TABLE OF CONTENTS



		Page
PART I. FINANCIAL INFORMATION					6
Item 1.			Financial Statements		6
			Condensed Consolidated Balance Sheets ~~as of December 31, 2017 and June 30, 2017~~ (Unaudited)		6
			Condensed Consolidated Statements of Income ~~for the three~~ and ~~six months ended December 31, 2017 and 2016~~ Comprehensive Income (Unaudited)		8
			Condensed Consolidated Statements of ~~Comprehensive Income for the three and six months ended December 31, 2017 and 2016~~Stockholders' Equity (Unaudited)		9
			~~Condensed Consolidated Statement of Stockholders' Deficit for the six months ended December 31, 2017 (Unaudited)~~	10
	Condensed Consolidated Statements of Cash ~~Flow for the six months ended December 31, 2017 and 2016~~ Flows(Unaudited)	11
			Notes to Condensed Consolidated Financial Statements (Unaudited)		1312
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations		3526
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		5646
Item 4.			Controls and Procedures		5747
PART II. OTHER INFORMATION					5848
Item 1.			Legal Proceedings		5848
Item 1A.			Risk Factors		5848
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		5848
Item 6.			Exhibits		~~Exhibits~~49	59
			Signatures		6050

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made in this ~~Quarterly Report~~quarterly report for the six months ended December 31, 2021 for Premier, Inc. (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 and associated supply chain disruptions and inflation;

•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 ~~terminability~~impact on us if members of ~~member participation in~~ our group purchasing organization ~~("GPO"~~(“GPO”) programs ~~with limited~~reduce activity levels or ~~no notice,~~terminate or ~~the failure of a significant number of members~~elect not to renew their ~~GPO participation agreements;~~contracts on substantially similar terms or at all;

•the rate at which the markets for our ~~non-GPO~~software 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 or~~other 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 or other products we may have purchased at elevated market prices or fixed prices;

•our ability to attract, hire, integrate and retain key personnel;

•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";~~and pandemic-related public health and reimbursement measures;

•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, state and ~~state~~international privacy, security and breach notification laws;

•compliance with current or future laws, rules or regulations relating to information blocking provisions of the 21st Century Cures Act issued by the Office of the National Coordinator for Health Information Technology (the “ONC Rules”) that may cause our certified Health Information Technology products to be regulated by the ONC Rules;

•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~~•the impact of payments required under notes payable to ~~extensive federal, state and local laws, regulations and procedures governing our integrated pharmacy operations;~~

~~risks inherent in~~former limited partners related to 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");~~

~~different interests among our member owners or between us and our member owners;~~

~~the ability of our member owners to exercise significant control over us, including through the election of all of our directors;~~

~~exemption from certain corporate governance requirements due to our status as a "controlled company" within the meaning~~early termination of the ~~NASDAQ rules;~~

~~the terms of agreements between us~~Unit Exchange and Tax Receivable Acceleration Agreements (the “Unit Exchange Agreements”) issued in connection with our ~~member owners;~~

~~payments made under the TRAs to Premier LP's limited partners~~August 2020 Restructuring on our overall cash flow and our ability to fully realize the expected tax benefits ~~related~~ to ~~the acquisition of Class B common units from Premier LP's limited partners;~~match such fixed payment obligations under those notes payable;

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 on 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 not~~repurchased by us pursuant to ~~pay cash dividends on our Class A common stock;~~

~~whether we complete our recently announced~~any then existing 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 under~~eligible for sale after the ~~program;~~

~~possible future issuances~~issuance of Class A common stock ~~preferred stock, limited partnership units or debt securities~~in our August 2020 Restructuring and the ~~dilutive effect~~potential 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, ~~2017~~2021 (the ~~"2017~~“2021 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.

Certain Definitions

For periods prior to August 11, 2020, references to “member owners” are references to participants in our GPO programs that were also limited partners of Premier Healthcare Alliance L.P. (“Premier LP”), sometimes referred to as “LPs,” 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 to “members” are references to health systems and other customers that participate in our GPO programs, or utilize any of our programs or services, some of which were formerly referred to as member owners.

References to the “August 2020 Restructuring” are references to our corporate restructuring on August 11, 2020 in which we (i) eliminated our dual-class ownership structure, through an exchange under which member owners converted their Class B common units in Premier LP and corresponding Class B common shares of Premier, Inc. into our Class A common stock, on a one-for-one basis, and (ii) exercised our right to terminate the Tax Receivable Agreement (the “TRA”) by providing all former limited partners a notice of termination and the amount of the expected payment to be made to each limited partner pursuant to the early termination provisions of the TRA with a determination date of August 10, 2020. For additional information and details regarding the August 2020 Restructuring, see our 2021 Annual Report.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PREMIER, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)


	December 31, 2021		June 30, 2021
Assets
Cash and cash equivalents	$	86,161	$	129,141
Accounts receivable (net of $1,312 and $1,174 allowance for credit losses, respectively)	137,902		142,557
Contract assets (net of $1,248 and $1,110 allowance for credit losses, respectively)	289,136		266,173
Inventory	148,415		176,376
Prepaid expenses and other current assets	66,499		68,049
Total current assets	728,113		782,296
Property and equipment (net of $559,269 and $518,332 accumulated depreciation, respectively)	225,470		224,271
Intangible assets (net of $311,650 and $289,912 accumulated amortization, respectively)	374,904		396,642
Goodwill	999,913		999,913
Deferred income tax assets	761,934		781,824
Deferred compensation plan assets	57,172		59,581
Investments in unconsolidated affiliates	192,398		153,224
Operating lease right-of-use assets	44,122		48,199
Other assets	67,436		76,948
Total assets	$	3,451,462	$	3,522,898

Liabilities and stockholders' equity
Accounts payable	$	70,510	$	85,413
Accrued expenses	53,728		48,144
Revenue share obligations	230,109		226,883
Accrued compensation and benefits	62,815		100,713
Deferred revenue	33,367		34,058
Current portion of notes payable to former limited partners	96,877		95,948
Line of credit and current portion of long-term debt	128,005		78,295
Other current liabilities	47,599		47,330
Total current liabilities	723,010		716,784
Long-term debt, less current portion	2,745		5,333
Notes payable to former limited partners, less current portion	250,324		298,995
Deferred compensation plan obligations	57,172		59,581

Deferred consideration, less current portion	57,444		56,809
Operating lease liabilities, less current portion	38,350		43,102
Other liabilities	43,615		112,401
Total liabilities	1,172,660		1,293,005
Commitments and contingencies (Note 14)	0		0

December 31, 2017 June 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
Inventory 62,067
50,426
Prepaid expenses and other current assets 24,021
35,164
Due from related parties 381
6,742
Total current assets 420,837
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
Goodwill 906,545
906,545
Deferred income tax assets 305,549
482,484
Deferred compensation plan assets 42,779
41,518
Investments in unconsolidated affiliates 98,388
92,879
Other assets 5,403
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 expenses 46,090
55,857
Revenue share obligations 74,651
72,078
Limited partners' distribution payable 20,396
24,951
Accrued compensation and benefits 41,725
53,506
Deferred revenue 45,699
44,443
Current portion of tax receivable agreements 17,925
17,925
Current portion of long-term debt 201,139
227,993
Other liabilities 9,106
32,019
Total current liabilities 506,357
571,587
Long-term debt, less current portion 6,544
6,279
Tax receivable agreements, less current portion 229,291
321,796
Deferred compensation plan obligations 42,779
41,518
Deferred tax liabilities 30,942
48,227
Other liabilities 55,183
42,099
Total liabilities 871,096
1,031,506

December 31, 2017 June 30, 2017
Redeemable limited partners' capital 2,398,640
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, 2017 573
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


	December 31, 2021		June 30, 2021
Stockholders' equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 124,403,702 shares issued and 119,935,420 shares outstanding at December 31, 2021 and 122,533,051 shares issued and outstanding at June 30, 2021	1,244		1,225
Treasury stock, at cost; 4,468,282 and 0 shares at December 31, 2021 and June 30, 2021, respectively	(176,024)		—
Additional paid-in capital	2,135,687		2,059,194
Retained earnings	317,896		169,474
Accumulated other comprehensive loss	(1)		—
Total stockholders' equity	2,278,802		2,229,893
Total liabilities and stockholders' equity	$	3,451,462	$	3,522,898

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except per share data)


														Three Months Ended				Six Months Ended
	Three Months Ended December 31,						Six Months Ended December 31,							December 31,				December 31,
	2017			2016			2017			2016				2021		2020		2021		2020
Net revenue:													Net revenue:
Net administrative fees	$	159,343		$	129,071		$	310,334		$	255,047		Net administrative fees	$	150,403	$	145,339	$	299,865	$	277,984
Other services and support	89,953			87,051			176,864			168,218			Other services and support	117,046		97,818		214,301		196,645
Services	249,296			216,122			487,198			423,265			Services	267,449		243,157		514,166		474,629
Products	162,102			142,378			314,764			248,507			Products	111,766		179,670		230,196		295,085
Net revenue	411,398			358,500			801,962			671,772			Net revenue	379,215		422,827		744,362		769,714
Cost of revenue:													Cost of revenue:
Services	47,255			44,856			94,191			87,546			Services	45,782		40,122		89,591		78,872
Products	153,272			131,158			297,712			226,971			Products	96,933		171,722		206,295		285,150
Cost of revenue	200,527			176,014			391,903			314,517			Cost of revenue	142,715		211,844		295,886		364,022
Gross profit	210,871			182,486			410,059			357,255			Gross profit	236,500		210,983		448,476		405,692
Other operating income:
Remeasurement of tax receivable agreement liabilities	177,174			—			177,174			5,722
Other operating income	177,174			—			177,174			5,722
Operating expenses:													Operating expenses:
Selling, general and administrative	108,620			95,927			222,941			193,887			Selling, general and administrative	146,840		129,997		274,654		253,951
Research and development	324			767			813			1,573			Research and development	846		722		1,840		1,298
Amortization of purchased intangible assets	13,817			11,151			27,715			20,360			Amortization of purchased intangible assets	10,850		10,260		21,739		23,464
Operating expenses	122,761			107,845			251,469			215,820			Operating expenses	158,536		140,979		298,233		278,713
Operating income	265,284			74,641			335,764			147,157			Operating income	77,964		70,004		150,243		126,979
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			Equity in net income of unconsolidated affiliates	6,116		4,572		13,174		10,499
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
Interest expense, net													Interest expense, net	(2,873)		(3,398)		(5,661)		(5,517)
(Loss) gain on FFF Put and Call Rights													(Loss) gain on FFF Put and Call Rights	—		(14,507)		64,110		(16,426)
Other income, net													Other income, net	2,392		4,890		2,072		8,573
Other income (expense), net	(14,007		)	208,972			(11,107		)	217,887			Other income (expense), net	5,635		(8,443)		73,695		(2,871)
Income before income taxes	251,277			283,613			324,657			365,044			Income before income taxes	83,599		61,561		223,938		124,108
Income tax expense	231,508			37,429			244,272			60,765
Income tax expense (benefit)													Income tax expense (benefit)	6,367		16,657		25,400		(78,324)
Net income	19,769			246,184			80,385			304,279			Net income	77,232		44,904		198,538		202,432
Net income attributable to non-controlling interest in Premier LP	(56,485		)	(181,173		)	(101,095		)	(230,774		)
Net income attributable to non-controlling interest													Net income attributable to non-controlling interest	(1,687)		(935)		(989)		(12,780)
Adjustment of redeemable limited partners' capital to redemption amount	317,916			335,264			638,340			397,072			Adjustment of redeemable limited partners' capital to redemption amount	—		—		—		(26,685)
Net income attributable to stockholders	$	281,200		$	400,275		$	617,630		$	470,577		Net income attributable to stockholders	$	75,545	$	43,969	$	197,549	$	162,967

Comprehensive income:													Comprehensive income:
Net income													Net income	$	77,232	$	44,904	$	198,538	$	202,432
Comprehensive income attributable to non-controlling interest													Comprehensive income attributable to non-controlling interest	(1,687)		(935)		(989)		(12,780)
Foreign currency translation loss													Foreign currency translation loss	(1)		—		(1)		—
Comprehensive income attributable to stockholders													Comprehensive income attributable to stockholders	$	75,544	$	43,969	$	197,548	$	189,652

Weighted average shares outstanding:													Weighted average shares outstanding:
Basic	55,209			49,445			54,059			48,330			Basic	121,181		122,127		122,063		110,851
Diluted	139,237			141,308			139,641			142,133			Diluted	122,473		122,919		123,523		111,573

Earnings (loss) 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		Basic	$	0.62	$	0.36	$	1.62	$	1.47
Diluted	$	(1.66	)	$	1.50		$	(1.30	)	$	1.75		Diluted	$	0.62	$	0.36	$	1.61	$	1.46

~~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,
2017 2016
Operating activities
Net income $ 80,385
$ 304,279
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 61,532
48,576
Equity in net income of unconsolidated affiliates (5,509 ) (14,706 )
Deferred income taxes 235,648
48,705
Stock-based compensation 17,699
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 assets 1,720
1,518
Changes in operating assets and liabilities:
Accounts receivable, prepaid expenses and other current assets (467 ) (11,888 )
Other assets 1,060
274
Inventories (11,641 ) (31,832 )
Accounts payable, accrued expenses and other current liabilities (20,238 ) (4,136 )
Long-term liabilities 1,287
(4,100 )
Loss on FFF put and call rights 15,607
174
Other operating activities 6,606
(11 )
Net cash provided by operating activities 206,515
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 facility 30,000
327,500
Payments on credit facility (50,000 ) —
Proceeds from exercise of stock options under equity incentive plan 2,808
2,909
Proceeds from issuance of Class A common stock under stock purchase plan 1,388
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 equivalents 6,279
(29,925 )
Cash and cash equivalents at beginning of year 156,735
248,817
Cash and cash equivalents at end of period $ 163,014
$ 218,892

Six Months Ended December 31,
2017 2016

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
$ —


	Six Months Ended December 31,
	2021		2020
Operating activities
Net income	$	198,538	$	202,432
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	63,205		60,031
Equity in net income of unconsolidated affiliates	(13,174)		(10,499)
Deferred income taxes	19,890		(104,378)
Stock-based compensation	23,788		14,545
(Gain) loss on FFF call/put rights	(64,110)		16,426
Other	930		323
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, inventories, prepaid expenses and other assets	50,164		(127,764)
Contract assets	(22,963)		(23,541)
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities	(58,741)		88,602
Net cash provided by operating activities	197,527		116,177
Investing activities
Purchases of property and equipment	(42,660)		(44,864)
Acquisition of businesses and equity method investments, net of cash acquired	(26,000)		(791)
Other	—		(1,228)
Net cash used in investing activities	(68,660)		(46,883)
Financing activities
Payments made on notes payable	(50,621)		(3,684)
Proceeds from credit facility	175,000		125,000
Payments on credit facility	(125,000)		(100,000)
Distributions to limited partners of Premier LP	—		(9,949)
Payments to limited partners of Premier LP related to tax receivable agreements	—		(24,218)
Cash dividends paid	(49,044)		(46,396)
Repurchase of Class A common stock (held as treasury stock)	(173,916)		—

Proceeds from exercise of stock options	37,267		2,416
Other	14,468		(2,754)
Net cash used in financing activities	(171,846)		(59,585)
Effect of exchange rate changes on cash flows	(1)		—
Net increase in cash and cash equivalents	(42,980)		9,709
Cash and cash equivalents at beginning of period	129,141		99,304
Cash and cash equivalents at end of period	$	86,161	$	109,013

See accompanying notes to the unaudited condensed consolidated financial statements.

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 ~~States~~States. The Company is a holding company with no material business operations of its own. Following an internal legal entity reorganization of the Company’s corporate subsidiaries in December 2021 to simplify the Company’s subsidiary reporting structure (the “Subsidiary Reorganization”), the Company’s primary asset is its equity interest in its wholly owned subsidiary Premier Healthcare Solutions, Inc., a Delaware corporation (“PHSI”). The Company conducts substantially all of its business operations through PHSI and ~~by public stockholders.~~its other consolidated subsidiaries, including Premier LP. 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 other businesses including food service, schools and universities.

The ~~Company's~~Company’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's~~Company’s enterprise data warehouse, mitigate the risk of innovation and disseminate best practices ~~that will~~to help the ~~Company's member organizations~~Company’s members 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 ~~two~~2 business segments: Supply Chain Services and Performance Services. See Note 1615 - Segments for further information related to the ~~Company's~~Company’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 pharmacy~~supply chain co-management and direct sourcing activities. The Performance Services segment ~~includes one~~consists of 3 sub-brands: PINC AITM, the Company’s technology and services platform with offerings that help optimize performance in three main areas – clinical intelligence, margin improvement and value-based care – using advanced analytics to identify improvement opportunities, consulting services for clinical and operational design, and workflow solutions to hardwire sustainable change in the provider, life sciences and payer markets; Contigo Health®, the Company’s direct-to-employer business which provides third party administrator services and management of health benefit programs; and RemitraTM, the Company’s digital invoicing and payables business.

December 2021 Subsidiary Reorganization

On December 1, 2021, the Company completed the Subsidiary Reorganization, an internal legal entity reorganization of the ~~largest informatics and advisory services businesses in~~Company’s corporate subsidiaries for the ~~United States focused on healthcare providers. The Company's software as a service ("SaaS") informatics products utilize~~purpose of simplifying the ~~Company's comprehensive data set~~Company’s subsidiary reporting structure. Pursuant to ~~provide actionable intelligence to its members, enabling them to benchmark, analyze and identify areas of improvement across~~ the three main categories of cost management, quality and safety, and population health management. The Performance Services segment also includes the Company's technology-enabled performance improvement collaboratives, advisory services, government services and insurance management services.

~~The Company, through its wholly-owned subsidiary,~~Subsidiary Reorganization, (i) Premier Services, LLC ("(“Prior Premier ~~GP"~~GP”)~~, held an approximate 40%~~ merged with and ~~37% general partner~~into Premier, with Premier being the surviving entity; (ii) Premier LP distributed 99% of the equity interest ~~in our main operating company,~~of PHSI to Premier ~~Healthcare Alliance, L.P. ("~~on a tax-free basis; (iii) Premier ~~LP"~~LP distributed 1% of the equity interest of PHSI to Premier Services II, LLC (“Premier Services”)~~, at December 31, 2017~~; (iv) Premier Services distributed the 1% of the equity interest of PHSI to Premier; and ~~June 30, 2017, respectively. In addition to their ownership~~(v) Premier contributed (a) its membership interest in Premier ~~our member owners held an approximate 60%~~Services and ~~63% limited partner~~(b) its partnership interest in Premier LP ~~at December 31, 2017 and June 30, 2017, respectively.~~

~~Basis of Presentation and Consolidation~~

~~Basis of Presentation~~

The member owners' interest in Premier LP is reflected as redeemable limited partners' capital in the Company's accompanying Condensed Consolidated Balance Sheets, and the limited partners' proportionate share of income in Premier LP is 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's accompanying Condensed Consolidated Statements of Comprehensive Income.

~~At December 31, 2017 and June 30, 2017, the member owners owned approximately 60% and 63%, respectively,~~PHSI. As a result of the ~~Company's combined Class A and Class B common stock through their ownership of Class B common stock. During~~Subsidiary Reorganization, (i) 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-seventhCompany conducts substantially all of its ~~initial allocation~~business operations through PHSI and PHSI’s direct and indirect subsidiaries and (ii) PHSI became the sole general partner 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, the public investors, which may include 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, of the Company's outstanding common stock through their ownership of Class A common stock.LP.

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 to~~include the ~~rules~~assets, liabilities, revenues and ~~regulations~~expenses 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~~consisting of normal recurring ~~adjustments.~~adjustments unless otherwise disclosed. 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 ~~2017~~2021 Annual Report.

~~We have reclassified $5.7 million from selling, general and administrative expenses to the remeasurement of tax receivable agreement liabilities~~

Supplementary Cash Flows Information

The following table presents supplementary cash flows information for the six months ended December 31, ~~2016 within the Condensed Consolidated Statements of Income in order to conform with the current period presentation.~~

~~Variable Interest Entities~~

Premier LP is a variable interest entity ("VIE") as the limited partners do 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, has the exclusive power2021 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 has both an obligation to absorb losses and a right to receive benefits. As such, the Company is the primary beneficiary of the VIE and consolidates the operations of Premier LP under the Variable Interest Model.

~~The assets and liabilities of Premier LP at December 31, 2017 and June 30, 2017 consisted of the following~~2020 (in thousands):

December 31, 2017 June 30, 2017
Assets
Current $ 378,412
$ 385,477
Noncurrent 1,593,777
1,616,539
Total assets of Premier LP $ 1,972,189
$ 2,002,016

Liabilities
Current $ 493,462
$ 560,582
Noncurrent 131,154
134,635
Total liabilities of Premier LP $ 624,616
$ 695,217

~~Net income attributable to Premier LP during the three and six months ended December 31, 2017 and 2016 was as follows (in thousands):~~

Three Months Ended December 31, Six Months Ended December 31,
2017 2016 2017 2016
Premier LP net income $ 94,838
$ 281,629
$ 167,129
$ 355,974

~~Premier LP's cash flows for the six months ended December 31, 2017 and 2016 consisted of the following (in thousands):~~

Six Months Ended December 31,
2017 2016
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 year 133,451
210,048
Cash and cash equivalents at end of period $ 121,743
$ 154,954


	Six Months Ended December 31,
	2021		2020
Supplementary non-cash investing and financing activities:
Increase in treasury stock related to a payable as a result of applying trade date accounting when recording the repurchase of Class A common stock	$	2,108	$	—
Non-cash additions to property and equipment	8		—
Accrued dividend equivalents	244		363
Increase in redeemable limited partners' capital for adjustment to fair value, with offsetting decrease in stockholders' equity	—		26,685
Decrease in redeemable limited partners' capital, with offsetting increase in stockholders' equity related to quarterly exchanges by member owners	—		(2,437)
Net increase in deferred tax assets related to departures and quarterly exchanges by member owners and other adjustments	—		331
Net increase in deferred tax assets related to final exchange by member owners	—		284,852
Reclassification of redeemable limited partners' capital to additional paid in capital	—		1,754,607
Decrease in additional paid-in capital related to notes payable to former limited partners, net of discounts	—		438,967
Net increase in additional paid-in capital related to departures and quarterly exchanges by member owners and other adjustments	—		37,319
Increase in additional paid-in capital related to final exchange by member owners	—		517,526

Use of Estimates in the Preparation of Financial Statements

The preparation of the ~~Company's~~Company’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,~~credit losses, 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 with~~used 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's~~Company’s significant accounting policies as described in the ~~2017~~2021 Annual ~~Report.~~

~~Recently Adopted Accounting Standards~~

~~In July 2015, the FASB issued Accounting Standards Update ("ASU") 2015-11,~~ ~~Inventory (Topic 330): Simplifying the Measurement of Inventory~~, which requires entities to measure most inventory "at the lower of cost 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. 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 accounted for~~Report, except as modifications. The new guidance will reduce diversity in practice 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.described below.

Recently Issued Accounting Standards Not Yet Adopted

In ~~January 2017,~~October 2021, the FASB issued ASU ~~2017-04,~~ ~~Intangibles - Goodwill~~No. 2021-08 Business Combinations (Topic 805): Accounting for Contract Assets and ~~Other (Topic 350): Simplifying the Test for Goodwill Impairment~~Contract Liabilities from Contracts with Customers, (“ASU 2021-08”), which ~~eliminates Step 2~~requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from ~~the goodwill impairment test. The guidance requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit~~Contracts 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 standardCustomers. ASU 2021-08 will be effective for the Company for the fiscal year beginning July 1, ~~2020.~~2023. Early adoption is permitted ~~for~~including adoption in interim ~~and annual goodwill impairment tests performed after January 1, 2017.~~periods. The Company is currently evaluating the impact of the adoption of the new standard on its consolidated financial statements and related disclosures.

~~In October 2016, the FASB issued ASU 2016-16,~~ ~~Income Taxes (Topic 740): Intra-Entity Transfers 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 intended 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 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 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 is 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 services 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~~Invoice Delivery Services, LP Assets

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,On March 1, 2021, the Company acquired, through its ~~consolidated~~indirect, wholly-owned subsidiary Premier ~~Supply Chain Improvement ("PSCI"), held 50%~~IDS, LLC, substantially all the assets and assumed certain liabilities 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"~~Invoice Delivery Services, LP (“IDS”) ~~(see Note 14 - Related Party Transactions) the remaining 50% ownership interest~~for an adjusted purchase price of ~~Innovatix and 100% of the ownership interest in Essensa for $325.0~~$80.7 million, subject to certain adjustments, of which ~~$227.5~~$80.0 million ~~in cash~~ was paid at closing ~~and $97.5 million~~with borrowings under the Company’s Credit Facility (as defined 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 millionDebt 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 included in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income.

Notes Payable).

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, 2017 97,500
Purchase price 325,000
Additional cash paid at closing 10,984
Adjusted purchase price 335,984
Earn-out liability 16,662
Receivable from GNYHA Holdings, LLC (3,000 )
Total consideration paid 349,646
Cash acquired (16,267 )
Net consideration 333,379
50% ownership interest in Innovatix 218,356
Payable to Innovatix and Essensa (5,765 )
Enterprise value 545,970

Accounts receivable 21,242
Prepaid expenses and other current assets 686
Fixed assets, net 3,476
Intangible assets 241,494
Total assets acquired 266,898
Accrued expenses 5,264
Revenue share obligations 7,011
Other current liabilities 694
Total liabilities assumed 12,969
Deferred tax liability 42,636
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.

~~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~~IDS 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~~total 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~~$57.7 million of goodwill ~~(see Note 7 - Goodwill) attributable~~based on the purchase price paid in the acquisition compared to the ~~anticipated profitability~~fair value of ~~Acro Pharmaceuticals.~~the tangible assets acquired. The ~~Acro Pharmaceuticals~~IDS acquisition was considered an asset acquisition for income tax ~~purposes and accordingly,~~purposes. Accordingly, the Company expects ~~the~~tax goodwill to be deductible for tax purposes. The initial purchase price allocation for the IDS acquisition is preliminary and subject to changes in the valuation of the assets acquired and liabilities assumed. IDS is being integrated within Premier under the brand name RemitraTM and is reported as part of the Performance Services segment.

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~~the Company’s historic consolidated financial statements. ~~The Company reports Acro Pharmaceuticals as part of its Supply Chain Services segment.~~

(4) INVESTMENTS

Investments in Unconsolidated Affiliates

The ~~Company's~~Company’s investments in unconsolidated affiliates consisted of the following (in thousands):


	Carrying Value				Equity in Net Income
					Three Months Ended				Six Months Ended
					December 31,				December 31,
	December 31, 2021		June 30, 2021		2021		2020		2021		2020
FFF	$	129,947	$	120,548	$	3,454	$	3,007	$	9,399	$	7,581
Exela	27,003		—		1,003		—		1,003		—
Prestige	16,815		14,478		1,579		1,594		2,337		2,646
Other investments	18,633		18,198		80		(29)		435		272
Total investments	$	192,398	$	153,224	$	6,116	$	4,572	$	13,174	$	10,499

Carrying Value Equity in Net Income (Loss)
Three Months Ended December 31, Six Months Ended December 31,
December 31, 2017 June 30, 2017 2017 2016 2017 2016
FFF $ 91,125
$ 85,520
$ 1,268
$ 1,119
$ 5,605
$ 4,177
Bloodbuy 2,001
2,066
(31 ) (34 ) (65 ) (52 )
PharmaPoint 4,074
4,232
(107 ) (85 ) (158 ) (162 )
Innovatix —
—
—
4,127
—
10,743
Other investments 1,188
1,061
127
—
127
—
Total investments $ 98,388
$ 92,879
$ 1,257
$ 5,127
$ 5,509
$ 14,706

~~On July 26, 2016, the~~The Company, through Premier Supply Chain Improvement, Inc. (“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~~at December 31, 2021 and June 30, 2021. On July 29, 2021, the FFF shareholders’ agreement was amended resulting in the ~~form~~termination of the FFF put ~~and call rights. The~~right, which had previously provided the majority shareholder of FFF a right to require the Company ~~recorded the initial investment~~to purchase such shareholder’s interest in FFF, on an all or nothing basis, on or after April 15, 2023 (“FFF Put Right”). The termination of the FFF Put Right resulted in the derecognition of the FFF Put Right liability and the recognition of a corresponding non-cash gain of $64.1 million in the accompanying Condensed Consolidated ~~Balance Sheets at $81.1 million,~~Statements of ~~which $65.7 million was in cash~~Income and ~~$15.4 million was consideration in the form of the initial net fair value of the FFF put and call rights~~Comprehensive Income (see Note 5 - Fair Value Measurements for additional ~~information related to the fair values~~information).

The Company, through its consolidated subsidiary, ExPre Holdings, LLC (“ExPre”), held an approximate 6% interest in Exela Holdings, Inc. (“Exela”), through its ownership of Exela Class A common stock at December 31, 2021. The Company owns approximately 15% of the ~~FFF put and call rights).~~ membership interest of ExPre, with the remainder of the membership interests held by 11 member health systems or their affiliates.

The Company, through its consolidated subsidiary, PRAM Holdings, LLC (“PRAM”), held an approximate 20% interest in Prestige Ameritech Ltd. (“Prestige”) through its ownership of Prestige limited partnership units at December 31, 2021. The Company owns approximately 26% of the membership interest of PRAM, with the remainder of the membership interests held by 16 member health systems or their affiliates.

The Company accounts for its ~~investment~~investments in FFF, Exela and Prestige using the equity method of accounting and includes ~~the~~each investment as part of the Supply Chain Services ~~segment.~~Segment.

The Company, through its consolidated subsidiary, PSCI, held a 15% ownership interest in BloodSolutions, LLC ("Bloodbuy") through its 5.3 million units of Class B Membership Interests at December 31, 2017 and June 30, 2017. 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 PharmaPoint 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) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table ~~provides a summary of~~represents the ~~Company's~~Company’s financial assets and liabilities, which are measured at fair value on a recurring basis (in thousands):

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 right 2,108
—
—
2,108
Deferred compensation plan assets 46,670
46,670
—
—
Total assets $ 77,168
$ 75,060
$ —
$ 2,108
Earn-out liabilities $ 2,792
$ —
$ —
$ 2,792
FFF put right 37,110
—
—
37,110
Total liabilities $ 39,902
$ —
$ —
$ 39,902

June 30, 2017
Cash equivalents $ 22,218
$ 22,218
$ —
$ —
FFF call right 4,655
—
—
4,655
Deferred compensation plan assets 47,202
47,202
—
—
Total assets $ 74,075
$ 69,420
$ —
$ 4,655
Earn-out liabilities $ 21,310
$ —
$ —
$ 21,310
FFF put right 24,050
—
—
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).~~


	Fair Value of Financial Assets and Liabilities		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
December 31, 2021
Cash equivalents	$	75	$	75	$	—	$	—
Deferred compensation plan assets	63,395		63,395		—		—
Total assets	63,470		63,470		—		—

Earn-out liabilities	24,139		—		—		24,139

Total liabilities	$	24,139	$	—	$	—	$	24,139

June 30, 2021
Cash equivalents	$	75	$	75	$	—	$	—
Deferred compensation plan assets	65,051		65,051		—		—
Total assets	65,126		65,126		—		—

Earn-out liabilities	24,249		—		—		24,249
FFF put right	64,110		—		—		64,110
Total liabilities	$	88,359	$	—	$	—	$	88,359

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 ($6.2 million and $5.5 million at December 31, 2021 and June 30, 2021, 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~~FFF Put and Call Rights

~~Earn-out liabilities were incurred in connection with acquisitions of Healthcare Insights, LLC (acquired on~~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,~~29, 2021, 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 in connection with the Company's equity investment in FFF (see Note 4 - Investments), which shareholders'~~shareholders’ agreement was amended resulting in the termination of the FFF Put Right and ~~restated November 22, 2017,~~the derecognition of the FFF Put Right liability.

In the event of a Key Man Event (generally defined in the FFF shareholders’ agreement as the resignation, termination for cause, death or disability of the majority shareholder), the Company has a call right that requires 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 ofsell its remaining interest in FFF ~~on or~~to the Company, and is exercisable at any time within 180 calendar days after the date of a Key Man Event (the “Call Right”, together with the FFF Put Right, the “Put and Call Rights”). As of December 31, ~~2020. Any such required purchases are to~~2021 and June 30, 2021, the Call Right had zero value. In the event that the Call Right is exercised, the purchase price for the additional interest in FFF will be ~~made~~ at a per share price equal to ~~FFF's~~FFF’s earnings before interest, taxes, depreciation and amortization ~~("EBITDA"~~(“FFF 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, ("divided by the number of shares of FFF common stock then outstanding (“Equity Value per ~~Share"~~Share”). ~~In addition,~~

At June 30, 2021, the amended and restated shareholders' agreement provides the Company with a call right requiring the majority shareholder to sell its remaining interest in FFF to the Company, which is exercisable at any time within the later of 180 calendar days after the date of a Key Man Event (generally defined in the shareholders' agreement as the resignation, termination for cause, death or disabilityfair values of the ~~majority shareholder) or 30 calendar days after December 31, 2020. In the event that the FFF put or call rights are exercised, the purchase price for the additional interest~~Put and Call Rights were determined using a Monte Carlo simulation in ~~FFF will be at~~ a ~~per share price equal to the Equity Value per Share.~~

~~The fair value of the FFF put and call rights were determined~~risk-neutral framework based on the Equity Value per Share calculation using unobservable inputs, which included the estimated ~~FFF put~~Put and ~~call rights'~~Call Rights expiration dates, the forecast of ~~FFF's~~FFF’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 to~~FFF’s enterprise value over the ~~Equity Value per Share~~option period was valued utilizing expected annual FFF EBITDA and revenue growth rates, among other assumptions. The resulting ~~from changes~~FFF enterprise value was an assumption utilized in the ~~unobservable inputs could have a significant impact on the fair values~~valuation of the ~~FFF put~~Put and ~~call rights.~~Call Rights.

The Company utilized the following assumptions to estimate the fair value of the Put and Call Rights at June 30, 2021:


	June 30, 2021
Annual FFF EBITDA growth rate	2.5-10.8%
Annual revenue growth rate	2.5-6.3%
Correlation	80.0	%
Weighted average cost of capital	14.0	%
Asset volatility	30.0	%
Credit spread	0.8	%

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.

At June 30, 2021, the Company recorded the ~~FFF put~~Put and ~~call rights~~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 ~~value~~values of the Put and Call Rights, including the gain recorded as a result of the termination of the FFF ~~put and call rights~~Put Right, were recorded within other income (expense), net in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income.

Earn-out liabilities

An earn-out liability was established in connection with the acquisition of substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc. (the “Acurity and Nexera asset acquisition”) in February 2020. The earn-out liability was classified as Level 3 of the fair value hierarchy.

The earn-out liability arising from expected earn-out payments related to the Acurity and Nexera asset acquisition was 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 transferred 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 acquisition agreement. The Acurity and Nexera earn-out liability utilized a credit spread of 0.9% at both December 31, 2021 and June 30, 2021. As of December 31, 2021 and June 30, 2021, 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 December 31, 2021 and June 30, 2021 was $24.1 million and $24.2 million, respectively.

Acurity and Nexera Earn-out (a)


Input assumptions	As of December 31, 2021		As of June 30, 2021
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 spread	0.9	%	0.9	%

(a)The Acurity and Nexera earn-out liability was initially valued as of February 28, 2020.

A reconciliation of the ~~Company's~~Company’s Put Right and earn-out liabilities ~~and FFF put and call rights~~ is as follows (in thousands):


	Beginning Balance		Purchases (Settlements) (a)(b)		(Gain)/Loss (c)		Ending Balance
Three Months Ended December 31, 2021
Earn-out liabilities	$	24,368	$	—	$	(229)	$	24,139

Total Level 3 liabilities	$	24,368	$	—	$	(229)	$	24,139

Three Months Ended December 31, 2020
Earn-out liabilities	$	23,017	$	(4,660)	$	4,343	$	22,700
FFF put right	38,677		—		14,507		53,184
Total Level 3 liabilities	$	61,694	$	(4,660)	$	18,850	$	75,884

Six Months Ended December 31, 2021
Earn-out liabilities	$	24,249	$	—	$	(110)	$	24,139
FFF put right	64,110		(64,110)		—		—
Total Level 3 liabilities	$	88,359	$	(64,110)	$	(110)	$	24,139

Six Months Ended December 31, 2020
Earn-out liabilities	$	33,151	$	(13,733)	$	3,282	$	22,700
FFF put right	36,758		—		16,426		53,184
Total Level 3 liabilities	$	69,909	$	(13,733)	$	19,708	$	75,884

(a)Purchases (Settlements) for the six months ended December 31, 2021 includes non-cash gain recognized as a result the termination of the FFF Put Right and the derecognition of the FFF Put Right liability.

Three Months Ended December 31, Six Months Ended December 31,
2017 2016 2017 2016
Amount % of Net Revenue Amount % of Net Revenue Amount % of Net Revenue Amount % 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

The following ~~table provides~~tables provide the reconciliation of net income 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 December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Net income	$	77,232	$	44,904	$	198,538	$	202,432
Interest expense, net	2,873		3,398		5,661		5,517
Income tax expense (benefit)	6,367		16,657		25,400		(78,324)
Depreciation and amortization	20,870		19,093		41,466		36,567
Amortization of purchased intangible assets	10,850		10,260		21,739		23,464
EBITDA	118,192		94,312		292,804		189,656
Stock-based compensation	16,330		7,415		24,081		14,790
Acquisition and disposition related expenses	3,746		7,918		7,167		10,763
Loss (gain) on FFF Put and Call Rights	—		14,507		(64,110)		16,426
Other expense, net	3,748		666		3,777		3,926
Adjusted EBITDA	$	142,016	$	124,818	$	263,719	$	235,561

Income before income taxes	$	83,599	$	61,561	$	223,938	$	124,108
Equity in net income of unconsolidated affiliates	(6,116)		(4,572)		(13,174)		(10,499)
Interest expense, net	2,873		3,398		5,661		5,517
Loss (gain) on FFF Put and Call Rights	—		14,507		(64,110)		16,426
Other expense, net	(2,392)		(4,890)		(2,072)		(8,573)
Operating income	77,964		70,004		150,243		126,979
Depreciation and amortization	20,870		19,093		41,466		36,567
Amortization of purchased intangible assets	10,850		10,260		21,739		23,464
Stock-based compensation	16,330		7,415		24,081		14,790
Acquisition and disposition related expenses	3,746		7,918		7,167		10,763
Equity in net income of unconsolidated affiliates	6,116		4,572		13,174		10,499
Deferred compensation plan income	2,389		4,803		2,071		7,710
Other expense, net	3,751		753		3,778		4,789
Adjusted EBITDA	$	142,016	$	124,818	$	263,719	$	235,561


	Three Months Ended December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Segment Adjusted EBITDA:
Supply Chain Services	$	134,280	$	118,939	$	263,549	$	221,590
Performance Services	39,010		36,609		62,725		73,724
Corporate	(31,274)		(30,730)		(62,555)		(59,753)
Adjusted EBITDA	$	142,016	$	124,818	$	263,719	$	235,561

Three Months Ended December 31, Six Months Ended December 31,
2017 2016 2017 2016
Net income $ 19,769
$ 246,184
$ 80,385
$ 304,279
Interest and investment loss, net 1,508
857
3,003
1,009
Income tax expense 231,508
37,429
244,272
60,765
Depreciation and amortization 17,310
14,198
33,817
28,216
Amortization of purchased intangible assets 13,817
11,151
27,715
20,360
EBITDA 283,912
309,819
389,192
414,629
Stock-based compensation 8,951
6,423
17,908
12,319
Acquisition related expenses 1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities (177,174 ) —
(177,174 ) (5,722 )
ERP implementation expenses 156
432
491
1,526
Acquisition related adjustment - revenue 87
5,813
192
5,964
Remeasurement gain attributable to acquisition of Innovatix, LLC —
(204,833 ) —
(204,833 )
Loss on disposal of long-lived assets 400
—
1,720
1,518
Loss on FFF put and call rights 15,587
—
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, net 1,508
857
3,003
1,009
Loss on disposal of long-lived assets 400
—
1,720
1,518
Other income 13,356
131
11,893
(875 )
Operating income 265,284
74,641
335,764
147,157
Depreciation and amortization 17,310
14,198
33,817
28,216
Amortization of purchased intangible assets 13,817
11,151
27,715
20,360
Stock-based compensation 8,951
6,423
17,908
12,319
Acquisition related expenses 1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities (177,174 ) —
(177,174 ) (5,722 )
ERP implementation expenses 156
432
491
1,526
Acquisition related adjustment - revenue 87
5,813
192
5,964
Equity in net income of unconsolidated affiliates 1,257
5,127
5,509
14,706
Deferred compensation plan income 1,577
8
3,116
1,103
Other expense 603
—
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 Services 27,929
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

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 December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Net income attributable to stockholders	$	75,545	$	43,969	$	197,549	$	162,967
Adjustment of redeemable limited partners’ capital to redemption amount	—		—		—		26,685
Net income attributable to non-controlling interest	1,687		935		989		12,780
Income tax expense (benefit)	6,367		16,657		25,400		(78,324)
Amortization of purchased intangible assets	10,850		10,260		21,739		23,464
Stock-based compensation	16,330		7,415		24,081		14,790
Acquisition and disposition related expenses	3,746		7,918		7,167		10,763
Loss (gain) on FFF Put and Call Rights	—		14,507		(64,110)		16,426
Other expense, net	5,490		2,805		7,378		7,229
Non-GAAP adjusted income before income taxes	120,015		104,466		220,193		196,780
Income tax expense on adjusted income before income taxes (a)	30,004		25,072		55,048		47,227
Non-GAAP Adjusted Net Income	$	90,011	$	79,394	$	165,145	$	149,553

Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings per Share
Weighted Average:
Basic weighted average shares outstanding	121,181		122,127		122,063		110,851
Dilutive securities	1,292		792		1,460		722

Weighted average shares outstanding - diluted	122,473		122,919		123,523		111,573

Class B shares outstanding (b)	—		—		—		11,185
Non-GAAP weighted average shares outstanding - diluted	122,473		122,919		123,523		122,758

(a)Reflects income tax expense at an estimated effective income tax rate of 25% of non-GAAP adjusted net income before income taxes for the three and six months ended December 31, 2021 and 24% of non-GAAP adjusted net income before income taxes for the three and six months ended December 31, 2020.

(b)For the six months ended December 31, 2020, the effect of 11.2 million Class B common shares was excluded from the GAAP diluted weighted average shares outstanding as they had an anti-dilutive effect and on a non-GAAP basis, the effect of 11.2 million Class B common shares was included in the non-GAAP diluted weighted average shares outstanding.

Three Months Ended December 31, Six Months Ended December 31,
2017 2016 2017 2016
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 LP 56,485
181,173
101,095
230,774
Income tax expense 231,508
37,429
244,272
60,765
Amortization of purchased intangible assets 13,817
11,151
27,715
20,360
Stock-based compensation 8,951
6,423
17,908
12,319
Acquisition related expenses 1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities

(177,174 ) —
(177,174 ) (5,722 )
ERP implementation expenses 156
432
491
1,526
Acquisition related adjustment - revenue 87
5,813
192
5,964
Remeasurement gain attributable to acquisition of Innovatix, LLC —
(204,833 ) —
(204,833 )
Loss on disposal of long-lived assets 400
—
1,720
1,518
Loss on FFF put and call rights 15,587
—
15,607
—
Other expense (51 ) 139
4
228
Non-GAAP adjusted fully distributed income before income taxes 114,724
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 share 55,209
49,445
54,059
48,330
Potentially dilutive shares 450
401
553
437
Conversion of Class B common units 83,578
91,462
85,029
93,366
Weighted average fully distributed shares outstanding - diluted 139,237
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 December 31,				Six Months Ended December 31,
	2021		2020		2021		2020
Earnings per share attributable to stockholders	$	0.62	$	0.36	$	1.62	$	1.47
Adjustment of redeemable limited partners’ capital to redemption amount	—		—		—		0.24
Net income attributable to non-controlling interest	0.01		0.01		0.01		0.12
Income tax expense (benefit)	0.05		0.14		0.21		(0.71)
Amortization of purchased intangible assets	0.09		0.08		0.18		0.21
Stock-based compensation	0.13		0.06		0.20		0.13
Acquisition and disposition related expenses	0.03		0.06		0.06		0.10
Loss (gain) on FFF Put and Call Rights	—		0.12		(0.53)		0.15
Other expense, net	0.06		0.02		0.06		0.07
Impact of corporation taxes (a)	(0.25)		(0.20)		(0.45)		(0.43)
Impact of dilutive shares (b)	(0.01)		—		(0.02)		(0.13)
Non-GAAP Adjusted Earnings Per Share	$	0.73	$	0.65	$	1.34	$	1.22

Three Months Ended December 31, Six Months Ended December 31,
2017 2016 2017 2016
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 LP 1.02
3.66
1.87
4.77
Income tax expense 4.19
0.76
4.52
1.26
Amortization of purchased intangible assets 0.25
0.23
0.51
0.42
Stock-based compensation 0.16
0.13
0.33
0.25
Acquisition related expenses 0.03
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 assets 0.01
—
0.03
0.03
Loss on FFF put and call rights 0.28
—
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 39% of Non-GAAP adjusted fully distributed~~(a)Reflects income tax expense at an estimated effective income tax rate of 25% of non-GAAP adjusted net 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.~~

~~Consolidated Results~~ - ~~Comparison of the Three and Six Months ended December 31, 2017 to 2016~~

~~Net Revenue~~

~~Net revenue increased $52.9 million, or 15%, to $411.4 million for the three~~ months ended December 31, ~~2017 from $358.5 million~~2021 and 24% of non-GAAP adjusted net income before income taxes for the three and six months ended December 31, ~~2016. Net revenue increased $130.2 million, or 19%,~~2020.

(b)Reflects impact of dilutive shares on a non-GAAP basis, primarily attributable to ~~$802.0 million~~the assumed conversion of the weighted average outstanding Class B common units for the six months ended December 31, ~~2017 from $671.8 million~~2020 for Class A common stock.

Consolidated Results - Comparison of the ~~six months ended~~Three Months Ended December 31, ~~2016.~~2021 to 2020

The variances in the material factors contributing to the changes in the consolidated results are discussed further in “Segment Results” below.

Net ~~administrative fees~~Revenue

Net revenue ~~increased $30.2~~decreased by $43.6 million ~~or 23%, from~~during the three months ended December 31, ~~2016~~2021 compared 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 in full on December 2, 2016. To a lesser extent, net administrative fees growth also benefited from 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.

~~Other services and support revenue increased $2.9 million, or 3%, from~~ the three months ended December 31, ~~2016 to 2017~~2020, primarily due to ~~increases~~a decrease of $67.9 million in ~~SaaS informatics~~ products ~~subscriptions~~revenue partially offset by an increase of $5.1 million in net administrative fees revenue and ~~ambulatory quality solutions services. Other services and support revenue increased $8.7~~an increase of $19.2 million ~~or 5% from the six months ended December 31, 2016 to 2017, 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 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 on a percentage of identified member savings and recognition occurs upon approval and documentation of the savings. 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 additional members 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 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.revenue.

Cost of Revenue

Cost of revenue ~~increased $24.5~~decreased by $69.1 million ~~or 14%, to $200.5 million for~~during the three months ended December 31, ~~2017 from $176.0 million for~~2021 compared to the three months ended December 31, ~~2016. Cost~~2020, primarily due to a decrease of $74.8 million in cost of products revenue ~~increased $77.4~~partially offset by an increase of $5.7 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~~in cost of services ~~revenue~~revenue.

Operating Expenses

Operating expenses increased ~~$2.4~~by $17.5 million ~~or 5%, from~~during the three months ended December 31, ~~2016~~2021 compared 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,~~2020, primarily ~~driven by higher product costs associated with the business operations of Acro Pharmaceuticals and~~ due to ~~higher costs driven by growth~~an increase of $16.8 million in ~~direct sourcing sales~~selling, general and ~~the impact~~administrative expenses and an increase of ~~increases~~$0.6 million in ~~raw materials pricing. We expect our cost~~amortization 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.purchased intangible assets.

Other ~~Operating~~ Income, Net

Other ~~operating~~ income, net increased ~~$177.2~~by $14.0 million ~~from~~during the three months ended December 31, ~~2016~~2021 compared 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 2017,2020, 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,~~loss on the FFF Put Right in the prior year period. There was no gain or ~~23%, from~~loss on the ~~three months ended December 31, 2016 to 2017 and $7.3 million, or 36%, from~~FFF Put Right recognized in the ~~six months ended December 31, 2016 to 2017, primarily~~current period as a result of ~~additional amortization~~the termination and corresponding derecognition of ~~purchased intangible assets related to our acquisitions. As we execute~~the FFF Put Right liability 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 dueJuly 29, 2021 (see Note 5 - Fair Value Measurements 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 accountaccompanying condensed consolidated financial statements 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.further information).

Income Tax Expense

For the three months ended December 31, ~~2017 and 2016, the Company~~2021, we recorded tax expense of ~~$231.5~~$6.4 million compared to tax expense of $16.7 million recorded during the three months ended December 31, 2020. The tax expense recorded during the three months ended December 31, 2021 and ~~$37.4 million, respectively, which equates to~~2020 resulted in effective tax rates of ~~92%~~7.6% and ~~13%~~27.1%, respectively. The change in the effective tax

rate is attributable to the Subsidiary Reorganization. (See Note 1 - Organization and Note 13 - 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 increased by $0.8 million during the three months ended December 31, 2021 compared to the three months ended December 31, 2020, primarily due to an increase in the portion of net income attributable to the non-controlling interest in PRAM, DePre and ExPre.

Adjusted EBITDA

Adjusted EBITDA, a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, increased by $17.2 million during the three months ended December 31, 2021, compared to the three months ended December 31, 2020. The increase was driven by increases of $15.4 million and $2.4 million in Supply Chain Services and Performance Services Adjusted EBITDA, respectively, partially offset by a decrease of $0.6 million in Corporate Adjusted EBITDA.

Consolidated Results - Comparison of the Six Months Ended December 31, 2021 to 2020

The variances in the material factors contributing to the changes in the consolidated results are discussed further in “Segment Results” below.

Net Revenue

Net revenue decreased by $25.3 million during the six months ended December 31, 2021 compared to the six months ended December 31, 2020, primarily due to decrease of $64.9 million in products revenue partially offset by an increase of $21.9 million in net administrative fees revenue and an increase of $17.7 million in other services and support revenue.

Cost of Revenue

Cost of revenue decreased by $68.1 million during the six months ended December 31, 2021 compared to the six months ended December 31, 2020, primarily due to a decrease of $78.9 million in cost of products revenue partially offset by an increase of $10.7 million in cost of services revenue.

Operating Expenses

Operating expenses increased by $19.5 million during the six months ended December 31, 2021 compared to the six months ended December 31, 2020, primarily due to an increase of $20.7 million in selling, general and administrative expenses partially offset by a decrease of $1.8 million in amortization of purchased intangible assets.

Other Income, Net

Other income, net increased by $76.6 million during the six months ended December 31, 2021 compared to the six months ended December 31, 2020, primarily due to the current period gain on the FFF Put Right as a result of the termination and corresponding derecognition of the FFF Put Right liability on July 29, 2021 compared to a loss on the FFF Put Right recognized in the prior year period (see Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements for further information) as well as an increase in equity in net income of unconsolidated affiliates (see Note 4 - Investments to the accompanying condensed consolidated financial statements for further information). The increases were partially offset by a decrease in deferred compensation plan income.

Income Tax Expense (Benefit)

For the six months ended December 31, ~~2017 and 2016, the Company~~2021, we recorded tax expense of ~~$244.3~~$25.4 million compared to a tax benefit of $78.3 million recorded during the six months ended December 31, 2020. The tax expense and ~~$60.8 million, respectively, which equates to~~benefit recorded during the six months ended December 31, 2021 and 2020 resulted in effective tax rates of ~~75%~~11.3% and ~~17%~~(63.1)%, respectively. The ~~increase~~change in the effective tax ~~rates~~rate is primarily attributable to the prior year one-time deferred tax benefit associated with the remeasurement of the 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 taxesasset and valuation ~~allowances against deferred tax assets at PHSI. See~~allowance release as a result of the August 2020 Restructuring. (See Note 13 - 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 ~~$124.7~~by $11.8 million ~~or 69%~~during the six months ended December 31, 2021 compared to the six months ended December 31, 2020, primarily due to the August 2020 Restructuring, whereby net income attributable to non-controlling interest in Premier LP was not recorded after August 11, 2020.

Adjusted EBITDA

Adjusted EBITDA, a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, ~~to $56.5~~increased by $28.2 million ~~for~~during the three months ended December 31, ~~2017 from $181.2 million for the three months ended December 31, 2016, primarily attributable~~2021, compared 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 with2020 driven by an increase of $42.0 million in ~~product revenue. These results were~~Supply Chain Services Adjusted EBITDA partially offset by ~~increased product costs~~decreases of $11.0 million and ~~selling, general~~$2.8 million in Performance Services and ~~administrative expenses resulting from higher salaries and benefits expenses as a result of acquisitions and to support growth. Additionally, Segment~~Corporate 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.~~respectively.

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.~~Results

Supply Chain Services - ~~Comparison of the Three and Six Months ended December 31, 2017 to 2016~~

The following table ~~summarizes~~presents our results of operations and ~~Non-GAAP~~ Adjusted EBITDA, a Non-GAAP financial measure, in the Supply Chain Services segment for the periods presented (in thousands):


	Three Months Ended December 31,							Six Months Ended December 31,
Supply Chain Services	2021		2020		Change			2021		2020		Change
Net revenue:
Net administrative fees	$	150,403	$	145,339	$	5,064	3%	$	299,865	$	277,984	$	21,881	8	%
Other services and support	9,326		4,086		5,240		128%	18,251		9,677		8,574		89	%
Services	159,729		149,425		10,304		7%	318,116		287,661		30,455		11	%
Products	111,766		179,670		(67,904)		(38)%	230,196		295,085		(64,889)		(22)	%
Net revenue	271,495		329,095		(57,600)		(18)%	548,312		582,746		(34,434)		(6)	%
Cost of revenue:
Services	3,267		774		2,493		322%	6,638		1,508		5,130		340	%
Products	96,933		171,722		(74,789)		(44)%	206,295		285,150		(78,855)		(28)	%
Cost of revenue	100,200		172,496		(72,296)		(42)%	212,933		286,658		(73,725)		(26)	%
Gross profit	171,295		156,599		14,696		9%	335,379		296,088		39,291		13	%
Operating expenses:
Selling, general and administrative	48,454		50,372		(1,918)		(4)%	96,498		94,796		1,702		2	%
Research and development	72		109		(37)		(34)%	236		127		109		86	%
Amortization of purchased intangible assets	8,116		8,055		61		1%	16,252		16,054		198		1	%
Operating expenses	56,642		58,536		(1,894)		(3)%	112,986		110,977		2,009		2	%
Operating income	114,653		98,063		16,590		17%	222,393		185,111		37,282		20	%
Depreciation and amortization	5,336		1,363					10,344		2,165
Amortization of purchased intangible assets	8,116		8,054					16,252		16,054
Acquisition and disposition related expenses	56		6,747					1,608		7,632
Equity in net income of unconsolidated affiliates	6,116		4,697					12,946		10,588
Other expense	3		15					6		40
Segment Adjusted EBITDA	$	134,280	$	118,939	$	15,341	13%	$	263,549	$	221,590	$	41,959	19	%

Three Months Ended December 31, Six Months Ended December 31,
Supply Chain Services 2017 2016 2017 2016
Net revenue:
Net administrative fees $ 159,343
$ 129,071
$ 310,334
$ 255,047
Other services and support 3,421
1,201
5,570
2,846
Services 162,764
130,272
315,904
257,893
Products 162,101
142,378
314,764
248,507
Net revenue 324,865
272,650
630,668
506,400
Cost of revenue:
Services 1,023
1,276
2,086
2,482
Products 153,272
131,154
297,712
226,968
Cost of revenue 154,295
132,430
299,798
229,450
Gross profit 170,570
140,220
330,870
276,950
Operating expenses:
Selling, general and administrative 42,185
38,044
84,120
70,547
Amortization of purchased intangible assets 4,976
2,154
10,017
2,366
Operating expenses 47,161
40,198
94,137
72,913
Operating income $ 123,409
$ 100,022
$ 236,733
$ 204,037
Depreciation and amortization 195
299
649
533
Amortization of purchased intangible assets 4,976
2,154
10,017
2,366
Acquisition related expenses 2,320
5,788
4,870
9,052
Acquisition related adjustment - revenue —
5,632
—
5,632
Equity in net income of unconsolidated affiliates 1,130
5,127
5,381
14,706
Other income 15
—
15
—
Non-GAAP Segment Adjusted EBITDA $ 132,045
$ 119,022
$ 257,665
$ 236,326
Comparison of the Three Months Ended December 31, 2021 to 2020

Net Revenue

Supply Chain Services segment net revenue ~~increased $52.2~~decreased by $57.6 million, or ~~19%~~18%, ~~to $324.9 million for~~during the three months ended December 31, ~~2017 from $272.7 million for~~2021 compared to the three months ended December 31, ~~2016. Supply Chain Services segment~~2020. The decrease in net revenue ~~increased $124.3~~was primarily due to a decrease in products revenue of $67.9 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~~lower demand for and ~~Essensa, which were acquired on December 2, 2016. To~~pricing of personal protective equipment (“PPE”) and other high demand supplies as a ~~lesser extent,~~result of the state of the COVID-19 pandemic partially offset by growth in commodity products under our PREMIERPRO® brand. As the COVID-19 pandemic subsides or becomes more manageable, we expect further stabilization of the market for some of these products and, accordingly, a decrease in period over period products revenue growth rates.

The decrease in net ~~administrative fees were also favorably impacted~~revenue was partially offset by ~~a supplier revenue recovery settlement and contract penetration of existing members. Growth~~an increase in net administrative fees ~~revenue was partially impacted by soft patient utilization trends and timing~~ of ~~cash receipts.~~

~~Product revenue increased $19.7~~$5.1 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~~the demand for supplies and services, increased utilization of our contracts by our existing members and the addition of new

categories and suppliers. In addition, the decrease was partially offset by an increase of $5.2 million in other services and support revenue largely due 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.

supply chain co-management fees.

Cost of Revenue

Supply Chain Services segment cost of revenue ~~increased $21.9~~decreased by $72.3 million ~~or 17%, to $154.3 million for~~during the three months ended December 31, ~~2017 from $132.4 million for~~2021 compared to the three months ended December 31, ~~2016.~~ 2020 primarily driven by the aforementioned decrease in products revenue due to the prior year increase in demand as well as fluctuations in product costs. This was partially offset by an increase in cost of services revenue due to the aforementioned increase in other services and support revenue and rapidly escalating shipping costs. As the COVID-19 pandemic subsides or becomes more manageable, we expect further stabilization of the market for some of these products and, accordingly, a decrease in period over period cost of products revenue.

Operating Expenses

Supply Chain Services segment operating expenses decreased by $1.9 million during the three months ended December 31, 2021 compared to the three months ended December 31, 2020. The decrease was primarily due to a decrease of $1.9 million in selling, general and administrative expenses driven by a decrease in acquisition and disposition related expenses partially offset by an increase in personnel costs and depreciation and amortization expense.

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA increased by $15.3 million, or 13%, during the three months ended December 31, 2021 compared to the three months ended December 31, 2020, primarily due to the aforementioned increase in net administrative fees revenue and favorable product mix in our direct sourcing activities business.

Comparison of the Six Months Ended December 31, 2021 to 2020

Net Revenue

Supply Chain Services segment net revenue decreased by $34.4 million, or 6%, during the six months ended December 31, 2021 compared to the six months ended December 31, 2020. The decrease in net revenue was primarily due to a decrease in products revenue of $64.9 million driven by lower demand for and pricing of PPE and other high demand supplies as a result of the state of the COVID-19 pandemic partially offset by growth in commodity products under our PREMIERPRO® brand. As the COVID-19 pandemic subsides or becomes more manageable, we expect further stabilization of the market for some of these products and, accordingly, a decrease in period over period products revenue growth rates.

The decrease was partially offset by an increase in net administrative fees of $21.9 million driven by an increase in the demand for supplies and services, increased utilization of our contracts by our existing members and the addition of new categories and suppliers. In addition, the decrease was partially offset by an increase of $8.6 million in other services and support revenue due to an increase in supply chain co-management fees.

Cost of Revenue

Supply Chain Services segment cost of revenue ~~increased $70.3~~decreased by $73.7 million ~~or 31%, to $299.8 million for~~during the six months ended December 31, ~~2017 from $229.5 million for~~2021 compared to 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,~~2020 primarily driven by ~~higher product costs associated with~~ the ~~business operations of Acro Pharmaceuticals and~~decrease in products revenue due to ~~growth~~the prior year increase in ~~direct sourcing sales~~demand partially offset by the aforementioned increase in other services and support revenue. As the ~~impact~~COVID-19 pandemic subsides or becomes more manageable, we expect further stabilization of ~~increases~~the market for some of these products and, accordingly, a decrease in ~~raw materials pricing.~~period over period cost of products revenue.

Operating Expenses

Supply Chain Services segment operating expenses increased ~~$7.0~~by $2.0 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 forduring the six months ended December 31, ~~2017 from $72.9 million for~~2021 compared to the six months ended December 31, ~~2016.~~

~~Selling,~~2020 primarily due to an increase in selling, general and administrative expenses of $1.7 million driven by an increase in depreciation and amortization expense. The increases were partially offset by a decrease in acquisition and disposition related expenses.

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA increased ~~$4.1 million, or 11%, from the three months ended December 31, 2016 to 2017 and $13.6~~by $42.0 million, or 19%, ~~from~~during the six months ended December 31, ~~2016~~2021 compared 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~~2020, primarily due 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. Thisaforementioned 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~~favorable product mix 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.our direct sourcing activities business.

Performance Services - ~~Comparison of the Three and Six Months ended December 31, 2017 to 2016~~

The following table ~~summarizes~~presents 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 Services	2021		2020		Change			2021		2020		Change
Net revenue:
Other services and support	$	107,729	$	93,732	$	13,997	15%	$	196,059	$	186,968	$	9,091	5%
Net revenue	107,729		93,732		13,997		15%	196,059		186,968		9,091		5%
Cost of revenue:
Services	42,515		39,348		3,167		8%	82,953		77,364		5,589		7%
Cost of revenue	42,515		39,348		3,167		8%	82,953		77,364		5,589		7%
Gross profit	65,214		54,384		10,830		20%	113,106		109,604		3,502		3%
Operating expenses:
Selling, general and administrative	42,462		33,813		8,649		26%	81,263		67,972		13,291		20%
Research and development	774		613		161		26%	1,604		1,171		433		37%
Amortization of purchased intangible assets	2,734		2,205		529		24%	5,487		7,410		(1,923)		(26)%
Operating expenses	45,970		36,631		9,339		25%	88,354		76,553		11,801		15%
Operating income	19,244		17,753		1,491		8%	24,752		33,051		(8,299)		(25)%
Depreciation and amortization	13,342		15,604					26,699		30,157
Amortization of purchased intangible assets	2,734		2,206					5,487		7,410
Acquisition related expenses	3,690		1,171					5,559		3,131
Equity in net income of unconsolidated affiliates	—		(125)					228		(89)
Other expense	—		—					—		64
Segment Adjusted EBITDA	$	39,010	$	36,609	$	2,401	7%	$	62,725	$	73,724	$	(10,999)	(15)%

Three Months Ended December 31, Six Months Ended December 31,
Performance Services 2017 2016 2017 2016
Net revenue:
Other services and support $ 86,533
$ 85,850
$ 171,294
$ 165,372
Net revenue 86,533
85,850
171,294
165,372
Cost of revenue:
Services 46,233
43,607
92,105
85,046
Cost of revenue 46,233
43,607
92,105
85,046
Gross profit 40,300
42,243
79,189
80,326
Operating expenses:
Selling, general and administrative 26,397
23,664
58,308
50,572
Research and development 335
573
807
1,159
Amortization of purchased intangible assets 8,841
8,996
17,699
17,993
Operating expenses 35,573
33,233
76,814
69,724
Operating income $ 4,727
$ 9,010
$ 2,375
$ 10,602
Depreciation and amortization 14,793
11,990
28,853
23,866
Amortization of purchased intangible assets 8,841
8,996
17,699
17,993
Acquisition related expenses (646 ) (1,573 ) (97 ) (1,879 )
Acquisition related adjustment - revenue 87
180
193
332
Equity in net income of unconsolidated affiliates 127
—
127
—
Non-GAAP Segment Adjusted EBITDA $ 27,929
$ 28,603
$ 49,150
$ 50,914
Comparison of the Three Months Ended December 31, 2021 to 2020

Net Revenue

~~Other services and support~~Net revenue in our Performance Services segment increased ~~$0.7~~by $14.0 million, or 1%15%, ~~to $86.5 million for~~during the three months ended December 31, ~~2017 from $85.9 million for~~2021 compared to the three months ended December 31, ~~2016~~2020. The increase was primarily driven by higher revenue associated with enterprise analytics license agreements executed during the current period as compared to the prior year period, incremental revenue from our Remitra business and growth in our Contigo Health business.

Cost of Revenue

Performance Services segment cost of revenue increased by $3.2 million during the three months ended December 31, 2021 compared to the three months ended December 31, 2020, primarily due to an increase in personnel costs related to growth in our Contigo Health business and incremental expenses associated with our Remitra business.

Operating Expenses

Performance Services segment operating expenses increased by $9.3 million during the three months ended December 31, 2021 compared to the three months ended December 31, 2020. The increase was primarily due to an increase of $8.6 million in selling, general and administrative expenses driven by an increase in professional fees and a decrease in capitalized labor costs as well as an increase of $0.5 million in amortization of purchased intangible assets.

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA increased by $2.4 million, or 7%, during the three months ended December 31, 2021 compared to the three months ended December 31, 2020 primarily due to the aforementioned increase in revenue partially offset by the aforementioned increases in ~~SaaS informatics products subscriptions~~cost of revenue and ~~ambulatory quality solutions services. Other services and support~~operating expenses.

Comparison of the Six Months Ended December 31, 2021 to 2020

Net Revenue

Net revenue in our Performance Services segment increased ~~$5.9~~by $9.1 million, or 4%5%, ~~to $171.3 million for~~during the six months ended December 31, ~~2017 from $165.4 million for~~2021 compared to the six months ended December 31, ~~2016~~2020. The increase was primarily ~~due~~driven by incremental revenue from our Remitra business, higher revenue associated with enterprise analytics license agreements executed during the current period as compared to the prior year period and 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.Contigo Health business.

Cost of Revenue

~~Cost~~Performance Services segment cost of revenue increased ~~$2.6~~by $5.6 million or 6%, to $46.2 million for the three months ended December 31, 2017 from $43.6 million for the three months ended December 31, 2016. Cost of revenue increased $7.1 million, or 8%, to $92.1 million forduring the six months ended December 31, ~~2017 from $85.0 million for~~2021 compared to the six months ended December 31, ~~2016. This~~2020, primarily due to an increase ~~is primarily driven by higher salaries~~in personnel costs related to growth in our Contigo Health business and ~~benefits~~incremental expenses ~~resulting from increased staffing to support growth and performance-based engagements.~~associated with our Remitra business.

Operating Expenses

~~Operating~~Performance Services segment operating expenses increased ~~$2.3~~by $11.8 million or 7%, to $35.6 million for the three months ended December 31, 2017 from $33.2 million for the three months ended December 31, 2016. Operating expenses increased $7.1 million, or 10%, to $76.8 million forduring the six months ended December 31, ~~2017 from $69.7 million for~~2021 compared to the six months ended December 31, ~~2016.~~

~~Selling,~~2020. The increase was primarily due to an increase of $13.3 million in selling, general and administrative expenses ~~increased $2.7~~driven by an increase in professional fees as well as a decrease in capitalized labor costs. The increase was partially offset by $1.9 million ~~or 12%, from the three months ended December 31, 2016 to 2017 and $7.7~~of lower amortization of purchased intangible assets.

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA decreased by $11.0 million, or 15%, ~~from~~during the six months ended December 31, ~~2016~~2021 compared to ~~2017, primarily driven by depreciation expense resulting from increased capitalization of labor in prior periods.~~

~~Amortization of purchased intangible assets decreased $0.2 million, or 2%, from the three months ended December 31, 2016 to 2017 and $0.3 million, or 2%, from~~ the six months ended December 31, ~~2016~~2020 primarily due to ~~2017, remaining relatively flat.~~

~~Segment Adjusted EBITDA~~

~~While revenue increased, Segment Adjusted EBITDA decreased $0.7 million, or 2%, to $27.9 million for~~ the three months ended December 31, 2017 from $28.6 million for the three months ended December 31, 2016. Segment Adjusted EBITDA decreased $1.8 million, or 3%, 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 an increaseaforementioned increases in cost of ~~sales related to an~~revenue and operating expenses partially offset by the increase in staffing 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 in 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.revenue.

Corporate - ~~Comparison of the Three and Six Months ended December 31, 2017 to 2016~~

The following table ~~summarizes~~presents corporate expenses and ~~Non-GAAP~~ Adjusted EBITDA for the periods presented (in thousands):


	Three Months Ended December 31,							Six Months Ended December 31,
Corporate	2021		2020		Change			2021		2020		Change
Operating expenses:
Selling, general and administrative	$	55,933	$	45,812	$	10,121	22%	$	96,902	$	91,183	$	5,719	6%

Operating expenses	55,933		45,812		10,121		22%	96,902		91,183		5,719		6%
Operating loss	(55,933)		(45,812)		(10,121)		22%	(96,902)		(91,183)		(5,719)		6%
Depreciation and amortization	2,192		2,126					4,423		4,245
Stock-based compensation	16,330		7,415					24,081		14,790
Deferred compensation plan income	2,389		4,803					2,071		7,710
Other expense, net	3,748		738					3,772		4,685
Adjusted EBITDA	$	(31,274)	$	(30,730)	$	(544)	(2)%	$	(62,555)	$	(59,753)	$	(2,802)	(5)%

Three Months Ended December 31, Six Months Ended December 31,
Corporate 2017 2016 2017 2016
Other operating income:
Remeasurement of tax receivable agreement liabilities $ 177,174
$ —
$ 177,174
$ 5,722
Other operating income 177,174
—
177,174
5,722
Operating expenses:
Selling, general and administrative 40,038
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 amortization 2,323
1,912
4,315
3,797
Stock-based compensation 8,951
6,423
17,908
12,319
Strategic and financial restructuring expenses 3
—
3
—
Adjustment to tax receivable agreement liabilities (177,174 ) —
(177,174 ) (5,722 )
ERP implementation expenses 156
433
491
1,526
Deferred compensation plan income 1,577
7
3,115
1,104
Other income 586
��
585
—
Non-GAAP Corporate Adjusted EBITDA $ (26,432 ) $ (25,616 ) $ (54,102 ) $ (54,458 )
Comparison of the Three Months Ended December 31, 2021 to 2020

~~Other~~ Operating ~~Income~~Expenses

~~Other~~Corporate operating ~~income~~expenses increased ~~$177.2~~by $10.1 million ~~from~~during the three months ended December 31, ~~2016~~2021 compared to ~~2017~~the three months ended December 31, 2020, primarily due to an increase in stock-based compensation expense due to higher achievement of performance share awards, an increase in professional fees related to strategic and ~~$171.5~~financial restructuring expenses in support of growth and strategic initiatives, and an increase in employee travel and meeting expenses as travel and meeting limitations due to the COVID-19 pandemic began to subside.

Adjusted EBITDA

Adjusted EBITDA decreased by $0.5 million, ~~from~~or 2%, during the three months ended December 31, 2021 compared to the three months ended December 31, 2020, primarily due to an increase in employee-related expenses, including employee travel and meeting expenses.

Comparison of the Six Months Ended December 31, 2021 to 2020

Operating Expenses

Corporate operating expenses increased by $5.7 million during the six months ended December 31, ~~2016~~2021 compared 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. See "Member-Owner TRA" below for additional information 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~~2020, primarily due to increases in stock-based compensation expense due to higher achievement of performance share awards and employee-related expenses, including employee travel and meeting expenses as travel and meeting limitations due to the COVID-19 pandemic began to subside.

Adjusted EBITDA

Adjusted EBITDA decreased by $2.8 million, ~~for~~or 5%, during the six months ended December 31, ~~2016.~~

~~Selling, general and administrative expenses increased $5.8 million, or 17%, from the three months ended December 31, 2016~~2021 compared to ~~2017 and $7.7 million, or 11%, from~~ the six months ended December 31, ~~2016 to 2017,~~2020, primarily ~~driven by an increase in stock-based compensation expense largely associated with anticipated achievement of certain performance targets, along with increased salaries and benefits expenses~~ due to ~~increased staffing to support continued growth and the acquisitions of Innovatix and Essensa and to a lesser extent Acro Pharmaceuticals.~~

~~Non-GAAP Adjusted EBITDA~~

~~Non-GAAP Adjusted EBITDA decreased by $0.8 million, or 3%, from the three months ended December 31, 2016 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 six months ended December 31, 2016 to 2017, driven primarily by a decrease in audit related fees and ~~severance~~employee-related expenses, ~~partially offset by the previously mentioned increase in professional services costs associated with a certain isolated strategic consulting engagement.~~including employee travel and meeting expenses.

Off-Balance Sheet Arrangements

As of December 31, ~~2017,~~2021, we did not have any off-balance sheet arrangements.

Liquidity and Capital Resources

Our principal source of cash has ~~historically~~primarily 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 defined below and Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for more information) 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 share~~of 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-developed~~internally developed software costs, software purchases and computer hardware purchases.

As of December 31, ~~2017~~2021 and June 30, ~~2017,~~2021, we had cash and cash equivalents ~~totaling $163.0~~of $86.2 million and ~~$156.7~~$129.1 million, respectively. As of December 31, 2021 and June 30, 2021, there were $125.0 million and $75.0 million, respectively, ~~and there were $200.0 million and $220.0 million, respectively, in~~of outstanding borrowings under ~~the~~our Credit Facility. During the six months ended December 31, ~~2017 the Company~~2021, we borrowed $175.0 million and repaid ~~$50.0~~$125.0 million of borrowings ~~and borrowed an additional $30.0 million~~ under ~~the~~our Credit ~~Facility.~~Facility, which was used for other general corporate purposes.

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 of~~dividend 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.

The COVID-19 global pandemic and its variants continue to create challenges throughout the United States and much of the rest of the world. The full extent to which the COVID-19 pandemic may impact our business, operating results, financial condition and liquidity in the future will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and variants thereof, the continued actions to contain it and treat its impact, including the success of the COVID-19 vaccination program, or recurrences of COVID-19, variants thereof or similar pandemics. As discussed in Item 1A. “Risk Factors” in our 2021 Annual Report as well as in this Quarterly Report under “Market and Industry Trends and Outlook” within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation, 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 material increases and decreases in demand for PPE, drugs and other supplies directly related to the treating and preventing the spread of COVID-19 and any variants thereof and decreases in demand for non-COVID-19-related supplies and services.

•Our member hospitals and non-acute care sites have experienced and continue to experience, 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 materially disrupted due to personnel shortages associated with ongoing COVID-19 rates of infection, stay-at-home orders, border closings, rapidly escalating shipping costs and material logistical delays due to port congestion.

•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. Inflation in such contract prices may impact member utilization of items and services available through our GPO contracts, with uncertain impact on our net administrative fees revenue and direct sourcing revenue. 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 and any variants thereof 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 foreseen and unforeseen events and circumstances, all of which could negatively impact us.

•In response to COVID-19 and variants thereof, 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.

Discussion of Cash Flows for the Six Months ~~ended~~Ended December 31, ~~2017~~2021 and ~~2016~~2020

A summary of net cash flows follows (in thousands):


	Six Months Ended December 31,							Six Months Ended December 31,
	2017			2016				2021		2020
Net cash provided by (used in):							Net cash provided by (used in):
Operating activities	$	206,515		$	138,364		Operating activities	$	197,527	$	116,177
Investing activities	(38,622		)	(336,358		)	Investing activities	(68,660)		(46,883)
Financing activities	(161,614		)	168,069			Financing activities	(171,846)		(59,585)
Net increase (decrease) in cash and cash equivalents	$	6,279		$	(29,925	)
Net increase in cash and cash equivalents							Net increase in cash and cash equivalents	$	(42,979)	$	9,709

Net cash provided by operating activities increased ~~$68.2~~by $81.4 million ~~from the six months ended December 31, 2016~~primarily due to ~~2017 primarily driven by an~~a decrease of $151.6 million in cash paid for cost of revenue. This increase ~~in net administrative fees as well as decreased outflows related to working capital needs,~~was partially offset by ~~increased selling, general~~a decrease of $43.6 million in cash received from net revenues and ~~administrative expenses~~increase of $34.4 million in ~~the current period.~~payments of operating expenses.

Net cash used in investing activities ~~decreased $297.7 million from the six months ended December 31, 2016 to 2017 driven~~increased by our $222.2 million acquisition of Innovatix and Essensa, our $68.8 million acquisition of Acro Pharmaceuticals and our $65.7 million investment in FFF during the prior period, partially offset by $48.0 million in proceeds from the sale of marketable securities during the prior period.

~~Net cash provided by financing activities was $168.1~~$21.8 million for the six months ended December 31, ~~2016 while~~2021 compared to the six months ended December 31, 2020. The increase in net cash used in investing activities was primarily due to $26.0 million of cash paid by ExPre for an ownership interest in Exela Holdings, Inc., which was partially offset by a $2.2 million reduction in purchases of property and equipment.

Net cash used in financing activities ~~was $161.6~~increased by $112.3 million for the six months ended December 31, ~~2017. The change in~~2021 compared to the six months ended December 31, 2020. Net cash ~~flows provided by and~~ used in financing activities was ~~largely~~ driven by ~~$327.5~~$173.9 million for repurchases of borrowings under the Credit Facility in the prior period, partially offset by $20.0 million in net repayments under the Credit Facility during the current period, and to a lesser extent, the $100.0 million settlement 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 share~~the fiscal 2022 stock repurchase program, an increase of $46.9 million in payments made on notes payable and an increase in cash dividend payments of $2.7 million. The net cash used in financing activities was partially offset by an increase of $25.0 million in net borrowings under our Credit Facility, a reduction of $34.2 million in distributions to limited partners of Premier LP and payments to limited partners of Premier LP related to tax receivable agreements as both distributions and payments were eliminated in connection with the ~~current period.~~August 2020 Restructuring, an increase of $34.8 million in proceeds from the issuance of Class A common stock in connection with the exercise of outstanding stock options and an increase of $17.2 million in other financing activities. Other financing activities is primarily driven by proceeds from member health systems that acquired membership interests in ExPre.

Discussion of Non-GAAP Free Cash Flow for theSix Months ~~ended~~Ended December 31, ~~2017~~2021 and ~~2016~~2020

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, early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring and purchases of property and equipment. Non-GAAP Free ~~cash flow~~Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt ~~repayments.~~ repayments under our Credit Facility.

A summary of Non-GAAP Free Cash Flow and reconciliation to net cash provided by operating activities for the periods presented follows (in thousands):


	Six Months Ended December 31,
	2021		2020
Net cash provided by operating activities	$	197,527	$	116,177
Purchases of property and equipment	(42,660)		(44,864)
Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)	(47,741)		—
Distributions to limited partners of Premier LP	—		(9,949)
Payments to limited partners of Premier LP related to tax receivable agreements	—		(24,218)
Non-GAAP Free Cash Flow	$	107,126	$	37,146



Delaware		35-2477140
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

13034 Ballantyne Corporate Place ~~Charlotte, North Carolina~~		~~28277~~
Charlotte,	North Carolina	28277
(Address of principal executive offices)		(Zip Code)


Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, $0.01 Par Value	PINC	NASDAQ Global Select Market


	Useful Life	December 31, 2021		June 30, 2021
Member relationships	14.7 years	$	386,100	$	386,100
Technology	6.1 years	186,017		186,017
Customer relationships	9.6 years	70,830		70,830
Trade names	7.4 years	24,610		24,610
Non-compete agreements	5.3 years	11,315		11,315
Other (a)	10.2 years	7,682		7,682
Total intangible assets		686,554		686,554
Accumulated amortization		(311,650)		(289,912)
Total intangible assets, net		$	374,904	$	396,642



	Useful Life	December 31, 2017			June 30, 2017
Member relationships	14.7 years	$	220,100		$	220,100
Technology	5.0 years	142,317			143,727
Customer relationships	8.3 years	48,120			48,120
Trade names	8.3 years	22,710			22,710
Distribution network	10.0 years	22,400			22,400
Favorable lease commitments	10.1 years	11,393			11,393
Non-compete agreements	5.9 years	8,710			8,710
Total intangible assets		475,750			477,160
Accumulated amortization		(125,903		)	(99,198		)
Intangible assets, net		$	349,847		$	377,962



	Commitment Amount		Due Date	December 31, 2017			June 30, 2017
Credit Facility	$	750,000	June 24, 2019	$	200,000		$	220,000
Notes payable	—		Various	7,683			14,272
Total debt				207,683			234,272
Less: Current portion				(201,139		)	(227,993		)
Total long-term debt				$	6,544		$	6,279



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	December 31, 2017			June 30, 2017
Redeemable limited partners' capital	2,398,640			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, 2017	573			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


	Class A Common Stock			Class B Common Stock			Treasury Stock			Additional Paid-In Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Stockholders' Equity
	Shares	Amount		Shares	Amount		Shares	Amount
Balance at June 30, 2021	122,533	$	1,225	—	$	—	—	$	—	$	2,059,194	$	—	$	169,474	$	2,229,893
Issuance of Class A common stock under equity incentive plan	1,239	13		—	—		—	—		22,851		—		—		22,864
Treasury stock	(1,091)	—		—	—		1,091	(42,628)		—		—		—		(42,628)
Stock-based compensation expense	—	—		—	—		—	—		7,554		—		—		7,554
Repurchase of vested restricted units for employee tax-withholding	—	—		—	—		—	—		(9,171)		—		—		(9,171)
Net income	—	—		—	—		—	—		—		—		121,306		121,306
Net loss attributable to non-controlling interest	—	—		—	—		—	—		(698)		—		698		—
Dividends ($0.20 per share)	—	—		—	—		—	—		—		—		(24,877)		(24,877)
Non-controlling interest related to acquisition	—	—		—	—		—	—		23,145		—		—		23,145
Balance at September 30, 2021	122,681	1,238		—	—		1,091	(42,628)		2,102,875		—		266,601		2,328,086
Issuance of Class A common stock under equity incentive plan	579	5		—	—		—	—		14,398		—		—		14,403
Issuance of Class A common stock under employee stock purchase plan	52	1		—	—		—	—		1,976		—		—		1,977
Treasury stock	(3,377)	—		—	—		3,377	(133,396)		—		—		—		(133,396)
Stock-based compensation expense	—	—		—	—		—	—		16,234		—		—		16,234
Repurchase of vested restricted units for employee tax-withholding	—	—		—	—		—	—		(1,495)		—		—		(1,495)
Net income	—	—		—	—		—	—		—		—		77,232		77,232
Net income attributable to non-controlling interest	—	—		—	—		—	—		1,687		—		(1,687)		—
Change in ownership of consolidated entity	—	—		—	—		—	—		12		—		—		12
Dividends ($0.20 per share)	—	—		—	—		—	—		—				(24,250)		(24,250)






Foreign currency translation loss	—	—		—	—		—	—		—		(1)		—		(1)
Balance at December 31, 2021	119,935	$	1,244	—	$	—	4,468	$	(176,024)	$	2,135,687	$	(1)	$	317,896	$	2,278,802



	Acquisition Date Fair Value
Cash paid at closing	$	227,500
Cash paid on January 10, 2017	97,500
Purchase price	325,000
Additional cash paid at closing	10,984
Adjusted purchase price	335,984
Earn-out liability	16,662
Receivable from GNYHA Holdings, LLC	(3,000		)
Total consideration paid	349,646
Cash acquired	(16,267		)
Net consideration	333,379
50% ownership interest in Innovatix	218,356
Payable to Innovatix and Essensa	(5,765		)
Enterprise value	545,970

Accounts receivable	21,242
Prepaid expenses and other current assets	686
Fixed assets, net	3,476
Intangible assets	241,494
Total assets acquired	266,898
Accrued expenses	5,264
Revenue share obligations	7,011
Other current liabilities	694
Total liabilities assumed	12,969
Deferred tax liability	42,636
Goodwill	$	334,677



	Carrying Value				Equity in Net Income (Loss)
					Three Months Ended December 31,						Six Months Ended December 31,
	December 31, 2017		June 30, 2017		2017			2016			2017			2016
FFF	$	91,125	$	85,520	$	1,268		$	1,119		$	5,605		$	4,177
Bloodbuy	2,001		2,066		(31		)	(34		)	(65		)	(52		)
PharmaPoint	4,074		4,232		(107		)	(85		)	(158		)	(162		)
Innovatix	—		—		—			4,127			—			10,743
Other investments	1,188		1,061		127			—			127			—
Total investments	$	98,388	$	92,879	$	1,257		$	5,127		$	5,509		$	14,706



	Beginning Balance		Purchases (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 right	24,008		—			(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 right	25,811		—			(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 right	24,050		—			(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



	December 31, 2017		June 30, 2017
Supply Chain Services	$	400,348	$	400,348
Performance Services	506,197		506,197
Total goodwill	$	906,545	$	906,545


	Receivables From Limited Partners		Redeemable Limited Partners' Capital		Total Redeemable Limited Partners' Capital
June 30, 2020	$	(995)	$	1,721,304	$	1,720,309
Distributions applied to receivables from limited partners	141		—		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 equity	854		(1,755,461)		(1,754,607)
September 30, 2020	$	—	$	—	$	—



Date	Distribution ^(a)
August 24, 2017	$	24,951
November 22, 2017	$	20,752



Date of Quarterly Exchange	Number of Class B Common Units Exchanged	Reduction in Redeemable Limited Partners' Capital
July 31, 2017	1,231,410	$	42,976
October 31, 2017	3,651,294	119,289
Total	4,882,704	$	162,265


~~(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.



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, 2017	1,231,410	86,067,478	53,212,057	62%/38%
October 31, 2017	3,651,294	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.~~


														Restricted Stock			Performance Share Awards			Stock Options
	Restricted Stock				Performance Share Awards				Stock Options					Number of Awards	Weighted Average Fair Value at Grant Date		Number of Awards	Weighted Average Fair Value at Grant Date		Number of Options	Weighted Average Exercise Price
	Number of Awards		Weighted Average Fair Value at Grant Date		Number of Awards		Weighted Average Fair Value at Grant Date		Number of Options		Weighted Average Exercise Price
Outstanding at June 30, 2017	576,988		$	32.92	1,085,872		$	32.79	3,372,499		$	30.31
Outstanding at June 30, 2021													Outstanding at June 30, 2021	990,301	$	35.27	1,731,002	$	35.56	2,163,006	$	30.32
Granted	206,929		$	32.81	690,470		$	32.62	550,563		$	32.80	Granted	617,505	$	37.79	651,392	$	37.18	—	$	—
Vested/exercised	(109,174	)	$	31.67	(352,867	)	$	31.73	(103,061	)	$	28.26	Vested/exercised	(281,142)	$	40.41	(588,142)	$	43.74	(1,236,015)	$	30.17
Forfeited	(20,276	)	$	32.50	(46,502	)	$	32.43	(92,179	)	$	34.28	Forfeited	(117,122)	$	33.57	(168,127)	$	31.87	(12,025)	$	36.54
Outstanding at December 31, 2017	654,467		$	33.11	1,376,973		$	32.99	3,727,822		$	30.64
Outstanding at December 31, 2021													Outstanding at December 31, 2021	1,209,542	$	35.53	1,626,125	$	33.63	914,966	$	30.45

Stock options outstanding and exercisable at December 31, 2017									2,620,480		$	29.64
Stock options outstanding and exercisable at December 31, 2021													Stock options outstanding and exercisable at December 31, 2021							914,966	$	30.45


	Unrecognized Stock-Based Compensation Expense		Weighted Average Amortization Period
Restricted stock	$	28,795	2.2 years
Performance share awards	29,291		1.9 years
Total unrecognized stock-based compensation expense	$	58,086	2.1 years



	Intrinsic Value of Stock Options
Outstanding and exercisable	$	3,336
Expected to vest	8
Total outstanding	$	3,344

Exercised during the six months ended December 31, 2017	$	588


	Intrinsic Value of Stock Options
Outstanding and exercisable	$	9,810

~~(a)~~	The 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.


~~(b)~~Exercised during the year ended December 31, 2021			~~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.~~$

9,697
~~(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.~~


	December 31, 2021		June 30, 2021
2022 (a)	$	6,003	$	11,738
2023	12,131		12,012
2024	12,267		12,145
2025	12,301		12,177
2026	9,005		8,878
Thereafter	1,324		1,293
Total future minimum lease payments	53,031		58,243
Less: imputed interest	4,351		5,289
Total operating lease liabilities (b)	$	48,680	$	52,954


~~(a)~~	~~Includes amortization of purchased intangible assets.~~


~~(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~~ (c)Includes non-cash employee stock-based compensation expense and stock purchase plan expense of $0.1 million for both the three months ended December 31, 2021 and 2020and $0.3 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.~~