equivalents$75 $75 $0 $0 
Deferred compensation plan assets61,107 61,107 0 0 
Total assets61,182 61,182 0 0 
Earn-out liabilities23,954 0 0 23,954 
FFF put right58,379 0 0 58,379 
Total liabilities$82,333 $0 $0 $82,333 
  Quoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs
(Level 3)
December 31, 2017    
Cash equivalents$28,390
$28,390
$—
$—
FFF call right2,108
—
—
2,108
Deferred compensation plan assets46,670
46,670
—
—
Total assets$77,168
$75,060
$—
$2,108
Earn-out liabilities$2,792
$—
$—
$2,792
FFF put right37,110
—
—
37,110
Total liabilities$39,902
$—
$—
$39,902
     
June 30, 2017    
Cash equivalents$22,218
$22,218
$—
$—
FFF call right4,655
—
—
4,655
Deferred compensation plan assets47,202
47,202
—
—
Total assets$74,075
$69,420
$—
$4,655
Earn-out liabilities$21,310
$—
$—
$21,310
FFF put right24,050
—
—
24,050
Total liabilities$45,360
$—
$—
$45,360
Cash equivalents were included in cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets (see Note 4 - Investments).
June 30, 2020Fair Value of Financial Assets and LiabilitiesQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs
(Level 3)
Cash equivalents$13,272 $13,272 $0 $0 
Deferred compensation plan assets52,538 52,538 0 0 
Total assets65,810 65,810 0 0 
Earn-out liability33,151 0 0 33,151 
FFF put right36,758 0 0 36,758 
Total liabilities$69,909 $0 $0 $69,909 
Deferred compensation plan assets consisted of highly liquid mutual fund investments, which were classified as Level 1. The current portion of deferred compensation plan assets ($5.2 million and $3.4 million at March 31, 2021 and June 30, 2020, respectively) was included in prepaid expenses and other current assets ($3.9 million and $5.7 million at December 31, 2017 and June 30, 2017, respectively) in the accompanying Condensed Consolidated Balance Sheets.
Financial Instruments Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
Earn-out liabilities
Earn-out liabilities were incurred in connection with acquisitions of Healthcare Insights, LLC (acquired on July 31, 2015), Inflow Health, LLC (acquired on October 1, 2015) and Innovatix and Essensa (acquired on December 2, 2016) (see Note 3 - Business Acquisitions). At December 31, 2017 and June 30, 2017, the earn-out liabilities were classified within Level 3 of the fair value

hierarchy. The fair values of the earn-out liabilities were determined based on estimated future earnings and the probability of achieving them. The current portion of the earn-out liabilities was $2.6 million and $21.1 million at December 31, 2017 and June 30, 2017, respectively, and was included in other liabilities, current in the accompanying Condensed Consolidated Balance Sheets. The decrease in the current portion of the earn-out liabilities is attributable to an $18.5 million earn-out payment to GNYHA Holdings that occurred during the current period. The long-term portion of the earn-out liabilities was $0.2 million at December 31, 2017 and June 30, 2017, and was included in other liabilities, non-current in the accompanying Condensed Consolidated Balance Sheets. Changes in the fair values of the earn-out liabilities were recorded within selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income.
FFF put and call rights
Pursuant to a shareholders' agreement entered into inIn connection with the Company'sCompany’s equity investment in FFF, (see Note 4 - Investments), which shareholders'the Company entered into a shareholders’ agreement was amended and restated November 22, 2017,that provides, among other things, that the majority shareholder of FFF holds a put right that provides such shareholder (i) the right to require the Company to purchase up to 50% of its interest in FFF, which is exercisable beginning on the fourth anniversary of the investment closing date, July 26, 2020, and (ii) requires the Company to purchase all or a portion of its remainingthe majority shareholder’s interest in FFF, on an all or nothing basis, on or after December 31, 2020.April 15, 2023. Any such required purchases are topurchase by the Company upon exercise of the put right by FFF’s majority shareholder must be made at a per share price equal to FFF'sFFF’s earnings before interest, taxes, depreciation and amortization ("EBITDA"(“EBITDA”) over the twelve calendar months prior to the purchase date multiplied by a market adjusted multiple, adjusted for any outstanding debt and cash and cash equivalents ("(“Equity Value per Share"Share”). In addition, in the amended and restated shareholders'event of a Key Man Event (generally defined in the shareholders’ agreement providesas the resignation, termination for cause, death or disability of the majority shareholder), the Company withhas a call right requiringthat requires the majority shareholder to sell its remaining interest in FFF to the Company, whichand is exercisable at any time within the later of
19

180 calendar days after (i) the date of a Key Man Event (generally defined inor (ii) January 30, 2021. As of March 31, 2021 and June 30, 2020, the shareholders' agreement as the resignation, termination for cause, death or disability of the majority shareholder) or 30 calendar days after December 31, 2020.call right had 0 value. In the event that the FFF put or calleither of these rights are exercised, the purchase price for the additional interest in FFF will be at a per share price equal to the Equity Value per Share.
The fair valuevalues of the FFF put and call rights were determined using a Monte Carlo simulation in a risk-neutral framework based on the Equity Value per Share calculation using unobservable inputs, which included the estimated FFF put and call rights'rights’ expiration dates, the forecast of FFF'sFFF’s EBITDA and enterprise value over the option period, forecasted movements in the overall market and the likelihood of a Key Man Event. Significant changes toFFF’s enterprise value over the Equity Value per Shareoption period was valued utilizing expected annual EBITDA and Revenue growth rates, among other assumptions. The resulting from changesFFF enterprise value was an assumption utilized in the unobservable inputs could have a significant impact on the fair valuesvaluation of the FFF put and call rights. Significant increases to weighted average cost of capital, business enterprise value, correlation and credit spread could significantly decrease the liability while a significant increase to asset volatility, EBITDA growth rate and revenue growth rate could significantly increase the liability.
The Company utilized the following assumptions to estimate the fair value of FFF Put and Call Rights:
March 31, 2021June 30, 2020
Annual EBITDA growth rate2.5-10.8%2.5-26.5%
Annual revenue growth rate2.5-6.3%1.4-14.4%
Correlation80.0 %80.0 %
Weighted average cost of capital14.0 %14.5 %
Asset volatility30.0 %28.0 %
Credit spread0.9 %1.7 %
The significant assumptions using the Monte Carlo simulation approach for valuation of the Put and Call Rights are:
(i)Annual EBITDA Growth Rate: The forecasted EBITDA growth range over six years;
(ii)Annual Revenue Growth Rate: The forecasted Revenue growth range over six years;
(iii)Correlation: The estimated correlation between future Business Enterprise Value and EBITDA of FFF;
(iv)Weighted Average Cost of Capital: The expected rate paid to security holders to finance debt and equity;
(v)Asset volatility: Based on the asset volatility of guideline public companies in the healthcare industry; and
(vi)Credit Spread: Based on term-matched BBB yield curve.
The Company recorded the FFF put and call rights within long-term other liabilities and long-term other assets, respectively, within the accompanying Condensed Consolidated Balance Sheets. Net changes in the fair valuevalues of the FFF put and call rights were recorded within other (expense) income, net in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income.

Earn-out liabilities
Earn-out liabilities were established in connection with the Acurity and Nexera asset acquisition and the Stanson Health, Inc. (“Stanson”) and Medpricer acquisitions. The earn-out liability associated with the Acurity and Nexera asset acquisition was classified as Level 3 of the fair value hierarchy. The earn-out liability associated with the Medpricer acquisition is no longer measured at fair value as of March 31, 2021, given Medpricer’s achievement of a portion of the earn-out. The full earn-out associated with the Stanson acquisition was paid to former employees and shareholders as of December 31, 2020.
The earn-out liability arising from expected earn-out payments related to the Acurity and Nexera asset acquisition were measured on the acquisition date using a probability-weighted expected payment model and are remeasured periodically due to changes in management’s estimates of the number of member renewals and market conditions. In determining the fair value of the contingent liabilities, management reviews the current results of the acquired business, along with projected results for the remaining earn-out period, to calculate the expected earn-out payment to be made based on the contractual terms set out in the respective acquisition agreement. The Acurity and Nexera earn-out liability utilized a credit spread of 1.0% at March 31, 2021 and June 30, 2020. As of March 31, 2021 and June 30, 2020, the undiscounted range of outcomes is between $0 and $30.0 million. A significant decrease in the probability could result in a significant decrease in the value of the earn-out liability. The fair value of the Acurity and Nexera earn-out liability at March 31, 2021 and June 30, 2020 was $24.0 million and $22.7 million, respectively.
20

Acurity and Nexera Earn-out (a)
Input assumptionsAs of March 31, 2021As of June 30, 2020
Probability of transferred member renewal percentage < 50%5.0 %5.0 %
Probability of transferred member renewal percentage between 50% and 65%10.0 %10.0 %
Probability of transferred member renewal percentage between 65% and 80%25.0 %25.0 %
Probability of transferred member renewal percentage > 80%60.0 %60.0 %
Credit spread1.0 %1.0 %
(a)    The Acurity and Nexera earn-out liability was initially valued as of February 28, 2020.
A reconciliation of the Company's earn-out liabilities andCompany’s FFF put and call rights and earn-out liabilities is as follows (in thousands):
Beginning Balance
Purchases (Settlements) (a)
Gain (Loss) (b)
Ending Balance
Three Months Ended March 31, 2021
Earn-out liabilities$22,700 0 (1,254)23,954 
FFF put right53,184 0 (5,195)58,379 
Total Level 3 liabilities$75,884 $0 $(6,449)$82,333 
Three Months Ended March 31, 2020
Earn-out liabilities$13,420 $22,700 $1,233 $34,887 
FFF put right19,065 0 (13,906)32,971 
Total Level 3 liabilities$32,485 $22,700 $(12,673)$67,858 
Nine Months Ended March 31, 2021
Earn-out liabilities$33,151 $(13,733)$(4,536)$23,954 
FFF put right36,758 0 (21,621)58,379 
Total Level 3 liabilities$69,909 $(13,733)$(26,157)$82,333 
Nine Months Ended March 31, 2020
FFF call right$204 $0 $(204)$0 
Total Level 3 assets204 0 (204)0 
Earn-out liabilities6,816 26,481 (1,590)34,887 
FFF put right41,652 0 8,681 32,971 
Total Level 3 liabilities$48,468 $26,481 $7,091 $67,858 
 Beginning BalancePurchases (Settlements)Gain (Loss)Ending Balance
Three Months Ended December 31, 2017    
FFF call right$4,593
$—
$(2,485)$2,108
Total Level 3 assets$4,593
$—
$(2,485)$2,108
Earn-out liabilities$21,675
$(18,500)$383
$2,792
FFF put right24,008
—
(13,102)37,110
Total Level 3 liabilities$45,683
$(18,500)$(12,719)$39,902
     
Three Months Ended December 31, 2016    
FFF call right$10,316
$—
$434
$10,750
Total Level 3 assets$10,316
$—
$434
$10,750
Earn-out liabilities$2,359
$16,662
$2,308
$16,713
FFF put right25,811
—
(573)26,384
Total Level 3 liabilities$28,170
$16,662
$1,735
$43,097
     
Six Months Ended December 31, 2017    
FFF call right$4,655
$—
$(2,547)$2,108
Total Level 3 assets$4,655
$—
$(2,547)$2,108
Earn-out liabilities$21,310
$(18,500)$18
$2,792
FFF put right24,050
—
(13,060)37,110
Total Level 3 liabilities$45,360
$(18,500)$(13,042)$39,902
     
Six Months Ended December 31, 2016    
FFF call right$—
$10,361
$389
$10,750
Total Level 3 assets$—
$10,361
$389
$10,750
Earn-out liabilities$4,128
$16,662
$4,077
$16,713
FFF put right—
25,821
(563)26,384
Total Level 3 liabilities$4,128
$42,483
$3,514
$43,097
(a)    Purchases (Settlements) for the nine months ended March 31, 2021 includes the Medpricer earnout, which has been earned in part but not yet paid as of March 31, 2021 and the Stanson earnout, which was paid in full as of December 31, 2020.
(b)    A gain on level 3 asset balances will increase the asset ending balance whereby a gain on level 3 liability balances will decrease the liability ending balance. A loss on level 3 asset balances will decrease the asset ending balance whereby a loss on level 3 liability balance will increase the liability ending balance.
Non-Recurring Fair Value Measurements
During the sixnine months ended DecemberMarch 31, 2017,2021, the Company recorded notes payable to members resulting from the deferral of the early termination payments associated with the termination of the TRA as part of the August 2020 restructuring. These notes include a Level 2 input associated with the implied interest rate of 1.8% and are calculated as of August 11, 2020. (see Note 9 - Debt and Notes Payable).
During the nine months ended March 31, 2021, no non-recurring fair value measurements were required relatedrelating to the measurement of goodwill and intangible assets for impairment. However, purchase price allocations required significant non-recurring Level 3 inputs. The preliminary fair values of the acquired intangible assets resulting from the IDS Acquisition was determined using the income approach (see Note 3 - Business Acquisitions).
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Financial Instruments forFor Which Fair Value Only is Disclosed
The fair values of non-interest bearing notes payable, classified as Level 2, were less than their carrying valuesvalue by approximately $0.5 million and $0.6$0.2 million at DecemberMarch 31, 20172021 and June 30, 2017, respectively,2020, based on assumed market interest rates of 2.9% and 2.6%1.6% for December 31, 2017 and June 30, 2017, respectively.both periods.
Other Financial Instruments
The fair values of cash, accounts receivable, accounts payable, accrued liabilities, and the Company's Credit Facility (as defined in Note 9 - Debt and Notes Payable) approximated carrying value due to the short-term nature of these financial instruments.


(7) CONTRACT BALANCES
(6)Deferred Revenue
Revenue recognized during the nine months ended March 31, 2021 that was included in the opening balance of deferred revenue at June 30, 2020 was $16.5 million, which is a result of satisfying performance obligations.
Performance Obligations
A performance obligation is a promise to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contracts may have a single performance obligation as the promise to transfer individual goods or services is not separately identifiable from other promises and, therefore, not distinct, while other contracts may have multiple performance obligations, most commonly due to the contract covering multiple phases or deliverable arrangements (licensing fees, implementation fees, maintenance and support fees, professional fees for consulting services), including certain performance guarantees.
Net revenue recognized during the three months ended March 31, 2021 from performance obligations that were satisfied or partially satisfied in prior periods was $8.5 million. The net revenue recognized was driven by a $11.4 million increase in net administrative fees revenue related to under-forecasted cash receipts received in the current period partially offset by a reduction of $2.9 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.
The reduction to net revenue recognized during the nine months ended March 31, 2021 from performance obligations that were satisfied or partially satisfied in prior periods was $3.9 million. The reduction was driven by a $0.9 million decrease in net administrative fees revenue related to over-forecasted cash receipts received in the current period and a reduction of $3.0 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.
Reduction in net revenue recognized during the three and nine months ended March 31, 2020 from performance obligations that were satisfied or partially satisfied in prior periods was $0.1 million and $1.4 million, respectively. The reduction was driven by $3.8 million and $6.9 million, respectively, associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business. This was offset by $3.7 million and $5.5 million, respectively, of net administrative fees revenue related to under-forecasted cash receipts received in the current period.
Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of March 31, 2021, the aggregate amount of the transaction price allocated to remaining performance obligations was $589.5 million. The Company expects to recognize approximately 45% of the remaining performance obligations over the next 12 months and an additional 26% over the following 12 months, with the remainder recognized thereafter.
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(8) GOODWILL AND INTANGIBLE ASSETS NET
Goodwill
Goodwill consisted of the following (in thousands):
Supply Chain ServicesPerformance ServicesTotal
June 30, 2020$387,722 $554,243 $941,965 
Acquisition of businesses and assets0 57,514 57,514 
Adjustments to acquisition purchase price780 (482)298 
March 31, 2021$388,502 $611,275 $999,777 
The initial purchase price allocation for the IDS Acquisition is preliminary and subject to changes in fair value of working capital and valuation of the assets acquired and the liabilities assumed.
Adjustments to acquisition purchase price since June 30, 2020 are a result of measurement period adjustments from the Acurity and Nexera asset acquisition and the HDP acquisition. See Note 3 - Business Acquisitions for more information.
Intangible Assets, Net
Intangible assets, net consisted of the following (in thousands):
Useful LifeMarch 31, 2021June 30, 2020
Member relationships14.7 years$386,100 $386,100 
Technology6.1 years186,017 164,117 
Customer relationships9.6 years70,830 70,830 
Trade names7.4 years24,610 24,160 
Non-compete agreements5.3 years11,315 11,315 
Other (a)
10.2 years7,682 6,060 
Total intangible assets686,554 662,582 
Accumulated amortization(279,023)(245,160)
Total intangible assets, net$407,531 $417,422 
 Useful LifeDecember 31, 2017June 30, 2017
Member relationships14.7 years$220,100
$220,100
Technology5.0 years142,317
143,727
Customer relationships8.3 years48,120
48,120
Trade names8.3 years22,710
22,710
Distribution network10.0 years22,400
22,400
Favorable lease commitments10.1 years11,393
11,393
Non-compete agreements5.9 years8,710
8,710
Total intangible assets 475,750
477,160
Accumulated amortization (125,903)(99,198)
Intangible assets, net $349,847
$377,962
(a) Includes a $1.0 million indefinite-lived asset that was acquired through the HDP acquisition.
Total intangible assets increased due to the IDS Acquisition (see Note 3 - Business Acquisitions). Intangible asset amortization totaled $13.8was $10.4 million and $11.2$14.0 million for the three months ended DecemberMarch 31, 20172021 and 2016,2020, respectively, and $27.7$33.9 million and $20.4$38.9 million for the sixnine months ended DecemberMarch 31, 20172021 and 2016,2020, respectively.
(7) GOODWILL(9) DEBT AND NOTES PAYABLE
GoodwillLong-term debt and notes payable consisted of the following (in thousands):
 December 31, 2017
June 30,
2017
Supply Chain Services$400,348
$400,348
Performance Services506,197
506,197
Total goodwill$906,545
$906,545
(8) DEBT
Long-term debt consisted of the following (in thousands):
 Commitment AmountDue DateDecember 31, 2017June 30, 2017
Credit Facility$750,000
June 24, 2019$200,000
$220,000
Notes payable—
Various7,683
14,272
Total debt  207,683
234,272
Less: Current portion  (201,139)(227,993)
Total long-term debt  $6,544
$6,279
March 31, 2021June 30, 2020
Credit Facility$200,000 $75,000 
Notes payable to members418,639 0 
Other notes payable9,297 9,200 
Total debt and notes payable627,936 84,200 
Less: current portion(299,447)(79,560)
Total long-term debt and notes payable$328,489 $4,640 
Credit Facility
Premier LP, along with its consolidated subsidiaries, PSCI and PHSI, as Co-Borrowers, Premier GP and certain domestic subsidiaries of Premier GP, as guarantors, entered into an unsecured Credit Facility, dated as of June 24, 2014 and amended on June 4, 2015.November 9, 2018 (the “Credit
23

Facility”). The Credit Facility has a maturity date of June 24, 2019.November 9, 2023, subject to up to 2 one-year extensions at the request of the Co-Borrowers and approval of a majority of the lenders under the Credit Facility. The Credit Facility provides for borrowings of up to $750.0 million$1.0 billion with (i) a $25.0$50.0 million sub-facility for standby letters of credit and (ii) a $75.0$100.0 million sub-facility for swingline loans. The Credit Facility also provides that Co-Borrowers may be increased from time to time at(i) incur incremental term loans and (ii) request an increase in the Company's requestrevolving commitments under the Credit Facility, together up to an aggregate additional amount of $250.0$350.0 million, subject to lender approval.the approval of the lenders providing such term loans or revolving commitment increases. The Credit Facility includes an unconditional and irrevocable guaranty of all obligations under the Credit Facility by Premier GP, certain domestic subsidiaries of Premier GP and future guarantors, if any. Premier, Inc. is not a guarantor under the Credit Facility.


AtOutstanding borrowings under the Company's option, committed loans may be in the form of Eurodollar rate loans ("Eurodollar Loans") or base rate loans ("Base Rate Loans"). Eurodollar LoansCredit Facility bear interest on a variable rate structure with borrowings bearing interest at the Eurodollar rate (defined as theeither London Interbank Offered Rate or LIBOR,(“LIBOR”) plus the Applicable Rate (defined as aan applicable margin based on the Consolidated Total Leverage Ratio (as defined in the Credit Facility))). Base Rate Loans bear interest at the Base Rate (defined as the highest ofranging from 1.000% to 1.500% or the prime rate announced by the administrative agent, the federal funds effectivelending rate plus 0.50% or the one-month LIBOR plus 1.0%) plus the Applicable Rate. The Applicable Rate rangesan applicable margin ranging from 1.125%0.000% to 1.750% for Eurodollar Loans and 0.125% to 0.750% for Base Rate Loans.0.500%. At DecemberMarch 31, 2017,2021, the interest rate for three-month Eurodollar Loans was 2.815% and the interest rate for Base Rate Loans was 4.625%. The Co-Borrowers are required to pay a commitment fee ranging from 0.125% to 0.250% per annum on the actual daily unused amount of commitmentsoutstanding borrowings under the Credit Facility. At December 31, 2017, the commitment feeFacility was 0.125%1.115%.
The Credit Facility contains customary representations and warranties as well as customary affirmative and negative covenants, including, among others, limitations on liens, indebtedness, fundamental changes, dispositions, restricted payments and investments, of which certain covenant calculations use EBITDA, a Non-GAAP financial measure. Under the terms of the Credit Facility, Premier GP is not permitted to allow its consolidated total leverage ratio (as defined in the Credit Facility) to exceed 3.00 to 1.00 for any period of four consecutive quarters. In addition, Premier GP must maintain a minimum consolidated interest coverage ratio (as defined in the Credit Facility) of 3.00 to 1.00 at the end of every fiscal quarter.covenants. Premier GP was in compliance with all such covenants at DecemberMarch 31, 2017.
2021. The Credit Facility also contains customary events of default, including among others, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaultsa cross-default of any indebtedness or guarantees in excess of $30.0 million, bankruptcy and other insolvency events, judgment defaults in excess of $30.0 million, and the occurrence of a change of control (as defined in the Credit Facility).$75.0 million. If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request of a majority of the required lenders under the Credit Facility, terminate the commitments and declare all of the amounts owed under the Credit Facility to be immediately due and payable. The Company may prepay amounts outstanding under the Credit Facility without premium or penalty provided that Co-Borrowers compensate the lenders for losses and expenses incurred as a result of the prepayment of any Eurodollar Loan, as defined in the Credit Facility.
Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, discretionary cash settlements of Class B unit exchanges under the Exchange Agreement, repurchases of Class A common stock pursuant to a stock repurchase program,programs, dividend payments, if and when declared, and other general corporate activities. During the sixnine months ended DecemberMarch 31, 2017,2021, the Company borrowed $225.0 million and repaid $50.0$100.0 million of borrowings and borrowed an additional $30.0 million under the Credit Facility. The Company had $200.0 million in outstanding borrowings under the Credit Facility at March 31, 2021 with $799.9 million of $200.0 million at December 31, 2017. Borrowings due within one yearavailable borrowing capacity after reductions for outstanding borrowings and outstanding letters of the balance sheet date are classified as current liabilities in the Condensed Consolidated Balance Sheets. They may be renewed or extended at the option ofcredit. In April 2021, the Company through the maturity daterepaid $75.0 million of outstanding borrowings under the Credit Facility.
Notes Payable
Notes Payable to Members
On August 10, 2020, the Company exercised its right to terminate the TRA by and among the Company and the former limited partners of Premier LP by providing all former LPs a notice of the termination and the amount of the expected payment to be made to each LP pursuant to the early termination provisions of the TRA (each such amount an “Early Termination Payment”) with a determination date of August 10, 2020 (the “Determination Date”). The valuation of the Early Termination Payment is based on the average of the closing prices of a share of Class A common stock on the stock exchange over the 20 trading days ending three days prior to the Determination Date. The aggregate amount of the Early Termination Payments was $472.6 million. Of that amount, $10.5 million was paid on September 15, 2020, to LPs that did not elect to execute a Unit Exchange and Tax Receivable Acceleration Agreement (“Unit Exchange Agreement”) in connection with the Company’s August 2020 restructuring. The remaining amount payable, $462.1 million in the aggregate, will be paid, without interest, to certain LPs that elected to execute a Unit Exchange Agreement, which deferred the Early Termination Payments over 18 quarterly installments commencing during the quarter ended March 31, 2021 and ending in the quarter ending June 30, 2025. While non-interest bearing, pursuant to GAAP requirements, the notes payable to members were recorded net of imputed interest of 1.8%. During the quarter ended March 31, 2021, the Company paid the first quarterly installment of $25.7 million.
At DecemberMarch 31, 20172021, the Company had $418.6 million of notes payable to members, net of discounts on notes payable of $17.8 million, of which $95.5 million was recorded to current portion of notes payable to members in the accompanying Condensed Consolidated Balance Sheets.
Other
At March 31, 2021 and June 30, 2017,2020, the Company had $7.7$9.3 million and $14.3$9.2 million respectively, in other notes payable, consisting primarily of non-interest bearing notes payable outstanding to departed member owners,respectively, of which $1.2$4.0 million and $8.0$4.6 million, respectively, were included in current portion of long-term debt and $6.5 million and $6.3 million, respectively, were included in long-term debt, less current portion, in the accompanying Condensed Consolidated Balance Sheets. NotesOther notes payable do not bear interest and generally have stated maturities ofthree to five years from their date of issuance.
24

(9)Future minimum principal payments on total outstanding notes payable as of March 31, 2021 are as follows (in thousands):
2021 (a)
$29,218 
2022105,211 
2023103,629 
2024104,231 
2025103,419 
Total principal payments$445,708 
(a)     For the period from April 1, 2021 to June 30, 2021.
(10) REDEEMABLE LIMITED PARTNERS' CAPITAL
Redeemable limited partners' capital representsOn July 31, 2020, after the member owners' 60% ownershipresignation of Premier LP through their ownership3 directors affiliated with the Company’s members, the Board of Class B common units at December 31, 2017. The member owners holdDirectors consisted of 15 (15) directors, comprised of 8 (8) independent directors, 6 (6) member-directors and the Company’s Chief Executive Officer, thus having a majority of independent directors on the votesBoard of Directors. Since the member-directors no longer comprised a majority of the Board of Directors, and anyas of July 31, 2020, the limited partner’s redemption or transfer or choice of consideration cannot be assumed to be withinfeature was under the control of the Company. Therefore, redeemable limited partners' capital is recorded atCompany (not the greaterholders of the book value or redemption amount per the Amended and Restated Limited Partnership Agreement of Premier LP (as amended, the "LP Agreement"), and is calculated asClass B common units). As a result, $1.8 billion representing the fair value of all Class B common unitsredeemable limited partners’ capital at July 31, 2020 was reclassified from temporary equity in the mezzanine section of the Condensed Consolidated Balance Sheets to additional paid in capital as if immediately exchangeable into Class A common shares. a component of permanent equity.
For the sixnine months ended DecemberMarch 31, 20172021 and 2016,2020, the Company recorded decreasesadjustments to the fair value of redeemable limited partners'partners’ capital as an adjustment of redeemable limited partners'partners’ capital to redemption amount in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income in the amountamounts of $638.3$(26.7) million and $397.1$516.7 million, respectively.
Redeemable limited partners' capital is classified as temporary equity in the mezzanine section of the accompanying Condensed Consolidated Balance Sheets as, pursuant With respect to the LP Agreement, withdrawal is atnine months ended March 31, 2021, 0 adjustments to the optionfair value of each member owner and the conditions of the repurchase are not solely within the Company's control.


The table below provides a summary of the changes in the redeemable limited partners'partners’ capital from June 30, 2017 to December 31, 2017 (in thousands):
 Receivables From Limited PartnersRedeemable Limited Partners' CapitalTotal Redeemable Limited Partners' Capital
June 30, 2017$(4,177)$3,142,760
$3,138,583
Distributions applied to receivables from limited partners984
—
984
Redemption of limited partners—
(269)(269)
Net income attributable to non-controlling interest in Premier LP—
101,095
101,095
Distributions to limited partners—
(41,148)(41,148)
Exchange of Class B common units for Class A common stock by member owners—
(162,265)(162,265)
Adjustment of redeemable limited partners' capital to redemption amount—
(638,340)(638,340)
December 31, 2017$(3,193)$2,401,833
$2,398,640
Receivables from limited partners represent amounts due from limited partners for their required capital in Premier LP. These receivables are either interest bearing notes that were issued to new limited partners or non-interest bearing loans (contribution loans) provided to existing limited partners. These receivables are reflected as a reduction toan adjustment of redeemable limited partners'partners’ capital so that amounts due from limited partners for capital are not reflected as redeemable limited partnership capital until paid. No interest bearing notes receivable were executed by limited partners of Premier LP during the six months ended December 31, 2017.
During the six months ended December 31, 2017, two limited partners withdrew from Premier LP. The limited partnership agreement provides for the redemption of former limited partners' Class B common units that are not eligible for exchange in the form of a five-year, unsecured, non-interest bearing term promissory note, a cash payment equal to the present value of the redemption amount or other mutually agreed upon terms. Partnership interest obligationswere recorded subsequent to former limited partners are reflected in notes payableJuly 31, 2020 in the accompanying Condensed Consolidated Balance Sheets. Under the Exchange Agreement, Class B common units that are eligible for exchange by withdrawing limited partners must be exchangedStatements of Income and Comprehensive Income. Refer to “Company Structure and Restructuring” in the subsequent exchange process.
Premier LP's distribution policy requires cash distributions as long as taxable income is generated and cash is available to distribute, on a quarterly basis prior to the 60th day after the end of each calendar quarter. The Company makes quarterly distributions to its limited partners in the form of a legal partnership income distribution governed by the terms of the LP Agreement. These partner distributions are based on the limited partner's ownership in Premier LP and relative participation across Premier service offerings. While these distributions are based on relative participation across Premier service offerings, they are not based directly on revenue generated from an individual partner's participation as the distributions are based on the net income (loss) of the partnership which encompasses the operating expenses of the partnership as well as participation by non-owner members in Premier's service offerings. To the extent Premier LP incurred a net loss, the limited partners would not receive a quarterly distribution. As provided in the LP Agreement, the amount of actual cash distributed may be reduced by the amount of such distributions used by limited partners to offset contribution loans or other amounts payable to the Company.
Quarterly distributions made to limited partners during the current fiscal year are as follows (in thousands):
Date
Distribution (a)
August 24, 2017$24,951
November 22, 2017$20,752
(a)Distributions are equal to Premier LP’s total taxable income from the preceding fiscal quarter-to-date period for each respective distribution date multiplied by the Company's standalone effective combined federal, state and local income tax rate for each respective distribution date. Premier LP expects to make a $20.4 million quarterly distribution on or before February 22, 2018. The distribution is reflected in limited partners' distribution payable in the accompanying Condensed Consolidated Balance Sheets at December 31, 2017.

Pursuant to the Exchange Agreement (see Note 1 - Organization and Basis of Presentation for more information),Presentation.
The tables below provide a summary of the changes in redeemable limited partners’ capital from June 30, 2020 to September 30, 2020 and June 30, 2019 to March 31, 2020 (in thousands). There were 0 changes in redeemable limited partner’s capital from September 30, 2020 to March 31, 2021.
Receivables From Limited PartnersRedeemable Limited Partners' CapitalTotal Redeemable Limited Partners' Capital
June 30, 2020$(995)$1,721,304 $1,720,309 
Distributions applied to receivables from limited partners141 — 141 
Net income attributable to non-controlling interest in Premier LP— 11,845 11,845 
Distributions to limited partners— (1,936)(1,936)
Exchange of Class B common units for Class A common stock by member owners— (2,437)(2,437)
Adjustment of redeemable limited partners' capital to redemption amount— 26,685 26,685 
Reclassification to permanent equity854 (1,755,461)(1,754,607)
September 30, 2020$0 $0 $0 
25

Receivables From Limited PartnersRedeemable Limited Partners’ CapitalTotal Redeemable Limited Partners’ Capital
June 30, 2019$(1,204)$2,524,474 $2,523,270 
Distributions applied to receivables from limited partners69 — 69 
Redemption of limited partners— (1,371)(1,371)
Net income attributable to non-controlling interest in Premier LP— 41,907 41,907 
Distributions to limited partners— (13,699)(13,699)
Exchange of Class B common units for Class A common stock by member owners— (50,792)(50,792)
Adjustment of redeemable limited partners' capital to redemption amount— (694,309)(694,309)
September 30, 2019(1,135)1,806,210 1,805,075 
Distributions applied to receivables from limited partners70 — 70 
Net income attributable to non-controlling interest in Premier LP— 55,704 55,704 
Distributions to limited partners— (12,689)(12,689)
Exchange of Class B common units for Class A common stock by member owners— (223,946)(223,946)
Adjustment of redeemable limited partners' capital to redemption amount— 480,153 480,153 
December 31, 2019(1,065)2,105,432 2,104,367 
Distributions applied to receivables from limited partners71 — 71 
Net income attributable to non-controlling interest in Premier LP— 35,058 35,058 
Distributions to limited partners— (9,314)(9,314)
Exchange of Class B common units for Class A common stock by member owners— (169,194)(169,194)
Adjustment of redeemable limited partners' capital to redemption amount— (302,569)(302,569)
March 31, 2020$(994)$1,659,413 $1,658,419 
Pursuant to the Exchange Agreement in place prior to the August 2020 restructuring, each limited partner hashad the cumulative right to exchange up to one-seventh of its initial allocation of Class B common units for shares of Class A common stock, cash or a combination of both, the form of consideration to be at the discretion of the Company's independent Audit and Compliance Committee.Committee of the Board of Directors. During the sixnine months ended DecemberMarch 31, 2017,2021, the Company recorded total reductions of $162.3$2.4 million to redeemable limited partners' capital prior to the August 2020 restructuring to reflect the exchange of approximately 4.90.1 million Class B common units and surrender and retirement of associateda corresponding number of shares of Class B common stock by member owners for a like number of shares of the Company's


Class A common stock (see Note 1112 - Earnings Per Share for more information). On August 11, 2020, the Exchange Agreement was terminated in connection with the restructuring as discussed in Note 1 - Organization and Basis of Presentation.
Quarterly exchanges during the current fiscal yearnine months ended March 31, 2021 were as follows (in thousands, except Class B common units).:
Date of Quarterly ExchangeNumber of Class B Common Units ExchangedReduction in Redeemable Limited Partners' Capital
July 31, 202069,684 $2,437 
As a result of the August 2020 restructuring, there were 0 quarterly exchanges subsequent to the July 31, 2020 exchange.
Date of Quarterly ExchangeNumber of Class B Common Units ExchangedReduction in Redeemable Limited Partners' Capital
July 31, 20171,231,410
$42,976
October 31, 20173,651,294
119,289
Total4,882,704
$162,265
(10)(11) STOCKHOLDERS' DEFICITEQUITY
As of DecemberMarch 31, 2017,2021, there were 54,685,668122,268,758 shares of the Company's Class A common stock, par value $0.01 per share, and 82,282,748 shares of the Company's Class B common stock, par value $0.000001 per share, outstanding.
On October 31, 2017, the Company's Board of Directors authorized the repurchase of up to $200 million of our outstanding Class A common stock as part of a balanced capital deployment strategy, such repurchases to be made from time to time in private or open market transactions at the Company's discretion in accordance with applicable federal securities laws. As of December 31, 2017, the Company had purchased approximately 2.6 million shares of Class A common stock at an average price of $28.96 per share for a total purchase price of approximately $74.7 million, of which $3.9 million relates to a forward purchase commitment included within accounts payable on our Condensed Consolidated Balance Sheets as a result of applying trade date accounting when recording the repurchase of such shares. As of December 31, 2017, the Company had approximately $125.3 million available under its share repurchase authorization, which expires June 30, 2018. Subsequent to December 31, 2017 and as of February 2, 2018, the Company had purchased approximately 1.0 million additional shares of Class A common stock at an average price of $31.67 per share for a total incremental purchase price of approximately $32.9 million, the amounts of which are not reflected in the Company's condensed consolidated financial statements for the quarter ended December 31, 2017. The repurchase authorization may be suspended, delayed or discontinued at any time at the discretion of the Company's Board of Directors.
Holders of Class A common stock are entitled to (i) one1 vote for each share held of record on all matters submitted to a vote of stockholders, (ii) receive dividends, when and if declared by the Board of Directors out of funds legally available, subject to any statutory or contractual restrictions on the payment of dividends and subject to any restrictions on the payment of dividends
26

imposed by the terms of any outstanding preferred stock or any class of series of stock having a preference over or the right to participate with the Class A common stock with respect to the payment of dividends or other distributions and (iii) receive pro rata, based on the number of shares of Class A common stock held, the remaining assets available for distribution upon the dissolution or liquidation of Premier, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any.
HoldersOn July 31, 2020, $1.8 billion representing the fair value of redeemable limited partners capital on July 31, 2020 was reclassified from temporary equity in the mezzanine section of the Condensed Consolidated Balance Sheets to additional paid in capital as a component of permanent equity. Refer to Note 10 - Redeemable Limited Partners' Capital for further discussion.
On August 11, 2020, pursuant to the Merger Agreement, each of the issued and outstanding Class B common units was canceled and converted automatically into a right to receive 1 share of the Company’s Class A common stock. In conjunction with the Merger, all of the issued and outstanding shares of Class B common stock are entitledof the Company beneficially held by the LPs were canceled in accordance with the Company’s Certificate of Incorporation. On August 11, 2020, the Company issued 50,143,414 shares of Class A common stock pursuant to one vote for eachthe Merger.
On September 15, 2020, December 15, 2020, and March 15, 2021, the Company paid a cash dividend of $0.19 per share heldon outstanding shares of Class A common stock to stockholders of record on all matters submitted to a vote of stockholders, but are not entitled to receive dividends, other than dividends payable in shares of Premier's common stock, or to receive a distribution upon the dissolution or a liquidation of Premier. Pursuant to the Voting Trust Agreement, the trustee will vote all of the Class B common stock as a block in the manner determined by the plurality of the votes received by the trustee from the member owners for the election of directors to serve onSeptember 1, 2020, December 1, 2020, and March 1, 2021, respectively. On April 23, 2021, the Board of Directors and bydeclared a majoritycash dividend of the votes received by the trustee from the member owners for all other matters. Class B common stock will not be listed$0.19 per share, payable on any stock exchange and, except in connection with any permitted sale or transferJune 15, 2021 to stockholders of Class B common units, cannot be sold or transferred.record on June 1, 2021.
(11)(12) EARNINGS PER SHARE
Basic earnings per share of Premier is computed by dividing net income attributable to stockholders by the weighted average number of shares of common stock outstanding for the period. Net income attributable to stockholders includes the adjustment recorded in the period to reflect redeemable limited partners'partners’ capital at the redemption amount, as a result ofwhich is due to the exchange benefit obtained by limited partners through the ownership of Class B common units. Except when the effect would be anti-dilutive, the diluted earnings (loss) per share calculation, which is calculated using the treasury stock method, includes the impact of shares that could be issued under the outstanding stock options, non-vested restricted stock units and awards, shares of non-vested performance share awards and the effect of the assumed redemption of Class B common units through the issuance of Class A common shares.


On August 11, 2020, pursuant to the Merger Agreement, each of the issued and outstanding Class B common units (and corresponding shares of the Company’s Class B common stock) was canceled and converted automatically into a right to receive 1 share of the Company’s Class A common stock, and the Company issued an aggregate of 50,143,414 shares of Class A common stock. Refer to Note 1 - Organization and Basis of Presentation for further discussion.
The following table provides a reconciliation of the numerator and denominator used for basic and diluted (loss) earnings per share (in thousands, except per share amounts):
Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Numerator for basic earnings per share:
Net income from continuing operations attributable to stockholders (a)
$48,321 $340,726 $234,445 $620,262 
Net income from discontinued operations attributable to stockholders0 2 0 529 
Net income attributable to stockholders$48,321 $340,728 $234,445 $620,791 
Numerator for diluted earnings per share:
Net income from continuing operations attributable to stockholders (a)
$48,321 $340,726 $234,445 $620,262 
Adjustment of redeemable limited partners’ capital to redemption amount0 (302,569)0 (516,725)
Net income from continuing operations attributable to non-controlling interest in Premier LP0 35,055 0 132,189 
Net income from continuing operations48,321 73,212 234,445 235,726 
Tax effect on Premier, Inc. net income (b)(c)
0 (7,067)0 (30,007)
Adjusted net income from continuing operations$48,321 $66,145 $234,445 $205,719 
27

 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Numerator for basic earnings per share:    
Net income attributable to stockholders$281,200
$400,275
$617,630
$470,577
     
Numerator for diluted earnings (loss) per share:    
Net income attributable to stockholders$281,200
$400,275
$617,630
$470,577
Adjustment of redeemable limited partners' capital to redemption amount(317,916)(335,264)(638,340)(397,072)
Net income attributable to non-controlling interest in Premier LP56,485
181,173
101,095
230,774
Net income19,769
246,184
80,385
304,279
Tax effect on Premier, Inc. net income (a)
(251,085)(34,496)(261,636)(55,448)
Adjusted net income (loss)$(231,316)$211,688
$(181,251)$248,831
     
Denominator for basic earnings per share:    
Weighted average shares (b)
55,209
49,445
54,059
48,330
     
Denominator for diluted earnings (loss) per share:    
Weighted average shares (b)
55,209
49,445
54,059
48,330
Effect of dilutive securities: (c)
    
Stock options189
220
270
261
Restricted stock261
181
283
176
Performance share awards—
—
—
—
Class B shares outstanding83,578
91,462
85,029
93,366
Weighted average shares and assumed conversions139,237
141,308
139,641
142,133
     
Basic earnings per share$5.09
$8.10
$11.43
$9.74
Diluted earnings (loss) per share$(1.66)$1.50
$(1.30)$1.75
Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Net income from discontinued operations attributable to stockholders$0 $2 $0 $529 
Net income from discontinued operations attributable to non-controlling interest in Premier LP0 3 0 480 
Adjusted net income from discontinued operations$0 $5 $0 $1,009 
Adjusted net income$48,321 $66,150 $234,445 $206,728 
Denominator for earnings per share:
Basic weighted average shares outstanding (d)
122,254 69,451 114,596 65,582 
Effect of dilutive securities: (e)
Stock options325 232 300 357 
Restricted stock373 216 336 239 
Performance share awards164 197 133 66 
Class B shares outstanding0 52,374 0 57,786 
Diluted weighted average shares and assumed conversions123,116 122,470 115,365 124,030 
Earnings per share attributable to stockholders:
Basic earnings per share attributable to stockholders$0.40 $4.91 $2.05 $9.47 
Diluted earnings per share attributable to stockholders$0.39 $0.54 $2.03 $1.66 
(a)Represents income tax expense related to Premier, Inc. retaining the portion of net income attributable to income from non-controlling interest in Premier, LP for the purpose of diluted earnings per share.
(b)Weighted average number of common shares used for basic earnings per share excludes weighted average shares of non-vested stock options, non-vested restricted stock, non-vested performance share awards and Class B shares outstanding for the three and six months ended December 31, 2017 and 2016.
(c)For the three and six months ended December 31, 2017, the effect of 2.2 million stock options was excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect, and the effect of 0.5 million performance share awards was excluded from diluted weighted average shares outstanding as they had not satisfied the applicable performance criteria at the end of the period.
(a)Net income from continuing operations attributable to stockholders was calculated as follows (in thousands):
Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Net income from continuing operations$51,444 $73,212 $277,033 $235,726 
Net income from continuing operations attributable to non-controlling interest(3,123)(35,055)(15,903)(132,189)
Adjustment of redeemable limited partners’ capital to redemption amount0 302,569 (26,685)516,725 
Net income from continuing operations attributable to stockholders$48,321 $340,726 $234,445 $620,262 
(b)For the three months ended March 31, 2021, the tax expense related to Premier, Inc. retaining the portion of net income from continuing operations attributable to income from non-controlling interest in PRAM and DePre Holdings, LLC (“DPH”) was calculated as a component of the income tax provision for the three months ended March 31, 2021.
(c)For the nine months ended March 31, 2021, the tax expense related to Premier, Inc. retaining the portion of net income from continuing operations attributable to income from non-controlling interest in Premier, LP, PRAM and DPH was calculated as a component of the income tax provision for the nine months ended March 31, 2021.
(d)For the three and sixnine months ended DecemberMarch 31, 2016,2020, represents income tax expense related to Premier, Inc. retaining the portion of net income from continuing operations attributable to income from non-controlling interest in Premier, LP for the purpose of diluted earnings per share.
(e)Weighted average number of common shares used for basic earnings per share excludes weighted average shares of non-vested stock options, non-vested restricted stock, non-vested performance share awards and Class B shares outstanding for the three and nine months ended March 31, 2021 and 2020.
(f)For the three months ended March 31, 2021, the effect of 1.90.4 million stock options and restricted stock units were excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect.
For the nine months ended March 31, 2021, the effect of 1.5 million stock options and restricted stock units and performance share awards7.5 million Class B common units were excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect.

For the three and nine months ended March 31, 2021, the effect of 0.7 million performance share awards was excluded from diluted weighted average shares outstanding as the awards had not satisfied the applicable performance criteria at the end of the period.

For the three and nine months ended March 31, 2020, the effect of 0.8 million stock options and restricted stock units was excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect. Additionally, the effect of less than 0.1 million performance share awards was excluded from diluted weighted average shares outstanding as the awards had not satisfied the applicable performance criteria at the end of the period.
Pursuant to the terms ofExchange Agreement in place prior to the Exchange Agreement,August 2020 restructuring, on a quarterly basis, the Company hashad the option, as determined by the independent Audit and Compliance Committee, to settle the exchange of Class B common units of Premier LP by member owners for cash, an equal number of Class A common shares of Premier, Inc. or a combination of cash and shares
28

of Class A common stock. In connection with the exchange of Class B common units by member owners, regardless of the consideration used to settle the exchange, an equal number of shares of Premier's Class B common stock arewere surrendered by member owners and retired (see Note 910 - Redeemable Limited Partners' Capital). On August 11, 2020, the Exchange Agreement was terminated in connection with the restructuring as discussed in Note 1 - Organization and Basis of Presentation.
The following table presents certain information regarding the exchange of Class B common units and associated Class B common stock for Premier's Class A common stock and/or cash in connection with the quarterly exchangesexchange pursuant to the terms of the Exchange Agreement, including activity related to the Class A and Class B common units and Class A and Class B common stock through the date of the applicable quarterly exchange:
Quarterly Exchange by Member Owners
Class B Common Shares Retired Upon Exchange (a)
Class B Common Shares Outstanding After Exchange (a)
Class A Common Shares Outstanding After Exchange (b)
Percentage of Combined Voting Power Class B/Class A Common Stock
July 31, 202069,684 50,143,414 71,724,149 41%/59%
(a)The number of Class B common shares retired or outstanding is equivalent to the number of Class B common units retired upon exchange or outstanding after the exchange, as applicable.
(b)The number of Class A common shares outstanding after exchange also includes activity related to the Company's share repurchase program equity incentive plan (see Note 13 - Stock-Based Compensation).
Quarterly Exchange by Member Owners
Class B Common Shares Retired Upon Exchange (a)
Class B Common Shares Outstanding After Exchange (a)
Class A Common Shares Outstanding After Exchange (b)
Percentage of Combined Voting Power Class B/Class A Common Stock
July 31, 20171,231,410
86,067,478
53,212,057
62%/38%
October 31, 20173,651,294
82,416,184
57,215,143
59%/41%
January 31, 2018 (c)
1,006,435
81,169,319
54,829,086
60%/40%
(a)The number of Class B common shares retired or outstanding is equivalent to the number of Class B common units retired upon exchange or outstanding after the exchange, as applicable.
(b)
The number of Class A common shares outstanding after exchange also includes activity related to the Company's share repurchase program (see Note 10 - Stockholders' Deficit), equity incentive plan (see Note 12 - Stock-Based Compensation) and departed member owners (see Note 9 - Redeemable Limited Partners' Capital).
(c)As the quarterly exchange occurred on January 31, 2018, the impact of the exchange is not reflected in the condensed consolidated financial statements for the quarter ended December 31, 2017.
(12)(13) STOCK-BASED COMPENSATION
Stock-based compensation expense is recognized over the requisite service period, which generally equals the stated vesting period. Pre-tax stock-based compensation expense was $8.9 million and $6.3 million for the three months ended December 31, 2017 and 2016, respectively, with a resulting deferred tax benefit of $2.2 million and $2.4 million, respectively. Pre-tax stock-based compensation expense was $17.7 million and $12.1 million for the six months ended December 31, 2017 and 2016, respectively, with a resulting deferred tax benefit of $4.4 million and $4.6 million, respectively. The associated deferred tax benefit was calculated at a rate of 26% for the three months ended March 31, 2021 and 25% for the three and six months ended DecemberMarch 31, 2017 and 38% for the three and six months ended December 31, 2016,2020, which represents the expected effective income tax rate at the time of the compensation expense deduction primarily at PHSI, and differs from the Company'sCompany’s current effective income tax rate which includes the impact of partnership income not subject to federalthe Merger. See Note 14 - Income Taxes for further information.
Stock-based compensation expense and state income taxes. The decrease inthe resulting deferred tax benefits were as follows (in thousands):
Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Pre-tax stock-based compensation expense$13,056 $7,568 $27,601 $19,048 
Deferred tax benefit (a)
2,521 1,915 4,641 4,819 
Total stock-based compensation expense, net of tax$10,535 $5,653 $22,960 $14,229 
(a) For the three and nine months ended March 31, 2021, the deferred tax benefit ratewas reduced by $0.9 million and 2.5 million, respectively, attributable to stock-based compensation expense that is a result ofnondeductible for tax purposes pursuant to Section 162(m) as amended by the Tax Cuts and Jobs Act which was enacted on December 22, 2017 (see Note 13 - Income Taxes).of 2017.
Premier 2013 Equity Incentive Plan
The Premier 2013 Equity Incentive Plan, as amended and restated (and including any further amendments thereto, the "2013“2013 Equity Incentive Plan"Plan”) provides for grants of up to 11.314.8 million shares of Class A common stock, all of which are eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units or performance share awards. As of DecemberMarch 31, 2017,2021, there were 3.55.3 million shares available for grant under the 2013 Equity Incentive Plan.

29


The following table includes information related to restricted stock, performance share awards and stock options for the sixnine months ended DecemberMarch 31, 2017:2021:
Restricted StockPerformance Share AwardsStock Options
Restricted Stock Performance Share Awards Stock OptionsNumber of AwardsWeighted Average Fair Value at Grant DateNumber of AwardsWeighted Average Fair Value at Grant DateNumber of OptionsWeighted Average Exercise Price

Number of AwardsWeighted Average Fair Value at Grant Date Number of AwardsWeighted Average Fair Value at Grant Date Number of OptionsWeighted Average Exercise Price
Outstanding at June 30, 2017576,988
$32.92
 1,085,872
$32.79
 3,372,499
$30.31
Outstanding at June 30, 2020Outstanding at June 30, 2020681,538 $37.91 1,606,309 $37.58 2,544,137 $30.17 
Granted206,929
$32.81
 690,470
$32.62
 550,563
$32.80
Granted571,761 $31.94 695,233 $29.20 0 $0 
Vested/exercised(109,174)$31.67
 (352,867)$31.73
 (103,061)$28.26
Vested/exercised(200,384)$34.40 (161,544)$32.77 (124,390)$30.96 
Forfeited(20,276)$32.50
 (46,502)$32.43
 (92,179)$34.28
Forfeited(57,813)$36.26 (401,425)$33.71 (33,184)$35.13 
Outstanding at December 31, 2017654,467
$33.11
 1,376,973
$32.99
 3,727,822
$30.64
Outstanding at March 31, 2021Outstanding at March 31, 2021995,102 $35.28 1,738,573 $35.57 2,386,563 $30.05 
        
Stock options outstanding and exercisable at December 31, 2017      2,620,480
$29.64
Stock options outstanding and exercisable at March 31, 2021Stock options outstanding and exercisable at March 31, 20212,386,563 $30.05 
Restricted stock units and restricted stock awards issued and outstanding generally vest over a three-year period for employees and a one-year period for directors. Performance share awards issued and outstanding generally vest over a three-year period if performance targets are met. Stock options have a term of ten years from the date of grant. Vested stock options will expire either after twelve months ofafter an employee'semployee’s termination with Premier or immediately upon an employee'semployee’s termination with Premier, depending on the termination circumstances. Stock options generally vest in equal annual installments over three years.
Unrecognized stock-based compensation expense at DecemberMarch 31, 20172021 was as follows (in thousands):
 Unrecognized Stock-Based Compensation ExpenseWeighted Average Amortization Period
Restricted stock$11,111
2.06 years
Performance share awards27,385
2.00 years
Stock options10,282
2.03 years
Total unrecognized stock-based compensation expense$48,778
2.02 years
Unrecognized Stock-Based Compensation ExpenseWeighted Average Amortization Period
Restricted stock$19,926 2.0 years
Performance share awards27,191 1.8 years
Total unrecognized stock-based compensation expense$47,1171.9 years
The aggregate intrinsic value of stock options at DecemberMarch 31, 20172021 was as follows (in thousands):
 Intrinsic Value of Stock Options
Outstanding and exercisable$3,336
Expected to vest8
Total outstanding$3,344
  
Exercised during the six months ended December 31, 2017$588


The Company estimated the fair value of each stock option on the date of grant using a Black-Scholes option-pricing model, applying the following assumptions, and amortized expense over each option's vesting period using the straight-line attribution approach:

Six Months Ended December 31,
 20172016
Expected life (a)
6 years6 years
Expected dividend (b)
——
Expected volatility (c)
29.92% - 32.26%32.0% - 33.0%
Risk-free interest rate (d)
1.89% - 2.14%1.31% - 2.00%
Weighted average option grant date fair value$9.48 - $11.42$10.48 - $10.80
Intrinsic Value of Stock Options
Outstanding and exercisable$9,757 
Expected to vest0 
Total outstanding$9,757 
(a)Exercised during the year ended March 31, 2021The six-year expected life (estimated period of time outstanding) of stock options granted was estimated using the "Simplified Method" which utilizes the midpoint between the vesting date and the end of the contractual term. This method was utilized for the stock options due to the lack of historical exercise behavior of Premier's employees.
527 
(b)No dividends are expected to be paid over the contractual term of the stock options granted, resulting in the use of a zero expected dividend rate.
(c)The expected volatility rate is based on the observed historical volatilities of comparable companies.
(d)The risk-free interest rate was interpolated from the five-year and seven-year Constant Maturity Treasury rate published by the United States Treasury as of the date of the grant.
(13)
(14) INCOME TAXES
The Company's income tax expense is attributableOn August 11, 2020, the Company entered into the Merger Agreement and pursuant to the activitiesMerger Agreement, each of the issued and outstanding Class B common units was canceled and converted automatically into a right to receive one share of the Company’s Class A common stock. In conjunction with the Merger, all the issued and outstanding shares of Class B common stock of the Company PHSIbeneficially held by the LPs were canceled in accordance with the Company’s Certificate of Incorporation.
At the consummation of the Merger, the Company simplified its tax structure, resulting in the Company and PSCI, all of which are subchapter C corporations and are subject to U.S. federal and state income taxes. In contrast, under the provisions of federal and state laws, Premier LP is not subject to federal and state income taxes as the income realized by Premier LP is taxable to its partners.
subsidiaries forming one consolidated filing group for tax purposes. As a result, the Company recorded a one-time deferred tax benefit of $131.4 million, primarily driven by deferred tax remeasurement due to the TCJA that was enacted on December 22, 2017, the U.S. federal corporate income tax rate was reduced from 35% to 21%. In accordance with U.S. GAAP, the impact of changes in tax rates and tax laws is recognized as a component of income tax expense from continuing operationschange in the period of enactment. For fiscal year-end companies, determination of temporary differences contemplates the use of a combined U.S. federal income taxstate statutory rate (which blends the income tax rates that were in effect prior to and after enactment) depending on expected timing of recognition for such temporary differences. The Company has remeasured its deferred tax balances as of the enactment date, accordingly. Given the nature and relative timing of the TCJA enactment, the Company is continuing to interpret the breadth of impact and has ultimately prescribed provisional relief pursuant to SAB 118 to certain components of its deferred tax balances. More specifically, the Company has incorporated various estimates regarding timing and determination of temporary difference recognition when calculating its net deferred tax expense.valuation allowance release.
30

Income tax expense for the three months ended DecemberMarch 31, 20172021 and 20162020 was $231.5$13.4 million and $37.4$4.2 million, respectively, which reflects effective tax rates of 92%21% and 13%5%, respectively. The effective tax rate for the three months ended March 31, 2021 increased compared to the prior year period as a result of the prior year impact of the income tax benefit associated with the NOL carryback provisions under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and the associated release of the valuation allowance in March 2020. Income tax (benefit) expense for the sixnine months ended DecemberMarch 31, 20172021 and 20162020 was $244.3$(88.0) million and $60.8$78.3 million, respectively, which reflects effective tax rates of 75%(47)% and 17%25%, respectively. The increasechange in the effective tax ratesrate for the nine months ended March 31, 2021 is primarily attributable todriven by the remeasurement ofaforementioned one-time deferred tax balances,remeasurement and valuation allowance release as a result of which $221.2 million related to the aforementioned decrease inMerger. Excluding the U.S. federal corporate incomeone-time deferred tax rate. The Company'sbenefit, the effective tax rates differ from income taxes recorded using a combined (or blended) rate largely due to Premier LP income, which is not subject to federal, state or local income taxes as well as valuation allowances associated withwould have been 23% for the nine months ended March 31, 2021.
Net deferred tax assets at PHSI.
Deferred tax assets decreased $159.7increased by $408.9 million to $274.6$821.4 million at DecemberMarch 31, 20172021 from $434.3$412.5 million at June 30, 2017.2020. The current period balanceincrease in net deferred tax assets was comprisedlargely driven by an increase of $305.5$285.0 million in deferred tax assets at Premier, Inc. offset by $30.9related to the final exchange of all outstanding Class B common units for the Company’s Class A common stock on August 11, 2020 and $131.4 million in deferred tax liabilities at PHSIremeasurement and PSCI. The decrease in deferred tax assets from the prior period was largely driven by $221.2 million in net reductions to deferred tax assets and liabilities in connection with the underlying revaluation associated with the previously mentioned decrease in the U.S. federal corporate income tax rate. This decrease was partially offset by a $65.3 million increase in deferred tax assets in connection with the quarterly member owner exchanges that occurred during the six months ended December 31, 2017.
The Company's tax receivable agreement ("TRA") liabilities represent 85% of the tax savings the Company expects to receive, if any, in U.S. federal, foreign, state and local income and franchise tax that may be realized (or deemed to realize, in the case of payments required to be made upon certain occurrences under such TRAs), payable to limited partners in connection with the Section 754 election by Premier LP. Tax savings are generatedvaluation allowance release as a result of the increase in tax basis resulting fromMerger.
On August 10, 2020, the initial sale of Class B common units, subsequent exchanges (pursuantCompany exercised its right to terminate the Exchange Agreement)TRA by and payments underamong the TRA. The election results in adjustments toCompany and the tax basis of the assetsformer limited partners of Premier LP upon member owner exchangesby providing all former LPs a notice of Class B common unitsthe termination and the amount of


Premier the expected payment to be made to each LP pursuant to the early termination provisions of the TRA on the Determination Date (see Note 9 - Debt and Notes Payable for Class A common stockfurther information). As a result of Premier, Inc. or cash.the TRA termination, TRA liabilities decreased $92.5 million to $247.2 million at December 31, 2017 from $339.7of $293.7 million at June 30, 2017. The change in TRA liabilities2020 were extinguished and a liability was driven primarily by the $177.2 million decrease in valuation as a resultrecorded to current portion of the TCJA's decrease in the U.S. federal corporate income tax rates, partially offset by $62.2 million in increases in TRA liabilities in connection with the quarterly member owner exchanges that occurred during the six months ended December 31, 2017notes payable to members and $20.9 million associated with the revaluation and remeasurement of the TRA liabilities duenotes payable to the change in the allocation and realization of future anticipated payments.
(14) RELATED PARTY TRANSACTIONS
GNYHA
GNYHA Purchasing Alliance, LLC and its member organizations ("GNYHA PA") owned approximately 8% of the outstanding partnership interests in Premier LP as of December 31, 2017. Although we no longer consider GNYHA PA a related party under U.S. GAAP, prior period information is included below.
Net administrative fees revenue based on purchases by GNYHA Services, Inc. ("GNYHA") (an affiliate of GNYHA PA) and its member organizations was $17.2 million and $34.9 million for the three and six months ended December 31, 2016, respectively. The Company has a contractual requirement under the GPO participation agreement to pay each member owner revenue share from Premier LP equal to 30% of all gross administrative fees collected by Premier LP based upon purchasing by such member owner's facilities through Premier LP's GPO supplier contracts. As GNYHA also remits to Premier LP all gross administrative fees collected by GNYHA based on purchases by its member organizations through GNYHA's own GPO supplier contracts, it also receives revenue share from Premier LP equal to 30% of such gross administrative fees remitted to the Company. Approximately $7.8 million of revenue share obligationsmembers, less current portion in the accompanying Condensed Consolidated Balance Sheets relatedfor amounts payable pursuant to revenue share obligations to GNYHA and its member organizations at June 30, 2017.the Unit Exchange Agreements.
In addition, of the $25.0 million limited partners' distribution payable in the accompanying Condensed Consolidated Balance Sheets at June 30, 2017, $2.7 million were payable to GNYHA and its member organizations. Services and support revenue earned from GNYHA and its member organizations was $3.5 million and $7.1 million during the three and six months ended December 31, 2016, respectively. Product revenue earned from, or attributable to services provided to, GNYHA and its member organizations was $4.3 million and $8.0 million during the three and six months ended December 31, 2016, respectively. Receivables from GNYHA and its member organizations, included in due from related parties in the accompanying Condensed Consolidated Balance Sheets, were $5.4 million at June 30, 2017.
Innovatix and Essensa(15) RELATED PARTY TRANSACTIONS
The Company held 50% of the membership interests in Innovatix until December 2, 2016, at which time it acquired the remaining 50% of the membership interests from GNYHA Holdings (see Note 3 - Business Acquisitions). The Company's share of Innovatix's net income included in equity in net income of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income prior to the acquisition was $4.1 million and $10.7 million during the three and six months ended December 31, 2016, respectively. The Company maintained a group purchasing agreement with Innovatix under which Innovatix members were permitted to utilize Premier LP's GPO supplier contracts. Gross administrative fees revenue and a corresponding revenue share recorded under the arrangement prior to the acquisition were $8.5 million and $19.9 million for the three and six months ended December 31, 2016, respectively.
The Company historically maintained a group purchasing agreement with Essensa, under which Essensa utilized the Company's GPO supplier contracts. On December 2, 2016, the Company acquired 100% of the membership interests in Essensa from GNYHA Holdings (see Note 3 - Business Acquisitions). Net administrative fees revenue recorded from Essensa prior to the acquisition was $0.5 million and $1.2 million for the three and six months ended December 31, 2016, respectively.
FFF
The Company'sCompany’s 49% ownership share of net income of FFF, which was acquired on July 26, 2016, included in equity in net income of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income was $1.3$0.8 million and $1.1$4.3 million for the three months ended DecemberMarch 31, 20172021 and 2016,2020, respectively, and $5.6$8.4 million and $4.2$10.8 million for the sixnine months ended DecemberMarch 31, 20172021 and 2016,2020, respectively. The Company maintains group purchasing agreements with FFF and receives administrative fees for purchases made by the Company'sCompany’s members and other customers pursuant to those agreements. Net administrative fees revenue recorded from purchases under those agreements was $2.3$1.1 million and $1.6$1.2 million during the three months ended DecemberMarch 31, 20172021 and 2016,2020, respectively, and $4.0$4.6 million and $1.7$5.8 million duringfor the sixnine months ended DecemberMarch 31, 20172021 and 2016, respectively.2020.
AEIX

(16) COMMITMENTS AND CONTINGENCIES

Operating Leases
The Company conducts all operational activitiesOperating lease expense for American Excess Insurance Exchange Risk Retention Group ("AEIX"), a reciprocal risk retention group that provides excess and umbrella healthcare professional and general liability insurance to certain hospital and healthcare system members. The Company is reimbursed by AEIX for actual costs, plus an annual incentive management fee not to exceed $0.5 million per calendar year. The Company received cost reimbursement of $1.4 million and $1.1 million during the three months ended DecemberMarch 31, 20172021 and 2016, respectively, and $2.92020 was $2.6 million and $2.2$2.7 million, duringrespectively. Operating lease expense for the sixnine months ended DecemberMarch 31, 20172021 and 2016, respectively.2020 were both $8.2 million. As of DecemberMarch 31, 20172021, the weighted average remaining lease term was 5.0 years and the weighted average discount rate was 4%.
Future minimum lease payments under noncancelable operating leases with initial lease terms in excess of one year were as follows (in thousands):
March 31, 2021June 30, 2020
2021 (a)
$2,995 $12,171 
202211,738 11,738 
202312,012 12,012 
202412,145 12,145 
202512,177 12,177 
Thereafter10,171 10,171 
Total future minimum lease payments61,238 70,414 
Less: imputed interest5,820 7,567 
Total operating lease liabilities (b)
$55,418 $62,847 
(a)As of March 31, 2021, future minimum lease payments are for the period from April 1, 2021 to June 30, 2017, $0.62021.
(b)As of March 31, 2021, total operating lease liabilities included $9.8 million in amounts receivable from AEIX are included in due from related partieswithin other liabilities, current in the accompanying Condensed Consolidated Balance Sheets.
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(15) COMMITMENTS AND CONTINGENCIESOther Matters
The Company is not currently involved in any litigation it believes to be significant.material. The Company is periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include claims relating to commercial, product liability, tort and personal injury, employment, antitrust, intellectual property, or other regulatory matters. Furthermore, as a public company, the Company may become subject to stockholder derivative or other similar litigation. If current or future government regulations, specifically, those with respect to antitrust or healthcare laws, are interpreted or enforced in a manner adverse to the Company or its business, the Company may be subject to enforcement actions, penalties and other material limitations which could have a material adverse effect on the Company'sCompany’s business, financial condition and results of operations.
(16)(17) SEGMENTS
The Company delivers its solutions and manages its business through two2 reportable business segments, the Supply Chain Services segment and the Performance Services segment. The Supply Chain Services segment includes the Company'sCompany’s GPO, integrated pharmacy offeringssupply chain co-management and direct sourcing activities. The Performance Services segment includes the Company'sCompany’s informatics, collaborative, advisoryconsulting services, government servicesdirect-to-employer initiative and insurance management services businesses.

The following table presents disaggregated revenue by business segment and underlying source (in thousands):

Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Net revenue:
Supply Chain Services
Net administrative fees$146,553 $174,049 $424,537 $518,566 
Other services and support8,630 3,396 18,307 8,439 
Services155,183 177,445 442,844 527,005 
Products215,995 61,183 511,080 167,344 
Total Supply Chain Services (a)
371,178 238,628 953,924 694,349 
Performance Services (a)
98,745 96,195 285,713 262,490 
Net revenue$469,923 $334,823 $1,239,637 $956,839 
Segment(a)Includes intersegment revenue that is eliminated in consolidation. Intersegment revenue is not separately identified in Segments as the amounts are not material.
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Additional segment information related to depreciation and amortization expense, capital expenditures and total assets was as follows (in thousands):
Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Depreciation and amortization expense (a):
Supply Chain Services$9,389 $6,896 $27,608 $16,592 
Performance Services18,196 30,950 55,763 91,862 
Corporate2,152 1,897 6,397 6,184 
Total depreciation and amortization expense$29,737 $39,743 $89,768 $114,638 
Capital expenditures:
Supply Chain Services$2,486 $2,485 $8,061 $4,571 
Performance Services18,835 20,840 54,118 57,956 
Corporate726 1,233 4,732 6,799 
Total capital expenditures$22,047 $24,558 $66,911 $69,326 
Three Months Ended December 31,Six Months Ended December 31,
2017201620172016
Net revenue: 
Supply Chain Services 
Net administrative fees$159,343
$129,071
$310,334
$255,047
Other services and support3,421
1,201
5,570
2,846
Services162,764
130,272
315,904
257,893
Products162,101
142,378
314,764
248,507
Total Supply Chain Services324,865
272,650
630,668
506,400
Performance Services86,533
85,850
171,294
165,372
Net revenue$411,398
$358,500
$801,962
$671,772
 
Depreciation and amortization expense (a):
 
Supply Chain Services$5,171
$2,453
$10,666
$2,920
Performance Services23,634
20,984
46,551
41,859
Corporate2,322
1,912
4,315
3,797
Total depreciation and amortization expense$31,127
$25,349
$61,532
$48,576
 
Capital expenditures: 
Supply Chain Services$541
$2,149
$848
$2,149
Performance Services19,742
13,920
33,291
30,771
Corporate1,692
1,290
4,483
1,405
Total capital expenditures$21,975
$17,359
$38,622
$34,325
 March 31, 2021June 30, 2020
Total assets: December 31, 2017June 30, 2017Total assets:
Supply Chain Services $1,001,803
$1,017,023
Supply Chain Services$1,698,254 $1,483,751 
Performance Services 874,269
888,862
Performance Services1,043,065 930,968 
Corporate 444,091
601,951
Corporate940,706 538,248 
Total assets  $2,320,163
$2,507,836
Total assets3,682,025 2,952,967 
Eliminations (b)
Eliminations (b)
(60)(4,452)
Total assets, netTotal assets, net$3,681,965 $2,948,515 
(a)Includes amortization of purchased intangible assets.
(a)Includes amortization of purchased intangible assets.
(b)Includes eliminations of intersegment transactions which occur during the ordinary course of business.
The Company uses Segment Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles ("Non-GAAP"(“Non-GAAP”)) as its primary measure of profit or loss to assess segment performance and to determine the allocation of resources. The Company also uses Segment Adjusted EBITDA to facilitate the comparison of the segment operating performance on a consistent basis from period to period. The Company defines Segment Adjusted EBITDA as the segment'ssegment’s net revenue and equity in net income of unconsolidated affiliates less operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expenses and non-recurring or non-cash items. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative and product development activities specific to the operation of each segment. Non-recurring items are income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.
For more information on Segment Adjusted EBITDA and the use of Non-GAAP financial measures, see "Our“Our Use of Non-GAAP Financial Measures"Measures” within Item 2 - Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations.

33


A reconciliation of income before income taxes to Segment Adjusted EBITDA is as follows (in thousands):
Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Income before income taxes$64,888 $77,377 $188,996 $314,062 
Equity in net income of unconsolidated affiliates (a)
(5,524)(4,442)(16,023)(11,038)
Interest and investment loss, net3,225 9,966 8,742 9,849 
Loss (gain) on FFF put and call rights (b)
5,195 13,906 21,621 (8,477)
Other (income) expense(1,594)5,005 (10,167)1,996 
Operating income66,190 101,812 193,169 306,392 
Depreciation and amortization19,337 25,777 55,904 75,690 
Amortization of purchased intangible assets10,400 13,966 33,864 38,948 
Stock-based compensation (c)
13,180 7,668 27,970 19,358 
Acquisition and disposition related expenses4,126 7,287 14,889 16,263 
Remeasurement of tax receivable agreement liabilities (d)
0 (902)0 (24,584)
Equity in net income of unconsolidated affiliates (a)
5,524 4,442 16,023 11,038 
Deferred compensation plan income (expense) (e)
1,521 (5,476)9,231 (2,484)
Other expense, net929 1,315 5,718 3,929 
Non-GAAP Adjusted EBITDA$121,207 $155,889 $356,768 $444,550 
Segment Non-GAAP Adjusted EBITDA:
Supply Chain Services (f)
$117,949 $149,212 $339,538 $447,081 
Performance Services (f)
35,950 34,634 109,675 84,977 
Corporate(32,692)(27,957)(92,445)(87,508)
Non-GAAP Adjusted EBITDA$121,207 $155,889 $356,768 $444,550 
 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Income before income taxes$251,277
$283,613
$324,657
$365,044
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(204,833)—
(204,833)
Equity in net income of unconsolidated affiliates (a)
(1,257)(5,127)(5,509)(14,706)
Interest and investment loss, net (b)
1,508
857
3,003
1,009
Loss on disposal of long-lived assets400
—
1,720
1,518
Other income13,356
131
11,893
(875)
Operating income265,284
74,641
335,764
147,157
Depreciation and amortization17,310
14,198
33,817
28,216
Amortization of purchased intangible assets13,817
11,151
27,715
20,360
Stock-based compensation (c)
8,951
6,423
17,908
12,319
Acquisition related expenses1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities (d)
(177,174)—
(177,174)(5,722)
ERP implementation expenses (e)
156
432
491
1,526
Acquisition related adjustment - revenue (f)
87
5,813
192
5,964
Equity in net income of unconsolidated affiliates (a)
1,257
5,127
5,509
14,706
Deferred compensation plan income (g)
1,577
8
3,116
1,103
Other expense603
—
602
—
Adjusted EBITDA$133,542
$122,009
$252,713
$232,782
     
Segment Adjusted EBITDA:    
Supply Chain Services$132,045
$119,022
$257,665
$236,326
Performance Services27,929
28,603
49,150
50,914
Corporate(26,432)(25,616)(54,102)(54,458)
Adjusted EBITDA$133,542
$122,009
$252,713
$232,782
(a)Refer to Note 5 - Investments for more information.
(a)Refer to Note 4 - Investments for further information regarding equity in net income of unconsolidated affiliates.
(b)Represents interest expense, net and realized gains and losses on our marketable securities.
(c)Represents non-cash employee stock-based compensation expense and stock purchase plan expense of $0.1 million and $0.2 million during the three months ended December 31, 2017 and 2016, respectively, and $0.2 million and $0.3 million during the six months ended December 31, 2017 and 2016, respectively.
(d)Represents
(b)Refer to Note 6 - Fair Value Measurements for more information.
(c)Includes non-cash employee stock-based compensation expense and stock purchase plan expense of $0.1 million during both of the three months ended March 31, 2021 and 2020. Also includes $0.4 million and $0.3 million during the nine months ended March 31, 2021 and 2020, respectively.
(d)The adjustments to TRA liabilities for a 14% decrease in the U.S. federal corporate income tax rate that occurred during the six months ended December 31, 2017, which is a result of the TCJA that was enacted on December 22, 2017, and a 1% decrease in the North Carolina state income tax rate that occurred during the six months ended December 31, 2016.
(e)Represents implementation and other costs associated with the implementation of our enterprise resource planning ("ERP") system.
(f)
Upon acquiring Innovatix and Essensa, we recorded a net $5.6 million purchase accounting adjustment to Adjusted EBITDA during the three months ended December 31, 2016 that reflects the fair value of administrative fees related to member purchases that occurred prior to December 2, 2016, but were reported to us subsequent to that date through December 31, 2016. Under our revenue recognition accounting policy, which is an accordance with GAAP, these administrative fees would be ordinarily recorded as revenue when reported to us; however, the acquisition method of accounting requires us to estimate the amount of purchases prior to the acquisition date and to record the fair value of the administrative fees to be received from those purchases as an account receivable (as opposed to recognizing revenue when these transactions are reported to us) and record any corresponding revenue share obligation as a liability. The purchase accounting adjustment amounted to an estimated $23.3 million of accounts receivable relating to these administrative fees and an estimated $4.1 million for the related revenue share obligation through December 31, 2016.
This item also includes non-cash adjustments to deferred revenue of acquired entities of $0.2 million and $0.3 million for the three and sixnine months ended DecemberMarch 31, 2016, respectively. Business combination accounting rules require2020 is primarily attributable to decreases in the CompanyPremier, Inc. effective tax rate related to record a deferred revenue liability at its fair value only if the acquired deferred revenue represents a legal performance obligation assumed by the acquirer. The fair value is based on direct and indirect incremental costs of providing the services plus a normal profit margin. Generally, this results in a reduction to the purchased deferred revenue balance, which was based on upfront software license update fees and product support contracts assumed in connection with acquisitions. Because these support contracts are typically one year in duration, our GAAP revenues for the one year period subsequent to the acquisition of a business do not reflect the full amount of support revenues on these assumed support contracts that would have otherwise been recorded by the acquired entity. The Non-GAAP adjustment to software license update fees and product support revenues is intended to include, and thus reflect, the full amount of such revenues.state tax liabilities.
(g) (e)Represents realized and unrealized gains and losses and dividend income on deferred compensation plan assets.


(f)Includes intersegment revenue which is eliminated in consolidation.
34

Item 2. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report. This discussion is designed to provide the reader with information that will assist in understanding our condensed consolidated financial statements, the changes in certain key items in those financial statements from quarter to quarter, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our condensed consolidated financial statements. In addition, the following discussion includes certain forward-looking statements. For a discussion of important factors, including the continuing development of our business and other factors which could cause actual results to differ materially from the results referred to in the forward-looking statements, see the discussions under "Risk Factors"“Risk Factors” and "Cautionary“Cautionary Note Regarding Forward-Looking Statements"Statements” herein and in the Company'sour Form 10-K for the fiscal year ended June 30, 20172020 (the "2017“2020 Annual Report"Report”), filed with the Securities and Exchange Commission ("SEC"(“SEC”).
Business Overview
Our Business
Premier, Inc. ("Premier"(“Premier”, the "Company"“Company”, "we"“we”, or "our"“our”) is a leading healthcare performance improvement company, uniting an alliance of approximately 3,900more than 4,100 U.S. hospitals and health systems and approximately 150,000200,000 other providers and organizations to transform healthcare. We partner with hospitals, health systems, physicians and other healthcare providers with the common goal of improving and innovating in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry. We deliver value through a comprehensive technology-enabled platform that offers critical supply chain services, clinical, financial, operational and population healthvalue-based care software-as-a-service ("SaaS"(“SaaS”) informaticsand licensed-based clinical analytics products, advisoryconsulting services and performance improvement collaborative programs.
As of December 31, 2017, we were controlled by 165 U.S. hospitals, health systems and other healthcare organizations, which represented 1,425 owned, leased and managed acute care facilities and other non-acute care organizations, through their ownership of Class B common stock. As of December 31, 2017, the Class A common stock and Class B common stock represented approximately 40% and 60%, respectively, of our combined Class A and Class B common stock. All of our Class B common stock was held beneficially by our member owners and all of our Class A common stock was held by public investors, which may include member owners that have received shares of our Class A common stock in connection with previous quarterly exchanges pursuant We also provide services to an exchange agreement (the "Exchange Agreement") entered into by the member owners in connection with the completion of our initial public offering on October 1, 2013 (see Note 1 - Organization and Basis of Presentation to the accompanying condensed consolidated financial statements for more information).non-healthcare businesses.
We generated net revenue, net income from continuing operations and Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles ("Non-GAAP"(“Non-GAAP”)) for the periods presented as follows (in thousands):
Three Months Ended December 31,Six Months Ended December 31,Three Months Ended March 31,Nine Months Ended March 31,
20172016201720162021202020212020
Net revenue$411,398
$358,500
$801,962
$671,772
Net revenue$469,923 $334,823 $1,239,637 $956,839 
Net income$19,769
$246,184
$80,385
$304,279
Net income from continuing operationsNet income from continuing operations$51,444 $73,212 $277,033 $235,726 
Non-GAAP Adjusted EBITDA$133,542
$122,009
$252,713
$232,782
Non-GAAP Adjusted EBITDA$121,207 $155,889 $356,768 $444,550 
See “Our Use of Non-GAAP Financial Measures” and “Results of Operations” below for a discussion of our use of Non-GAAP Adjusted EBITDA and a reconciliation of net income from continuing operations to Non-GAAP Adjusted EBITDA.
Our Business Segments
Our business model and solutions are designed to provide our members and other customers access to scale efficiencies spread thewhile focusing on optimization of information resources and cost of their development,containment, provide actionable intelligence derived from anonymized data in our data warehouse provided by our members, mitigate the risk of innovation and disseminate best practices that will help our member organizations and other customers succeed in their transformation to higher quality and more cost-effective healthcare. We deliver our integrated platform of solutions that address the areas of total cost management, quality and safety improvement and population health management through two business segments: Supply Chain Services and Performance Services.
Segment net revenue for the three months ended March 31, 2021 and 2020 was as follows (in thousands):
Three Months Ended March 31,Change% of Net Revenue
Net revenue:202120202021202020212020
Supply Chain Services$371,178 $238,628 $132,550 56 %79 %71 %
Performance Services98,745 96,195 2,550 3 %21 %29 %
Net revenue$469,923 $334,823 $135,100 40 %100 %100 %
35

Segment net revenue for the nine months ended March 31, 2021 and 2020 was as follows (in thousands):
Nine Months Ended March 31,Change% of Net Revenue
Net revenue:202120202021202020212020
Supply Chain Services$953,924 $694,349 $259,575 37 %77 %73 %
Performance Services285,713 262,490 23,223 9 %23 %27 %
Net revenue$1,239,637 $956,839 $282,798 30 %100 %100 %
Our Supply Chain Services segment includes one of the largest healthcare group purchasing organization ("GPO"programs (“GPO”) programs in the United States, serving acute, non-acute, non-healthcare and alternate sites, supply chain co-management and includes integrated pharmacy andour direct sourcing activities. Supply Chain Services net revenue grew from $272.7 million for the three months ended December 31, 2016 to $324.9


million for the three months ended December 31, 2017, representing net revenue growth of 19%, and accounted for 79% of our overall net revenue for the three months ended December 31, 2017. Supply Chain Services net revenue grew from $506.4 million for the six months ended December 31, 2016 to $630.7 million for the six months ended December 31, 2017, representing net revenue growth of 25%, and accounted for 79% of our overall net revenue for the six months ended December 31, 2017. We generate revenue in our Supply Chain Services segment from administrative fees received from suppliers based on the total dollar volume of supplies purchased by our members and other customers, fees from supply chain co-management and through product sales in connection with our integrated pharmacy and direct sourcing activities.
Our Performance Services segment includes one of the largest informaticsclinical and advisorycost analytics and consulting services businesses in the United States focused on healthcare providers. Performance Services net revenue increased from $85.9 million forWe are also expanding our capabilities to more fully address and coordinate care improvement and standardization in the three months ended December 31, 2016 to $86.5 million for the three months ended December 31, 2017, representing a 1% increase,employer, payor and accounted for 21% of our overall net revenue for the three months ended December 31, 2017. Performance Services net revenue increased from $165.4 million for the six months ended December 31, 2016 to $171.3 million for the six months ended December 31, 2017, representing a 4% increase,life sciences markets. Our SaaS-based clinical analytics products and accounted for 21% of our overall net revenue for the six months ended December 31, 2017. Our SaaS informatics productstechnology licenses utilize our comprehensive data set to provide actionable intelligence to our members and other customers, enabling them to benchmark, analyze and identify areas of improvement across three main categories: cost management, quality and safety, and population health management.value based care. The Performance Services segment also includes our technology-enabled performance improvement collaboratives, advisoryconsulting services, government servicesdirect to employer initiative and insurance management services.
CEO Transition
In February 2021, we announced that Susan D. DeVore is retiring on June 30, 2021 and will step down as our chief executive officer and from the Board of Directors effective May 1, 2021, and that our president, Michael J. Alkire, will become our chief executive officer and a member of the Board of Directors effective May 1, 2021. Ms. DeVore is expected to provide consulting services for a period of twenty-four (24) months after her separation.
Acquisitions
Acquisition of Innovatix and EssensaInvoice Delivery Services, LP Assets
Prior to December 2, 2016, the Company,On March 1, 2021, we, through itsa newly formed consolidated subsidiary, Premier Supply Chain Improvement ("PSCI"IDS, LLC, acquired substantially all the assets and assumed certain liabilities of Invoice Delivery Services, LP (“IDS”), held 50% for an adjusted purchase price of $80.4 million, subject to certain adjustments, of which $80.0 million was paid at closing with borrowings under our Credit Facility (as defined in Note 9 - Debt and Notes Payable to the accompanying condensed financial statements).
IDS offers digitization technologies that convert paper and portable document format (“PDF”) invoices to an electronic format to automate, streamline, and simplify accounts payable processes in healthcare. IDS’ solutions include those for electronic invoicing and tracking, as well as digital payments. IDS will be integrated within Premier under the brand name RemitraTM and reported as part of the membership interests in Innovatix,Performance Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for further information.
Acquisition of Health Design Plus, LLC ("Innovatix").
On December 2, 2016, the Company,May 4, 2020, we, through PSCI,our consolidated subsidiary, Premier Healthcare Solutions, Inc. (“PHSI”), acquired the remaining 50% ownership interests of Innovatix and 100%97% of the ownership interest in Essensa Ventures,equity of Health Design Plus, LLC ("Essensa"(“HDP”) Thefor an adjusted purchase price afterof $23.8 million, giving effect to certain purchase price adjustments pursuant toprovided for in the purchase agreement, was $336.0 million.agreement. The acquisitiontransaction was funded with borrowings under the Company's credit facility dated June 24, 2014, as amended on June 4, 2015 (the "Credit Facility"). Innovatixour Credit Facility. HDP is a third-party administrator and Essensa are GPOs focused on serving alternate site healthcare providersarranges care for employees through its Centers of Excellence program. Shortly after closing, HDP was renamed Contigo Health, LLC (“Contigo Health”) and other non-healthcare organizations throughout the United States. The Company reports Innovatix and Essensais reported as part of itsthe Performance Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for further information.
Acquisition of Acurity and Nexera Assets
On February 28, 2020, we, through two newly formed consolidated subsidiaries, Prince A Purchaser, LLC (“PAP”) and Prince N Purchaser, LLC (“PNP”), acquired substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc., both indirect wholly owned subsidiaries of Greater New York Hospital Association (“GYNHA”), for an aggregate amount of $291.5 million, of which $166.1 million was paid at closing with borrowings under our Credit Facility (the “Acurity and Nexera asset acquisition”). Pursuant to the terms of the asset purchase agreement (as amended, the “Purchase Agreement”), an additional
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$120.0 million will be paid to the sellers in four equal annual installments of $30.0 million on or about June 30, 2021, 2022, 2023 and 2024. An additional $4.7 million was paid to GNYHA during the three months ended March 31, 2021. In addition, the Purchase Agreement provides a graduated earn-out opportunity to Acurity, Inc. of up to $30.0 million based upon our achievement of a range of member renewals on terms to be agreed to by us and GNYHA based on prevailing market conditions in December 2023.
After the closing of the transaction, we changed the names of PAP and PNP to Acurity, LLC (“Acurity”) and Nexera, LLC (“Nexera”), respectively. Acurity is a regional group purchasing organization and has been a customer and strategic partner of ours for more than 24 years. Nexera is a hospital financial improvement consulting firm which partners with healthcare organizations to improve hospital and health system performance, with a significant focus on supply chain enhancement and transformation. We report the operations of Acurity and Nexera as part of the Supply Chain Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for morefurther information.
Acquisition of Acro PharmaceuticalsMedpricer
On August 23, 2016, the Company,October 28, 2019, we, through itsour consolidated subsidiary, NS3 Health, LLC,Premier Supply Chain Improvement, Inc. (“PSCI”), acquired 100%all of the membership interests of Acro Pharmaceutical Services LLC ("Acro"outstanding capital stock in Medpricer.com, Inc. (“Medpricer”) and Community Pharmacy Services, LLC (collectively with Acro, "Acro Pharmaceuticals"). The aggregatefor an adjusted purchase price afterof $38.5 million giving effect to certain purchase price adjustments pursuant toprovided for in the purchase agreement, was $62.9 million.agreement. The acquisitiontransaction was funded with available cash on hand. Acro Pharmaceuticalsborrowings under the Credit Facility. Medpricer is a specialty pharmacy businessSaaS-based provider of technology solutions that provides customized healthcare management solutionsenable hospitals and other organizations to members. The Company reports Acro Pharmaceuticalsanalyze, benchmark and source purchased services contracts independent of any existing GPO affiliation. During the fourth quarter of fiscal year 2020, Medpricer changed its name to Conductiv, Inc. (“Conductiv”) and is reported as part of itsthe Supply Chain Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for morefurther information.
Market and Industry Trends and Outlook
We expect that certain trends and economic or industry-wideindustrywide factors will continue to affect our business, both in the short-termshort- and long-term. We have based our expectations described below on assumptions made by us and on information currently available to us. To the extent our underlying assumptions about, or interpretation of, available information prove to be incorrect, our actual results may vary materially from our expected results. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in the 2020 Annual Report.
Trends in the U.S. healthcare market affect our revenues and costs in the Supply Chain Services and Performance Services segments. The trends we see affecting our current healthcare business include the impact of the implementation of current or future healthcare legislation, particularly the uncertainty regarding the status of the Affordable Care Act (“ACA”) and the potential for the ACA its repeal, replacement,to be struck down as unconstitutional by the U.S. Supreme Court or other modification,significantly altered by Congress. Actions related to the enactment of new regulatoryACA could be disruptive for Premier and our customers, impacting revenue, reporting requirements, expansion and contraction of insurance coverage and associated costs that may impact subscriber elections, intense cost pressure, payment reform, provider consolidation,reforms, shift in care to the alternate site market and increased data availability and transparency. To meet the demands of this environment, there will be increased focus on scale and cost containment and healthcare providers will need to measure and report on and bear financial risk for outcomes. WeOver the long-term, we believe these trends will result in increased demand for our Supply Chain Services and Performance Services solutions in the areas of cost management, quality and safety, and population health management,value-based care, however, there are uncertainties and risks that may affect the actual impact of these anticipated trends, expected demand for our services or related assumptions on our business. See "Cautionary“Cautionary Note Regarding Forward-Looking Statements"Statements” for more information.

COVID-19 Pandemic

In addition to the trends in the U.S. healthcare market discussed above, we face known and unknown uncertainties arising from the outbreak of the novel coronavirus (“COVID-19”) and the resulting global pandemic and financial and operational uncertainty, including its impact on the overall economy, our sales, operations and supply chains, our members and other customers, workforce and suppliers, and countries. As a result of the COVID-19 pandemic and potential future pandemic outbreaks, we face significant risks including, but not limited to:
•Changes in the demand for our products and services. We have experienced and may continue to experience uncertainty from both significant increases and decreases in demand as a result of COVID-19. There has been a significant increase in demand for personal protective equipment (“PPE”), drugs and other supplies directly related to treating and preventing the spread of COVID-19. However, either voluntarily or due to government orders or advisories, patients, hospitals and other medical facilities continue to defer some elective procedures and routine medical visits during the crisis, which created a decline in the demand for supplies and services not related to COVID-19 through the third quarter of fiscal 2021 and such lower demand is expected to continue through fiscal 2021. In addition, as a result of our members' and other customers’ focus on managing COVID-19 and its impacts, we
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may experience uncertain demand for our consulting and other performance service engagements. Furthermore, during the COVID-19 pandemic, many of our members' non-acute or non-healthcare facilities, such as education and hospitality businesses, closed, operated on a limited or reduced basis and have delayed re-opening, and, as a result, we may see a material reduction in product sales to those facilities. The extent to which these impacts on demand will continue, and the effect that they will have on our business and operating results, will depend upon future developments that are highly uncertain and cannot be accurately predicted.
•Limited access to our members' facilities that impacts our ability to fulfill our contractual requirements. Our member hospitals and non-acute care sites have experienced reduced or limited access for non-patients, including our field teams, consultants and other professionals, and travel restrictions have impacted our employees' ability to travel to our members' facilities. The long-term continuation, or any future recurrence of these circumstances may negatively impact the ability of our employees to more effectively deliver existing or sell new products and services to our members and could affect our performance of our existing contracts.
•Materials and personnel shortages and disruptions in supply chain, including manufacturing and shipping. The global supply chain has been significantly disrupted due to stay at home orders, border closings and rapidly escalating shipping costs. Borders closings and restrictions in response to COVID-19, particularly regarding China and India, have impacted our access to products for our members and other customers. Staffing or personnel shortages due to shelter in place orders and quarantines have impacted and in the future may impact us and our members, other customers or suppliers. In addition, due to unprecedented demand during the COVID-19 pandemic, there are widespread shortages in certain product categories. In the food service line, COVID-19 related illnesses have impacted food processing suppliers and led to plant closures. If the supply chains for materials used in the products purchased by our members through our GPO or products contract manufactured through our direct sourcing business are adversely impacted by restrictions resulting from COVID-19, our supply chains may be disrupted. In addition, due to the volatility of the price and supply of products, including PPE, there is risk that we may purchase products from suppliers at that we cannot recover in the event of a potential material price decline. Failure of our suppliers, contract manufacturers, distributors, contractors and other business partners to meet their obligations to our members, other customers or to us, or significant disruptions in their ability to do so due to their own financial or operational difficulties, may adversely impact our operations.
•Requests for contract modifications, payment deferrals or exercises of force majeure clauses. We have and may continue to receive requests for contract modifications, payment waivers and deferrals, payment reductions or amended payment terms from our contract counterparties. We have and may continue to receive requests to delay service or payment on performance service contracts. In addition, we may receive requests from our suppliers for increases to their contracted prices, and such requests may be implemented in the future. In addition, several pharmacy suppliers have exercised force majeure clauses related to failure to supply clauses in their contracts with us because they are unable to obtain raw materials for manufacturing from India and China. The standard failure to supply language in our contracts contains financial penalties to suppliers if they are unable to supply products, which such suppliers may not be able to pay. In addition, we may not be able to source products from alternative suppliers on commercially reasonable terms, or at all.
•Overall economic and capital markets decline. The impact of the COVID-19 pandemic could result in a prolonged recession or depression in the United States or globally that could harm the banking system, limit demand for all products and services and cause other seen and unforeseen events and circumstances, all of which could negatively impact us. The continued spread of COVID-19 has led to and could continue to lead to severe disruption and volatility in the United States and global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. In addition, trading prices on the public stock market, including our Class A common stock, have been highly volatile as a result of the COVID-19 pandemic.
•Managing the evolving regulatory environment. In response to COVID-19, federal, state and local governments are issuing new rules, regulations, changing reimbursement eligibility rules, orders and advisories on a regular basis. These government actions can impact us, our members and other customers and suppliers.
The ultimate impact of COVID-19, recurrences, or similar pandemics on our business, results of operations, financial condition and cash flows is dependent on future developments, including the duration of any pandemic and the related length of its impact on the United States and global economies, which are uncertain and cannot be predicted at this time. The impact of the COVID-19 pandemic, recurrences, or future similar pandemics may also exacerbate many of the other risks described in Item 1A. “Risk Factors” section of the 2020 Annual Report. Despite our efforts to manage these impacts, their ultimate impact depends on factors beyond our knowledge or control, including the duration and severity of any outbreak and actions taken to contain its spread and mitigate its public health effects. The foregoing and other continued disruptions in our business as a
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result of COVID-19 could result in a material adverse effect on our business, results of operations, financial condition, cash flows, prospects and the trading prices of our securities in the near-term and through some or all of fiscal 2021 and beyond.
Critical Accounting Policies and Estimates
Management's DiscussionRefer to Note 1 - Organization and AnalysisBasis of Financial ConditionPresentation and Results of Operations is primarily based upon ourNote 2 - Significant Accounting Policies to the accompanying condensed consolidated financial statements which have been prepared in accordance with GAAP. The preparation offor more information related to our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Significant estimates, including estimates for allowances for doubtful accounts, useful lives of property and equipment, stock-based compensation, payables under tax receivable agreements ("TRA"), deferred tax balances including valuation allowances on deferred tax assets, uncertain tax positions, values of investments not publicly traded, deferred revenue, future cash flows associated with asset impairments, values of put and call rights and the allocation of purchase prices are evaluated on an ongoing basis. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Given the Company's use of estimates referenced above, it is important to highlight that on December 22, 2017,in the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act ("TCJA"). The TCJA includes significant changes to the U.S. corporate income tax system, specifically reducing the U.S. federal corporate income tax rate from 35% to 21%. As changes under the TCJA are broad and complex, the Company continues to interpret the breadthpreparation of its immediate and long-term impacts. The Company notes that concurrent with the enactment of the TCJA, the SEC issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the TCJA.
SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting required under the Financial Accounting Standards Board Accounting Standards Codification ("ASC") 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company's accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional amount on its financial statements. If a company cannot determine a provisional estimate to be included on its financial statements it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately prior to the enactment of the TCJA. With this in mind, the Company has prescribed such provisional relief via SAB 118 by incorporating various estimates regarding timing and determination of temporary difference recognition when calculating components of its deferred tax balances. While the Company is able to provide reasonable estimates of the impactsas well as information related to the TCJA, the final impact may differ from these estimates, due to, among other things,material changes in interpretations, assumptions, additional guidance that may be released by the I.R.S. and other actions that we may take that are yet to be determined.
There have been no material changes to the Company'sour significant accounting policies as describedthat were included in the Company's 2017our 2020 Annual Report.
New Accounting Standards
New accounting standards that we have recently adopted as well as those that have been recently issued but not yet adopted by the Companyus are included in Note 2 - Significant Accounting Policies to the accompanying condensed consolidated financial statements, which is incorporated herein by reference.
Key Components of Our Results of Operations
Net Revenue
Net revenue consists of service revenue, which includes net administrative fees revenue and other services and support revenue, and product revenue. Net administrative fees revenue consists of GPO administrative fees in our Supply Chain Services segment. Other services and support revenue consists primarily of fees generated by our Performance Services segment in connection with our SaaS informatics products subscriptions, license fees, advisory services and performance improvement collaborative subscriptions.as discussed below. Product revenue consists of integrated pharmacy and direct sourcing product sales, which are included in the Supply Chain Services segment.
Supply Chain Services
Supply Chain Services revenue consists of GPO net administrative fees (gross administrative fees received from suppliers, reduced by the amount of any revenue share paid to members), specialty pharmacy revenue,supply chain co-management and direct sourcing revenue and managed service revenue.


The success of our Supply Chain Services revenue streams are influenced by our ability to negotiate favorable contracts with suppliers and members, the number of members that utilize our GPO supplier contracts and the volume of their purchases, the number of members that utilize our integrated pharmacy, as well as the impact of changes in the defined allowable reimbursement amounts determined by Medicare, Medicaid and other managed care plans and the number of members and other customers that purchase products through our direct sourcing activities and the impact of competitive pricing. Our managed services line of business is a fee for service model created to perform supply chain related services for members, including pharmacy benefit management ("PBM") services in partnership with a national PBM company.
Performance Services
Performance Services revenue consists of SaaS informaticsclinical analytics products subscriptions, license fees, performance improvement collaborative and other service subscriptions, professional fees for advisoryconsulting services, third party administrator fees for our direct to employer initiative, insurance services management fees and commissions from endorsed commercial insurance programs.
Our Performance Services growth will depend upon the expansion of our SaaS informaticsclinical analytics products, performance improvement collaboratives and advisoryconsulting services to new and existing members impact of applied research initiatives,and other customers, renewal of existing subscriptions to our SaaS and licensed informatics products, and expansionour ability to generate additional applied sciences engagements and expand into new markets with potential future acquisitions.markets.
Cost of Revenue
Cost of revenue consists of cost of service revenue and cost of product revenue.
Cost of service revenue includes expenses related to employees (including compensation and benefits) and outside consultants who directly provide services related to revenue-generating activities, including advisoryconsulting services to members and other customers and implementation services related to SaaS clinical analytics along with associated amortization of certain capitalized contract costs. Amortization of contract costs represent amounts that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract. Amortization of contract costs included within cost of service revenue include costs related to implementing SaaS informatics products.tools. Cost of service revenue also includes expenses related to hosting services, related data center capacity costs, third-party product license expenses and amortization of the cost of internal use software.internally developed software applications.
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Cost of product revenue consists of purchase and shipment costs for specialty pharmaceuticals and direct sourced medical products. Our cost of product revenue is influenced by the cost and availability of specialty pharmaceuticals and the manufacturing and transportation costs associated with direct sourced medical products.
Other Operating Income
Other operating income includes the adjustment to TRA liabilities. Changes in estimated TRA liabilities that are the result of a change in tax accounting method, including the impacts of the TCJA, are recorded as a component of other operating income in the Condensed Consolidated Statements of Income. Changes in estimated TRA liabilities that are related to new basis changes as a result of the exchange of Class B common units for a like number of shares of Class A common stock or as a result of departed member owners are recorded as an increase to additional paid-in capital in the Condensed Consolidated Statements of Stockholders' Deficit. See "Income Tax Expense" below for additional information.
Operating Expenses
Selling, general and administrative expenses are directly associated with selling and administrative functions and support of revenue-generating activities including expenses to support and maintain our software-related products and services. Selling, general and administrative expenses primarily consist of compensation and benefits related costs, travel-related expenses, business development expenses, including costs for business acquisition opportunities, business disposition related expenses, indirect costs such as insurance, professional fees and other general overhead expenses, and adjustments to TRA liabilities.amortization of certain contract costs. Amortization of contract costs represent amounts, including sales commissions, that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract.
Research and development expenses consist of employee-related compensation and benefit expenses and third-party consulting fees of technology professionals, net of capitalized labor, incurred to develop our software-related products and services.
Amortization of purchased intangible assets includes the amortization of all identified intangible assets resulting from acquisitions.assets.
Other (Expense) Income, Net
Other (expense) income, net, includes equity in net income of unconsolidated affiliates that is generated from our equity method investments. Our equity method investments primarily consist of our 49% ownershipinterests in FFF Enterprises, Inc. ("FFF"(“FFF”), and prior to the acquisition of Innovatix and Essensa on December 2, 2016, included our 50% ownership interest in Innovatix. In connection with the acquisition of Innovatix and Essensa, the Company recorded a one-time gain of $205.1 million related to the remeasurement of our historical 50% equity method investment in Innovatix to fair value.Prestige Ameritech Ltd. (“Prestige”). Other (expense) income, net, also includes the change in fair value of our FFF put and call rights (see Note 6 - Fair Value Measurements), interest income and expense, realized and unrealized gains or losses on deferred compensation plan assets, and gains or losses on the disposal of assets.


assets, and any impairment on our held-to-maturity investments.
Income Tax Expense
The Company'sOn August 11, 2020, we entered into the Merger Agreement by and among us, Premier Healthcare Alliance, LP (“Premier LP”) and BridgeCo, a wholly owned subsidiary of Premier Services, LLC formed for the sole purpose of merging with and into Premier LP. Pursuant to the Merger Agreement, (i) each of the issued and outstanding Class B common units of Premier LP was canceled and converted automatically into a right to receive one share of our Class A common stock, and (ii) all of the issued and outstanding shares of our Class B common stock beneficially held by the limited partners of Premier LP were canceled in accordance with our Certificate of Incorporation. As a result of the Merger, we simplified our tax structure whereby we and our subsidiaries formed one consolidated filing group for federal income tax expense is attributable to the activities of the Company, PHSI and PSCI, all of which are subchapter C corporations and are subject to U.S. federal and state income taxes. In contrast, under the provisions of federal and state laws, Premier LP is not subject to federal and state income taxes as the income realized by Premier LP is taxable to its partners. The Company’s overall effective tax rate differs from the U.S. statutory tax rate primarily due to the aforementioned ownership structure as well as other items noted inpurposes. See Note 1314 - Income Taxes.
Given the Company’s ownership and capital structure, various effective tax rates are calculated for specific tax items. For example, the deferred tax benefit related to stock-based compensation expense (see Note 12 - Stock-Based Compensation) is calculated based on the effective tax rateAdjusted Net Income, a Non-GAAP financial measure as defined below in “Our Use of PHSI, the legal entity where the majority of stock-based compensation expense is recorded. The Company’s effective tax rate, as discussed in Note 13 - Income Taxes, represents the effective tax rate computed in accordance with generally accepted accounting principles ("GAAP") based on total income tax expense (reflected in income tax expense in the Condensed Consolidated Statements of Income) of the Company, PHSI and PSCI, divided by consolidated pre-tax income.
Non-GAAP Adjusted Fully Distributed Net IncomeFinancial Measures”, is calculated net of taxes based on the Company’s fully distributedour estimated annual effective tax rate for federal and state income tax, adjusted for the Companyunusual or infrequent items, as we are a whole as if it were one taxable entityconsolidated group for tax purposes with all of its subsidiaries'our subsidiaries’ activities included. Prior to the enactment of the Act, theAugust 11, 2020, Adjusted Net Income was calculated as if we were one consolidated group for tax purposes. The rate used to compute the Non-GAAP Adjusted Fully Distributed Net Income was 39%. As a result of the TCJA, the rate will be reduced22% for the fiscal year. However,three and nine months ended March 31, 2021 and 26% for the purpose of computing Non-GAAP Adjusted Fully Distributed Net Income for the current quarter, the Company continues to use the 39% rate due to the rate change becoming effective as of January 1, 2018. Going forward, the Company will adjust its fully distributed tax rate to 25% to determine its Non-GAAP Adjusted Fully Distributed Net Income for the remainder of fiscal year 2018.three and nine months ended March 31, 2020.
Net Income Attributable to Non-Controlling Interest
As of DecemberFor the nine months ended March 31, 2017,2021, we owned an approximate 40% controlling general partner interest in Premier LP through our wholly-owned subsidiary, Premier Services, LLC ("Premier GP"). Net income attributable to non-controlling interest represents the portion ofrecognized net income attributable to the limited partners of Premier LP which was reduced from approximately 63% asthrough August 11, 2020, the date of the Merger. At March 31, 2021, we, through Premier Services, LLC (“Premier GP), the sole general partner of Premier LP, and Premier Services II, LLC, a Delaware limited liability company, wholly owned subsidiary of us and sole limited partner of Premier LP, held 100% interest in Premier LP. At June 30, 20172020, we held 59% sole general partner interest in Premier LP. In addition to approximately 60% as of Decembertheir equity ownership interest in us, our members held a 0% and 41% limited partner interest in Premier LP at March 31, 2017, as a result of completed quarterly exchanges pursuant to the Exchange Agreement2021 and June 30, 2020, respectively (see Note 910 - Redeemable Limited Partners' Capital)Capital to the accompanying condensed consolidated financial statements).
Through our consolidated subsidiary, PRAM Holdings, LLC (“PRAM”), we hold an approximate 20% interest in Prestige through PRAM’s ownership of Prestige limited partnership units at March 31, 2021. We own approximately 26% of the membership interest of PRAM, with the remainder held by 16 member health systems, and recognized net income attributable to non-controlling interest for the 74% interest held by the 16 member health systems.
Through our consolidated subsidiary, DePre Holdings, LLC (“DPH”), we hold an approximate 49% interest in DePre, LLC (“DePre”) through DPH’s ownership of DePre membership interests at March 31, 2021. We own approximately 21% of the membership interest of DPH, with the remainder held by 34 member health systems, and recognized net income attributable to non-controlling interest for the 79% interest held by the 34 member health systems.
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As of March 31, 2021, we own 97% of the equity interest in HDP and recognized net income attributable to non-controlling interest for the 3% of equity retained by University Hospitals Holdings, Inc.
Our Use of Non-GAAP Financial Measures
The other key business metrics we consider are EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income (historically referenced as “Adjusted Fully Distributed Net Income,Income”), Adjusted Earnings per Share (historically referenced as “Adjusted Fully Distributed Earnings per ShareShare”) and Free Cash Flow, which are all Non-GAAP financial measures.
We define EBITDA as net income before income or loss from discontinued operations, net of tax, interest and investment income, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets. We define Adjusted EBITDA as EBITDA before merger and acquisition related expenses and non-recurring, non-cash or non-operating items and including equity in net income of unconsolidated affiliates. For all Non-GAAP financial measures, we consider non-recurring items to be income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Such items include certain strategic and financial restructuring expenses. Non-operating items include gaingains or losslosses on the disposal of assets and interest and investment income or expense.
We define Segment Adjusted EBITDA as the segment'ssegment’s net revenue less cost of revenue and operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expenses and non-recurring or non-cash items and including equity in net income of unconsolidated affiliates. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative, and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.
We define Adjusted Fully Distributed Net Income as net income attributable to Premier (i) excluding income or loss from discontinued operations, net, (ii) excluding income tax expense, (ii)(iii) excluding the impact of adjustment of redeemable limited partners'partners’ capital to redemption amount, (iii)(iv) excluding the effect of non-recurring andor non-cash items, (iv)including certain strategic and financial restructuring expenses, (v) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination of non-controlling interest in Premier LP and (v)(vi) reflecting an adjustment for income tax expense on Non-GAAP fully distributed net income before income taxes at our estimated annual effective income tax rate.rate, adjusted for unusual or infrequent items. We define Adjusted Fully Distributed Earnings per Share as Adjusted Fully Distributed Net Income divided by diluted weighted average shares (see Note 1112 - Earnings Per Share).


We define Free Cash Flow as net cash provided by operating activities from continuing operations less distributions and TRATax Receivable Agreement (“TRA”) payments to limited partners and purchases of property and equipment. Free Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments.
Adjusted EBITDA and Free Cash Flow are supplemental financial measures used by us and by external users of our financial statements and are considered to be indicators of the operational strength and performance of our business. Adjusted EBITDA and Free Cash Flow measures allow us to assess our performance without regard to financing methods and capital structure and without the impact of other matters that we do not consider indicative of the operating performance of our business. More specifically, Segment Adjusted EBITDA is the primary earnings measure we use to evaluate the performance of our business segments.
We use Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings per Share to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting our business. We believe Adjusted EBITDA and Segment Adjusted EBITDA assist our Board of Directors, management and investors in comparing our operating performance on a consistent basis from period to period because they remove the impact of earnings elements attributable to our asset base (primarily depreciation and amortization) and, certain items outside the control of our management team, e.g. taxes, as well as other non-cash items (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation), and non-recurring items (such as strategic and financial restructuring expenses) and income and expense that has been classified as discontinued operations from our operating results. We believe Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings per Share assist our Board of Directors, management and investors in comparing our net income and earnings per share on a consistent basis from period to period because these measures remove non-cash (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation) and non-recurring items (such as strategic and financial restructuring expenses), and eliminate the variability of non-controlling interest that results from member owner exchanges of Class B common units for shares of Class A common stock. We believe Free Cash Flow is an
41

important measure because it represents the cash that we generate after payment of tax distributions to limited partners and capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth. Our Free Cash Flow allows us to enhance stockholder value through acquisitions, partnerships, joint ventures, investments in related businesses and debt reduction.
Despite the importance of these Non-GAAP financial measures in analyzing our business, determining compliance with certain financial covenants in our Credit Facility, measuring and determining incentive compensation and evaluating our operating performance relative to our competitors, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income, Adjusted Fully Distributed Earnings per Share and Free Cash Flow are not measurements of financial performance under GAAP, may have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income, net cash provided by operating activities, or any other measure of our performance derived in accordance with GAAP.
Some of the limitations of the EBITDA, Adjusted EBITDA and Segment Adjusted EBITDA measures include that they do not reflect: our capital expenditures or our future requirements for capital expenditures or contractual commitments; changes in, or cash requirements for, our working capital needs; the interest expense or the cash requirements to service interest or principal payments under our Credit Facility; income tax payments we are required to make; and any cash requirements for replacements of assets being depreciated or amortized. In addition, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA and Free Cash Flow are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash flows from operating activities.
Some of the limitations of the Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings per Share measures are that they do not reflect income tax expense or income tax payments we are required to make. In addition, Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings per Share are not measures of profitability under GAAP.
We also urge you to review the reconciliation of these Non-GAAP financial measures included elsewhere in this Quarterly Report. To properly and prudently evaluate our business, we encourage you to review the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and to not rely on any single financial measure to evaluate our business. In addition, because the EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income, Adjusted Fully Distributed Earnings per Share and Free Cash Flow measures are susceptible to varying calculations, such Non-GAAP financial measures may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.


Non-recurring and non-cash items excluded in our calculation of Adjusted EBITDA, Segment Adjusted EBITDA and Adjusted Fully Distributed Net Income consist of stock-based compensation, strategicacquisition and financial restructuringdisposition related expenses, adjustments toremeasurement of TRA liabilities, enterprise resource planning ("ERP") implementation expensesgain on FFF put and acquisition related adjustment - revenue.call rights, income and expense that has been classified as discontinued operations and other expense. More information about certain of the more significant items follows below.
Stock-based compensation
In addition to non-cash employee stock-based compensation expense, this item includes non-cash stock purchase plan expense of $0.1 million and $0.2 million for both the three months ended DecemberMarch 31, 20172021 and 2016, respectively,2020 and $0.2$0.4 million and $0.3 million for the sixnine months ended DecemberMarch 31, 20172021 and 2016.2020, respectively (see Note 13 - Stock-Based Compensation to the accompanying condensed consolidated financial statements).
Acquisition and disposition related expenses
Acquisition related expenses include legal, accounting, and other expenses related to acquisition activities and gains and losses on the change in fair value of earn-out liabilities. Disposition related expenses include severance and retention benefits and financial advisor fees and legal fees related to disposition activities.
Remeasurement of TRA liabilities
The Company recordsOn August 10, 2020, we exercised our right to terminate the TRA entered into as of September 25, 2013 and effective as of October 1, 2013 by and among us and the former limited partners of Premier LP by providing all former LPs a notice of the termination and the amount of the expected payment to be made to each LP pursuant to the early termination provisions of the TRA with a determination date of August 10, 2020.
Prior to termination of the TRA, we recorded TRA liabilities based on 85% of the estimated amount of tax savings the Company expectswe expected to receive, generally over a 15-year period, which arewere attributable to the initial purchase of Class B common units from the member owners made concurrently with the IPO and subsequent exchanges by member owners of Class B common units into Class A common stock or cash. Tax payments made under the TRA will bewere made to the member owners as the Company realizeswe realized tax benefits. Determining the estimated amount of tax savings the Company expectswe expected to receive requiresrequired judgment as deductibility of goodwill amortization expense iswas not assured and the estimate of tax savings iswas dependent upon the actual realization of the tax benefit and the tax rates in effect at that time.
Changes in estimated TRA liabilities that are the result of a change in tax accounting method, including the impacts of the TCJA, are recorded as a component of other operating income in the Condensed Consolidated Statements of Income. Changes in estimated TRA liabilities that are related to new basis changes as a result of the exchange of Class B common units for a like number of shares of Class A common stock
42

Gain or as a result of departed member owners are recorded as an increase to additional paid-in capital in the Condensed Consolidated Statements of Stockholders' Deficit.loss on FFF put and call rights
The adjustments to TRA liabilities for the three and six months ended December 31, 2017 are primarily attributableSee Note 6 - Fair Value Measurements to the 14% decrease in the U.S. federal corporate income tax rate, which occurred as a result of the TCJA that was enacted on December 22, 2017 (see Note 13 - Income Taxes). The adjustment to TRA liabilities for six months ended December 31, 2016 is primarily attributable to the 1% decrease in the North Carolina state income tax rate that occurred during the six months ended December 31, 2016.accompanying condensed consolidated financial statements.
ERP implementation expenses
43
This item includes costs related to the implementation of a new ERP system.
Acquisition related adjustment - revenue

During the three months ended December 31, 2016, we recorded a net $5.6 million purchase accounting adjustment to Adjusted EBITDA related to our acquisition of Innovatix and Essensa on December 2, 2016. These adjustments reflect the fair value of administrative fees related to member purchases that occurred prior to December 2, 2016, but were reported to us subsequent to that date through December 31, 2016. Under our revenue recognition accounting policy, which is an accordance with GAAP, these administrative fees would be ordinarily recorded as revenue when reported to us; however, the acquisition method of accounting requires us to estimate the amount of purchases prior to the acquisition date and to record the fair value of the administrative fees to be received from those purchases as an account receivable (as opposed to recognizing revenue when these transactions are reported to us) and record any corresponding revenue share obligation as a liability. The purchase accounting adjustment amounted to an estimated $23.3 million of accounts receivable relating to these administrative fees and an estimated $4.1 million for the related revenue share obligation through December 31, 2016.
This item also includes non-cash adjustments to deferred revenue of acquired entities of $0.2 million and $0.3 million for the three and six months ended December 31, 2016, respectively. Business combination accounting rules require the Company to record a deferred revenue liability at its fair value only if the acquired deferred revenue represents a legal performance obligation assumed by the acquirer. The fair value is based on direct and indirect incremental costs of providing the services plus a normal profit margin. Generally, this results in a reduction to the purchased deferred revenue balance, which is based on upfront software license update fees and product support contracts assumed in connection with acquisitions. Because these support contracts are typically one year in duration, our GAAP revenues for the one year period subsequent to the acquisition of a business do not reflect the full amount of support revenues on these assumed support contracts that would have otherwise been recorded by the acquired entity. The Non-GAAP adjustment to software license update fees and product support revenues is intended to include, and thus reflect, the full amount of such revenues.


Results of Operations
Results of operations for all periods presented have been retrospectively adjusted to reflect continuing operations unless otherwise indicated.
The following table summarizespresents our results of operations for the periods presented (in thousands, except per share data):
Three Months Ended December 31, Six Months Ended December 31,Three Months Ended March 31,Nine Months Ended March 31,
20172016 201720162021202020212020
Amount% of Net RevenueAmount% of Net Revenue Amount% of Net RevenueAmount% of Net RevenueAmount% of Net RevenueAmount% of Net RevenueAmount% of Net RevenueAmount% of Net Revenue
Net revenue:         Net revenue:
Net administrative fees$159,343
39%$129,071
36% $310,334
39%$255,047
38%Net administrative fees$146,553 31%$174,049 52%$424,537 34%$518,566 54%
Other services and support89,953
22%87,051
24% 176,864
22%168,218
25%Other services and support107,375 23%99,591 30%304,020 25%270,929 29%
Services249,296
61%216,122
60% 487,198
61%423,265
63%Services253,928 54%273,640 82%728,557 59%789,495 83%
Products162,102
39%142,378
40% 314,764
39%248,507
37%Products215,995 46%61,183 18%511,080 41%167,344 17%
Net revenue411,398
100%358,500
100% 801,962
100%671,772
100%Net revenue469,923 100%334,823 100%1,239,637 100%956,839 100%
Cost of revenue:        Cost of revenue:
Services47,255
12%44,856
13% 94,191
13%87,546
13%Services46,980 10%49,007 15%125,852 10%143,965 15%
Products153,272
37%131,158
37% 297,712
37%226,971
34%Products211,136 45%54,121 16%496,286 40%150,415 16%
Cost of revenue200,527
49%176,014
49% 391,903
49%314,517
47%Cost of revenue258,116 55%103,128 31%622,138 50%294,380 31%
Gross profit210,871
51%182,486
51% 410,059
51%357,255
53%Gross profit211,807 45%231,695 69%617,499 50%662,459 69%
Other operating income:        
Remeasurement of tax receivable agreement liabilities177,174
43%—
—% 177,174
22%5,722
1%
Other operating income177,174
43%—
—% 177,174
22%5,722
1%
Operating expenses:        Operating expenses:
Selling, general and administrative108,620
26%95,927
27% 222,941
28%193,887
29%Selling, general and administrative134,502 29%115,289 34%388,453 31%315,311 33%
Research and development324
—%767
—% 813
—%1,573
—%Research and development715 —%628 —%2,013 —%1,808 —%
Amortization of purchased intangible assets13,817
3%11,151
3% 27,715
3%20,360
3%Amortization of purchased intangible assets10,400 2%13,966 4%33,864 3%38,948 4%
Operating expenses122,761
30%107,845
30% 251,469
31%215,820
32%Operating expenses145,617 31%129,883 38%424,330 34%356,067 37%
Operating income265,284
64%74,641
22% 335,764
42%147,157
23%Operating income66,190 14%101,812 30%193,169 16%306,392 32%
Other income, net(14,007)(3)%208,972
58% (11,107)(1)%217,887
32%
Other (expense) income, netOther (expense) income, net(1,302)—%(24,435)(7)%(4,173)—%7,670 1%
Income before income taxes251,277
61%283,613
80% 324,657
40%365,044
55%Income before income taxes64,888 14%77,377 23%188,996 15%314,062 33%
Income tax expense231,508
56%37,429
10% 244,272
30%60,765
9%
Income tax expense (benefit)Income tax expense (benefit)13,444 3%4,165 1%(88,037)(7)%78,336 8%
Net income from continuing operationsNet income from continuing operations51,444 11%73,212 22%277,033 22%235,726 25%
Income from discontinued operations, net of taxIncome from discontinued operations, net of tax— —%5 —%— —%1,009 —%
Net income19,769
5%246,184
69% 80,385
10%304,279
46%Net income51,444 11%73,217 22%277,033 22%236,735 25%
Net income attributable to non-controlling interest in Premier LP(56,485)(14)%(181,173)(51)% (101,095)(13)%(230,774)(34)%
Adjustment of redeemable limited partners' capital to redemption amount317,916
nm335,264
nm 638,340
nm397,072
nm
Net income from continuing operations attributable to non-controlling interestNet income from continuing operations attributable to non-controlling interest(3,123)(1)%(35,055)(10)%(15,903)(1)%(132,189)(14)%
Net income from discontinued operations attributable to non-controlling interestNet income from discontinued operations attributable to non-controlling interest— —%(3)—%— —%(480)—%
Net income attributable to non-controlling interestNet income attributable to non-controlling interest(3,123)(1)%(35,058)(10)%(15,903)(1)%(132,669)(14)%
Adjustment of redeemable limited partners’ capital to redemption amountAdjustment of redeemable limited partners’ capital to redemption amount— nm302,569 nm(26,685)nm516,725 nm
Net income attributable to stockholders$281,200
nm$400,275
nm $617,630
nm$470,577
nmNet income attributable to stockholders$48,321 nm$340,728 nm$234,445 nm$620,791 nm
        
Weighted average shares outstanding:        Weighted average shares outstanding:
Basic55,209
 49,445
 54,059
 48,330
 Basic122,254 69,451 114,596 65,582 
Diluted139,237
 141,308
 139,641
 142,133
 Diluted123,116 122,470 115,365 124,030 
        
Earnings per share attributable to stockholders:Earnings per share attributable to stockholders:       Earnings per share attributable to stockholders:
Basic$5.09
 $8.10
 $11.43
 $9.74
 
Diluted$(1.66) $1.50
 $(1.30) $1.75
 
Basic earnings per share attributable to stockholdersBasic earnings per share attributable to stockholders$0.40 $4.91 $2.05 $9.47 
Diluted earnings per share attributable to stockholdersDiluted earnings per share attributable to stockholders$0.39 $0.54 $2.03 $1.66 
nm = Not meaningful

44







The following table provides certain Non-GAAP financial measures for the periods presented (in thousands, except per share data). Refer to "Our“Our Use of Non-GAAP Financial Measures"Measures” for further information regarding items excluded in our calculation of Adjusted EBITDA and Segment Adjusted EBITDA.
 Three Months Ended December 31, Six Months Ended December 31,
 20172016 20172016
 Amount% of Net RevenueAmount% of Net Revenue Amount% of Net RevenueAmount% of Net Revenue
Certain Non-GAAP Financial Data:         
Adjusted EBITDA$133,542
32%$122,009
34% $252,713
32%$232,782
35%
Non-GAAP Adjusted Fully Distributed Net Income$69,982
17%$65,242
18% $131,695
16%$124,170
18%
Non-GAAP Adjusted Fully Distributed Earnings Per Share$0.50
 $0.46
  $0.94
 $0.87
 


























Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Certain Non-GAAP Financial Data:Amount% of Net RevenueAmount% of Net RevenueAmount% of Net RevenueAmount% of Net Revenue
Adjusted EBITDA$121,207 26%$155,889 47%$356,768 29%$444,550 46%
Non-GAAP Adjusted Net Income$78,535 17%$88,908 27%$232,023 19%$265,668 28%
Non-GAAP Adjusted Earnings Per Share$0.64 nm$0.73 nm$1.89 nm$2.14 nm
The following table providestables provide the reconciliation of net income from continuing operations to Adjusted EBITDA and the reconciliation of income before income taxes to Segment Adjusted EBITDA (in thousands). Refer to "Our“Our Use of Non-GAAP Financial Measures"Measures” for further information regarding items excluded in our calculation of Adjusted EBITDA and Segment Adjusted EBITDA.
Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Net income from continuing operations$51,444 $73,212 $277,033 $235,726 
Interest and investment loss, net3,225 9,966 8,742 9,849 
Income tax expense (benefit)13,444 4,165 (88,037)78,336 
Depreciation and amortization19,337 25,777 55,904 75,690 
Amortization of purchased intangible assets10,400 13,966 33,864 38,948 
EBITDA97,850 127,086 287,506 438,549 
Stock-based compensation13,180 7,668 27,970 19,358 
Acquisition and disposition related expenses4,126 7,287 14,889 16,263 
Remeasurement of tax receivable agreement liabilities— (902)— (24,584)
Loss (gain) on FFF put and call rights5,195 13,906 21,621 (8,477)
Other expense, net856 844 4,782 3,441 
Adjusted EBITDA$121,207 $155,889 $356,768 $444,550 
Income before income taxes$64,888 $77,377 $188,996 $314,062 
Equity in net income of unconsolidated affiliates(5,524)(4,442)(16,023)(11,038)
Interest and investment loss, net3,225 9,966 8,742 9,849 
Loss (gain) on FFF put and call rights5,195 13,906 21,621 (8,477)
Other (income) expense(1,594)5,005 (10,167)1,996 
Operating income66,190 101,812 193,169 306,392 
Depreciation and amortization19,337 25,777 55,904 75,690 
Amortization of purchased intangible assets10,400 13,966 33,864 38,948 
Stock-based compensation13,180 7,668 27,970 19,358 
Acquisition and disposition related expenses4,126 7,287 14,889 16,263 
Remeasurement of tax receivable agreement liabilities— (902)— (24,584)
Equity in net income of unconsolidated affiliates5,524 4,442 16,023 11,038 
Deferred compensation plan income (expense)1,521 (5,476)9,231 (2,484)
Other expense, net929 1,315 5,718 3,929 
Adjusted EBITDA$121,207 $155,889 $356,768 $444,550 

45

 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Net income$19,769
$246,184
$80,385
$304,279
Interest and investment loss, net1,508
857
3,003
1,009
Income tax expense231,508
37,429
244,272
60,765
Depreciation and amortization17,310
14,198
33,817
28,216
Amortization of purchased intangible assets13,817
11,151
27,715
20,360
EBITDA283,912
309,819
389,192
414,629
Stock-based compensation8,951
6,423
17,908
12,319
Acquisition related expenses1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities(177,174)—
(177,174)(5,722)
ERP implementation expenses156
432
491
1,526
Acquisition related adjustment - revenue87
5,813
192
5,964
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(204,833)—
(204,833)
Loss on disposal of long-lived assets400
—
1,720
1,518
Loss on FFF put and call rights15,587
—
15,607
—
Other expense(51)139
4
228
Adjusted EBITDA$133,542
$122,009
$252,713
$232,782
     
Income before income taxes$251,277
$283,613
$324,657
$365,044
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(204,833)—
(204,833)
Equity in net income of unconsolidated affiliates(1,257)(5,127)(5,509)(14,706)
Interest and investment loss, net1,508
857
3,003
1,009
Loss on disposal of long-lived assets400
—
1,720
1,518
Other income13,356
131
11,893
(875)
Operating income265,284
74,641
335,764
147,157
Depreciation and amortization17,310
14,198
33,817
28,216
Amortization of purchased intangible assets13,817
11,151
27,715
20,360
Stock-based compensation8,951
6,423
17,908
12,319
Acquisition related expenses1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities(177,174)—
(177,174)(5,722)
ERP implementation expenses156
432
491
1,526
Acquisition related adjustment - revenue87
5,813
192
5,964
Equity in net income of unconsolidated affiliates1,257
5,127
5,509
14,706
Deferred compensation plan income1,577
8
3,116
1,103
Other expense603
—
602
—
Adjusted EBITDA$133,542
$122,009
$252,713
$232,782
     
Segment Adjusted EBITDA:    
Supply Chain Services$132,045
$119,022
$257,665
$236,326
Performance Services27,929
28,603
49,150
50,914
Corporate(26,432)(25,616)(54,102)(54,458)
Adjusted EBITDA$133,542
$122,009
$252,713
$232,782



Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Segment Adjusted EBITDA:
Supply Chain Services$117,949 $149,212 $339,538 $447,081 
Performance Services35,950 34,634 109,675 84,977 
Corporate(32,692)(27,957)(92,445)(87,508)
Adjusted EBITDA$121,207 $155,889 $356,768 $444,550 
The following table provides the reconciliation of net income attributable to stockholders to Non-GAAP Adjusted Fully Distributed Net Income and the reconciliation of the numerator and denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Fully Distributed Earnings per Share for the periods presented (in thousands). Refer to "Our“Our Use of Non-GAAP Financial Measures"Measures” for further information regarding items excluded in our calculation of Non-GAAP Adjusted Fully Distributed Net Income and Non-GAAP Adjusted Fully Distributed Earnings per Share.
Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Net income attributable to stockholders$48,321 $340,728 $234,445 $620,791 
Adjustment of redeemable limited partners’ capital to redemption amount— (302,569)26,685 (516,725)
Net income attributable to non-controlling interest3,123 35,058 15,903 132,669 
Income from discontinued operations, net of tax— (5)— (1,009)
Income tax expense (benefit)13,444 4,165 (88,037)78,336 
Amortization of purchased intangible assets10,400 13,966 33,864 38,948 
Stock-based compensation13,180 7,668 27,970 19,358 
Acquisition and disposition related expenses4,126 7,287 14,889 16,263 
Remeasurement of tax receivable agreement liabilities— (902)— (24,584)
Loss (gain) on FFF put and call rights5,195 13,906 21,621 (8,477)
Other expense, net2,897 844 10,126 3,441 
Non-GAAP adjusted income before income taxes100,686 120,146 297,466 359,011 
Income tax expense on adjusted income before income taxes (a)
22,151 31,238 65,443 93,343 
Non-GAAP Adjusted Net Income$78,535 $88,908 $232,023 $265,668 
Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings per Share
Weighted Average:
Basic weighted average shares outstanding122,254 69,451 114,596 65,582 
Dilutive securities862 645 769 662 
Class B shares outstanding (b)
— 52,374 — 57,786 
Weighted average shares outstanding - diluted123,116 122,470 115,365 124,030 
Dilutive securities— — — — 
Class B shares outstanding (b)
— — 7,511 — 
Non-GAAP weighted average shares outstanding - diluted123,116 122,470 122,876 124,030 
(a)Reflects income tax expense at an estimated effective income tax rate of 22% of non-GAAP adjusted net income before income taxes for the three and nine months ended March 31, 2021 and 26% of non-GAAP adjusted income before income taxes for the three and nine months ended March 31, 2020.
(b)For the nine months ended March 31, 2021, the effect of 7.5 million Class B commons were excluded from the GAAP diluted weighted average shares outstanding as they had an anti-dilutive effect. On a non-GAAP basis, the effect of 7.5 million Class B common units was included in the non-GAAP diluted weighted average shares outstanding.

46
 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Net income attributable to stockholders$281,200
$400,275
$617,630
$470,577
Adjustment of redeemable limited partners' capital to redemption amount(317,916)(335,264)(638,340)(397,072)
Net income attributable to non-controlling interest in Premier LP56,485
181,173
101,095
230,774
Income tax expense231,508
37,429
244,272
60,765
Amortization of purchased intangible assets13,817
11,151
27,715
20,360
Stock-based compensation8,951
6,423
17,908
12,319
Acquisition related expenses1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities

(177,174)—
(177,174)(5,722)
ERP implementation expenses156
432
491
1,526
Acquisition related adjustment - revenue87
5,813
192
5,964
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(204,833)—
(204,833)
Loss on disposal of long-lived assets400
—
1,720
1,518
Loss on FFF put and call rights15,587
—
15,607
—
Other expense(51)139
4
228
Non-GAAP adjusted fully distributed income before income taxes114,724
106,954
215,893
203,557
Income tax expense on fully distributed income before income taxes(a)
44,742
41,712
84,198
79,387
Non-GAAP Adjusted Fully Distributed Net Income$69,982
$65,242
$131,695
$124,170
     
Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Fully Distributed Earnings per Share
Weighted Average:    
Common shares used for basic and diluted earnings (loss) per share55,209
49,445
54,059
48,330
Potentially dilutive shares450
401
553
437
Conversion of Class B common units83,578
91,462
85,029
93,366
Weighted average fully distributed shares outstanding - diluted139,237
141,308
139,641
142,133

(a)Reflects income tax expense at an estimated effective income tax rate of 39% of Non-GAAP adjusted fully distributed income before income taxes for the three and six months ended December 31, 2017 and 2016.


The following table provides the reconciliation of earnings per share attributable to stockholders to Non-GAAP Adjusted Fully Distributed Earnings per Share for the periods presented. Refer to "Our“Our Use of Non-GAAP Financial Measures"Measures” for further information regarding items excluded in our calculation of Non-GAAP Adjusted Fully Distributed Earnings per Share.
Three Months Ended March 31,Nine Months Ended March 31,
2021202020212020
Earnings per share attributable to stockholders$0.40 $4.91 $2.05 $9.47 
Adjustment of redeemable limited partners’ capital to redemption amount— (4.36)0.23 (7.88)
Net income attributable to non-controlling interest0.03 0.50 0.14 2.02 
Income from discontinued operations, net of tax— — — (0.02)
Income tax expense (benefit)0.11 0.06 (0.77)1.19 
Amortization of purchased intangible assets0.09 0.20 0.30 0.59 
Stock-based compensation0.11 0.11 0.24 0.30 
Acquisition and disposition related expenses0.03 0.10 0.13 0.25 
Remeasurement of tax receivable agreement liabilities— (0.01)— (0.37)
Loss (gain) on FFF put and call rights0.04 0.20 0.19 (0.13)
Other expense, net0.02 0.01 0.09 0.05 
Impact of corporation taxes (a)
(0.19)(0.45)(0.57)(1.42)
Impact of dilutive shares (b)
— (0.54)(0.14)(1.91)
Non-GAAP Adjusted Earnings Per Share$0.64 $0.73 $1.89 $2.14 
 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Earnings per share attributable to stockholders$5.09
$8.10
$11.43
$9.74
Adjustment of redeemable limited partners' capital to redemption amount(5.76)(6.79)(11.81)(8.22)
Net income attributable to non-controlling interest in Premier LP1.02
3.66
1.87
4.77
Income tax expense4.19
0.76
4.52
1.26
Amortization of purchased intangible assets0.25
0.23
0.51
0.42
Stock-based compensation0.16
0.13
0.33
0.25
Acquisition related expenses0.03
0.09
0.09
0.15
Remeasurement of tax receivable agreement liabilities(3.21)—
(3.28)(0.12)
ERP implementation expenses—
0.01
0.01
0.03
Acquisition related adjustment - revenue—
0.12
—
0.12
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(4.14)—
(4.24)
Loss on disposal of long-lived assets0.01
—
0.03
0.03
Loss on FFF put and call rights0.28
—
0.29
—
Impact of corporation taxes (a)
(0.80)(0.84)(1.56)(1.63)
Impact of dilutive shares (b)
(0.76)(0.87)(1.49)(1.69)
Non-GAAP Adjusted Fully Distributed Earnings Per Share$0.50
$0.46
$0.94
$0.87
(a)Reflects income tax expense at an estimated effective income tax rate of 22%ofnon-GAAP adjusted net income before income taxes for the three and nine months ended March 31, 2021 and 26% of non-GAAP adjusted income before income taxes for the three and nine months ended March 31, 2020.
(a)Reflects income tax expense at an estimated effective income tax rate of 39% of Non-GAAP adjusted fully distributed income before income taxes for the three and six months ended December 31, 2017 and 2016.
(b)Reflects impact of dilutive shares, primarily attributable to the assumed conversion of all Class B common units for Class A common stock.
(b)Reflects impact of dilutive shares on a non-GAAP basis, primarily attributable to the assumed conversion of all Class B common units for Class A common stock.
Consolidated Results - Comparison of the Three and Six Months ended DecemberEnded March 31, 20172021 to 20162020
Net Revenue
Net revenue increased $52.9by $135.1 million or 15%, to $411.4 million forduring the three months ended DecemberMarch 31, 2017 from $358.5 million for2021 compared to the three months ended DecemberMarch 31, 2016. Net2020, primarily due to an increase of $154.8 million in product revenue and an increase of $7.8 million in other services and support revenue, partially offset by a decrease of $27.5 million in net administrative fees revenue. The variances in the material factors contributing to the changes in consolidated net revenue are discussed further in “Segment Results” below.
Cost of Revenue
Cost of revenue increased $130.2by $155.0 million or 19%, to $802.0 million for the six months ended December 31, 2017 from $671.8 million for the six months ended December 31, 2016.
Net administrative fees revenue increased $30.2 million, or 23%, fromduring the three months ended DecemberMarch 31, 20162021 compared to 2017 and $55.3 million, or 22%, from the sixthree months ended DecemberMarch 31, 20162020, primarily due to 2017,an increase of $157.0 million in cost of product revenue, partially offset by a decrease of $2.0 million in cost of services revenue. The variances in the material factors contributing to the changes in consolidated cost of revenue are discussed further in “Segment Results” below.
Operating Expenses
Operating expenses increased by $15.7 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to an increase of $19.2 million in selling, general and administrative expenses. The variances in the material factors contributing to the changes in consolidated operating expenses are discussed further in “Segment Results” below.
Other Income, Net
Other income, net increased by $23.1 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to a decrease in the loss on the FFF put and call rights in the current period (see Note 6 - Fair Value Measurements to the accompanying condensed consolidated financial statements for further information) and the other than temporary impairment charges associated with held-to-maturity investments in the prior year period.
Income Tax Expense
For the three months ended March 31, 2021, we recorded tax expense of $13.4 million compared to tax expense of $4.2 million recorded during the three months ended March 31, 2020. The tax expense recorded during the three months ended March 31,
47

2021 and 2020 results in effective tax rates of 21% and 5%, respectively. The increase in the effective tax rate is largely driven by aggregate contributions from Innovatixthe prior year impact of the income tax benefit associated with the NOL carryback provisions under the CARES Act and Essensa,the associated release of the valuation allowance in March 2020. See Note 14 - Income Taxes to the accompanying condensed consolidated financial statements for more information.
Net Income Attributable to Non-Controlling Interest
Net income attributable to non-controlling interest decreased by $32.0 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to the Merger, whereby net income attributable to non-controlling interest in Premier LP was not recorded after the Merger date of August 11, 2020. As of March 31, 2021, we owned a 99.999% controlling general partner interest and a 0.001% limited partnership interest in Premier GP. At June 30, 2020, the portion of net income attributable to the limited partners of Premier LP was 41%.
Partially offsetting the decrease was the addition of non-controlling interest for the portion of net income attributable to PRAM, DPH and HDP, which were acquiredwas 74%, 79% and 3%, respectively.
Adjusted EBITDA
Adjusted EBITDA, a Non-GAAP financial measure as defined in full on December 2, 2016. To“Our Use of Non-GAAP Financial Measures”, decreased by $34.7 million during the three months ended March 31, 2021, compared to the three months ended March 31, 2020. The variances in the material factors contributing to the changes in consolidated Non-GAAP Adjusted EBITDA are discussed further in “Segment Results” below.
Consolidated Results - Comparison of the Nine Months Ended March 31, 2021 to 2020
Net Revenue
Net revenue increased by $282.8 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to an increase of $343.7 million in product revenue and an increase of $33.1 million in other services and support revenue, partially offset by a lesser extent, net administrative fees growth also benefited from a supplier revenue recovery settlement and contract penetrationdecrease of existing members. Growth$94.0 million in net administrative fees revenue. The variances in the material factors contributing to the changes in consolidated net revenue are discussed further in “Segment Results” below.
Cost of Revenue
Cost of revenue increased by $327.8 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to an increase of $345.9 million in cost of product revenue, partially offset by a decrease of $18.1 million in cost of services revenue. The variances in the material factors contributing to the changes in consolidated cost of revenue are discussed further in “Segment Results” below.
Operating Expenses
Operating expenses increased by $68.3 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to an increase of $73.1 million in selling, general and administrative expenses. The variances in the material factors contributing to the changes in consolidated operating expenses are discussed further in “Segment Results” below.
Other Income, Net
Other income, net decreased by $11.8 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to the loss on the FFF put and call rights in the current period compared to the gain on the FFF put and call rights in the prior year period (see Note 6 - Fair Value Measurements to the accompanying condensed consolidated financial statements for further information) partially offset by an increase in deferred compensation plan income and the other than temporary impairment charges associated with held-to-maturity investments in the prior year period.
Income Tax (Benefit) Expense
For the nine months ended March 31, 2021, we recorded a tax benefit of $88.0 million compared to tax expense of $78.3 million recorded during the nine months ended March 31, 2020. The tax benefit and expense recorded during the nine months ended March 31, 2021 and 2020 results in effective tax rates of (47)% and 25%, respectively. The change in the effective tax rate is primarily attributable to the one-time deferred tax benefit associated with remeasurement of the deferred tax asset and valuation allowance release as a result of the Merger. See Note 14 - Income Taxes to the accompanying condensed consolidated financial statements for more information.
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Net Income Attributable to Non-Controlling Interest
Net income attributable to non-controlling interest decreased by $116.8 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to the Merger, whereby net income attributable to non-controlling interest was not recorded after the Merger date of August 11, 2020.
Partially offsetting the decrease was the addition of non-controlling interest for the portion of net income attributable to PRAM, DPH and HDP, which was 74%, 79% and 3%, respectively.
Adjusted EBITDA
Adjusted EBITDA, a Non-GAAP financial measure, decreased by $87.8 million during the nine months ended March 31, 2021, compared to the nine months ended March 31, 2020. The variances in the material factors contributing to the changes in consolidated Non-GAAP Adjusted EBITDA are discussed further in “Segment Results” below.
Segment Results
Supply Chain Services
The following table presents our results of operations and Adjusted EBITDA, a Non-GAAP financial measure, in the Supply Chain Services segment for the periods presented (in thousands):
Three Months Ended March 31,Nine Months Ended March 31,
Supply Chain Services20212020Change20212020Change
Net revenue:
Net administrative fees$146,553 $174,049 $(27,496)(16)%$424,537 $518,566 $(94,029)(18)%
Other services and support8,630 3,396 5,234 154%18,307 8,439 9,868 117 %
Services155,183 177,445 (22,262)(13)%442,844 527,005 (84,161)(16)%
Products215,995 61,183 154,812 253%511,080 167,344 343,736 205 %
Net revenue371,178 238,628 132,550 56%953,924 694,349 259,575 37 %
Cost of revenue:
Services1,120 123 997 nm2,627 278 2,349 845 %
Products211,136 54,121 157,015 290%496,286 150,415 345,871 230 %
Cost of revenue212,256 54,244 158,012 291%498,913 150,693 348,220 231 %
Gross profit158,922 184,384 (25,462)(14)%455,011 543,656 (88,645)(16)%
Operating expenses:
Selling, general and administrative49,714 45,512 4,202 9%144,511 119,179 25,332 21 %
Research and development72 — 72 —%199 6 193 — %
Amortization of purchased intangible assets8,151 6,125 2,026 33%24,205 14,318 9,887 69 %
Operating expenses57,937 51,637 6,300 12%168,915 133,503 35,412 27 %
Operating income100,985 132,747 (31,762)(24)%$286,096 $410,153 $(124,057)(30)%
Depreciation and amortization1,238 771 3,403 2,274 
Amortization of purchased intangible assets8,151 6,125 24,205 14,318 
Acquisition and disposition related expenses2,053 4,871 9,684 9,204 
Equity in net income of unconsolidated affiliates5,319 4,431 15,907 10,865 
Other expense203 267 243 267 
Segment Adjusted EBITDA$117,949 $149,212 $(31,263)(21)%$339,538 $447,081 $(107,543)(24)%
Comparison of the Three Months Ended March 31, 2021 to 2020
Net Revenue
Supply Chain Services segment net revenue increased by $132.6 million, or 56%, during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 largely due to an increase in product revenue of $154.8 million that was primarily driven by growth in commodity products and aggregated purchasing of certain products as well as the aggregated purchasing of PPE and other high demand supplies as a result of the COVID-19 pandemic. The increase in Supply Chain
49

Services segment net revenue is also due to a $5.2 million increased supply chain co-management fees as a result of the asset acquisition of Nexera.
These increases were partially offset by a decrease in net administrative fees of $27.5 million as a result of amendments to GPO Participation Agreements, effective as of July 1, 2020, lower utilization of GPO contracts and the related decline in the demand for supplies and services as a result of COVID-19 and amortization of the prepaid contract administrative fee share for one-time rebates paid by Acurity, Inc. to certain of its then members, as agreed to by Acurity, Inc. prior to entering into the Purchase Agreement (“Acurity prepaid contract administrative fee share”). These decreases in net administrative fees were partially offset by growth from further penetration of member purchased services, the addition of new categories and suppliers and the addition of new members to our contract portfolio.
Cost of Revenue
Supply Chain Services segment cost of revenue increased by $158.0 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020. The increase in cost of revenue, driven by the aforementioned increase in product revenue, was greater than the increase in product revenue of $154.8 million primarily due to product costs in excess of the selling price that we incurred as a result of COVID-19.
Operating Expenses
Supply Chain Services segment operating expenses increased by $6.3 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020. The increase was primarily due to an increase in selling, general and administrative expenses of $4.2 million driven by an increase in expenses associated with our fiscal year 2020 acquisition of Medpricer and the Acurity and Nexera asset acquisition partially impactedoffset by soft patienta decrease in employee travel and meeting expenses due to COVID-19. In addition, operating expenses increased by $2.0 million as a result of increased amortization of purchased intangible assets related to the fiscal year 2020 acquisitions.
Segment Adjusted EBITDA
Supply Chain Services Segment Adjusted EBITDA decreased by $31.3 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to the aforementioned decrease in net administrative fees and the increase in selling, general and administrative expenses largely due to our fiscal year 2020 acquisitions.
Comparison of the Nine Months Ended March 31, 2021 to 2020
Net Revenue
Supply Chain Services segment net revenue increased by $259.6 million, or 37%, during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020 largely driven by an increase in product revenue of $343.7 million due primarily to the aggregated purchasing of PPE as a result of COVID-19 and growth in commodity products and aggregated purchasing of certain products. Supply Chain Services segment revenue also increased by $9.9 million due to supply chain co-management fees as a result of the asset acquisition of Nexera.
There has been a significant increase in demand for PPE and other supplies directly related to treating and preventing the spread of COVID-19, as well as replenishing and maintaining certain inventory levels, that has contributed significantly to the increase in product revenue. To the extent the COVID-19 pandemic subsides or becomes more manageable, we expect the market for these high demand products to stabilize and, accordingly, we anticipate product revenue growth rates to correspondingly decrease.
These increases were partially offset by a decrease in net administrative fees of $94.0 million primarily as a result of amendments to GPO Participation Agreements, effective as of July 1, 2020, lower utilization of GPO contracts and the related decline in the demand for supplies and services as a result of COVID-19 and amortization of the Acurity prepaid contract administrative fee share. These decreases in net administrative fees were partially offset by further penetration of member purchased services and the addition of new categories and suppliers.
We anticipate lower net administrative fees for the remainder of fiscal year 2021 due to amendments to GPO Participation Agreements and the ongoing impact from COVID-19. However, once the COVID-19 pandemic subsides and we move into fiscal year 2022, we expect our net administrative fees revenue to grow to the extent our existing members increase the utilization of our contracts and new members convert to our contract portfolio. Due to competitive market trends, we have experienced, and timingexpect to continue to experience, requests, at times, to provide existing and prospective members and other
50

customers increases in revenue share on incremental or overall purchasing volume that could, if materially increased, adversely impact our revenues and overall financial performance.
Cost of cash receipts.Revenue
Supply Chain Services segment cost of revenue increased by $348.2 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020 primarily due to the aforementioned increase in product revenue as well as higher costs for products that we incurred as a result of COVID-19. As a result of the COVID-19 pandemic, we expect higher costs in fiscal year 2021 due to increased demand in PPE. To the extent the COVID-19 pandemic subsides or becomes more manageable, we expect the market for these high demand products to stabilize and, accordingly, we anticipate our product costs to correspondingly decrease. However, once the COVID-19 pandemic subsides, we expect our cost of non-COVID-19-related product revenue to increase to the extent we are able to sell additional direct-sourced medical products to new and existing members and other customers. Depending on the underlying product sales mix in the future, increases in product revenues could reduce our gross profit as a percentage of our net revenue.
Operating Expenses
Supply Chain Services segment operating expenses increased by $35.4 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020. The increase was primarily due to an increase in selling, general and administrative expenses of $25.3 million driven by an increase in expenses associated with our fiscal year 2020 acquisition of Medpricer and the Acurity and Nexera asset acquisition partially offset by a decrease in employee travel and meeting expenses due to the COVID-19 pandemic. In addition, operating expenses increased by $9.9 million as a result of increased amortization of purchased intangible assets related to the fiscal year 2020 acquisitions.
Segment Adjusted EBITDA
Supply Chain Services Segment Adjusted EBITDA decreased by $107.5 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to the aforementioned decrease in net administrative fees and the increase in selling, general and administrative expenses largely due to our fiscal year 2020 acquisitions.
Performance Services
The following table presents our results of operations and Adjusted EBITDA in the Performance Services segment for the periods presented (in thousands):
Three Months Ended March 31,Nine Months Ended March 31,
Performance Services20212020Change20212020Change
Net revenue:
Other services and support$98,745 $96,195 $2,550 3%$285,713 $262,490 $23,223 9%
Net revenue98,745 96,195 2,550 3%285,713 262,490 23,223 9%
Cost of revenue:
Services45,860 48,884 (3,024)(6)%123,225 143,687 (20,462)(14)%
Cost of revenue45,860 48,884 (3,024)(6)%123,225 143,687 (20,462)(14)%
Gross profit52,885 47,311 5,574 12%162,488 118,803 43,685 37%
Operating expenses:
Selling, general and administrative34,517 37,586 (3,069)(8)%102,488 106,522 (4,034)(4)%
Research and development643 628 15 2%1,814 1,797 17 1%
Amortization of purchased intangible assets2,249 7,841 (5,592)(71)%9,659 24,630 (14,971)(61)%
Operating expenses37,409 46,055 (8,646)(19)%113,961 132,949 (18,988)(14)%
Operating income (loss)15,476 1,256 14,220 nm$48,527 $(14,146)$62,673 nm
Depreciation and amortization15,947 23,109 46,104 67,232 
Amortization of purchased intangible assets2,249 7,841 9,659 24,630 
Acquisition related expenses2,073 2,416 5,205 7,059 
Equity in net income of unconsolidated affiliates205 11 116 173 
Other expense— 1 64 29 
Segment Adjusted EBITDA$35,950 $34,634 $1,316 4%$109,675 $84,977 $24,698 29%
51

Comparison of the Three Months Ended March 31, 2021 to 2020
Net Revenue
Net revenue in our Performance Services segment increased by $2.6 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020. The increase was primarily driven by incremental revenue associated with our acquisition of HDP in May 2020, growth in life sciences business and growth in the cost management and consulting services. This increase was partially offset by a reduction in the technology businesses due to lower revenue associated with enterprise analytics license agreements executed during the current period as compared to the prior year period and lower revenue as a result of the planned reduction and subsequent discontinuance of the Hospital Improvement Innovation Network (“HIIN”) contract in March 2020.
Cost of Revenue
Performance Services segment cost of revenue decreased by $3.0 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to a decrease in amortization of internally developed software applications, lower consulting expenses due to decreased utilization of third-party contractors and lower expenses as a result of the planned reduction and subsequent discontinuance of the HIIN contract in March 2020. These decreases were partially offset by incremental expenses associated with the HDP acquisition.
Operating Expenses
Performance Services segment operating expenses decreased by $8.6 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to $5.6 million of lower amortization of purchased intangible assets during the current period and decreased selling, general and administrative expenses of $3.1 million. The decrease in selling, general and administrative expenses was driven by a decrease in amortization of internally developed software applications and a decrease in employee travel and meeting expenses as a result of the COVID-19 pandemic.
Segment Adjusted EBITDA
Performance Services Segment Adjusted EBITDA increased by $1.3 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020 primarily due to the aforementioned increase in revenue and lower employee travel and meeting expenses due to the COVID-19 pandemic offset by incremental expenses associated with the HDP acquisition.
Comparison of the Nine Months Ended March 31, 2021 to 2020
Net Revenue
Other services and support revenue in our Performance Services segment increased $2.9by $23.2 million or 3%, fromduring the threenine months ended DecemberMarch 31, 20162021 compared to 2017 primarily due to increases in SaaS informatics products subscriptions and ambulatory quality solutions services. Other services and support revenue increased $8.7 million, or 5% from the sixnine months ended DecemberMarch 31, 2016 to 2017,2020. The increase was primarily due todriven by growth across the technology businesses, including new enterprise analytics license agreements, as well as incremental revenue associated with our fiscal year 2020 acquisition of HDP. These increases were partially offset by lower demand in cost management advisoryconsulting services related to performance-based engagements. We also experienced increases in SaaS informatics products subscriptions, applied science services and government services related revenue. We expect to experience quarterly variability within other services and support revenue due to the timing of revenue recognition from certain advisory services and performance-based engagements in which our revenue is based onas a percentage of identified member savings and recognition occurs upon approval and documentationresult of the savings. COVID-19 pandemic and lower revenue as a result of the planned reduction and subsequent discontinuance of the HIIN contract in March 2020.
We expect our other services and support revenue to grow over the long-term to the extent we are able to expand our sales to existing members and as additional members and other customers, employer, payor and life sciences markets, begin to utilize our products and services.
Product revenue increased $19.7 million, or 14%, from the three months ended December 31, 2016 to 2017 and $66.3 million, or 27%, from the six months ended December 31, 2016 to 2017, primarily driven by an increase in integrated pharmacy revenues driven by contributions from expansion and growth in therapy offerings largely associated with the Company's acquisitionplatform of Acro


Pharmaceuticals, which occurred on August 23, 2016, as well as an increase in sales of certain limited distribution drugs dispensed to treat Idiopathic Pulmonary Fibrosis, Multiple Sclerosis and Oncology, partially offset by a slight decrease in the sales of Hepatitis-C pharmaceuticals. We also experienced increased sales of direct sourcing products. We expect our integrated pharmacy and direct sourcing product revenues to continue to grow to the extent we are able to increase our product offerings, expand our product sales to existing members and additional members begin to utilize our programs.
Cost of Revenue
Cost of revenue increased $24.5 million, or 14%, to $200.5 million for the three months ended December 31, 2017 from $176.0 million for the three months ended December 31, 2016. Cost of revenue increased $77.4 million, or 25%, to $391.9 million for the six months ended December 31, 2017 from $314.5 million for the six months ended December 31, 2016.
Cost of services revenue increased $2.4 million, or 5%, from the three months ended December 31, 2016 to 2017 and $6.7 million, or 8% from the six months ended December 31, 2016 to 2017, primarily driven by an increase in salaries and benefits expense resulting from increased staffing to support growth along with higher consulting costs for certain performance-based engagements. We expect cost of service revenue to increase to the extent we expand our performance improvement collaboratives and advisory services to members, continue to develop new and existing internally-developed software applications and expand into new product offerings.
Cost of product revenue increased $22.1 million, or 17%, from the three months ended December 31, 2016 to 2017 and $70.7 million, or 31% from the six months ended December 31, 2016 to 2017, primarily driven by higher product costs associated with the business operations of Acro Pharmaceuticals and due to higher costs driven by growth in direct sourcing sales and the impact of increases in raw materials pricing. We expect our cost of product revenue to increase to the extent we are able to sell additional integrated pharmacy and direct-sourced medical products to new and existing members and enroll additional members into our integrated pharmacy program. The increased cost of product revenues is expected to reduce our gross profit as a percentage of our net revenues.
Other Operating Income
Other operating income increased $177.2 million from the three months ended December 31, 2016 to 2017 and $171.5 million from the six months ended December 31, 2016 to 2017 as a result of the remeasurement of TRA liabilities, which was primarily attributable to the 14% decrease in the U.S. federal corporate income tax rate associated with the TCJA.
Operating Expenses
Operating expenses decreased $15.0 million, or 14%, to $122.8 million for the three months ended December 31, 2017 from $107.8 million for the three months ended December 31, 2016. Operating expenses decreased $35.7 million, or 17%, to $251.5 million for the six months ended December 31, 2017 from $215.8 million for the six months ended December 31, 2016.
Selling, General and Administrative
Selling, general and administrative expenses increased $12.7 million, or 13%, from the three months ended December 31, 2016 to 2017 and $29.0 million, or 15%, from the six months ended December 31, 2016 to 2017, primarily driven by an increase in salaries and benefits expenses resulting from increased staffing mostly associated with acquisitions and to support growth, along with an increase in stock-based compensation expense largely driven by growth in overall equity award grant size year over year in addition to anticipated achievement of certain performance targets.
Research and Development
Research and development expenses decreased by $0.5 million from the three months ended December 31, 2016 to 2017 and increased by $0.8 million from the six months ended December 31, 2016 to 2017. Research and development expenses consist of employee-related compensation and benefit expenses and third-party consulting fees for technology professionals, net of capitalized labor, incurred to develop our software-related products and services. We experience fluctuations in our research and development expenditures across reportable periods due to the timing of our software development lifecycles, new product features and functionality, new technologies and upgrades to our service offerings.
Amortization of Purchased Intangible Assets
Amortization of purchased intangible assets increased $2.6 million, or 23%, from the three months ended December 31, 2016 to 2017 and $7.3 million, or 36%, from the six months ended December 31, 2016 to 2017, primarily as a result of additional amortization of purchased intangible assets related to our acquisitions. As we execute on our growth strategy and further deploy capital, we expect further increases in amortization of intangible assets in connection with future potential acquisitions.


Other Income (Expense), Net
Other income (expense), net decreased $223.0 million, or 107%, to $(14.0) million for the three months ended December 31, 2017 from $209.0 million for the three months ended December 31, 2016 and decreased $229.0 million, or 105%, to $(11.1) million for the six months ended December 31, 2017 from $217.9 million for the six months ended December 31, 2016, primarily due to the one-time $205.1 million gain recognized from the remeasurement of the 50% equity method investment in Innovatix to fair value upon acquisition of Innovatix on December 2, 2016 (see Note 3 - Business Acquisitions) along with a reduction in equity in net income of unconsolidated affiliates. As a result of acquiring the remaining 50% of Innovatix, we no longer account for our ownership using the equity method. Other income (expense), net was also impacted by the loss on FFF put and call rights in the current period and partially offset by a moderate increase in equity in net income of FFF, which experienced improved performance in the six months ended December 31, 2017.
Income Tax Expense
For the three months ended December 31, 2017 and 2016, the Company recorded tax expense of $231.5 million and $37.4 million, respectively, which equates to effective tax rates of 92% and 13%, respectively. For the six months ended December 31, 2017 and 2016, the Company recorded tax expense of $244.3 million and $60.8 million, respectively, which equates to effective tax rates of 75% and 17%, respectively. The increase in effective tax rates is primarily attributable to the remeasurement of deferred tax balances related to the decrease in the U.S. federal corporate income tax rate from 35% to 21%, pursuant to the TCJA enacted on December 22, 2017. The Company's effective tax rate differs from income taxes recorded at the combined (or blended) statutory income tax rate primarily due to partnership income not subject to federal, state and local income taxes and valuation allowances against deferred tax assets at PHSI. See Note 13 - Income Taxes for more information.
Net Income Attributable to Non-Controlling Interest
Net income attributable to non-controlling interest decreased $124.7 million, or 69%, to $56.5 million for the three months ended December 31, 2017 from $181.2 million for the three months ended December 31, 2016, primarily attributable to a decrease in non-controlling ownership percentage in Premier LP to 60% from 64%, respectively. Net income attributable to non-controlling interest decreased $129.7 million, or 56%, to $101.1 million for the six months ended December 31, 2017 from $230.8 million for the six months ended December 31, 2016, primarily attributable to a decrease in non-controlling ownership percentage in Premier LP to 60% from 64%, respectively.
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA increased $11.5 million, or 9%, to $133.5 million for the three months ended December 31, 2017 from $122.0 million for the three months ended December 31, 2016, primarily as a result of growth in net administrative fees revenue including contributions related to the Innovatix and Essensa acquisition, net of a $4.1 million reduction in equity in net income of unconsolidated affiliates due to acquiring the remaining 50% of Innovatix as it was historically accounted for as an unconsolidated affiliate through the date of acquisition, along with an increase in product revenue. These results were partially offset by increased product costs and selling, general and administrative expenses resulting from higher salaries and benefits expenses as a result of acquisitions and to support growth. Additionally, Segment Adjusted EBITDA for the prior period included a $5.6 million non-cash adjustment for cash collections not recognized as revenue on a GAAP basis due to a purchase accounting adjustment.
Non-GAAP Adjusted EBITDA increased $19.9 million, or 9%, to $252.7 million for the six months ended December 31, 2017 from $232.8 million for the six months ended December 31, 2016, primarily as a result of growth in net administrative fees revenue including contributions related to the Innovatix and Essensa acquisition, net of a $10.7 million reduction in equity in net income of unconsolidated affiliates due to acquiring the remaining 50% of Innovatix as it was historically accounted for as an unconsolidated affiliate through the date of acquisition, along with an increase in product revenue and, to a lesser extent, an increase in other services and support revenue driven by growth in cost management advisory services related to performance-based engagements, and an increase in SaaS informatics products subscriptions, applied science services and government services related revenue. These increases were partially offset by increased product costs and selling, general and administrative expenses resulting from higher salaries and benefits expenses as a result of acquisitions and to support growth. Additionally, Segment Adjusted EBITDA for the prior period included a $5.6 million non-cash adjustment for cash collections not recognized as revenue on a GAAP basis due to a purchase accounting adjustment.


Supply Chain Services - Comparison of the Three and Six Months ended December 31, 2017 to 2016
The following table summarizes our results of operations and Non-GAAP Adjusted EBITDA in the Supply Chain Services segment for the periods presented (in thousands):
 Three Months Ended December 31,Six Months Ended December 31,
Supply Chain Services2017201620172016
Net revenue:    
Net administrative fees$159,343
$129,071
$310,334
$255,047
Other services and support3,421
1,201
5,570
2,846
Services162,764
130,272
315,904
257,893
Products162,101
142,378
314,764
248,507
Net revenue324,865
272,650
630,668
506,400
Cost of revenue:    
Services1,023
1,276
2,086
2,482
Products153,272
131,154
297,712
226,968
Cost of revenue154,295
132,430
299,798
229,450
Gross profit170,570
140,220
330,870
276,950
Operating expenses:    
Selling, general and administrative42,185
38,044
84,120
70,547
Amortization of purchased intangible assets4,976
2,154
10,017
2,366
Operating expenses47,161
40,198
94,137
72,913
Operating income$123,409
$100,022
$236,733
$204,037
Depreciation and amortization195
299
649
533
Amortization of purchased intangible assets4,976
2,154
10,017
2,366
Acquisition related expenses2,320
5,788
4,870
9,052
Acquisition related adjustment - revenue—
5,632
—
5,632
Equity in net income of unconsolidated affiliates1,130
5,127
5,381
14,706
Other income15
—
15
—
Non-GAAP Segment Adjusted EBITDA$132,045
$119,022
$257,665
$236,326
Net Revenue
Supply Chain Services segment net revenue increased $52.2 million, or 19%, to $324.9 million for the three months ended December 31, 2017 from $272.7 million for the three months ended December 31, 2016. Supply Chain Services segment net revenue increased $124.3 million, or 25%, to $630.7 million for the six months ended December 31, 2017 from $506.4 million for the six months ended December 31, 2016.
Net administrative fees revenue increased $30.2 million, or 23%, from the three months ended December 31, 2016 to 2017 and $55.3 million, or 22%, from the six months ended December 31, 2016 to 2017, primarily driven by aggregate contributions from Innovatix and Essensa, which were acquired on December 2, 2016. To a lesser extent, net administrative fees were also favorably impacted by a supplier revenue recovery settlement and contract penetration of existing members. Growth in net administrative fees revenue was partially impacted by soft patient utilization trends and timing of cash receipts.
Product revenue increased $19.7 million, or 14%, from the three months ended December 31, 2016 to 2017 and $66.3 million, or 27%, from the six months ended December 31, 2016 to 2017, primarily driven by an increase in integrated pharmacy revenues mostly attributable to contributions from expansion and growth in therapy offerings largely associated with the Company's acquisition of Acro Pharmaceuticals, which occurred on August 23, 2016, as well as an increase in sales of certain limited distribution drugs dispensed to treat Idiopathic Pulmonary Fibrosis, Multiple Sclerosis and Oncology, partially offset by a slight decrease in the sales of Hepatitis-C pharmaceuticals. We also experienced increased sales of direct sourcing products. We expect our integrated pharmacy and direct sourcing product revenues to continue to grow to the extent we are able to increase our product offerings, expand our product sales to existing members and additional members begin to utilize our programs.


Cost of Revenue
Supply Chain Services segment cost of revenue increased $21.9 million, or 17%, to $154.3 million for the three months ended December 31, 2017 from $132.4 million for the three months ended December 31, 2016. Supply Chain Services segment cost of revenue increased $70.3 million, or 31%, to $299.8 million for the six months ended December 31, 2017 from $229.5 million for the six months ended December 31, 2016.
Cost of product revenue increased $22.1 million, or 17%, from the three months ended December 31, 2016 to 2017 and $70.7 million, or 31%, from the six months ended December 31, 2016 to 2017, primarily driven by higher product costs associated with the business operations of Acro Pharmaceuticals and due to growth in direct sourcing sales and the impact of increases in raw materials pricing.
Operating Expenses
Supply Chain Services segment operating expenses increased $7.0 million, or 17%, to $47.2 million for the three months ended December 31, 2017 from $40.2 million for the three months ended December 31, 2016. Supply Chain Services segment operating expenses increased $21.2 million, or 29%, to $94.1 million for the six months ended December 31, 2017 from $72.9 million for the six months ended December 31, 2016.
Selling, general and administrative expenses increased $4.1 million, or 11%, from the three months ended December 31, 2016 to 2017 and $13.6 million, or 19%, from the six months ended December 31, 2016 to 2017, due to higher salaries and benefits expense primarily associated with the acquisitions of Innovatix and Essensa and to a lesser extent, the acquisition of Acro Pharmaceuticals.
Amortization of purchased intangible assets increased $2.8 million from the three months ended December 31, 2016 to 2017 and $7.7 million from the six months ended December 31, 2016 to 2017, primarily as a result of additional amortization of purchased intangible assets related to our acquisitions.
Segment Adjusted EBITDA
Segment Adjusted EBITDA increased $13.0 million, or 11%, to $132.0 million for the three months ended December 31, 2017 from $119.0 million for the three months ended December 31, 2016. Segment Adjusted EBITDA increased $21.3 million, or 9%, to $257.7 million for the six months ended December 31, 2017 from $236.3 million for the six months ended December 31, 2016. This increase was primarily a result of growth in net administrative fees revenue including contributions related to the Innovatix and Essensa acquisition, net of the reduction in equity in net income of unconsolidated affiliates due to acquiring the remaining 50% of Innovatix as it was historically accounted for as an unconsolidated affiliate through the date of acquisition, along with an increase in product revenue. These increases were partially offset by increased product costs and selling, general and administrative expenses resulting from higher salaries and benefit expenses as a result of acquisitions and to support growth. Additionally, Segment Adjusted EBITDA for the prior period included a $5.6 million non-cash adjustment for cash collections not recognized as revenue on a GAAP basis due to a purchase accounting adjustment.


Performance Services - Comparison of the Three and Six Months ended December 31, 2017 to 2016
The following table summarizes our results of operations and Non-GAAP Adjusted EBITDA in the Performance Services segment for the periods presented (in thousands):
 Three Months Ended December 31,Six Months Ended December 31,
Performance Services2017201620172016
Net revenue:    
Other services and support$86,533
$85,850
$171,294
$165,372
Net revenue86,533
85,850
171,294
165,372
Cost of revenue:    
Services46,233
43,607
92,105
85,046
Cost of revenue46,233
43,607
92,105
85,046
Gross profit40,300
42,243
79,189
80,326
Operating expenses:    
Selling, general and administrative26,397
23,664
58,308
50,572
Research and development335
573
807
1,159
Amortization of purchased intangible assets8,841
8,996
17,699
17,993
Operating expenses35,573
33,233
76,814
69,724
Operating income$4,727
$9,010
$2,375
$10,602
Depreciation and amortization14,793
11,990
28,853
23,866
Amortization of purchased intangible assets8,841
8,996
17,699
17,993
Acquisition related expenses(646)(1,573)(97)(1,879)
Acquisition related adjustment - revenue87
180
193
332
Equity in net income of unconsolidated affiliates127
—
127
—
Non-GAAP Segment Adjusted EBITDA$27,929
$28,603
$49,150
$50,914
Net Revenue
Other services and support revenue increased $0.7 million, or 1%, to $86.5 million for the three months ended December 31, 2017 from $85.9 million for the three months ended December 31, 2016 primarily due to increases in SaaS informatics products subscriptions and ambulatory quality solutions services. Other services and support revenue increased $5.9 million, or 4%, to $171.3 million for the six months ended December 31, 2017 from $165.4 million for the six months ended December 31, 2016 primarily due to growth in cost management advisory services related to performance-based engagements. We also experienced increases in SaaS informatics products subscriptions, applied science services and government services related revenue.
We expect to experience quarterly variability in revenue generated from our Performance Services segment due to the timing of revenue recognition from certain advisory services and performance-based engagements in which our revenue is based on a percentage of identified member savings and recognition occurs upon approval and documentation of the savings. We expect our Performance Services revenue to grow over the long-term to the extent we are able to expand our sales to existing members and additional members begin to utilize our products and services.
Cost of Revenue
CostPerformance Services segment cost of revenue increased $2.6decreased by $20.5 million or 6%, to $46.2 million forduring the threenine months ended DecemberMarch 31, 2017 from $43.6 million for2021 compared to the threenine months ended DecemberMarch 31, 2016. Cost2020, primarily due to a decrease in amortization of revenue increased $7.1 million, or 8%,internally developed software applications, lower consulting expenses due to $92.1 million fordecreased utilization of third-party contractors and lower expenses as a result of the six months ended December 31, 2017 from $85.0 million forplanned reduction and subsequent discontinuance of the six months ended December 31, 2016. This increase is primarily drivenHIIN contract in March 2020. These decreases were partially offset by higher salaries and benefitsincremental expenses resulting from increased staffing to support growth and performance-based engagements.associated with the HDP acquisition.
Operating Expenses
OperatingPerformance Services segment operating expenses increased $2.3decreased by $19.0 million or 7%, to $35.6 million forduring the threenine months ended DecemberMarch 31, 2017 from $33.2 million for2021 compared to the threenine months ended DecemberMarch 31, 2016. Operating expenses increased $7.12020. The decrease was primarily due to a reduction in amortization of
52

purchased intangible assets of $15.0 million or 10%, to $76.8 million for the six months ended December 31, 2017 from $69.7 million for the six months ended December 31, 2016.


Selling,and a decrease in selling, general and administrative expenses increased $2.7of $4.0 million or 12%, from the three months ended December 31, 2016 to 2017 and $7.7 million, or 15%, from the six months ended December 31, 2016 to 2017, primarily driven by depreciation expense resulting from increased capitalizationa decrease in employee travel and meeting expenses due to COVID-19 and a decrease in amortization of laborinternally developed software applications partially offset by an increase in prior periods.
Amortization of purchased intangible assets decreased $0.2 million, or 2%, fromexpenses associated with the three months ended December 31, 2016 to 2017 and $0.3 million, or 2%, from the six months ended December 31, 2016 to 2017, remaining relatively flat.HDP acquisition.
Segment Adjusted EBITDA
While revenue increased,Performance Services Segment Adjusted EBITDA decreased $0.7increased by $24.7 million or 2%, to $27.9 million forduring the threenine months ended DecemberMarch 31, 2017 from $28.6 million for2021 compared to the threenine months ended DecemberMarch 31, 2016. Segment Adjusted EBITDA decreased $1.8 million, or 3%,2020 primarily due to $49.15 million for the six months ended December 31, 2017 from $50.9 million for the six months ended December 31, 2016. This decrease is primarily a result of anaforementioned increase in cost of sales related to an increaserevenue and decrease in staffingselling, general and costs to support growth and performance-based engagements, and was impacted on a comparable basis due to higher revenue recognition from performance-based engagements inadministrative expenses offset by incremental expenses associated with the prior year. Specifically, the Company made investments in staff and infrastructure to support growth involving primarily larger and more complex engagements that include significant performance-based advisory services initiatives.HDP acquisition.
Corporate - Comparison of the Three and Six Months ended December 31, 2017 to 2016
The following table summarizespresents corporate expenses and Non-GAAP Adjusted EBITDA for the periods presented (in thousands):
Three Months Ended March 31,Nine Months Ended March 31,
Corporate20212020Change20212020Change
Operating expenses:
Selling, general and administrative$50,271 $32,191 $18,080 56%$141,454 $89,610 $51,844 58%
Research and development— — — nm— 5 (5)nm
Operating expenses50,271 32,191 18,080 56%141,454 89,615 51,839 58%
Operating loss(50,271)(32,191)(18,080)56%(141,454)(89,615)(51,839)58%
Depreciation and amortization2,152 1,897 6,397 6,184 
Stock-based compensation13,180 7,668 27,970 19,358 
Remeasurement of tax receivable agreement liabilities— (902)— (24,584)
Deferred compensation plan income1,521 (5,476)9,231 (2,484)
Other income726 1,047 5,411 3,633 
Adjusted EBITDA$(32,692)$(27,957)$(4,735)17%$(92,445)$(87,508)$(4,937)6%
 Three Months Ended December 31,Six Months Ended December 31,
Corporate2017201620172016
Other operating income:    
Remeasurement of tax receivable agreement liabilities$177,174
$—
$177,174
$5,722
Other operating income177,174
—
177,174
5,722
Operating expenses:    
Selling, general and administrative40,038
34,197
80,513
72,790
Research and development(10)194
6
414
Operating expenses$40,028
$34,391
$80,519
$73,204
Operating income (loss)$137,146
$(34,391)$96,655
$(67,482)
Depreciation and amortization2,323
1,912
4,315
3,797
Stock-based compensation8,951
6,423
17,908
12,319
Strategic and financial restructuring expenses3
—
3
—
Adjustment to tax receivable agreement liabilities(177,174)—
(177,174)(5,722)
ERP implementation expenses156
433
491
1,526
Deferred compensation plan income1,577
7
3,115
1,104
Other income586
��
585
—
Non-GAAP Corporate Adjusted EBITDA$(26,432)$(25,616)$(54,102)$(54,458)
Comparison of the Three Months Ended March 31, 2021 to 2020
Other Operating IncomeExpenses
OtherCorporate operating incomeexpenses increased $177.2by $18.1 million fromduring the three months ended DecemberMarch 31, 20162021 compared to 2017 and $171.5 million from the sixthree months ended DecemberMarch 31, 20162020, primarily due to 2017an increase in deferred compensation plan expense due to market changes and incremental personnel costs related to the fiscal year 2020 acquisitions. These increases to operating expenses were partially offset by a decrease in employee travel and meeting expenses due to the COVID-19 pandemic.
Adjusted EBITDA
Adjusted EBITDA decreased by $4.7 million during the three months ended March 31, 2021 compared to the three months ended March 31, 2020, primarily due to incremental personnel costs related to the fiscal year 2020 acquisitions offset by a decrease in employee travel and meeting expenses due to the COVID-19 pandemic.
Comparison of the Nine Months Ended March 31, 2021 to 2020
Operating Expenses
Corporate operating expenses increased by $51.8 million during the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020, primarily due to the prior period net remeasurement of the TRA as a result of the remeasurement of TRA liabilities, which was primarily attributable to the 14% decreasechange in the U.S. federal corporateNorth Carolina state income tax rate associatedlaw, costs incurred in connection with the TCJA. See "Member-Owner TRA" below for additional informationour August 2020 restructuring, incremental personnel costs related to the Company's TRA liabilities.
Operating Expenses
Operating expenses increased $5.6 million, or 16%, to $40.0 million for the three months ended December 31, 2017 from $34.4 million for the three months ended December 31, 2016. Operating expenses increased $7.3 million, or 10%, to $80.5 million for the six months ended December 31, 2017 from $73.2 million for the six months ended December 31, 2016.


Selling, generalfiscal year 2020 acquisitions and administrative expenses increased $5.8 million, or 17%, from the three months ended December 31, 2016 to 2017 and $7.7 million, or 11%, from the six months ended December 31, 2016 to 2017, primarily driven by an increase in stock-baseddeferred compensation plan expense largely associated with anticipated achievement of certain performance targets, along with increased salariesdue to market changes. These increases to operating expenses were partially offset by a decrease in employee travel and benefitsmeeting expenses due to increased staffing to support continued growth and the acquisitions of Innovatix and Essensa and to a lesser extent Acro Pharmaceuticals.COVID-19 pandemic.
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA decreased by $0.8$4.9 million or 3%, fromduring the threenine months ended DecemberMarch 31, 20162021 compared to 2017, driven primarily by an increase in professional services costs associated with a certain isolated strategic consulting engagement and increased $0.4 million, or 1%, from the sixnine months ended DecemberMarch 31, 20162020, primarily due to 2017, driven primarilyincremental personnel costs related to the fiscal year 2020 acquisitions offset by a decrease in audit related feesemployee travel and severancemeeting expenses partially offset bydue to the previously mentioned increase in professional services costs associated with a certain isolated strategic consulting engagement.COVID-19 pandemic.
53

Off-Balance Sheet Arrangements
As of DecemberMarch 31, 2017,2021, we did not have any off-balance sheet arrangements.
Liquidity and Capital Resources
Our principal source of cash has historically been cash provided by operating activities. From time to time we have used, and expect to use in the future, borrowings under our Credit Facility as a source of liquidity. Our primary cash requirements involve operating expenses, working capital fluctuations, revenue share obligations, tax payments, capital expenditures, discretionary cash settlement of Class B common unit exchanges under the Exchange Agreement,dividend payments on our Class A common stock, if and when declared, repurchases under our current shareof Class A common stock pursuant to stock repurchase program,programs in place from time to time, acquisitions and related business investments, and other general corporate activities. Our capital expenditures typically consist of internally-developedinternally developed software costs, software purchases, and computer hardware purchases.
As of DecemberMarch 31, 20172021 and June 30, 2017,2020, we had cash and cash equivalents totaling $163.0of $132.6 million and $156.7$99.3 million, respectively,respectively. As of March 31, 2021 and June 30, 2020, there were $200.0 million and $220.0$75.0 million, respectively, inof outstanding borrowings under the Credit Facility. During the sixnine months ended DecemberMarch 31, 2017 the Company2021, we borrowed $225.0 million and repaid $50.0$100.0 million of borrowings and borrowed an additional $30.0under the Credit Facility, which was used for other general corporate purposes. In April 2021, we repaid $75.0 million of outstanding borrowings under the Credit Facility.
We expect cash generated from operations and borrowings under our Credit Facility to provide us with adequate liquidity to fund our anticipated working capital requirements, revenue share obligations, tax payments, capital expenditures, discretionary cash settlement ofdividend payments on our Class BA common unit exchanges under the Exchange Agreement,stock, if and when declared, and repurchases of Class A common stock pursuant to our stock repurchase program, and growth for the foreseeable future.programs in place from time to time. Our capital requirements depend on numerous factors, including funding requirements for our product and service development and commercialization efforts, our information technology requirements, and the amount of cash generated by our operations. We currently believe that we have adequate capital resources at our disposal to fund currently anticipated capital expenditures, business growth and expansion, and current and projected debt service requirements. However, strategic growth initiatives will likely require the use of one or a combination of various forms of capital resources including available cash on hand, cash generated from operations, borrowings under our Credit Facility, and other long-term debt and, potentially, proceeds from the issuance of additional equity or debt securities.

During the second half of fiscal 2020, COVID-19 became a global pandemic that spread throughout the United States and much of the rest of the world. The full extent to which the COVID-19 pandemic will impact our business, operating results, financial condition and liquidity will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19, the actions to contain it or treat its impact, including the timing, development and deployment of an effective vaccine, or recurrences of COVID-19 or similar pandemics. As discussed in Item 1A. “Risk Factors” in our 2020 Annual Report, as a result of the COVID-19 pandemic and potential future pandemic outbreaks, we face significant risks including but not limited to the following:

•We have experienced and may continue to experience demand uncertainty from both significant increases in demand for PPE, drugs and other products related to the treatment of COVID-19 and decreases in demand for non-COVID-19-related products.
•Our GPO member hospitals and non-acute care sites have experienced reduced or limited access for non-patients, including our field teams, consultants and other professionals, and travel restrictions have impacted our employees' ability to travel to our members' facilities.
•The global supply chain has been significantly disrupted due to stay at home orders, border closings and rapidly escalating shipping costs.
•We have and may continue to receive requests for contract modifications, payment waivers and deferrals, payment reductions or amended payment terms from our contract counterparties. In addition, several pharmacy suppliers have exercised force majeure clauses related to failure to supply clauses in their contracts with us.
•The impact of the COVID-19 pandemic could result in a prolonged recession or depression in the United States or globally that could harm the banking system, limit demand for all products and services and cause other seen and unforeseen events and circumstances, all of which could negatively impact us.
•In response to the COVID-19 pandemic, federal, state and local governments are issuing new rules, regulations, changing reimbursement eligibility rules, orders and advisories on a regular basis. These government actions can impact us, our members, other customers and suppliers.
54

Discussion of Cash Flows for the SixNine Months ended DecemberEnded March 31, 20172021 and 20162020
A summary of net cash flows follows (in thousands):
Six Months Ended December 31,Nine Months Ended March 31,
2017201620212020
Net cash provided by (used in): Net cash provided by (used in):
Operating activities$206,515
$138,364
Operating activities$192,365 $248,082 
Investing activities(38,622)(336,358)Investing activities(149,291)(171,954)
Financing activities(161,614)168,069
Financing activities(9,794)15,213 
Net increase (decrease) in cash and cash equivalents$6,279
$(29,925)
Operating activities from discontinued operationsOperating activities from discontinued operations— 9,338 
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents$33,280 $100,679 
Net cash provided by operating activities increased $68.2decreased by $55.7 million fromfor the sixnine months ended DecemberMarch 31, 20162021 compared to 2017the nine months ended March 31, 2020. The decrease in net cash provided by operating activities was primarily due to lower profitability of our Supply Chain Services segment from lower net administrative fees revenue as a result of amendments to GPO Participation Agreements, effective as of July 1, 2020, lower utilization of GPO contracts and the related decline in the demand for supplies and services as a result of the COVID-19 pandemic and amortization of the Acurity prepaid contract administrative fee share. In addition, net cash provided by operating activities was impacted by changes in our net working capital, including higher levels of inventory, primarily driven by an increase in net administrative feesthe impact of the aggregated purchasing of PPE as well as decreased outflows related to working capital needs, partially offset by increased selling, general and administrative expenses ina result of the current period.COVID-19 pandemic.
Net cash used in investing activities decreased $297.7by $22.7 million for the nine months ended March 31, 2021 compared to the nine months ended March 31, 2020. The decrease in net cash used in investing activities is primarily due to a $15.2 million reduction in cash paid for business acquisitions and a reduction of $10.2 million in investments in unconsolidated affiliates as a result of no investments in unconsolidated affiliates in the current year. These decreases were offset by cash proceeds of $3.6 million received in the prior year from the six months ended December 31, 2016 to 2017 driven byliquidation of property and equipment in connection with our $222.2 million acquisition of Innovatix and Essensa, our $68.8 million acquisition of Acro Pharmaceuticals and our $65.7 million investmentexit from specialty pharmacy operations in FFF during the prior period, partially offset by $48.0 million in proceeds from the sale of marketable securities during the prior period.June 2019.
Net cash provided byused in financing activities was $168.1changed by $25.0 million for the sixnine months ended DecemberMarch 31, 2016 while2021 compared to the nine months ended March 31, 2020. The change in net cash used in financing activities was $161.6 million for the six months ended December 31, 2017. The change in cash flows provided by and used in financing activities was largely driven by $327.5a $100.0 million ofdecrease in net borrowings under the Credit Facility, incash dividends payments of $69.6 million and a $25.7 million payment on the prior period, partiallyoutstanding notes payable to members (see Note 9 - Debt and Notes Payable). These were offset by $20.0a decrease of $150.1 million in net repayments under the Credit Facility during the current period, and to a lesser extent, the $100.0 million settlementfor prior year repurchases of exchange of Class B units by member owners in the prior period and the $70.8 million used to repurchase Class A common stock under our sharethe fiscal year 2020 stock repurchase program and a $29.6 million reduction in distributions to limited partners of Premier LP as a result of the current period.elimination of distributions in connection with the August 2020 restructuring.
Net cash provided by operating activities attributable to discontinued operations decreased by $9.3 million for the nine months ended March 31, 2021, compared to the nine months ended March 31, 2020 primarily due to payments on liabilities that were outstanding as of March 31, 2020.
Discussion of Non-GAAP Free Cash Flow for the SixNine Months ended DecemberEnded March 31, 20172021 and 20162020
We define Non-GAAP Free Cash Flow as net cash provided by operating activities from continuing operations less distributions and TRA payments to limited partners and purchases of property and equipment. Free cash flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments. A summary of Non-GAAP Free Cash Flow and reconciliation to net cash provided by operating activities for the periods presented follows (in thousands):
55

Nine Months Ended March 31,
Six Months Ended December 31,20212020
Net cash provided by operating activities from continuing operations (a)
Net cash provided by operating activities from continuing operations (a)
$192,365 $340,228 
20172016
Net cash provided by operating activities$206,515
$138,364
Purchases of property and equipment(38,622)(34,325)Purchases of property and equipment(66,911)(69,326)
Distributions to limited partners of Premier LP(b)(45,703)(44,630)(9,949)(39,590)
Payments to limited partners of Premier LP related to tax receivable agreements (b)
Payments to limited partners of Premier LP related to tax receivable agreements (b)
(24,218)(17,425)
Non-GAAP Free Cash Flow$122,190
$59,409
Non-GAAP Free Cash Flow$91,287 $213,887 
(a) Net cash provided by operating activities from continuing operations for the nine months ended March 31, 2020 excludes the impact of the Acurity prepaid contract administrative fee share, as defined above.
(b) Limited partners refers to member owners prior to the August 2020 restructuring.
Non-GAAP Free Cash Flow increased $62.8decreased by $122.6 million fromfor the sixnine months ended DecemberMarch 31, 20162021 compared to 2017the nine months ended March 31, 2020. The decrease in Non-GAAP Free Cash Flow was primarily due to the aforementioned decrease in net cash provided by operating activities which was driven by lower net administrative fees revenue as a result of amendments to GPO Participation Agreements and lower utilization of GPO contracts as a result of COVID-19 as well as changes in our net working capital, including higher levels of inventory, primarily driven by an increasethe impact of the aggregated purchasing of PPE as a result of the COVID-19 pandemic. The net cash provided by operating activities for continuing operations for the nine months ended March 31, 2020 also includes the impact of the Acurity prepaid contract administrative fee share.
In addition, the change in net administrative fees as well as decreased working capital needs, partiallyNon-GAAP Free Cash Flow was due to higher TRA payments during the nine months ended March 31, 2021 which include the $10.5 million that was paid to limited partners of Premier LP who did not elect to execute a Unit Exchange and Tax Receivable Acceleration Agreement in connection with the August 2020 restructuring offset by increased selling, general and administrative expensesthe elimination of distributions to limited partners of Premier LP in connection with the current period. August 2020 restructuring.
These decreases in Non-GAAP Free Cash Flow were offset by lower distributions to limited partners of Premier LP as a result of the August 2020 restructuring.
See “Our Use of Non-GAAP Financial Measures” above for additional information regarding our use of Non-GAAP Free Cash Flow.
The Company anticipates that its Non-GAAP Free Cash Flow will benefit as a result of the decrease in the U.S. federal corporate income tax rate associated with the TCJA as distributions to limited partners of Premier LP and payments to limited partners of Premier LP related to tax receivable agreements are expected to decrease in future periods as a result of the decreased federal corporate income tax rate.


Contractual Obligations
Notes Payable to Members
At DecemberMarch 31, 2017,2021, we had commitments of $7.7$418.6 million, net of imputed interest of $17.8 million for obligations under notes payable which represented obligationsrepresents the aggregate early termination payments due to departed member owners.members in connection with the early termination of the TRA. Notes payable to departed member owners generallymembers will be paid, without interest, in 18 equal quarterly installments commencing during the quarter ended March 31, 2021 and ending in the quarter ending June 30, 2025. See Note 9 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for more information.
Other Notes Payable
At March 31, 2021, we had commitments of $9.3 million for other obligations under notes payable. Other notes payable have stated maturities ofbetween three to five years from the date of issuance and are non-interest bearing. See Note 89 - Debt inand Notes Payable to the accompanying condensed consolidated financial statements for more information.
2014 Credit Facility
Premier LP, along with its consolidated subsidiaries, PSCI and PHSI, as Co-Borrowers, Premier GP and certain domestic subsidiaries of Premier GP, as guarantors, entered into an unsecured Credit Facility, dated as of June 24, 2014 and amended on June 4, 2015.November 9, 2018. The Credit Facility has a maturity date of June 24, 2019.November 9, 2023, subject to up to two one-year extensions at the request of the Co-Borrowers and approval of a majority of the lenders under the Credit Facility. The Credit Facility provides for borrowings of up to $750.0 million$1.0 billion with (i) a $25.0$50.0 million sub-facility for standby letters of credit and (ii) a $75.0$100.0 million sub-facility for swingline loans. The Credit Facility also provides that Co-Borrowers may be increased from time to time at(i) incur incremental term loans and (ii) request an increase in the Company's requestrevolving commitments under the Credit Facility, together up to an aggregate additional amount of $250.0$350.0 million, subject to lender approval.the approval of the lenders providing such term loans or revolving commitment increase. The Credit Facility includes an unconditional and irrevocable guaranty of all obligations under the Credit Facility by Premier GP, certain domestic subsidiaries of Premier GP and future guarantors, if any. Premier, Inc. is not a guarantor under the Credit Facility.
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At the Company'sour option, committed loans may be in the form of Eurodollar rate loans ("(“Eurodollar Loans"Loans”) or base rate loans ("(“Base Rate Loans"Loans”). Eurodollar Loans bear interest at the Eurodollar rate (defined as the London Interbank Offered Rate, or LIBOR, plus the Applicable Rate (defined as a margin based on the Consolidated Total Net Leverage Ratio (as defined in the Credit Facility))). Base Rate Loans bear interest at the Base Rate (defined as the highest of the prime rate announced by the administrative agent, the federal funds effective rate plus 0.50% or, the one-month LIBOR plus 1.0% and 0.0%) plus the Applicable Rate. The Applicable Rate ranges from 1.125%1.000% to 1.750%1.500% for Eurodollar Loans and 0.125%0.000% to 0.750%0.500% for Base Rate Loans. In the event that LIBOR is no longer available, the Credit Facility states that interest will be calculated based upon rates offered to leading banks for comparable loans by leading banks in the London interbank market. At DecemberMarch 31, 2017,2021, the interest rate for three-monthone-month Eurodollar Loans was 2.815%1.148% and the interest rate for the Base Rate Loans was 4.625%3.250%. The Co-Borrowers are required to pay a commitment fee ranging from 0.125%0.100% to 0.250%0.200% per annum on the actual daily unused amount of commitments under the Credit Facility. At DecemberMarch 31, 2017,2021, the commitment fee was 0.125%0.100%.
The Credit Facility contains customary representations and warranties as well as customary affirmative and negative covenants, including, among others, limitations on liens, indebtedness, fundamental changes, dispositions, restricted payments and investments, of which certain covenant calculations use EBITDA, a Non-GAAP financial measure.investments. Under the terms of the Credit Facility, Premier GP is not permitted to allow itsGP’s consolidated total net leverage ratio (as defined in the Credit Facility) tomay not exceed 3.003.75 to 1.00 for any period of four consecutive quarters.quarters, provided that, in connection with any acquisition for which the aggregate consideration exceeds $250.0 million, the maximum consolidated total net leverage ratio may increase to 4.25 to 1.00 for the four consecutive fiscal quarters beginning with the quarter in which such acquisition is completed. In addition, Premier GP must maintain a minimum consolidated interest coverage ratio (as defined in the Credit Facility) of 3.002.50 to 1.00 at the end of every fiscal quarter. Premier GP was in compliance with all such covenants at DecemberMarch 31, 2017.2021.
The Credit Facility also contains customary events of default including, among others, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults of any indebtedness or guarantees in excess of $30.0$75.0 million, bankruptcy and other insolvency events, ERISA-related liabilities and judgment defaults in excess of $30.0$50.0 million, and the occurrence of a change of control (as defined in the Credit Facility). If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request of a majority of the required lenders under the Credit Facility, terminate the commitments and declare all of the amounts owed under the Credit Facility to be immediately due and payable. The CompanyWe may prepay amounts outstanding under the Credit Facility without premium or penalty provided that Co-Borrowers compensate the lenders for losses and expenses incurred as a result of the prepayment of any Eurodollar Loan, as defined in the Credit Facility.
Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, discretionary cash settlements of Class B unit exchanges under the Exchange Agreement,dividends, if and when declared, repurchases of shares of our Class A common stock pursuant to our stock repurchase program,programs, in place from time to time, and other general corporate activities. During the six months ended December 31, 2017, the Company repaid $50.0We had $200.0 million of borrowings and borrowed an additional $30.0 million under the Credit Facility. Borrowings due within one year of the balance sheet date are classified as current liabilities in the Condensed Consolidated Balance Sheets. The Company had outstanding borrowings under the Credit Facility at March 31, 2021 with $799.9 million of $200.0available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. In April 2021, we repaid $75.0 million at December 31, 2017. They may be renewed or extended at the option of the Company through the maturity date ofoutstanding borrowings under the Credit Facility.
The above summary does not purport to be complete, and is subject to, and qualified in its entirety by reference to, the complete text of the Credit Facility, as amended, which is filed as an exhibitExhibit 10.21 to the 20172020 Annual Report. See also Note 89 - Debt in ourand Notes Payable to the accompanying condensed consolidated financial statements in Part I of this Quarterly Report.statements.


Member-Owner TRA
The Company entered into TRAs with each of our member owners. Pursuant to the TRAs, we will pay member owners 85% of the tax savings, if any, in U.S. federal, foreign, state and local income and franchise tax that we actually realize (or are deemed to realize, in the case of payments required to be made upon certain occurrences under such TRAs) in connection with the Section 754 election. The election results in adjustments to the tax basis of the assets of Premier LP upon member owner exchanges of Class B common units of Premier LP for Class A common stock of Premier, Inc. or cash. Tax savings are generated as a result of the increases in tax basis resulting from the initial sale of Class B common units, subsequent exchanges (pursuant to the Exchange Agreement) and payments under the TRA.
The Company had TRA liabilities of $247.2 million and $339.7 million at December 31, 2017 and June 30, 2017, respectively. The $92.5 million decrease was primarily attributable to the $177.2 million revaluation and remeasurement of TRA liabilities associated with the decrease in the U.S. federal corporate income tax rate as a result of the TCJA, partially offset by $62.2 million in increases in TRA liabilities in connection with the quarterly member owner exchanges that occurred during the period and $20.9 million associated with the revaluation and remeasurement of TRA liabilities due to a change in the allocation and realization of future anticipated payments.
Stock Repurchase PlanCash Dividends
On October 31, 2017,September 15, 2020, December 15, 2020, and March 15, 2021, we announced that our Boardpaid a cash dividend of Directors authorized the repurchase of up to $200 million of our$0.19 per share on outstanding Class A common stock as part of a balanced capital deployment strategy, such repurchases to be made from time to time in private or open market transactions at the Company's discretion, in accordance with applicable federal securities laws. As of December 31, 2017, we had purchased approximately 2.6 million shares of Class A common stock at an average priceto stockholders of $28.96record on September 1, 2020, December 1, 2020, and March 1, 2021 respectively. On April 23, 2021, our Board of Directors declared a cash dividend of $0.19 per share, for a total purchase price of approximately $74.7 million, of which $3.9 million relates to a forward purchase commitment included within accounts payable on our Condensed Consolidated Balance SheetsJune 15, 2021 to stockholders of record on June 1, 2021.
We currently expect quarterly dividends to continue to be paid on or about December 15, March 15, June 15, and September 15. However, the actual declaration of any future cash dividends, and the setting of record and payment dates as a result of applying trade date accounting when recordingwell as the repurchase of such shares. As of December 31, 2017, we had approximately $125.3 million available under our share repurchase authorization, which expires June 30, 2018. Subsequent to December 31, 2017 and as of February 2, 2018, we had purchased approximately 1.0 million additional shares of Class A common stock at an average price of $31.67 per share for a total incremental purchase price of approximately $32.9 million, the amounts, of which are not reflected in our condensed consolidated financial statements for the quarter ended December 31, 2017. The repurchase authorization maywill be suspended, delayed or discontinued at any time at the discretion of our Board of Directors.Directors each quarter after consideration of various factors, including our results of operations, financial condition and capital requirements, earnings, general business conditions, restrictions imposed by our current credit facility and any future financing arrangements, legal restrictions on the payment of dividends and other factors our Board of Directors deems relevant.
Costs Associated with Exit or Disposal Activities
57
As part of our ongoing integration synergies and efforts to realign resources for future growth areas, we are implementing certain personnel adjustments, including a workforce reduction. On February 5, 2018, we communicated to our employees that these personnel adjustments impact approximately 75 positions (approximately 65 of which are related to the workforce reduction), or approximately 3% of total employees. We finalized and committed to this course of action on February 2, 2018. The workforce reduction is expected to result in pre-tax cash restructuring charges, primarily relating to severance and transition assistance, of approximately $5.2 million. Charges related to the workforce reduction, which is expected to be substantially completed in February 2018, will be expensed in the third quarter ending March 31, 2018. The majority of employees impacted by these personnel adjustments are from our Performance Services segment.

Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk.Risk
Our exposure to market risk related primarily to the increase or decrease in the amount of any interest expense we must pay with respect to outstanding variable-rate debt instruments. At DecemberMarch 31, 2017,2021, we had $200.0 million outstanding borrowings under our Credit Facility. At March 31, 2021, a one-percent change in the weighted average interest rate charged on outstanding borrowings under the Credit Facility. Committed loans may beFacility would result in a net change in interest expense over the form of Eurodollar Rate Loans or Base Rate Loans (as defined in the Credit Facility) at our option. Eurodollar Rate Loans bear interest at the Eurodollar Rate (defined as the London Interbank Offer Rate, or LIBOR) plus the Applicable Rate (defined as a margin based on the Consolidated Total Leverage Ratio (as defined in the Credit Facility)). Base Rate Loans bear interest at the Base Rate (defined as the highest of the prime rate announcednext twelve months by the administrative agent, the federal funds effective rate plus 0.50% or the one-month LIBOR plus 1.0%) plus the Applicable Rate. The Applicable Rate ranges from 1.125% to 1.750% for Eurodollar Rate Loans and 0.125% to 0.750% for Base Rate Loans. At December 31, 2017, the interest rate for three-month Eurodollar Rate Loans was 2.815% and the interest rate for Base Rate Loans was 4.625%.$2.0 million.
We invest our excess cash in a portfolio of individual cash equivalents. We do not currently hold, and we have never held, any derivative financial instruments. We do not expect changes in interest rates to have a material impact on our financial condition or results of operations.operations or financial position. We plan to ensure the safety and preservation of our invested funds by limiting default, market, and investment risks. We plan to mitigate default risk by investing in low-risk securities.
Foreign Currency Risk.Risk
Substantially all of our financial transactions are conducted in U.S. dollars. We do not have significant foreign operations and, accordingly, do not believe we have only minimal market risk associated with foreign currencies.


Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC'sSEC’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
As of the end of the period covered by this Quarterly Report, we carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon our evaluation, our chief executive officer and chief financial officer have concluded that due solely to the identification of a material weakness in our internal control over financial reporting as described in Part II, Item 9A of our 2017 Form 10-K that has not yet been fully remediated, our disclosure controls and procedures were not effective as of DecemberMarch 31, 2017.2021.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended DecemberMarch 31, 20172021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than as described below under “Remediation Plan”.reporting.
Remediation Plan
58
As disclosed in Part II, Item 9A of our 2017 Form 10-K, we identified a material weakness in our internal control over financial reporting related to the income tax accounting for complex, non-routine or infrequent transactions. Since that time, we have begun implementing a remediation plan to address this material weakness. The remediation plan consists of augmenting the Company’s accounting resources, training, and implementing a more formal review and documentation process around the income tax accounting for complex, non-routine or infrequent transactions that may arise from time to time. Management believes that this remediation plan will strengthen our overall internal control over financial reporting and specifically with respect to complex, non-routine or infrequent transactions. Management is continuing to assess the sufficiency and expected effectiveness of our remediation efforts, and we may take additional measures or modify our internal control over financial reporting for these types of transactions.
This material weakness will not be considered fully remediated until newly implemented remediation controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect these remedial actions to be effectively implemented during fiscal year 2018 in order to successfully remediate this material weakness by June 30, 2018. If these remedial measures are insufficient or not implemented effectively, or additional deficiencies arise, material misstatements may occur in the future. Among other things, any unremediated or additional material weaknesses could have the effects described in our 2017 Form 10-K, specifically under “Item 1A. Risk Factors - If we fail to maintain an effective system of integrated internal controls, we may not be able to report our financial results accurately, or we may determine that our prior financial statements are not reliable, which could have a material adverse effect on our business, financial condition and results of operations.”




PART II—OTHER INFORMATION
Item 1. Legal Proceedings
We participate in businesses that are subject to substantial litigation. We are,litigation from time to time,time. We are periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include claims relating to commercial,contractual disputes, product liability, tort andor personal injury, employment, antitrust, intellectual property regulatory, or other commercial or regulatory matters. If current or future government regulations specifically those with respect to antitrust or healthcare laws, are interpreted or enforced in a manner adverse to us or our business, including without limitation those with respect to antitrust or healthcare laws, we may be subject to enforcement actions, penalties, damages and other material limitations on our business.
In the past,Furthermore, as a public company, we may become subject to stockholder derivative or other similar litigation.
From time to time we have been named as a defendant in severalclass action or other antitrust lawsuits brought by suppliers or purchasers of medical products. Typically, these lawsuits have alleged the existence of a conspiracy among manufacturers of competing products, anddistributors and/or operators of GPOs, including us, to deny the plaintiff access to a market for its products.certain products to raise the prices for products and/or limit the plaintiff’s choice of products to buy. We believe that we have at all times conducted our business affairs in an ethical and legally compliant manner and have successfully resolved all such actions. We mayNo assurance can be given that we will not be subjected to similar actions in the future and no assurance can be givenor that any such existing or future matters will be resolved in a manner satisfactory to us or which will not harm our business, financial condition or results of operations.
Additional information relating to certain legal proceedings in which we are involved is included in Note 1516 - Commitments and Contingencies to the accompanying condensed consolidated financial statements, which information is incorporated herein by reference.
Item 1A. Risk Factors
During the quarter ended DecemberMarch 31, 2017,2021, there were no material changes to the risk factors disclosed in "Risk Factors"Item 1A. “Risk Factors” in the 20172020 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Purchases of Equity Securities5. Other Information
On October 31, 2017, we announced thatApril 23, 2021, our boardBoard of directors authorizedDirectors declared a cash dividend of $0.19 per share, payable on June 15, 2021 to stockholders of record on June 1, 2021. Declaration of any future cash dividends will be at the repurchase of up to $200 milliondiscretion of our outstanding Class A common stock, prior to June 30, 2018, as partBoard of a balancedDirectors after consideration of various factors, including our results of operations, financial condition and capital deployment strategy. Subject to compliance with applicable federal securities laws, repurchases are authorized to be made from time to time in open market transactions, privately negotiated transactions, orrequirements, earnings, general business conditions, restrictions imposed by our current credit facility and any future financing arrangements, legal restrictions on the payment of dividends and other transactions, including trades under a plan established in accordance with Rule 10b5-1 under the Securities Exchange Actfactors our Board of 1934, as amended. All repurchases of our Class A common stock have been recorded as treasury shares. The following table summarizes information relating to repurchases made of our Class A common stock during the quarter ended December 31, 2017.Directors deems relevant.
59
PeriodTotal Number of Shares Purchased
Average Price Paid per Share ($) (1)
Total Number of Shares Purchased as Part of Publicly Announced Program
Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)(2)
November 9 through November 30, 20171,201,100
$28.51
1,201,100
$166
December 1 through December 31, 20171,376,859
29.35
1,376,859
125
Total2,577,959
$28.96
2,577,959
$125

(1) Average price paid per share excludes fees and commissions.
(2) As of December 31, 2017, we had purchased 2.6 million shares of Class A common stock at an average price of $28.96 per share for a total of $74.7 million since the program's inception.


Item 6. Exhibits
Exhibit No.Description
10.1
10.2
Transition Agreement and Release, dated October 9, 2017,effective February 1, 2021, by and between Durral R. GilbertSusan D. DeVore and Premier Healthcare Solutions, Inc. (Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on October 10, 2017)February 2, 2021). +
31.110.2
31.1
31.2
32.1
32.2
101Sections of the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended DecemberMarch 31, 2017,2021, formatted in XBRL (eXtensibleiXBRL (Inline eXtensible Business Reporting Language), submitted in the following files:
101.INS101.SCHXBRL Instance Document.*
101.SCHInline XBRL Taxonomy Extension Schema Document.*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.*
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.*
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.*
104The cover page from the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL (included in Exhibit 101).*
*    Filed herewith.
+    Indicates a management contract or compensatory plan or arrangement
‡    Furnished herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.
PREMIER, INC.
PREMIER, INC.
Date:May 4, 2021By:
Date:February 5, 2018By:/s/ Craig S. McKasson
Name:Craig S. McKasson
Title:Chief Administrative and Financial Officer and Senior Vice President
Signing on behalf of the registrant and as principal financial officer and principal accounting officer

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