~~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
$ —


	Nine Months Ended March 31,
	2023		2022
Operating activities
Net income	$	155,982	$	237,607
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	100,568		95,764
Equity in net income of unconsolidated affiliates	(14,547)		(17,165)
Deferred income taxes	2,083		36,926
Stock-based compensation	16,375		37,792
Gain on FFF Put and Call Rights	—		(64,110)
Other, net	3,066		4,578
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, inventories, prepaid expenses and other assets	47,389		91,418
Contract assets	(31,975)		(39,139)
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities	52,237		(48,882)
Net cash provided by operating activities	331,178		334,789
Investing activities
Purchases of property and equipment	(58,464)		(61,061)
Acquisition of businesses and equity method investments, net of cash acquired	(187,750)		(26,000)
Investment in unconsolidated affiliates	(2,060)		(16,000)
Other	(1,510)		(10,000)
Net cash used in investing activities	(249,784)		(113,061)
Financing activities
Payments made on notes payable	(76,024)		(75,082)
Proceeds from credit facility	350,000		300,000
Payments on credit facility	(265,000)		(125,000)
Proceeds from exercise of stock options under equity incentive plan	704		37,385
Cash dividends paid	(75,227)		(72,861)
Repurchase of Class A common stock (held as treasury stock)	—		(250,129)
Other, net	(10,489)		14,318
Net cash used in financing activities	(76,036)		(171,369)
Effect of exchange rate changes on cash flows	(8)		3
Net increase in cash and cash equivalents	5,350		50,362
Cash and cash equivalents at beginning of period	86,143		129,141
Cash and cash equivalents at end of period	$	91,493	$	179,503

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. 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. The Company, together with its subsidiaries and affiliates, is a leading healthcare performance improvement company that unites hospitals, health systems, physicians, employers, product suppliers, service providers, and other healthcare providers and organizations to improve and innovate in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare ~~industry.~~industry and continues to expand its capabilities to more fully address and coordinate care improvement and standardization in the employer, payor and life sciences markets. 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 business segments: Supply Chain Services and Performance Services. See Note 1614 - 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, purchased services and direct sourcing activities. The Performance Services segment ~~includes one~~consists of three sub-brands: PINC AITM, the ~~largest informatics~~Company’s technology and ~~advisory~~ services ~~businesses~~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 and managed services for clinical and operational design, and workflow solutions to hardwire sustainable change in the ~~United States focused on healthcare providers. The Company's software as a service ("SaaS") informatics products utilize~~provider, life sciences and payer markets; Contigo Health®, the Company's comprehensive data set 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, governmentCompany’s direct-to-employer business which provides third-party administrator services and ~~insurance~~ management ~~services.~~

The Company, through its wholly-owned subsidiary, Premier Services, LLC ("Premier GP"), held an approximate 40% and 37% general partner interest in our main operating company, Premier Healthcare Alliance, L.P. ("Premier LP"), at December 31, 2017 and June 30, 2017, respectively. In additionof health-benefit programs that allow employers to ~~their ownership interest in Premier, our member owners held an approximate 60% and 63% limited partner 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, of the Company's combined Class A and Class B common stock through their ownership of Class B common stock. During the six months ended December 31, 2017, the member owners exchanged 4.9 million Class B common units and associated Class B common shares for an equal number of Class A common shares pursuant to an exchange agreement (the "Exchange Agreement") entered into by the member owners in connectioncontract directly with the completion of our initial public offering on October 1, 2013. The Exchange Agreement provides each member owner the cumulative right to exchange up to one-seventh of its initial allocation of Class B common units,healthcare providers as well as ~~any additional Class B common units purchased by such member owner pursuant~~partner with healthcare providers to ~~certain rights~~provide employers access to a specialized care network through Contigo Health’s centers of ~~first refusal, for shares of Class A common stock (on a one-for-one basis subject~~excellence program and cost containment and wrap network; and RemitraTM, the Company’s digital invoicing and payables automation business which provides financial support services 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 Audithealthcare providers 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.suppliers.

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~~2022 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~~nine months ended ~~December~~March 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 power2023 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~~2022 (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


	Nine Months Ended March 31,
	2023		2022
Supplemental schedule of non-cash investing and financing activities:

Non-cash additions to property and equipment	$	5	$	129
Non-cash investment in unconsolidated affiliates	7,800		—
Accrued dividend equivalents	778		738

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, but not limited to, estimates for net administrative fees revenue, software licenses, other services and support revenue, contract assets, deferred revenue, contract costs, allowances for ~~doubtful accounts,~~credit losses, reserves for net realizable value of inventory, obsolete inventory, 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~~2022 Annual Report.

Recently Adopted Accounting Standards

In ~~July 2015,~~October 2021, the ~~FASB~~Financial Accounting Standards Board issued Accounting Standards Update ~~("ASU"~~(“ASU”) ~~2015-11,~~ ~~Inventory~~No. 2021-08 Business Combinations (Topic ~~330)~~805): ~~Simplifying the Measurement of Inventory~~Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, (“ASU 2021-08”), which requires ~~entities to~~that an acquirer recognize and measure ~~most inventory "at the lower of cost~~contract assets 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.contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The Company adopted ~~this~~ASU 2021-08 during the second quarter of fiscal 2023. The standard ~~effective July 1, 2017 using the prospective approach. The implementation of this ASU~~ did not have a material ~~effect~~impact 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,~~ ~~which~~clarifies when changes to the terms or conditions of a share-based payment award must be accounted for 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.

~~Recently Issued Accounting Standards Not Yet Adopted~~

~~In January 2017, the FASB issued ASU 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~, which eliminates Step 2 from the goodwill impairment test. The guidance requires an entity to perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. In addition, the guidance eliminates the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The new standard will be effective for the Company for the fiscal year beginning July 1, 2020. Early adoption is permitted for interim and annual goodwill impairment tests performed after January 1, 2017. The Company is currently evaluating the impact of the adoption of the new standard on its consolidatedCompany’s financial statements ~~and~~nor its 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~~TRPN Direct Pay, Inc. and ~~Essensa~~Devon Health, Inc. 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 October 13, 2022, the Company, through its consolidated subsidiary ~~Premier Supply Chain Improvement ("PSCI"~~Contigo Health, LLC (“Contigo Health”), ~~held 50%~~acquired certain assets (the “TRPN Transferred Assets”) of TRPN Direct Pay, Inc. and Devon Health, Inc. (collectively, “TRPN”), including contracts with more than 900,000 providers (collectively, the ~~membership interests~~“Assumed Contracts”), and agreed to assume certain liabilities and obligations of TRPN with regard to the Assumed Contracts (referred to as the “TRPN acquisition”). The TRPN Transferred Assets relate to businesses of TRPN focused on improving access to quality healthcare and reducing the cost of medical claims through pre-negotiated discounts with network providers, including acute-care hospitals, surgery centers, physicians and other non-acute providers in ~~Innovatix (see Note 4 - Investments). On December 2, 2016,~~the United States. Contigo Health also agreed to license proprietary cost containment technology of TRPN.

The purchase price paid by the Company ~~through PSCI, acquired from GNYHA Holdings, LLC ("GNYHA Holdings") (see~~to complete the TRPN acquisition consisted of cash of $177.5 million, funded with borrowings under the Company’s Credit Facility (as defined in Note 148 - ~~Related Party Transactions) the remaining 50% ownership interest of Innovatix~~Debt and ~~100% of the ownership interest in Essensa for $325.0 million,~~Notes Payable) and cash on hand, of which ~~$227.5~~$17.8 million was placed in ~~cash was paid at closing~~escrow to satisfy indemnification obligations of TRPN to Contigo Health and ~~$97.5 million in cash was paid on January 10, 2017. As a result of certain purchase price adjustments provided for in~~its affiliates and other parties related thereto under the purchase agreement governing the ~~adjusted purchase price was $336.0 million.~~

In connection with the acquisition, the Company utilized its credit facility dated June 24, 2014, as amended on June 4, 2015 (the "Credit Facility") to fund the $325.0 million purchase price (see Note 8 - Debt), the outstanding portion of which is reflected within current portion of long-term debt in the Condensed Consolidated Balance Sheets at December 31, 2017. The Company incurred transaction costs related to this acquisition of $1.6 million and $4.4 million during the three months ended December 31, 2017 and 2016, respectively, and $3.4 million and $4.7 million during the six months ended December 31, 2017 and 2016, respectively. These transaction costs were included in selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income.

TRPN acquisition.

The Company has accounted for the Innovatix and Essensa acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired (see Note 6 - Intangible Assets, Net) and liabilities assumed based on their fair values. The acquisition resulted in the recognition of approximately $334.7 million of goodwill (see Note 7 - Goodwill) attributable to the anticipated profitability of Innovatix and Essensa. The acquisition was considered an asset acquisition for tax purposes, and accordingly, the Company expects the goodwill to be deductible for tax purposes.

~~The fair values assigned to the net assets acquired and the liabilities assumed as of the acquisition date were as follows (in thousands):~~

Acquisition Date Fair Value
Cash paid at closing $ 227,500
Cash paid on January 10, 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~~TRPN 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 $116.6 million, consisting primarily of the provider network.

The TRPN acquisition resulted in the recognition of ~~approximately $33.9~~$60.9 million of goodwill ~~(see Note 7 - Goodwill)~~ attributable to the anticipated profitability of ~~Acro Pharmaceuticals.~~TRPN, based on the purchase price paid in the acquisition compared to the fair value of the net assets acquired. The ~~Acro Pharmaceuticals~~TRPN 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 TRPN acquisition is preliminary and subject to changes in the valuation of the assets acquired and liabilities assumed. TRPN is being integrated within Premier under Contigo Health 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 historic~~the Company’s historical 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):


					Equity in Net Income
					Three Months Ended				Nine Months Ended
	Carrying Value				March 31,				March 31,
	March 31, 2023		June 30, 2022		2023		2022		2023		2022
FFF	$	136,584	$	137,162	$	1,370	$	2,437	$	9,075	$	11,836
Exela	31,368		27,733		2,865		501		3,635		1,504
Qventus	16,000		16,000		—		—		—		—
Prestige	16,206		15,597		139		935		610		3,272
Other investments	30,142		19,053		256		118		1,227		553
Total investments	$	230,300	$	215,545	$	4,630	$	3,991	$	14,547	$	17,165

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 its ~~consolidated~~indirect, wholly owned subsidiary ~~PSCI, acquired~~Premier Supply Chain Improvement, Inc. (“PSCI”), held a 49% interest in FFF Enterprises, Inc. (“FFF”) through its ownership of ~~the issued and outstanding~~ stock of FFF ~~Enterprises, Inc. ("FFF")~~at March 31, 2023 and June 30, 2022. The Company accounts for ~~$65.7 million~~its investment in ~~cash plus consideration in the form~~FFF as part of the Supply Chain Services segment.

On March 3, 2023, the Company and the majority shareholder of FFF ~~put~~amended the FFF shareholders’ agreement and ~~call rights. The~~in lieu of a distribution, the Company ~~recorded~~received an increase of $24.8 million to the ~~initial investment~~its liquidation preferences on the Class B common stock in FFF, bringing the Company’s total liquidation preference in FFF to $32.3 million. In the event of liquidation or dissolution of FFF, the Company will receive the liquidation preference of $32.3 million prior to any pro rata distribution of FFF’s proportional equity value between the Company and the majority shareholder of FFF. As a result of the increase to the liquidation preference and priority of the Company’s Class B common stock in FFF in the ~~accompanying Condensed Consolidated Balance Sheets at $81.1 million,~~event of ~~which $65.7 million was in cash and $15.4 million was consideration in~~liquidation or dissolution of FFF, the ~~form of the initial net fair value of the FFF put and call rights (see Note 5 - Fair Value Measurements for additional information related to the fair values of the FFF put and call rights). The~~ Company ~~accounts~~will no longer account for its investment in FFF using the equity method of accounting. As of the date of the amendment, the Company will account for its investment in FFF at cost less impairments, if any, plus or minus any observable changes in fair value.

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 March 31, 2023. At March 31, 2023, the Company owned approximately 15% of the 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 March 31, 2023. At March 31, 2023, the Company owned 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 investments in Exela and Prestige using the equity method of accounting and includes ~~the~~each investment as part of the Supply Chain Services segment.

The Company, through ~~its consolidated subsidiary, PSCI, held a 15% ownership~~PHSI, purchased an approximate 7% interest in ~~BloodSolutions, LLC ("Bloodbuy"~~Qventus, Inc. (“Qventus”) through its ~~5.3 million units~~ownership of ~~Class B Membership Interests at December 31, 2017 and June 30, 2017.~~Qventus Series C preferred stock. The Company accounts for its investment in ~~Bloodbuy using the equity method of accounting as the~~Qventus at cost less impairments, if any, plus or minus any observable changes in fair value. The Company ~~has rights to appoint a Board member, and~~ includes ~~the investment~~Qventus as part of the ~~Supply Chain~~Performance 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)
March 31, 2023
Cash equivalents	$	76	$	76	$	—	$	—
Deferred compensation plan assets	52,787		52,787		—		—
Total assets	52,863		52,863		—		—

Earn-out liabilities	27,174		—		—		27,174

Total liabilities	$	27,174	$	—	$	—	$	27,174

June 30, 2022
Cash equivalents	$	75	$	75	$	—	$	—
Deferred compensation plan assets	52,718		52,718		—		—
Total assets	52,793		52,793		—		—

Earn-out liabilities	22,789		—		—		22,789

Total liabilities	$	22,789	$	—	$	—	$	22,789

Deferred compensation plan assets consisted of highly liquid mutual fund investments, which were classified as Level 1. The current portion of deferred compensation plan assets ($5.1 million and $5.3 million at March 31, 2023 and June 30, 2022, 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 ~~December~~the date of a Key Man Event (the “Call Right”, together with the FFF Put Right, the “Put and Call Rights”). As of March 31, ~~2020. Any such required purchases are to~~2023 and June 30, 2022, 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,~~

Earn-out liabilities

At March 31, 2023, earn-out liabilities have been established in connection with certain of our acquisitions, including the ~~amended~~acquisition of substantially all of the assets and ~~restated shareholders' agreement provides~~certain liabilities of Acurity, Inc. and Nexera, Inc. (the “Acurity and Nexera asset acquisition”) in February 2020 as well as other immaterial acquisitions. The earnout liability related to the Acurity and Nexera asset acquisition was based upon the Company’s achievement of a range of member renewals on terms to be agreed to by the Company ~~with a call right requiring~~and Greater New York Hospital Association based on prevailing market conditions in December 2023. Earn-out liabilities are classified as Level 3 of the ~~majority shareholder to sell its remaining interest in FFF~~fair value hierarchy.

Acurity and Nexera Earn-out (a)

The earn-out liability arising from expected earn-out payments related to the ~~Company, which~~Acurity and Nexera asset acquisition was measured on the acquisition date using a probability-weighted expected payment model and is ~~exercisable at any time within~~remeasured periodically due to changes in management’s estimates of the ~~later~~number of ~~180 calendar days after~~transferred member renewals and market conditions. In determining the ~~date~~fair value of ~~a Key Man Event (generally defined~~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 ~~shareholders' agreement as~~acquisition agreement. The Acurity and Nexera earn-out liability utilized a credit spread of 1.8% at March 31, 2023 and 1.6% at June 30, 2022. As of March 31, 2023 and June 30, 2022, the ~~resignation, termination for cause, death or disability~~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 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 in FFF will be at a per share price equal to the Equity Value per Share.

earn-out liability. The fair value of the ~~FFF put~~Acurity and ~~call rights were determined based on the Equity Value per Share calculation using unobservable inputs, which included the estimated FFF put~~Nexera earn-out liability at March 31, 2023 and ~~call rights' expiration dates, the forecast~~June 30, 2022 was $23.0 million and $22.8 million, respectively.


Input assumptions	As of March 31, 2023		As of June 30, 2022
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	1.8	%	1.6	%

(a)The Acurity and Nexera earn-out liability was initially valued as of FFF's EBITDA over the option period, forecasted movements in the overall market and the likelihood of a Key Man Event. Significant changes to the Equity Value per Share resulting from changes in the unobservable inputs could have a significant impact on the fair values of the FFF put and call rights.

The Company recorded the FFF put and call rights within long-term other liabilities and long-term other assets, respectively, within the accompanying Condensed Consolidated Balance Sheets. Net changes in the fair value of the FFF put and call rights were recorded within other income in the accompanying Condensed Consolidated Statements of Income.

February 28, 2020.

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


	Beginning Balance		Purchases (Settlements)(a)		(Gain)/Loss (b)		Ending Balance
Three Months Ended March 31, 2023
Earn-out liabilities	$	24,098	$	—	$	3,076	$	27,174

Total Level 3 liabilities	$	24,098	$	—	$	3,076	$	27,174

Three Months Ended March 31, 2022
Earn-out liabilities	$	24,139	$	—	$	(945)	$	23,194

Total Level 3 liabilities	$	24,139	$	—	$	(945)	$	23,194

Nine Months Ended March 31, 2023
Earn-out liabilities	$	22,789	$	1,460	$	2,925	$	27,174

Total Level 3 liabilities	$	22,789	$	1,460	$	2,925	$	27,174

Nine Months Ended March 31, 2022
Earn-out liabilities	$	24,249	$	—	$	(1,055)	$	23,194
FFF put right	64,110		(64,110)		—		—
Total Level 3 liabilities	$	88,359	$	(64,110)	$	(1,055)	$	23,194

(a)Purchases for the nine months ended March 31, 2023 includes an earn-out which has not been earned or paid as of March 31, 2023. Settlements for the nine months ended March 31, 2022 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~~:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Net income	$	48,649	$	39,069	$	155,982	$	237,607
Interest expense, net	4,269		2,804		11,759		8,465
Income tax expense	17,232		14,694		59,766		40,094
Depreciation and amortization	20,275		21,408		65,153		62,874
Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
EBITDA	102,341		89,126		328,075		381,930
Stock-based compensation	6,709		14,149		16,859		38,229
Acquisition- and disposition-related expenses	6,294		3,115		11,592		10,282
Strategic initiative and financial restructuring-related expenses	1,942		5,540		10,988		9,314
Gain on FFF Put and Call Rights	—		—		—		(64,110)
Other reconciling items, net (a)	—		258		(312)		262
Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907

Income before income taxes	$	65,881	$	53,763	$	215,748	$	277,701
Equity in net income of unconsolidated affiliates	(4,630)		(3,991)		(14,547)		(17,165)
Interest expense, net	4,269		2,804		11,759		8,465
Gain on FFF Put and Call Rights	—		—		—		(64,110)
Other (income) expense, net	(2,954)		4,248		(3,720)		2,176
Operating income	62,566		56,824		209,240		207,067
Depreciation and amortization	20,275		21,408		65,153		62,874
Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
Stock-based compensation	6,709		14,149		16,859		38,229
Acquisition- and disposition-related expenses	6,294		3,115		11,592		10,282
Strategic initiative and financial restructuring-related expenses	1,942		5,540		10,988		9,314
Equity in net income of unconsolidated affiliates	4,630		3,991		14,547		17,165
Deferred compensation plan expense (income)	2,859		(3,994)		3,148		(1,923)
Other reconciling items, net (b)	95		4		260		9
Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Segment Adjusted EBITDA:
Supply Chain Services	$	122,040	$	118,034	$	371,228	$	381,586
Performance Services	25,018		26,552		87,587		89,277
Corporate	(29,772)		(32,398)		(91,613)		(94,956)
Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907

(a)Other reconciling items, net is primarily attributable to ~~"Our Use~~(gain) loss on disposal of ~~Non-GAAP Financial Measures" for further information regarding~~long-lived assets.

(b)Other reconciling items, ~~excluded in our calculation of Adjusted EBITDA and Segment Adjusted EBITDA.~~net is attributable to other miscellaneous expenses.

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~~:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Net income attributable to stockholders	$	46,801	$	38,415	$	153,563	$	235,964
Net income attributable to non-controlling interest	1,848		654		2,419		1,643
Income tax expense	17,232		14,694		59,766		40,094
Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
Stock-based compensation	6,709		14,149		16,859		38,229
Acquisition- and disposition-related expenses	6,294		3,115		11,592		10,282
Strategic initiative and financial restructuring-related expenses	1,942		5,540		10,988		9,314
Gain on FFF Put and Call Rights	—		—		—		(64,110)
Other reconciling items, net (a)	1,161		1,885		3,520		5,489
Non-GAAP adjusted income before income taxes	93,903		89,603		294,122		309,795
Income tax expense on adjusted income before income taxes (b)	24,415		21,505		76,472		74,351
Non-GAAP Adjusted Net Income	$	69,488	$	68,098	$	217,650	$	235,444

Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings per Share
Weighted Average:
Basic weighted average shares outstanding	118,872		118,697		118,668		120,957
Dilutive securities	944		1,116		1,164		1,345
Weighted average shares outstanding - diluted	119,816		119,813		119,832		122,302

(a)Other reconciling items, net is primarily attributable to ~~"Our Use~~loss on disposal of ~~Non-GAAP Financial Measures"~~long-lived assets and imputed interest on notes payable to former limited partners.

(b)Reflects income tax expense at an estimated effective income tax rate of 26% of non-GAAP adjusted net income before income taxes for ~~further information regarding items excluded in our calculation~~the three and nine months ended March 31, 2023 and 24% of ~~Non-GAAP Adjusted Fully Distributed Net Income~~non-GAAP adjusted net income before income taxes for the three and ~~Non-GAAP Adjusted Fully Distributed Earnings per Share.~~

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.

nine months ended March 31, 2022.

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~~presented:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2023		2022		2023		2022
Basic earnings per share attributable to stockholders	$	0.39	$	0.32	$	1.29	$	1.95
Net income attributable to non-controlling interest	0.02		0.01		0.02		0.01
Income tax expense	0.14		0.12		0.50		0.33
Amortization of purchased intangible assets	0.10		0.09		0.30		0.27
Stock-based compensation	0.06		0.12		0.14		0.32
Acquisition- and disposition-related expenses	0.05		0.03		0.10		0.09
Strategic initiative and financial restructuring-related expenses	0.02		0.05		0.09		0.08
Gain on FFF Put and Call Rights	—		—		—		(0.53)
Other reconciling items, net (a)	0.01		0.02		0.04		0.04
Impact of corporation taxes (b)	(0.21)		(0.18)		(0.64)		(0.61)
Impact of dilutive shares	—		(0.01)		(0.02)		(0.02)
Non-GAAP Adjusted Earnings per Share	$	0.58	$	0.57	$	1.82	$	1.93

(b)Reflects income tax expense at an estimated effective income tax rate of 26% of non-GAAP adjusted net income before income taxes for ~~further information regarding items excluded in our calculation~~the three and nine months ended March 31, 2023 and 24% of ~~Non-GAAP Adjusted Fully Distributed Earnings per Share.~~non-GAAP adjusted net income before income taxes for the three and nine months ended March 31, 2022.

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 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~~Ended March 31, ~~2017~~2023 to ~~2016~~2022

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 ~~increased $52.9~~decreased by $25.6 million ~~or 15%, to $411.4 million for~~during the three months ended ~~December~~March 31, ~~2017 from $358.5 million for~~2023 compared to the three months ended ~~December~~March 31, ~~2016. Net revenue increased $130.2 million, or 19%, to $802.0 million for the six months ended December 31, 2017 from $671.8 million for the six months ended December 31, 2016.~~

Net administrative fees revenue increased $30.2 million, or 23%, from the three months ended December 31, 2016 to 2017 and $55.3 million, or 22%, from the six months ended December 31, 2016 to 2017, primarily driven by aggregate contributions from Innovatix and Essensa, which were acquired 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 primarily~~2022, due to ~~increases~~a decrease of $36.4 million in ~~SaaS informatics~~ products ~~subscriptions~~revenue, partially offset by an increase of $10.8 million in software licenses and ambulatory quality solutions services. Other services and support revenue increased $8.7 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 $32.2 million ~~or 14%,~~during the three months ended March 31, 2023 compared to ~~$200.5~~the three months ended March 31, 2022, primarily due to a decrease of $39.6 million in cost of products revenue, partially offset by an increase of $7.4 million in cost of services and software licenses.

Operating Expenses

Operating expenses were flat for the three months ended ~~December~~March 31, ~~2017 from $176.0 million for~~2023 compared to the three months ended ~~December~~March 31, ~~2016. Cost of revenue increased $77.4 million, or 25%, to $391.9 million for the six months ended December 31, 2017 from $314.5 million for the six months ended December 31, 2016.~~

Cost of services revenue increased $2.4 million, or 5%, from the three months ended December 31, 2016 to 2017 and $6.7 million, or 8% from the six months ended December 31, 2016 to 2017, primarily driven by an increase in salaries and benefits expense resulting from increased staffing to support growth along with higher consulting costs for certain performance-based engagements. We expect cost of service revenue to increase to the extent we expand our performance improvement collaboratives and advisory services to members, continue to develop new and existing internally-developed software applications and expand into new product offerings.

Cost of product revenue increased $22.1 million, or 17%, from the three months ended December 31, 2016 to 2017 and $70.7 million, or 31% from the six months ended December 31, 2016 to 2017, primarily driven by higher product costs associated with the business operations of Acro Pharmaceuticals and due to higher costs driven by growth in direct sourcing sales and the impact of increases in raw materials pricing. We expect our cost of product revenue to increase to the extent we are able to sell additional integrated pharmacy and direct-sourced medical products to new and existing members and enroll additional members into our integrated pharmacy program. The increased cost of product revenues is expected to reduce our gross profit as a percentage of our net revenues.

~~Other Operating Income~~

Other operating income increased $177.2 million from the three months ended December 31, 2016 to 2017 and $171.5 million from the six months ended December 31, 2016 to 2017 as a result of the remeasurement of TRA liabilities, which was primarily attributable to the 14% decrease in the U.S. federal corporate income tax rate associated with the TCJA.

~~Operating Expenses~~

Operating expenses decreased $15.0 million, or 14%, to $122.8 million for the three months ended December 31, 2017 from $107.8 million for the three months ended December 31, 2016. Operating expenses decreased $35.7 million, or 17%, to $251.5 million for the six months ended December 31, 2017 from $215.8 million for the six months ended December 31, 2016.

~~Selling, General and Administrative~~

Selling, general and administrative expenses increased $12.7 million, or 13%, from the three months ended December 31, 2016 to 2017 and $29.0 million, or 15%, from the six months ended December 31, 2016 to 2017, primarily driven by an increase in salaries and benefits expenses resulting from increased staffing mostly associated with acquisitions and to support growth, along with an increase in stock-based compensation expense largely driven by growth in overall equity award grant size year over year in addition to anticipated achievement of certain performance targets.

~~Research and Development~~

Research and development expenses decreased by $0.5 million from the three months ended December 31, 2016 to 2017 and increased by $0.8 million from the six months ended December 31, 2016 to 2017. Research and development expenses consist of employee-related compensation and benefit expenses and third-party consulting fees for technology professionals, net of capitalized labor, incurred to develop our software-related products and services. We experience fluctuations in our research and development expenditures across reportable periods due to the timing of our software development lifecycles, new product features and functionality, new technologies and upgrades to our service offerings.

~~Amortization of Purchased Intangible Assets~~

Amortization of purchased intangible assets increased $2.6 million, or 23%, from the three months ended December 31, 2016 to 2017 and $7.3 million, or 36%, from the six months ended December 31, 2016 to 2017, primarily as a result of additional amortization of purchased intangible assets related to our acquisitions. As we execute on our growth strategy and further deploy capital, we expect further increases in amortization of intangible assets in connection with future potential acquisitions.

2022.

Other Income (Expense), Net

Other income (expense), net ~~decreased $223.0~~increased by $6.4 million ~~or 107%, to $(14.0) million for~~during the three months ended ~~December~~March 31, ~~2017 from $209.0 million for~~2023 compared to the three months ended ~~December~~March 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,~~2022, primarily due to ~~the one-time $205.1~~an increase in income of $7.2 million ~~gain recognized from the remeasurement~~in other income (expense), net, and an increase 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~~$0.6 million in equity in net income of unconsolidated affiliates. As a result of acquiring the remaining 50% of Innovatix, we no longer account for our ownership using the equity method. Other income (expense), net was also impacted by the loss on FFF put and call rights in the current period andThese increases were partially offset by ~~a moderate~~an increase of $1.5 million in ~~equity in net income of FFF, which experienced improved performance in the six months ended December 31, 2017.~~interest expense, net.

Income Tax Expense

For the three months ended ~~December~~March 31, ~~2017~~2023 and ~~2016, the Company~~2022, we recorded tax expense of ~~$231.5~~$17.2 million and ~~$37.4~~$14.7 million, ~~respectively, which equates to~~respectively. The tax expense recorded during the three months ended March 31, 2023 and 2022 resulted in effective tax rates of ~~92%~~26% and 13%, respectively. For the six months ended December 31, 2017 and 2016, the Company recorded tax expense of $244.3 million and $60.8 million, respectively, which equates to effective tax rates of 75% and 17%27%, respectively. The ~~increase~~change in the effective tax ~~rates~~rate is primarily attributable to the ~~remeasurement~~impact of ~~deferred tax balances related to the~~a decrease in the U.S. federal corporate income tax rate from 35% to 21%, pursuant to the TCJA enacted on December 22, 2017. The Company's effective tax rate differs from income taxes recorded at the combined (or blended) statutory income tax rate primarily due to partnership income not subject to federal, state and local income taxes and valuation allowances against deferred tax assets at PHSI. Seestock-based compensation expense. (See Note 1312 - 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~~increased by $1.1 million ~~or 69%, to $56.5 million for~~during the three months ended ~~December~~March 31, ~~2017 from $181.2 million for~~2023 compared to the three months ended ~~December~~March 31, ~~2016,~~2022, primarily due to an increase in the portion of net income attributable to non-controlling interests in our consolidated subsidiaries.

Adjusted EBITDA

Adjusted EBITDA, a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, increased by $5.1 million during the three months ended March 31, 2023, compared to the three months ended March 31, 2022, primarily driven by increases of $4.0 million and $2.6 million in Supply Chain Services and Corporate Adjusted EBITDA, respectively, partially offset by a decrease of $1.6 million in Performance Services Adjusted EBITDA.

Consolidated Results - Comparison of the Nine Months Ended March 31, 2023 to 2022

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 $96.5 million during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022, due to a decrease of $140.7 million in products revenue, partially offset by increases of $39.7 million in software licenses, other services and support revenue and $4.6 million in net administrative fees.

Cost of Revenue

Cost of revenue decreased by $99.3 million during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022, due to a decrease of $126.4 million in cost of products revenue, partially offset by an increase of $27.1 million in cost of services and software licenses.

Operating Expenses

Operating expenses were flat for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022.

Other Income, Net

Other income, net decreased by $64.1 million during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022, primarily due to the prior year gain of $64.1 million on the FFF Put Right as a result of the termination and corresponding derecognition of the FFF Put Right liability in fiscal year 2022.

Income Tax Expense

For the nine months ended March 31, 2023 and 2022, we recorded tax expense of $59.8 million and $40.1 million, respectively. The tax expense recorded during the nine months ended March 31, 2023 and 2022 resulted in effective tax rates of 28% and 14%, respectively. The change in the effective tax rate is primarily attributable to ~~a decrease in non-controlling ownership percentage in Premier LP~~the impact of the Subsidiary Reorganization on the prior year effective tax rate. (See Note 12 - Income Taxes to ~~60% from 64%, respectively.~~ the accompanying condensed consolidated financial statements.)

Net Income Attributable to Non-Controlling Interest

Net income attributable to non-controlling interest ~~decreased $129.7 million, or 56%, to $101.1 million~~was flat for the ~~six~~nine months ended ~~December~~March 31, ~~2017 from $230.8 million for~~2023 compared to the ~~six~~nine months ended ~~December~~March 31, ~~2016, primarily attributable to a decrease in non-controlling ownership percentage in Premier LP to 60% from 64%, respectively.~~2022.

~~Non-GAAP~~ Adjusted EBITDA

~~Non-GAAP~~ Adjusted EBITDA, ~~increased $11.5~~a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, decreased by $8.7 million ~~or 9%, to $133.5 million for~~during the ~~three~~nine months ended ~~December~~March 31, ~~2017 from $122.0 million for~~2023, compared to the ~~three~~nine months ended ~~December~~March 31, ~~2016,~~2022, primarily ~~as a result~~driven by decreases of ~~growth~~$10.4 million and $1.7 million in ~~net administrative fees revenue including contributions related to the Innovatix~~Supply Chain Services and Essensa acquisition, net of a $4.1 million reduction in equity in net income of unconsolidated affiliates due to acquiring the remaining 50% of Innovatix as it was historically accounted for as an unconsolidated affiliate through the date of acquisition, along with an increase in product revenue.Performance Services, respectively. These ~~results~~decreases were partially offset by increased product costs and selling, general and administrative expenses resulting from higher salaries and benefits expenses as a result of acquisitions and to support growth. Additionally, Segment Adjusted EBITDA for the prior period included a $5.6 million non-cash adjustment for cash collections not recognized as revenue on a GAAP basis due to a purchase accounting adjustment.

Non-GAAP Adjusted EBITDA increased $19.9 million, or 9%, to $252.7 million for the six months ended December 31, 2017 from $232.8 million for the six months ended December 31, 2016, primarily as a result of growth in net administrative fees revenue including contributions related to the Innovatix and Essensa acquisition, net of a $10.7 million reduction in equity in net income of unconsolidated affiliates due to acquiring the remaining 50% of Innovatix as it was historically accounted for as an unconsolidated affiliate through the date of acquisition, along with an increase of $3.4 million 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, Corporate Adjusted EBITDA.

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 March 31,							Nine Months Ended March 31,
	2023		2022		Change			2023		2022		Change
Net revenue:
Net administrative fees	$	148,441	$	148,396	$	45	—%	$	452,870	$	448,261	$	4,609	1%
Software licenses, other services and support	11,032		8,914		2,118		24%	35,963		27,165		8,798		32%
Services and software licenses	159,473		157,310		2,163		1%	488,833		475,426		13,407		3%
Products	57,212		93,629		(36,417)		(39)%	183,066		323,825		(140,759)		(43)%
Net revenue	216,685		250,939		(34,254)		(14)%	671,899		799,251		(127,352)		(16)%
Cost of revenue:
Services and software licenses	4,134		3,835		299		8%	13,731		10,472		3,259		31%
Products	49,013		88,621		(39,608)		(45)%	168,507		294,916		(126,409)		(43)%
Cost of revenue	53,147		92,456		(39,309)		(43)%	182,238		305,388		(123,150)		(40)%
Gross profit	163,538		158,483		5,055		3%	489,661		493,863		(4,202)		(1)%
Operating expenses:
Selling, general and administrative	52,033		49,954		2,079		4%	151,848		146,453		5,395		4%
Research and development	77		65		12		18%	322		301		21		7%
Amortization of purchased intangible assets	7,931		8,093		(162)		(2)%	23,970		24,344		(374)		(2)%
Operating expenses	60,041		58,112		1,929		3%	176,140		171,098		5,042		3%
Operating income	103,497		100,371		3,126		3%	313,521		322,765		(9,244)		(3)%
Depreciation and amortization	5,071		6,021					16,892		16,365
Amortization of purchased intangible assets	7,931		8,093					23,970		24,345
Acquisition- and disposition-related expenses	907		(180)					2,417		1,428
Equity in net income of unconsolidated affiliates	4,566		3,726					14,250		16,672
Other reconciling items, net	68		3					178		11
Segment Adjusted EBITDA	$	122,040	$	118,034	$	4,006	3%	$	371,228	$	381,586	$	(10,358)	(3)%

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 March 31, 2023 to 2022

Net Revenue

Supply Chain Services segment net revenue ~~increased $52.2~~decreased by $34.3 million, or ~~19%~~14%, during the three months ended March 31, 2023 compared to ~~$324.9~~the three months ended March 31, 2022 driven by a decrease of $36.4 million in products revenue, partially offset by an increase of $2.1 million in software licenses, other services and support revenue.

Net Administrative Fees

Net administrative fees were flat for the three months ended ~~December~~March 31, ~~2017 from $272.7 million for~~2023 compared to the three months ended ~~December~~March 31, ~~2016. Supply Chain Services segment net~~2022.

Products Revenue

Products revenue ~~increased $124.3~~decreased by $36.4 million, or ~~25%~~39%, ~~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~~during the three months ended ~~December~~March 31, ~~2016~~2023 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 on December 2, 2016. To a lesser extent, net administrative fees were also favorably impacted by a supplier revenue recovery settlement and contract penetration of existing members. Growth in net administrative fees revenue was partially impacted by soft patient utilization trends and timing of cash receipts.

~~Product revenue increased $19.7 million, or 14%, from~~ the three months ended ~~December~~March 31, ~~2016~~2022, primarily a result of lower demand for commodity products and other previously high-demand supplies due to ~~2017~~members’ and ~~$66.3~~other customers’ elevated inventory levels and continued utilization of excess inventory purchased during the COVID-19 pandemic.

Software Licenses, Other Services and Support Revenue

Software licenses, other services and support revenue increased by $2.1 million, or ~~27%~~24%, ~~from~~during the ~~six~~three months ended ~~December~~March 31, ~~2016~~2023 compared to ~~2017,~~the three months ended March 31, 2022, primarily ~~driven by~~due to an increase in ~~integrated pharmacy revenues mostly attributable to contributions from expansion~~purchased services revenue and growth in ~~therapy offerings largely~~service fees 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 ourcommitted purchasing programs.

Cost of Revenue

Supply Chain Services segment cost of revenue ~~increased $21.9~~decreased by $39.3 million, or ~~17%~~43%, ~~to $154.3 million for~~during the three months ended ~~December~~March 31, ~~2017 from $132.4 million for~~2023 compared to the three months ended ~~December~~March 31, ~~2016. Supply Chain Services segment~~2022. The decrease was primarily attributable to the decrease in products revenue and the corresponding decrease in cost of products revenue ~~increased $70.3~~of $39.6 million ~~or 31%, to $299.8 million for the six months ended December 31, 2017 from $229.5 million for the six months ended December 31, 2016.~~

Cost of product revenue increased $22.1 million, or 17%, from the three months ended December 31, 2016 to 2017 and $70.7 million, or 31%, from the six months ended December 31, 2016 to 2017, primarily driven by higher product costs associated with the business operations of Acro Pharmaceuticals and due to ~~growth~~the prior year increase in ~~direct sourcing sales and~~demand as well as lower logistics costs in the ~~impact of increases in raw materials pricing.~~current period.

Operating Expenses

Supply Chain Services segment operating expenses increased ~~$7.0~~by $1.9 million, or ~~17%~~3%, ~~to $47.2 million for~~during the three months ended ~~December~~March 31, ~~2017 from $40.2 million for~~2023 compared to the three months ended ~~December~~March 31, ~~2016.~~ 2022 driven by an increase in SG&A expenses primarily due to restructuring charges as a result of the cost-savings plan enacted during the current year period and acquisition- and disposition-related expenses primarily due to the change in the fair value of the Acurity and Nexera earn-out liability (see Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements).

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA increased by $4.0 million during the three months ended March 31, 2023 compared to the three months ended March 31, 2022, primarily due to higher equity earnings from our investments in unconsolidated affiliates as well as lower logistics costs in cost of products revenue.

Comparison of the Nine Months Ended March 31, 2023 to 2022

Net Revenue

Supply Chain Services segment net revenue decreased by $127.4 million, or 16%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022 driven by a decrease of $140.8 million in products revenue, partially offset by increases of $8.8 million in software licenses, other services and support revenue and $4.6 million in net administrative fees.

Net Administrative Fees

Net administrative fees increased by $4.6 million, or 1%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022. The net increase was driven by increased utilization of our contracts by existing members in our Continuum of Care Program partially offset by an increase in revenue share paid to members primarily as a result of the increased utilization.

Products Revenue

Products revenue decreased by $140.8 million, or 43%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022. The decrease was primarily a result of lower demand for commodity products and other previously high-demand supplies due to members’ and other customers’ elevated inventory levels and continued utilization of excess inventory purchased during the COVID-19 pandemic.

Software Licenses, Other Services and Support Revenue

Software licenses, other services and support revenue increased by $8.8 million, or 32%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022, primarily due to an increase in purchased services revenue and supply chain co-management fees as well as growth in service fees associated with our committed purchasing programs.

Cost of Revenue

Supply Chain Services segment cost of revenue decreased by $123.2 million, or 40%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022 primarily attributable to the decrease in cost of products revenue of $126.4 million in relation to the decrease in products revenue due to the prior year increase in demand partially offset by fluctuations in product costs and higher logistics costs in the current year period. This decrease was partially offset by an increase in personnel costs as well as consulting services expenses associated with the increase in purchased services revenue.

Operating Expenses

Supply Chain Services segment operating expenses increased ~~$21.2~~by $5.0 million, or ~~29%~~3%, ~~to $94.1 million for~~during the ~~six~~nine months ended ~~December~~March 31, ~~2017 from $72.9 million for~~2023 compared to the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~

~~Selling, general and administrative~~2022 driven by an increase in SG&A expenses ~~increased $4.1 million, or 11%, from the three months ended December 31, 2016 to 2017 and $13.6 million, or 19%, from the six months ended December 31, 2016 to 2017,~~primarily due to ~~higher salaries and benefits expense primarily associated with the acquisitions of Innovatix and Essensa and to a lesser extent, the acquisition of Acro Pharmaceuticals.~~

~~Amortization of purchased intangible assets increased $2.8 million from the three months ended December 31, 2016 to 2017 and $7.7 million from the six months ended December 31, 2016 to 2017, primarily~~restructuring charges as a result of ~~additional amortization of purchased intangible assets related to our acquisitions.~~

~~Segment Adjusted EBITDA~~

~~Segment Adjusted EBITDA~~the cost-savings plan enacted during the current year period, increased $13.0 million, or 11%, to $132.0 million for the three months ended December 31, 2017 from $119.0 million for the three months ended December 31, 2016. Segment Adjusted EBITDA increased $21.3 million, or 9%, to $257.7 million for the six months ended December 31, 2017 from $236.3 million for the six months ended December 31, 2016. This increase was primarily a result of growth in net administrative fees revenue including contributions related to the Innovatixheadcount and Essensa acquisition, net of the reduction in equity in net income of unconsolidated affiliates due to acquiring the remaining 50% of Innovatix as it was historically accounted for as an unconsolidated affiliate through the date of acquisition, along with an increase in product revenue. These increases were partially offset by increased product costsemployee travel and ~~selling, general and administrative expenses resulting from higher salaries and benefit~~meeting expenses as a result of ~~acquisitions and to support growth. Additionally,~~the easing of pandemic-related travel restrictions during the current year period.

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA ~~for~~decreased by $10.4 million during the ~~prior period included a $5.6 million non-cash adjustment for cash collections not recognized as revenue on a GAAP basis~~nine months ended March 31, 2023 compared to the nine months ended March 31, 2022, primarily due to the aforementioned decrease in products revenue and corresponding decrease in cost of products revenue, higher operating expenses due to increased headcount and employee travel and meeting expenses as pandemic-related travel restrictions were lifted and a ~~purchase accounting adjustment.~~decrease in equity earnings from our investments in unconsolidated affiliates.

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 March 31,							Nine Months Ended March 31,
	2023		2022		Change			2023		2022		Change
Net revenue:
Software licenses, other services and support
SaaS-based products subscriptions	$	44,685	$	49,347	$	(4,662)	(9)%	142,097		144,357		$	(2,260)	(2)%
Consulting services	22,087		16,342		5,745		35%	57,963		46,440		11,523		25%
Software licenses	14,400		12,169		2,231		18%	51,197		44,033		7,164		16%
Other	24,384		19,045		5,339		28%	72,603		58,132		14,471		25%
Net revenue	105,556		96,903		8,653		9%	323,860		292,962		30,898		11%
Cost of revenue:
Services and software licenses	50,015		42,900		7,115		17%	149,697		125,854		23,843		19%
Cost of revenue	50,015		42,900		7,115		17%	149,697		125,854		23,843		19%
Gross profit	55,541		54,003		1,538		3%	174,163		167,108		7,055		4%
Operating expenses:
Selling, general and administrative	48,281		43,354		4,927		11%	135,438		124,617		10,821		9%
Research and development	924		761		163		21%	2,654		2,366		288		12%
Amortization of purchased intangible assets	3,985		3,059		926		30%	11,445		8,545		2,900		34%
Operating expenses	53,190		47,174		6,016		13%	149,537		135,528		14,009		10%
Operating (loss) income	2,351		6,829		(4,478)		(66)%	24,626		31,580		(6,954)		(22)%
Depreciation and amortization	13,204		13,104					41,962		39,804
Amortization of purchased intangible assets	3,985		3,059					11,445		8,545
Acquisition- and disposition-related expenses	5,387		3,295					9,175		8,854
Equity in net income of unconsolidated affiliates	64		265					297		494
Other reconciling items, net	27		—					82		—
Segment Adjusted EBITDA	$	25,018	$	26,552	$	(1,534)	(6)%	$	87,587	$	89,277	$	(1,690)	(2)%

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 March 31, 2023 to 2022

Net Revenue

~~Other services and support~~Net revenue in our Performance Services segment increased ~~$0.7~~by $8.7 million, or 1%9%, ~~to $86.5 million for~~during the three months ended ~~December~~March 31, ~~2017 from $85.9 million for~~2023 compared to the three months ended ~~December~~March 31, ~~2016~~2022. The increase was primarily attributable to growth of $5.7 million in consulting services under our PINC AI platform, an increase of $5.3 million in other revenue driven by growth in Contigo

Health primarily as a result of the TRPN acquisition and growth of $2.2 million in software licenses driven by an increased number of enterprise analytics license agreements entered into during the current year period. These increases were partially offset by a decrease in SaaS-based products subscription revenue due to the conversion of SaaS-based products to licensed-based products.

Cost of Revenue

Performance Services segment cost of revenue increased by $7.1 million, or 17%, during the three months ended March 31, 2023 compared to the three months ended March 31, 2022, primarily due to ~~increases~~an increase in ~~SaaS informatics products subscriptions and ambulatory quality solutions services. Other~~consulting services ~~and~~expenses as well as higher costs associated with increased headcount to support revenue growth in the area of clinical intelligence within our PINC AI platform and Contigo Health business.

Operating Expenses

Performance Services segment operating expenses increased ~~$5.9~~by $6.0 million, or 4%13%, ~~to $171.3 million for~~during the ~~six~~three months ended ~~December~~March 31, ~~2017 from $165.4 million for~~2023 compared to the ~~six~~three months ended ~~December~~March 31, ~~2016~~2022. The increase was driven by an increase of $4.9 million in SG&A expenses primarily due to higher costs associated with increased headcount in our PINC AI platform and Contigo Health business and an increase in acquisition- and disposition-related expenses. In addition, operating expenses increased by $0.9 million due to amortization of purchased intangible assets primarily associated with the TRPN acquisition.

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA decreased by $1.5 million, or 6%, during the three months ended March 31, 2023 compared to the three months ended March 31, 2022 primarily due to the aforementioned higher cost of revenue driven by increases in consulting services and higher operating expenses related to increased headcount to support revenue growth. These decreases to adjusted EBITDA were partially offset by revenue growth in ~~cost management advisory services related~~PINC AI and Contigo Health.

Comparison of the Nine Months Ended March 31, 2023 to ~~performance-based engagements. We also experienced increases~~2022

Net Revenue

Net revenue 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 increased by $30.9 million, or 11%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022. The increase was primarily attributable to growth of $14.5 million in other revenue driven by growth in Contigo Health as well as incremental revenue from the TRPN acquisition, growth of $11.5 million in consulting services under our PINC AI platform and growth of $7.2 million in software licenses driven by an increased number of enterprise analytics license agreements entered into during the current year period. These increases were partially offset by a decrease in SaaS-based products subscription revenue due to the ~~timing~~conversion 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 revenueSaaS-based products 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.~~licensed-based products.

Cost of Revenue

~~Cost~~Performance Services segment cost of revenue increased ~~$2.6~~by $23.8 million, or 6%19%, ~~to $46.2 million for~~during the ~~three~~nine months ended ~~December~~March 31, ~~2017 from $43.6 million for~~2023 compared to the ~~three~~nine months ended ~~December~~March 31, ~~2016. Cost of revenue~~2022, primarily due to an increase in consulting services as well as higher costs associated with increased $7.1 million, or 8%, to $92.1 million for the six months ended December 31, 2017 from $85.0 million for the six months ended December 31, 2016. This increase is primarily driven by higher salaries and benefits expenses resulting from increased staffingheadcount to support revenue growth in our PINC AI platform and ~~performance-based engagements.~~Contigo Health business.

Operating Expenses

~~Operating~~Performance Services segment operating expenses increased ~~$2.3 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~~by $14.0 million, or 10%, ~~to $76.8 million for~~during the ~~six~~nine months ended ~~December~~March 31, ~~2017 from $69.7 million for~~2023 compared to the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~

Selling, general and administrative expenses increased $2.7 million, or 12%, from the three months ended December 31, 2016 to 2017 and $7.7 million, or 15%, from the six months ended December 31, 2016 to 2017, primarily2022. The increase was driven by ~~depreciation~~an increase of $10.8 million in SG&A expenses due to higher costs associated with increased headcount primarily in our PINC AI business and increased employee travel and meeting expenses as a result of the easing of pandemic-related travel restrictions during the current year period. In addition, operating expense ~~resulting from~~ increased ~~capitalization~~by $2.9 million as a result of ~~labor in prior periods.~~

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

Segment Adjusted EBITDA

~~While revenue increased,~~Performance Services Segment Adjusted EBITDA decreased ~~$0.7~~by $1.7 million, or 2%, ~~to $27.9 million for~~during the ~~three~~nine months ended ~~December~~March 31, ~~2017 from $28.6 million for~~2023 compared to the ~~three~~nine months ended ~~December~~March 31, ~~2016. Segment Adjusted EBITDA decreased $1.8 million, or 3%,~~2022 primarily due to ~~$49.15 million for~~ the ~~six months ended December 31, 2017 from $50.9 million for the six months ended December 31, 2016. This decrease is primarily a result of an increase in~~aforementioned higher cost of ~~sales related to an increase~~revenue driven by increases in ~~staffing~~consulting services and ~~costs to support growth and performance-based engagements, and was impacted on a comparable basis~~increases in operating expenses due to ~~higher~~costs associated with increased headcount, partially offset by revenue ~~recognition from performance-based engagements~~growth in ~~the prior year. Specifically, the Company made investments in staff~~PINC AI and ~~infrastructure to support growth involving primarily larger and more complex engagements that include significant performance-based advisory services initiatives.~~Contigo Health.

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 March 31,							Nine Months Ended March 31,
	2023		2022		Change			2023		2022		Change
Operating expenses:
Selling, general and administrative	$	43,282	$	50,376	$	(7,094)	(14)%	$	128,907	$	147,279	$	(18,372)	(12)%

Operating expenses	43,282		50,376		(7,094)		(14)%	128,907		147,279		(18,372)		(12)%
Operating loss	(43,282)		(50,376)		7,094		(14)%	(128,907)		(147,279)		18,372		(12)%
Depreciation and amortization	2,000		2,282					6,299		6,705
Stock-based compensation	6,709		14,149					16,859		38,229
Strategic initiative and financial restructuring-related expenses	1,942		5,539					10,988		9,311
Deferred compensation plan expense (income)	2,859		(3,992)					3,148		(1,922)

Adjusted EBITDA	$	(29,772)	$	(32,398)	$	2,626	8%	$	(91,613)	$	(94,956)	$	3,343	4%

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 March 31, 2023 to 2022

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

~~Other~~Corporate operating ~~income increased $177.2~~expenses decreased by $7.1 million, ~~from~~or 14%, during the three months ended ~~December~~March 31, ~~2016~~2023 compared to ~~2017 and $171.5 million from~~ the ~~six~~three months ended ~~December~~March 31, ~~2016~~2022, primarily due to ~~2017~~a decrease in performance-related compensation expense, a decrease in stock-based compensation expense due to lower forecasted achievement and lower professional fees related to strategic initiative and financial restructuring-related activities. These decreases were partially offset by a net increase in expenses as a result of the ~~remeasurement of TRA liabilities, which was primarily attributable to~~cost-savings plan enacted during the ~~14% decrease~~current year period and an increase in deferred compensation plan expense 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.~~current period as a result of market changes.

~~Operating Expenses~~Adjusted EBITDA

~~Operating expenses~~Corporate adjusted EBITDA increased ~~$5.6~~by $2.6 million, or ~~16%~~8%, ~~to $40.0 million~~ for the three months ended ~~December~~March 31, ~~2017 from $34.4 million for~~2023 compared to the three months ended ~~December~~March 31, ~~2016.~~ 2022 primarily as a result of decreases in performance-related compensation and stock-based compensation expenses partially offset by increases attributed to the aforementioned cost-savings plan.

Comparison of the Nine Months Ended March 31, 2023 to 2022

Operating Expenses

Corporate operating expenses ~~increased $7.3~~decreased by $18.4 million, or ~~10%~~12%, ~~to $80.5 million for~~during the ~~six~~nine months ended ~~December~~March 31, ~~2017 from $73.2 million for~~2023 compared to the ~~six~~nine months ended ~~December~~March 31, ~~2016.~~

~~Selling, general and administrative expenses increased $5.8 million, or 17%, from the three months ended December 31, 2016~~2022, primarily due to ~~2017 and $7.7 million, or 11%, from the six months ended December 31, 2016 to 2017, primarily driven by an increase~~a decrease in performance-related compensation expense, a decrease in stock-based compensation expense ~~largely associated with anticipated~~due to lower forecasted achievement of ~~certain~~ performance ~~targets, along with increased salaries~~share awards and ~~benefits~~a net decrease in expenses ~~due~~as a result of the cost-savings plan enacted during the current year period. These decreases were partially offset by increases in deferred compensation plan expense as a result of market changes and professional fees related to ~~increased staffing to support continued growth~~strategic initiative and ~~the acquisitions of Innovatix and Essensa and to a lesser extent Acro Pharmaceuticals.~~financial restructuring-related activities.

~~Non-GAAP~~ Adjusted EBITDA

~~Non-GAAP Adjusted~~Corporate adjusted EBITDA ~~decreased~~increased by ~~$0.8~~$3.3 million, or 3%4%, ~~from~~for the ~~three~~nine months ended ~~December~~March 31, ~~2016~~2023 compared to ~~2017, driven primarily by an increase in professional services costs associated with a certain isolated strategic consulting engagement and increased $0.4 million, or 1%, from~~ the ~~six~~nine months ended ~~December~~March 31, ~~2016 to 2017, driven~~2022 primarily byas a ~~decrease~~result of decreases in ~~audit related fees~~performance-related compensation and ~~severance~~stock-based compensation expenses partially offset by increases attributed to the ~~previously mentioned increase in professional services costs associated with a certain isolated strategic consulting engagement.~~aforementioned cost-savings plan.

Off-Balance Sheet Arrangements

As of ~~December~~March 31, ~~2017,~~2023, we did not have any off-balance sheet arrangements.

Liquidity and Capital Resources

Our principal source of cash has ~~historically~~ been primarily 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 in Note 8 - Debt and Notes Payable to the

accompanying condensed consolidated financial statements) as a source of liquidity. Our primary cash requirements ~~involve~~include 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~~March 31, ~~2017~~2023 and June 30, ~~2017,~~2022, we had cash and cash equivalents ~~totaling $163.0~~of $91.5 million and ~~$156.7~~$86.1 million, respectively. As of March 31, 2023 and June 30, 2022, there was $235.0 million and $150.0 million, respectively, ~~and there were $200.0~~of outstanding borrowings under our Credit Facility. During the nine months ended March 31, 2023, we borrowed $285.0 million and ~~$220.0~~repaid $135.0 million ~~respectively,~~under our Prior Loan Agreement (as defined in ~~outstanding borrowings~~Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) and borrowed $65.0 million and repaid $130.0 million under the Credit Facility. ~~During~~Our Credit Facility may be used for acquisitions and related business investments as well as general corporate activities. Borrowings for the ~~six~~nine months ended ~~December~~March 31, ~~2017~~2023 under the ~~Company~~Prior Loan Agreement were used to partially fund the TRPN acquisition (see Note 3 - Business Acquisitions for further information). In April 2023, we repaid ~~$50.0~~$60.0 million of outstanding borrowings ~~and borrowed an additional $30.0 million~~ under the Credit Facility.

We expect cash generated from operations and borrowings under our Credit Facility to provide us with adequate liquidity to fund our anticipated working capital requirements, revenue share obligations, tax payments, capital expenditures, ~~discretionary cash settlement of~~notes payable, including notes payable to former LPs, dividend payments on our Class BA common ~~unit exchanges under the Exchange Agreement,~~stock, if and when declared, repurchases of Class A common stock pursuant to ~~our~~ stock repurchase ~~program,~~programs in place from time to time and ~~growth for the foreseeable future.~~to fund business acquisitions. 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.

Discussion of Cash Flows for the ~~Six~~Nine Months ~~ended December~~Ended March 31, ~~2017~~2023 and ~~2016~~2022

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


	Six Months Ended December 31,							Nine Months Ended March 31,
	2017			2016				2023		2022
Net cash provided by (used in):							Net cash provided by (used in):
Operating activities	$	206,515		$	138,364		Operating activities	$	331,178	$	334,789
Investing activities	(38,622		)	(336,358		)	Investing activities	(249,784)		(113,061)
Financing activities	(161,614		)	168,069			Financing activities	(76,036)		(171,369)
Net increase (decrease) in cash and cash equivalents	$	6,279		$	(29,925	)
Effect of exchange rate changes on cash flows							Effect of exchange rate changes on cash flows	(8)		3
Net increase in cash and cash equivalents							Net increase in cash and cash equivalents	$	5,350	$	50,362

Net cash provided by operating activities ~~increased $68.2~~decreased by $3.6 million ~~from~~for the ~~six~~nine months ended ~~December~~March 31, ~~2016~~2023 compared to ~~2017 primarily~~the nine months ended March 31, 2022. The decrease in net cash provided by operating activities was due to a decrease of $163.7 million in cash receipts from members and other customers driven by higher prior year products revenue to support member and other customer needs during the COVID-19 pandemic and an increase in ~~net administrative fees as well as decreased outflows related~~revenue share paid to ~~working capital needs,~~members. These were partially offset by ~~increased selling, general~~a decrease of $150.5 million in cash paid primarily due to a decrease in inventory purchases to support prior year products revenue growth and ~~administrative~~lower operating expenses indriven by our cost-savings plan enacted during the current year period. Additionally, net operating cash flows increased by $9.6 million in miscellaneous cash receipts primarily due to dividends received on our investments in unconsolidated affiliates.

Net cash used in investing activities ~~decreased $297.7~~increased by $136.7 million ~~from~~for the ~~six~~nine months ended ~~December~~March 31, ~~2016~~2023 compared to ~~2017 driven by our $222.2 million~~the nine months ended March 31, 2022. The increase in net cash used in investing activities was primarily due to the TRPN acquisition ~~of Innovatix and Essensa, our $68.8 million acquisition of Acro Pharmaceuticals and our $65.7 million investment~~ in ~~FFF during~~ the ~~prior~~current year period, partially offset by ~~$48.0 million~~the cash outlay in ~~proceeds from the sale of marketable securities during~~ the prior ~~period.~~year period for the investment in Exela Holdings, Inc. in the nine months ended March 31, 2022 as well as decreases in other investing activities and in purchases of property and equipment.

Net cash ~~provided~~used by financing activities decreased by $95.3 million for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022. The decrease in net cash used by financing activities was ~~$168.1~~primarily driven by the prior year

period cash outflow of $250.1 million for the six months ended December 31, 2016 while net cash used in financing activities was $161.6 million for the six months ended December 31, 2017. The change in cash flows provided by and used in financing activities was largely driven by $327.5 millionrepurchase 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~~fiscal 2022 stock repurchase program and a decrease of $90.0 million in net borrowings under our Credit Facility. These changes were partially offset by $36.7 million less proceeds from the issuance of Class A common stock in connection with the exercise of outstanding stock options in the current ~~period.~~year period as compared to the prior year period as well as a decrease of $24.8 million in other financing activities. The change in other financing activities was primarily driven by fiscal 2022 proceeds from member health systems that acquired membership interests in ExPre in fiscal year 2022.

Discussion of Non-GAAP Free Cash Flow for the ~~Six~~Nine Months ~~ended December~~Ended March 31, ~~2017~~2023 and ~~2016~~2022

We define Non-GAAP Free Cash Flow as net cash provided by operating activities from continuing operations less ~~distributions and TRA~~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 is as follows (in thousands):


	Nine Months Ended March 31,
	2023		2022
Net cash provided by operating activities	$	331,178	$	334,789
Purchases of property and equipment	(58,464)		(61,061)
Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)	(73,180)		(71,786)
Non-GAAP Free Cash Flow	$	199,534	$	201,942


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)



		Page
PART I. FINANCIAL INFORMATION					67
Item 1.			Financial Statements		67
			Condensed Consolidated Balance Sheets ~~as of December 31, 2017 and June 30, 2017~~ (Unaudited)		67
			Condensed Consolidated Statements of Income ~~for the three~~ and ~~six months ended December 31, 2017 and 2016~~ Comprehensive Income (Unaudited)		89
			Condensed Consolidated Statements of ~~Comprehensive Income for the three and six months ended December 31, 2017 and 2016~~Stockholders' Equity (Unaudited)		910
			~~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)	1112
			Notes to Condensed Consolidated Financial Statements (Unaudited)		13
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations		3527
Item 3.			Quantitative and Qualitative Disclosures About Market Risk		5649
Item 4.			Controls and Procedures		5749
PART II. OTHER INFORMATION					5851
Item 1.			Legal Proceedings		5851
Item 1A.			Risk Factors		5851
Item 2.6.			~~Unregistered Sales of Equity Securities and Use of Proceeds~~Exhibits		5852
~~Item 6.~~			~~Exhibits~~Signatures		5953
	~~Signatures~~	60


	March 31, 2023		June 30, 2022
Assets
Cash and cash equivalents	$	91,493	$	86,143
Accounts receivable (net of $2,747 and $2,043 allowance for credit losses, respectively)	115,289		114,129
Contract assets (net of $808 and $755 allowance for credit losses, respectively)	290,824		260,061
Inventory	94,431		119,652
Prepaid expenses and other current assets	59,091		65,581
Total current assets	651,128		645,566
Property and equipment (net of $642,684 and $578,644 accumulated depreciation, respectively)	206,687		213,379
Intangible assets (net of $252,997 and $217,582 accumulated amortization, respectively)	442,718		356,572
Goodwill	1,069,073		999,913
Deferred income tax assets	722,949		725,032
Deferred compensation plan assets	47,699		47,436
Investments in unconsolidated affiliates	230,300		215,545
Operating lease right-of-use assets	31,658		39,530
Other assets	110,305		114,154
Total assets	$	3,512,517	$	3,357,127

Liabilities and stockholders' equity
Accounts payable	$	53,486	$	44,631
Accrued expenses	63,372		40,968
Revenue share obligations	258,112		245,395
Accrued compensation and benefits	59,088		93,638
Deferred revenue	27,880		30,463
Current portion of notes payable to former limited partners	99,200		97,806
Line of credit and current portion of long-term debt	236,272		153,053
Other current liabilities	102,922		47,183
Total current liabilities	900,332		753,137
Long-term debt, less current portion	1,008		2,280
Notes payable to former limited partners, less current portion	126,614		201,188
Deferred compensation plan obligations	47,699		47,436

Deferred consideration, less current portion	29,189		28,702
Operating lease liabilities, less current portion	25,468		32,960
Other liabilities	46,416		42,574
Total liabilities	1,176,726		1,108,277
Commitments and contingencies (Note 13)



	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


	March 31, 2023		June 30, 2022
Stockholders' equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 125,309,682 shares issued and 118,880,307 shares outstanding at March 31, 2023 and 124,481,610 shares issued and 118,052,235 shares outstanding at June 30, 2022	1,253		1,245
Treasury stock, at cost; 6,429,375 shares at both March 31, 2023 and June 30, 2022	(250,129)		(250,129)
Additional paid-in capital	2,175,048		2,166,047
Retained earnings	409,630		331,690
Accumulated other comprehensive loss	(11)		(3)
Total stockholders' equity	2,335,791		2,248,850
Total liabilities and stockholders' equity	$	3,512,517	$	3,357,127


														Three Months Ended				Nine Months Ended
	Three Months Ended December 31,						Six Months Ended December 31,							March 31,				March 31,
	2017			2016			2017			2016				2023		2022		2023		2022
Net revenue:													Net revenue:
Net administrative fees	$	159,343		$	129,071		$	310,334		$	255,047		Net administrative fees	$	148,441	$	148,396	$	452,870	$	448,261
Other services and support	89,953			87,051			176,864			168,218
Services	249,296			216,122			487,198			423,265
Software licenses, other services and support													Software licenses, other services and support	116,579		105,808		359,795		320,109
Services and software licenses													Services and software licenses	265,020		254,204		812,665		768,370
Products	162,102			142,378			314,764			248,507			Products	57,212		93,629		183,066		323,825
Net revenue	411,398			358,500			801,962			671,772			Net revenue	322,232		347,833		995,731		1,092,195
Cost of revenue:													Cost of revenue:
Services	47,255			44,856			94,191			87,546
Services and software licenses													Services and software licenses	54,149		46,735		163,428		136,326
Products	153,272			131,158			297,712			226,971			Products	49,013		88,621		168,507		294,916
Cost of revenue	200,527			176,014			391,903			314,517			Cost of revenue	103,162		135,356		331,935		431,242
Gross profit	210,871			182,486			410,059			357,255			Gross profit	219,070		212,477		663,796		660,953
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	143,587		143,676		416,165		418,330
Research and development	324			767			813			1,573			Research and development	1,001		826		2,976		2,666
Amortization of purchased intangible assets	13,817			11,151			27,715			20,360			Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
Operating expenses	122,761			107,845			251,469			215,820			Operating expenses	156,504		155,653		454,556		453,886
Operating income	265,284			74,641			335,764			147,157			Operating income	62,566		56,824		209,240		207,067
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	4,630		3,991		14,547		17,165
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	(4,269)		(2,804)		(11,759)		(8,465)
Gain on FFF Put and Call Rights													Gain on FFF Put and Call Rights	—		—		—		64,110
Other income (expense), net													Other income (expense), net	2,954		(4,248)		3,720		(2,176)
Other income (expense), net	(14,007		)	208,972			(11,107		)	217,887			Other income (expense), net	3,315		(3,061)		6,508		70,634
Income before income taxes	251,277			283,613			324,657			365,044			Income before income taxes	65,881		53,763		215,748		277,701
Income tax expense	231,508			37,429			244,272			60,765			Income tax expense	17,232		14,694		59,766		40,094
Net income	19,769			246,184			80,385			304,279			Net income	48,649		39,069		155,982		237,607
Net income attributable to non-controlling interest in Premier LP	(56,485		)	(181,173		)	(101,095		)	(230,774		)
Adjustment of redeemable limited partners' capital to redemption amount	317,916			335,264			638,340			397,072
Net income attributable to non-controlling interest													Net income attributable to non-controlling interest	(1,848)		(654)		(2,419)		(1,643)

Net income attributable to stockholders	$	281,200		$	400,275		$	617,630		$	470,577		Net income attributable to stockholders	$	46,801	$	38,415	$	153,563	$	235,964

Comprehensive income:													Comprehensive income:
Net income													Net income	$	48,649	$	39,069	$	155,982	$	237,607
Comprehensive income attributable to non-controlling interest													Comprehensive income attributable to non-controlling interest	(1,848)		(654)		(2,419)		(1,643)
Foreign currency translation gain (loss)													Foreign currency translation gain (loss)	1		4		(8)		3
Comprehensive income attributable to stockholders													Comprehensive income attributable to stockholders	$	46,802	$	38,419	$	153,555	$	235,967

Weighted average shares outstanding:													Weighted average shares outstanding:
Basic	55,209			49,445			54,059			48,330			Basic	118,872		118,697		118,668		120,957
Diluted	139,237			141,308			139,641			142,133			Diluted	119,816		119,813		119,832		122,302

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	$	0.39	$	0.32	$	1.29	$	1.95
Diluted	$	(1.66	)	$	1.50		$	(1.30	)	$	1.75		Diluted	$	0.39	$	0.32	$	1.28	$	1.94


	Class A Common Stock			Treasury Stock		Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity
	Shares	Amount			Shares			Amount
Balance at June 30, 2022	118,052	$	1,245		6,429	$	(250,129)		$	2,166,047	$	331,690	$	(3)	$	2,248,850
Issuance of Class A common stock under equity incentive plan	694	7			—	—			637		—		—		644

Stock-based compensation expense	—	—			—	—			7,136		—		—		7,136
Repurchase of vested restricted units for employee tax-withholding	—	—			—	—			(13,089)		—		—		(13,089)
Net income	—	—			—	—			—		42,959		—		42,959
Net income attributable to non-controlling interest	—	—			—	—			243		(243)		—		—
Change in ownership of consolidated entity	—	—			—	—			26		—		—		26
Dividends ($0.21 per share)	—	—			—	—			—		(25,097)		—		(25,097)

Foreign currency translation adjustment	—	—			—	—			—		—		(10)		(10)
Balance at September 30, 2022	118,746	1,252			6,429	(250,129)			2,161,000		349,309		(13)		2,261,419
Issuance of Class A common stock under equity incentive plan	54	—			—	—			60		—		—		60
Issuance of Class A common stock under employee stock purchase plan	67	1			—	—			2,267		—		—		2,268

Stock-based compensation expense	—	—			—	—			2,679		—		—		2,679
Repurchase of vested restricted units for employee tax-withholding	—	—			—	—			(41)		—		—		(41)
Net income	—	—			—	—			—		64,374		—		64,374
Net income attributable to non-controlling interest	—	—			—	—			328		(328)		—		—
Change in ownership of consolidated entity	—	—			—	—			26		—		—		26
Dividends ($0.21 per share)	—	—			—	—			—		(25,303)		—		(25,303)






Foreign currency translation adjustment	—	—			—	—			—		—		1		1
Other	—	—			—	—			590		—		—		590
Balance at December 31, 2022	118,867	1,253			6,429	(250,129)			2,166,909		388,052		(12)		2,306,073
Issuance of Class A common stock under equity incentive plan	13	—			—	—			—		—		—		—


Stock-based compensation expense	—	—			—	—			6,560		—		—		6,560
Repurchase of vested restricted units for employee tax-withholding	—	—			—	—			(297)		—		—		(297)
Net income	—	—			—	—			—		48,649		—		48,649
Net income attributable to non-controlling interest	—	—			—	—			1,848		(1,848)		—		—
Change in ownership of consolidated entity	—	—			—	—			28		—		—		28
Dividends ($0.21 per share)	—	—			—	—			—		(25,223)		—		(25,223)





Foreign currency translation adjustment	—	—			—	—			—		—		1		1
Balance at March 31, 2023	118,880	$	1,253		6,429	$	(250,129)		$	2,175,048	$	409,630	$	(11)	$	2,335,791



	Class A Common Stock				Class B Common Stock				Treasury Stock				Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Deficit
	Shares		Amount		Shares		Amount		Shares	Amount			Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Deficit
Balance at June 30, 2017	51,943		$	519	87,299		$	—	—	$	—		$	—		$	(1,662,772	)	$	(1,662,253	)
Exchange of Class B units for Class A common stock by member owners	4,883		50		(4,883	)	—		—	—			162,215			—			162,265
Redemption of limited partners	—		—		(133	)	—		—	—			—			—			—
Decrease in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation	—		—		—		—		—	—			(8,669		)	—			(8,669		)
Issuance of Class A common stock under equity incentive plan	390		4		—		—		—	—			2,804			—			2,808
Issuance of Class A common stock under employee stock purchase plan	48		—		—		—		—	—			1,388			—			1,388
Treasury stock	(2,578	)	—		—		—		2,578	(74,698		)	—			—			(74,698		)
Stock-based compensation expense	—		—		—		—		—	—			17,699			—			17,699
Repurchase of vested restricted units for employee tax-withholding	—		—		—		—		—	—			(5,743		)	—			(5,743		)
Net income	—		—		—		—		—	—			—			80,385			80,385
Net income attributable to non-controlling interest in Premier LP	—		—		—		—		—	—			—			(101,095		)	(101,095		)
Adjustment of redeemable limited partners' capital to redemption amount	—		—		—		—		—	—			(169,694		)	808,034			638,340
Balance at December 31, 2017	54,686		$	573	82,283		$	—	2,578	$	(74,698	)	$	—		$	(875,448	)	$	(949,573	)



	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


	Supply Chain Services		Performance Services		Total
June 30, 2022	$	388,502	$	611,411	$	999,913
Acquisition of businesses and assets	—		69,160		69,160
March 31, 2023	$	388,502	$	680,571	$	1,069,073


	Useful Life	March 31, 2023		June 30, 2022
Member relationships	14.7 years	$	386,100	$	386,100
Provider network	15.0 years	106,500		—
Technology	7.1 years	99,317		98,017
Customer relationships	9.4 years	57,930		47,830
Non-compete agreements	5.2 years	17,715		17,315
Trade names	6.7 years	18,920		17,210
Other (a)	9.3 years	9,233		7,682
Total intangible assets		695,715		574,154
Accumulated amortization		(252,997)		(217,582)
Total intangible assets, net		$	442,718	$	356,572


2023 (a)	$	12,688
2024	49,761
2025	48,136
2026	46,892
2027	44,240
Thereafter	240,001
Total amortization expense	$	441,718



	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



	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



	Receivables From Limited Partners			Redeemable Limited Partners' Capital			Total Redeemable Limited Partners' Capital
June 30, 2017	$	(4,177	)	$	3,142,760		$	3,138,583
Distributions applied to receivables from limited partners	984			—			984
Redemption of limited partners	—			(269		)	(269		)
Net income attributable to non-controlling interest in Premier LP	—			101,095			101,095
Distributions to limited partners	—			(41,148		)	(41,148		)
Exchange of Class B common units for Class A common stock by member owners	—			(162,265		)	(162,265		)
Adjustment of redeemable limited partners' capital to redemption amount	—			(638,340		)	(638,340		)
December 31, 2017	$	(3,193	)	$	2,401,833		$	2,398,640



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


~~(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, 2022													Outstanding at June 30, 2022	1,201,130	$	35.59	1,578,795	$	33.66	896,354	$	30.38
Granted	206,929		$	32.81	690,470		$	32.62	550,563		$	32.80	Granted	419,519	36.69		823,009	35.34		—	—
Vested/exercised	(109,174	)	$	31.67	(352,867	)	$	31.73	(103,061	)	$	28.26	Vested/exercised	(257,571)	36.37		(826,743)	36.35		(24,351)	32.84
Forfeited	(20,276	)	$	32.50	(46,502	)	$	32.43	(92,179	)	$	34.28	Forfeited	(72,268)	35.81		(81,350)	33.41		(2,906)	35.65
Outstanding at December 31, 2017	654,467		$	33.11	1,376,973		$	32.99	3,727,822		$	30.64
Outstanding at March 31, 2023													Outstanding at March 31, 2023	1,290,810	$	35.78	1,493,711	$	33.09	869,097	$	30.30

Stock options outstanding and exercisable at December 31, 2017									2,620,480		$	29.64
Stock options outstanding and exercisable at March 31, 2023													Stock options outstanding and exercisable at March 31, 2023							869,097	$	30.30


	Unrecognized Stock-Based Compensation Expense		Weighted Average Amortization Period
Restricted stock	$	23,381	1.8 years
Performance share awards	22,830		1.8 years
Total unrecognized stock-based compensation expense	$	46,211	1.8 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


~~(a)~~			~~The six-year expected life (estimated period~~Intrinsic Value of ~~time outstanding) of stock options granted was estimated using the "Simplified Method" which utilizes the midpoint between the vesting date~~Stock Options
Outstanding 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.~~exercisable

$	2,325
~~(b)~~Exercised during the nine months ended March 31, 2023			~~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.~~

78
~~(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.~~


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


~~(a)~~	~~Refer to Note 4 - Investments for further information regarding equity in net income of unconsolidated affiliates.~~