UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 __________________________________________________________________________________________
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
 __________________________________________________________________________________________
(Mark One)
(Mark One)
x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 20172023
OR
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         
Commission File NumberNumber: 001-36092
 __________________________________________________________________________________________
Premier, Inc.
(Exact name of registrant as specified in its charter)
 ___________________________________________________________________________________________
Premier, Inc.
Delaware(Exact name of registrant as specified in its charter)
Delaware35-2477140
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
13034 Ballantyne Corporate Place
Charlotte,North Carolina28277
(Address of principal executive offices)(Zip Code)
(704) 357-0022
(Registrant'sRegistrant’s telephone number, including area code)
 __________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 Par ValuePINCNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x☒     No   o☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes  x ☒ No  o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large“large accelerated filer," "accelerated” “accelerated filer," "smaller” “smaller reporting company,"” and "emerging“emerging growth company"company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerx☒Accelerated filero☐Non-accelerated filero☐
Smaller reporting companyo☐Emerging growth companyo☐(Do not check if a smaller reporting company)
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   o ☐ No   x☒
As of February 2, 2018,1, 2024, there were 54,713,852119,817,876 shares of the registrant'sregistrant’s Class A common stock, par value $0.01 per share and 80,978,267 shares of the registrant's Class B common stock, par value $0.000001 per share, outstanding.





TABLE OF CONTENTS
Page
6
6
Condensed Consolidated Balance Sheets as of December 31, 2017 and June 30, 2017 (Unaudited)
6
Condensed Consolidated Statements of Income for the three and six months ended December 31, 2017 and 2016 Comprehensive Income(Unaudited)
87
Condensed Consolidated Statements of Comprehensive Income for the three and six months ended December 31, 2017 and 2016Stockholders' Equity (Unaudited)
98
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)
119
Notes to Condensed Consolidated Financial Statements (Unaudited)
1310
3525
5645
5745
5846
5846
5846
Unregistered Sales of Equity Securities and Use of Proceeds5.
46
Exhibits
47
6048





CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements made in this Quarterly Report on Form 10-Q for the six months ended December 31, 2023 for Premier, Inc. (this “Quarterly Report”) that are not statements of historical or current facts, such as those under the heading "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations,"” are "forward-looking statements"“forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in conditional or future tenses or that include terms such as "believes," "belief," "expects," "estimates," "intends," "anticipates"“believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or "plans"“plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to our beliefs and expectations regarding future events and trends affecting our business and are necessarily subject to uncertainties, many of which are outside our control. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:
•competition which could limit our ability to maintain or expand market share within our industry;
•consolidation in the healthcare industry;
•potential delays in recognizing or increasing revenue if the sales cycle or implementation period takes longer than expected;
•the terminabilityimpact to our business if members of member participation in our group purchasing organization ("GPO"(“GPO”) programs with limitedreduce activity levels or no notice,terminate or the failure of a significant number of memberselect not to renew their GPO participation agreements;contracts on substantially similar terms or at all;
the rate at which the markets for our non-GPO services and products develop;
the dependency of our members on payments from third-party payers;
•our reliance on administrative fees that we receive from GPO suppliers;
•the rate at which the markets for our software as a service (“SaaS”) or licensed-based clinical analytics products and services develop;
•the dependency of our members on payments from third-party payers;
•our ability to maintain third-party provider and strategic alliances or enter into new alliances;
•our ability to timely offer new and innovative products and services;
•the portion of our revenues that we receive from our largest members;members and other customers;
•risks and expenses related to future acquisition opportunities and integration of previous or future acquisitions;
•the impact on our business and stock price due to our evaluation of potential strategic alternatives;
•financial and operational risks associated with non-controlling investments in other businesses or partnerships orother joint ventures with, other businesses, particularly those that we do not control;control, particularly early-stage companies;
•pending and potential litigation;
•our reliance on Internet infrastructure, bandwidth providers, data center providers and other third parties and our own systems for providing services to our users;
•data loss or corruption due to failures or errors in our systems and service disruptions at our data centers, or breaches or failures of our security measures;
•the financial, operational, legal and reputational consequences of cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our members or other third parties;
•our ability to use, disclose, de-identify or license data and to integrate third-party technologies;
•our use of "open source"“open source” software;
changes in industry pricing benchmarks;
our inability to grow our integrated pharmacy business or maintain current patients due to increases in the safety risk profiles of prescription drugs or the withdrawal of prescription drugs from the market, or our inability to maintain and expand our existing base of drugs in our integrated pharmacies;
•our dependency on contract manufacturing facilities located in various parts of the world;
•inventory risk we face in the event of a potential material decline in demand or price for the personal protective equipment or other products we may have purchased at elevated market prices or fixed prices;
•our ability to attract, hire, integrate and retain key personnel;

•the impact of continuing uncertain economic conditions to our business operations due to, but not limited to, inflation and the risk of global recession;

adequate protection of our intellectual property and potential claims against our use•the impact of the intellectual propertycontinuing financial and operational uncertainty due to pandemics, epidemics or public health emergencies and associated supply chain disruptions;
•the financial and operational uncertainty due to global economic and political instability and conflicts;
•the impact of third parties;global climate change or by regulatory responses to such change;
potential sales and use tax liability in certain jurisdictions;
3

changes in tax laws that materially impact our tax rate, income tax expense, cash flows or tax receivable agreement ("TRA") liabilities;
our indebtedness and our ability to obtain additional financing on favorable terms;
fluctuation of our quarterly cash flows, revenues and results of operations;
•changes and uncertainty in the political, economic or regulatory environment affecting healthcare organizations, including with respect to the status of the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010 collectively referred to as the "ACA";and pandemic-related public health and reimbursement measures;
•our compliance with complex international, federal and state laws, rules and regulations governing financial relationships among healthcare providers and the submission of false or fraudulent healthcare claims;
•interpretation and enforcement of current or future antitrust laws and regulations;
•compliance with complex federal, state and stateinternational privacy, security and breach notification laws;
•compliance with current or future laws, rules or regulations relating to information blocking provisions of the 21st Century Cures Act issued by the Office of the National Coordinator for Health Information Technology (the “ONC Rules”) that may cause our certified Health Information Technology products to be regulated by the ONC Rules;
•compliance with current or future laws, rules and regulations adopted by the Food &and Drug Administration ("FDA") applicable to our software applications that may be considered medical devices;
compliance with,•adequate protection of our intellectual property and potential changes to, extensive federal, state and local laws, regulations and procedures governingclaims against our integrated pharmacy operations;
risks inherent in the filling, packaging and distribution of pharmaceuticals, including the counseling required to be provided by our pharmacists for dispensing of products;
our holding company structure and dependence on distributions from Premier Healthcare Alliance, L.P. ("Premier LP");
different interests among our member owners or between us and our member owners;
the ability of our member owners to exercise significant control over us, including through the election of all of our directors;
exemption from certain corporate governance requirements due to our status as a "controlled company" within the meaninguse of the NASDAQ rules;intellectual property of third parties;
•potential sales and use, franchise and income tax liability in certain jurisdictions;
•changes in tax laws that materially impact our tax rate, income tax expense, anticipated tax benefits, deferred tax assets, cash flows and profitability and potential material tax disputes;
•the termsimpact of agreements between us and our member owners;
payments maderequired under the TRAsnotes payable to Premier LP'sformer limited partners related to the early termination of the Unit Exchange and Tax Receivable Acceleration Agreements (the “Unit Exchange Agreements”) issued in connection with our August 2020 Restructuring on our overall cash flow and our ability to fully realize the expected tax benefits related to the acquisition of Class B common units from Premier LP's limited partners;match such fixed payment obligations under those notes payable;
changes to Premier LP's allocation methods or examinations or changes in interpretation of applicable tax laws and regulations by various taxing authorities that may increase a tax-exempt limited partner's risk that some allocated income is unrelated business taxable income;
•provisions in our certificate of incorporation and bylaws and the Amended and Restated Limited Partnership Agreement of Premier LP (as amended, the "LP Agreement") and provisions of Delaware law and other applicable laws that discourage or prevent strategic transactions, including a takeover of us;
•our indebtedness and our ability to obtain additional financing on favorable terms, including our ability to renew or replace our existing long-term credit facility at or before maturity;
•fluctuation of our quarterly cash flows, revenues and results of operations;
•failure to maintain an effective system of internal controls;controls over financial reporting or an inability to remediate any weaknesses identified and the related costs of remediation;
•the impact on the price of our Class A common stock if we cease paying dividends or reduce dividend payments from current levels;
•the number of shares of Class A common stock that will be eligible for sale or exchange in the near future and the dilutive effect of such issuances;
our intention notrepurchased by us pursuant to pay cash dividends on our Class A common stock;
whether we complete our recently announcedany then existing Class A common stock repurchase program and the timing of any such repurchases;
•the number and per share price of shares of Class A common stock ultimately purchased undereligible for sale after the program;
possible future issuancesissuance of Class A common stock preferred stock, limited partnership units or debt securitiesin our August 2020 Restructuring and the dilutive effectpotential impact of such issuances;sales; and


•the risk factors discussed under the heading "Risk Factors" in Item 1A of Part II herein and“Risk Factors” under Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 20172023 (the "2017“2023 Annual Report"Report”), filed with the Securities and Exchange Commission ("SEC"(“SEC”)., as updated by our Quarterly Reports on Form 10-Q (including this Quarterly Report) filed with the SEC.
More information on potential factors that could affect our financial results is included from time to time in the "Cautionary“Cautionary Note Regarding Forward-Looking Statements," "Risk Factors"” “Risk Factors” and "Management's“Management’s Discussion and Analysis of Financial Condition and Results of Operations"Operations” or similarly captioned sections of this Quarterly Report and our other periodic and current filings made from time to time with the SEC, which are available on our website at http://investors.premierinc.com.investors.premierinc.com (the contents of which are not part of this Quarterly Report). You should not place undue reliance on any of our forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Furthermore, we cannot guarantee future results, events, levels of activity, performance or achievements.

Certain Definitions

For periods on or after August 11, 2020, references to “members” are references to health systems and other customers that utilize any of our programs or services, some of which were formerly member owners who participated in our GPO programs and were also limited partners of Premier Healthcare Alliance L.P. (“Premier LP”).
References to the “August 2020 Restructuring” are references to our corporate restructuring on August 11, 2020 in which we (i) eliminated our dual-class ownership structure through an exchange under which member owners who were limited partners of
4

Premier LP converted their Class B common units in Premier LP and corresponding Class B common shares of Premier, Inc. into our Class A common stock, on a one-for-one basis, and (ii) exercised our right to terminate the Tax Receivable Agreement (the “TRA”) by providing all former limited partners a notice of termination and the amount of the expected payment to be made to each limited partner pursuant to the early termination provisions of the TRA with a determination date of August 10, 2020. For additional information and details regarding the August 2020 Restructuring, see our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.
References to the “Subsidiary Reorganization” are references to an internal legal reorganization of our corporate subsidiaries in December 2021 for the purpose of simplifying our subsidiary reporting structure. For additional information and details regarding the Subsidiary Reorganization, see our Quarterly Report on Form 10-Q for the period ended December 31, 2021.
References to “adjacent markets” are references to the non-provider healthcare markets penetrated by Premier, Inc.’s businesses and brands that are designed to diversify revenue for the Company. This includes PINC AI Clinical Decision Support serving providers and payers; PINC AI Applied Sciences serving biotech, pharmaceutical and medical device companies; Contigo Health that serves self-insured employers, including healthcare providers that are also payers (“payviders”); and Remitra that serves healthcare suppliers and providers.
5

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





 December 31, 2017June 30, 2017
Redeemable limited partners' capital2,398,640
3,138,583
Stockholders' deficit:  
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 57,263,627 shares issued and 54,685,668 shares outstanding at December 31, 2017 and 51,943,281 shares issued and outstanding at June 30, 2017573
519
Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 82,282,748 and 87,298,888 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively—
—
Treasury stock, at cost; 2,577,959 shares(74,698)—
Additional paid-in-capital—
—
Accumulated deficit(875,448)(1,662,772)
Accumulated other comprehensive loss—
—
Total stockholders' deficit(949,573)(1,662,253)
Total liabilities, redeemable limited partners' capital and stockholders' deficit$2,320,163
$2,507,836
December 31, 2023June 30, 2023
Assets
Cash and cash equivalents$371,110 $89,793 
Accounts receivable (net of $2,394 and $2,878 allowance for credit losses, respectively)122,300 115,295 
Contract assets (net of $1,137 and $885 allowance for credit losses, respectively)331,727 299,219 
Inventory72,766 76,932 
Prepaid expenses and other current assets92,354 60,387 
Total current assets990,257 641,626 
Property and equipment (net of $703,148 and $662,554 accumulated depreciation, respectively)218,050 212,308 
Intangible assets (net of $290,884 and $265,684 accumulated amortization, respectively)404,830 430,030 
Goodwill1,012,355 1,012,355 
Deferred income tax assets808,562 653,629 
Deferred compensation plan assets48,792 50,346 
Investments in unconsolidated affiliates229,434 231,826 
Operating lease right-of-use assets24,439 29,252 
Other assets95,809 110,115 
Total assets$3,832,528 $3,371,487 
Liabilities and stockholders' equity
Accounts payable$54,252 $54,375 
Accrued expenses50,946 47,113 
Revenue share obligations279,855 262,288 
Accrued compensation and benefits53,798 60,591 
Deferred revenue20,692 24,311 
Current portion of notes payable to former limited partners100,594 99,665 
Line of credit and current portion of long-term debt1,008 216,546 
Current portion of liability related to the sale of future revenues35,800 — 
Other current liabilities96,750 50,574 
Total current liabilities693,695 815,463 
Long-term debt, less current portion— 734 
Liability related to the sale of future revenues, less current portion579,409 — 
Notes payable to former limited partners, less current portion50,994 101,523 
Deferred compensation plan obligations48,792 50,346 
Operating lease liabilities, less current portion16,016 21,864 
Other liabilities53,413 47,202 
Total liabilities1,442,319 1,037,132 
Commitments and contingencies (Note 14)
Stockholders' equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 126,245,859 shares issued and 119,816,484 shares outstanding at December 31, 2023 and 125,587,858 shares issued and 119,158,483 shares outstanding at June 30, 20231,262 1,256 
Treasury stock, at cost; 6,429,375 shares at both December 31, 2023 and June 30, 2023(250,129)(250,129)
Additional paid-in capital2,186,115 2,178,134 
Retained earnings452,946 405,102 
Accumulated other comprehensive income (loss)15 (8)
Total stockholders' equity2,390,209 2,334,355 
Total liabilities and stockholders' equity$3,832,528 $3,371,487 
See accompanying notes to the unaudited condensed consolidated financial statements.

6


PREMIER, INC.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended December 31,Six Months Ended December 31,
2017201620172016
Three Months EndedThree Months EndedSix Months Ended
December 31,December 31,December 31,
20232023202220232022
Net revenue: 
Net administrative fees$159,343
$129,071
$310,334
$255,047
Other services and support89,953
87,051
176,864
168,218
Services249,296
216,122
487,198
423,265
Net administrative fees
Net administrative fees
Software licenses, other services and support
Services and software licenses
Products162,102
142,378
314,764
248,507
Net revenue411,398
358,500
801,962
671,772
Cost of revenue: 
Services47,255
44,856
94,191
87,546
Services and software licenses
Services and software licenses
Services and software licenses
Products153,272
131,158
297,712
226,971
Cost of revenue200,527
176,014
391,903
314,517
Gross profit210,871
182,486
410,059
357,255
Other operating income: 
Remeasurement of tax receivable agreement liabilities177,174
—
177,174
5,722
Other operating income177,174
—
177,174
5,722
Operating expenses: 
Selling, general and administrative
Selling, general and administrative
Selling, general and administrative108,620
95,927
222,941
193,887
Research and development324
767
813
1,573
Amortization of purchased intangible assets13,817
11,151
27,715
20,360
Operating expenses122,761
107,845
251,469
215,820
Operating income265,284
74,641
335,764
147,157
Remeasurement gain attributable to acquisition of Innovatix, LLC—
204,833
—
204,833
Equity in net income of unconsolidated affiliates1,257
5,127
5,509
14,706
Interest and investment loss, net(1,508)(857)(3,003)(1,009)
Loss on disposal of long-lived assets(400)—
(1,720)(1,518)
Other income (expense)(13,356)(131)(11,893)875
Equity in net (loss) income of unconsolidated affiliates
Interest income (expense), net
Other income, net
Other income (expense), net(14,007)208,972
(11,107)217,887
Income before income taxes251,277
283,613
324,657
365,044
Income tax expense231,508
37,429
244,272
60,765
Net income19,769
246,184
80,385
304,279
Net income attributable to non-controlling interest in Premier LP(56,485)(181,173)(101,095)(230,774)
Adjustment of redeemable limited partners' capital to redemption amount317,916
335,264
638,340
397,072
Net loss (income) attributable to non-controlling interest
Net income attributable to stockholders$281,200
$400,275
$617,630
$470,577
 
Comprehensive income:
Comprehensive income:
Comprehensive income:
Net income
Net income
Net income
Comprehensive loss (income) attributable to non-controlling interest
Foreign currency translation gain (loss)
Comprehensive income attributable to stockholders
Weighted average shares outstanding: 
Weighted average shares outstanding:
Weighted average shares outstanding:
Basic
Basic
Basic55,209
49,445
54,059
48,330
Diluted139,237
141,308
139,641
142,133
 
Earnings (loss) per share attributable to stockholders: 
Earnings per share attributable to stockholders:
Earnings per share attributable to stockholders:
Earnings per share attributable to stockholders:
Basic
Basic
Basic$5.09
$8.10
$11.43
$9.74
Diluted$(1.66)$1.50
$(1.30)$1.75
See accompanying notes to the unaudited condensed consolidated financial statements.

7


PREMIER, INC.
Condensed Consolidated Statements of Comprehensive IncomeStockholders' Equity
Six Months Ended December 31, 2023 and 2022
(Unaudited)
(In thousands)thousands, except per share data)
Class A
Common Stock		Treasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive (Loss) IncomeTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at June 30, 2023119,158 $1,256 6,429 $(250,129)$2,178,134 $405,102 $(8)$2,334,355 
Issuance of Class A common stock under equity incentive plan514 5 — — — — — 5 
Stock-based compensation expense— — — — 6,692 — — 6,692 
Repurchase of vested restricted units for employee tax-withholding— — — — (5,178)— — (5,178)
Net income— — — — — 42,410 — 42,410 
Net loss attributable to non-controlling interest— — — — (2,351)2,351 — — 
Change in ownership of consolidated entity— — — — 27 — — 27 
Dividends ($0.21 per share)— — — — — (25,603)— (25,603)
Foreign currency translation adjustment— — — — — — (3)(3)
Balance at September 30, 2023119,672 1,261 6,429 (250,129)2,177,324 424,260 (11)2,352,705 
Issuance of Class A common stock under equity incentive plan56 — — — — — — — 
Issuance of Class A common stock under employee stock purchase plan88 1 — — 1,975 — — 1,976 
Stock-based compensation expense— — — — 8,378 — — 8,378 
Repurchase of vested restricted units for employee tax-withholding— — — — (151)— — (151)
Net income— — — — — 52,866 — 52,866 
Net loss attributable to non-controlling interest— — — — (1,436)1,436 — — 
Change in ownership of consolidated entity— — — — 25 — — 25 
Dividends ($0.21 per share)— — — — — (25,616)— (25,616)
Foreign currency translation adjustment— — — — — — 26 26 
Balance at December 31, 2023119,816 $1,262 6,429 $(250,129)$2,186,115 $452,946 $15 $2,390,209 
 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Net income$19,769
$246,184
$80,385
$304,279
Net unrealized gain on marketable securities—
—
—
128
Total comprehensive income19,769
246,184
80,385
304,407
Less: comprehensive income attributable to non-controlling interest(56,485)(181,173)(101,095)(230,859)
Comprehensive income attributable to stockholders$(36,716)$65,011
$(20,710)$73,548
Class A
Common Stock		Treasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive (Loss) IncomeTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at June 30, 2022118,052 $1,245 6,429 $(250,129)$2,166,047 $331,690 $(3)$2,248,850 
Issuance of Class A common stock under equity incentive plan694 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, 2022118,746 1,252 6,429 (250,129)2,161,000 349,309 (13)2,261,419 
Issuance of Class A common stock under equity incentive plan54 — — — 60 — — 60 
Issuance of Class A common stock under employee stock purchase plan67 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, 2022118,867 $1,253 6,429 $(250,129)$2,166,909 $388,052 $(12)$2,306,073 
See accompanying notes to the unaudited condensed consolidated financial statements.


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



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


 Six Months Ended December 31,
 20172016
   
Supplemental schedule of non-cash investing and financing activities:  
Decrease in redeemable limited partners' capital for adjustment to fair value, with offsetting increases in additional paid-in-capital and accumulated deficit$638,340
$397,072
Reduction in redeemable limited partners' capital, with offsetting increases in common stock and additional paid-in capital related to quarterly exchanges by member owners$162,265
$107,213
Reduction in redeemable limited partners' capital for limited partners' distribution payable$41,148
$44,870
Distributions utilized to reduce subscriptions, notes, interest and accounts receivable from member owners$984
$1,074
Net increase in deferred tax assets related to quarterly exchanges by member owners and other adjustments$75,998
$77,638
Net increase in tax receivable agreement liabilities related to quarterly exchanges by member owners and other adjustments$84,667
$49,352
Net increase (decrease) in additional paid-in capital related to quarterly exchanges by member owners and other adjustments$(8,669)$28,286
Increase in treasury stock related to a forward purchase commitment as a result of applying trade date accounting when recording the repurchase of Class A common stock$3,854
$—
Six Months Ended December 31,
20232022
Operating activities
Net income$95,276 $107,333 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization65,795 68,377 
Equity in net loss (income) of unconsolidated affiliates2,392 (9,917)
Deferred income taxes(154,933)1,959 
Stock-based compensation15,070 9,815 
Other, net2,966 10,167 
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable(7,005)(5,145)
Contract assets(33,178)(26,458)
Inventory4,166 3,231 
Prepaid expenses and other assets(10,624)17,685 
Accounts payable2,608 16,707 
Revenue share obligations17,567 9,974 
Accrued expenses, deferred revenue and other liabilities35,280 (7,003)
Net cash provided by operating activities35,380 196,725 
Investing activities
Purchases of property and equipment(49,068)(38,416)
Acquisition of businesses and equity method investments, net of cash acquired— (187,750)
Other— (1,300)
Net cash used in investing activities(49,068)(227,466)
Financing activities
Payments on notes payable(50,872)(51,049)
Proceeds from credit facility— 285,000 
Payments on credit facility(215,000)(135,000)
Proceeds from sale of future revenues629,820 — 
Payments on liability related to the sale of future revenues(14,611)— 
Cash dividends paid(51,059)(50,205)
Other, net(3,296)(9,516)
Net cash provided by financing activities294,982 39,230 
Effect of exchange rate changes on cash flows23 (9)
Net increase in cash and cash equivalents281,317 8,480 
Cash and cash equivalents at beginning of period89,793 86,143 
Cash and cash equivalents at end of period$371,110 $94,623 
See accompanying notes to the unaudited condensed consolidated financial statements.

9


PREMIER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) ORGANIZATION AND BASIS OF PRESENTATION
Organization
Premier, Inc. ("Premier"(“Premier” or the "Company"“Company”) is a publicly-held,publicly held, for-profit Delaware corporation owned by hospitals, health systems and other healthcare organizations (such owners of Premier are referred to herein as "member owners") located in the United StatesStates. The Company is a holding company with no material business operations of its own. The Company’s primary asset is its equity interest in its wholly owned subsidiary Premier 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 technology-driven 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, payer and life sciences markets. Additionally, the Company also provides some of the various products and services noted above to non-healthcare businesses, including through its direct sourcing activities as well as continued access to its group purchasing organization (“GPO”) programs for non-healthcare members whose contracts were sold to OMNIA Partners, LLC (“OMNIA”) (see Note 9 - Liability Related to the Sale of Future Revenues).
The Company'sCompany’s business model and solutions are designed to provide its members and other customers access to scale efficiencies, spread the cost of their development, provide actionable intelligence derived from anonymized data in the Company'sCompany’s enterprise data warehouse, mitigate the risk of innovation and disseminate best practices that willto help the Company's member organizationsCompany’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 1615 - Segments for further information related to the Company'sCompany’s reportable business segments. The Company has no significant foreign operations or revenues. The Supply Chain Services segment includes one of the largest national healthcare group purchasing organization ("GPO")GPO programs in the United States and integrated pharmacyprovides supply chain co-management, purchased services and direct sourcing activities. The Performance Services segment includes oneconsists of three sub-brands: PINC AITM, the largest informaticsCompany’s technology and advisory services businessesplatform 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 utilizeprovider, payer and life sciences 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")of health-benefit programs that enable healthcare providers that are also payers (e.g., held an approximate 40%payviders) 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 additionemployers 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 pursuantpartner with healthcare providers to certain rightsprovide 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 subjectexcellence program and cost containment and wrap network; and Remitra®, 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 suppliers 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.providers.
Principles of Consolidation
The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC and in accordance with U.S. generally accepted accounting principles ("GAAP"(“GAAP”) for interim financial information and pursuant toinclude the rulesassets, liabilities, revenues and regulationsexpenses of all majority-owned subsidiaries over which the SEC.Company exercised control and when applicable, entities for which the Company had a controlling financial interest or was the primary beneficiary. All intercompany transactions have been eliminated upon consolidation. Accordingly, certain information and disclosures normally included in annual financial statements have been condensed or omitted. The accompanying condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, includingconsisting of normal recurring adjustments.adjustments, unless otherwise disclosed. Certain amounts in prior periods have been reclassified to conform to the current period presentation. 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 20172023 Annual Report.
We have reclassified $5.7 million from selling, general and administrative expenses to the remeasurement of tax receivable agreement liabilities
10

Supplementary Cash Flows Information
The following table presents supplementary cash flows information for the six months ended December 31, 2016 within the Condensed Consolidated Statements of Income in order to conform with the current period presentation.
Variable Interest Entities
Premier LP is a variable interest entity ("VIE") as the limited partners do not have the ability to exercise a substantive removal right with respect to the general partner. The Company does not hold a majority interest but, through Premier GP, has the exclusive 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 following2022 (in thousands):
 December 31, 2017June 30, 2017
Assets  
Current$378,412
$385,477
Noncurrent1,593,777
1,616,539
Total assets of Premier LP$1,972,189
$2,002,016
   
Liabilities  
Current$493,462
$560,582
Noncurrent131,154
134,635
Total liabilities of Premier LP$624,616
$695,217
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,
 2017201620172016
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,
 20172016
Net cash provided by (used in):  
Operating activities$207,514
$121,731
Investing activities(38,622)(336,358)
Financing activities(180,600)159,533
Net decrease in cash and cash equivalents(11,708)(55,094)
Cash and cash equivalents at beginning of year133,451
210,048
Cash and cash equivalents at end of period$121,743
$154,954
Six Months Ended December 31,
20232022
Supplemental schedule of non-cash investing and financing activities:
Accrued dividend equivalents$956 $519 
Non-cash additions to property and equipment— 84 
Use of Estimates in the Preparation of Financial Statements
The preparation of the Company'sCompany’s condensed consolidated financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Significant estimates are evaluated on an ongoing basis, including, 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 withused in the evaluation of asset impairments, values of put and call rights, values of earn-out liabilities and the allocation of purchase prices. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Given the Company's use of estimates referenced above, it is important to highlight that on December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act ("TCJA"). The TCJA includes significant changes to the U.S. corporate income tax system, specifically reducing the U.S. federal corporate income tax rate from 35% to 21%. As changes under the TCJA are broad and complex, the Company continues to interpret the breadth of its immediate and long-term impacts. The Company notes that concurrent with the enactment of the TCJA, the SEC issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effects of the TCJA.
SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting required under the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the TCJA for which the accounting under ASC 740 is complete. To the extent that a company's accounting for certain income tax effects of the TCJA is incomplete but it is able to determine a reasonable estimate, it must record a provisional amount on its financial statements. If a company cannot determine a provisional estimate to be included on its financial statements, it should continue to apply ASC 740 on the basis of the provision of the tax laws that were in effect immediately prior to the enactment of the TCJA. With this in mind, the Company has prescribed such provisional relief via SAB 118 by incorporating various estimates regarding timing and determination of temporary difference recognition when calculating components of its deferred tax balances. While the Company is able to provide reasonable estimates of the impacts related to the TCJA, the final impact may differ from these estimates, due to, among other things, changes in interpretations, assumptions, additional guidance that may be released by the I.R.S. and other actions that we may take that are yet to be determined.
(2) SIGNIFICANT ACCOUNTING POLICIES
There have been no material changes to the Company'sCompany’s significant accounting policies as described in the 20172023 Annual Report.Report, except as described below.
Recently Adopted Accounting StandardsLiability Related to the Sale of Future Revenues
In July 2015, the FASB issued Accounting Standards Update ("ASU") 2015-11, Inventory (Topic 330): Simplifying the Measurement of Inventory, which requires entities to measure most inventory "at the lower of cost and net realizable value," thereby simplifying the guidance under which an entity must measure inventory at the lower of cost or market. This guidance does not apply to inventories that are measured by using either the last-in, first-out method or the retail inventory method. The Company adopted this standard effective July 1, 2017 usingaccounts for the prospective approach. The implementationsale of this ASU did not havefuture revenues as a material effect onliability, with both current and non-current portions. In order to determine the Company's condensed consolidated financial statements.


In May 2017,timing of the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718): Scopereduction in debt associated with the sale of Modification Accounting, whichclarifies when changesfuture revenues, the Company estimates the total future revenues expected to be remitted 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.purchaser. The Company adopted this standardrecognizes interest expense based on an estimated effective October 1, 2017 usingannual interest rate. The Company determines the prospective approach. The implementationeffective interest rate based on recognized and expected future revenue and maintains a consistent interest rate throughout the life 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,agreement. This estimate contains significant assumptions that impact both the FASB issued ASU 2017-04, Intangibles - Goodwillamount of debt and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2interest expense recorded over the life of the agreement. To the extent the amount or timing of future payments varies materially from the goodwill impairment test. The guidance requires an entityoriginal estimate, the Company will make a cumulative adjustment 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 exceedsof 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 standarddebt, which 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 consolidated financial statements and related disclosures.
In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory, which removes the prohibitionrecorded as a non-cash gain or loss in ASC 740 against the immediate recognition of the current and deferredother 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 statementCondensed Consolidated Statements 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 statementsIncome and related disclosures.Comprehensive Income.
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 InnovatixTRPN Direct Pay, Inc. and EssensaDevon 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 continuum of care 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") (seeto 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 InnovatixDebt 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 closingescrow 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 inits affiliates and other parties related thereto under the purchase agreement governing the adjusted purchase price was $336.0 million.TRPN acquisition.
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.
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The Company has accounted for the Innovatix and Essensa acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired (see Note 6 - Intangible Assets, Net) and liabilities assumed based on their fair values. The acquisition resulted in the recognition of approximately $334.7 million of goodwill (see Note 7 - Goodwill) attributable to the anticipated profitability of Innovatix and Essensa. The acquisition was considered an asset acquisition for tax purposes, and accordingly, the Company expects the goodwill to be deductible for tax purposes.
The fair values assigned to the net assets acquired and the liabilities assumed as of the acquisition date were as follows (in thousands):
 Acquisition Date Fair Value
Cash paid at closing$227,500
Cash paid on January 10, 201797,500
Purchase price325,000
Additional cash paid at closing10,984
Adjusted purchase price335,984
Earn-out liability16,662
Receivable from GNYHA Holdings, LLC(3,000)
Total consideration paid349,646
Cash acquired(16,267)
Net consideration333,379
50% ownership interest in Innovatix218,356
Payable to Innovatix and Essensa(5,765)
Enterprise value545,970
  
Accounts receivable21,242
Prepaid expenses and other current assets686
Fixed assets, net3,476
Intangible assets241,494
Total assets acquired266,898
Accrued expenses5,264
Revenue share obligations7,011
Other current liabilities694
Total liabilities assumed12,969
Deferred tax liability42,636
Goodwill$334,677
The acquisition provides the seller an earn-out opportunity of up to $43.0 million based on Innovatix's and Essensa's Adjusted EBITDA (as defined in the purchase agreement) for the fiscal year ending June 30, 2017, which is still in the process of being finalized. The Company paid the seller $18.5 million of the earn-out opportunity during the current period. As of December 31, 2017, the fair value of the earn-out liability was $2.6 million (see Note 5 - Fair Value Measurements).
Certain executive officers of Innovatix and Essensa executed employment agreements that became effective upon the closing of the acquisition. The purchase agreement provides that in the event that Innovatix's and Essensa's Adjusted EBITDA exceeds agreed upon amounts, certain of those executive officers are entitled to receive a retention bonus payment of up to $3.0 million in the aggregate, for which the Company will be reimbursed by GNYHA Holdings, LLC, of which $1.5 million was paid and reimbursed during the current period.
The Company's 50% ownership interest in Innovatix prior to the acquisition was accounted for under the equity method and had a carrying value of $13.3 million (see Note 4 - Investments). In connection with the acquisition, the Company's investment was remeasured under business combination accounting rules to a fair value of $218.4 million, resulting in a one-time gain of $205.1 million which was recorded as other income.


Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to our historic consolidated financial statements. The Company reports Innovatix and Essensa as part of its Supply Chain Services segment.
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 PharmaceuticalsTRPN 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 Pharmaceuticalstotal fair value assigned to intangible assets acquired was $116.6 million, consisting primarily of the provider network.
The TRPN acquisition resulted in the initial 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 PharmaceuticalsTRPN acquisition was considered an asset acquisition for income tax purposes and accordingly,purposes. Accordingly, the Company expects thetax goodwill to be deductible for tax purposes. In fiscal year 2023, the Company recorded a pre-tax goodwill impairment charge of $54.4 million related to the Contigo Health reporting unit including goodwill recognized as a result of the TRPN acquisition. TRPN has been 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 historicthe 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'sCompany’s investments in unconsolidated affiliates consisted of the following (in thousands):
Equity in Net (Loss) Income
Three Months EndedSix Months Ended
Carrying ValueDecember 31,December 31,
December 31, 2023June 30, 20232023202220232022
FFF$136,080 $136,080 $— $518 $— $7,705 
Exela30,855 32,905 (631)632 (2,050)770 
Qventus16,000 16,000 — — — — 
Prestige15,465 15,503 (157)291 (38)471 
Other investments31,034 31,338 122 233 (304)971 
Total investments$229,434 $231,826 $(666)$1,674 $(2,392)$9,917 
 Carrying Value Equity in Net Income (Loss)
    Three Months Ended December 31,Six Months Ended December 31,
 December 31, 2017June 30, 2017 2017201620172016
FFF$91,125
$85,520
 $1,268
$1,119
$5,605
$4,177
Bloodbuy2,001
2,066
 (31)(34)(65)(52)
PharmaPoint4,074
4,232
 (107)(85)(158)(162)
Innovatix—
—
 —
4,127
—
10,743
Other investments1,188
1,061
 127
—
127
—
Total investments$98,388
$92,879
 $1,257
$5,127
$5,509
$14,706
On July 26, 2016, theThe Company, through its consolidatedindirect, wholly owned subsidiary PSCI, acquiredPremier 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") for $65.7 million in cash plus consideration inat December 31, 2023 and June 30, 2023. On March 3, 2023, the formCompany and the majority shareholder of FFF amended the FFF shareholders’ agreement and as of the FFF put and call rights. Thedate of the amendment, the Company recorded the initialaccounts for its investment in FFF in the accompanying Condensed Consolidated Balance Sheets at $81.1 million, of which $65.7 million wascost less impairments, if any, plus or minus any observable changes in cash and $15.4 million was consideration in the form of the initial net fair value of(refer to the FFF put and call rights (see Note 5 - Fair Value Measurements2023 Annual Report for additional information related toand details regarding the fair values of the FFF put and call rights)March 2023 amendment). The Company accounts for its investment in FFF using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.
The Company, through its consolidated subsidiary, PSCI,ExPre Holdings, LLC (“ExPre”), held a 15% ownershipan approximate 6% interest in BloodSolutions, LLC ("Bloodbuy"Exela Holdings, Inc. (“Exela”) through its 5.3 million unitsownership of Exela Class B Membership InterestsA common stock at December 31, 20172023 and June 30, 2017. 2023. At December 31, 2023 and June 30, 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 December 31, 2023 and June 30, 2023. At December 31, 2023 and June 30, 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 investmentinvestments in BloodbuyExela and Prestige using the equity method of accounting as the Company has rights to appoint a Board member, and includes theeach investment as part of the Supply Chain Services segment.
The Company, through its consolidated subsidiary, PSCI,PHSI, held a 28% ownershipan approximate 7% interest in PharmaPoint, LLC ("PharmaPoint"Qventus, Inc. (“Qventus”) through its 5.0 million unitsownership of Class B Membership InterestsQventus Series C preferred stock at December 31, 20172023 and June 30, 2017.2023. The Company accounts for its investment in PharmaPoint using the equity method of accounting andQventus at cost less impairments, if any, plus or minus any observable changes in fair value. The Company includes the investmentQventus as part of the Supply ChainPerformance Services segment.

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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 ofrepresents the Company'sCompany’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 right2,108
—
—
2,108
Deferred compensation plan assets46,670
46,670
—
—
Total assets$77,168
$75,060
$—
$2,108
Earn-out liabilities$2,792
$—
$—
$2,792
FFF put right37,110
—
—
37,110
Total liabilities$39,902
$—
$—
$39,902
     
June 30, 2017    
Cash equivalents$22,218
$22,218
$—
$—
FFF call right4,655
—
—
4,655
Deferred compensation plan assets47,202
47,202
—
—
Total assets$74,075
$69,420
$—
$4,655
Earn-out liabilities$21,310
$—
$—
$21,310
FFF put right24,050
—
—
24,050
Total liabilities$45,360
$—
$—
$45,360
Cash equivalents were included in cash and cash equivalents in the accompanying Condensed Consolidated Balance Sheets (see Note 4 - Investments).
Fair Value of Financial Assets and LiabilitiesQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs
(Level 3)
December 31, 2023
Cash equivalents$147,592 $147,592 $— $— 
Deferred compensation plan assets55,189 55,189 — — 
Total assets202,781 202,781 — — 
Earn-out liabilities27,876 — — 27,876 
Total liabilities$27,876 $— $— $27,876 
June 30, 2023
Cash equivalents$77 $77 $— $— 
Deferred compensation plan assets55,566 55,566 — — 
Total assets55,643 55,643 — — 
Earn-out liabilities26,603 — — 26,603 
Total liabilities$26,603 $— $— $26,603 
Deferred compensation plan assets consisted of highly liquid mutual fund investments, which were classified as Level 1. The current portion of deferred compensation plan assets ($6.4 million and $5.2 million at December 31, 2023 and June 30, 2023, respectively) was included in prepaid expenses and other current assets ($3.9 million and $5.7 million at December 31, 2017 and June 30, 2017, respectively) in the accompanying Condensed Consolidated Balance Sheets.
Financial Instruments Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
Earn-out liabilities
Earn-out liabilities were incurredhave been established in connection with certain acquisitions, including the acquisition of Healthcare Insights, LLC (acquiredsubstantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc. (the “Acurity and Nexera asset acquisition”) in February 2020. The earn-out liability related to the Acurity and Nexera asset acquisition was based upon the Company’s achievement of a range of member renewals on July 31, 2015), Inflow Health, LLC (acquiredterms agreed to by the Company and Greater New York Hospital Association based on October 1, 2015) and Innovatix and Essensa (acquired onprevailing market conditions in December 2, 2016) (see Note 3 - Business Acquisitions). At December 31, 2017 and June 30, 2017, the earn-out2023. Earn-out liabilities wereare classified withinas Level 3 of the fair value hierarchy.

Acurity and Nexera Earn-out (a)
hierarchy. The fair valuesearn-out liability arising from expected earn-out payments related to the Acurity and Nexera asset acquisition was measured on the acquisition date using a probability-weighted expected payment model and is remeasured periodically due to changes in management’s estimates of the number of transferred member renewals and market conditions. In determining the fair value of the contingent liabilities, management reviews the current results of the acquired business, along with projected results for the remaining earn-out liabilities were determinedperiod, to calculate the expected earn-out payment to be made based on estimated future earningsthe contractual terms set out in the acquisition agreement. The Acurity and the probabilityNexera earn-out liability utilized a credit spread of achieving them. The current portion of the earn-out liabilities was $2.6 million and $21.1 million1.1% at December 31, 20172023 and 1.6% at 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 at2023. At December 31, 2017 and June 30, 2017, and2023, the most likely outcome 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' agreement was amended and restated November 22, 2017, the majority shareholder of FFF holds a put right that provides such shareholder (i) the right to require the Company to purchase up to 50% of its interest in FFF, which is exercisable beginning on the fourth anniversary of the investment closing date, July 26, 2020, and (ii) requires the Company to purchase all or a portion of its remaining interest in FFF on or after December 31, 2020. Any such required purchases aredetermined to be made at a per share price equal to FFF's earnings before interest, taxes, depreciation$30.0 million from an undiscounted range of outcomes between $0 and amortization ("EBITDA") over the twelve calendar months prior to the purchase date multiplied by a market adjusted multiple, adjusted for any outstanding debt and cash and cash equivalents ("Equity Value per Share"). In addition, the amended and restated shareholders' agreement provides the Company with a call right requiring the majority shareholder to sell its remaining interest in FFF to the Company, which is exercisable at any time within the later of 180 calendar days after the date of a Key Man Event (generally defined in the shareholders' agreement as the resignation, termination for cause, death or disability 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.
$30.0 million. The fair value of the FFF putAcurity and call rights were determined based on the Equity Value per Share calculation using unobservable inputs, which included the estimated FFF putNexera earn-out liability at December 31, 2023 and call rights' expiration dates, the forecastJune 30, 2023 was $27.9 million and $23.1 million, respectively.
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Input assumptionsAs of December 31, 2023As of June 30, 2023
Probability of transferred member renewal percentage < 50%— %5.0 %
Probability of transferred member renewal percentage between 50% and 65%— %10.0 %
Probability of transferred member renewal percentage between 65% and 80%— %25.0 %
Probability of transferred member renewal percentage > 80%100.0 %60.0 %
Credit spread1.1 %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'sCompany’s earn-out liabilities and FFF put and call rights is as follows (in thousands):
Beginning Balance
Purchases (Settlements) (a)
(Gain)/Loss (b)
Ending Balance
Three Months Ended December 31, 2023
Earn-out liabilities$29,861 $(1,375)$(610)$27,876 
Total Level 3 liabilities$29,861 $(1,375)$(610)$27,876 
Three Months Ended December 31, 2022
Earn-out liabilities$22,361 $1,460 $277 $24,098 
Total Level 3 liabilities$22,361 $1,460 $277 $24,098 
Six Months Ended December 31, 2023
Earn-out liabilities$26,603 $(1,375)$2,648 $27,876 
Total Level 3 liabilities$26,603 $(1,375)$2,648 $27,876 
Six Months Ended December 31, 2022
Earn-out liabilities$22,789 $1,460 $(151)$24,098 
Total Level 3 liabilities$22,789 $1,460 $(151)$24,098 

(a)Settlements for the three and six months ended December 31, 2023 represent payments on earn-out liabilities. Purchases for the three and six months ended December 31, 2022 includes an earn-out which had not been earned or paid as of December 31, 2022.
 Beginning BalancePurchases (Settlements)Gain (Loss)Ending Balance
Three Months Ended December 31, 2017    
FFF call right$4,593
$—
$(2,485)$2,108
Total Level 3 assets$4,593
$—
$(2,485)$2,108
Earn-out liabilities$21,675
$(18,500)$383
$2,792
FFF put right24,008
—
(13,102)37,110
Total Level 3 liabilities$45,683
$(18,500)$(12,719)$39,902
     
Three Months Ended December 31, 2016    
FFF call right$10,316
$—
$434
$10,750
Total Level 3 assets$10,316
$—
$434
$10,750
Earn-out liabilities$2,359
$16,662
$2,308
$16,713
FFF put right25,811
—
(573)26,384
Total Level 3 liabilities$28,170
$16,662
$1,735
$43,097
     
Six Months Ended December 31, 2017    
FFF call right$4,655
$—
$(2,547)$2,108
Total Level 3 assets$4,655
$—
$(2,547)$2,108
Earn-out liabilities$21,310
$(18,500)$18
$2,792
FFF put right24,050
—
(13,060)37,110
Total Level 3 liabilities$45,360
$(18,500)$(13,042)$39,902
     
Six Months Ended December 31, 2016    
FFF call right$—
$10,361
$389
$10,750
Total Level 3 assets$—
$10,361
$389
$10,750
Earn-out liabilities$4,128
$16,662
$4,077
$16,713
FFF put right—
25,821
(563)26,384
Total Level 3 liabilities$4,128
$42,483
$3,514
$43,097
(b)Gains on level 3 liability balances will decrease the liability ending balance, and losses on level 3 liability balances will increase the liability ending balance.
Non-Recurring Fair Value Measurements
As a result of the August 2020 Restructuring, the Company recorded non-interest bearing notes payable to former limited partners during the first quarter of fiscal year 2021. Although these notes are non-interest bearing, they include a Level 2 input associated with an implied fixed annual interest rate of 1.8% (see Note 8 - Debt and Notes Payable). As of December 31, 2023 and June 30, 2023, the notes payable to former limited partners were recorded net of discounts of $2.4 million and $4.2 million, respectively.
During the six months ended December 31, 2017,2023, no non-recurring fair value measurements were required relatedrelating to the measurement of goodwill and intangible assets for impairment.
Financial Instruments forFor Which Fair Value Only is Disclosed
The fair values of non-interest bearing notes payable, classified as Level 2, were less than theirequal to the carrying values by approximately $0.5 million and $0.6 millionvalue at both December 31, 20172023 and June 30, 2017, respectively,2023 based on an assumed market interest ratesrate of 2.9% and 2.6% for December 31, 2017 and June 30, 2017, respectively.1.6%.
Other Financial Instruments
The fair values of cash, accounts receivable, accounts payable, accrued liabilities and the Company's Credit Facility (as defined in Note 8 - Debt and Notes Payable) approximated carrying value due to the short-term nature of these financial instruments.

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(6) CONTRACT BALANCES
Deferred Revenue
Revenue recognized during the six months ended December 31, 2023 that was included in the opening balance of deferred revenue at June 30, 2023 was $18.9 million, which is a result of satisfying certain performance obligations.
Performance Obligations
A performance obligation is a contractual obligation to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contracts may have a single performance obligation as the agreement to transfer individual goods or services is not separately identifiable from other contractual obligations and, therefore, not distinct, while other contracts may have multiple performance obligations, most commonly due to the contract covering multiple phases or deliverable arrangements (licensing fees, SaaS subscription fees, maintenance and support fees, and professional fees for consulting services).
Refer to the Company’s significant accounting policies in the 2023 Annual Report for discussion of revenue recognition on contracts with customers.
A reduction to net revenue of $0.8 million was recognized during the three months ended December 31, 2023 from performance obligations that were satisfied or partially satisfied in prior periods. The reduction was driven by a $1.3 million decrease in net administrative fees revenue related to over-forecasted cash receipts received in the current period partially offset by an increase of $0.5 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.
Net revenue of $3.2 million was recognized during the six months ended December 31, 2023 from performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by an increase of $3.9 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business. This increase was partially offset by a reduction of $0.7 million in net administrative fees revenue related to over-forecasted cash receipts received in the current period.
A reduction to net revenue of $0.4 million was recognized during the three months ended December 31, 2022 from performance obligations that were satisfied or partially satisfied in prior periods. The reduction was driven by a $0.8 million decrease associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business. This decrease was partially offset by an increase of $0.4 million in net administrative fees revenue related to under-forecasted cash receipts received in the current period.
Net revenue of $2.5 million was recognized during the six months ended December 31, 2022 from performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by an increase of $4.6 million in net administrative fees revenue related to under-forecasted cash receipts received in the current period partially offset by a reduction of $2.1 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.
Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was $771.6 million. The Company expects to recognize approximately 38% of the remaining performance obligations over the next twelve months and an additional 23% over the following twelve months, with the remainder recognized thereafter.
(7) GOODWILL AND INTANGIBLE ASSETS NET
Goodwill
At December 31, 2023 and June 30, 2023, the Company had goodwill balances recorded at Supply Chain Services and Performance Services of $386.2 million and $626.1 million, respectively. At December 31, 2023 and June 30, 2023, the Company had accumulated impairment losses to goodwill at Supply Chain Services and Performance Services of $2.3 million and $54.4 million, respectively.
15

Fiscal 2023 Goodwill Impairment
During the year ended June 30, 2023, the Company recorded pre-tax goodwill impairment charges of $54.4 million and $2.3 million related to the Contigo Health and Direct Sourcing reporting units, respectively.
Intangible Assets, Net
Intangible assets, net consisted of the following (in thousands):
December 31, 2023June 30, 2023
Useful LifeGrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Member relationships14.7 years$386,100 $(149,831)$236,269 $386,100 $(136,751)$249,349 
Provider network15.0 years106,500 (8,579)97,921 106,500 (5,029)101,471 
Technology7.1 years99,317 (70,721)28,596 99,317 (67,581)31,736 
Customer relationships9.4 years57,930 (34,294)23,636 57,930 (31,846)26,084 
Trade names6.7 years18,920 (13,029)5,891 18,920 (11,983)6,937 
Non-compete agreements5.2 years17,715 (11,091)6,624 17,715 (9,738)7,977 
Other (a)
9.3 years9,232 (3,339)5,893 9,232 (2,756)6,476 
Total$695,714 $(290,884)$404,830 $695,714 $(265,684)$430,030 

(a)Includes a $1.0 million indefinite-lived asset.
 Useful LifeDecember 31, 2017June 30, 2017
Member relationships14.7 years$220,100
$220,100
Technology5.0 years142,317
143,727
Customer relationships8.3 years48,120
48,120
Trade names8.3 years22,710
22,710
Distribution network10.0 years22,400
22,400
Favorable lease commitments10.1 years11,393
11,393
Non-compete agreements5.9 years8,710
8,710
Total intangible assets 475,750
477,160
Accumulated amortization (125,903)(99,198)
Intangible assets, net $349,847
$377,962
The net carrying value of intangible assets by segment was as follows (in thousands):
Intangible asset
December 31, 2023June 30, 2023
Supply Chain Services$253,920 $269,710 
Performance Services (a)
150,910 160,320 
Total intangible assets, net$404,830 $430,030 

(a)Includes a $1.0 million indefinite-lived asset.
The estimated amortization totaled $13.8 millionexpense for each of the next five fiscal years and $11.2 millionthereafter is as follows (in thousands):
2024 (a)
$24,562 
202548,136 
202646,892 
202744,240 
202839,197 
Thereafter200,803 
Total amortization expense$403,830 
(a)As of December 31, 2023, estimated amortization expense is for the three months ended December 31, 2017period from January 1, 2024 to June 30, 2024.
(8) DEBT AND NOTES PAYABLE
Long-term debt and 2016, respectively, and $27.7 million and $20.4 million for the six months ended December 31, 2017 and 2016, respectively.
(7) GOODWILL
Goodwillnotes payable consisted of the following (in thousands):
 December 31, 2017
June 30,
2017
Supply Chain Services$400,348
$400,348
Performance Services506,197
506,197
Total goodwill$906,545
$906,545
(8) DEBT
Long-term debt consisted of the following (in thousands):
December 31, 2023June 30, 2023
Credit Facility$— $215,000 
Notes payable to former limited partners, net of discount151,588 201,188 
Other notes payable1,008 2,280 
Total debt and notes payable152,596 418,468 
Less: current portion(101,602)(316,211)
Total long-term debt and notes payable$50,994 $102,257 
16
 Commitment AmountDue DateDecember 31, 2017June 30, 2017
Credit Facility$750,000
June 24, 2019$200,000
$220,000
Notes payable—
Various7,683
14,272
Total debt  207,683
234,272
Less: Current portion  (201,139)(227,993)
Total long-term debt  $6,544
$6,279

Credit Facility
Premier LP,PHSI, along with its consolidated subsidiaries, Premier LP and PSCI and PHSI, as Co-Borrowers, Premier GP(“Co-Borrowers”), and certain domestic subsidiaries of Premier GP,the Co-Borrowers, as guarantors, entered into ana senior unsecured Amended and Restated Credit Facility,Agreement, dated as of June 24, 2014 and amended on June 4, 2015.December 12, 2022 (the “Credit Facility”). The Credit Facility has a maturity date of June 24, 2019. The Credit FacilityDecember 12, 2027, subject to up to two one-year extensions, and provides for borrowings of up to $750.0 million$1.0 billion with (i) a $25.0$50.0 million sub-facility for standby letters of credit and (ii) a $75.0$100.0 million sub-facility for swingline loans. The Credit Facility also provides that Co-Borrowers may be increased from time to time at(i) incur incremental term loans and (ii) request an increase in the Company's requestrevolving commitments under the Credit Facility, together up to an aggregate additional amount of $250.0$350.0 million, subject to lender approval.the approval of the lenders providing such term loans or revolving commitment increase. The Credit Facility includescontains an unconditional and irrevocable guaranty of all obligations of Co-Borrowers under the Credit Facility by Premier GP, certain domestic subsidiaries of Premier GPthe current and future guarantors, if any.guarantors. Premier Inc. is not a guarantor under the Credit Facility.


At the Company's option, committed loans may be in the form of Eurodollar rate loans ("Eurodollar Loans") or base rate loans ("Base Rate Loans"). Eurodollar Loans bear interest at the Eurodollar rate (defined as the London Interbank Offered Rate, or LIBOR, plus the Applicable Rate (defined as a margin based on the Consolidated Total Leverage Ratio (as defined in the Credit Facility))). Base Rate Loans bear interest at the Base Rate (defined as the highest of the prime rate announced by the administrative agent, the federal funds effective rate plus 0.50% or the one-month LIBOR plus 1.0%) plus the Applicable Rate. The Applicable Rate ranges from 1.125% to 1.750% for Eurodollar Loans and 0.125% to 0.750% for Base Rate Loans. At December 31, 2017,2023, the interest rateCompany had no outstanding borrowings under the Credit Facility with $995.0 million of available borrowing capacity after reductions for three-month Eurodollar Loans was 2.815%outstanding letters of credit. At June 30, 2023, the Company had $215.0 million in outstanding borrowings under the Credit Facility with $785.0 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. For the interest rate for Base Rate Loans was 4.625%. The Co-Borrowers are required to pay asix months ended December 31, 2023, the Company had no new borrowings and repaid $215.0 million of outstanding borrowings under the Credit Facility. At both December 31, 2023 and June 30, 2023, the annual commitment fee, ranging from 0.125% to 0.250% per annumbased on the actual daily unused amount of commitments under the Credit Facility. At December 31, 2017, the commitment feeFacility, was 0.125%.
The Credit Facility contains customary representations and warranties as well as customary affirmative and negative covenants, including, among others, limitations At June 30, 2023, the weighted average interest rate on liens, indebtedness, fundamental changes, dispositions, restricted payments and investments, of which certain covenant calculations use EBITDA, a Non-GAAP financial measure. Under the terms of the Credit Facility, Premier GP is not permitted to allow its consolidated total leverage ratio (as defined in the Credit Facility) to exceed 3.00 to 1.00 for any period of four consecutive quarters. In addition, Premier GP must maintain a minimum consolidated interest coverage ratio (as defined in the Credit Facility) of 3.00 to 1.00 at the end of every fiscal quarter. Premier GP was in compliance with all such covenants at December 31, 2017.
The Credit Facility also contains customary events of default including, among others, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults of any indebtedness or guarantees in excess of $30.0 million, bankruptcy and other insolvency events, judgment defaults in excess of $30.0 million, and the occurrence of a change of control (as defined in the Credit Facility). If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request of the required lenders, terminate the commitments and declare all of the amounts owed under the Credit Facility to be immediately due and payable. The Company may prepay amounts outstanding under the Credit Facility without premium or penalty provided that Co-Borrowers compensate the lenders for losses and expenses incurred as a result of the prepayment of any Eurodollar Loan, as defined in the Credit Facility.
Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, discretionary cash settlements of Class B unit exchanges under the Exchange Agreement, repurchases of Class A common stock pursuant to a stock repurchase program, and other general corporate activities. During the six months ended December 31, 2017, the Company repaid $50.0 million of borrowings and borrowed an additional $30.0 million under the Credit Facility. The Company had outstanding borrowings under the Credit Facility of $200.0 millionwas 6.470%. The Company was in compliance with all covenants at December 31, 2017. Borrowings due within one year2023 and June 30, 2023.
Notes Payable
Notes Payable to Former Limited Partners
At December 31, 2023, the Company had $151.6 million of the balance sheet date are classified asnotes payable to former LPs, net of discounts on notes payable of $2.4 million, of which $100.6 million was recorded to current liabilitiesportion of notes payable to former limited partners in the accompanying Condensed Consolidated Balance Sheets. They may be renewed or extended atAt June 30, 2023, the optionCompany had $201.2 million of notes payable to former LPs, net of discounts on notes payable of $4.2 million, of which $99.7 million was recorded to current portion of notes payable to former limited partners in the accompanying Condensed Consolidated Balance Sheets. The notes payable to former LPs were issued in connection with the early termination of the Company through the maturity dateTRA as part of the Credit Facility.August 2020 Restructuring. Although the notes payable to former LPs are non-interest bearing, pursuant to GAAP requirements, they were recorded net of imputed interest at a fixed annual rate of 1.8%.
Notes PayableOther
At December 31, 20172023 and June 30, 2017,2023, the Company had $7.7$1.0 million and $14.3$2.3 million respectively, in other notes payable, consisting primarily of non-interest bearing notes payable outstanding to departed member owners,respectively, of which $1.2$1.0 million and $8.0$1.5 million, respectively, were included in current portion of long-term debt and $6.5 million and $6.3 million, respectively, were included in long-term debt, less current portion, in the accompanying Condensed Consolidated Balance Sheets. NotesOther notes payable do not bear interest and generally have stated maturities ofthree to five years from their date of issuance.
(9) REDEEMABLE LIMITED PARTNERS' CAPITALLIABILITY RELATED TO THE SALE OF FUTURE REVENUES
Redeemable limited partners' capital representsSale of Non-Healthcare GPO Member Contracts
On July 25, 2023 (the “Closing Date”), the member owners' 60% ownershipCompany sold the equity interest in its wholly-owned subsidiary, Non-Healthcare Holdings, LLC, pursuant to an equity purchase agreement with OMNIA (“Equity Purchase Agreement”) for an initial base purchase price of Premier LP through their ownership$689.2 million. The initial base purchase price was subject to certain post-closing purchase price adjustments, and pursuant to the Equity Purchase Agreement at closing, OMNIA paid the company $523.2 million in cash and deposited $166.0 million in cash into escrow. The release of Class B common units atthe escrow and determination of the final total purchase price is subject to certain members agreeing to certain consents and certain related business performance measurements. As of December 31, 2017.2023, the Company has received cash of $629.8 million, including the closing payment and payments out of escrow based on post-closing adjustments through that date. The member owners holdCompany is estimating the majorityfinal total purchase price to be up to $740.0 million through the continued release of funds from escrow and additional payments from OMNIA based on subsequent post-closing adjustments. The final total estimated purchase price has been reduced from previous estimates taking into account certain post-closing adjustments and remains subject to additional adjustments. See Note 13 - Income Taxes for further income tax considerations on cash proceeds received as of December 31, 2023.
Pursuant to the terms of the votesEquity Purchase Agreement, OMNIA acquired Premier’s non-healthcare GPO member agreements which includes the associated net cash flows generated from administrative fees from purchasing on supplier contracts. In conjunction with the execution of the Board of DirectorsEquity Purchase Agreement, the Company and any redemption or transfer or choice of consideration cannot be assumedOMNIA entered into a 10 year channel partnership agreement (the “Channel Agreement”) pursuant to be within the controlwhich OMNIA’s existing and newly acquired members will
17

have access to Premier’s supplier portfolio in which 100% of the Company. Therefore, redeemable limited partners' capital is recorded atadministrative fees generated will be remitted to OMNIA. Under the greaterterms of the book value or redemption amount per the Amended and Restated Limited PartnershipChannel Agreement, of Premier LP (as amended, the "LP Agreement"), and is calculated as the fair value of all Class B common units as if immediately exchangeable into Class A common shares. For the six months ended December 31, 2017 and 2016,although the Company recorded decreasessold the rights to retain future net administrative fees from the non-healthcare GPO member agreements, the Company continues to maintain significant involvement in the generation of the gross administrative fees through its supplier portfolio. Additionally, the Company has the right to retain an “Access Fee” over the term of the Channel Agreement based on the continued growth of the non-healthcare GPO member agreements. Due to the fair valueCompany’s continued involvement, the Company will continue to record net administrative fees from the non-healthcare agreements as revenue. The Company recorded the net proceeds from this transaction as a liability related to the sale of redeemable limited partners' capital as an adjustment of redeemable limited partners' capital to redemption amount in the accompanying Condensed Consolidated Statements of Income in the amount of $638.3 million and $397.1 million, respectively.
Redeemable limited partners' capital is classified as temporary equity in the mezzanine section offuture revenues on the accompanying Condensed Consolidated Balance Sheets, as, pursuantwhich will be amortized using the effective interest method over the remaining contractual life of the Channel Agreement. The Company has no obligation to pay OMNIA any principal or interest balance on the sale of future revenues liability outside of the cash flows generated for administrative fees from the Channel Agreement.
As payments for administrative fees are remitted to OMNIA, the balance of Premier’s obligation will effectively be repaid over the term of the Channel Agreement. To determine the amortization of the liability related to the LP Agreement, withdrawal is atsale of future revenues, the option of each member owner andCompany estimated the conditionstotal future revenues expected to be remitted over the life of the repurchaseChannel Agreement less any Access Fees retained by the Company. Future payments will result in the reduction of the liability related to the sale of future revenues less interest expense. The Company calculated the effective interest rate based on future expected revenue, which resulted in an effective annual interest rate of 2.5%. The Company will maintain a consistent interest rate throughout the life of the Channel Agreement. This estimate contains significant assumptions that impact both the amount of liability and interest expense recorded over the life of the Channel Agreement. The Company will assess the estimated future cash flows related to the sale of future revenues for material changes at each reporting period. There are several factors that could materially affect the amount and timing of payments to OMNIA, and correspondingly, the amount of interest expense recorded, most of which are outside the Company’s control. Such factors include, but are not solely within the Company's control.


The table below provides a summarylimited to, retention by OMNIA of the changesnon-healthcare GPO members, growing the existing portfolio of non-healthcare members and general competition of GPOs.
Changes to any of these factors could result in an increase or decrease to expected future revenue and interest expense related to the sale of future revenues. To the extent the amount or timing of future payments varies materially from the original estimate, the Company will make a cumulative adjustment to the carrying amount of the liability, which will be recorded as a non-cash gain or loss in other income in the redeemable limited partners' capital from June 30, 2017 to December 31, 2017 (in thousands):
 Receivables From Limited PartnersRedeemable Limited Partners' CapitalTotal Redeemable Limited Partners' Capital
June 30, 2017$(4,177)$3,142,760
$3,138,583
Distributions applied to receivables from limited partners984
—
984
Redemption of limited partners—
(269)(269)
Net income attributable to non-controlling interest in Premier LP—
101,095
101,095
Distributions to limited partners—
(41,148)(41,148)
Exchange of Class B common units for Class A common stock by member owners—
(162,265)(162,265)
Adjustment of redeemable limited partners' capital to redemption amount—
(638,340)(638,340)
December 31, 2017$(3,193)$2,401,833
$2,398,640
Receivables from limited partners represent amounts due from limited partners for their required capital in Premier LP. These receivables are either interest bearing notes that were issued to new limited partners or non-interest bearing loans (contribution loans) provided to existing limited partners. These receivables are reflected as a reduction to redeemable limited partners' capital so that amounts due from limited partners for capital are not reflected as redeemable limited partnership capital until paid. No interest bearing notes receivable were executed by limited partnersCondensed Consolidated Statements of Premier LP duringIncome and Comprehensive Income. For the three and six months ended December 31, 2017.2023, the Company did not record cumulative adjustments to the carrying amount of the liability.
During the six months endedAt December 31, 2017, two limited partners withdrew from Premier LP. The limited partnership agreement provides for2023, the redemptionCompany had $615.2 million of former limited partners' Class B common units that are not eligible for exchange in the form of a five-year, unsecured, non-interest bearing term promissory note, a cash payment equaldebt related to the present valuesale of non-healthcare GPO member contracts and associated future revenues, of which $35.8 million was recorded to current portion of the redemption amount, or other mutually agreed upon terms. Partnership interest obligationsliability related to former limited partners are reflected in notes payablethe sale of future revenues in the accompanying Condensed Consolidated Balance Sheets. UnderFor the Exchange Agreement, Class B common units that are eligible for exchange by withdrawing limited partners must be exchanged in the subsequent exchange process.
Premier LP's distribution policy requires cash distributions as long as taxable income is generatedthree and cash is available to distribute, on a quarterly basis prior to the 60th day after the end of each calendar quarter. The Company makes quarterly distributions to its limited partners in the form of a legal partnership income distribution governed by the terms of the LP Agreement. These partner distributions are based on the limited partner's ownership in Premier LP and relative participation across Premier service offerings. While these distributions are based on relative participation across Premier service offerings, they are not based directly on revenue generated from an individual partner's participation as the distributions are based on the net income (loss) of the partnership which encompasses the operating expenses of the partnership as well as participation by non-owner members in Premier's service offerings. To the extent Premier LP incurred a net loss, the limited partners would not receive a quarterly distribution. As provided in the LP Agreement, the amount of actual cash distributed may be reduced by the amount of such distributions used by limited partners to offset contribution loans or other amounts payable to the Company.
Quarterly distributions made to limited partners during the current fiscal year are as follows (in thousands):
Date
Distribution (a)
August 24, 2017$24,951
November 22, 2017$20,752
(a)Distributions are equal to Premier LP’s total taxable income from the preceding fiscal quarter-to-date period for each respective distribution date multiplied by the Company's standalone effective combined federal, state and local income tax rate for each respective distribution date. Premier LP expects to make a $20.4 million quarterly distribution on or before February 22, 2018. The distribution is reflected in limited partners' distribution payable in the accompanying Condensed Consolidated Balance Sheets at December 31, 2017.

Pursuant to the Exchange Agreement (see Note 1 - Organization and Basis of Presentation for more information), each limited partner has the cumulative right to exchange up to one-seventh of its initial allocation of Class B common units for shares of Class A common stock, cash or a combination of both, the form of consideration to be at the discretion of the Company's independent Audit and Compliance Committee. During the six months ended December 31, 2017,2023, the Company recorded total reductions$14.8 million and $26.5 million in revenue that was sold to OMNIA in net administrative fees and $3.9 million and $6.4 million in interest expense related to the sale of $162.3 million to redeemable limited partners' capital to reflectfuture revenues in interest expense, net in the exchangeCondensed Consolidated Statements of approximately 4.9 million Class B common unitsIncome and surrender of associated shares of Class B common stock by member owners for a like number of sharesComprehensive Income.
The following table shows the activity of the Company'sliability related to the sale of future revenues since the transaction inception through December 31, 2023 (in thousands):

December 31, 2023
Proceeds from the sale of future revenues$523,198 
Proceeds from the release of escrow funds106,622 
Imputed interest expense associated with the sale of future revenues6,408 
Payments against the liability related to the sale of future revenues(21,019)
Liability related to the sale of future revenues$615,209

Class A common stock (see Note 11 - Earnings Per Share for more information). Quarterly exchanges during the current fiscal year were as follows (in thousands, except Class B common units).
Date of Quarterly ExchangeNumber of Class B Common Units ExchangedReduction in Redeemable Limited Partners' Capital
July 31, 20171,231,410
$42,976
October 31, 20173,651,294
119,289
Total4,882,704
$162,265
(10) STOCKHOLDERS' DEFICITEQUITY
As of December 31, 2017,2023, there were 54,685,668119,816,484 shares of the Company'sCompany’s Class A common stock, par value $0.01 per share, and 82,282,748 sharesoutstanding.
During the six months ended December 31, 2023, the Company paid cash dividends of the Company's Class B common stock, par value $0.000001$0.21 per share outstanding.
On October 31, 2017, the Company's Board of Directors authorized the repurchase of up to $200 million of ouron outstanding Class A common stock as part of a balanced capital deployment strategy, such repurchases to be made from time to time in private or open market transactions at the Company's discretion in accordance with applicable federal securities laws. As of December 31, 2017, the Company had purchased approximately 2.6 million shares of Class A common stock at an average priceto stockholders on each of $28.96 per share for a total purchase price of approximately $74.7 million, of which $3.9 million relates to a forward purchase commitment included within accounts payable on our Condensed Consolidated Balance Sheets as a result of applying trade date accounting when recording the repurchase of such shares. As ofSeptember 15, 2023 and December 31, 2017, the Company had approximately $125.3 million available under its share repurchase authorization, which expires June 30, 2018. Subsequent to December 31, 2017 and as of February 2, 2018, the Company had purchased approximately 1.0 million additional shares of Class A common stock at an average price of $31.67 per share for a total incremental purchase price of approximately $32.9 million, the amounts of which are not reflected in the Company's condensed consolidated financial statements for the quarter ended December 31, 2017. The repurchase authorization may be suspended, delayed or discontinued at any time at the discretion of the Company's Board of Directors.
Holders of Class A common stock are entitled to (i) one vote for each share held of record on all matters submitted to a vote of stockholders, (ii) receive dividends, when and if declared by15, 2023. On January 25, 2024, the Board of Directors outdeclared a quarterly cash dividend of funds legally available, subject$0.21 per share, payable on March 15, 2024 to any statutory or contractual restrictions on the payment of dividends and subject to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock or any class of series of stock having a preference over or the right to participate with the Class A common stock with respect to the payment of dividends or other distributions and (iii) receive pro rata, based on the number of shares of Class A common stock held, the remaining assets available for distribution upon the dissolution or liquidation of Premier, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any.
Holders of Class B common stock are entitled to one vote for each share heldstockholders of record on all matters submitted to a vote of stockholders, but are not entitled to receive dividends, other than dividends payable in shares of Premier's common stock, or to receive a distribution upon the dissolution or a liquidation of Premier. Pursuant to the Voting Trust Agreement, the trustee will vote all of the Class B common stock as a block in the manner determined by the plurality of the votes received by the trustee from the member owners for the election of directors to serve on the Board of Directors, and by a majority of the votes received by the trustee from the member owners for all other matters. Class B common stock will not be listed on any stock exchange and, except in connection with any permitted sale or transfer of Class B common units, cannot be sold or transferred.March 1, 2024.
18

(11) EARNINGS PER SHARE
Basic earnings per share of Premier is computed by dividing net income attributable to stockholders by the weighted average number of shares of common stock outstanding for the period. Net income attributable to stockholders includes the adjustment recorded in the period to reflect redeemable limited partners' capital at the redemption amount, as a result of the exchange benefit obtained by limited partners through the ownership of Class B common units. Except when the effect would be anti-dilutive, the diluted earnings per share calculation, which is calculated using the treasury stock method, includes the impact of all potentially issuable dilutive shares that could be issued under the outstanding stock options, non-vested restricted stock units and awards, shares of non-vested performance share awards and the effect of the assumed redemption of Class B common units through the issuance of Class A common shares.


stock.
The following table provides a reconciliation of the numerator and denominator used for basic and diluted earnings per share (in thousands, except per share amounts):
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Numerator for basic and diluted earnings per share:
Net income attributable to stockholders (a)
$54,302 $64,046 $99,063 $106,762 
Denominator for earnings per share:
Basic weighted average shares outstanding119,702 118,787 119,523 118,569 
Effect of dilutive securities: (b)
Stock options— 86 — 116 
Restricted stock units355 466 444 514 
Performance share awards— 313 128 643 
Diluted weighted average shares120,057 119,652 120,095 119,842 
Earnings per share attributable to stockholders:
Basic$0.45 $0.54 $0.83 $0.90 
Diluted$0.45 $0.54 $0.82 $0.89 

(a)Net income attributable to stockholders was calculated as follows (in thousands):
 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Numerator for basic earnings per share:    
Net income attributable to stockholders$281,200
$400,275
$617,630
$470,577
     
Numerator for diluted earnings (loss) per share:    
Net income attributable to stockholders$281,200
$400,275
$617,630
$470,577
Adjustment of redeemable limited partners' capital to redemption amount(317,916)(335,264)(638,340)(397,072)
Net income attributable to non-controlling interest in Premier LP56,485
181,173
101,095
230,774
Net income19,769
246,184
80,385
304,279
Tax effect on Premier, Inc. net income (a)
(251,085)(34,496)(261,636)(55,448)
Adjusted net income (loss)$(231,316)$211,688
$(181,251)$248,831
     
Denominator for basic earnings per share:    
Weighted average shares (b)
55,209
49,445
54,059
48,330
     
Denominator for diluted earnings (loss) per share:    
Weighted average shares (b)
55,209
49,445
54,059
48,330
Effect of dilutive securities: (c)
    
Stock options189
220
270
261
Restricted stock261
181
283
176
Performance share awards—
—
—
—
Class B shares outstanding83,578
91,462
85,029
93,366
Weighted average shares and assumed conversions139,237
141,308
139,641
142,133
     
Basic earnings per share$5.09
$8.10
$11.43
$9.74
Diluted earnings (loss) per share$(1.66)$1.50
$(1.30)$1.75
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Net income$52,866 $64,374 $95,276 $107,333 
Net loss (income) attributable to non-controlling interest1,436 (328)3,787 (571)
Net income attributable to stockholders$54,302 $64,046 $99,063 $106,762 
(a)Represents income tax expense related to Premier, Inc. retaining the portion of net income attributable to income from non-controlling interest in Premier, LP for the purpose of diluted earnings per share.
(b)Weighted average number of common shares used for basic earnings per share excludes weighted average shares of non-vested stock options, non-vested restricted stock, non-vested performance share awards and Class B shares outstanding for the three and six months ended December 31, 2017 and 2016.
(c)For the three and six months ended December 31, 2017, the effect of 2.2 million stock options was excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect, and the effect of 0.5 million performance share awards was excluded from diluted weighted average shares outstanding as they had not satisfied the applicable performance criteria at the end of the period.
(b)For both the three and six months ended December 31, 2016, the effect of 1.92023, 1.3 million stock options and restricted stock units were excluded from diluted weighted average shares outstanding as their effects were anti-dilutive. Additionally, for both the three and six months ended December 31, 2023, 0.1 million performance share awards were excluded from diluted weighted average shares outstanding as theythe awards had not satisfied the applicable performance criteria at the end of the period.
For the three and six months ended December 31, 2022, the effect of 0.5 million and 0.7 million stock options and restricted stock units, respectively, was excluded from diluted weighted average shares outstanding as it had an anti-dilutive effect.


Pursuant to Additionally, for the termsthree and six months ended December 31, 2022, the effect of 0.2 million and 0.3 million performance share awards, respectively, was excluded from diluted weighted average shares outstanding as the awards had not satisfied the applicable performance criteria at the end of the Exchange Agreement, on a quarterly basis, the Company has the option, as determined by the independent Audit and Compliance Committee, to settle the exchange of Class B common units of Premier LP by member owners for cash, an equal number of Class A common shares of Premier, Inc. or a combination of cash and shares of Class A common stock. In connection with the exchange of Class B common units by member owners, regardless of the consideration used to settle the exchange, an equal number of shares of Premier's Class B common stock are surrendered by member owners and retired (see Note 9 - Redeemable Limited Partners' Capital). The following table presents certain information regarding the exchange of Class B common units and associated Class B common stock for Premier's Class A common stock and/or cash in connection with the quarterly exchanges pursuant to the terms of the Exchange Agreement, including activity related to the Class A and Class B common units and Class A and Class B common stock through the date of the applicable quarterly exchange: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, 20171,231,410
86,067,478
53,212,057
62%/38%
October 31, 20173,651,294
82,416,184
57,215,143
59%/41%
January 31, 2018 (c)
1,006,435
81,169,319
54,829,086
60%/40%
(a)The number of Class B common shares retired or outstanding is equivalent to the number of Class B common units retired upon exchange or outstanding after the exchange, as applicable.
(b)
The number of Class A common shares outstanding after exchange also includes activity related to the Company's share repurchase program (see Note 10 - Stockholders' Deficit), equity incentive plan (see Note 12 - Stock-Based Compensation) and departed member owners (see Note 9 - Redeemable Limited Partners' Capital).
(c)As the quarterly exchange occurred on January 31, 2018, the impact of the exchange is not reflected in the condensed consolidated financial statements for the quarter ended December 31, 2017.
(12) STOCK-BASED COMPENSATION
Stock-based compensation expense is recognized over the requisite service period, which generally equals the stated vesting period. Pre-tax stock-based compensation expense was $8.9 million and $6.3 million for the three months ended December 31, 2017 and 2016, respectively, with a resultingThe associated deferred tax benefit was calculated at a tax rate of $2.2 million25% and $2.4 million, respectively. Pre-tax stock-based compensation expense was $17.7 million and $12.1 million26% for the six months ended December 31, 20172023 and 2016,2022, respectively, with a resulting deferred tax benefit of $4.4 million and $4.6 million, respectively. The deferred tax benefit was calculated at a rate of 25% for the three and six months ended December 31, 2017 and 38% for the three and six months ended December 31, 2016, which represents the expected effective income tax rate at the time of the compensation expense deduction primarily at PHSI, and differs from the Company'sCompany’s current effective income tax rate which includesrate. See Note 13 - Income Taxes for further information related to income taxes.
19

Stock-based compensation expense and the impact of partnership income not subject to federalresulting deferred tax benefits were as follows (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Pre-tax stock-based compensation expense$8,378 $2,679 $15,070 $9,815 
Less: deferred tax benefit (a)
1,382 1,060 2,926 2,007 
Total stock-based compensation expense, net of tax$6,996 $1,619 $12,144 $7,808 

(a)For the three months ended December 31, 2023 and state income taxes. The decrease in2022, the deferred tax benefit ratewas reduced by $0.8 million and increased by $0.4 million, respectively, attributable to stock-based compensation expense that is a result ofnondeductible for tax purposes pursuant to Section 162(m) as amended by the Tax Cuts and Jobs Act whichof 2017.
For the six months ended December 31, 2023 and 2022, the deferred tax benefit was enacted on December 22, 2017 (see Note 13 - Income Taxes).reduced by $0.9 million and $0.5 million, respectively, attributable to stock-based compensation expense that is nondeductible for tax purposes pursuant to Section 162(m) as amended by the Tax Cuts and Jobs Act of 2017.
Premier 2013 Equity Incentive Plan
The Premier 2013 Equity Incentive Plan, as amended and restated (and including any further amendments thereto, the "2013“2013 Equity Incentive Plan"Plan”) provided for grants of up to 14.8 million shares of Class A common stock, all of which were eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units or performance share awards. On September 24, 2023, the 2013 Equity Incentive Plan expired; no new grants will be issued under the plan.
Premier 2023 Equity Incentive Plan
The Premier 2023 Equity Incentive Plan (the “2023 Equity Incentive Plan”), which became effective December 1, 2023 upon approval of Premier’s stockholders, provides for grants of up to 11.36.0 million shares of Class A common stock, all of which are eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock,shares, restricted stock units or performance share awards. As of December 31, 2017,2023, there were 3.5approximately 5.9 million shares available for grant under the 20132023 Equity Incentive Plan.


The following table includes information related to restricted stock, performance share awards and stock options granted under either the 2013 Equity Incentive Plan or the 2023 Equity Incentive Plan for the six months ended December 31, 2017:2023:
Restricted Stock Performance Share Awards Stock Options

Number of AwardsWeighted Average Fair Value at Grant Date Number of AwardsWeighted Average Fair Value at Grant Date Number of OptionsWeighted Average Exercise Price
Outstanding at June 30, 2017576,988
$32.92
 1,085,872
$32.79
 3,372,499
$30.31
Restricted StockRestricted StockPerformance Share AwardsStock Options
Number of AwardsNumber of AwardsWeighted Average Fair Value at Grant DateNumber of AwardsWeighted Average Fair Value at Grant DateNumber of OptionsWeighted Average Exercise Price
Outstanding at June 30, 2023
Granted206,929
$32.81
 690,470
$32.62
 550,563
$32.80
Vested/exercised(109,174)$31.67
 (352,867)$31.73
 (103,061)$28.26
Forfeited(20,276)$32.50
 (46,502)$32.43
 (92,179)$34.28
Outstanding at December 31, 2017654,467
$33.11
 1,376,973
$32.99
 3,727,822
$30.64
Outstanding at December 31, 2023
        
Stock options outstanding and exercisable at December 31, 2017      2,620,480
$29.64
Stock options outstanding and exercisable at December 31, 2023
Stock options outstanding and exercisable at December 31, 2023
Stock options outstanding and exercisable at December 31, 2023
Restricted stock units and restricted stock awards issued and outstandingprior to June 1, 2023 generally vest over a three-year period for employees and a one-year period for directors. Beginning June 1, 2023, restricted stock units and restricted stock awards issued to employees generally vest annually over the service period. Performance share awards issued and outstanding generally vest overat the end of a three-year period ifsubject to whether and to what extent performance targets are met. Stock options generally vest in equal annual installments over three years. Stock options have a term of ten years from the date of grant. Vested stock options will generally expire either after twelve months ofafter an employee'semployee’s termination with Premier or immediately uponthe Company; however, in certain termination circumstances, vested stock options will expire 90 days after an employee'semployee’s termination with Premier, depending on the termination circumstances. Stock options generally vest in equal annual installments over three years.Company.
20

Unrecognized stock-based compensation expense at December 31, 20172023 was as follows (in thousands):
Unrecognized Stock-Based Compensation ExpenseWeighted Average Amortization Period
Restricted stock$42,883 2.2 years
Performance share awards20,721 2.1 years
Total unrecognized stock-based compensation expense$63,6042.2 years
 Unrecognized Stock-Based Compensation ExpenseWeighted Average Amortization Period
Restricted stock$11,111
2.06 years
Performance share awards27,385
2.00 years
Stock options10,282
2.03 years
Total unrecognized stock-based compensation expense$48,778
2.02 years
The aggregate intrinsic value ofAt December 31, 2023, there was no unrecognized stock-based compensation expense for outstanding stock options. There were no options exercised during the six months ended December 31, 2023, and the stock options outstanding and exercisable at December 31, 2017 was as follows (in thousands):2023 had zero aggregate intrinsic value.
 Intrinsic Value of Stock Options
Outstanding and exercisable$3,336
Expected to vest8
Total outstanding$3,344
  
Exercised during the six months ended December 31, 2017$588


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

Six Months Ended December 31,
 20172016
Expected life (a)
6 years6 years
Expected dividend (b)
——
Expected volatility (c)
29.92% - 32.26%32.0% - 33.0%
Risk-free interest rate (d)
1.89% - 2.14%1.31% - 2.00%
Weighted average option grant date fair value$9.48 - $11.42$10.48 - $10.80
(a)The six-year expected life (estimated period of time outstanding) of stock options granted was estimated using the "Simplified Method" which utilizes the midpoint between the vesting date and the end of the contractual term. This method was utilized for the stock options due to the lack of historical exercise behavior of Premier's employees.
(b)No dividends are expected to be paid over the contractual term of the stock options granted, resulting in the use of a zero expected dividend rate.
(c)The expected volatility rate is based on the observed historical volatilities of comparable companies.
(d)The risk-free interest rate was interpolated from the five-year and seven-year Constant Maturity Treasury rate published by the United States Treasury as of the date of the grant.
(13) INCOME TAXES
The Company's income tax expense is attributable to the activities of the Company, PHSI and PSCI, all of which are subchapter C corporations and are subject to U.S. federal and state income taxes. In contrast, under the provisions of federal and state laws, Premier LP is not subject to federal and state income taxes as the income realized by Premier LP is taxable to its partners.
As a result of the TCJA that was enacted on December 22, 2017, the U.S. federal corporate income tax rate was reduced from 35% to 21%. In accordance with U.S. GAAP, the impact of changes in tax rates and tax laws is recognized as a component of income tax expense from continuing operations in the period of enactment. For fiscal year-end companies, determination of temporary differences contemplates the use of a combined U.S. federal income tax rate (which blends the income tax rates that were in effect prior to and after enactment) depending on expected timing of recognition for such temporary differences. The Company has remeasured its deferred tax balances as of the enactment date, accordingly. Given the nature and relative timing of the TCJA enactment, the Company is continuing to interpret the breadth of impact and has ultimately prescribed provisional relief pursuant to SAB 118 to certain components of its deferred tax balances. More specifically, the Company has incorporated various estimates regarding timing and determination of temporary difference recognition when calculating its net deferred tax expense.
Income tax expense for the three months ended December 31, 20172023 and 20162022 was $231.5$19.3 million and $37.4$23.8 million, respectively, which reflects effective tax rates of 92% and 13%, respectively. 27% for both periods.
Income tax expense for the six months ended December 31, 20172023 and 20162022 was $244.3$33.2 million and $60.8$42.5 million, respectively, which reflects effective tax rates of 75%26% and 17%28%, respectively. The increasechange in the effective tax rates is primarily attributable to the remeasurement of deferred tax balances, of which $221.2 million related to the aforementioned decrease in the U.S. federal corporate income tax rate. The Company's effective tax rates differ from income taxes recorded using a combined (or blended) rate largely due to Premier LP income, which is not subject to federal, state or local income taxes as well as valuation allowances associated with deferred tax assets at PHSI.
Deferred tax assets decreased $159.7 million to $274.6 million at December 31, 2017 from $434.3 million at June 30, 2017. The current period balance was comprised of $305.5 million in deferred tax assets at Premier, Inc. offset by $30.9 million in deferred tax liabilities at PHSI and PSCI. The decrease in deferred tax assets from the prior period was largely driven by $221.2 million in net reductions to deferred tax assets and liabilities in connection with the underlying revaluation associated with the previously mentioned decrease in the U.S. federal corporate income tax rate. This decrease was partially offset by a $65.3 million increase in deferred tax assets in connection with the quarterly member owner exchanges that occurred duringfor the six months ended December 31, 2017.
The Company's tax receivable agreement ("TRA") liabilities represent 85% of the tax savings the Company expects to receive, if any, in U.S. federal, foreign, state and local income and franchise tax that may be realized (or deemed to realize, in the case of payments required to be made upon certain occurrences under such TRAs), payable to limited partners in connection with the Section 754 election by Premier LP. Tax savings are generated as a result of the increase in tax basis resulting from the initial sale of Class B common units, subsequent exchanges (pursuant2023 compared to the Exchange Agreement)prior year period is primarily related to changes in stock-based compensation expense, state law repricing and payments under the TRA. The election results in adjustments to thestatute of limitation release on uncertain tax basis of the assets of Premier LP upon member owner exchanges of Class B common units ofpositions.


Premier LP for Class A common stock of Premier, Inc. or cash. TRA liabilities decreased $92.5 million to $247.2 million at December 31, 2017 from $339.7 million at June 30, 2017. The change in TRA liabilities was driven primarily by the $177.2 million decrease in valuation as a result of the TCJA's decrease in the U.S. federal corporate income tax rates, partially offset by $62.2 million in increases in TRA liabilities in connection with the quarterly member owner exchanges that occurred during the six months ended December 31, 2017 and $20.9 million associated with the revaluation and remeasurement of the TRA liabilities due to the change in the allocation and realization of future anticipated payments.
(14) RELATED PARTY TRANSACTIONS
GNYHA
GNYHA Purchasing Alliance, LLC and its member organizations ("GNYHA PA") owned approximately 8% of the outstanding partnership interests in Premier LP asAs of December 31, 2017. Although we no longer consider GNYHA PA a related party under U.S. GAAP, prior period information is2023, total tax liabilities included below.
Net administrative fees revenue based on purchases by GNYHA Services, Inc. ("GNYHA") (an affiliate of GNYHA PA) and its member organizations was $17.2$46.9 million and $34.9 million forwithin other current liabilities in the accompanying Condensed Consolidated Balance Sheets. During the three and six months ended December 31, 2016, respectively. The2023, the Company recorded $10.1 million and $154.0 million cash tax obligations, respectively, associated with the sale of non-healthcare GPO member contracts and associated future revenues to OMNIA. As of December 31, 2023, the Company has a contractual requirement under the GPO participation agreement to pay each member owner revenue share from Premier LP equal to 30%made payments of all gross administrative fees collected by Premier LP based upon purchasing by such member owner's facilities through Premier LP's GPO supplier contracts. As GNYHA also remits to Premier LP all gross administrative fees collected by GNYHA based on purchases by its member organizations through GNYHA's own GPO supplier contracts, it also receives revenue share from Premier LP equal to 30% of such gross administrative fees remitted$138.5 million for taxes related to the Company. Approximately $7.8proceeds received from the sale of future revenues to OMNIA. The remaining $15.5 million will be paid during the remainder of revenue share obligations in the accompanying Condensed Consolidated Balance Sheets related to revenue share obligations to GNYHA and its member organizations at June 30, 2017.
In addition, of the $25.0 million limited partners' distribution payable in the accompanying Condensed Consolidated Balance Sheets at June 30, 2017, $2.7 million were payable to GNYHA and its member organizations. Services and support revenue earned from GNYHA and its member organizations was $3.5 million and $7.1 millionfiscal year 2024. Additionally, during the three and six months ended December 31, 2016, respectively. Product revenue earned from, or attributable to services provided to, GNYHA and its member organizations was $4.32023, the Company recorded offsetting deferred tax assets of $10.4 million and $8.0$154.7 million during the three and six months ended December 31, 2016, respectively. Receivables from GNYHA and its member organizations, included in due from related parties in the accompanying Condensed Consolidated Balance Sheets, were $5.4 million at June 30, 2017.
Innovatix and Essensa
The Company held 50% of the membership interests in Innovatix until December 2, 2016, at which time it acquired the remaining 50% of the membership interests from GNYHA Holdings (see Note 3 - Business Acquisitions). The Company's share of Innovatix's netto be recorded to income included in equity in net income of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income prior to the acquisition was $4.1 million and $10.7 million during the three and six months ended December 31, 2016, respectively. The Company maintained a group purchasing agreement with Innovatix under which Innovatix members were permitted to utilize Premier LP's GPO supplier contracts. Gross administrative fees revenue and a corresponding revenue share recorded under the arrangement prior to the acquisition were $8.5 million and $19.9 million for the three and six months ended December 31, 2016, respectively.
The Company historically maintained a group purchasing agreement with Essensa, under which Essensa utilized the Company's GPO supplier contracts. On December 2, 2016,tax expense as the Company acquired 100% of the membership interests in Essensa from GNYHA Holdings (see Note 3 - Business Acquisitions). Net administrative feesrecognizes revenue recorded from Essensa prior to the acquisition was $0.5 million and $1.2 million for the three and six months ended December 31, 2016, respectively.associated with non-healthcare GPO member contracts.
FFF
The Company's 49% ownership share of net income of FFF, which was acquired on July 26, 2016, included in equity in net income of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income was $1.3 million and $1.1 million(14) COMMITMENTS AND CONTINGENCIES
Operating Leases
Operating lease expense for the three months ended December 31, 20172023 and 2016, respectively, and $5.62022 was $2.4 million and $4.2$2.5 million, respectively. Operating lease expense for the six months ended December 31, 20172023 and 2016, respectively. The Company maintains group purchasing agreements with FFF and receives administrative fees for purchases made by the Company's members pursuant to those agreements. Net administrative fees revenue recorded from purchases under those agreements2022 was $2.3$4.9 million and $1.6$5.0 million, during the three months ended December 31, 2017 and 2016, respectively, and $4.0 million and $1.7 million during the six months ended December 31, 2017 and 2016, respectively.
AEIX


The Company conducts all operational activities for American Excess Insurance Exchange Risk Retention Group ("AEIX"), a reciprocal risk retention group that provides excess and umbrella healthcare professional and general liability insurance to certain hospital and healthcare system members. The Company is reimbursed by AEIX for actual costs, plus an annual incentive management fee not to exceed $0.5 million per calendar year. The Company received cost reimbursement of $1.4 million and $1.1 million during the three months ended December 31, 2017 and 2016, respectively, and $2.9 million and $2.2 million during the six months ended December 31, 2017 and 2016, respectively. As of December 31, 20172023, the weighted average remaining lease term was 2.4 years, and the weighted average discount rate was 4%.
Future minimum lease payments under noncancellable operating leases with initial lease terms in excess of one year were as follows (in thousands):
December 31, 2023June 30, 2023
2024 (a)
$6,256 $12,381 
202512,389 12,389 
20269,005 9,005 
2027 (b)
1,324 1,324 
Total future minimum lease payments28,974 35,099 
Less: imputed interest1,345 1,947 
Total operating lease liabilities (c)
$27,629 $33,152 

(a)As of December 31, 2023, future minimum lease payments are for the period from January 1, 2024 to June 30, 2017, $0.62024.
(b)There are no future lease payment obligations after 2027.
(c)As of December 31, 2023, total operating lease liabilities included $11.6 million in amounts receivable from AEIX are included in due from related partieswithin other current liabilities in the accompanying Condensed Consolidated Balance Sheets.
21

(15) COMMITMENTS AND CONTINGENCIESOther Matters
The Company is not currently involved in any litigation it believes to be significant.material. The Company is periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include stockholder derivative or other similar litigation, claims relating to commercial, product liability, tort and personal injury, employment, antitrust, intellectual property, or other regulatory matters. If current or future government regulations, specifically,including but not limited to those with respect to antitrust or healthcare laws, are interpreted or enforced in a manner adverse to the Company or its business, the Company may be subject to regulatory inquiries or investigations, enforcement actions, penalties and other material limitations which could have a material adverse effect on the Company'sCompany’s business, financial condition and results of operations.
(16)(15) SEGMENTS
The Company delivers its solutions and manages its business through two reportable business segments, the Supply Chain Services segment and the Performance Services segment. The Supply Chain Services segment includes the Company'sCompany’s GPO, integrated pharmacy offeringssupply chain co-management, purchased services and direct sourcing activities. The Performance Services segment includesconsists of three sub-brands: PINC AI, the Company's informatics, collaborative, advisoryCompany’s technology and services government servicesplatform; Contigo Health, the Company’s direct-to-employer business; and insurance services businesses.Remitra, the Company’s digital invoicing and payables automation business.

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

Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Net revenue:
Supply Chain Services
Net administrative fees$149,563 $154,423 $298,590 $304,429 
Software licenses, other services and support12,511 14,104 23,697 24,931 
Services and software licenses162,074 168,527 322,287 329,360 
Products55,781 66,993 106,366 125,854 
Total Supply Chain Services (a)
217,855 235,520 428,653 455,214 
Performance Services
Software licenses, other services and support
SaaS-based products subscriptions43,565 49,664 88,905 97,412 
Consulting services21,921 18,514 45,689 35,876 
Software licenses20,868 30,804 35,809 36,797 
Other(b)
30,609 25,133 54,566 48,219 
Total Performance Services (a)
116,963 124,115 224,969 218,304 
Total segment net revenue334,818 359,635 653,622 673,518 
Eliminations (a)
(73)(9)(125)(19)
Net revenue$334,745 $359,626 $653,497 $673,499 

(a)Includes intersegment revenue that is eliminated in consolidation. Intersegment revenue is not separately identified in Segments as the amounts are not material.
Segment(b)Includes revenue from Contigo Health, Remitra and other PINC AI revenue.
22

Additional segment information related to depreciation and amortization expense, capital expenditures and total assets was as follows (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Depreciation and amortization expense (a):
Supply Chain Services$13,795 $13,610 $27,368 $27,860 
Performance Services16,927 18,802 34,269 36,218 
Corporate2,057 2,074 4,158 4,299 
Total depreciation and amortization expense$32,779 $34,486 $65,795 $68,377 
Capital expenditures:
Supply Chain Services$15,251 $6,280 $26,165 $13,015 
Performance Services12,547 13,079 21,988 25,265 
Corporate— 127 915 136 
Total capital expenditures$27,798 $19,486 $49,068 $38,416 
Three Months Ended December 31,Six Months Ended December 31,
2017201620172016
Net revenue: 
December 31, 2023December 31, 2023June 30, 2023
Total assets:
Supply Chain Services 
Net administrative fees$159,343
$129,071
$310,334
$255,047
Other services and support3,421
1,201
5,570
2,846
Services162,764
130,272
315,904
257,893
Products162,101
142,378
314,764
248,507
Total Supply Chain Services324,865
272,650
630,668
506,400
Performance Services86,533
85,850
171,294
165,372
Net revenue$411,398
$358,500
$801,962
$671,772
 
Depreciation and amortization expense (a):
 
Supply Chain Services$5,171
$2,453
$10,666
$2,920
Performance Services23,634
20,984
46,551
41,859
Corporate2,322
1,912
4,315
3,797
Total depreciation and amortization expense$31,127
$25,349
$61,532
$48,576
 
Capital expenditures: 
Supply Chain Services$541
$2,149
$848
$2,149
Performance Services19,742
13,920
33,291
30,771
Corporate1,692
1,290
4,483
1,405
Total capital expenditures$21,975
$17,359
$38,622
$34,325
 
Total assets: December 31, 2017June 30, 2017
Supply Chain Services $1,001,803
$1,017,023
Performance Services 874,269
888,862
Corporate 444,091
601,951
Total assets  $2,320,163
$2,507,836
Eliminations (b)
Total assets, net
(a)Includes amortization of purchased intangible assets.

(a)Includes amortization of purchased intangible assets.
(b)Includes eliminations of intersegment transactions which occur during the ordinary course of business.
The Company uses Segment Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles ("Non-GAAP"(“Non-GAAP”)) as its primary measure of profit or loss to assess segment performance and to determine the allocation of resources. The Company also uses Segment Adjusted EBITDA to facilitate the comparison of the segment operating performance on a consistent basis from period to period. The Company defines Segment Adjusted EBITDA as the segment'ssegment’s net revenue and equity in net incomeless cost of unconsolidated affiliates lessrevenue and operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expensesacquisition-related expense and non-recurring or non-cash items. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative and product development activities specific to the operation of each segment. Non-recurring items are income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.
The Company has revised the definition for Segment Adjusted EBITDA from the definition reported in the 2023 Annual Report to exclude the impact of equity earnings in unconsolidated affiliates. For comparability purposes, prior year non-GAAP measures are presented based on the current definition.
For more information on Segment Adjusted EBITDA and the use of Non-GAAP financial measures, see "Our“Our Use of Non-GAAP Financial Measures"Measures” within Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.

23


A reconciliation of income before income taxes to unaudited Segment Adjusted EBITDA, a Non-GAAP financial measure, is as follows (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Income before income taxes$72,144 $88,139 $128,492 $149,867 
Equity in net loss (income) of unconsolidated affiliates (a)
666 (1,674)2,392 (9,917)
Interest (income) expense, net(2,438)4,631 (2,633)7,490 
Other income, net(4,679)(2,930)(3,587)(766)
Operating income65,693 88,166 124,664 146,674 
Depreciation and amortization20,267 21,439 40,595 44,878 
Amortization of purchased intangible assets12,512 13,047 25,200 23,499 
Stock-based compensation (b)
8,495 2,801 15,388 10,150 
Acquisition- and disposition-related expenses1,198 3,138 7,403 5,298 
Strategic initiative and financial restructuring-related expenses1,284 7,527 3,030 9,046 
Deferred compensation plan expense (c)
4,605 2,659 3,480 289 
Other reconciling items, net74 85 107 165 
Non-GAAP Adjusted EBITDA (d)
$114,128 $138,862 $219,867 $239,999 
Segment Non-GAAP Adjusted EBITDA:
Supply Chain Services (e)
$114,491 $126,315 $229,465 $239,504 
Performance Services (e)
30,955 43,205 52,729 62,336 
Corporate(31,318)(30,658)(62,327)(61,841)
Non-GAAP Adjusted EBITDA$114,128 $138,862 $219,867 $239,999 

(a)Refer to Note 4 - Investments for more information.
 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Income before income taxes$251,277
$283,613
$324,657
$365,044
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(204,833)—
(204,833)
Equity in net income of unconsolidated affiliates (a)
(1,257)(5,127)(5,509)(14,706)
Interest and investment loss, net (b)
1,508
857
3,003
1,009
Loss on disposal of long-lived assets400
—
1,720
1,518
Other income13,356
131
11,893
(875)
Operating income265,284
74,641
335,764
147,157
Depreciation and amortization17,310
14,198
33,817
28,216
Amortization of purchased intangible assets13,817
11,151
27,715
20,360
Stock-based compensation (c)
8,951
6,423
17,908
12,319
Acquisition related expenses1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities (d)
(177,174)—
(177,174)(5,722)
ERP implementation expenses (e)
156
432
491
1,526
Acquisition related adjustment - revenue (f)
87
5,813
192
5,964
Equity in net income of unconsolidated affiliates (a)
1,257
5,127
5,509
14,706
Deferred compensation plan income (g)
1,577
8
3,116
1,103
Other expense603
—
602
—
Adjusted EBITDA$133,542
$122,009
$252,713
$232,782
     
Segment Adjusted EBITDA:    
Supply Chain Services$132,045
$119,022
$257,665
$236,326
Performance Services27,929
28,603
49,150
50,914
Corporate(26,432)(25,616)(54,102)(54,458)
Adjusted EBITDA$133,542
$122,009
$252,713
$232,782
(a)Refer to Note 4 - Investments for further information regarding equity in net income of unconsolidated affiliates.
(b)Represents interest expense, net and realized gains and losses on our marketable securities.
(c)Represents non-cash employee stock-based compensation expense and stock purchase plan expense of $0.1 million and $0.2 million during the three months ended December 31, 2017 and 2016, respectively, and $0.2 million and $0.3 million during the six months ended December 31, 2017 and 2016, respectively.
(d)Represents adjustments to TRA liabilities for a 14% decrease in the U.S. federal corporate income tax rate that occurred during the six months ended December 31, 2017, which is a result of the TCJA that was enacted on December 22, 2017, and a 1% decrease in the North Carolina state income tax rate that occurred during the six months ended December 31, 2016.
(e)Represents implementation and other costs associated with the implementation of our enterprise resource planning ("ERP") system.
(f)
Upon acquiring Innovatix and Essensa, we recorded a net $5.6 million purchase accounting adjustment to Adjusted EBITDA during the three months ended December 31, 2016 that reflects the fair value of administrative fees related to member purchases that occurred prior to December 2, 2016, but were reported to us subsequent to that date through December 31, 2016. Under our revenue recognition accounting policy, which is an accordance with GAAP, these administrative fees would be ordinarily recorded as revenue when reported to us; however, the acquisition method of accounting requires us to estimate the amount of purchases prior to the acquisition date and to record the fair value of the administrative fees to be received from those purchases as an account receivable (as opposed to recognizing revenue when these transactions are reported to us) and record any corresponding revenue share obligation as a liability. The purchase accounting adjustment amounted to an estimated $23.3 million of accounts receivable relating to these administrative fees and an estimated $4.1 million for the related revenue share obligation through December 31, 2016.
This item also includes(b)Includes non-cash adjustments to deferred revenueemployee stock-based compensation expense and stock purchase plan expense of acquired entities of $0.2$0.1 million and $0.3 million for both the three months ended December 31, 2023 and 2022 and $0.3 million for both the six months ended December 31, 2016, respectively. Business combination accounting rules require the Company to record a2023 and 2022.
(c)Represents changes in deferred revenue liability at its fair value only if the acquired deferred revenue represents a legal performance obligation assumed by the acquirer. The fair value is based on direct and indirect incremental costs of providing the services plus a normal profit margin. Generally, this results in a reduction to the purchased deferred revenue balance, which was based on upfront software license update fees and product support contracts assumed in connection with acquisitions. Because these support contracts are typically one year in duration, our GAAP revenues for the one year period subsequent to the acquisition of a business do not reflect the full amount of support revenues on these assumed support contracts that would have otherwise been recorded by the acquired entity. The Non-GAAP adjustment to software license update fees and product support revenues is intended to include, and thus reflect, the full amount of such revenues.
(g) Representscompensation plan liabilities resulting from realized and unrealized gains and losses and dividend income on deferred compensation plan assets.


(d)The definition for Non-GAAP Adjusted EBITDA was revised from the definition reported in the 2023 Annual Report to exclude the impact of equity earnings in unconsolidated affiliates. For comparability purposes, prior year non-GAAP financial measures are presented based on the current definition.
(e)Includes intersegment revenue which is eliminated in consolidation.
(16) SUBSEQUENT EVENTS
On February 5, 2024, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with Bank of America, N.A. (“Bank of America”) to repurchase an aggregate of $400.0 million of shares of the Company’s Class A common stock (“common stock”). Under the terms of the ASR Agreement, the Company will make a payment of $400.0 million to Bank of America and, by February 9, 2024, will receive initial deliveries of approximately $320.0 million in common stock based on the closing price on February 7, 2024, with the final settlement expected to be completed in the first quarter of fiscal year 2025.

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Item 2. Management'sManagement’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report. This discussion is designed to provide the reader with information that will assist in understanding our condensed consolidated financial statements, the changes in certain key items in those financial statements from quarter to quarter, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our condensed consolidated financial statements. In addition, the following discussion includes certain forward-looking statements. For a discussion of important factors, including the continuing development of our business and other factors which could cause actual results to differ materially from the results referred to in the forward-looking statements, see the discussions under "Risk Factors"“Risk Factors” and "Cautionary“Cautionary Note Regarding Forward-Looking Statements"Statements” herein and in the Company'sour Annual Report on Form 10-K for the fiscal year ended June 30, 20172023 (the "2017“2023 Annual Report"Report”), filed with the Securities and Exchange Commission ("SEC"(“SEC”).
Business Overview
Our Business
Premier, Inc. ("Premier",(“Premier,” the "Company", "we",“Company,” “we” or "our"“our”) is a leading technology-driven healthcare performance improvement company, uniting an alliance of approximately 3,900 U.S. hospitals, and health systems and approximately 150,000 other providers and organizations to transform healthcare. We partner with hospitals, health systems, physicians, employers, product suppliers, service providers, payers and other healthcare providers and organizations with the common goal of improving and innovating in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry. We deliver value through a comprehensive technology-enabled platform that offers critical supply chain services, clinical, financial, operational and population healthvalue-based care software-as-a-service ("SaaS"(“SaaS”) informatics products, advisoryas well as clinical and enterprise analytics licenses, consulting services, and performance improvement collaborative programs.
Asprograms, third-party administrator services, access to our centers of December 31, 2017, we were controlled by 165 U.S. hospitals, health systemsexcellence program, cost containment and otherwrap network and digital invoicing and payment automation processes for healthcare organizations, which represented 1,425 owned, leasedsuppliers and managed acuteproviders. We also continue to expand our capabilities to more fully address and coordinate care facilitiesimprovement and other non-acute care organizations, through their ownershipstandardization in the employer, payer and life sciences markets. We also provide some of Class B common stock. As of December 31, 2017, the Class A common stockvarious products and Class B common stock represented approximately 40% and 60%, respectively, of our combined Class A and Class B common stock. All of our Class B common stock was held beneficially by our member owners and all of our Class A common stock was held by public investors, which may include member owners that have received shares of our Class A common stock in connection with previous quarterly exchanges pursuantservices noted above to an exchange agreement (the "Exchange Agreement") entered into by the member owners in connection with the completion of our initial public offering on October 1, 2013 (see Note 1 - Organization and Basis of Presentation to the accompanying condensed consolidated financial statements for more information).non-healthcare businesses.
We generated net revenue, net income and Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles ("Non-GAAP"(“Non-GAAP”)) for the periods presented as follows (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
2017201620172016
Three Months Ended December 31,Three Months Ended December 31,Six Months Ended December 31,
20232023202220232022
Net revenue$411,398
$358,500
$801,962
$671,772
Net income$19,769
$246,184
$80,385
$304,279
Non-GAAP Adjusted EBITDA$133,542
$122,009
$252,713
$232,782
See “Our Use of Non-GAAP Financial Measures” and “Results of Operations” below for a discussion of our use of Non-GAAP Adjusted EBITDA and a reconciliation of net income to Non-GAAP Adjusted EBITDA.
Strategic Review
On February 5, 2024, we announced that our Board of Directors has concluded its exploration of strategic alternatives. As part of the strategic review process, the Board of Directors has authorized us to seek partners for some or all of our holdings in Contigo Health, LLC (“Contigo Health”), our subsidiary focused on providing comprehensive services that optimize employee health benefits; and S2S Global, our direct sourcing subsidiary.
Additionally, on February 2, 2024, our Board of Directors authorized the repurchase of up to $1.0 billion of our outstanding Class A common stock and on February 5, 2024, under the share repurchase authorization, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with Bank of America, N.A. (“Bank of America”) to repurchase an aggregate of $400.0 million of shares of the Company’s Class A common stock (“common stock”). Refer to “Share Repurchase Authorization” within “Contractual Obligations” section of Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations for more information.
Our Business Segments
Our business model and solutions are designed to provide our members and other customers access to scale efficiencies, spread the cost of their development, provide actionable intelligence derived from anonymized data in our enterprise data warehouse, provided by our members, mitigate the risk of innovation and disseminate best practices that will help our member organizationsmembers and other customers succeed in their
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transformation to higher quality and more cost-effective healthcare. We deliver our integrated platform of solutions that address the areas of total cost management, quality and safetyclinical intelligence, margin improvement and population health managementvalue-based care through two business segments: Supply Chain Services and Performance Services.
Segment net revenue for the three months ended December 31, 2023 and 2022 was as follows (in thousands):
Three Months Ended December 31,% of Net Revenue
Net revenue:20232022Change20232022
Supply Chain Services$217,855 $235,520 $(17,665)(8)%65 %65 %
Performance Services116,963 124,115 (7,152)(6)%35 %35 %
Segment net revenue$334,818 $359,635 $(24,817)(7)%100 %100 %
Segment net revenue for the six months ended December 31, 2023 and 2022 was as follows (in thousands):
Six Months Ended December 31,% of Net Revenue
Net revenue:20232022Change20232022
Supply Chain Services$428,653 $455,214 $(26,561)(6)%66 %68 %
Performance Services224,969 218,304 6,665 3 %34 %32 %
Segment net revenue$653,622 $673,518 $(19,896)(3)%100 %100 %
Our Supply Chain Services segment includes one of the largest national healthcare group purchasing organization ("GPO"(“GPO”) programs in the United States, serving acute non-acute, non-healthcare and alternatecontinuum of care sites and includes integrated pharmacy and direct sourcing activities. Supply Chain Services net revenue grew from $272.7 million for the three months ended December 31, 2016 to $324.9


million for the three months ended December 31, 2017, representing net revenue growth of 19%, and accounted for 79% of our overall net revenue for the three months ended December 31, 2017. Supply Chain Services net revenue grew from $506.4 million for the six months ended December 31, 2016 to $630.7 million for the six months ended December 31, 2017, representing net revenue growth of 25%, and accounted for 79% of our overall net revenue for the six months ended December 31, 2017. We generate revenue in our Supply Chain Services segment from administrative fees received from suppliers based on the total dollar volume of suppliesproviding supply chain co-management, purchased by our members and through product sales in connection with our integrated pharmacyservices and direct sourcing activities.
Our Performance Services segment includes oneconsists of the largest informaticsthree sub-brands: PINC AITM, our technology and advisory services businessesplatform 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 onprovider, payer and life sciences markets; Contigo Health®, our direct-to-employer business which provides third-party administrator services and management of health benefit programs that enable healthcare providers. Performance Services net revenue increased from $85.9 million forproviders that are also payers (e.g. payviders) and employers to contract directly with healthcare providers as well as partner with the three months ended December 31, 2016 to $86.5 million for the three months ended December 31, 2017, representing a 1% increase, and accounted for 21% of our overall net revenue for the three months ended December 31, 2017. Performance Services net revenue increased from $165.4 million for the six months ended December 31, 2016 to $171.3 million for the six months ended December 31, 2017, representing a 4% increase, and accounted for 21% of our overall net revenue for the six months ended December 31, 2017. Our SaaS informatics products utilize our comprehensive data sethealthcare providers to provide actionable intelligenceemployers access to a specialized care network through Contigo Health’s centers of excellence program and cost containment and wrap network; and Remitra®, our members, enabling themdigital invoicing and payables automation business which provides financial support services to benchmark, analyzehealthcare suppliers and identify areas of improvement across three main categories: cost management, qualityproviders. Each sub-brand serves different markets but are all united in our vision to optimize provider performance and safetyaccelerate industry innovation for better, smarter healthcare.
Sales and population health management. The Performance Services segment also includes our technology-enabled performance improvement collaboratives, advisory services, government services and insurance management services.
Acquisitions
Acquisition of InnovatixTRPN Direct Pay, Inc. and EssensaDevon Health, Inc. Assets
Prior to December 2, 2016, the Company,On October 13, 2022, we acquired, through itsour consolidated subsidiary, Premier Supply Chain Improvement ("PSCI"), held 50%Contigo Health, certain assets and assumed certain liabilities of the membership interests in Innovatix, LLC ("Innovatix"). On December 2, 2016, the Company, through PSCI, acquired the remaining 50% ownership interests of InnovatixTRPN Direct Pay, Inc. and 100% of the ownership interest in Essensa Ventures, LLC ("Essensa"Devon Health, Inc. (collectively, “TRPN”) Thefor an adjusted purchase price after adjustments pursuant to the purchase agreement, was $336.0of $177.5 million. The acquisition was funded with borrowings under the Company's credit facility dated June 24, 2014, as amended on June 4, 2015 (the "Credit Facility"). Innovatixassets acquired and Essensa are GPOsliabilities assumed relate to businesses of TRPN focused on serving alternate siteimproving 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-healthcare organizations throughoutcontinuum of care providers in the United States. The Company reports InnovatixU.S. Contigo Health also agreed to license proprietary cost containment technology of TRPN. TRPN has been integrated under Contigo Health and Essensais reported as part of its Supply Chainthe Performance Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for morefurther information.
AcquisitionSale of Acro PharmaceuticalsNon-Healthcare GPO Member Contracts
On August 23, 2016, the Company, through its consolidated subsidiary, NS3 Health,July 25, 2023, we sold substantially all of our non-healthcare GPO member contracts pursuant to an equity purchase agreement with OMNIA Partners, LLC acquired 100% of the membership interests of Acro Pharmaceutical Services LLC ("Acro"(“OMNIA”) and Community Pharmacy Services, LLC (collectively with Acro, "Acro Pharmaceuticals"). The aggregatefor a purchase price afterestimated to be up to $740.0 million, which has been reduced from previous estimates taking into account certain post-closing adjustments pursuantand remains subject to additional adjustments. For a period of at least 10 years following the closing, the non-healthcare GPO members will continue to be able to make purchases through our group purchasing contracts. See Note 9 - Liability Related to the purchase agreement, was $62.9 million. The acquisition was funded with available cash on hand. Acro Pharmaceuticals is a specialty pharmacy business that provides customized healthcare management solutionsSale of Future Revenues to members. The Company reports Acro Pharmaceuticals as part of its Supply Chain Services segment. See Note 3 - Business Acquisitionsthe accompanying condensed consolidated financial statements for morefurther information.
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Market and Industry Trends and Outlook
We expect that certain trends and economic or industry-wideindustrywide factors will continue to affect our business, in both in the short-termshort- and long-term. We have based our expectations described below on assumptions made by us and on information currently available to us. To the extent our underlying assumptions about, or interpretation of, available information prove to be incorrect, our actual results may vary materially from our expected results. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” herein and in the 2023 Annual Report.
Trends in the U.S. healthcare market as well as the broader U.S. and global economy affect our revenues and costs in the Supply Chain Services and Performance Services segments. The trends we see affecting our current healthcare business include the impact of inflation on the broader economy, the significant increase to input costs in healthcare, including the rising cost of labor, and the impact of the implementation of current or future healthcare legislation. Implementation of healthcare legislation particularly the uncertainty regarding the status of the ACA, its repeal, replacement, or other modification, the enactment of new regulatorycould be disruptive for Premier and our customers, impacting revenue, reporting requirements, expansion and contraction of insurance coverage and associated costs that may impact subscriber elections, intense cost pressure, payment reform, provider consolidation,reforms, shift in care to the alternate site market and increased data availability and transparency. To meet the demands of this environment, there will be increased focus on scale and cost containment and healthcare providers will need to measure and report on and bear financial risk for outcomes. WeOver the long-term, we believe these trends will result in increased demand for our Supply Chain Services and Performance Services solutions in the areas of cost management, quality and safety, and population health management,value-based care; however, there are uncertainties and risks that may affect the actual impact of these anticipated trends, expected demand for our services or related assumptions on our business. See "Cautionary“Cautionary Note Regarding Forward-Looking Statements"Statements” for more information.

Impact of Inflation

While the U.S. inflation rate continues to decline from its peak in calendar year 2022, the U.S. economy is still experiencing elevated rates of inflation. We have continued to limit the impact of inflation on our members and believe that we maintain significantly lower inflation impacts across our diverse product portfolio than national levels. However, in certain areas of our business, there is still some level of risk and uncertainty for our members and other customers as labor costs, raw material costs and availability, rising interest rates and inflation continue to pressure supplier pricing as well as apply significant pressure on our margin.
We continue to evaluate the contributing factors, specifically logistics, raw materials and labor, that have led to adjustments to selling prices. We have seen logistics costs normalize as well as some reductions in the costs of specific raw materials compared to pre-pandemic levels; however, the cost of labor remains high. We are continuously working to manage price increases as market conditions change. The impact of inflation on our aggregated product portfolio is partially mitigated by contract term price protection for a large portion of our portfolio, as well as price reductions in certain product categories such as pharmaceuticals. See Item 1A. “Risk Factors” in our 2023 Annual Report.
Furthermore, as the Federal Reserve seeks to further reduce inflation, market interest rates may continue to be elevated, increasing the cost of borrowing under our Credit Facility (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) as well as impacting our results of operations, financial condition and cash flows.
Geopolitical Tensions
Geopolitical tensions continue to affect the global economy and financial markets, as well as exacerbate ongoing economic challenges, including issues such as rising inflation, energy costs, logistics costs and global supply-chain disruption.
We continue to monitor the impacts of geopolitical tensions on macroeconomic conditions and prepare for any implications they may have on member demand, our suppliers’ ability to deliver products, cybersecurity risks and our liquidity and access to capital. See Item 1A. “Risk Factors” in our 2023 Annual Report.
Pandemics, Epidemics or Public Health Emergencies
In addition to the trends in the U.S. healthcare market discussed above, the outbreak of the novel coronavirus (“COVID-19”) and the resulting global pandemic and the impact on the healthcare industry continues to impact our sales, operations and supply chains, our members and other customers, and workforce and suppliers. As a result of pandemics, epidemics or public health emergencies, we may face material risks including, but not limited to:
•Labor shortages in the healthcare workforce which may result in increased in labor costs.
•Changes in the demand for our products and services may create demand uncertainty from both material increases and decreases in demand and pricing for our products and services.
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•Limited access to our members’ facilities as well as travel restrictions limits our abilityto participate in face-to-face events with them, such as committee meetings and conferences, and limits our ability to foster relationships and effectively deliver existing or sell new products and services to our members.
•Disruption to the global supply chain, particularly in China, may impact products purchased by our members through our GPO or products contract manufactured through our direct sourcing business. Failure of our suppliers, contract manufacturers, distributors, contractors and other business partners to meet their obligations to our members, other customers or to us, or material disruptions in their ability to do so due to their own financial or operational difficulties, may adversely impact our operations.
•Requests for contract modifications, payment waivers and deferrals, payment reductions or amended payment terms from our contract counterparties, requests to delay service or payment on performance service contracts and requests from our suppliers for increases to their contracted prices.
•A general decline in the overall economic and capital markets could increase our cost of capital and adversely affect our ability to access the capital markets in the future.
While both the U.S. and the World Health Organization declared an end to the COVID-19 pandemic as a public health emergency in May 2023, the risks associated with a pandemic remains and the resulting impact on our business, results of operations, financial conditions and cash flows as well as the U.S. and global economies is uncertain and cannot be predicted at this time. The impact of another pandemic, epidemic or public health emergency may also exacerbate many of the other risks described in the Item 1A. “Risk Factors” section of the 2023 Annual Report. Despite our efforts to manage these impacts, their ultimate impact depends on factors beyond our knowledge or control, including the duration and severity of any outbreak and actions taken to contain its spread and mitigate its public health effects. The foregoing and other continued disruptions in our business as a result of pandemics, epidemics or public health emergencies could result in a material adverse effect on our business, results of operations, financial condition, cash flows, prospects and the trading prices of our securities in the near-term and through fiscal 2024 and beyond.
Critical Accounting Policies and Estimates
Management's DiscussionRefer to Note 1 - Organization and AnalysisBasis of Financial ConditionPresentation and Results of Operations is primarily based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Significant estimates, including estimates for allowances for doubtful accounts, useful lives of property and equipment, stock-based compensation, payables under tax receivable agreements ("TRA"), deferred tax balances including valuation allowances on deferred tax assets, uncertain tax positions, values of investments not publicly traded, deferred revenue, future cash flows associated with asset impairments, values of put and call rights and the allocation of purchase prices are evaluated on an ongoing basis. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Given the Company's use of estimates referenced above, it is important to highlight that on December 22, 2017, 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 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.
There have been no material changes to the Company's significant accounting policies as described in the Company's 2017 Annual Report.
New Accounting Standards
New accounting standards that we have recently adopted as well as those that have been recently issued but not yet adopted by the Company are included in Note 2 - Significant Accounting Policies to the accompanying condensed consolidated financial statements which is incorporated hereinfor more information related to our use of estimates in the preparation of financial statements as well as information related to material changes in our significant accounting policies that were included in our 2023 Annual Report.
New Accounting Standards
There were no new accounting standards adopted by reference.the Company during the six months ended December 31, 2023.
Key Components of Our Results of Operations
Net Revenue
Net revenue consists of service revenue, which includes net administrative fees revenue, andsoftware licenses, other services and support revenue and productproducts revenue. Net administrative fees revenue consists of GPO administrative fees in our Supply Chain Services segment. Other services and support revenue consists primarily of fees generated by our Performance Services segment in connection with our SaaS informatics products subscriptions, license fees, advisory services and performance improvement collaborative subscriptions. Product revenue consists of integrated pharmacy and direct sourcing product sales, which are included in the Supply Chain Services segment.
Supply Chain Services
Supply Chain Services revenue consists of GPO is comprised of:
•net administrative fees (grossrevenue which consists of gross administrative fees received from suppliers, reduced by the amount of any revenue share paid to members), specialty pharmacymembers;
•software licenses, other services and support revenue direct sourcingwhich consist of supply chain co-management and purchased services revenue; and
•products revenue and managed service revenue.which consists of inventory sales.


The success of our Supply Chain Services revenue streams areis influenced by our ability to negotiate favorable contracts with suppliers and members, the number of members that utilize our GPO supplier contracts and the volume of their purchases, the number of members that utilize our integrated pharmacy, as well as the impact of changes in the defined allowable reimbursement amounts determined by Medicare, Medicaid and other managed care plans, and the number of members and other customers that purchase products through our direct sourcing activities, the continued impact of members’ and other customers’ elevated inventory levels on our direct sourcing business and the impact of competitive pricing. Our managed services lineRefer to “Impact of business is a feeInflation” within “Liquidity and Capital Resources” section of Item 2 - Management's
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Discussion and Analysis of Financial Condition and Results of Operations for service model created to perform supply chain related services for members, including pharmacy benefit management ("PBM") services in partnership with a national PBM company.discussion of inflation and its impact on our Supply Chain Services’ businesses.
Performance Services
Performance Services revenue consistsis comprised of SaaS informaticsthe following software licenses, other services and support revenue:
•healthcare information technology license and SaaS-based clinical intelligence, margin improvement and value-based care products subscriptions, license fees, professional fees for consulting services, PINC AI data licenses, performance improvement collaborative and other service subscriptions professional fees for advisory services,and insurance services management fees and commissions from endorsed commercial insurance programs.programs under our PINC AI technology and services platform;
•third-party administrator fees, fees from the centers of excellence program and cost containment and wrap network fees for Contigo Health; and
•fees from healthcare suppliers and providers for Remitra.
Our Performance Services growth will depend upon the expansion of our SaaS informatics products, performance improvement collaboratives and advisory services to new and existing members impact of applied research initiatives,and other customers, renewal of existing subscriptions to our SaaS informaticsand licensed software products and expansion into new markets with potential future acquisitions.the shift from recurring subscription-based agreements to enterprise analytics licenses at a sufficient rate to offset reductions in recurring SaaS-based revenue.
Cost of Revenue
Cost of servicerevenue consists of cost of services and software licenses revenue and cost of products revenue.
Cost of services and software licenses revenue includes expenses related to employees, (includingconsisting of compensation and benefits)benefits, and outside consultants who directly provide services related to revenue-generating activities, including advisoryconsulting services to members and other customers, third-party administrator services and implementation services related to our SaaS and licensed software products along with associated amortization of certain capitalized contract costs. Amortization of contract costs represent amounts that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract including costs related to implementing SaaS informatics products.tools. Cost of serviceservices and software licenses revenue also includes expenses related to hosting services, related data center capacity costs, third-party product license expenses and amortization of the cost of internal use software.internally developed software applications.
Cost of productproducts revenue consists of purchase and shipmentlogistics costs for specialty pharmaceuticals and direct sourced medical products. Our cost of product revenueproducts and commodity products and is influenced by the cost and availability of specialty pharmaceuticals and the manufacturing and transportation costs associated with direct sourced medical and commodity products.
Other Operating Income
Other operating income includes the adjustment Refer to TRA liabilities. Changes in estimated TRA liabilities that are the result“Impact of a change in tax accounting method, including the impactsInflation” within “Liquidity and Capital Resources” section of the TCJA, are recorded as a componentItem 2 - Management's Discussion and Analysis of other operating income in the Condensed Consolidated StatementsFinancial Condition and Results of Income. Changes in estimated TRA liabilities that are related to new basis changes as a resultOperations for discussion of the exchange of Class B common units for a like number of shares of Class A common stock or as a result of departed member owners are recorded as an increase to additional paid-in capital in the Condensed Consolidated Statements of Stockholders' Deficit. See "Income Tax Expense" below for additional information.inflation and its impact on our Supply Chain Services’ businesses.
Operating Expenses
Selling,Operating expenses includes selling, general and administrative (“SG&A”) expenses, research and development expenses and amortization of purchased intangible assets.
SG&A expenses are directly associated with selling and administrative functions and support of revenue-generating activities including expenses to support and maintain our software-related products and services. Selling, general and administrativeSG&A expenses primarily consist of compensationcompensation- and benefits related costs,benefits-related costs; travel-related expenses,expenses; business development expenses, including costs for business acquisition opportunities,opportunities; non-recurring strategic initiative and financial restructuring-related expenses; indirect costs such as insurance, professional fees and other general overhead expenses,expenses; and adjustments to TRA liabilities.amortization of certain contract costs. Amortization of contract costs represent amounts, including sales commissions, that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract.
Research and development expenses consist of employee-related compensation and benefit expenses and third-party consulting fees of technology professionals, net of capitalized labor, incurred to develop our software-related products and services.services prior to reaching technological feasibility.
Amortization of purchased intangible assets includes the amortization of all identified intangible assets resulting from acquisitions.assets.
Other Income, Net
Other income, net, includes equity in net income of unconsolidated affiliates that is generated from our equity method investments. Our equity method investments primarily consist of our 49% ownershipinterests in Exela Holdings, Inc. (“Exela”) and Prestige Ameritech Ltd. (“Prestige”). As of March 3, 2023, our investment in FFF Enterprises, Inc. ("FFF"(“FFF”), and prior was no longer accounted for
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under the equity method of accounting (see Note 4 - Investments to the acquisition of Innovatixaccompanying condensed consolidated financial statements for further information). Other income, net, includes interest income primarily related to interest earned on investments in money market funds and Essensa on December 2, 2016, includedinterest expense primarily related to funds borrowed through our 50% ownershipCredit Facility and imputed interest in Innovatix. In connectionexpense associated with the acquisition of Innovatix and Essensa, the Company recorded a one-time gain of $205.1 millionliability related to the remeasurementsale of our historical 50% equity method investment in Innovatixfuture revenues (see Note 8 - Debt and Notes Payable and Note 9 - Liability Related to fair value.the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information). Other income, net, also includes, but is not limited to, interest income and expense, realized and unrealized gains or losses on deferred compensation plan assets, and gains or losses on the disposal of assets.


assets, and any impairment on our assets or held-to-maturity investments.
Income Tax Expense
The Company's income tax expense is attributable to the activities of the Company, PHSI and PSCI, all of which are subchapter C corporations and are subject to U.S. federal and state income taxes. In contrast, under the provisions of federal and state laws, Premier LP is not subject to federal and state income taxes as the income realized by Premier LP is taxable to its partners. The Company’s overall effective tax rate differs from the U.S. statutory tax rate primarily due to the aforementioned ownership structure as well as other items noted in Note 13 - Income Taxes.
Given the Company’s ownership and capital structure, various effective tax rates are calculated for specific tax items. For example, the deferred tax benefit related to stock-based compensation expense (see Note 12 - Stock-Based Compensation) is calculated based on the effective tax rate of PHSI, the legal entity where the majority of stock-based compensation expense is recorded. The Company’s effective tax rate, as discussed inSee Note 13 - Income Taxes representsto the effective tax rate computed in accordance with generally accepted accounting principles ("GAAP") based on totalaccompanying condensed consolidated financial statements for discussion of income tax expense (reflected in income tax expense in the Condensed Consolidated Statements of Income) of the Company, PHSI and PSCI, divided by consolidated pre-tax income.
Non-GAAP Adjusted Fully Distributed Net Income is calculated net of taxes based on the Company’s fully distributed tax rate for federal and state income tax for the Company as a whole as if it were one taxable entity with all of its subsidiaries' activities included. Prior to the enactment of the Act, the rate used to compute the Non-GAAP Adjusted Fully Distributed Net Income was 39%. As a result of the TCJA, the rate will be reduced for the fiscal year. However, for the purpose of computing Non-GAAP Adjusted Fully Distributed Net Income for the current quarter, the Company continues to use the 39% rate due to the rate change becoming effective as of January 1, 2018. Going forward, the Company will adjust its fully distributed tax rate to 25% to determine its Non-GAAP Adjusted Fully Distributed Net Income for the remainder of fiscal year 2018.expense.
Net IncomeIncome/Loss Attributable to Non-Controlling Interest
We recognize net income/loss attributable to non-controlling interest for non-Premier ownership in our consolidated subsidiaries which hold interest in our equity method investments (see Note 4 - Investments to the accompanying condensed consolidated financial statements for further information). At December 31, 2023, we recognized net loss attributable to non-controlling interests held by member health systems or their affiliates in the consolidated subsidiaries holding our equity method investments, including but not limited to the 74% and 85% interest held in PRAM Holdings, LLC (“PRAM”) and ExPre Holdings, LLC (“ExPre”), respectively. In partnership with member health systems or their affiliates, these investments are part of our long-term supply chain resiliency program to promote domestic and geographically diverse manufacturing and to help ensure a robust and resilient supply chain for essential medical products.
As of December 31, 2017,2023, we owned an approximate 40% controlling general partner93% of the equity interest in Premier LP through our wholly-owned subsidiary, Premier Services, LLC ("Premier GP"). Net incomeContigo Health and recognized net loss attributable to non-controlling interest representsfor the portion7% of net income attributable to the limited partnersequity held by certain customers of Premier LP, which was reduced from approximately 63% as of June 30, 2017 to approximately 60% as of December 31, 2017, as a result of completed quarterly exchanges pursuant to the Exchange Agreement (see Note 9 - Redeemable Limited Partners' Capital).Contigo Health.
Our Use of Non-GAAP Financial Measures
The other key business metrics we consider are EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income, Adjusted Fully Distributed Earnings perPer Share and Free Cash Flow, which are all Non-GAAP financial measures. Non-GAAP financial measures are not an alternative to GAAP and may be different from Non-GAAP financial measures used by other companies, but we believe they are useful for understanding our performance for the reasons described below.
We define EBITDA as net income before income or loss from discontinued operations, net of tax, interest and investment income or expense, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets. We define Adjusted EBITDA as EBITDA before merger and acquisition relatedacquisition-related expenses and non-recurring, non-cash or non-operating items and including equity in net income of unconsolidated affiliates.items. For all Non-GAAP financial measures, we consider non-recurring items to be income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Such items include certain strategic initiative and financial restructuringrestructuring-related expenses. Non-operating items include gaingains or losslosses on the disposal of assets and interest and investment income or expense.
We define Segment Adjusted EBITDA as the segment'ssegment’s net revenue less cost of revenue and operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition relatedacquisition-related expenses and non-recurring or non-cash items and including equity in net income of unconsolidated affiliates.items. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative, and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.
We have revised the definitions for Adjusted EBITDA and Segment Adjusted EBITDA from the definitions reported in the 2023 Annual Report to exclude the impact of equity earnings in unconsolidated affiliates. For comparability purposes, prior year non-GAAP financial measures are presented based on the current definitions.
We define Adjusted Fully Distributed Net Income as net income attributable to Premier (i) excluding income tax expense,or loss from discontinued operations, net, (ii) excluding the impact of adjustment of redeemable limited partners' capital to redemption amountincome tax expense, (iii) excluding the effect of non-recurring andor non-cash items, (iv) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination of non-controlling interest in Premier LPincluding certain strategic initiative and (v)financial restructuring-related expenses, (iv) reflecting an adjustment for income tax expense on Non-GAAP fully distributed net income before income taxes at our estimated annual effective income tax rate.rate, adjusted for unusual or infrequent items and (v) excluding the equity in net income of unconsolidated affiliates. We define Adjusted Fully Distributed Earnings perPer Share as Adjusted Fully Distributed Net Income divided by diluted weighted average shares (see Note 11 - Earnings Per Share)Share to the accompanying condensed consolidated financial statements for further information). We have revised the definition for Adjusted Net Income

30


from the definition reported in the 2023 Annual Report to (1) remove the exclusion of the impact of adjustment of redeemable limited partners’ capital to redemption amount, (2) remove the impact of the exchange of all Class B common units for shares of Class A common stock for periods prior to our August 2020 Restructuring and the resulting elimination of non-controlling interest in Premier LP, and (3) add the exclusion of equity earnings in unconsolidated affiliates. For comparability purposes, prior year Adjusted Net Income is presented based on the current definition.
We define Free Cash Flow as net cash provided by operating activities from continuing operations less distributions and TRA(i) early termination payments to certain former limited partners that elected to execute a Unit Exchange and Tax Receivable Acceleration Agreement (“Unit Exchange Agreement”) in connection with our August 2020 Restructuring and (ii) purchases of property and equipment. Free Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments.
Adjusted EBITDA and Free Cash Flow are supplemental financial measures used by us and by external users of our financial statements and are considered to be indicators of the operational strength and performance of our business. Adjusted EBITDA and Free Cash Flow measures allow us to assess our performance without regard to financing methods and capital structure and without the impact of other matters that we do not consider indicative of the operating performance of our business. More specifically, Segment Adjusted EBITDA is the primary earnings measure we use to evaluate the performance of our business segments.
We use Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings perPer Share to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting our business. We believe Adjusted EBITDA and Segment Adjusted EBITDA assist our Board of Directors, management and investors in comparing our operating performance on a consistent basis from period to period because they remove the impact of earnings elements attributable to our asset base (primarily depreciation and amortization) and, certain items outside the control of our management team, e.g. taxes, as well as other non-cash items (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation) and, non-recurring items (such as strategic initiative and financial restructuringrestructuring-related expenses) and income and expense that has been classified as discontinued operations from our operating results. We believe Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings perPer Share assist our Board of Directors, management and investors in comparing our net income and earnings per share on a consistent basis from period to period because these measures remove non-cash (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation) and non-recurring items (such as strategic initiative and financial restructuringrestructuring-related expenses), and eliminate the variability of non-controlling interest that results from member owner exchangesand equity in net income of Class B common units for shares of Class A common stock.unconsolidated affiliates. We believe Free Cash Flow is an important measure because it represents the cash that we generate after payment of tax distributionspayments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring and capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth. Our Free Cash Flow allowsenables us to enhanceseek enhancement of stockholder value through acquisitions, partnerships, joint ventures, investments in related businesses and debt reduction.
Despite the importance of these Non-GAAP financial measures in analyzing our business, determining compliance with certain financial covenants in our Credit Facility, measuring and determining incentive compensation and evaluating our operating performance relative to our competitors, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income, Adjusted Fully Distributed Earnings perPer Share and Free Cash Flow are not measurements of financial performance under GAAP, may have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income, net cash provided by operating activities, or any other measure of our performance derived in accordance with GAAP.
Some of the limitations of the EBITDA, Adjusted EBITDA and Segment Adjusted EBITDA measures include that they do not reflect: our capital expenditures or our future requirements for capital expenditures or contractual commitments; changes in, or cash requirements for, our working capital needs; the interest expense or the cash requirements to service interest or principal payments under our Credit Facility; income tax payments we are required to make; and any cash requirements for replacements of assets being depreciated or amortized. In addition, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA and Free Cash Flow are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash flows from operating activities.
Some of the limitations of the Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings perPer Share measures are that they do not reflect income tax expense or income tax payments we are required to make. In addition, Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings perPer Share are not measures of profitability under GAAP.
We also urge you to review the reconciliation of these Non-GAAP financial measures included elsewhere in this Quarterly Report. To properly and prudently evaluate our business, we encourage you to review the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and to not rely on any single financial measure to evaluate our business. In addition, because the EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net
31

Income, Adjusted Fully Distributed Earnings perPer Share and Free Cash Flow measures are susceptible to varying calculations, such Non-GAAP financial measures may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.


Non-recurring and non-cash items excluded in our calculation of Adjusted EBITDA, Segment Adjusted EBITDA and Adjusted Fully Distributed Net Income consist of stock-based compensation, acquisition- and disposition-related expenses, strategic initiative and financial restructuringrestructuring-related expenses, adjustments to TRA liabilities, enterprise resource planning ("ERP") implementation expensesincome and acquisition related adjustment - revenue.expense that has been classified as discontinued operations and other reconciling items. More information about certain of the more significant items follows below.
Income tax expense on adjusted income
Adjusted Net Income, a Non-GAAP financial measure as defined above in “Our Use of Non-GAAP Financial Measures”, is calculated net of taxes based on our estimated annual effective tax rate for federal and state income tax, adjusted for unusual or infrequent items, as we are a consolidated group for tax purposes with all of our subsidiaries’ activities included. The tax rate used to compute the Adjusted Net Income was 27% for the three and six months ended December 31, 2023 and 26% for the three and six months ended December 31, 2022.
Stock-based compensation
In addition to non-cash employee stock-based compensation expense, this item includes non-cash stock purchase plan expense of $0.1 million and $0.2 million for both the three months ended December 31, 20172023 and 2016, respectively, and $0.2 million2022 and $0.3 million for both the six months ended December 31, 20172023 and 2016.
Remeasurement of TRA liabilities
The Company records TRA liabilities based on 85% of the estimated amount of tax savings the Company expects to receive, generally over a 15-year period, which are attributable2022 (see Note 12 - Stock-Based Compensation to the initial purchase of Class B common units from the member owners made concurrently with the IPOaccompanying condensed consolidated financial statements for further information).
Acquisition- and subsequent exchanges by member owners of Class B common units into Class A common stock or cash. Tax payments made under the TRA will be made to the member owners as the Company realizes tax benefits. Determining the estimated amount of tax savings the Company expects to receive requires judgment as deductibility of goodwill amortization expense is not assureddisposition-related expenses
Acquisition-related expenses include legal, accounting and the estimate of tax savings is dependent upon the actual realization of the tax benefit and the tax rates in effect at that time.
Changes in estimated TRA liabilities that are the result of a change in tax accounting method, including the impacts of the TCJA, are recorded as a component of other operating income in the Condensed Consolidated Statements of Income. Changes in estimated TRA liabilities that areexpenses related to new basis changes as a result ofacquisition activities and gains and losses on the exchange of Class B common units for a like number of shares of Class A common stock or as a result of departed member owners are recorded as an increase to additional paid-in capitalchange in the Condensed Consolidated Statements of Stockholders' Deficit.
The adjustments to TRA liabilities for the three and six months ended December 31, 2017 are primarily attributable to the 14% decrease in the U.S. federal corporate income tax rate, which occurred as a result of the TCJA that was enacted on December 22, 2017 (see Note 13 - Income Taxes). The adjustment to TRA liabilities for six months ended December 31, 2016 is primarily attributable to the 1% decrease in the North Carolina state income tax rate that occurred during the six months ended December 31, 2016.
ERP implementation expenses
This item includes costs related to the implementation of a new ERP system.
Acquisition related adjustment - revenue
During the three months ended December 31, 2016, we recorded a net $5.6 million purchase accounting adjustment to Adjusted EBITDA related to our acquisition of Innovatix and Essensa on December 2, 2016. These adjustments reflect the fair value of administrativeearn-out liabilities. Disposition-related expenses include severance and retention benefits and financial advisor fees and legal fees related to member purchases that occurred priordisposition activities.
Strategic initiative and financial restructuring-related expenses
Strategic initiative and financial restructuring-related expenses include legal, accounting and other expenses related to December 2, 2016,strategic initiative and financial restructuring-related activities.
Other reconciling items
Other reconciling items include, but were reportedare not limited to, us subsequentgains and losses on disposal of long-lived assets and imputed interest on notes payable to that date through December 31, 2016. Under our revenue recognition accounting policy, which is an accordance with GAAP, these administrative fees would be ordinarily recorded as revenue when reported to us; however, the acquisition method of accounting requires us to estimate the amount of purchases prior to the acquisition date and to record the fair value of the administrative fees to be received from those purchases as an account receivable (as opposed to recognizing revenue when these transactions are reported to us) and record any corresponding revenue share obligation as a liability. The purchase accounting adjustment amounted to an estimated $23.3 million of accounts receivable relating to these administrative fees and an estimated $4.1 million for the related revenue share obligation through December 31, 2016.former limited partners.
This item also includes non-cash adjustments to deferred revenue of acquired entities of $0.2 million and $0.3 million for the three and six months ended December 31, 2016, respectively. Business combination accounting rules require the Company to record a deferred revenue liability at its fair value only if the acquired deferred revenue represents a legal performance obligation assumed by the acquirer. The fair value is based on direct and indirect incremental costs of providing the services plus a normal profit margin. Generally, this results in a reduction to the purchased deferred revenue balance, which is based on upfront software license update fees and product support contracts assumed in connection with acquisitions. Because these support contracts are typically one year in duration, our GAAP revenues for the one year period subsequent to the acquisition of a business do not reflect the full amount of support revenues on these assumed support contracts that would have otherwise been recorded by the acquired entity. The Non-GAAP adjustment to software license update fees and product support revenues is intended to include, and thus reflect, the full amount of such revenues.
32



Results of Operations
The following table summarizespresents our results of operations for the periods presented (in thousands, except per share data):
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Amount% of Net RevenueAmount% of Net RevenueAmount% of Net RevenueAmount% of Net Revenue
Net revenue:
Net administrative fees$149,563 45%$154,423 43%$298,590 46%$304,429 45%
Software licenses, other services and support129,401 39%138,210 38%248,541 38%243,216 36%
Services and software licenses278,964 83%292,633 81%547,131 84%547,645 81%
Products55,781 17%66,993 19%106,366 16%125,854 19%
Net revenue334,745 100%359,626 100%653,497 100%673,499 100%
Cost of revenue:
Services and software licenses65,990 20%55,265 15%130,122 20%109,279 16%
Products47,472 14%61,620 17%91,510 14%119,494 18%
Cost of revenue113,462 34%116,885 33%221,632 34%228,773 34%
Gross profit221,283 66%242,741 67%431,865 66%444,726 66%
Operating expenses155,590 46%154,575 43%307,201 47%298,052 44%
Operating income65,693 20%88,166 25%124,664 19%146,674 22%
Other income (expense), net6,451 2%(27)—%3,828 1%3,193 —%
Income before income taxes72,144 22%88,139 25%128,492 20%149,867 22%
Income tax expense19,278 6%23,765 7%33,216 5%42,534 6%
Net income52,866 16%64,374 18%95,276 15%107,333 16%
Net loss (income) attributable to non-controlling interest1,436 —%(328)—%3,787 1%(571)—%
Net income attributable to stockholders$54,302 16%$64,046 18%$99,063 15%$106,762 16%
Earnings per share attributable to stockholders:
Basic$0.45 $0.54 $0.83 $0.90 
Diluted$0.45 $0.54 $0.82 $0.89 
 Three Months Ended December 31, Six Months Ended December 31,
 20172016 20172016
 Amount% of Net RevenueAmount% of Net Revenue Amount% of Net RevenueAmount% of Net Revenue
Net revenue:         
Net administrative fees$159,343
39%$129,071
36% $310,334
39%$255,047
38%
Other services and support89,953
22%87,051
24% 176,864
22%168,218
25%
Services249,296
61%216,122
60% 487,198
61%423,265
63%
Products162,102
39%142,378
40% 314,764
39%248,507
37%
Net revenue411,398
100%358,500
100% 801,962
100%671,772
100%
Cost of revenue:         
Services47,255
12%44,856
13% 94,191
13%87,546
13%
Products153,272
37%131,158
37% 297,712
37%226,971
34%
Cost of revenue200,527
49%176,014
49% 391,903
49%314,517
47%
Gross profit210,871
51%182,486
51% 410,059
51%357,255
53%
Other operating income:         
Remeasurement of tax receivable agreement liabilities177,174
43%—
—% 177,174
22%5,722
1%
Other operating income177,174
43%—
—% 177,174
22%5,722
1%
Operating expenses:         
Selling, general and administrative108,620
26%95,927
27% 222,941
28%193,887
29%
Research and development324
—%767
—% 813
—%1,573
—%
Amortization of purchased intangible assets13,817
3%11,151
3% 27,715
3%20,360
3%
Operating expenses122,761
30%107,845
30% 251,469
31%215,820
32%
Operating income265,284
64%74,641
22% 335,764
42%147,157
23%
Other income, net(14,007)(3)%208,972
58% (11,107)(1)%217,887
32%
Income before income taxes251,277
61%283,613
80% 324,657
40%365,044
55%
Income tax expense231,508
56%37,429
10% 244,272
30%60,765
9%
Net income19,769
5%246,184
69% 80,385
10%304,279
46%
Net income attributable to non-controlling interest in Premier LP(56,485)(14)%(181,173)(51)% (101,095)(13)%(230,774)(34)%
Adjustment of redeemable limited partners' capital to redemption amount317,916
nm335,264
nm 638,340
nm397,072
nm
Net income attributable to stockholders$281,200
nm$400,275
nm $617,630
nm$470,577
nm
          
Weighted average shares outstanding:         
Basic55,209
 49,445
  54,059
 48,330
 
Diluted139,237
 141,308
  139,641
 142,133
 
          
Earnings per share attributable to stockholders:        
Basic$5.09
 $8.10
  $11.43
 $9.74
 
Diluted$(1.66) $1.50
  $(1.30) $1.75
 
nm = Not meaningful







For the following Non-GAAP financial measures and reconciliations of our performance derived in accordance with GAAP to the Non-GAAP financial measures, refer to “Our Use of Non-GAAP Financial Measures” for further information regarding items excluded in our calculation of Adjusted EBITDA, Segment Adjusted EBITDA, Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Earnings Per Share. The definitions for Adjusted EBITDA and Non-GAAP Adjusted Net Income were revised from those reported in the 2023 Annual Report. For comparability purposes, prior year non-GAAP financial measures are presented based on the current definitions in the above section “Our Use of Non-GAAP Financial Measures”.
The following table provides certain Non-GAAP financial measures for the periods presented (in thousands, except per share data). Refer to "Our Use of Non-GAAP Financial Measures" for further information regarding items excluded in our calculation of Adjusted EBITDA and Segment Adjusted EBITDA.:
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Certain Non-GAAP Financial Data:Amount% of Net RevenueAmount% of Net RevenueAmount% of Net RevenueAmount% of Net Revenue
Adjusted EBITDA$114,128 34%$138,862 39%$219,867 34%$239,999 36%
Non-GAAP Adjusted Net Income71,940 21%84,168 23%136,827 21%140,400 21%
Non-GAAP Adjusted Earnings Per Share0.60 nm0.70 nm1.14 nm1.17 nm
nm = Not meaningful
33
 Three Months Ended December 31, Six Months Ended December 31,
 20172016 20172016
 Amount% of Net RevenueAmount% of Net Revenue Amount% of Net RevenueAmount% of Net Revenue
Certain Non-GAAP Financial Data:         
Adjusted EBITDA$133,542
32%$122,009
34% $252,713
32%$232,782
35%
Non-GAAP Adjusted Fully Distributed Net Income$69,982
17%$65,242
18% $131,695
16%$124,170
18%
Non-GAAP Adjusted Fully Distributed Earnings Per Share$0.50
 $0.46
  $0.94
 $0.87
 



























The following table providestables 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 December 31,Six Months Ended December 31,
2023202220232022
Net income$52,866 $64,374 $95,276 $107,333 
Interest (income) expense, net(2,438)4,631 (2,633)7,490 
Income tax expense19,278 23,765 33,216 42,534 
Depreciation and amortization20,267 21,439 40,595 44,878 
Amortization of purchased intangible assets12,512 13,047 25,200 23,499 
EBITDA102,485 127,256 191,654 225,734 
Stock-based compensation8,495 2,801 15,388 10,150 
Acquisition- and disposition-related expenses1,198 3,138 7,403 5,298 
Strategic initiative and financial restructuring-related expenses1,284 7,527 3,030 9,046 
Equity in net loss (income) of unconsolidated affiliates666 (1,674)2,392 (9,917)
Other reconciling items, net (a)
— (186)— (312)
Adjusted EBITDA$114,128 $138,862 $219,867 $239,999 
Income before income taxes$72,144 $88,139 $128,492 $149,867 
Equity in net loss (income) of unconsolidated affiliates666 (1,674)2,392 (9,917)
Interest (income) expense, net(2,438)4,631 (2,633)7,490 
Other income, net(4,679)(2,930)(3,587)(766)
Operating income65,693 88,166 124,664 146,674 
Depreciation and amortization20,267 21,439 40,595 44,878 
Amortization of purchased intangible assets12,512 13,047 25,200 23,499 
Stock-based compensation8,495 2,801 15,388 10,150 
Acquisition- and disposition-related expenses1,198 3,138 7,403 5,298 
Strategic initiative and financial restructuring-related expenses1,284 7,527 3,030 9,046 
Deferred compensation plan income4,605 2,659 3,480 289 
Other reconciling items, net (b)
74 85 107 165 
Adjusted EBITDA$114,128 $138,862 $219,867 $239,999 

Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Segment Adjusted EBITDA:
Supply Chain Services$114,491 $126,315 $229,465 $239,504 
Performance Services30,955 43,205 52,729 62,336 
Corporate(31,318)(30,658)(62,327)(61,841)
Adjusted EBITDA$114,128 $138,862 $219,867 $239,999 

(a)Other reconciling items, net is primarily attributable to "Our Useloss on disposal of Non-GAAP Financial Measures" for further information regardinglong-lived assets.
(b)Other reconciling items, excluded in our calculation of Adjusted EBITDA and Segment Adjusted EBITDA.net is attributable to other miscellaneous expenses.
34
 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Net income$19,769
$246,184
$80,385
$304,279
Interest and investment loss, net1,508
857
3,003
1,009
Income tax expense231,508
37,429
244,272
60,765
Depreciation and amortization17,310
14,198
33,817
28,216
Amortization of purchased intangible assets13,817
11,151
27,715
20,360
EBITDA283,912
309,819
389,192
414,629
Stock-based compensation8,951
6,423
17,908
12,319
Acquisition related expenses1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities(177,174)—
(177,174)(5,722)
ERP implementation expenses156
432
491
1,526
Acquisition related adjustment - revenue87
5,813
192
5,964
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(204,833)—
(204,833)
Loss on disposal of long-lived assets400
—
1,720
1,518
Loss on FFF put and call rights15,587
—
15,607
—
Other expense(51)139
4
228
Adjusted EBITDA$133,542
$122,009
$252,713
$232,782
     
Income before income taxes$251,277
$283,613
$324,657
$365,044
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(204,833)—
(204,833)
Equity in net income of unconsolidated affiliates(1,257)(5,127)(5,509)(14,706)
Interest and investment loss, net1,508
857
3,003
1,009
Loss on disposal of long-lived assets400
—
1,720
1,518
Other income13,356
131
11,893
(875)
Operating income265,284
74,641
335,764
147,157
Depreciation and amortization17,310
14,198
33,817
28,216
Amortization of purchased intangible assets13,817
11,151
27,715
20,360
Stock-based compensation8,951
6,423
17,908
12,319
Acquisition related expenses1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities(177,174)—
(177,174)(5,722)
ERP implementation expenses156
432
491
1,526
Acquisition related adjustment - revenue87
5,813
192
5,964
Equity in net income of unconsolidated affiliates1,257
5,127
5,509
14,706
Deferred compensation plan income1,577
8
3,116
1,103
Other expense603
—
602
—
Adjusted EBITDA$133,542
$122,009
$252,713
$232,782
     
Segment Adjusted EBITDA:    
Supply Chain Services$132,045
$119,022
$257,665
$236,326
Performance Services27,929
28,603
49,150
50,914
Corporate(26,432)(25,616)(54,102)(54,458)
Adjusted EBITDA$133,542
$122,009
$252,713
$232,782



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 perPer Share for the periods presented (in thousands). Refer:
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Net income attributable to stockholders$54,302 $64,046 $99,063 $106,762 
Income tax expense19,278 23,765 33,216 42,534 
Amortization of purchased intangible assets12,512 13,047 25,200 23,499 
Stock-based compensation8,495 2,801 15,388 10,150 
Acquisition- and disposition-related expenses1,198 3,138 7,403 5,298 
Strategic initiative and financial restructuring-related expenses1,284 7,527 3,030 9,046 
Equity in net loss (income) of unconsolidated affiliates666 (1,674)2,392 (9,917)
Other reconciling items, net (a)
813 1,091 1,742 2,359 
Non-GAAP adjusted income before income taxes98,548 113,741 187,434 189,731 
Income tax expense on adjusted income before income taxes (b)
26,608 29,573 50,607 49,331 
Non-GAAP Adjusted Net Income$71,940 $84,168 $136,827 $140,400 
Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings Per Share
Weighted Average:
Basic weighted average shares outstanding119,702 118,787 119,523 118,569 
Dilutive securities355 865 572 1,273 
Weighted average shares outstanding - diluted120,057 119,652 120,095 119,842 

(a)Other reconciling items, net is primarily attributable to "Our Useloss 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 27% of non-GAAP adjusted net income before income taxes for further information regarding items excluded in our calculationthe three and six months ended December 31, 2023 and 26% of Non-GAAP Adjusted Fully Distributed Net Incomenon-GAAP adjusted net income before incomes taxes for the three and Non-GAAP Adjusted Fully Distributed Earnings per Share.
 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Net income attributable to stockholders$281,200
$400,275
$617,630
$470,577
Adjustment of redeemable limited partners' capital to redemption amount(317,916)(335,264)(638,340)(397,072)
Net income attributable to non-controlling interest in Premier LP56,485
181,173
101,095
230,774
Income tax expense231,508
37,429
244,272
60,765
Amortization of purchased intangible assets13,817
11,151
27,715
20,360
Stock-based compensation8,951
6,423
17,908
12,319
Acquisition related expenses1,674
4,216
4,773
7,153
Remeasurement of tax receivable agreement liabilities

(177,174)—
(177,174)(5,722)
ERP implementation expenses156
432
491
1,526
Acquisition related adjustment - revenue87
5,813
192
5,964
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(204,833)—
(204,833)
Loss on disposal of long-lived assets400
—
1,720
1,518
Loss on FFF put and call rights15,587
—
15,607
—
Other expense(51)139
4
228
Non-GAAP adjusted fully distributed income before income taxes114,724
106,954
215,893
203,557
Income tax expense on fully distributed income before income taxes(a)
44,742
41,712
84,198
79,387
Non-GAAP Adjusted Fully Distributed Net Income$69,982
$65,242
$131,695
$124,170
     
Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Fully Distributed Earnings per Share
Weighted Average:    
Common shares used for basic and diluted earnings (loss) per share55,209
49,445
54,059
48,330
Potentially dilutive shares450
401
553
437
Conversion of Class B common units83,578
91,462
85,029
93,366
Weighted average fully distributed shares outstanding - diluted139,237
141,308
139,641
142,133
(a)Reflects income tax expense at an estimated effective income tax rate of 39% of Non-GAAP adjusted fully distributed income before income taxes for the three and six months ended December 31, 2017 and 2016.


six months ended December 31, 2022.
The following table provides the reconciliation of earnings per share attributable to stockholders to Non-GAAP Adjusted Fully Distributed Earnings perPer Share for the periods presented. Referpresented:
Three Months Ended December 31,Six Months Ended December 31,
2023202220232022
Basic earnings per share attributable to stockholders$0.45 $0.54 $0.83 $0.90 
Income tax expense0.16 0.20 0.28 0.36 
Amortization of purchased intangible assets0.10 0.11 0.21 0.20 
Stock-based compensation0.07 0.02 0.13 0.09 
Acquisition- and disposition-related expenses0.01 0.03 0.06 0.04 
Strategic initiative and financial restructuring-related expenses0.01 0.06 0.03 0.08 
Equity in net loss (income) of unconsolidated affiliates0.01 (0.01)0.02 (0.08)
Other reconciling items, net (a)
0.01 0.01 0.01 0.02 
Impact of corporation taxes (b)
(0.22)(0.25)(0.42)(0.42)
Impact of dilutive shares— (0.01)(0.01)(0.02)
Non-GAAP Adjusted Earnings Per Share$0.60 $0.70 $1.14 $1.17 

(a)Other reconciling items, net is primarily attributable to "Our Useloss 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 27% of non-GAAP adjusted net income before income taxes for further information regarding items excluded in our calculationthe three and six months ended December 31, 2023 and 26% of Non-GAAP Adjusted Fully Distributed Earnings per Share.non-GAAP adjusted net income before incomes taxes for the three and six months ended December 31, 2022.
35

 Three Months Ended December 31,Six Months Ended December 31,
 2017201620172016
Earnings per share attributable to stockholders$5.09
$8.10
$11.43
$9.74
Adjustment of redeemable limited partners' capital to redemption amount(5.76)(6.79)(11.81)(8.22)
Net income attributable to non-controlling interest in Premier LP1.02
3.66
1.87
4.77
Income tax expense4.19
0.76
4.52
1.26
Amortization of purchased intangible assets0.25
0.23
0.51
0.42
Stock-based compensation0.16
0.13
0.33
0.25
Acquisition related expenses0.03
0.09
0.09
0.15
Remeasurement of tax receivable agreement liabilities(3.21)—
(3.28)(0.12)
ERP implementation expenses—
0.01
0.01
0.03
Acquisition related adjustment - revenue—
0.12
—
0.12
Remeasurement gain attributable to acquisition of Innovatix, LLC—
(4.14)—
(4.24)
Loss on disposal of long-lived assets0.01
—
0.03
0.03
Loss on FFF put and call rights0.28
—
0.29
—
Impact of corporation taxes (a)
(0.80)(0.84)(1.56)(1.63)
Impact of dilutive shares (b)
(0.76)(0.87)(1.49)(1.69)
Non-GAAP Adjusted Fully Distributed Earnings Per Share$0.50
$0.46
$0.94
$0.87
(a)Reflects income tax expense at an estimated effective income tax rate of 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 endedEnded December 31, 20172023 to 20162022
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 $52.9decreased by $24.9 million or 15%, to $411.4 million forduring the three months ended December 31, 2017 from $358.5 million for2023 compared to the three months ended December 31, 2016. 2022, primarily due to decreases of $11.2 million in products revenue, $8.8 million in software licenses and other services and support revenue and $4.8 million in net administrative fees revenue.
Net revenue increased $130.2decreased by $20.0 million or 19%, to $802.0 million forduring the six months ended December 31, 2017 from $671.8 million for2023 compared to the six months ended December 31, 2016.
Net administrative fees2022, primarily due to decreases of $19.5 million in products revenue increased $30.2and $5.8 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 impactedoffset by soft patient utilization trendsan increase of $5.3 million in software licenses 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 due to increases in SaaS informatics products subscriptions and ambulatory quality solutions services. Other services and support revenue increased $8.7 million, or 5% from the 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 $24.5decreased by $3.4 million or 14%, to $200.5 million forduring the three months ended December 31, 2017 from $176.0 million for2023 compared to the three months ended December 31, 2016. 2022, primarily due to a decrease of $14.1 million in cost of products revenue, partially offset by an increase of $10.7 million in cost of services and software licenses.
Cost of revenue increased $77.4decreased by $7.2 million or 25%, to $391.9 million forduring the six months ended December 31, 2017 from $314.5 million for2023 compared to the six months ended December 31, 2016.
Cost2022, primarily due to a decrease of $28.0 million in cost of products revenue, partially offset by an increase of $20.8 million in cost of services revenueand software licenses.
Operating Expenses
Operating expenses increased $2.4by $1.0 million or 5%, fromduring the three months ended December 31, 20162023 compared to 2017 and $6.7the three months ended December 31, 2022 primarily driven by an increase in SG&A expenses.
Operating expenses increased by $9.1 million or 8% fromduring the six months ended December 31, 20162023 compared 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 2017,2022 primarily driven by higher product costs associated with the business operationsincreases of Acro Pharmaceuticals$7.6 million and due to higher costs driven by growth$1.7 million 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 benefitSG&A 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.


respectively.
Other Income (Expense), Net
Other income (expense), net decreased $223.0increased by $6.5 million or 107%, to $(14.0) million forduring the three months ended December 31, 2017 from $209.0 million for2023 compared to the three months ended December 31, 20162022, primarily due to an increase of $7.1 million in interest income, net and decreased $229.0an increase in income of $1.8 million or 105%in other income (expense), to $(11.1)net, partially offset by a decrease in income of $2.3 million in equity in net income of unconsolidated affiliates.
Other income (expense), net was flat for the six months ended December 31, 2017 from $217.9 million for2023 compared to the six months ended December 31, 2016, primarily due to the one-time $205.1 million gain recognized from the remeasurement of the 50% equity method investment in Innovatix to fair value upon acquisition of Innovatix on December 2, 2016 (see Note 3 - Business Acquisitions) along with a reduction in equity in net income of unconsolidated affiliates. As a result of acquiring the remaining 50% of Innovatix, we no longer account for our ownership using the equity method. Other income (expense), net was also impacted by the loss on FFF put and call rights in the current period and partially offset by a moderate increase in equity in net income of FFF, which experienced improved performance in the six months ended December 31, 2017.2022.
Income Tax Expense
For the three months ended December 31, 20172023 and 2016, the Company2022, we recorded tax expense of $231.5$19.3 million and $37.4$23.8 million, respectively, which equates torespectively. The tax expense recorded during the three months ended December 31, 2023 and 2022 resulted in an effective tax ratesrate of 92% and 13%, respectively. 27% for both periods.
For the six months ended December 31, 20172023 and 2016, the Company2022, we recorded tax expense of $244.3$33.2 million and $60.8$42.5 million, respectively, which equates torespectively. The tax expense recorded during the six months ended December 31, 2023 and 2022 resulted in effective tax rates of 75%26% and 17%28%, respectively. The increasechange in the effective tax ratesrate is primarily attributable to the remeasurementimpact of deferred tax balances related to thea decrease in stock-based compensation expense, state law repricing and the U.S. federal corporate incomestatute of limitation release on uncertain 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.positions. See Note 13 - Income Taxes to the accompanying condensed consolidated financial statements for morefurther information.
Net IncomeIncome/Loss Attributable to Non-Controlling Interest
Net income attributable to non-controlling interest decreased $124.7by $1.7 million or 69%, to $56.5a net loss attributable to non-controlling interest of $1.4 million forduring the three months ended December 31, 2017 from $181.2 million for2023 compared to the three months ended December 31, 2016,2022, primarily attributabledue to our consolidated subsidiaries with non-controlling interests incurring a decreasenet loss in non-controlling ownership percentage in Premier LP to 60% from 64%, respectively. the current quarter.
Net income attributable to non-controlling interest decreased $129.7by $4.4 million or 56%, to $101.1a net loss attributable to non-controlling interest of $3.8 million forduring the six months ended December 31, 2017 from $230.8 million for2023 compared to the six months ended December 31, 2016,2022,
36

respectively, primarily attributabledue to our consolidated subsidiaries with non-controlling interests incurring a decreasenet loss in non-controlling ownership percentage in Premier LP to 60% from 64%, respectively.the current year period.
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA increased $11.5decreased by $24.8 million or 9%, to $133.5 million forduring the three months ended December 31, 2017 from $122.0 million for2023 compared to the three months ended December 31, 2016,2022, primarily as a resultdriven by decreases of growth$12.3 million and $11.8 million in net administrative fees revenue including contributions related to the InnovatixPerformance 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. These results were partially offset by increased product costs and selling, general and administrative expenses resulting from higher salaries and benefits expenses as a result of acquisitions and to support growth. Additionally, SegmentSupply Chain Services Adjusted EBITDA, for the prior period included a $5.6 million non-cash adjustment for cash collections not recognized as revenue on a GAAP basis due to a purchase accounting adjustment.respectively.
Non-GAAP Adjusted EBITDA increased $19.9decreased by $20.1 million or 9%, to $252.7 million forduring the six months ended December 31, 2017 from $232.8 million for2023 compared to the six months ended December 31, 2016,2022, primarily as a result of growth in net administrative fees revenue including contributions related to the Innovatix and Essensa acquisition, net of a $10.7 million reduction in equity in net income of unconsolidated affiliates due to acquiring the remaining 50% of Innovatix as it was historically accounted for as an unconsolidated affiliate through the date of acquisition, along with an increase in product revenue and, to a lesser extent, an increase in other services and support revenue driven by growthdecreases of $10.0 million and $9.6 million in cost management advisory services related to performance-based engagements,Supply Chain Services 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, SegmentPerformance Services Adjusted EBITDA, for the prior period included a $5.6 million non-cash adjustment for cash collections not recognized as revenue on a GAAP basis due to a purchase accounting adjustment.respectively.


Segment Results
Supply Chain Services - Comparison of the Three and Six Months ended December 31, 2017 to 2016
The following table summarizespresents our results of operations and Non-GAAP Adjusted EBITDA in the Supply Chain Services segment for the periods presented (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
20232022Change20232022Change
Net revenue:
Net administrative fees$149,563 $154,423 $(4,860)(3)%$298,590 $304,429 $(5,839)(2)%
Software licenses, other services and support12,511 14,104 (1,593)(11)%23,697 24,931 (1,234)(5)%
Services and software licenses162,074 168,527 (6,453)(4)%322,287 329,360 (7,073)(2)%
Products55,781 66,993 (11,212)(17)%106,366 125,854 (19,488)(15)%
Net revenue217,855 235,520 (17,665)(8)%428,653 455,214 (26,561)(6)%
Cost of revenue:
Services and software licenses10,260 4,389 5,871 134%20,659 9,597 11,062 115%
Products47,472 61,620 (14,148)(23)%91,510 119,494 (27,984)(23)%
Cost of revenue57,732 66,009 (8,277)(13)%112,169 129,091 (16,922)(13)%
Gross profit160,123 169,511 (9,388)(6)%316,484 326,123 (9,639)(3)%
Operating expenses:
Selling, general and administrative56,630 49,792 6,838 14%105,281 99,815 5,466 5%
Research and development156 116 40 34%242 245 (3)(1)%
Amortization of purchased intangible assets7,859 7,956 (97)(1)%15,790 16,039 (249)(2)%
Operating expenses64,645 57,864 6,781 12%121,313 116,099 5,214 4%
Operating income95,478 111,647 (16,169)(14)%195,171 210,024 (14,853)(7)%
Depreciation and amortization5,936 5,654 11,578 11,821 
Amortization of purchased intangible assets7,859 7,956 15,790 16,039 
Acquisition- and disposition-related expenses5,144 1,001 6,819 1,510 
Other reconciling items, net74 57 107 110 
Segment Adjusted EBITDA$114,491 $126,315 $(11,824)(9)%$229,465 $239,504 $(10,039)(4)%
 Three Months Ended December 31,Six Months Ended December 31,
Supply Chain Services2017201620172016
Net revenue:    
Net administrative fees$159,343
$129,071
$310,334
$255,047
Other services and support3,421
1,201
5,570
2,846
Services162,764
130,272
315,904
257,893
Products162,101
142,378
314,764
248,507
Net revenue324,865
272,650
630,668
506,400
Cost of revenue:    
Services1,023
1,276
2,086
2,482
Products153,272
131,154
297,712
226,968
Cost of revenue154,295
132,430
299,798
229,450
Gross profit170,570
140,220
330,870
276,950
Operating expenses:    
Selling, general and administrative42,185
38,044
84,120
70,547
Amortization of purchased intangible assets4,976
2,154
10,017
2,366
Operating expenses47,161
40,198
94,137
72,913
Operating income$123,409
$100,022
$236,733
$204,037
Depreciation and amortization195
299
649
533
Amortization of purchased intangible assets4,976
2,154
10,017
2,366
Acquisition related expenses2,320
5,788
4,870
9,052
Acquisition related adjustment - revenue—
5,632
—
5,632
Equity in net income of unconsolidated affiliates1,130
5,127
5,381
14,706
Other income15
—
15
—
Non-GAAP Segment Adjusted EBITDA$132,045
$119,022
$257,665
$236,326
Comparison of the Three and Six Months Ended December 31, 2023 to 2022
Net Revenue
Supply Chain Services segment net revenue increased $52.2decreased by $17.7 million, or 19%8%, to $324.9 million forduring the three months ended December 31, 2017 from $272.7 million for2023 compared to the three months ended December 31, 2016. 2022 primarily due to decreases of $11.2 million in products revenue, $4.9 million in net administrative fees revenue and $1.6 million in software licenses, other services and support revenue.
37

Supply Chain Services segment net revenue increased $124.3decreased by $26.6 million, or 25%6%, to $630.7 million forduring the six months ended December 31, 2017 from $506.4 million for2023 compared to the six months ended December 31, 2016.2022 primarily due to decreases of $19.5 million in products revenue, $5.8 million in net administrative fees revenue and $1.2 million in software licenses, other services and support revenue.
Net Administrative Fees
Net administrative fees revenue increased $30.2decreased by $4.9 million, or 23%3%, fromand $5.8 million, or 2%, during the three months ended December 31, 20162023 compared to 2017the three months ended December 31, 2022 and $55.3 million, or 22%, from the six months ended December 31, 20162023 compared to 2017,the six months ended December 31, 2022, respectively. The decreases in both periods were primarily driven by an increase in the aggregate contributions from Innovatixblended member fee share due to market dynamics, partially offset by increased utilization 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 contractfurther penetration of our contracts by existing members. Growth in net administrative fees
Products Revenue
Products revenue was partially impacteddecreased by soft patient utilization trends and timing of cash receipts.
Product revenue increased $19.7$11.2 million, or 14%17%, fromand $19.5 million, or 15%, during the three months ended December 31, 20162023 compared to 2017the three months ended December 31, 2022 and $66.3 million, or 27%, from the six months ended December 31, 20162023 compared to 2017,the six months ended December 31, 2022, respectively. The decrease in products revenue is primarily drivena result of lower demand and pricing for commodity products and other previously high-demand supplies due to members’ and other customers’ elevated inventory levels and continued utilization of excess inventory by members purchased during the pandemic as well as pricing constraints on certain commodity products due to an excess market supply.
Software Licenses, Other Services and Support Revenue
Software licenses, other services and support revenue decreased by $1.6 million, or 11%, and $1.2 million, or 5%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022 and the six months ended December 31, 2023 compared to the six months ended December 31, 2022, respectively. The decrease in software licenses, other services and support revenue is primarily due to a decrease in purchased services revenue, partially offset by an increase in integrated pharmacy revenues mostly attributable to contributions from expansion and growth in therapy offerings largely associated with the Company's acquisition of Acro Pharmaceuticals, which occurred on August 23, 2016, as well as an increase in sales of certain limited distribution drugs dispensed to treat Idiopathic Pulmonary Fibrosis, Multiple Sclerosis and Oncology, partially offset by a slight decrease in the sales of Hepatitis-C pharmaceuticals. We also experienced increased sales of direct sourcing products. We expect our integrated pharmacy and direct sourcing product revenues to continue to grow to the extent we are able to increase our product offerings, expand our product sales to existing members and additional members begin to utilize our programs.


supply chain co-management fees.
Cost of Revenue
Supply Chain Services segment cost of revenue increased $21.9decreased by $8.3 million, or 17%13%, to $154.3 million forduring the three months ended December 31, 2017 from $132.4 million for2023 compared to the three months ended December 31, 2016. 2022. The decrease was primarily attributable to the decrease in products cost of revenue of $14.1 million in relation to the aforementioned decrease in products revenue as well as lower logistics and products costs in the current period. This decrease was partially offset by an increase of $5.9 million in the cost of services and software licenses revenue due to an increase in personnel costs associated with increased headcount in support of our supply chain co-management business.
Supply Chain Services segment cost of revenue increased $70.3decreased by $16.9 million, or 31%13%, to $299.8 million forduring the six months ended December 31, 2017 from $229.5 million for2023 compared to the six months ended December 31, 2016.
Cost2022. The decrease was primarily attributable to the decrease in products cost of product revenue increased $22.1of $28.0 million or 17%, fromin relation to the three months ended December 31, 2016aforementioned decrease in products revenue as well as lower logistics and products costs in the current period. This decrease was partially offset by an increase of $11.1 million in the cost of services and software licenses revenue due to 2017 and $70.7 million, or 31%, from the six months ended December 31, 2016 to 2017, primarily driven by higher productan increase in personnel costs associated with the business operationsincreased headcount in support of Acro Pharmaceuticals and due to growth in direct sourcing sales and the impact of increases in raw materials pricing.our supply chain co-management business.
Operating Expenses
Supply Chain Services segment operating expenses increased $7.0by $6.8 million, or 17%12%, to $47.2 million forduring the three months ended December 31, 2017 from $40.2 million for2023 compared to the three months ended December 31, 2016. 2022 due to an increase in SG&A expenses primarily due to an increase in acquisition- and disposition-related expenses driven by 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) and an increase in employee-related expenses.
Supply Chain Services segment operating expenses increased $21.2by $5.2 million, or 29%4%, to $94.1 million forduring the six months ended December 31, 2017 from $72.9 million for2023 compared to the six months ended December 31, 2016.2022 attributable to an increase in SG&A expenses primarily due to an increase in acquisition- and disposition-related expenses driven by 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).
Selling, general and administrative expenses increased $4.1Segment Adjusted EBITDA
Supply Chain Services Segment Adjusted EBITDA decreased by $11.8 million, or 11%9%, fromand $10.0 million, or 4%, during the three months ended December 31, 20162023 compared to 2017the three months ended December 31, 2022 and $13.6 million, or 19%, fromthe six months ended
38

December 31, 2023 compared to the six months ended December 31, 2016 to 2017,2022, respectively. The decreases were primarily due to the aforementioned decrease in net revenue and higher salaries and benefits expense primarilypersonnel costs associated with the acquisitions of Innovatix and Essensa andincreased headcount to a lesser extent, the acquisition of Acro Pharmaceuticals.
Amortization of purchased intangible assets increased $2.8 million from the three months ended December 31, 2016 to 2017 and $7.7 million from the six months ended December 31, 2016 to 2017, primarily as a result of additional amortization of purchased intangible assets related to our acquisitions.
Segment Adjusted EBITDA
Segment Adjusted EBITDA increased $13.0 million, or 11%, to $132.0 million for the three months ended December 31, 2017 from $119.0 million for the three months ended December 31, 2016. Segment Adjusted EBITDA increased $21.3 million, or 9%, to $257.7 million for the six months ended December 31, 2017 from $236.3 million for the six months ended December 31, 2016. This increase was primarily a result ofsupport growth in net administrative fees revenue including contributions related to the Innovatix and Essensa acquisition, net of the reduction in equity in net income of unconsolidated affiliates due to acquiring the remaining 50% of Innovatix as it was historically accounted for as an unconsolidated affiliate through the date of acquisition, along with an increase in product revenue. These increases wereour supply chain co-management business partially offset by increased product costslower logistics and selling, general and administrative expenses resulting from higher salaries and benefit expenses as a result of acquisitions and to support growth. Additionally, Segment Adjusted EBITDA for the prior period included a $5.6 million non-cash adjustment for cash collections not recognized as revenue on a GAAP basis due to a purchase accounting adjustment.products cost in our direct sourcing business.


Performance Services - Comparison of the Three and Six Months ended December 31, 2017 to 2016
The following table summarizespresents our results of operations and Non-GAAP Adjusted EBITDA in the Performance Services segment for the periods presented (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
20232022Change20232022Change
Net revenue:
Software licenses, other services and support
SaaS-based products subscriptions$43,565 $49,664 $(6,099)(12)%88,905 97,412 $(8,507)(9)%
Consulting services21,921 18,514 3,407 18%45,689 35,876 9,813 27%
Software licenses20,868 30,804 (9,936)(32)%35,809 36,797 (988)(3)%
Other30,609 25,133 5,476 22%54,566 48,219 6,347 13%
Net revenue116,963 124,115 (7,152)(6)%224,969 218,304 6,665 3%
Cost of revenue:
Services and software licenses55,730 50,876 4,854 10%109,463 99,682 9,781 10%
Cost of revenue55,730 50,876 4,854 10%109,463 99,682 9,781 10%
Gross profit61,233 73,239 (12,006)(16)%115,506 118,622 (3,116)(3)%
Operating expenses:
Selling, general and administrative37,834 45,026 (7,192)(16)%86,671 87,157 (486)(1)%
Research and development772 884 (112)(13)%1,549 1,730 (181)(10)%
Amortization of purchased intangible assets4,653 5,091 (438)(9)%9,410 7,460 1,950 26%
Operating expenses43,259 51,001 (7,742)(15)%97,630 96,347 1,283 1%
Operating income17,974 22,238 (4,264)(19)%17,876 22,275 (4,399)(20)%
Depreciation and amortization12,274 13,711 24,859 28,758 
Amortization of purchased intangible assets4,653 5,091 9,410 7,460 
Acquisition- and disposition-related expenses(3,946)2,137 584 3,788 
Other reconciling items, net— 28 — 55 
Segment Adjusted EBITDA$30,955 $43,205 $(12,250)(28)%$52,729 $62,336 $(9,607)(15)%
 Three Months Ended December 31,Six Months Ended December 31,
Performance Services2017201620172016
Net revenue:    
Other services and support$86,533
$85,850
$171,294
$165,372
Net revenue86,533
85,850
171,294
165,372
Cost of revenue:    
Services46,233
43,607
92,105
85,046
Cost of revenue46,233
43,607
92,105
85,046
Gross profit40,300
42,243
79,189
80,326
Operating expenses:    
Selling, general and administrative26,397
23,664
58,308
50,572
Research and development335
573
807
1,159
Amortization of purchased intangible assets8,841
8,996
17,699
17,993
Operating expenses35,573
33,233
76,814
69,724
Operating income$4,727
$9,010
$2,375
$10,602
Depreciation and amortization14,793
11,990
28,853
23,866
Amortization of purchased intangible assets8,841
8,996
17,699
17,993
Acquisition related expenses(646)(1,573)(97)(1,879)
Acquisition related adjustment - revenue87
180
193
332
Equity in net income of unconsolidated affiliates127
—
127
—
Non-GAAP Segment Adjusted EBITDA$27,929
$28,603
$49,150
$50,914
Net Revenue
Other services and support revenue increased $0.7 million, or 1%, to $86.5 million for the three months ended December 31, 2017 from $85.9 million for the three months ended December 31, 2016 primarily due to increases in SaaS informatics products subscriptions and ambulatory quality solutions services. Other services and support revenue increased $5.9 million, or 4%, to $171.3 million for the six months ended December 31, 2017 from $165.4 million for the six months ended December 31, 2016 primarily due to growth in cost management advisory services related to performance-based engagements. We also experienced increases in SaaS informatics products subscriptions, applied science services and government services related revenue.
We expect to experience quarterly variability in revenue generated from our Performance Services segment due to the timing of revenue recognition from certain advisory services and performance-based engagements in which our revenue is based on a percentage of identified member savings and recognition occurs upon approval and documentation of the savings. We expect our Performance Services revenue to grow over the long-term to the extent we are able to expand our sales to existing members and additional members begin to utilize our products and services.
Cost of Revenue
Cost of revenue increased $2.6 million, or 6%, to $46.2 million for the three months ended December 31, 2017 from $43.6 million for the three months ended December 31, 2016. Cost of revenue increased $7.1 million, or 8%, to $92.1 million 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 staffing to support growth and performance-based engagements.
Operating Expenses
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 million, or 10%, to $76.8 million for the six months ended December 31, 2017 from $69.7 million for the six months ended December 31, 2016.


Selling, 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, primarily driven by depreciation expense resulting from increased capitalization of labor in prior periods.
Amortization of purchased intangible assets decreased $0.2 million, or 2%, from the three months ended December 31, 2016 to 2017 and $0.3 million, or 2%, from the six months ended December 31, 2016 to 2017, remaining relatively flat.
Segment Adjusted EBITDA
While revenue increased, Segment Adjusted EBITDA decreased $0.7 million, or 2%, to $27.9 million for the three months ended December 31, 2017 from $28.6 million for the three months ended December 31, 2016. Segment Adjusted EBITDA decreased $1.8 million, or 3%, to $49.15 million for the six months ended December 31, 2017 from $50.9 million for the six months ended December 31, 2016. This decrease is primarily a result of an increase in cost of sales related to an increase in staffing and costs to support growth and performance-based engagements, and was impacted on a comparable basis due to higher revenue recognition from performance-based engagements in the prior year. Specifically, the Company made investments in staff and infrastructure to support growth involving primarily larger and more complex engagements that include significant performance-based advisory services initiatives.
Corporate - Comparison of the Three and Six Months Ended December 31, 2023 to 2022
Net Revenue
Net revenue in our Performance Services segment decreased by $7.2 million, or 6%, during the three months ended December 31, 20172023 compared to 2016the three months ended December 31, 2022. The decrease was primarily attributable to a decrease of $9.9 million in software licenses driven by a decreased number of enterprise analytics license agreements entered into during the current year period compared to the prior year period and a decrease of $6.1 million in SaaS-based products subscription revenue due to conversion of SaaS-based products to licensed-based products in recent periods and contract expirations. These decreases were partially offset by increases of $5.5 million in other revenue related to data contracts in adjacent markets and $3.4 million in consulting services revenue through our PINC AI platform.
Net revenue in our Performance Services segment increased by $6.7 million, or 3%, during the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The increase was primarily attributable to growth of $9.8 million in consulting services driven by new agreements entered into during the current year period under our PINC AI platform, and an increase of $6.3 million in other revenue driven by increased data contracts in adjacent markets in the current year period and increases in Remitra revenue. These increases were partially offset by a decrease of $8.5 million in SaaS-based products subscription revenue primarily due to the conversion of SaaS-based products to licensed-based products in recent periods and contract expirations.
39

Cost of Revenue
Performance Services segment cost of revenue increased by $4.9 million, or 10%, and $9.8 million, or 10%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022 and the six months ended December 31, 2023 compared to the six months ended December 31, 2022, respectively. These increases were primarily due to an increase in consulting services expenses as well as higher costs associated with increased headcount to support our PINC AI platform in adjacent markets and our Contigo Health business, including incremental expenses attributable to the TRPN acquisition.
Operating Expenses
Performance Services segment operating expenses decreased by $7.7 million, or 15%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022. The decrease was primarily driven by a decrease of $7.2 million in SG&A expenses primarily due to a decrease in acquisition- and disposition-related expenses primarily related to lower than anticipated payout of an earn-out liability (see Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements) and lower contractor costs associated with decreased net revenue.
Performance Services segment operating expenses increased by $1.3 million, or 1%, during the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The increase was primarily driven by an increase in amortization of purchased intangible assets primarily attributable to the TRPN acquisition and an increase in employee-related expenses. These increases were partially offset by a decrease in acquisition- and disposition-related expenses primarily related to lower than anticipated payout of an earn-out liability (see Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements).
Segment Adjusted EBITDA
Performance Services Segment Adjusted EBITDA decreased by $12.3 million, or 28%, during the three months ended December 31, 2023 compared to the three months ended December 31, 2022, primarily due to the aforementioned decrease in net revenue and increase in costs of revenue, partially offset by the decrease in contractor costs.
Performance Services Segment Adjusted EBITDA decreased by $9.6 million, or 15%, during the six months ended December 31, 2023 compared to the six months ended December 31, 2022, primarily due to the aforementioned increases in costs of revenue and employee-related expenses, partially offset by the increase in net revenue.
Corporate
The following table summarizespresents corporate expenses and Non-GAAP Adjusted EBITDA for the periods presented (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
20232022Change20232022Change
Operating expenses:
Selling, general and administrative$47,759 $45,719 $2,040 4%$88,383 $85,625 $2,758 3%
Operating expenses47,759 45,719 2,040 4%88,383 85,625 2,758 3%
Operating loss(47,759)(45,719)(2,040)4%(88,383)(85,625)(2,758)3%
Depreciation and amortization2,057 2,074 4,158 4,299 
Stock-based compensation8,495 2,801 15,388 10,150 
Strategic initiative and financial restructuring-related expenses1,284 7,527 3,030 9,046 
Deferred compensation plan expense4,605 2,659 3,480 289 
Adjusted EBITDA$(31,318)$(30,658)$(660)(2)%$(62,327)$(61,841)$(486)(1)%
 Three Months Ended December 31,Six Months Ended December 31,
Corporate2017201620172016
Other operating income:    
Remeasurement of tax receivable agreement liabilities$177,174
$—
$177,174
$5,722
Other operating income177,174
—
177,174
5,722
Operating expenses:    
Selling, general and administrative40,038
34,197
80,513
72,790
Research and development(10)194
6
414
Operating expenses$40,028
$34,391
$80,519
$73,204
Operating income (loss)$137,146
$(34,391)$96,655
$(67,482)
Depreciation and amortization2,323
1,912
4,315
3,797
Stock-based compensation8,951
6,423
17,908
12,319
Strategic and financial restructuring expenses3
—
3
—
Adjustment to tax receivable agreement liabilities(177,174)—
(177,174)(5,722)
ERP implementation expenses156
433
491
1,526
Deferred compensation plan income1,577
7
3,115
1,104
Other income586
��
585
—
Non-GAAP Corporate Adjusted EBITDA$(26,432)$(25,616)$(54,102)$(54,458)
Comparison of the Three Months Ended December 31, 2023 to 2022
Other Operating IncomeExpenses
OtherCorporate operating incomeexpenses increased $177.2by $2.0 million, fromor 4%, and $2.8 million, or 3%, during the three months ended December 31, 20162023 compared to 2017the three months ended December 31, 2022 and $171.5 million from the six months ended December 31, 20162023 compared to 2017the six months ended December 31, 2022, respectively. These increases were primarily due to increases in deferred compensation plan expense as a result of market changes and stock-based compensation expense due to lower forecasted
40

achievement of performance share awards in the remeasurement of TRA liabilities, which was primarily attributable to the 14%prior year period. These increases were partially offset by a decrease in the U.S. federal corporate income tax rate associated with the TCJA. See "Member-Owner TRA" below for additional informationprofessional fees related to strategic initiative and financial restructuring-related activities in the Company's TRA liabilities.current period.
Operating ExpensesAdjusted EBITDA
Operating expenses increased $5.6 million, or 16%, to $40.0 millionCorporate adjusted EBITDA was flat for the three months ended December 31, 2017 from $34.4 million for2023 compared to the three months ended December 31, 2016. Operating expenses increased $7.3 million, or 10%, to $80.5 million for2022 and the six months ended December 31, 2017 from $73.2 million for2023 compared to the six months ended December 31, 2016.2022.


Selling, general and administrative expenses increased $5.8 million, or 17%, from the three months ended December 31, 2016 to 2017 and $7.7 million, or 11%, from the six months ended December 31, 2016 to 2017, primarily driven by an increase in stock-based compensation expense largely associated with anticipated achievement of certain performance targets, along with increased salaries and benefits expenses due to increased staffing to support continued growth and the acquisitions of Innovatix and Essensa and to a lesser extent Acro Pharmaceuticals.
Non-GAAP Adjusted EBITDA
Non-GAAP Adjusted EBITDA decreased by $0.8 million, or 3%, from the three months ended December 31, 2016 to 2017, driven primarily by an increase in professional services costs associated with a certain isolated strategic consulting engagement and increased $0.4 million, or 1%, from the six months ended December 31, 2016 to 2017, driven primarily by a decrease in audit related fees and severance expenses, partially offset by the previously mentioned increase in professional services costs associated with a certain isolated strategic consulting engagement.
Off-Balance Sheet Arrangements
As of December 31, 2017,2023, we did not have any off-balance sheet arrangements.
Liquidity and Capital Resources
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.liquidity to fund acquisitions and related business investments as well as general corporate activities. In addition, at December 31, 2023, we had a higher cash balance due to cash proceeds received from the sale of our non-healthcare GPO member contracts in the first quarter of fiscal year 2024. Our primary cash requirements involveinclude operating expenses, working capital fluctuations, revenue share obligations, tax payments, capital expenditures, discretionary cash settlement of Class B common unit exchanges under the Exchange Agreement,dividend payments on our Class A common stock, if and when declared, repurchases under our current shareof Class A common stock pursuant to stock repurchase program,programs in place from time to time, acquisitions and related business investments and other general corporate activities. Our capital expenditures typically consist of internally-developedinternally developed software costs, software purchases and computer hardware purchases.
As of December 31, 20172023 and June 30, 2017,2023, we had cash and cash equivalents totaling $163.0of $371.1 million and $156.7$89.8 million, respectively, and there were $200.0 million and $220.0 million, respectively, inrespectively.
Credit Facility
At December 31, 2023, we had no outstanding borrowings under theour Credit Facility. At June 30, 2023, we had $215.0 million of outstanding borrowings under our Credit Facility. During the six months ended December 31, 2017 the Company2023, we had no borrowings and repaid $50.0$215.0 million of 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 ofnotes 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.

Cash Dividends

In each of September 2023 and December 2023, we paid a cash dividend of $0.21 per share on outstanding shares of Class A common stock. On January 25, 2024, our Board of Directors declared a quarterly cash dividend of $0.21 per share, payable on March 15, 2024 to stockholders of record on March 1, 2024.
Sale of Non-Healthcare GPO Member Contracts
On July 25, 2023, we sold substantially all of our non-healthcare GPO member contracts pursuant to an equity purchase agreement with OMNIA for a purchase price estimated to be up to $740.0 million, which has been reduced from previous estimates taking into account certain post-closing adjustments and remains subject to additional adjustments. As of December 31, 2023, we have received cash of $629.8 million, including the closing payment and payments out of escrow based on post-closing adjustments through that date. See Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information.
41

Discussion of Cash Flows for the Six Months endedEnded December 31, 20172023 and 20162022
A summary of net cash flows is as follows (in thousands):
Six Months Ended December 31,
20172016
Six Months Ended December 31,Six Months Ended December 31,
202320232022
Net cash provided by (used in): 
Operating activities
Operating activities
Operating activities$206,515
$138,364
Investing activities(38,622)(336,358)
Financing activities(161,614)168,069
Net increase (decrease) in cash and cash equivalents$6,279
$(29,925)
Effect of exchange rate changes on cash flows
Net increase in cash and cash equivalents
Net cash provided by operating activities increased $68.2decreased by $161.3 million fromfor the six months ended December 31, 20162023 compared to 2017the six months ended December 31, 2022. The decrease in net cash provided by operating activities was due to an increase of cash paid for taxes of $152.0 million primarily related to proceeds received from the sale of non-healthcare GPO member contracts and associated future revenues to OMNIA in the current year period, a decrease of $21.0 million in cash receipts driven by lower net revenue and collections in the current period and an increase of $7.0 million in cash paid primarily due to an increase in net administrative fees as well as decreased outflows related to working capital needs,payable payments partially offset by increased selling, general and administrativea decrease in inventory purchases. These were partially offset by a decrease of cash paid for operating expenses of $19.8 million primarily due to a decrease in the current period.performance-related compensation.
Net cash used in investing activities decreased $297.7 million from the six months ended December 31, 2016 to 2017 driven by our $222.2 million acquisition of Innovatix and Essensa, our $68.8 million acquisition of Acro Pharmaceuticals and our $65.7 million investment in FFF during the prior period, partially offset by $48.0 million in proceeds from the sale of marketable securities during the prior period.
Net cash provided by financing activities was $168.1$178.4 million for the six months ended December 31, 2016 while2023 compared to the six months ended December 31, 2022. The decrease in net cash used in investing activities was primarily due to the cash outlay for the TRPN acquisition in the six months ended December 31, 2022, partially offset by an increase in purchases of property and equipment.
Net cash provided by financing activities was $161.6increased by $255.8 million for the six months ended December 31, 2017.2023 compared to the six months ended December 31, 2022. The changeincrease in net cash flows provided by and used in financing activities was largelyprimarily driven by $327.5the proceeds from the sale of future revenues of $629.8 million of borrowings under the Credit Facility in the priorcurrent period (see Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information). This increase was partially offset by $20.0a decrease of $365.0 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 stockborrowings under our share repurchase program in the current period.Credit Facility.
Discussion of Non-GAAP Free Cash Flow for theSix Months endedEnded December 31, 20172023 and 20162022
We define Non-GAAP Free Cash Flow as net cash provided by operating activities from continuing operations less distributions and TRA(i) early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring and (ii) purchases of property and equipment. Non-GAAP Free cash flowCash 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):
Six Months Ended December 31,
20232022
Net cash provided by operating activities$35,380 $196,725 
Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)
(49,600)(48,670)
Purchases of property and equipment(49,068)(38,416)
Non-GAAP Free Cash Flow$(63,288)$109,639 

 Six Months Ended December 31,
 20172016
Net cash provided by operating activities$206,515
$138,364
Purchases of property and equipment(38,622)(34,325)
Distributions to limited partners of Premier LP(45,703)(44,630)
Non-GAAP Free Cash Flow$122,190
$59,409
Non-GAAP Free(a)Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring are presented in our Condensed Consolidated Statements of Cash Flow increased $62.8 million fromFlows under “Payments made on notes payable.” During the six months ended December 31, 20162023, we paid $51.3 million to 2017members including imputed interest of $1.7 million which is included in net cash provided by operating activities. During the six months ended December 31, 2022, we paid $51.3 million to members including imputed interest of $2.7 million which is included in net cash provided by operating activities. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for further information.
Non-GAAP Free Cash Flow decreased by $172.9 million for the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The decrease in Non-GAAP Free Cash Flow was primarily drivendue to the aforementioned
42

$161.3 million decrease in net cash provided by operating activities and an increase in net administrative fees as well as decreased working capital needs, partially offset by increased selling, generalpurchases of property and administrative expenses in the current period. equipment of $10.7 million.
See “Our Use of Non-GAAP Financial Measures” above for additional information regarding our use of Non-GAAP Free Cash Flow.
The Company anticipates that its Non-GAAP Free Cash Flow will benefit as a result of the decrease in the U.S. federal corporate income tax rate associated with the TCJA as distributions to limited partners of Premier LP and payments to limited partners of Premier LP related to tax receivable agreements are expected to decrease in future periods as a result of the decreased federal corporate income tax rate.


Contractual Obligations
Notes PayableCredit Facility
At December 31, 2017, we had commitments of $7.7 million for obligationsOutstanding borrowings under notes payable which represented obligations to departed member owners. Notes payable to departed member owners generally have stated maturities of five years from the date of issuance and are non-interest bearing. SeeCredit Facility (as defined in Note 8 - Debt inand Notes Payable to the accompanying condensed consolidated financial statements for more information.
2014 Credit Facility
Premier LP, along with its consolidated subsidiaries, PSCI and PHSI, as Co-Borrowers, Premier GP and certain domestic subsidiaries of Premier GP, as guarantors, entered into an unsecured Credit Facility, dated as of June 24, 2014 and amended on June 4, 2015. The Credit Facility has a maturity date of June 24, 2019. The Credit Facility provides for borrowings of up to $750.0 million with (i) a $25.0 million sub-facility for standby letters of credit and (ii) a $75.0 million sub-facility for swingline loans. The Credit Facility may be increased from time to time at the Company's request up to an aggregate additional amount of $250.0 million, subject to lender approval. The Credit Facility includes an unconditional and irrevocable guaranty of all obligations under the Credit Facility by Premier GP, certain domestic subsidiaries of Premier GP and future guarantors, if any. Premier, Inc. is not a guarantor under the Credit Facility.
At the Company's option, committed loans may be in the form of Eurodollar rate loans ("Eurodollar Loans") or base rate loans ("Base Rate Loans"). Eurodollar Loansstatements) bear interest at the Eurodollaron a variable rate (defined as the London Interbank Offered Rate, or LIBOR, plus the Applicable Rate (defined as a margin based on the Consolidated Total Leverage Ratio (as defined in the Credit Facility))). Base Rate Loans bear interest at the Base Rate (defined as the highest of the prime rate announced by the administrative agent, the federal funds effective rate plus 0.50% or the one-month LIBOR plus 1.0%) plus the Applicable Rate. The Applicable Rate ranges from 1.125% to 1.750% for Eurodollar Loans and 0.125% to 0.750% for Base Rate Loans.structure. At December 31, 2017, the interest rate for three-month Eurodollar Loans was 2.815%2023, we had no outstanding borrowings under our Credit Facility and the interest rate for the Base Rate Loans was 4.625%. The Co-Borrowers are required to pay a commitment fee ranging from 0.125% to 0.250% per annum on the actual daily unused amount of commitments under the Credit Facility. At December 31, 2017, the commitment fee for unused capacity was 0.125%.
The Credit Facility contains customary representations and warranties as well as customary affirmative and negative covenants, including, among others, limitations on liens, indebtedness, fundamental changes, dispositions, restricted payments and investments, of which certain covenant calculations use EBITDA, a Non-GAAP financial measure. Under the terms of the Credit Facility, Premier GP is not permitted to allow its consolidated total leverage ratio (as defined in the Credit Facility) to exceed 3.00 to 1.00 for any period of four consecutive quarters. In addition, Premier GP must maintain a minimum consolidated interest coverage ratio (as defined in the Credit Facility) of 3.00 to 1.00 at the end of every fiscal quarter. Premier GP was We were in compliance with all such covenants at December 31, 2017.
The Credit Facility also contains customary events of default including, among others, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults of any indebtedness or guarantees in excess of $30.0 million, bankruptcy and other insolvency events, judgment defaults in excess of $30.0 million, and the occurrence of a change of control (as defined in the Credit Facility). If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request, of the required lenders, terminate the commitments and declare all of the amounts owed under the Credit Facility to be immediately due and payable. The Company may prepay amounts outstanding under the Credit Facility without premium or penalty provided that Co-Borrowers compensate the lenders for losses and expenses incurred as a result of the prepayment of any Eurodollar Loan, as defined in the Credit Facility.2023.
Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, discretionary cash settlements of Class B unit exchanges under the Exchange Agreement, repurchases of shares of our Class A common stock pursuant to our stock repurchase program,programs, in place from time to time, dividend payments, if and when declared, and other general corporate activities. During the six months endedAt December 31, 2017, the Company repaid $50.0 million of borrowings and borrowed an additional $30.0 million under the Credit Facility. Borrowings due within one year of the balance sheet date are classified as current liabilities in the Condensed Consolidated Balance Sheets. The Company2023, we had no outstanding borrowings under the Credit Facility with $995.0 million of $200.0 million at December 31, 2017. They may be renewed or extended at the optionavailable borrowing capacity after reductions for outstanding borrowings and outstanding letters of the Company through the maturity date of the Credit Facility. credit.
The above summary does not purport to be complete, and is subject to, and qualified in its entirety by reference to, the complete text of the Credit Facility, as amended, which is filed as an exhibitExhibit 10.19 to the 20172023 Annual Report. See also Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements.
Notes Payable to Former Limited Partners
At December 31, 2023, $154.0 million remains to be paid without interest in oursix equal quarterly installments to former limited partners that elected to execute Unit Exchange Agreements ending with the quarter ended June 30, 2025. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements in Part Ifor further information.
Other Notes Payable
At December 31, 2023, we had commitments of this Quarterly Report.


Member-Owner TRA
The Company entered into TRAs with each$1.0 million for other obligations under notes payable. Other notes payable have stated maturities between three to five years from the date of our member owners. Pursuantissuance and are non-interest bearing. See Note 8 - Debt and Notes Payable to the TRAs,accompanying condensed consolidated financial statements for further information.
Sale of Non-Healthcare GPO Member Contracts
At December 31, 2023, we had commitments of $615.2 million, net of imputed interest of $87.5 million, for the sale of future revenues due to OMNIA in connection to the sale of non-healthcare GPO member contracts. The liability will pay member owners 85% of the tax savings, if any,be paid, without interest, in U.S. federal, foreign, state and local income and franchise tax that we actually realize (or are deemed to realize, in the case ofmonthly payments required to be made upon certain occurrences under such TRAs)from net administrative fees received in connection with the Section 754 election. The election results in adjustmentssold contracts commencing during the first quarter of fiscal year 2024 and continuing for at least 10 years. See Note 9 - Liability Related to the tax basisSale of Future Revenues to the assetsaccompanying condensed consolidated financial statements for further information.
Cash Dividends
In each of Premier LP upon member owner exchangesSeptember 2023 and December 2023, we paid a cash dividend of Class B common units$0.21 per share on outstanding shares of Premier LP for Class A common stockstock. On January 25, 2024, our Board of Premier, Inc.Directors declared a quarterly cash dividend of $0.21 per share, payable on March 15, 2024 to stockholders of record on March 1, 2024.
We currently expect quarterly dividends to continue to be paid on or cash. Tax savings are generatedabout December 15, March 15, June 15 and September 15, respectively. However, the actual declaration of any future cash dividends, and the setting of record and payment dates as a resultwell as the per share amounts, will be at the discretion of our Board of Directors each quarter after consideration of various factors, including our results of operations, financial condition and capital requirements, earnings, general business conditions, restrictions imposed by our current Credit Facility and any future financing arrangements, legal restrictions on the increases in tax basis resulting from the initial salepayment of Class B common units, subsequent exchanges (pursuant to the Exchange Agreement)dividends and payments under the TRA.other factors our Board of Directors deems relevant.
The Company had TRA liabilities of $247.2 million and $339.7 million at December 31, 2017 and June 30, 2017, respectively. The $92.5 million decrease was primarily attributable to the $177.2 million revaluation and remeasurement of TRA liabilities associated with the decrease in the U.S. federal corporate income tax rate as a result of the TCJA, partially offset by $62.2 million in increases in TRA liabilities in connection with the quarterly member owner exchanges that occurred during the period and $20.9 million associated with the revaluation and remeasurement of TRA liabilities due to a change in the allocation and realization of future anticipated payments.
StockShare Repurchase PlanAuthorization
On October 31, 2017, we announced thatFebruary 2, 2024, our Board of Directors authorized the repurchase of up to $200 million$1.0 billion of our outstanding Class A common stock as part of a balanced capital deployment strategy, such repurchases to be made from time to time in private or open market transactions atstock. On February 5, 2024, under the Company's discretion, in accordance with applicable federal securities laws. As of December 31, 2017, we had purchased approximately 2.6 million shares of Class A common stock at an average price of $28.96 per share for a total purchase price of approximately $74.7 million, of which $3.9 million relates to a forward purchase commitment included within accounts payable on our Condensed Consolidated Balance Sheets as a result of applying trade date accounting when recording the repurchase of such shares. As of December 31, 2017, we had approximately $125.3 million available under our share repurchase authorization, which expires June 30, 2018. Subsequentwe entered into an ASR Agreement with Bank of America to December 31, 2017 and asrepurchase an aggregate of February 2, 2018, we had purchased approximately 1.0$400.0 million additionalof shares of Class Aour common stock. Under the terms of the ASR Agreement, we will
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make a payment of $400.0 million to Bank of America and, by February 9, 2024, will receive initial deliveries of approximately $320.0 million in common stock at anbased on the closing price on February 7, 2024. The final number of shares of common stock to be repurchased and retired under the share repurchase transaction under the ASR Agreement (the “ASR Transaction”) will be determined on completion of the ASR Transaction and will generally be based on the volume-weighted average share price of $31.67 per share forthe common stock during the term of the ASR Transaction, less a total incremental purchase price of approximately $32.9 million, the amounts of which are not reflected in our condensed consolidated financial statements for the quarter ended December 31, 2017. The repurchase authorization may be suspended, delayed or discontinued at any time at the discretion of our Board of Directors.
Costs Associated with Exit or Disposal Activities
As part of our ongoing integration synergiesdiscount and effortssubject to realign resources for future growth areas, we are implementing certain personnel adjustments including a workforce reduction. On February 5, 2018, we communicated to our employees that these personnel adjustments impact approximately 75 positions (approximately 65 of which are relatedpursuant to the workforce reduction), or approximately 3%terms and conditions of total employees. We finalized and committed to this coursethe ASR Agreement. The final settlement of action on February 2, 2018. The workforce reduction is expected to result in pre-tax cash restructuring charges, primarily relating to severance and transition assistance, of approximately $5.2 million. Charges related to the workforce reduction, whichASR Transaction is expected to be substantially completed in February 2018, willthe first quarter of fiscal year 2025. At settlement, under certain circumstances, Bank of America may be expensedrequired to deliver additional shares of common stock to us, or, under certain circumstances, we may be required to make a cash payment or to deliver shares of our common stock to Bank of America.
Fiscal 2024 Developments
Impact of Inflation
While the U.S. inflation rate continues to decline from its peak in calendar year 2022, the U.S. economy is still experiencing elevated rates of inflation. We have continued to limit the impact of inflation on our members and believe that we maintain significantly lower inflation impacts across our diverse product portfolio than national levels. However, in certain areas of our business, there is still some level of risk and uncertainty for our members and other customers as labor costs, raw material costs and availability, rising interest rates and inflation continue to pressure supplier pricing as well as apply significant pressure on our margin.
We continue to evaluate the contributing factors, specifically logistics, raw materials and labor, that have led to adjustments to selling prices. We have seen logistics costs normalize as well as some reductions in the third quarter ending March 31, 2018.costs of specific raw materials compared to pre-pandemic levels; however, the cost of labor remains high. We are continuously working to manage price increases as market conditions change. The majorityimpact of employees impactedinflation on our aggregated product portfolio is partially mitigated by these personnel adjustments are fromcontract term price protection for a large portion of our Performance Services segment.portfolio, as well as price reductions in certain product categories such as pharmaceuticals. See Item 1A. “Risk Factors” in our 2023 Annual Report.
Furthermore, as the Federal Reserve seeks to further reduce inflation, market interest rates may continue to be elevated, increasing the cost of borrowing under our Credit Facility (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) as well as impacting our results of operations, financial condition and cash flows.
Geopolitical Tensions
Geopolitical tensions continue to affect the global economy and financial markets, as well as exacerbate ongoing economic challenges, including issues such as rising inflation, energy costs and global supply-chain disruption.
We continue to monitor the impacts of the geopolitical tensions on macroeconomic conditions and prepare for any implications they may have on member demand, our suppliers’ ability to deliver products, cybersecurity risks and our liquidity and access to capital. Refer to Item 1A. “Risk Factors” in our 2023 Annual Report as well as “Market and Industry Trends and Outlook” within Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report for further discussion.
Pandemics, Epidemics or Public Health Emergencies
The outbreak of the novel coronavirus (“COVID-19”) and the resulting global pandemic and the impact on the healthcare industry continues to impact our sales, operations and supply chains, our members and other customers and workforce and suppliers. While both the U.S. and the World Health Organization declared an end to the COVID-19 pandemic as a public health emergency in May 2023, the risks associated with a pandemic remains and the resulting impact on our business, results of operations, financial conditions and cash flows as well as the U.S. and global economies is uncertain and cannot be predicted at this time.
Refer to Item 1A. “Risk Factors” in our 2023 Annual Report as well as “Market and Industry Trends and Outlook” within Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report for further discussion of the material risks we face.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Interest Rate Risk.Risk
Our exposure to market risk relatedrelates primarily to the increase or decrease in the amount of any interest expense we must pay with respect to outstanding variable-rate debt instruments. At December 31, 2017,2023, we had $200.0 million inno outstanding borrowings under theour Credit Facility. Committed loans may be in the form of Eurodollar Rate Loans or Base Rate Loans (as defined in the Credit Facility) at our option. Eurodollar Rate Loans bear interest at the Eurodollar Rate (defined as the London Interbank Offer Rate, or LIBOR) plus the Applicable Rate (defined as a margin based on the Consolidated Total Leverage Ratio (as defined in the Credit Facility)). Base Rate Loans bear interest at the Base Rate (defined as the highest of the prime rate announced by the administrative agent, the federal funds effective rate plus 0.50% or the one-month LIBOR plus 1.0%) plus the Applicable Rate. The Applicable Rate ranges from 1.125% to 1.750% for Eurodollar Rate Loans and 0.125% to 0.750% for Base Rate Loans. At December 31, 2017, the interest rate for three-month Eurodollar Rate Loans was 2.815% and the interest rate for Base Rate Loans was 4.625%.
We invest our excess cash in a portfolio of individual cash equivalents. We do not currently hold and we have never held, any material derivative financial instruments. We do not expect changes in interest rates to have a material impact on our financial condition or results of operations.operations or financial position. We plan to ensure the safetymitigate default, market, and preservationinvestment risks of our invested funds by limiting default, market and investment risks. We plan to mitigate default risk by investing in low-risk securities.
Foreign Currency Risk.Risk
Substantially all of our financial transactions are conducted in U.S. dollars. We do not have significant foreign operations and, accordingly, do not believe we have only minimal market risk associated with foreign currencies.


Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act)Act of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC'sSEC’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.
As of December 31, 2023, the end of the period covered by this Quarterly Report, we carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon our evaluation, our chief executive officer and chief financial officer have concluded that due solely to the identification of a material weakness in our internal control over financial reporting as described in Part II, Item 9A of our 2017 Form 10-K that has not yet been fully remediated, our disclosure controls and procedures were not effective as of December 31, 2017.2023.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 20172023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, other than as described below under “Remediation Plan”.reporting.
Remediation Plan
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As disclosed in Part II, Item 9A of our 2017 Form 10-K, we identified a material weakness in our internal control over financial reporting related to the income tax accounting for complex, non-routine or infrequent transactions. Since that time, we have begun implementing a remediation plan to address this material weakness. The remediation plan consists of augmenting the Company’s accounting resources, training, and implementing a more formal review and documentation process around the income tax accounting for complex, non-routine or infrequent transactions that may arise from time to time. Management believes that this remediation plan will strengthen our overall internal control over financial reporting and specifically with respect to complex, non-routine or infrequent transactions. Management is continuing to assess the sufficiency and expected effectiveness of our remediation efforts, and we may take additional measures or modify our internal control over financial reporting for these types of transactions.
This material weakness will not be considered fully remediated until newly implemented remediation controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively. We expect these remedial actions to be effectively implemented during fiscal year 2018 in order to successfully remediate this material weakness by June 30, 2018. If these remedial measures are insufficient or not implemented effectively, or additional deficiencies arise, material misstatements may occur in the future. Among other things, any unremediated or additional material weaknesses could have the effects described in our 2017 Form 10-K, specifically under “Item 1A. Risk Factors - If we fail to maintain an effective system of integrated internal controls, we may not be able to report our financial results accurately, or we may determine that our prior financial statements are not reliable, which could have a material adverse effect on our business, financial condition and results of operations.”




PART II—II. OTHER INFORMATION
Item 1. Legal Proceedings
We participate inoperate businesses that are subject to substantial litigation. We are,litigation from time to time,time. We are periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include claims relating to commercial,contractual disputes, product liability, tort andor personal injury, employment, antitrust, intellectual property regulatory, or other commercial or regulatory matters. If current or future government regulations specifically those with respect to antitrust or healthcare laws, are interpreted or enforced in a manner adverse to us or our business, including without limitation those with respect to antitrust or healthcare laws, we may be subject to enforcement actions, penalties, damages and other material limitations on our business.
In the past,From time to time we have been named as a defendant in severalclass action antitrust lawsuits brought by suppliers or purchasers of medical products. Typically, these lawsuits have alleged the existence of a conspiracy among manufacturers of competing products, anddistributors and/or operators of GPOs, including us, to deny the plaintiff access to a market for its products.certain products, to raise the prices for products and/or limit the plaintiff’s choice of products to buy. We believe that we have at all times conducted our business affairs in an ethical and legally compliant manner and have successfully resolved all such actions. We mayNo assurance can be given that we will not be subjected to similar actions in the future and no assurance can be givenor that any such existing or future matters will be resolved in a manner satisfactory to us or which will not harm our business, financial condition or results of operations.
On March 4, 2022, a shareholder derivative complaint captioned City of Warren General Employees’ Retirement System v. Michael Alkire, et al., Case No. 2022-0207-JTL, purportedly brought on behalf of Premier, was filed in the Delaware Court of Chancery against our current and former Chief Executive Officers and certain current and former directors. We are named as a nominal defendant in the complaint. The lawsuit alleges that the named officers and directors breached their fiduciary duties and committed corporate waste by approving agreements between Premier and certain of the former LPs that provided for accelerated payments as consideration for the early termination of the TRA with such LPs. The complaint asserts that the aggregate early termination payment amounts of $473.5 million exceeded the alleged value of the tax assets underlying the TRA by approximately $225.0 million. The complaint seeks unspecified damages, costs and expenses, including attorney fees, and declaratory and other equitable relief. Since the lawsuit is purportedly brought on behalf of Premier, and we are only a nominal defendant, the alleged damages were allegedly suffered by us. We and the individual defendants deny the allegations in the complaint and intend to vigorously defend the litigation. In light of the fact that the lawsuit is in an early stage and the claims do not specify an amount of damages, we cannot predict the ultimate outcome of the suit.
Additional information relating to certain legal proceedings in which we are involved is included in Note 1514 - Commitments and Contingencies to the accompanying condensed consolidated financial statements, which information is incorporated herein by reference.
Item 1A. Risk Factors
During the quarter ended December 31, 2017,2023, there were no material changes to the risk factors disclosed in "Risk Factors"Item 1A. “Risk Factors” in the 20172023 Annual Report.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds5. Other Information
Purchases of Equity Securities
On October 31, 2017, we announced that our board of directors authorizedDuring the repurchase of up to $200 million of our outstanding Class A common stock, prior to June 30, 2018, as part of a balanced capital deployment strategy. Subject to compliance with applicable federal securities laws, repurchases are authorized to be made from time to time in open market transactions, privately negotiated transactions, or other transactions, including trades under a plan established in accordance with Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. All repurchases of our Class A common stock have been recorded as treasury shares. The following table summarizes information relating to repurchases made of our Class A common stock during the quarterthree months ended December 31, 2017.2023, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).
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PeriodTotal Number of Shares Purchased
Average Price Paid per Share ($) (1)
Total Number of Shares Purchased as Part of Publicly Announced Program
Approximate Dollar Value of Shares that May Yet be Purchased Under the Program (in millions)(2)
November 9 through November 30, 20171,201,100
$28.51
1,201,100
$166
December 1 through December 31, 20171,376,859
29.35
1,376,859
125
Total2,577,959
$28.96
2,577,959
$125
(1) Average price paid per share excludes fees and commissions.

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


Item 6. Exhibits
Exhibit No.Description
3.1
Exhibit No.Description
10.1
10.2
Transition Agreement and Release, dated October 9, 2017, by and between Durral R. Gilbert and Premier Healthcare Solutions, Inc. (Incorporated by reference to Exhibit 10.13.1 to our Current Report on Form 8-K filed on October 10, 2017)January 26, 2024).
31.110.1
10.2
31.1
31.2
32.1
32.2
101Sections of the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended December 31, 2017,2023, formatted in XBRL (eXtensibleiXBRL (Inline eXtensible Business Reporting Language), submitted in the following files:
101.INSInline XBRL Instance Document.*Document*
101.SCHInline XBRL Taxonomy Extension Schema Document.*
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document.*
101.LABInline XBRL Taxonomy Extension Label Linkbase Document.*
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document.*
104The cover page from the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended December 31, 2023, formatted in Inline XBRL (included in Exhibit 101).*
*    Filed herewith.
+    Indicates a management contract or compensatory plan or arrangement.
‡    Furnished herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.
PREMIER, INC.
Date:February 6, 2024By:PREMIER, INC.
Date:February 5, 2018By:/s/ Craig S. McKasson
Name:Name:Craig S. McKasson
Title:Title:Chief Administrative and Financial Officer and Senior Vice President
Signing onOn behalf of the registrant and as principal financial officer and principal accounting officer

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