UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________________________________________________________

FORM 10-Q

__________________________________________________________________________________________

(Mark One)



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

For the quarterly period ended March 31, ~~2019~~2020



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

For the transition period from to

Commission File Number 001-36092

__________________________________________________________________________________________

Premier, Inc.

(Exact name of registrant as specified in its charter)

___________________________________________________________________________________________



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

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

~~(704)~~ (704) 357-0022

(Registrant's telephone number, including area code)

__________________________________________________________________________________________



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

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. Yesx ☒ No o☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yesx ☒ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filer	x☒	Accelerated filer	o☐	Non-accelerated filer	o☐
Smaller reporting company	o☐	Emerging growth company	o☐	(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



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

☒

As of May ~~3, 2019,~~1, 2020, there were ~~61,826,774~~71,574,119 shares of the registrant's Class A common stock, par value $0.01 per share, and ~~64,548,044~~50,213,098 shares of the registrant's Class B common stock, par value $0.000001 per share, outstanding.

TABLE OF CONTENTS



		Page
PART I. FINANCIAL INFORMATION		76
Item 1.	Financial Statements	76
	Condensed Consolidated Balance Sheets as of March 31, ~~2019~~2020 and June 30, ~~2018~~2019 (Unaudited)	76
	Condensed Consolidated Statements of Income for the three and nine months ended March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)	98
	Condensed Consolidated Statements of Comprehensive Income for the three and nine months ended March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)	10
	Condensed Consolidated Statements of Stockholders' ~~Deficit~~Equity (Deficit) for the nine months ended March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)	11
	Condensed Consolidated Statements of Cash Flows for the nine months ended March 31, 2020 and 2019 ~~and 2018~~ (Unaudited)	13
	Notes to Condensed Consolidated Financial Statements (Unaudited)	15
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	4538
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7561
Item 4.	Controls and Procedures	7561
PART II. OTHER INFORMATION		7762
Item 1.	Legal Proceedings	7762
Item 1A.	Risk Factors	7762
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7764
Item 5.6.	~~Other Information~~Exhibits	77
~~Item 6.~~	~~Exhibits~~	7865
	Signatures	7966

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made in this Quarterly Report that are not statements of historical or current facts, such as those under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations," are "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" or "plans" to be uncertain and forward-looking. Forward-looking statements may include comments as to our beliefs and expectations regarding future events and trends affecting our business and are necessarily subject to uncertainties, many of which are outside our control. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:

the impact of the continuing financial and operational uncertainty due to the coronavirus ("COVID-19") pandemic, including its impact on the overall economy, our sales, operations and supply chains, our members, workforce and suppliers, and countries, and the interpretation and enforcement of current or future government regulations impacting suppliers' ability to bring drugs and devices to market as well as reimbursement to healthcare providers;

competition which could limit our ability to maintain or expand market share within our industry;

consolidation in the healthcare industry;

potential delays recognizing or increasing revenue if the sales cycle or implementation period takes longer than expected;

the terminability of member participation in our group purchasing organization ("GPO") programs with limited or no notice, or the failure of a significant number of members to renew their GPO participation agreements on substantially similar terms or at all;

the rate at which the markets for our ~~SaaS~~software as a service ("SaaS") informatics products and services develop;

the dependency of our members on payments from third-party payers;

our reliance on administrative fees that we receive from GPO suppliers;

our ability to maintain third-party provider and strategic alliances or enter into new alliances;

our ability to timely offer new and innovative products and services;

the portion of revenues we receive from our largest members;

risks and expenses related to future acquisition opportunities and integration of acquisitions;

financial and operational risks associated with investments in or loans to businesses that we do not control, particularly early stage companies;

potential litigation;

our reliance on Internet infrastructure, bandwidth providers, data center providers and other third parties and our own systems for providing services to our users;

data loss or corruption due to failures or errors in our systems and service disruptions at our data centers, or breaches or failures of our security measures;

the financial, operational and reputational consequences of cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our members or other third parties;

our ability to use, disclose, de-identify or license data and to integrate third-party technologies;

our use of "open source" software;

~~changes in pharmaceutical 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 pharmacy operations;

our dependency on contract manufacturing facilities located in various parts of the world;

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

adequate protection of our intellectual property and potential claims against our use of the intellectual property of third parties;

potential sales and use tax liability in certain jurisdictions;

changes in tax laws that materially impact our tax rate, income tax expense, cash flows or tax receivable agreement ("TRA") liabilities;

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 maturity;

fluctuation of our quarterly cash flows, revenues and results of operations;

changes and uncertainty in the political, economic or regulatory environment affecting healthcare organizations, including with respect to the status of the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010, collectively referred to as the "ACA";

our compliance with complex international, federal and state laws governing financial relationships among healthcare providers and the submission of false or fraudulent healthcare claims;

interpretation and enforcement of current or future antitrust laws and regulations;

compliance with complex federal and state privacy, security and breach notification laws;

compliance with current or future laws, rules or regulations adopted by the Food & Drug Administration ("FDA") applicable to our ~~current or acquired~~ software applications that may be considered medical devices;

~~compliance with, and potential changes to, extensive federal, state and local laws, regulations and procedures governing our integrated pharmacy operations;~~

~~risks inherent in the filling, packaging and distribution of pharmaceuticals, including the counseling required to be provided by our pharmacists for dispensing of products;~~

our holding company structure and dependence on distributions from Premier Healthcare Alliance, L.P. ("Premier LP");

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~~our ability to comply with the NASDAQ corporate governance ~~requirements due to~~guidelines triggered by the loss of our ~~status as a~~ "controlled company" ~~within the meaning of the NASDAQ rules and the impact of any loss of such exemption;~~status in a timely manner;

the terms of agreements between us and our member owners;

payments made under the TRAs to Premier LP's limited partners and our ability to realize the expected tax benefits related to the acquisition of Class B common units of Premier LP (the "Class B common units") from Premier LP's limited partners;

changes to Premier LP's allocation methods or examinations or changes in interpretation of applicable tax laws and regulations by various taxing authorities that may increase a tax-exempt limited partner's risk that some allocated income is unrelated business taxable income;

provisions in our certificate of incorporation and bylaws and the Amended and Restated Limited Partnership Agreement of Premier LP (as amended, the "LP Agreement") and provisions of Delaware law that discourage or prevent strategic transactions, including a takeover of us;

failure to maintain an effective system of internal controls over financial reporting or an inability to remediate any weaknesses identified and the related costs of remediation;

the number of shares of Class A common stock that will be eligible for sale ~~upon~~or exchange ~~of Class B common units of Premier LP~~ in the near future and the dilutive effect of such issuances;

our lack of ~~current plans to pay~~ cash dividends on our Class A common stock;

the timing and number of shares of Class A common stock ~~repurchased~~re-purchased by the Company, if any, pursuant to our current or any future Class A common stock repurchase program;

possible future issuances of common stock, preferred stock, limited partnership units or debt securities and the dilutive effect of such issuances; and

the risk factors discussed under the heading "Risk Factors" ~~in Item 1A of Part II herein and~~ under Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2018~~2019 (the ~~"2018~~"2019 Annual Report"), filed with the Securities and Exchange Commission ("SEC").

More information on potential factors that could affect our financial results is included from time to time in the "Cautionary Note Regarding Forward-Looking Statements," "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and

Results of 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/. 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.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PREMIER, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)


	March 31, 2019		June 30, 2018		March 31, 2020		June 30, 2019
Assets
Cash and cash equivalents	$	137,512	$	152,386	$	241,734	$	141,055
Accounts receivable (net of $3,716 and $1,841 allowance for doubtful accounts, respectively)	206,595		185,874
Accounts receivable (net of $1,125 and $739 allowance for doubtful accounts, respectively)					139,902		168,115
Contract assets	197,016		—		234,467		205,509
Inventory	64,775		66,139		48,522		51,032
Prepaid expenses and other current assets	28,593		23,325		87,746		23,765
Due from related parties	466		894
Current assets of discontinued operations					—		24,568
Total current assets	634,957		428,618		752,371		614,044
Property and equipment (net of $347,301 and $297,591 accumulated depreciation, respectively)	212,306		206,693
Intangible assets (net of $195,404 and $153,635 accumulated amortization, respectively)	303,966		322,115
Property and equipment (net of $431,633 and $359,235 accumulated depreciation, respectively)					203,512		205,108
Intangible assets (net of $233,888 and $197,858 accumulated amortization, respectively)					420,104		270,722
Goodwill	943,970		906,545		929,615		880,709
Deferred income tax assets	413,511		305,624		436,047		422,014
Deferred compensation plan assets	43,696		44,577		42,780		45,466
Investments in unconsolidated affiliates	98,642		94,053		120,642		99,636
Operating lease right-of-use assets					59,901		—
Other assets	33,125		3,991		98,097		31,868
Total assets	$	2,684,173	$	2,312,216	$	3,063,069	$	2,569,567

Liabilities, redeemable limited partners' capital and stockholders' deficit
Liabilities, redeemable limited partners' capital and stockholders' equity (deficit)
Accounts payable	$	68,708	$	60,130	$	62,304	$	54,540
Accrued expenses	108,042		64,257		67,289		82,476
Revenue share obligations	132,602		78,999		149,976		137,359
Limited partners' distribution payable	13,145		15,465		9,314		13,202
Accrued compensation and benefits	54,771		64,112		56,208		70,799
Deferred revenue	34,154		39,785		38,042		35,623
Current portion of tax receivable agreements	17,505		17,925		18,118		17,505
Current portion of long-term debt	152,046		100,250
Line of credit and current portion of long-term debt					254,745		27,608
Other liabilities	7,009		7,959		30,187		7,113
Current liabilities of discontinued operations					—		11,797
Total current liabilities	587,982		448,882		686,183		458,022
Long-term debt, less current portion	6,188		6,962		4,828		6,003
Tax receivable agreements, less current portion	323,863		237,176		276,739		326,607
Deferred compensation plan obligations	43,696		44,577		42,780		45,466
Deferred tax liabilities	20,479		17,569		13,140		4,766
Deferred consideration					112,917		—
Operating lease liabilities, less current portion					55,336		—
Other liabilities	63,681		63,704		71,265		67,683
Total liabilities	1,045,889		818,870		1,263,188		908,547

Redeemable limited partners' capital					1,658,419		2,523,270
Stockholders' equity (deficit):

March 31, 2019 June 30, 2018

Redeemable limited partners' capital 2,239,998
2,920,410
Stockholders' deficit:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 64,245,753 shares issued and 61,391,417 shares outstanding at March 31, 2019 and 57,530,733 shares issued and 52,761,177 shares outstanding at June 30, 2018 642
575
Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 64,983,232 and 80,335,701 shares issued and outstanding at March 31, 2019 and June 30, 2018, respectively —
—
Treasury stock, at cost; 2,854,336 and 4,769,556 shares, respectively (102,910 ) (150,058 )
Additional paid-in-capital —
—
Accumulated deficit (499,446 ) (1,277,581 )
Total stockholders' deficit (601,714 ) (1,427,064 )
Total liabilities, redeemable limited partners' capital and stockholders' deficit $ 2,684,173
$ 2,312,216



	March 31, 2020		June 30, 2019
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 71,070,617 shares issued and outstanding at March 31, 2020 and 64,357,305 shares issued and 61,938,157 shares outstanding at June 30, 2019	711		644
Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 50,715,564 and 64,548,044 shares issued and outstanding at March 31, 2020 and June 30, 2019, respectively	—		—
Treasury stock, at cost; 0 and 2,419,148 shares at March 31, 2020 and June 30, 2019, respectively	—		(87,220		)
Additional paid-in-capital	140,751		—
Accumulated deficit	—		(775,674		)
Total stockholders' equity (deficit)	141,462		(862,250		)
Total liabilities, redeemable limited partners' capital and stockholders' equity (deficit)	$	3,063,069	$	2,569,567

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)


													Three Months Ended						Nine Months Ended
	Three Months Ended March 31,						Nine Months Ended March 31,						March 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Net revenue:
Net administrative fees	$	164,534		$	161,612		$	492,229		$	471,946		$	174,049		$	164,534		$	518,566		$	492,229
Other services and support	95,937			97,492			282,656			274,357			99,591			95,111			270,929			279,734
Services	260,471			259,104			774,885			746,303			273,640			259,645			789,495			771,963
Products	162,404			166,234			471,393			480,997			61,183			41,568			167,344			129,441
Net revenue	422,875			425,338			1,246,278			1,227,300			334,823			301,213			956,839			901,404
Cost of revenue:
Services	46,545			47,037			133,106			141,228			49,007			46,545			143,965			133,107
Products	157,438			156,511			458,593			454,222			54,121			39,496			150,415			124,024
Cost of revenue	203,983			203,548			591,699			595,450			103,128			86,041			294,380			257,131
Gross profit	218,892			221,790			654,579			631,850			231,695			215,172			662,459			644,273
Other operating income:
Remeasurement of tax receivable agreement liabilities	—			—			—			177,174
Other operating income	—			—			—			177,174
Operating expenses:
Selling, general and administrative	118,503			109,007			334,485			331,948			115,289			113,336			315,311			320,198
Research and development	296			292			928			1,105			628			296			1,808			928
Amortization of purchased intangible assets	14,233			13,881			41,770			41,597			13,966			13,572			38,948			39,787
Operating expenses	133,032			123,180			377,183			374,650			129,883			127,204			356,067			360,913
Operating income	85,860			98,610			277,396			434,374			101,812			87,968			306,392			283,360
Equity in net income (loss) of unconsolidated affiliates	553			(4,939		)	4,687			570
Equity in net income of unconsolidated affiliates													4,442			553			11,038			4,687
Interest and investment loss, net	(1,081		)	(1,236		)	(2,628		)	(4,239		)	(9,966		)	(1,081		)	(9,849		)	(2,628		)
Loss on disposal of long-lived assets	(303		)	(5		)	(303		)	(1,725		)
(Loss) gain on FFF put and call rights													(13,906		)	(4,109		)	8,477			3,458
Other (expense) income	(135		)	(2,593		)	5,123			(14,486		)	(5,005		)	3,671			(1,996		)	1,362
Other (expense) income, net	(966		)	(8,773		)	6,879			(19,880		)	(24,435		)	(966		)	7,670			6,879
Income before income taxes	84,894			89,837			284,275			414,494			77,377			87,002			314,062			290,239
Income tax expense	11,092			13,288			23,689			257,560			4,165			11,737			78,336			25,791
Net income from continuing operations													73,212			75,265			235,726			264,448
Income (loss) from discontinued operations, net of tax													5			(1,463		)	1,009			(3,862		)
Net income	73,802			76,549			260,586			156,934			73,217			73,802			236,735			260,586
Net income from continuing operations attributable to noncontrolling interest													(35,055		)	(44,135		)	(132,189		)	(163,230		)
Net (income) loss from discontinued operations attributable to noncontrolling interest													(3		)	747			(480		)	2,098
Net income attributable to non-controlling interest in Premier LP	(43,388		)	(53,047		)	(161,132		)	(154,142		)	(35,058		)	(43,388		)	(132,669		)	(161,132		)
Adjustment of redeemable limited partners' capital to redemption amount	235,394			(127,039		)	178,910			511,301			302,569			235,394			516,725			178,910
Net income (loss) attributable to stockholders	$	265,808		$	(103,537	)	$	278,364		$	514,093
Net income attributable to stockholders													$	340,728		$	265,808		$	620,791		$	278,364

Weighted average shares outstanding:
Basic	62,020			53,529			58,346			53,885			69,451			62,020			65,582			58,346
Diluted	129,072			53,529			132,249			138,254			122,470			129,072			124,030			132,249

Earnings (loss) per share attributable to stockholders:
Basic	$	4.29		$	(1.93	)	$	4.77		$	9.54
Diluted	$	0.48		$	(1.93	)	$	1.68		$	0.79



	Three Months Ended					Nine Months Ended
	March 31,					March 31,
	2020		2019			2020		2019
Earnings per share attributable to stockholders:
Basic (loss) earnings per share:
Continuing operations	$	4.91	$	4.30		$	9.46	$	4.80
Discontinued operations	—		(0.01		)	0.01		(0.03		)
Basic earnings per share attributable to stockholders	$	4.91	$	4.29		$	9.47	$	4.77

Diluted (loss) earnings per share:
Continuing operations	$	0.54	$	0.49		$	1.66	$	1.71
Discontinued operations	—		(0.01		)	—		(0.03		)
Diluted earnings per share attributable to stockholders	$	0.54	$	0.48		$	1.66	$	1.68

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Comprehensive Income

(Unaudited)

(In thousands)


													Three Months Ended						Nine Months Ended
	Three Months Ended March 31,						Nine Months Ended March 31,						March 31,
	2019			2018			2019			2018			2020			2019			2020			2019
Net income	$	73,802		$	76,549		$	260,586		$	156,934		$	73,217		$	73,802		$	236,735		$	260,586
Less: comprehensive income attributable to non-controlling interest	(43,388		)	(53,047		)	(161,132		)	(154,142		)	(35,058		)	(43,388		)	(132,669		)	(161,132		)
Comprehensive income attributable to stockholders	$	30,414		$	23,502		$	99,454		$	2,792		$	38,159		$	30,414		$	104,066		$	99,454

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statement of Stockholders' ~~Deficit~~Equity (Deficit)

Nine Months Ended March 31, ~~2019~~2020

(Unaudited)

(In thousands)


	Class A Common Stock				Class B Common Stock				Treasury Stock					Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Deficit			Class A Common Stock				Class B Common Stock				Treasury Stock					Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
	Shares		Amount		Shares		Amount		Shares		Amount			Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Deficit			Shares		Amount		Shares		Amount		Shares		Amount			Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Equity (Deficit)
Balance at June 30, 2018	52,761		$	575	80,336		$	—	4,769		$	(150,058	)	$	—		$	(1,277,581	)	$	(1,427,064	)
Balance at July 1, 2018	52,761		575		80,336		—		4,769		(150,058		)	—			(1,277,581		)	(1,427,064		)
Balance at June 30, 2019																							61,938		$	644	64,548		$	—	2,419		$	(87,220	)	$	—		$	(775,674	)	$	(862,250	)
Balance at July 1, 2019																							61,938		644		64,548		—		2,419		(87,220		)	—			(775,674		)	(862,250		)
Impact of change in accounting principle	—		—		—		—		—		—			—			121,945			121,945			—		—		—		—		—		—			—			(899		)	(899		)
Adjusted balance at July 1, 2018	52,761		$	575	80,336		$	—	4,769		$	(150,058	)	$	—		$	(1,155,636	)	$	(1,305,119	)
Adjusted balance at July 1, 2019																							61,938		644		64,548		—		2,419		(87,220		)	—			(776,573		)	(863,149		)
Exchange of Class B units for Class A common stock by member owners	817		—		(817	)	—		(817	)	25,974			4,562			—			30,536			1,311		—		(1,311	)	—		(1,311	)	47,258			3,534			—			50,792
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation	—		—		—		—		—		—			373			—			373
Redemption of limited partners																							—		—		(782	)	—		—		—			—			—			—
Increase in additional paid-in capital related to departures and quarterly exchange by member owners, including associated TRA revaluation																							—		—		—		—		—		—			12,272			—			12,272
Issuance of Class A common stock under equity incentive plan	547		5		—		—		—		—			7,467			—			7,472			485		5		—		—		—		—			1,749			—			1,754
Treasury stock	(335	)	—		—		—		335		(12,313		)	—			—			(12,313		)	(1,055	)	—		—		—		1,055		(35,649		)	—			—			(35,649		)
Stock-based compensation expense	—		—		—		—		—		—			6,195			—			6,195			—		—		—		—		—		—			3,704			—			3,704
Repurchase of vested restricted units for employee tax-withholding	—		—		—		—		—		—			(6,948		)	—			(6,948		)	—		—		—		—		—		—			(8,311		)	—			(8,311		)
Net income	—		—		—		—		—		—			—			81,973			81,973			—		—		—		—		—		—			—			71,329			71,329
Net income attributable to non-controlling interest in Premier LP	—		—		—		—		—		—			—			(55,113		)	(55,113		)	—		—		—		—		—		—			—			(41,907		)	(41,907		)
Adjustment of redeemable limited partners' capital to redemption amount	—		—		—		—		—		—			(11,649		)	(696,544		)	(708,193		)	—		—		—		—		—		—			(12,948		)	707,257			694,309
Balance at September 30, 2018	53,790		$	580	79,519		$	—	4,287		$	(136,397	)	$	—		$	(1,825,320	)	$	(1,961,136	)
Balance at September 30, 2019																							62,679		$	649	62,455		$	—	2,163		$	(75,611	)	$	—		$	(39,894	)	$	(114,856	)
Exchange of Class B units for Class A common stock by member owners	9,807		55		(9,807	)	—		(4,287	)	136,397			304,892			—			441,344			6,873		19		(6,873	)	—		(5,031	)	164,810			59,117			—			223,946
Redemption of limited partners	—		—		(227	)	—		—		—			—			—			—
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation	—		—		—		—		—		—			14,379			—			14,379
Increase in additional paid-in capital related to departure and quarterly exchange by member owners, including associated TRA revaluation																							—		—		—		—		—		—			1,103			—			1,103
Issuance of Class A common stock under equity incentive plan	187		3		—		—		—		—			4,648			—			4,651			146		1		—		—		—		—			4,243			—			4,244
Issuance of Class A common stock under employee stock purchase plan	38		—		—		—		—		—			1,488			—			1,488			40		—		—		—		—		—			1,540			—			1,540
Treasury stock	(2,535	)	—		—		—		2,535		(97,199		)	—			—			(97,199		)	(3,549	)	—		—		—		3,549		(112,917		)	—			—			(112,917		)
Stock-based compensation expense	—		—		—		—		—		—			7,716			—			7,716			—		—		—		—		—		—			7,775			—			7,775
Repurchase of vested restricted units for employee tax-withholding	—		—		—		—		—		—			(1,082		)	—			(1,082		)	—		—		—		—		—		—			(47		)	—			(47		)
Net income	—		—		—		—		—		—			—			104,811			104,811			—		—		—		—		—		—			—			92,189			92,189
Net income attributable to non-controlling interest in Premier LP	—		—		—		—		—		—			—			(62,631		)	(62,631		)	—		—		—		—		—		—			—			(55,704		)	(55,704		)
Adjustment of redeemable limited partner's capital to redemption amount	—		—		—		—		—		—			(332,041		)	983,750			651,709			—		—		—		—		—		—			(73,731		)	(406,422		)	(480,153		)
Balance at December 31, 2018	61,287		$	638	69,485		$	—	2,535		$	(97,199	)	$	—		$	(799,390	)	$	(895,951	)
Balance at December 31, 2019																							66,189		$	669	55,582		$	—	681		$	(23,718	)	$	—		$	(409,831	)	$	(432,880	)
Exchange of Class B units for Class A common stock by member owners	3,705		2		(3,705	)	—		(3,500	)	134,910			12,528			—			147,440			4,866		41		(4,866	)	—		(723	)	25,245			143,908			—			169,194
Redemption of limited partners	—		—		(797	)	—		—		—			—			—			—
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation	—		—		—		—		—		—			9,730			—			9,730
Increase in additional paid-in capital related to departure and quarterly exchange by member owners, including associated TRA revaluation																							—		—		—		—		—		—			58,193			—			58,193
Issuance of Class A common stock under equity incentive plan	218		2		—		—		—		—			5,189			—			5,191			58		1		—		—		—		—			308			—			309
Treasury stock	(3,819	)	—		—		—		3,819		(140,621		)	—			—			(140,621		)	(42	)	—		—		—		42		(1,527		)	—			—			(1,527		)
Stock-based compensation expense	—		—		—		—		—		—			6,781			—			6,781			—		—		—		—		—		—			7,568			—			7,568
Repurchase of vested restricted units for employee tax-withholding	—		—		—		—		—		—			(92		)	—			(92		)	—		—		—		—		—		—			(123		)	—			(123		)
Net income	—		—		—		—		—		—			—			73,802			73,802			—		—		—		—		—		—			—			73,217			73,217
Net income attributable to non-controlling interest in Premier LP	—		—		—		—		—		—			—			(43,388		)	(43,388		)	—		—		—		—		—		—			—			(35,058		)	(35,058		)
Adjustment of redeemable limited partner's capital to redemption amount	—		—		—		—		—		—			(34,136		)	269,530			235,394			—		—		—		—		—		—			(69,103		)	371,672			302,569
Balance at March 31, 2019	61,391		$	642	64,983		$	—	2,854		$	(102,910	)	$	—		$	(499,446	)	$	(601,714	)
Balance at March 31, 2020																							71,071		$	711	50,716		$	—	—		$	—		$	140,751		$	—		$	141,462

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statement of Stockholders' ~~Deficit~~Equity (Deficit)

Nine Months Ended March 31, ~~2018~~2019

(Unaudited)

(In thousands)


	Class A Common Stock				Class B Common Stock				Treasury Stock					Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Deficit			Class A Common Stock				Class B Common Stock				Treasury Stock					Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Deficit
	Shares		Amount		Shares		Amount		Shares		Amount			Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Deficit			Shares		Amount		Shares		Amount		Shares		Amount			Additional Paid-In Capital			Accumulated Deficit			Total Stockholders' Deficit
Balance at June 30, 2017	51,943		$	519	87,299		$	—	—		$	—		$	—		$	(1,662,772	)	$	(1,662,253	)
Balance at June 30, 2018																							52,761		$	575	80,336		$	—	4,769		$	(150,058	)	$	—		$	(1,277,581	)	$	(1,427,064	)
Balance at July 1, 2018																							52,761		575		80,336		—		4,769		(150,058		)	—			(1,277,581		)	(1,427,064		)
Impact of change in accounting principle																							—		—		—		—		—		—			—			121,945			121,945
Adjusted balance at July 1, 2018																							52,761		$	575	80,336		$	—	4,769		$	(150,058	)	$	—		$	(1,155,636	)	$	(1,305,119	)
Exchange of Class B units for Class A common stock by member owners	1,232		13		(1,232	)	—		—		—			42,963			—			42,976			817		—		(817	)	—		(817	)	25,974			4,562			—			30,536
Decrease in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation	—		—		—		—		—		—			(11,452		)	—			(11,452		)
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation																							—		—		—		—		—		—			373			—			373
Issuance of Class A common stock under equity incentive plan	383		4		—		—		—		—			2,648			—			2,652			547		5		—		—		—		—			7,467			—			7,472
Treasury stock																							(335	)	—		—		—		335		(12,313		)	—			—			(12,313		)
Stock-based compensation expense	—		—		—		—		—		—			8,815			—			8,815			—		—		—		—		—		—			6,195			—			6,195
Repurchase of vested restricted units for employee tax-withholding	—		—		—		—		—		—			(5,729		)	—			(5,729		)	—		—		—		—		—		—			(6,948		)	—			(6,948		)
Net income	—		—		—		—		—		—			—			60,616			60,616			—		—		—		—		—		—			—			81,973			81,973
Net income attributable to non-controlling interest in Premier LP	—		—		—		—		—		—			—			(44,610		)	(44,610		)	—		—		—		—		—		—			—			(55,113		)	(55,113		)
Adjustment of redeemable limited partners' capital to redemption amount	—		—		—		—		—		—			(37,245		)	357,669			320,424			—		—		—		—		—		—			(11,649		)	(696,544		)	(708,193		)
Balance at September 30, 2017	53,558		$	536	86,067		$	—	—		$	—		$	—		$	(1,289,097	)	$	(1,288,561	)
Balance at September 30, 2018																							53,790		$	580	79,519		$	—	4,287		$	(136,397	)	$	—		$	(1,825,320	)	$	(1,961,136	)
Exchange of Class B units for Class A common stock by member owners	3,651		37		(3,651	)	—		—		—			119,252			—			119,289			9,807		55		(9,807	)	—		(4,287	)	136,397			304,892			—			441,344
Redemption of limited partners	—		—		(133	)	—		—		—			—			—			—			—		—		(227	)	—		—		—			—			—			—
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation	—		—		—		—		—		—			2,783			—			2,783			—		—		—		—		—		—			14,379			—			14,379
Issuance of Class A common stock under equity incentive plan	7		—		—		—		—		—			156			—			156			187		3		—		—		—		—			4,648			—			4,651
Issuance of Class A common stock under employee stock purchase plan	48		—		—		—		—		—			1,388			—			1,388			38		—		—		—		—		—			1,488			—			1,488
Treasury stock	(2,578	)	—		—		—		2,578		(74,698		)	—			—			(74,698		)	(2,535	)	—		—		—		2,535		(97,199		)	—			—			(97,199		)
Stock-based compensation expense	—		—		—		—		—		—			8,884			—			8,884			—		—		—		—		—		—			7,716			—			7,716
Repurchase of vested restricted units for employee tax-withholding	—		—		—		—		—		—			(14		)	—			(14		)	—		—		—		—		—		—			(1,082		)	—			(1,082		)
Net income	—		—		—		—		—		—			—			19,769			19,769			—		—		—		—		—		—			—			104,811			104,811
Net income attributable to non-controlling interest in Premier LP	—		—		—		—		—		—			—			(56,485		)	(56,485		)	—		—		—		—		—		—			—			(62,631		)	(62,631		)
Adjustment of redeemable limited partners' capital to redemption amount	—		—		—		—		—		—			(132,449		)	450,365			317,916
Balance at December 31, 2017	54,686		$	573	82,283		$	—	2,578		$	(74,698	)	$	—		$	(875,448	)	$	(949,573	)
Adjustment of redeemable limited partner's capital to redemption amount																							—		—		—		—		—		—			(332,041		)	983,750			651,709
Balance at December 31, 2018																							61,287		$	638	69,485		$	—	2,535		$	(97,199	)	$	—		$	(799,390	)	$	(895,951	)
Exchange of Class B units for Class A common stock by member owners	1,006		—		(1,006	)	—		(1,006	)	29,855			2,804			—			32,659			3,705		2		(3,705	)	—		(3,500	)	134,910			12,528			—			147,440
Redemption of limited partners	—		—		(299	)	—		—		—			—			—			—			—		—		(797	)	—		—		—			—			—			—
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation	—		—		—		—		—		—			2,753			—			2,753			—		—		—		—		—		—			9,730			—			9,730
Issuance of Class A common stock under equity incentive plan	89		1		—		—		—		—			806			—			807			218		2		—		—		—		—			5,189			—			5,191
Treasury stock	(3,840	)	—		—		—		3,840		(125,431		)	—			—			(125,431		)	(3,819	)	—		—		—		3,819		(140,621		)	—			—			(140,621		)
Stock-based compensation expense	—		—		—		—		—		—			7,231			—			7,231			—		—		—		—		—		—			6,781			—			6,781
Repurchase of vested restricted units for employee tax-withholding	—		—		—		—		—		—			(173		)	—			(173		)	—		—		—		—		—		—			(92		)	—			(92		)
Net income	—		—		—		—		—		—			—			76,549			76,549			—		—		—		—		—		—			—			73,802			73,802
Net income attributable to non-controlling interest in Premier LP	—		—		—		—		—		—			—			(53,047		)	(53,047		)	—		—		—		—		—		—			—			(43,388		)	(43,388		)
Adjustment of redeemable limited partners' capital to redemption amount	—		—		—		—		—		—			(13,421		)	(113,618		)	(127,039		)
Balance at March 31, 2018	51,941		$	574	80,978		$	—	5,412		$	(170,274	)	$	—		$	(965,564	)	$	(1,135,264	)
Adjustment of redeemable limited partner's capital to redemption amount																							—		—		—		—		—		—			(34,136		)	269,530			235,394
Balance at March 31, 2019																							61,391		$	642	64,983		$	—	2,854		$	(102,910	)	$	—		$	(499,446	)	$	(601,714	)

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)


	Nine Months Ended March 31,						Nine Months Ended March 31,
	2019			2018			2020			2019
Operating activities
Net income	$	260,586		$	156,934		$	236,735		$	260,586
Adjustments to reconcile net income to net cash provided by operating activities:
(Income) loss from discontinued operations, net of tax							(1,009		)	3,862
Depreciation and amortization	105,952			93,998			114,638			103,316
Equity in net income of unconsolidated affiliates	(4,687		)	(570		)	(11,038		)	(4,687		)
Deferred income taxes	7,747			243,550			60,394			9,849
Stock-based compensation	20,692			24,930			19,048			20,354
Remeasurement of tax receivable agreement liabilities	—			(177,174		)	(24,584		)	—
Loss on disposal of long-lived assets	303			1,725
(Gain) loss on FFF put and call rights	(3,458		)	18,674
Changes in operating assets and liabilities:
Accounts receivable, contract assets, prepaid expenses and other current assets	(56,886		)	(3,558		)
Other assets	(1,646		)	378
Inventories	1,364			(6,804		)
Accounts payable, accrued expenses, deferred revenue and other current liabilities	37,873			9,690
Long-term liabilities	(2,223		)	1,336
Impairment of held to maturity investments							8,500			—
Gain on FFF put and call rights							(8,477		)	(3,458		)
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, inventories, prepaid expenses and other assets							(95,953		)	(30,268		)
Contract assets							(28,909		)	(28,056		)
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities							(23,341		)	24,118
Other operating activities	2,519			6,625			2,078			1,018
Net cash provided by operating activities from continuing operations							248,082			356,634
Net cash provided by operating activities from discontinued operations							9,338			11,502
Net cash provided by operating activities	368,136			369,734			257,420			368,136
Investing activities
Purchases of property and equipment	(70,117		)	(65,260		)	(69,326		)	(69,906		)
Acquisition of Stanson Health, Inc., net of cash acquired	(50,854		)	—
Investments in convertible notes	(11,500		)	—
Acquisition of businesses, net of cash acquired							(96,346		)	(50,854		)
Investments in unconsolidated affiliates							(10,165		)	—
Proceeds from sale of assets							3,632			—
Other investing activities	86			—			251			(11,414		)
Net cash used in investing activities from continuing operations							(171,954		)	(132,174		)
Net cash used in investing activities from discontinued operations							—			(211		)
Net cash used in investing activities	(132,385		)	(65,260		)	(171,954		)	(132,385		)
Financing activities
Payments made on notes payable	—			(7,997		)	(2,046		)	—
Redemption of limited partner of Premier LP	256			—
Proceeds from credit facility	50,000			30,000			375,000			50,000
Payments on credit facility	—			(50,000		)	(150,000		)	—
Proceeds from exercise of stock options under equity incentive plan	17,314			3,615
Proceeds from issuance of Class A common stock under employee stock purchase plan	1,488			1,388
Repurchase of vested restricted units for employee tax-withholding	(8,122		)	(5,916		)
Distributions to limited partners of Premier LP	(44,746		)	(66,098		)	(39,590		)	(44,746		)
Payments to limited partners of Premier LP related to tax receivable agreements	(17,975		)	—			(17,425		)	(17,975		)
Repurchase of Class A common stock (held as treasury stock)	(248,840		)	(200,129		)	(150,093		)	(248,840		)
Earn-out liability payment to GNYHA Holdings	—			(16,662		)
Net cash used in financing activities	(250,625		)	(311,799		)
Net decrease in cash and cash equivalents	(14,874		)	(7,325		)
Other financing activities							(633		)	10,936
Net cash provided by (used in) financing activities							15,213			(250,625		)
Net increase (decrease) in cash and cash equivalents							100,679			(14,874		)
Cash and cash equivalents at beginning of year	152,386			156,735			141,055			152,386
Cash and cash equivalents at end of period	$	137,512		$	149,410		$	241,734		$	137,512

Nine Months Ended March 31,
2019 2018

Supplemental schedule of non-cash investing and financing activities:
Decrease in redeemable limited partners' capital for adjustment to fair value, with offsetting increase in additional paid-in-capital and accumulated deficit $ 178,910
$ 511,301
Reduction in redeemable limited partners' capital, with offsetting increases in common stock and additional paid-in capital related to quarterly exchanges by member owners $ 619,321
$ 194,924
Reduction in redeemable limited partners' capital for limited partners' distribution payable $ 42,426
$ 54,305
Distributions utilized to reduce subscriptions, notes, interest and accounts receivable from member owners $ 933
$ 1,478
Net increase in deferred tax assets related to quarterly exchanges by member owners and other adjustments $ 128,723
$ 82,244
Net increase in tax receivable agreement liabilities related to quarterly exchanges by member owners and other adjustments $ 104,241
$ 88,160
Net increase (decrease) in additional paid-in capital related to quarterly exchanges by member owners and other adjustments $ 24,482
$ (5,916 )
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 $ 1,293
$ —
Payable to member owners incurred upon repurchase of ownership interest $ 1,820
$ 942



	Nine Months Ended March 31,
	2020			2019
Supplemental schedule of non-cash investing and financing activities:
Decrease in redeemable limited partners' capital for adjustment to fair value, with offsetting increase in additional paid-in-capital and accumulated deficit	$	516,725		$	178,910
Decrease in redeemable limited partners' capital, with offsetting decrease in common stock and additional paid-in capital related to quarterly exchanges by member owners	443,931			619,321
Decrease in redeemable limited partners' capital for limited partners' distribution payable	35,701			42,426
Distributions utilized to reduce subscriptions, notes, interest and accounts receivable from member owners	209			933
Net increase in deferred tax assets related to departures and quarterly exchanges by member owners and other adjustments	63,958			128,723
Net (decrease) increase in tax receivable agreement liabilities related to departures and quarterly exchanges by member owners and other adjustments	(7,246		)	104,241
Net decrease in notes payable related to departures and quarterly exchanges by member owners and other adjustments	364			—
Net increase in additional paid-in capital related to departures and quarterly exchanges by member owners and other adjustments	71,568			24,482
Increase in treasury stock related to a payable as a result of applying trade date accounting when recording the repurchase of Class A common stock	—			1,293
Contingent consideration related to acquisition of business	26,481			—
Deferred consideration related to acquisition of business	118,320			—
Non-cash additions to property and equipment	5,000			—
Payable to member owners incurred upon repurchase of ownership interest	1,372			1,820

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(1) ORGANIZATION AND BASIS OF PRESENTATION

Organization

Premier, Inc. ("Premier" or the "Company") is a publicly-held, for-profit Delaware corporation owned by public stockholders and by hospitals, health systems and other healthcare organizations (such owners of Premier are referred to herein as "member owners") located in the United ~~States and by public stockholders.~~States. The Company is a holding company with no material business operations of its own. The Company's primary asset is its equity interest in its wholly-owned subsidiary Premier Services, LLC, a Delaware limited liability company ("Premier GP"). Premier GP is the sole general partner of Premier Healthcare Alliance, L.P. ("Premier LP"), a California limited partnership. The Company conducts substantially all of its business operations through Premier LP and its other consolidated subsidiaries. The Company, together with its subsidiaries and affiliates, is a leading healthcare performance improvement company that unites hospitals, health systems, physicians and other healthcare providers to improve and innovate in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry.

The Company's business model and solutions are designed to provide its members access to scale efficiencies, spread the cost of their development, provide actionable intelligence derived from anonymized data in the Company's data warehouse, mitigate the risk of innovation and disseminate best practices to help the Company's member organizations succeed in their transformation to higher quality and more cost-effective healthcare.

The Company, together with its subsidiaries and affiliates, delivers its integrated platform of solutions through ~~two~~2 business segments: Supply Chain Services and Performance Services. See Note 17 - Segments for further information related to the Company's reportable business segments. The Supply Chain Services segment includes one of the largest healthcare group purchasing organization ("GPO") programs in the United States and ~~integrated pharmacy and~~ direct sourcing activities. The Performance Services segment, through its development, integration and delivery of technology with wrap-around service offerings, includes one of the largest informatics and consulting services businesses in the United States focused on healthcare providers. ~~More specifically, the~~The Company's software as a service ("SaaS") informatics products utilize 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~~3 main categories of cost management, quality and safety, and value-based care. While leveraging these tools, the Company also combines its consulting services and technology-enabled performance improvement collaboratives to provide a more comprehensive and holistic customer value proposition and overall experience. The Performance Services segment also includes the Company's ~~government services and~~ insurance management services.

Acquisitions and Divestitures

Acquisition of Acurity and Nexera Assets

On February 28, 2020, the Company, through two newly formed consolidated subsidiaries, Prince A Purchaser, LLC ("PAP") and Prince N Purchaser, LLC ("PNP"), acquired substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc., both indirect wholly-owned subsidiaries of Greater New York Hospital Association ("GNYHA"), for an aggregate amount of $291.5 million, of which $166.1 million was paid at closing with borrowings under the Company's Credit Facility (as defined in Note 9 - Debt). Pursuant to the terms of the asset purchase agreement (as amended, the "Purchase Agreement"), an additional $120.0 million will be paid to the sellers in 4 equal annual installments of $30.0 million on or about June 30, 2021, 2022, 2023 and 2024. An additional $5.4 million is expected to be paid during the Company’s second fiscal quarter of 2021. In addition to the aggregate amount of $291.5 million, the Purchase Agreement provides a graduated earn-out opportunity to Acurity, Inc. of up to $30.0 million based upon the Company’s achievement of a range of member renewals on terms to be agreed to by the Company and GNYHA based on prevailing market conditions in December 2023.

After the closing of the transaction, PAP and PNP changed their names to Acurity, LLC ("Acurity") and Nexera, LLC ("Nexera"), respectively. Acurity is a regional group purchasing organization and has been a customer and strategic partner of the Company for more than 24 years. Nexera is a hospital financial improvement consulting firm which partners with healthcare organizations to improve hospital and health system performance, with a significant focus on supply chain enhancement and transformation. The Company reports the operations of Acurity and Nexera as part of its Supply Chain Services segment. See Note 3 - Business Acquisitions for further information.

Acquisition of Medpricer

On October 28, 2019, the Company, through its consolidated subsidiary, Premier Supply Chain Improvement, Inc. ("PSCI"), acquired all of the outstanding capital stock in Medpricer.com, Inc. ("Medpricer") for an adjusted purchase price of $38.5 million

with borrowings under the Credit Facility. Medpricer is a SaaS-based provider of technology solutions that enable hospitals and other organizations to analyze, benchmark and source purchased services contracts independent of any existing GPO affiliation. Medpricer is reported as part of the Supply Chain Services segment. See Note 3 - Business Acquisitions for further information.

Acquisition of Stanson

On November 9, 2018, the Company, through its consolidated subsidiary Premier Healthcare Solutions, Inc. ("PHSI"), acquired all of the outstanding capital stock in Stanson Health, Inc. ("Stanson") through a reverse subsidiary merger transaction for an adjusted purchase price of $55.4 million in cash. Stanson is a SaaS-based provider of clinical decision support tools that are integrated directly into the electronic health record workflow to help provide real-time, patient-specific best practices at the point of care. Stanson is reported as part of the Performance Services segment. See Note 3 - Business Acquisitions for further information.

Divestiture of Specialty Pharmacy Business - Discontinued Operations

On June 7, 2019, the Company and its consolidated subsidiaries, NS3 Health, LLC, Commcare Pharmacy - FTL, LLC, and Acro Pharmaceutical Services LLC completed the sale of prescription files and records and certain other assets used in the Company's specialty pharmacy business to ProCare Pharmacy, L.L.C., an affiliate of CVS Health Corporation, for $22.3 million. The Company also received $7.6 million related to the sale of a portion of its pharmaceutical inventory on June 10, 2019, and an additional $3.6 million on July 24, 2019 primarily in connection with the sale of its remaining pharmaceutical inventory. In addition, during the nine months ended March 31, 2020, the Company substantially completed its wind down and exit from the specialty pharmacy business. See Note 4 - Discontinued Operations and Exit Activities for further information.

The Company met the criteria for classifying certain assets and liabilities of the specialty pharmacy business as a discontinued operation as of June 30, 2019. Accordingly, unless otherwise indicated, information in the notes to the condensed consolidated financial statements has been retrospectively adjusted to reflect continuing operations for all periods presented.

Company Structure

The Company, through Premier GP, held an approximate ~~49%~~58% and ~~40%~~49% sole general partner interest in Premier LP at March 31, ~~2019~~2020 and June 30, ~~2018,~~2019, respectively. In addition to their equity ownership interest in the Company, ~~our~~the member owners held an ~~aggregate of approximately~~approximate 42% and 51% ~~and 60%~~ limited partner interest in Premier LP at March 31, ~~2019~~2020 and June 30, ~~2018,~~2019, respectively. As a result of exchanges under an exchange agreement entered into by the member owners in connection with the completion of the Company's initial public offering on October 1, 2013 (the "Exchange Agreement"), as of July 31, 2019, the Class A common stock and Class B common stock represented approximately 50.2% and 49.8% respectively, of the Company's combined Class A and Class B common stock and accordingly, the Class B common stock held by member owners no longer represented the majority of the Company's outstanding common stock. On July 31, 2019, as a result of the Class B common unit exchange process, the Company no longer qualified for the "controlled company" exemption under NASDAQ rules and must comply with all general NASDAQ rules regarding board and committee composition by July 31, 2020. The Company expects to comply with all NASDAQ rules in a timely manner, including having a majority of independent directors on the Board of Directors by July 31, 2020.

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 March 31, ~~2019~~2020 and June 30, ~~2018,~~2019, the member owners owned ~~an aggregate of approximately~~42% and 51% ~~and 60%~~, respectively, of the Company's combined Class A and Class B common stock through their ownership of Class B common stock. During the nine months ended March 31, ~~2019,~~2020, the member owners exchanged ~~14.3~~13.1 million Class B common units and associated Class B common shares for an equal number of Class A common shares pursuant to ~~an exchange agreement (the "Exchange Agreement") entered into by~~ the ~~member owners in connection with the completion of our initial public offering on October 1, 2013.~~Exchange Agreement. The Exchange Agreement provides each member owner the cumulative right to exchange up to one-seventh of its initial allocation of Class B common units, as well as any additional Class B common units purchased by such member owner pursuant to certain rights of first refusal, for shares of Class A common stock (on a one-for-one basis subject to customary adjustments for subdivisions or combinations by split, reverse split, distribution, reclassification, recapitalization or otherwise), cash or a combination of both, the form of consideration to be at the discretion of the Company's independent Audit and Compliance Committee of the Board of Directors (the "Audit and Compliance Committee"). ~~In connection with Class B common units exchanged for Class A common~~

~~shares during~~During the nine months ended March 31, ~~2019, approximately 14.3~~2020, 13.1 million Class B common units were contributed to Premier LP, converted to Class A common units and remain outstanding. Correspondingly, ~~approximately 14.3~~13.1 million Class B common shares were retired during the same period. For further information, see Note ~~10 - Redeemable Limited Partners' Capital and Note~~ 12 - Earnings ~~(Loss)~~ Per Share.

Refer to the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2018 (the "2018 Annual Report") filed with the Securities and Exchange Commission ("SEC") on August 23, 2018 for further discussion of the Exchange Agreement.

At ~~both~~ March 31, ~~2019~~2020 and June 30, ~~2018,~~2019, 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 ~~an aggregate of approximately~~58% and 49% ~~and 40%~~, respectively, of the Company's outstanding common stock through their ownership of Class A common stock.

The Company has corrected prior period information within the current period financial statements related to a specific component used in calculating the tax effect on Premier, Inc. net income for purposes of diluted earnings (loss) per share. Diluted earnings (loss) per share for the nine months ended March 31, 2018 was previously stated at ($0.84) per share and has been corrected to $0.79 per share. The Company believes the correction is immaterial and the amount had no impact on the Company's overall financial condition, results of operations or cash flows.

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") for interim financial information and include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries over which the Company exercised control and when applicable, entities for which the Company had a controlling financial interest or was the primary beneficiary. All intercompany transactions have been eliminated upon consolidation. Accordingly, certain information and disclosures normally included in annual financial statements have been condensed or omitted. The accompanying condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, including normal recurring adjustments. The Company believes that the disclosures are adequate to make the information presented not misleading and should be read in conjunction with the audited consolidated financial statements and related footnotes contained in the ~~2018~~2019 Annual Report.

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 power and authority to manage the business and affairs of Premier LP, to make all decisions with respect to driving the economic performance of Premier LP, and 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 March 31, ~~2019~~2020 and June 30, ~~2018~~2019, including assets and liabilities of discontinued operations, consisted of the following (in thousands):



	March 31, 2020		June 30, 2019
Assets
Current	$	742,525	$	603,390
Noncurrent	1,874,662		1,536,685
Total assets of Premier LP	$	2,617,187	$	2,140,075

Liabilities
Current	$	753,763	$	517,616
Noncurrent	290,163		118,032
Total liabilities of Premier LP	$	1,043,926	$	635,648

March 31, 2019 June 30, 2018

New revenue standard ^(a)
Previous revenue standard
Assets
Current $ 621,146
$ 393,863
Noncurrent 1,635,703
1,577,974
Total assets of Premier LP $ 2,256,849
$ 1,971,837

Liabilities
Current $ 633,346
$ 457,172
Noncurrent 128,555
128,793
Total liabilities of Premier LP $ 761,901
$ 585,965


~~(a)~~	~~The Company adopted Topic 606 effective July 1, 2018, while comparative results are presented under Topic 605. Refer to Note 2 - Significant Accounting Policies for more information.~~

Net income attributable to Premier LP, including income and expense that has been classified as discontinued operations, during the three and nine months ended March 31, ~~2019~~2020 and ~~2018~~2019 was as follows (in thousands):

Three Months Ended March 31, Nine Months Ended March 31,
2019 2018 2019 2018

New revenue standard ^(a)
Previous revenue standard
New revenue standard ^(a)
Previous revenue standard
Premier LP net income $ 84,883
$ 87,920
$ 295,928
$ 255,050



	Three Months Ended				Nine Months Ended
	March 31,				March 31,
	2020		2019		2020		2019
Premier LP net income	$	84,185	$	84,883	$	290,430	$	295,928


~~(a)~~	~~The Company adopted Topic 606 effective July 1, 2018, while comparative results are presented under Topic 605. Refer to Note 2 - Significant Accounting Policies for more information.~~

Premier LP's cash flows, including cash flows attributable to discontinued operations, for the nine months ended March 31, ~~2019~~2020 and ~~2018~~2019 consisted of the following (in thousands):



	Nine Months Ended March 31,
	2020			2019
Net cash provided by (used in):
Operating activities	$	252,566		$	391,508
Investing activities	(171,954		)	(132,385		)
Financing activities	24,790			(251,440		)
Net increase in cash and cash equivalents	105,402			7,683
Cash and cash equivalents at beginning of year	131,210			117,741
Cash and cash equivalents at end of period	$	236,612		$	125,424

Nine Months Ended March 31,
2019 2018

New revenue standard ^(a)
Previous revenue standard
Net cash provided by (used in):
Operating activities $ 391,508
$ 388,340
Investing activities (132,385 ) (65,260 )
Financing activities (251,440 ) (344,463 )
Net increase (decrease) in cash and cash equivalents 7,683
(21,383 )
Cash and cash equivalents at beginning of year 117,741
133,450
Cash and cash equivalents at end of period $ 125,424
$ 112,067


~~(a)~~	~~The Company adopted Topic 606 effective July 1, 2018, while comparative results are presented under Topic 605. Refer to Note 2 - Significant Accounting Policies for more information.~~

Use of Estimates in the Preparation of Financial Statements

The preparation of the Company's condensed consolidated financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Significant estimates are evaluated on an ongoing basis, including estimates for net administrative fees revenue, other services and support revenue, contract assets, deferred revenue, contract costs, allowances for doubtful accounts, useful lives of property and equipment, stock-based compensation, payables under tax receivable agreements ("~~TRAs"~~TRA"), deferred tax balances including valuation allowances on deferred tax assets, uncertain tax positions, values of investments not publicly traded, projected future cash flows used in the evaluation of asset ~~impairment,~~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%. Concurrent with the enactment~~impact of the ~~TCJA,~~coronavirus ("COVID-19") pandemic on our business, results of operations, financial condition and cash flows is dependent on future developments, including the ~~SEC issued Staff Accounting Bulletin No. 118 ("SAB 118"), which provides guidance on accounting for the tax effects~~duration of the ~~TCJA.~~

~~SAB 118 provided a measurement period that should not extend beyond one year from~~pandemic and 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 effectsrelated length 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~~impact on the ~~basis of the provision of the tax laws that were in effect immediately prior to the enactment of the TCJA. With~~United States and global economies, which are uncertain and cannot be predicted at this ~~in mind, the Company prescribed provisional relief under SAB 118 through the one year measurement period to calculate components of~~

~~its deferred tax balances. During the second quarter of fiscal year 2019, the Company completed its accounting for all of the enactment date income tax effects of the TCJA.~~time.

(2) SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company's significant accounting policies ~~included within~~as described in the ~~2018~~2019 Annual Report, except as described below.

Recently Adopted Accounting Standards

In ~~January~~February 2016, the FASB issued ASU ~~2016-01,~~ ~~Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities~~No. 2016-02, Leases (Topic 842), ("ASU 2016-12"), which ~~is intended to provide users~~increases transparency and comparability by requiring the recognition of ~~financial statements with more useful information~~lease assets and lease liabilities on the ~~recognition, measurement, presentation, and~~balance sheet, as well as requiring the disclosure of ~~financial instruments.~~key information about leasing arrangements. The Company adopted ~~this standard effective~~ASU 2016-02 on July 1, ~~2018. The implementation of this ASU did not have~~2019 on a ~~material effect on the Company's condensed consolidated financial statements.~~

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~, which supersedes 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 allowed for either full retrospective or modified retrospective ~~adoption.~~

~~In August 2015,~~basis under the ~~FASB issued an amendment~~optional transition method; therefore, comparative periods are presented in ~~ASU 2015-14,~~ ~~Revenue from Contracts~~accordance with ~~Customers (Topic 606): Deferral~~Accounting Standards Codification ("ASC") Topic 840. Additionally, the Company elected the package of practical expedients permitted under the ~~Effective Date, to defer the effective date of~~transition guidance within the new standard, which allowed us to carry forward (1) historical lease classification and assessments for ~~all entities by one year.~~expired and existing leases, and (2) historical accounting for initial direct costs for existing leases. The new standard, as amended, is 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 is permitted.

~~In March 2016, the FASB issued another amendment in ASU 2016-08,~~ ~~Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations~~, 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 principalCompany elected not to recognize ~~revenue~~any operating lease right-of-use assets or operating lease liabilities for any lease whose term is 12 months or less and does not include a purchase option that the ~~gross amount and the agent~~Company is reasonably certain 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.~~exercise. The ~~new standard is 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 is 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 electCompany also elected to account for the ~~cost of shipping and handling performed after control of a good has been transferred to the customer~~non-lease components within its leases 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 is 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 anypart of the ~~new or previously existing optional exemptions~~single lease component to ~~expand their qualitative disclosures. The new standard also makes twelve other technical corrections and modifications to ASU 2014-09. The new standard is effective with ASU 2014-09.~~

~~The Company adopted this standard effective July 1, 2018 using the modified retrospective approach.~~which they are related. Refer to ~~the "Effects~~"Adoption of ASC Topic ~~606" below~~842" for ~~more~~additional information ~~related to~~on the impact of ~~this standard on~~ the ~~Company's significant accounting policies and condensed consolidated financial statements.~~adoption of ASC Topic 842.

Recently Issued Accounting Standards Not Yet Adopted

In August 2018, the FASB issued ASU 2018-15, Intangibles- Goodwill and Other- Internal Use Software (Topic 350): ~~Customer Account~~Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract,("ASU 2018-15"), which requires customers in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal use software guidance in ASC 350-40 to determine which implementation costs to capitalize ~~as assets~~ or expense as incurred. More specifically, capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The new standardexpense. ASU 2018-15 will be effective for the Company for the fiscal year beginning July 1, 2020. Early adoption is permitted including adoption in ~~any~~

interim periods. ~~Entities have the option to apply the guidance prospectively to all implementation costs incurred after the date of adoption or retrospectively.~~ The Company is currently evaluating the impact of the adoption of the new standard on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement, ("ASU 2018-13"), which improves the effectiveness of fair value measurement disclosures by eliminating, adding and modifying certain disclosure requirements for fair value measurements as part of its disclosure framework project. ~~More specifically, entities~~Entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. ~~The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The new standard~~ASU 2018-13 will be effective for the Company for the fiscal year beginning July 1, 2020. 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 2017,~~June 2016, the FASB issued ASU ~~2017-04,~~ ~~Intangibles - Goodwill and Other~~2016-13, Financial Instruments-Credit Losses (Topic ~~350)~~326): ~~Simplifying the Test for Goodwill Impairment~~Measurement of Credit Losses on Financial Instruments, (“ASU 2016-13”), which ~~eliminates Step 2 from~~modifies the ~~goodwill impairment test. The guidance requires an entity to perform its annual, or interim, goodwill impairment test by comparing~~measurement of expected credit losses on certain financial instruments and the ~~fair value~~timing of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit's fair value. In addition, the guidance eliminates the requirement for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The new standardwhen such losses are recorded. ASU 2016-13, 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~~has performed an initial analysis on the impact of the adoption of the new standard, and does not expect the adoption to have a material impact on its consolidated financial statements and ~~related disclosures.~~

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases (Topic 842), which is intended~~disclosures; however, we will continue 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 12 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 beginningevaluate through July 1, ~~2019. Early adoption is permitted. The Company is currently evaluating the impact~~2020.

Adoption of ~~the adoption of the new standard on its consolidated financial statements and related disclosures.~~

~~Effects of~~ASC Topic ~~606~~842

As a result of adopting ASC Topic ~~606,~~842, the Company's accounting policies and condensed consolidated financial statements were updated as follows:

~~Contract Assets~~

~~Supply Chain Services contract assets represent estimated customer purchases on supplier~~The Company enters into lease contracts ~~for which administrative fees have been earned, but not collected. Performance Services contract assets represent revenue earned for services provided but~~in which the Company is ~~not contractually able~~the lessee, substantially all of which are related to ~~bill as~~office space leased in various buildings used for general corporate purposes. The terms of ~~the end of the respective reporting period.~~

~~ContractCosts~~

~~Contract costs represent amounts~~these non-cancelable operating leases typically require the Company ~~has capitalized~~to pay rent and ~~reflect~~a share of operating expenses and real estate taxes, generally with an inflation-based rent increase included. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease right-of-use assets and operating lease liabilities are recognized based on the ~~incremental costs~~present value of ~~obtaining and fulfilling a contract, which include sales commissions and costs related to implementing SaaS informatics tools. For commissions on new contracts, these costs are amortized~~future minimum lease payments over the ~~life of~~lease term beginning at the ~~expected relationship with the customer~~commencement date. Operating lease right-of-use assets are adjusted for ~~the respective performance obligation. For renewals, commissions are amortized over the contract life with the customer. Implementation~~lease incentives, deferred rent and initial direct costs, are amortized straight-line, once the tool is implemented, over the life of the expected relationship with the customer for the respective performance obligation, which is consistent with the transfer of services to the customer to which the implementation relates.if incurred. The Company's contract costs are included in other assets on the Condensed Consolidated Balance Sheets, while the associated amortization related to sales commissions is included in selling, general and administrative expenses and the associated amortization related to implementation costs is included in cost of revenue in the Condensed Consolidated Statements of Income.

~~Deferred Revenue~~

Deferred revenue consists of unrecognized revenue related to advanced customer invoicing or member payments received prior to fulfillment of the Company's revenue recognition criteria. Substantially all deferred revenue consists of deferred subscription fees and deferred consulting fees. Subscription fees for Company-hosted SaaS applications are deferred until the customer's unique data records have been incorporated into the underlying software database, or until customer site-specific software has been implemented and the customer has access to the software. Deferred consulting fees arise upon invoicing to customers prior to services being performed.

~~Performance Obligations~~

A performance obligation is a promise to transfer a distinct good or service to a customer. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contracts may have a single performance obligation as the promise to transfer individual goods or services isleases generally do not ~~separately identifiable from other promises and,~~include an implicit rate; therefore, not distinct; while other contracts may have multiple performance obligations, most commonly due to the contract covering multiple deliverable arrangements (licensing fees, implementation fees, subscription fees, professional fees for consulting services, etc.).

~~Revenue Recognition~~

The Company accounts for a contract with a customer when the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection.

~~Revenue is recognized when, or as, control of a promised product or service transfers to a customer, in an amount that reflects the consideration to which~~ the Company ~~expects to be entitled in exchange for transferring those products or services. If~~determined the ~~consideration promised in a contract includes a variable amount, the Company estimates the amount to which it expects to be entitled~~present value of future minimum lease payments using either the expected value or most likely amount method. The Company's contracts may include terms that could cause variability in the transaction price, including, for example, revenue share, rebates, discounts, and variable fees based on performance.

The Company only includes estimated amounts of consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. These estimates require management to make complex, difficult or subjective judgments, and to make estimates about the effect of matters inherently uncertain. As such, the Company may not be able to reliably estimate variable fees based on performance in certain long-term arrangements due to uncertainties that are not expected to be resolved for a long period of time or when the Company's experience with similar types of contracts is limited. Estimates of variable consideration and the determination of whether to include estimated amounts of consideration in the transaction price arean incremental borrowing rate based on information ~~(historical, current and forecasted) that~~available as of July 1, 2019, the transition date. The related lease expense is reasonably available to the Company, taking into consideration the type of customer, the type of transaction and the specific facts and circumstances of each arrangement. Additionally, management performs periodic analyses to verify the accuracy of estimates for variable consideration.

Although the Company believes that its approach in developing estimates and reliance on certain judgments and underlying inputs is reasonable, actual results could differ which may result in exposure of increases or decreases in revenue that could be material.

~~Net Administrative Fees Revenue~~

Net administrative fees revenue is a single performance obligation earned through a series of distinct daily services and includes maintaining a network of members to participate in the group purchasing program and providing suppliers efficiency in contracting and access to the Company's members. Revenue is generated through administrative fees received from suppliers, which are

estimated based on the total dollar volume of goods and services purchased by the Company's members in connection with its GPO programs and is included in service revenue in the accompanying Condensed Consolidated Statements of Income.

The Company, through its GPO programs, aggregates member purchasing power to negotiate pricing discounts and improve contract terms with suppliers. Contracted suppliers pay the Company administrative fees which generally represent 1% to 3% of the gross purchase price of goods and services sold to members under the contracts the Company has negotiated. Administrative fees are variable consideration and are recognized as earned based upon estimated purchases by the Company's members utilizing the Company's GPO supplier contracts. The Company estimates revenue using an estimated value approach using predictive analytics based on historical member spend and updates for current trends and expectations. Member and supplier contracts substantiate persuasive evidence of an arrangement. The Company does not take title to the underlying equipment or products purchased by members through its GPO supplier contracts. Administrative fee revenue receivable is included in contract assets in the accompanying Condensed Consolidated Balance Sheet.

The Company pays revenue share equal to a percentage of gross administrative fees, which is estimated according to the members' contractual agreements with the Company using a portfolio approach based on historical revenue fee share percentages and adjusted for current or anticipated trends. Revenue share is recognized as a reduction to gross administrative fees revenue to arrive at a net administrative fees revenue, and the corresponding revenue share liability is included in revenue share obligations in the accompanying Condensed Consolidated Balance Sheets.

~~Product Revenue~~

Specialty pharmacy revenue is generated through a single performance obligation through dispensing prescription medication to customers. Revenue is recognized at a point in time as the prescription medication is dispensed to the customers and is recorded net of the estimated contractual adjustments under agreements with Medicare, Medicaid and other managed care plans. Consideration from specialty pharmacy is variable as payments for the products provided under such agreements vary from period to period and are based on defined allowable reimbursements rather than standard billing rates. The difference between the standard billing rate and allowable reimbursement rate results in contractual adjustments which are recorded as deductions from the transaction price.

Direct sourcing generates revenue through products sold to distributors, hospitals and other customers. Revenue is recognized once control of products has been transferred to the customer and is recorded net of discounts and rebates offered to customers. Discounts and rebates are estimated based on contractual terms and historical trends.

~~Other Services and Support Revenue~~

Within Performance Services, which provides technology with wrap-around service offerings, revenue consists of SaaS informatics products subscriptions, certain perpetual and term licenses, performance improvement collaborative and other service subscriptions, professional fees for consulting services, and insurance services management fees and commissions from group-sponsored insurance programs.

SaaS informatics subscriptions include the right to use the Company's proprietary hosted technology on a SaaS basis, training and member support to deliver improvements in cost management, quality and safety, value-based care and provider analytics. SaaS arrangements create a single performance obligation for each subscription within the contract in which the nature of the obligation is a stand-ready obligation, and each day of service meets the criteria for over time recognition. Pricing varies by application and size of healthcare system. Informatics subscriptions are generally three to five-year agreements with automatic renewal clauses and annual price escalators that typically do not allow for early termination. These agreements do not allow for physical possession of the software. Subscription fees are typically billed on a monthly basis and revenue is recognized as a single deliverable on a straight-line basis over the remaining contractual period following implementation. Implementation involves the completion of data preparation services that are unique to each member's data set and, in certain cases, the installation of member site-specific software, in order to access and transfer member data into the Company's hosted SaaS informatics products. Implementation is generally 60 to 240 days following contract execution before the SaaS informatics products can be fully utilized by the member.lease term.

The Company sells certain perpetual and term licenses that include professional services and post-contract customer support in the form of maintenance and support services. The license, professional services and maintenance services each represent a distinct promise and are identified as separate performance obligations. Pricing varies by application and size of healthcare system. Fees under these contracts include the license fees, professional services fees and the maintenance and support services fees. The Company recognizes the license fees upon delivery of the licenses, the professional services fees over the implementation period, and the maintenance and support services fees straight-line over the remaining contract term following implementation. Generally, implementation is approximately 240 days following contract execution before the products can be fully utilized by the member.

Revenue from performance improvement collaboratives and other service subscriptions that support the Company's offerings in cost management, quality and safety and value-based care is recognized over the service period as the services are provided, which is generally one year. Performance improvement collaboratives and other service subscriptions revenue is considered one performance obligation and is generated by providing customers access to online communities whereby data is housed and available for analytics and benchmarking.

Professional fees for consulting services are sold under contracts, the terms of which vary based on the nature of the engagement. These services typically include general consulting, report-based consulting and cost savings initiatives. Promised services under such consulting engagements are typically not considered distinct and are regularly combined and accounted for as one performance obligation. Fees are billed as stipulated in the contract, and revenue is recognized on a proportional performance method as services are performed or when deliverables are provided. In situations where the contracts have significant contract performance guarantees, the performance guarantees are estimated and accounted for as a form of variable consideration when determining the transaction price. In the event that guaranteed savings levels are not achieved, the Company may have to perform additional services at no additional charge in order to achieve the guaranteed savings or pay the difference between the savings that were guaranteed and the actual achieved savings. Occasionally, our entitlement to consideration is predicated on the occurrence of an event such as the delivery of a report for which client acceptance is required. However, except for event-driven point-in-time transactions, the majority of services provided within this service line are delivered over time due to the continuous benefit provided to our customers.

Consulting arrangements can require significant estimates for the transaction price and estimated number of hours within an engagement. These estimates are based on the expected value which is derived from outcomes from historical contracts that are similar in nature and forecasted amounts based on anticipated savings for the new agreements. The transaction price is generally constrained until the target transaction price becomes more certain.

Insurance services management fees are recognized in the period in which such services are provided. Commissions from group sponsored insurance programs is earned by acting as an intermediary in the placement of effective insurance policies. Under this arrangement, revenue is recognized at a point in time on the effective date of the associated policies when control of the policy transfers to the customer and is constrained for estimated early terminations.

Certain administrative and/or patient management integrated pharmacy services are provided in situations where prescriptions are sent back to member health systems for dispensing. Additionally, the Company derives revenue from pharmaceutical manufacturers for providing patient education and utilization data. Revenue is recognized as these services are provided.

~~Multiple Deliverable Arrangements~~

The Company enters into agreements where the individual deliverables discussed above, such as SaaS subscriptions and consulting services, are bundled into a single service arrangement. These agreements are generally provided over a time period ranging from approximately three months to five years after the applicable contract execution date. Revenue, including both fixed and variable consideration, is allocated to the individual performance obligations within the arrangement based on the standalone selling price when it is sold separately in a stand-alone arrangement.

~~Condensed Consolidated Financial Statements~~

The Company applied Topic 606 ("New Revenue Standard") using the modified retrospective method, which resulted in recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at July 1, 2018 for contracts that were not complete at that date. Therefore, the comparative information has not been adjusted and continues to be reported under Topic 605 ("Previous Revenue Standard"). The following tables summarize the impacts of adopting ASC Topic ~~606~~842 on the ~~Company's condensed consolidated financial statements for the three and nine months ended March 31, 2019~~Condensed Consolidated Balance Sheets (in ~~thousands, except per share data)~~thousands). See Note 616 - ~~Contract Balances~~Commitments and ~~Note 17 - Segments~~Contingencies for ~~more~~further information.

~~Cumulative Effect - Adoption of New Revenue Standard~~

The cumulative effect adjustment related to the adoption of the New Revenue Standard has been revised from the amounts previously disclosed in our interim financial statements filed on the Form 10-Q for the quarterly periods ended September 30, 2018 and December 31, 2018 to correct certain immaterial misstatements. The result of correcting these misstatements was a $5.3 million decrease to opening accumulated deficit, a $0.7 million decrease to contract assets and a $4.6 million increase to deferred revenue, recorded during the three months ended March 31, 2019.

Impact of change in accounting principle

June 30, 2018
As presented
Impact of new revenue standard
July 1, 2018
New revenue standard
Assets
Accounts receivable (net of $1,841 allowance for doubtful accounts) $ 185,874
$ (5,421 ) $ 180,453
Contract assets $ —
$ 168,960
$ 168,960
Total current assets $ 428,618
$ 163,539
$ 592,157
Deferred income tax assets $ 305,624
$ (7,106 ) $ 298,518
Other assets $ 3,991
$ 15,390
$ 19,381
Total assets $ 2,312,216
$ 171,823
$ 2,484,039

Liabilities, redeemable limited partners' capital and stockholders' deficit
Revenue share obligations $ 78,999
$ 43,880
$ 122,879
Deferred revenue $ 39,785
$ 2,401
$ 42,186
Total current liabilities $ 448,882
$ 46,281
$ 495,163
Deferred tax liabilities $ 17,569
$ 3,597
$ 21,166
Total liabilities $ 818,870
$ 49,878
$ 868,748

Accumulated deficit $ (1,277,581 ) $ 121,945
$ (1,155,636 )
Total stockholders' deficit $ (1,427,064 ) $ 121,945
$ (1,305,119 )
Total liabilities, redeemable limited partners' capital and stockholders' deficit $ 2,312,216
$ 171,823
$ 2,484,039



	June 30, 2019 As presented			Impact of ASC Topic 842			July 1, 2019 Adjusted
Intangible assets, net^(a)	$	270,722		$	(8,474	)	$	262,248
Deferred income tax assets	422,014			302			422,316
Operating lease right-of-use assets	—			62,642			62,642
Total assets	$	2,569,567		$	54,470		$	2,624,037

Other current liabilities	$	7,113		$	7,661		$	14,774
Current liabilities of discontinued operations	11,797			1,200			12,997
Operating lease liabilities	—			58,596			58,596
Other long-term liabilities	67,683			(12,088		)	55,595
Total liabilities	$	908,547		$	55,369		$	963,916

Accumulated deficit^(b)	$	(775,674	)	$	(899	)	$	(776,573	)
Total liabilities and equity	$	2,569,567		$	54,470		$	2,624,037


(a)	The Company reclassified a favorable lease commitment, which was recorded within intangible assets, net in the Consolidated Balance Sheets as of June 30, 2019, to operating lease right-of-use assets as part of the adoption of ASC Topic 842.


(b)	The Company recognized a non-cash impairment charge of $1.2 million ($0.9 million net of deferred tax impact), which was recorded as an adjustment to the opening balance of equity at July 1, 2019. The impairment charge was related to operating lease right-of-use assets of the specialty pharmacy business, which is classified as a discontinued operation.

(3) BUSINESS ACQUISITIONS

Acquisition of Acurity and Nexera Assets

On February 28, 2020, the Company completed the Acurity and Nexera asset acquisition (the "Acurity and Nexera asset acquisition"). Pursuant to the terms of the Purchase Agreement, the Company agreed to pay an aggregate amount of $291.5 million, of which $166.1 million was paid at closing with borrowings under the Credit Facility. An additional $120.0 million will be paid in 4 equal annual installments of $30.0 million on or about June 30, 2021, 2022, 2023 and 2024. An additional $5.4 million is expected to be paid to an affiliate of GNYHA during the Company’s second fiscal quarter of 2021.

The Purchase Agreement provides an earn-out opportunity for Acurity, Inc. of up to $30.0 million based upon the Company’s achievement of a range of member renewals on terms to be agreed to by the Company and GNYHA based on prevailing market conditions in December 2023. As of March 31, 2020, the fair value of the earn-out liability was $22.7 million (see Note 6 - Fair Value Measurements).

Prior to entering into the Purchase Agreement, Acurity, Inc. agreed to provide one-time rebates to certain of its then members based on their pre-closing purchasing volume. The Company has concluded that these one-time rebates of $93.8 million will be excluded from the purchase price and capitalized as prepaid contract administrative fee share at closing. The prepaid contract administrative fee share will be treated as a reduction in the determination of net administrative fee revenue over the remaining life of the acquired contracts on the Company’s financial statements. As a result, the total fair value of consideration paid as part of the acquisition totaled $202.6 million. The current and noncurrent components of the prepaid contract administrative fee share were recorded to the "Prepaid expenses and other current assets" and "Other assets" line items, respectively, on the Condensed Consolidated Balance ~~Sheet~~Sheets.

At the closing of the transaction, GNYHA Purchasing Alliance, LLC unilaterally terminated its participation in the TRA, and will cease to be a limited partner of Premier LP on November 2, 2020.

The Company has accounted for the Acurity and Nexera asset acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on fair values. Total fair value assigned to the intangible assets was $187.7 million, consisting primarily of acquired member relationships of $166.0 million. The initial purchase price allocation for the Acurity and Nexera asset acquisition is preliminary and subject to changes in the valuation of the assets acquired and liabilities assumed. The acquisition resulted in the recognition of $22.7 million of goodwill (see Note 8 - ~~Selected Financial Data~~Goodwill and Intangible Assets) attributable to the anticipated profitability of the acquired assets of Acurity, Inc. and Nexera, Inc. The acquisition was considered an asset acquisition for tax purposes, and accordingly, the Company expects the goodwill to be deductible for tax purposes. The initial purchase price allocation for the Acurity and Nexera asset acquisition is preliminary and subject to changes in fair value valuation of the assets acquired and the liabilities assumed.

Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to the Company's historic consolidated financial statements. After closing of the transaction, PAP and PNP changed their names to Acurity and Nexera, respectively, and the Company reports their operations as part of its Supply Chain Services segment.

Impact of change in accounting principle
March 31, 2019 As presented Impact of new revenue standard Previous revenue standard
Assets
Accounts receivable (net of $3,716 allowance for doubtful accounts) $ 206,595
$ (7,407 ) $ 214,002
Contract assets $ 197,016
$ 197,016
$ —
Prepaid expenses and other current assets $ 28,593
$ (4,873 ) $ 33,466
Total current assets $ 634,957
$ 184,736
$ 450,221
Deferred income tax assets $ 413,511
$ (6,152 ) $ 419,663
Other assets $ 33,125
$ 15,173
$ 17,952
Total assets $ 2,684,173
$ 193,757
$ 2,490,416

Liabilities, redeemable limited partners' capital and stockholders' deficit
Revenue share obligations $ 132,602
$ 50,342
$ 82,260
Limited partners' distribution payable $ 13,145
$ 5,013
$ 8,132
Deferred revenue $ 34,154
$ (11,279 ) $ 45,433
Total current liabilities $ 587,982
$ 44,076
$ 543,906
Deferred tax liabilities $ 20,479
$ 2,357
$ 18,122
Total liabilities $ 1,045,889
$ 46,433
$ 999,456

Accumulated deficit $ (499,446 ) $ 147,324
$ (646,770 )
Total stockholders' deficit $ (601,714 ) $ 147,324
$ (749,038 )
Total liabilities, redeemable limited partners' capital and stockholders' deficit $ 2,684,173
$ 193,757
$ 2,490,416
Acquisition of Medpricer

On October 28, 2019, the Company, through its consolidated subsidiary PSCI, acquired all of the outstanding capital stock in Medpricer for an adjusted purchase price of $38.5 million. The acquisition was funded with borrowings under the Credit Facility.

The acquisition provides the sellers an earn-out opportunity of up to $5.0 million based on Medpricer's achievement of a revenue target for the calendar year ended December 31, 2020. As of March 31, 2020, the fair value of the earn-out liability was $1.9 million (see Note 6 - Fair Value Measurements).

The Company has accounted for the Medpricer 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. Total fair value assigned to intangible assets acquired was $12.1 million, primarily comprised of developed software technology.

The Medpricer acquisition resulted in the recognition of $26.2 million of goodwill attributable to the anticipated profitability of Medpricer. The Medpricer acquisition was considered a stock purchase for tax purposes and accordingly, the goodwill is not deductible for tax purposes.

~~Condensed Consolidated Statements~~

Pro forma results of ~~Income - Selected Financial Data~~

Impact of change in accounting principle

Three Months Ended
March 31, 2019

Nine Months Ended
March 31, 2019
As presented Impact of new revenue standard Previous revenue standard As presented Impact of new revenue standard Previous revenue standard
Cost of revenue:
Services $ 46,545
$ (1,296 ) $ 47,841
$ 133,106
$ (5,842 ) $ 138,948
Products 157,438
(10,440 ) 167,878
458,593
(32,738 ) 491,331
Cost of revenue $ 203,983
$ (11,736 ) $ 215,719
$ 591,699
$ (38,580 ) $ 630,279
Gross profit $ 218,892
$ 1,909
$ 216,983
$ 654,579
$ 29,657
$ 624,922
Operating expenses:
Selling, general and administrative $ 118,503
$ (1,032 ) $ 119,535
$ 334,485
$ (3,413 ) $ 337,898
Operating expenses $ 133,032
$ (1,032 ) $ 134,064
$ 377,183
$ (3,413 ) $ 380,596
Operating income $ 85,860
$ 2,941
$ 82,919
$ 277,396
$ 33,070
$ 244,326
Income before income taxes $ 84,894
$ 2,941
$ 81,953
$ 284,275
$ 33,070
$ 251,205
Income tax expense $ 11,092
$ (1,239 ) $ 12,331
$ 23,689
$ 2,678
$ 21,011
Net income $ 73,802
$ 4,180
$ 69,622
$ 260,586
$ 30,392
$ 230,194
Net income attributable to non-controlling interest in Premier LP $ (43,388 ) $ (2,728 ) $ (40,660 ) $ (161,132 ) $ (19,314 ) $ (141,818 )
Adjustment of redeemable limited partners' capital to redemption amount $ 235,394
$ 1,681
$ 233,713
$ 178,910
$ 14,301
$ 164,609
Net income attributable to stockholders $ 265,808
$ 3,133
$ 262,675
$ 278,364
$ 25,379
$ 252,985

Weighted average shares outstanding:
Basic 62,020
62,020
62,020
58,346
58,346
58,346
Diluted 129,072
129,072
129,072
132,249
132,249
132,249

Impact of change in accounting principle

Three Months Ended
March 31, 2019

Nine Months Ended
March 31, 2019
As presented Impact of new revenue standard Previous revenue standard As presented Impact of new revenue standard Previous revenue standard
Earnings per share attributable to stockholders:
Basic $ 4.29
$ 0.05
$ 4.24
$ 4.77
$ 0.43
$ 4.34
Diluted $ 0.48
$ 0.04
$ 0.44
$ 1.68
$ 0.21
$ 1.47

~~Condensed Consolidated Statement~~operations for the acquisition have not been presented because the effects on revenue and net income were not material to the Company's historic consolidated financial statements. The Company reports Medpricer as part of ~~Comprehensive Income~~

Impact of change in accounting principle

Three Months Ended
March 31, 2019

Nine Months Ended
March 31, 2019
As presented Impact of new revenue standard Previous revenue standard As presented Impact of new revenue standard Previous revenue standard
Net income $ 73,802
$ 4,180
$ 69,622
$ 260,586
$ 30,392
$ 230,194
Less: Comprehensive income attributable to non-controlling interest (43,388 ) (2,728 ) (40,660 ) (161,132 ) (19,314 ) (141,818 )
Comprehensive income attributable to Premier, Inc. $ 30,414
$ 1,452
$ 28,962
$ 99,454
$ 11,078
$ 88,376

~~Condensed Consolidated Statement of Cash Flows - Selected Financial Data~~

Impact of change in accounting principle
Nine Months Ended March 31, 2019 As presented Impact of new revenue standard Previous revenue standard
Operating activities
Net income $ 260,586
$ 30,392
$ 230,194
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred income taxes $ 7,747
$ (2,196 ) $ 9,943
Changes in operating assets and liabilities:

Accounts receivable, contract assets, prepaid expenses and other current assets $ (56,886 ) $ (21,196 ) $ (35,690 )
Other assets $ (1,646 ) $ 218
$ (1,864 )
Accounts payable, accrued expenses, deferred revenue and other current liabilities $ 37,873
$ (7,218 ) $ 45,091
Net decrease in cash and cash equivalents $ (14,874 ) $ —
$ (14,874 )

~~(3) BUSINESS ACQUISITIONS~~its Supply Chain Services segment.

Acquisition of Stanson

Stanson Health, Inc. ("Stanson") is a SaaS-based provider of clinical decision support and prior authorization tools that are integrated directly into the electronic health record workflow, providing real-time, patient-specific best practices at the point of care. On November 9, 2018, the Company, through its consolidated subsidiary ~~Premier Healthcare Solutions, Inc. ("PHSI"),~~PHSI, acquired ~~100%~~all of the outstanding capital stock in Stanson through a reverse subsidiary merger transaction for ~~$51.5 million in cash. As a result of certain purchase price adjustments provided for in the purchase agreement, the~~an adjusted purchase price ~~was~~of $55.4 million. The acquisition was funded with ~~available~~ cash on hand.

The acquisition provides the sellers and certain employees an earn-out opportunity of up to $15.0 million based on Stanson's successful commercial delivery of a SaaS tool on or prior to March 31, 2020, achievement of certain development milestones on or prior to December 31, ~~2019~~2020 and achievement of ~~certain~~a revenue ~~milestones~~target for the calendar year ended December 31, 2020. As of March 31, ~~2019,~~2020, the fair value of the earn-out liability was ~~$6.2~~$10.3 million (see Note 56 - Fair Value Measurements).

The Company has accounted for the Stanson 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. Total fair value assigned to the intangible assets acquired was $23.6 million, primarily comprised of developed software technology. ~~The purchase price allocation for the Stanson acquisition is preliminary and subject to changes in the valuation of the assets acquired and the liabilities assumed.~~

The Stanson acquisition resulted in the recognition of ~~$37.4~~$37.5 million of goodwill (see Note 8 - ~~Goodwill)~~Goodwill and Intangible Assets) attributable to the anticipated profitability of Stanson. The Stanson acquisition was considered a stock purchase for tax purposes and accordingly, the ~~Company expects the~~ goodwill tois not be deductible for tax purposes.

Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to ~~our~~the Company's historic consolidated financial statements. The Company reports Stanson as part of its Performance Services segment.

(4) DISCONTINUED OPERATIONS AND EXIT ACTIVITIES

In connection with the sale of certain assets and wind down and exit from the specialty pharmacy business (see Note 1 - Organization and Basis of Presentation), the Company met the criteria for classifying certain assets and liabilities of its specialty pharmacy business as a discontinued operation as of June 30, 2019. Prior to its classification as a discontinued operation, the specialty pharmacy business was included as part of the Supply Chain Services segment.

The Company incurred $0.9 million of severance and retention expenses directly associated with the specialty pharmacy business within discontinued operations during the nine months ended March 31, 2020.

The following table summarizes the major classes of assets and liabilities classified as discontinued operations at March 31, 2020 and June 30, 2019 (in thousands):



	March 31, 2020		June 30, 2019
Assets
Accounts receivable	$	—	$	21,183
Inventory	—		3,385
Assets of discontinued operations	$	—	$	24,568

Liabilities
Accounts payable	$	—	$	2,255
Accrued expenses	—		6,630
Accrued compensation and benefits	—		2,373
Other current liabilities	—		539
Liabilities of discontinued operations	$	—	$	11,797

The following table summarizes the major components of net income (loss) from discontinued operations (in thousands):



	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2020			2019
Net revenue	$	—		$	121,662		$	—		$	344,873
Cost of revenue	—			117,942			—			334,567
Gross profit	—			3,720			—			10,306
Selling, general and administrative expense	—			5,167			—			14,286
Amortization of purchased intangible assets	—			661			—			1,984
Operating expenses	—			5,828			—			16,270
Operating loss from discontinued operations	—			(2,108		)	—			(5,964		)
Net gain on disposal of assets	24			—			1,399			—
Income (loss) from discontinued operations before income taxes	24			(2,108		)	1,399			(5,964		)
Income tax expense (benefit)	19			(645		)	390			(2,102		)
Income (loss) from discontinued operations, net of tax	5			(1,463		)	1,009			(3,862		)
Net (income) loss from discontinued operations attributable to non-controlling interest in Premier LP	(3		)	747			(480		)	2,098
Net income (loss) from discontinued operations attributable to stockholders	$	2		$	(716	)	$	529		$	(1,764	)

(5) INVESTMENTS

Investments in Unconsolidated Affiliates

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



	Carrying Value				Equity in Net Income
					Three Months Ended				Nine Months Ended
					March 31,				March 31,
	March 31, 2020		June 30, 2019		2020		2019		2020		2019
FFF	$	107,735	$	96,905	$	4,340	$	444	$	10,830	$	4,430
Other investments	12,907		2,731		102		109		208		257
Total investments	$	120,642	$	99,636	$	4,442	$	553	$	11,038	$	4,687

Carrying Value Equity in Net Income (Loss)
Three Months Ended March 31, Nine Months Ended March 31,
March 31, 2019 June 30, 2018 2019 2018 2019 2018
FFF $ 96,234
$ 91,804
$ 444
$ 64
$ 4,430
$ 5,668
PharmaPoint —
—
—
(4,073 ) —
(4,232 )
Other investments 2,408
2,249
109
(930 ) 257
(866 )
Total investments $ 98,642
$ 94,053
$ 553
$ (4,939 ) $ 4,687
$ 570

The Company, through ~~its consolidated subsidiary, Premier Supply Chain Improvement, Inc. ("PSCI"),~~PSCI, held a 49% interest in FFF Enterprises, Inc. ("FFF") through its ownership of stock of FFF at March 31, ~~2019~~2020 and June 30, ~~2018.~~2019. The Company records the fair value of the FFF put and call rights in the accompanying Condensed Consolidated Balance Sheets (see Note 56 - Fair Value Measurements for additional information). 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, held a 28% ownership interest in PharmaPoint, LLC ("PharmaPoint") through its ownership of Class B Membership Interests in PharmaPoint at March 31, 2019 and June 30, 2018. During the three months ended March 31, 2018, the Company determined that it was unlikely to recover its investment in PharmaPoint, and as a result recognized an other-than-temporary impairment of $4.0 million, which is included in equity in net income (loss) of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income. The Company accounts for its investment in PharmaPoint using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.

~~(5)~~

(6) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table provides a summary of the Company's financial assets and liabilities ~~which are~~ measured at fair value on a recurring basis at March 31, 2020 (in thousands):



	Fair Value of Financial Assets and Liabilities		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	188,101	$	188,101	$	—	$	—
Deferred compensation plan assets	45,697		45,697		—		—
Total assets	$	233,798	$	233,798	$	—	$	—
Earn-out liabilities	$	34,887	$	—	$	—	$	34,887
FFF put right	32,971		—		—		32,971
Total liabilities	$	67,858	$	—	$	—	$	67,858

Fair Value of Financial Assets and Liabilities Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs
(Level 3)
March 31, 2019
Cash equivalents $ 42,377
$ 42,377
$ —
$ —
FFF call right 328
—
—
328
Deferred compensation plan assets 48,367
48,367
—
—
Total assets $ 91,072
$ 90,744
$ —
$ 328
Earn-out liabilities $ 6,243
—
—
$ 6,243
FFF put right 38,299
—
—
38,299
Total liabilities $ 44,542
$ —
$ —
$ 44,542

June 30, 2018
Cash equivalents $ 62,684
$ 62,684
$ —
$ —
FFF call right 610
—
—
610
Deferred compensation plan assets 48,215
48,215
—
—
Total assets $ 111,509
$ 110,899
$ —
$ 610
FFF put right $ 42,041
$ —
$ —
$ 42,041
Total liabilities $ 42,041
$ —
$ —
$ 42,041
The following table provides a summary of the Company's financial assets and liabilities measured at fair value on a recurring basis at June 30, 2019 (in thousands):



	Fair Value of Financial Assets and Liabilities		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Cash equivalents	$	57,607	$	57,607	$	—	$	—
FFF call right	204		—		—		204
Deferred compensation plan assets	50,229		50,229		—		—
Total assets	$	108,040	$	107,836	$	—	$	204
Earn-out liability	$	6,816	$	—	$	—	$	6,816
FFF put right	41,652		—		—		41,652
Total liabilities	$	48,468	$	—	$	—	$	48,468

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 ($2.9 million and $4.8 million at March 31, 2020 and June 30, 2019, respectively) was included in ~~prepaid~~the "Prepaid expenses and other current ~~assets ($4.7 million and $3.6 million at March 31, 2019 and June 30, 2018, respectively)~~assets" line item in the accompanying Condensed Consolidated Balance Sheets.

Financial Instruments Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

FFF put and call rights

~~Pursuant to a shareholders' agreement entered into in~~In connection with the Company's equity investment in FFF, the Company entered into a shareholders' agreement on July 26, 2016, ~~(see Note 4 - Investments),~~ which ~~shareholders' agreement~~ was amended and restated on November 22, ~~2017,~~2017. On July 29, 2019, the parties entered into a second amended and restated shareholders' agreement that provides, among other things, that the majority shareholder of FFF ~~has~~holds a put right that requires the Company to purchase ~~(i) up to 50% of~~ the majority shareholder's interest in FFF, ~~which is exercisable beginning~~ on an all or nothing basis, on or after April 15, 2023. Any required purchase by the ~~fourth anniversary~~Company upon exercise of the ~~investment closing date, July 26, 2020, and (ii) all or a portion of the~~put right by FFF's majority ~~shareholder's remaining interest in FFF 30 calendar days after December 31, 2020. Any such required purchases are to~~shareholder must be made at a per share price equal to FFF's earnings before interest, taxes, depreciation 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, under the second amended and restated shareholders' agreement, the Company has a call right that requires the majority shareholder to sell its remaining interest in FFF to the Company, and is exercisable at any time within the later of 180 calendar days after the date of a Key Man Event (generally defined in the second amended and restated shareholders' agreement as the resignation, termination for cause, death or disability of the majority shareholder) or after January 30, 2021. As of March 31, 2020, the call right had 0 value. In the event that either of these rights are exercised, the purchase price for the additional interest in FFF will be at a per share price equal to the Equity Value per Share.

The fair values of the FFF put and call rights were determined based on the Equity Value per Share calculation using unobservable inputs, which included the estimated FFF put and call rights' expiration dates, the forecast 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.~~Sheets. Net changes in the fair values of the FFF put and call rights were recorded within other expense in the accompanying Condensed Consolidated Statements of ~~Income.~~Income.

Earn-out liabilities

Earn-out liabilities were established in connection with ~~acquisitions of Healthcare Insights, LLC on July 31, 2015, Inflow Health, LLC on October 1, 2015, Innovatix, LLC~~the Acurity and ~~Essensa Ventures, LLC, each on December 2, 2016~~Nexera asset acquisition as well as the Medpricer and Stanson ~~on November 9, 2018.~~acquisitions. The earn-out liabilities were classified as Level 3 of the fair value ~~hierarchy~~hierarchy. The earn-out liability value for the Acurity and ~~their~~Nexera asset acquisition is based upon the Company’s estimated achievement of a range of member renewals on terms to be agreed to by the Company and GNYHA based on prevailing market conditions in December 2023. The earn-out liability values for the Medpricer and Stanson acquisitions were determined based on estimated future earnings and the probability of achieving them. 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.~~Income.

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



	Beginning Balance		Purchases (Settlements)		Gain (Loss)			Ending Balance
Three Months Ended March 31, 2020
FFF call right	$	—	$	—	$	—		$	—
Total Level 3 assets	$	—	$	—	$	—		$	—
Earn-out liability	$	13,420	$	22,700	$	1,233		$	34,887
FFF put right	19,065		—		(13,906		)	32,971
Total Level 3 liabilities	$	32,485	$	22,700	$	(12,673	)	$	67,858

Three Months Ended March 31, 2019
FFF call right	$	431	$	—	$	(103	)	$	328
Total Level 3 assets	$	431	$	—	$	(103	)	$	328
Earn-out liabilities	$	4,548	$	—	$	(1,695	)	$	6,243
FFF put right	34,295		—		(4,004		)	38,299
Total Level 3 liabilities	$	38,843	$	—	$	(5,699	)	$	44,542

Nine Months Ended March 31, 2020
FFF call right	$	204	$	—	$	(204	)	$	—
Total Level 3 assets	$	204	$	—	$	(204	)	$	—
Earn-out liabilities	$	6,816	$	26,481	$	(1,590	)	$	34,887
FFF put right	41,652		—		8,681			32,971
Total Level 3 liabilities	$	48,468	$	26,481	$	7,091		$	67,858

Nine Months Ended March 31, 2019
FFF call right	$	610	$	—	$	(282	)	$	328
Total Level 3 assets	$	610	$	—	$	(282	)	$	328
Earn-out liabilities	$	—	$	4,548	$	(1,695	)	$	6,243
FFF put right	42,041		—		3,742			38,299
Total Level 3 liabilities	$	42,041	$	4,548	$	2,047		$	44,542

Beginning Balance Purchases (Settlements) Gain (Loss) Ending Balance
Three Months Ended March 31, 2019
FFF call right $ 431
$ —
$ (103 ) $ 328
Total Level 3 assets $ 431
$ —
$ (103 ) $ 328
Earn-out liabilities $ 4,548
$ —
$ (1,695 ) $ 6,243
FFF put right 34,295
—
(4,004 ) 38,299
Total Level 3 liabilities $ 38,843
$ —
$ (5,699 ) $ 44,542

Three Months Ended March 31, 2018
FFF call right $ 2,108
$ —
$ (1,356 ) $ 752
Total Level 3 assets $ 2,108
$ —
$ (1,356 ) $ 752
Earn-out liabilities $ 2,792
$ (2,625 ) $ 106
$ 61
FFF put right 37,110
—
(1,711 ) 38,821
Total Level 3 liabilities $ 39,902
$ (2,625 ) $ (1,605 ) $ 38,882

Nine Months Ended March 31, 2019
FFF call right $ 610
$ —
$ (282 ) $ 328
Total Level 3 assets $ 610
$ —
$ (282 ) $ 328
Earn-out liabilities $ —
$ 4,548
$ (1,695 ) $ 6,243
FFF put right 42,041
—
3,742
38,299
Total Level 3 liabilities $ 42,041
$ 4,548
$ 2,047
$ 44,542

Nine Months Ended March 31, 2018
FFF call right $ 4,655
$ —
$ (3,903 ) $ 752
Total Level 3 assets $ 4,655
$ —
$ (3,903 ) $ 752
Earn-out liabilities $ 21,310
$ (21,125 ) $ 124
$ 61
FFF put right 24,050
—
(14,771 ) 38,821
Total Level 3 liabilities $ 45,360
$ (21,125 ) $ (14,647 ) $ 38,882

Non-Recurring Fair Value Measurements

During the nine months ended March 31, ~~2019,~~2020, no non-recurring fair value measurements were required relating to the measurement of goodwill and intangible assets for impairment. However, purchase price allocations required significant non-recurring Level 3 inputs. The preliminary fair values of the acquired intangible assets resulting from the Acurity and Nexera asset acquisition as well as the acquisition of ~~Stanson~~Medpricer were determined using the income approach (see Note 3 - Business Acquisitions).

Financial Instruments For Which Fair Value Only is Disclosed

The fair values of non-interest bearing notes payable, classified as Level 2, were less than their carrying ~~values~~value by ~~approximately $0.6~~$0.3 million and $0.5 million at ~~both~~ March 31, ~~2019~~2020 and June 30, ~~2018~~2019, respectively, based on assumed market interest rates of ~~3.8%~~2.1% and ~~3.6%~~3.4%, respectively.

Other Financial Instruments

The fair values of cash, accounts receivable, accounts payable, accrued liabilities, and the ~~Company's~~ Credit Facility (as defined in Note 9 - Debt) approximated carrying value due to the short-term nature of these financial instruments.

~~(6)~~(7) CONTRACT BALANCES

~~Contract Assets,~~ Deferred Revenue ~~and Revenue Share Obligations~~

The timing of revenue recognition, billings and cash collections results in accounts receivables, contract assets (unbilled receivables) and deferred revenue on the Condensed Consolidated Balance Sheets. The $197.0 million increase in contract assets from June 30, 2018 to March 31, 2019 was largely attributable to the establishment of $169.0 million in contract assets upon adoption of the New Revenue Standard of which $141.5 million was for Supply Chain Services and $27.5 million was for Performance Services. Subsequent to adoption of the New Revenue Standard, Supply Chain Services contract assets increased an additional $18.8 million, which represents changes in the Company's estimated revenue for which cash has not yet been collected associated with net administrative fees for the current period. Performance Services contract assets increased $9.2 million primarily due to the acceleration of revenue recognition from licensing and certain consulting services contracts which represents performance obligations that have been satisfied prior to customer invoicing. Performance Services contract assets also increased due to the timing of payments related to certain cost management consulting services and performance-based engagements where revenue is recognized as work is performed.

The $53.6 million increase in revenue share obligation from June 30, 2018 to March 31, 2019 is largely a function of the aforementioned increases in contract assets and the underlying revenue share arrangements associated with the Company's GPO participation agreements.

Revenue recognized during the nine months ended March 31, ~~2019~~2020 that was included in the opening balance of deferred revenue at June 30, ~~2018~~2019 was ~~approximately $26.8~~$27.9 million, which is a result of satisfying performance obligations within the Performance Services segment.

Performance Obligations

A performance obligation is a promise to transfer a distinct good or service to a customer. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contracts may have a single performance obligation as the promise to transfer individual goods or services is not separately identifiable from other promises and, therefore, not distinct, while other contracts may have multiple performance obligations, most commonly due to the contract covering multiple phases or deliverable arrangements (licensing fees, implementation fees, maintenance and support fees, professional fees for consulting services), including certain performance guarantees.

~~Net~~Reduction in net revenue recognized during the three and nine months ended March 31, ~~2019~~2020 from performance obligations that were satisfied or partially satisfied ~~on or before December 31, 2018~~in prior periods was ~~$3.6 million.~~$0.1 million and $1.4 million, respectively. The reduction was driven by $3.8 million and $6.9 million, respectively, associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business. This was ~~driven primarily~~offset by $3.7 million and $5.5 million, respectively, of net administrative fees revenue related to under-forecasted cash receipts received in the current period.

Net revenue recognized during the three and nine months ended March 31, 2019 from performance obligations that were satisfied or partially satisfied ~~on or before June 30, 2018~~in prior periods was $3.6 million and $9.6 ~~million. This~~million, respectively. The net revenue recognized during the three and nine months ended March 31, 2019 was driven primarily by $3.8 million and $5.4 million, respectively, of net administrative fees revenue related to under-forecasted cash receipts received in the current period as well as a reduction of $0.2 million and an increase of $4.2 million, respectively, associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.

Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of March 31, ~~2019,~~2020, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~approximately $491.2~~$572.7 million. The Company expects to recognize approximately ~~50%~~41% of the remaining performance obligations over the next 12 months and an additional ~~25%~~28% over the following 12 months, with the remainder recognized thereafter.

~~Contract Costs~~

The Company is required to capitalize the incremental costs of obtaining and fulfilling a contract, which include sales commissions and costs associated with implementing SaaS informatics tools. At March 31, 2019, the Company had $15.2 million in capitalized

contract costs, including $9.0 million related to implementation costs and $6.2 million related to sales commissions. The Company had $1.4 million and $4.8 million of related amortization expense for the three and nine months ended March 31, 2019, respectively.

~~(7)~~

(8) GOODWILL AND INTANGIBLE ASSETS ~~NET~~

~~Intangible assets, net consisted of the following (in thousands):~~

Useful Life March 31, 2019 June 30, 2018
Member relationships 14.7 years $ 220,100
$ 220,100
Technology 5.7 years 164,217
142,317
Customer relationships 8.2 years 49,320
48,120
Trade names 8.3 years 22,910
22,710
Distribution network 10.0 years 22,400
22,400
Favorable lease commitments 10.1 years 11,393
11,393
Non-compete agreements 5.8 years 9,030
8,710
Total intangible assets 499,370
475,750
Accumulated amortization (195,404 ) (153,635 )
Intangible assets, net $ 303,966
$ 322,115

The increase in total intangible assets was due to the acquisition of Stanson in November 2018 (see Note 3 - Business Acquisitions). Intangible asset amortization totaled $14.2 million and $13.9 million for the three months ended March 31, 2019 and 2018, respectively, and $41.8 million and $41.6 million for the nine months ended March 31, 2019 and 2018, respectively.

~~(8) GOODWILL~~Goodwill

Goodwill consisted of the following (in thousands):



	Supply Chain Services		Performance Services		Total
June 30, 2019	$	336,973	$	543,736	$	880,709
Acquisition of businesses and assets	48,906		—		48,906
March 31, 2020	$	385,879	$	543,736	$	929,615

Supply Chain Services Performance Services Total
June 30, 2018 $ 400,348
$ 506,197
$ 906,545
Stanson —
37,425
37,425
March 31, 2019 $ 400,348
$ 543,622
$ 943,970

The initial purchase price allocations for the Company's Acurity and Nexera asset acquisition and the acquisition of ~~Stanson is~~Medpricer are preliminary and subject to changes in fair value of working capital and valuation of the assets acquired and the liabilities assumed. ~~The Company recorded Stanson acquisition adjustments during the three months ended March 31, 2019 which were related to working capital adjustments subsequent to the acquisition date.~~ See Note 3 - Business Acquisitions for more information.

Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):



	Weighted Average Useful Life as of March 31, 2020	March 31, 2020			June 30, 2019
Member relationships	14.8 years	$	386,100		$	220,100
Technology	5.6 years	169,217			164,217
Customer relationships	9.0 years	63,230			48,010
Trade names	7.6 years	23,870			16,060
Non-compete agreements	5.3 years	11,315			8,800
Favorable lease commitments	n/a	—			11,393
Other	6.0 years	260			—
Total intangible assets		653,992			468,580
Accumulated amortization		(233,888		)	(197,858		)
Total intangible assets, net		$	420,104		$	270,722

Total intangible assets increased due to the Acurity and Nexera asset acquisition and the acquisition of Medpricer (see Note 3 - Business Acquisitions). Intangible asset amortization was $14.0 million and $13.6 million for the three months ended March 31, 2020 and 2019, respectively, and $38.9 million and $39.8 million for the nine months ended March 31, 2020 and 2019, respectively.

(9) DEBT

Long-term debt consisted of the following (in thousands):



	March 31, 2020			June 30, 2019
Credit Facility	$	250,000		$	25,000
Notes payable	9,573			8,611
Total debt	259,573			33,611
Less: current portion	(254,745		)	(27,608		)
Total long-term debt	$	4,828		$	6,003

Commitment Amount Due Date March 31, 2019 June 30, 2018
Credit Facility $ 1,000,000
November 9, 2023 $ 150,000
$ 100,000
Notes payable —
Various 8,234
7,212
Total debt 158,234
107,212
Less: current portion (152,046 ) (100,250 )
Total long-term debt $ 6,188
$ 6,962

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 November 9, ~~2018.~~2018 (the "Credit Facility"). The Credit Facility has a maturity date of November 9, 2023, subject to up to ~~two~~2 one-year extensions at the request of the Co-Borrowers

and approval of a majority of the lenders under the Credit Facility. The Credit Facility provides for borrowings of up to $1.0 billion with (i) a $50.0 million sub-facility for standby letters of credit and (ii) a $100.0 million sub-facility for swingline loans. The Credit Facility also provides that Co-Borrowers may from time to time (i) incur incremental term loans and (ii) request an increase in the revolving commitments under the Credit Facility, together up to an aggregate of $350.0 million, subject to the approval of the lenders providing such term loans or revolving commitment increases. The Credit Facility includes an unconditional and irrevocable guaranty of all obligations under the Credit Facility by Premier GP, certain domestic subsidiaries of Premier GP and future guarantors, if any. Premier, Inc. is not a guarantor under the Credit Facility.

The Credit Facility replaced our then existing Credit Facility dated June 24, 2014 and amended as of June 4, 2015 (the "Prior Loan Agreement"). The Prior Loan Agreement included a $750.0 million unsecured revolving credit facility and was scheduled to mature on June 24, 2019. At the time of its termination, outstanding borrowings, accrued interest and fees and expenses under the Prior Loan Agreement totaled approximately $100.7 million, which was repaid with cash on hand andOutstanding borrowings under the ~~new~~ 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~~Facility bear interest on a variable rate structure with borrowings bearing interest at ~~the Eurodollar rate (defined as the~~either London Interbank Offered Rate or LIBOR, plus the Applicable Rate (defined as a margin based on the Consolidated Total Net Leverage Ratio (as defined in the Credit Facility))). Base Rate Loans bear interest at the Base Rate (defined as the highest of the prime rate announced by the administrative agent, the federal funds effective rate plus 0.50%, the one-month LIBOR plus 1.0% and 0.0%("LIBOR") plus ~~the Applicable Rate. The Applicable Rate ranges~~an applicable margin ranging from 1.000% to 1.500% ~~for Eurodollar Loans and~~or the prime lending rate plus an applicable margin ranging from 0.000% to 0.500% ~~for Base Rate Loans.~~. At March 31, ~~2019,~~2020, the interest rate ~~for one-month Eurodollar Loans was 3.495% and the interest rate for Base Rate Loans was 5.500%. The Co-Borrowers are required to pay a commitment fee ranging from 0.100% to 0.200% per annum~~ on ~~the actual daily unused amount of commitments~~outstanding borrowings under the Credit ~~Facility. At March 31, 2019, the commitment fee~~Facility was ~~0.100%~~1.96%.

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. Under the terms of the Credit Facility, Premier GP is not permitted to allow its consolidated total net leverage ratio (as defined in the Credit Facility) to exceed 3.75 to 1.00 for any period of four consecutive quarters, provided that, in connection with any acquisition for which the aggregate consideration exceeds $250.0 million, the maximum consolidated total net leverage ratio may be increased to 4.25 to 1.00 for the four consecutive fiscal quarters beginning with the quarter in which such acquisition is completed. In addition, Premier GP must maintain a minimum consolidated interest coverage ratio (as defined in the Credit Facility) of 2.50 to 1.00 at the end of every fiscal quarter.covenants. Premier GP was in compliance with all such covenants at March 31, ~~2019.~~

2020. The Credit Facility also contains customary events of default, including ~~among others, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults~~a cross-default of any indebtedness or guarantees in excess of $75.0 million, bankruptcy and other insolvency events, ERISA-related liabilities and judgment defaults in excess of $50.0 million, and the occurrence of a change of control (as defined in the Credit Facility).million. If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request of a majority of the lenders under the Credit Facility, terminate the commitments and declare all of the amounts owed under the Credit Facility to be immediately due and payable. The Company may prepay amounts outstanding under the Credit Facility without premium or penalty provided that Co-Borrowers compensate the lenders for losses and expenses incurred as a result of the prepayment of any Eurodollar Loan, as defined in the Credit Facility.

Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, discretionary cash settlements of Class B unit exchanges under the Exchange Agreement, repurchases of Class A common stock pursuant to stock repurchase programs, and other general corporate activities. During the nine months ended March 31, ~~2019,~~2020, the Company borrowed ~~$50.0~~$375.0 million and repaid $150.0 million of borrowings under the Credit Facility. The Company had $250.0 million in outstanding borrowings under the Credit Facility ~~of $150.0 million~~ at March 31, ~~2019.~~

In2020 with $750.0 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. On April ~~2019,~~27, 2020, the Company repaid ~~$50.0~~$150.0 million of outstanding borrowings under the Credit Facility.

Notes Payable

At March 31, ~~2019~~2020 and June 30, ~~2018,~~2019, the Company had ~~$8.2~~$9.6 million and ~~$7.2~~$8.6 million in notes payable, respectively, ~~consisting primarily of non-interest bearing notes payable outstanding to departed member owners,~~ of which ~~$2.0~~$4.8 million and ~~$0.2~~$2.6 million, respectively, were included in current portion of long-term debt ~~and $6.2 million and $7.0 million, respectively, were included in~~

~~long-term debt, less current portion,~~ in the accompanying Condensed Consolidated Balance ~~Sheets.~~Sheets. Notes payable do not bear interest and generally have stated maturities of five years from their date of issuance.

(10) REDEEMABLE LIMITED PARTNERS' CAPITAL

Redeemable limited partners' capital represents the member owners' ~~51%~~42% ownership of Premier LP through their ownership of Class B common units at March 31, ~~2019.~~2020. The member owners hold the majority of the votes of the Board of Directors and any redemption or transfer or choice of consideration cannot be assumed to be within the control of the Company. Therefore, redeemable limited partners' capital is recorded at the greater of the book value or redemption amount per the Amended and Restated Limited Partnership Agreement of Premier LP (as amended, the "LP Agreement"), and is calculated as the fair value of all Class B common units as if immediately exchangeable into Class A common shares. For the nine months ended March 31, ~~2019~~2020 and ~~2018,~~2019, the Company recorded ~~decreases~~adjustments to the fair value 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 amounts of ~~$178.9~~$516.7 million and ~~$511.3~~$178.9 million, respectively.

Redeemable limited partners' capital is classified as temporary equity in the mezzanine section of the accompanying Condensed Consolidated Balance Sheets as, pursuant to the LP Agreement, withdrawal is at the option of each member owner and the conditions of the repurchase are not solely within the Company's control.

The tables below provide a summary of the changes in the redeemable limited partners' capital from June 30, 2019 to March 31, 2020 and June 30, 2018 to March 31, 2019 ~~and June 30, 2017 to March 31, 2018~~ (in thousands):



	Receivables From Limited Partners			Redeemable Limited Partners' Capital			Total Redeemable Limited Partners' Capital
Balance at June 30, 2019	$	(1,204	)	$	2,524,474		$	2,523,270
Distributions applied to receivables from limited partners	69			—			69
Redemption of limited partners	—			(1,371		)	(1,371		)
Net income attributable to non-controlling interest in Premier LP	—			41,907			41,907
Distributions to limited partners	—			(13,699		)	(13,699		)
Exchange of Class B common units for Class A common stock by member owners	—			(50,792		)	(50,792		)
Adjustment of redeemable limited partners' capital to redemption amount	—			(694,309		)	(694,309		)
Balance at September 30, 2019	$	(1,135	)	$	1,806,210		$	1,805,075
Distributions applied to receivables from limited partners	70			—			70
Net income attributable to non-controlling interest in Premier LP	—			55,704			55,704
Distributions to limited partners	—			(12,689		)	(12,689		)
Exchange of Class B common units for Class A common stock by member owners	—			(223,946		)	(223,946		)
Adjustment of redeemable limited partners' capital to redemption amount	—			480,153			480,153
Balance at December 31, 2019	$	(1,065	)	$	2,105,432		$	2,104,367
Distributions applied to receivables from limited partners	71			—			71
Net income attributable to non-controlling interest in Premier LP	—			35,058			35,058
Distributions to limited partners	—			(9,314		)	(9,314		)
Exchange of Class B common units for Class A common stock by member owners	—			(169,194		)	(169,194		)
Adjustment of redeemable limited partners' capital to redemption amount	—			(302,569		)	(302,569		)
Balance at March 31, 2020	$	(994	)	$	1,659,413		$	1,658,419

Receivables From Limited Partners Redeemable Limited Partners' Capital Total Redeemable Limited Partners' Capital
June 30, 2018 $ (2,205 ) $ 2,922,615
$ 2,920,410
Distributions applied to receivables from limited partners 437
—
437
Net income attributable to non-controlling interest in Premier LP —
55,113
55,113
Distributions to limited partners —
(14,993 ) (14,993 )
Exchange of Class B common units for Class A common stock by member owners —
(30,536 ) (30,536 )
Adjustment of redeemable limited partners' capital to redemption amount —
708,193
708,193
September 30, 2018 $ (1,768 ) $ 3,640,392
$ 3,638,624
Distributions applied to receivables from limited partners 416
—
416
Redemption of limited partners —
(448 ) (448 )
Net income attributable to non-controlling interest in Premier LP —
62,631
62,631
Distributions to limited partners —
(14,288 ) (14,288 )
Exchange of Class B common units for Class A common stock by member owners —
(441,344 ) (441,344 )
Adjustment of redeemable limited partners' capital to redemption amount —
(651,709 ) (651,709 )
December 31, 2018 $ (1,352 ) $ 2,595,234
$ 2,593,882
Distributions applied to receivables from limited partners 80
—
80
Redemption of limited partners —
(1,372 ) (1,372 )
Net income attributable to non-controlling interest in Premier LP —
43,388
43,388
Distributions to limited partners —
(13,145 ) (13,145 )
Exchange of Class B common units for Class A common stock by member owners —
(147,441 ) (147,441 )
Adjustment of redeemable limited partners' capital to redemption amount —
(235,394 ) (235,394 )
March 31, 2019 $ (1,272 ) $ 2,241,270
$ 2,239,998



	Receivables From Limited Partners			Redeemable Limited Partners' Capital			Total Redeemable Limited Partners' Capital
Balance at June 30, 2018	$	(2,205	)	$	2,922,615		$	2,920,410
Distributions applied to receivables from limited partners	437			—			437
Net income attributable to non-controlling interest in Premier LP	—			55,113			55,113
Distributions to limited partners	—			(14,993		)	(14,993		)
Exchange of Class B common units for Class A common stock by member owners	—			(30,536		)	(30,536		)
Adjustment of redeemable limited partners' capital to redemption amount	—			708,193			708,193
Balance at September 30, 2018	$	(1,768	)	$	3,640,392		$	3,638,624
Distributions applied to receivables from limited partners	416			—			416
Redemption of limited partners	—			(448		)	(448		)
Net income attributable to non-controlling interest in Premier LP	—			62,631			62,631
Distributions to limited partners	—			(14,288		)	(14,288		)
Exchange of Class B common units for Class A common stock by member owners	—			(441,344		)	(441,344		)
Adjustment of redeemable limited partners' capital to redemption amount	—			(651,709		)	(651,709		)
Balance at December 31, 2018	$	(1,352	)	$	2,595,234		$	2,593,882
Distributions applied to receivables from limited partners	80			—			80
Redemption of limited partners	—			(1,372		)	(1,372		)
Net income attributable to non-controlling interest in Premier LP	—			43,388			43,388
Distributions to limited partners	—			(13,145		)	(13,145		)
Exchange of Class B common units for Class A common stock by member owners	—			(147,441		)	(147,441		)
Adjustment of redeemable limited partners' capital to redemption amount	—			(235,394		)	(235,394		)
Balance at March 31, 2019	$	(1,272	)	$	2,241,270		$	2,239,998

Receivables From Limited Partners Redeemable Limited Partners' Capital Total Redeemable Limited Partners' Capital
June 30, 2017 $ (4,177 ) $ 3,142,760
$ 3,138,583
Distributions applied to receivables from limited partners 492
—
492
Net income attributable to non-controlling interest in Premier LP —
44,610
44,610
Distributions to limited partners —
(20,752 ) (20,752 )
Exchange of Class B common units for Class A common stock by member owners —
(42,976 ) (42,976 )
Adjustment of redeemable limited partners' capital to redemption amount —
(320,424 ) (320,424 )
September 30, 2017 $ (3,685 ) $ 2,803,218
$ 2,799,533
Distributions applied to receivables from limited partners 492
—
492
Redemption of limited partners —
(269 ) (269 )
Net income attributable to non-controlling interest in Premier LP —
56,485
56,485
Distributions to limited partners —
(20,396 ) (20,396 )
Exchange of Class B common units for Class A common stock by member owners —
(119,289 ) (119,289 )
Adjustment of redeemable limited partners' capital to redemption amount —
(317,916 ) (317,916 )
December 31, 2017 $ (3,193 ) $ 2,401,833
$ 2,398,640
Distributions applied to receivables from limited partners 494
—
494
Redemption of limited partners —
(673 ) (673 )
Net income attributable to non-controlling interest in Premier LP —
53,047
53,047
Distributions to limited partners —
(13,157 ) (13,157 )
Exchange of Class B common units for Class A common stock by member owners —
(32,659 ) (32,659 )
Adjustment of redeemable limited partners' capital to redemption amount —
127,039
127,039
March 31, 2018 $ (2,699 ) $ 2,535,430
$ 2,532,731

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~~and 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 partners of Premier LP during the nine months ended March 31, ~~2019.~~2020.

During the nine months ended March 31, ~~2019, four~~2020, 3 limited partners withdrew from Premier LP. The limited partnership agreement provides ~~Premier LP with an option to redeem~~for the redemption of former limited partners' Class B common units that are not eligible for exchange, ~~upon payment of a specified redemption amount paid~~ in the form of a five-year, unsecured, non-interest bearing term promissory note, a cash payment equal to the present value of the redemption amount, or other mutually agreed upon terms. Partnership interest obligations to former limited partners are reflected in notes payable in the accompanying Condensed Consolidated Balance Sheets. Under the Exchange Agreement, Class B common units that are eligible for exchange by withdrawing limited partners must be exchanged in the subsequent quarter's exchange process.

Premier LP's distribution policy requires cash distributions as long as taxable income is generated and cash is available to distribute on a quarterly basis prior to the 60^th 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 or 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 23, 2018 $ 15,465
November 21, 2018 $ 14,993
February 21, 2019 $ 14,288



Date	Distribution ^(a)
August 22, 2019	$	13,202
November 27, 2019	$	13,699
February 20, 2020	$	12,689

(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 ~~$13.1~~$9.3 million quarterly distribution on or before May 29, ~~2019.~~2020. The distribution is reflected in limited partners' distribution payable in the accompanying Condensed Consolidated Balance Sheets at March 31, ~~2019.~~2020.

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.~~Committee of the Board of Directors. During the nine months ended March 31, ~~2019,~~2020, the Company recorded total reductions of ~~$619.3~~$443.9 million to redeemable limited partners' capital to reflect the exchange of ~~approximately 14.3~~13.1 million Class B common units and surrender and retirement of a corresponding number of shares of Class B common stock by member owners for a like number of shares of the Company's Class A common stock (see Note 12 - Earnings ~~(Loss)~~ 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 Exchange	Number of Class B Common Units Exchanged	Reduction in Redeemable Limited Partners' Capital
July 31, 2019	1,310,771	$	50,792
October 31, 2019	6,873,699	223,946
January 31, 2020	4,866,082	169,194
Total	13,050,552	$	443,932

Date of Quarterly Exchange Number of Class B Common Units Exchanged Reduction in Redeemable Limited Partners' Capital
July 31, 2018 816,468
$ 30,536
October 31, 2018 9,807,651
441,344
January 31, 2019 3,705,459
147,440
Total 14,329,578
$ 619,320

(11) STOCKHOLDERS' ~~DEFICIT~~EQUITY (DEFICIT)

As of March 31, ~~2019,~~2020, there were ~~61,391,417~~71,070,617 shares of the Company's Class A common stock, par value $0.01 per share, and ~~64,983,232~~50,715,564 shares of the Company's Class B common stock, par value $0.000001 per share, outstanding.

On May 7, ~~2018,~~2019, the ~~Company's~~Company announced that its Board of Directors ~~approved~~authorized the repurchase of up to ~~$250.0~~$300.0 million of ~~our~~the Company's Class A common stock during fiscal year ~~2019 as a continuation of our balanced capital deployment strategy.~~2020. As of March 31, ~~2019,~~2020, the Company ~~completed its stock repurchase program, through which approximately 6.7~~had purchased 4.6 million shares of Class A common stock ~~were purchased~~ at an average price of ~~$37.38~~$32.28 per share for a total purchase price of ~~approximately $250.0~~$150.0 million. The repurchase authorization may be suspended, delayed, or discontinued at any time at the discretion of the Company's Board of Directors. Repurchases are subject to compliance with applicable federal securities laws and the Company's management may, at its discretion, suspend, delay, or discontinue repurchases at any time, based on market conditions, alternate uses of capital, or other factors. The Company does not currently expect to make additional purchases of its Class A common stock under the repurchase program during the remainder of fiscal year 2020.

Holders of Class A common stock are entitled to (i) ~~one~~1 vote for each share held of record on all matters submitted to a vote of stockholders, (ii) receive dividends, when and if declared by the Board of Directors out of funds legally available, subject to any statutory or contractual restrictions on the payment of dividends and subject to any restrictions on the payment of dividends 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~~1 vote for each share held 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 terms of a voting trust agreement by and among the Company, Premier LP, the holders of Class B common stock and Wells Fargo Delaware Trust Company, N.A., as the trustee, 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.

(12) EARNINGS ~~(LOSS)~~ 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~~which is due to the exchange benefit obtained by limited partners through the ownership of Class B common units. Except when the effect would be anti-dilutive, the diluted earnings (loss) per share calculation, which is calculated using the treasury stock method, includes the impact of shares that could be issued under the outstanding stock options, non-vested restricted stock units and awards, shares of non-vested performance share awards and the effect of the assumed redemption of Class B common units through the issuance of Class A common shares.

The following table provides a reconciliation of the numerator and denominator used for basic and diluted (loss) earnings ~~(loss)~~ per share (in thousands, except per share amounts):

Three Months Ended March 31, Nine Months Ended March 31,
2019 2019 2018 2019 2019 2018
As presented
Previous revenue standard ^(a)
As presented
Previous revenue standard ^(a)
Numerator for basic earnings (loss) per share:
Net income (loss) attributable to stockholders $ 265,808
$ 262,675
$ (103,537 ) $ 278,364
$ 252,985
$ 514,093

Numerator for diluted earnings (loss) per share:
Net income (loss) attributable to stockholders $ 265,808
$ 262,675
$ (103,537 ) $ 278,364
$ 252,985
$ 514,093
Adjustment of redeemable limited partners' capital to redemption amount (235,394 ) (233,713 ) —
(178,910 ) (164,609 ) (511,301 )
Net income attributable to non-controlling interest in Premier LP 43,388
40,660
—
161,132
141,818
154,142
Net income (loss) 73,802
69,622
(103,537 ) 260,586
230,194
156,934
Tax effect on Premier, Inc. net income ^(b)
(11,762 ) (12,278 ) —
(38,503 ) (36,128 ) (47,951 )
Adjusted net income (loss) $ 62,040
$ 57,344
$ (103,537 ) $ 222,083
$ 194,066
$ 108,983

Denominator for basic earnings (loss) per share:
Weighted average shares ^(c)
62,020
62,020
53,529
58,346
58,346
53,885

Denominator for diluted earnings (loss) per share:
Weighted average shares ^(c)
62,020
62,020
53,529
58,346
58,346
53,885
Effect of dilutive securities: ^(d)

Stock options 474
474
—
630
630
266
Restricted stock 256
256
—
304
304
285
Class B shares outstanding 66,322
66,322
—
72,969
72,969
83,818
Weighted average shares and assumed conversions 129,072
129,072
53,529
132,249
132,249
138,254

Basic earnings (loss) per share ^(e)
$ 4.29
$ 4.24
$ (1.93 ) $ 4.77
$ 4.34
$ 9.54
Diluted earnings (loss) per share ^(e)
$ 0.48
$ 0.44
$ (1.93 ) $ 1.68
$ 1.47
$ 0.79



	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2020			2019
Numerator for basic earnings per share:
Net income from continuing operations attributable to stockholders ^(a)	$	340,726		$	266,524		$	620,262		$	280,128
Net income (loss) from discontinued operations attributable to stockholders	2			(716		)	529			(1,764		)
Net income attributable to stockholders	$	340,728		$	265,808		$	620,791		$	278,364

Numerator for diluted earnings per share:
Net income from continuing operations attributable to stockholders^(a)	$	340,726		$	266,524		$	620,262		$	280,128
Adjustment of redeemable limited partners' capital to redemption amount	(302,569		)	(235,394		)	(516,725		)	(178,910		)
Net income from continuing operations attributable to non-controlling interest in Premier LP	35,055			44,135			132,189			163,230
Net income from continuing operations	73,212			75,265			235,726			264,448
Tax effect on Premier, Inc. net income ^(b)	(7,067		)	(11,762		)	(30,007		)	(38,503		)
Adjusted net income from continuing operations	$	66,145		$	63,503		$	205,719		$	225,945

Net income (loss) from discontinued operations attributable to stockholders	$	2		$	(716	)	$	529		$	(1,764	)
Net income (loss) from discontinued operations attributable to non-controlling interest in Premier LP	3			(747		)	480			(2,098		)
Adjusted net income (loss) from discontinued operations	$	5		$	(1,463	)	$	1,009		$	(3,862	)

Adjusted net income	$	66,150		$	62,040		$	206,728		$	222,083

Denominator for earnings per share:
Basic weighted average shares outstanding	69,451			62,020			65,582			58,346
Effect of dilutive securities: ^(d)
Stock options	232			474			357			630
Restricted stock	216			256			239			304
Performance share awards	197			—			66			—
Class B shares outstanding	52,374			66,322			57,786			72,969
Diluted weighted average shares and assumed conversions	122,470			129,072			124,030			132,249



	Three Months Ended March 31,					Nine Months Ended March 31,
	2020		2019			2020		2019

Basic earnings per share:
Basic earnings per share from continuing operations	$	4.91	$	4.30		$	9.46	$	4.80
Basic earnings (loss) per share from discontinued operations	—		(0.01		)	0.01		(0.03		)
Basic earnings per share attributable to stockholders	$	4.91	$	4.29		$	9.47	$	4.77

Diluted earnings per share:
Diluted earnings per share from continuing operations	$	0.54	$	0.49		$	1.66	$	1.71
Diluted earnings (loss) per share from discontinued operations	—		(0.01		)	—		(0.03		)
Diluted earnings per share attributable to stockholders	$	0.54	$	0.48		$	1.66	$	1.68


(a)	~~The Company adopted Topic 606 effective July 1, 2018, while comparative results are presented under Topic 605. Refer~~Net income from continuing operations attributable to ~~Note 2 - Significant Accounting Policies for more information.~~stockholders was calculated as follows (in thousands):



	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2019			2018
Net income from continuing operations	$	73,212		$	75,265		$	235,726		$	264,448
Net income from continuing operations attributable to non-controlling interest in Premier LP	(35,055		)	(44,135		)	(132,189		)	(163,230		)
Adjustment of redeemable limited partners' capital to redemption amount	302,569			235,394			516,725			178,910
Net income from continuing operations attributable to stockholders	$	340,726		$	266,524		$	620,262		$	280,128


(b)	Represents income tax expense related to Premier, Inc. retaining the portion of net income from continuing operations attributable to income from non-controlling interest in Premier, LP for the purpose of diluted earnings ~~(loss)~~ per share.


(c)	Weighted average number of common shares used for basic earnings ~~(loss)~~ per share excludes weighted average shares of non-vested stock options, non-vested restricted stock, non-vested performance share awards and Class B shares outstanding for the three and nine months ended March 31, ~~2019~~2020 and ~~2018.~~2019.

(d)

For ~~the~~ three and nine months ended March 31, ~~2019,~~2020, the effect of ~~0.6~~0.8 million stock options and restricted stock units was excluded from diluted weighted average shares outstanding as they had an anti-dilutive ~~effect, and~~effect. Additionally, the effect of ~~0.7~~less than $0.1 million performance share awards was excluded from diluted weighted average shares outstanding as ~~they~~the awards had not satisfied the applicable performance criteria at the end of the period.

For the three ~~months ended March 31, 2018, the effect of 2.9 million stock options, restricted stock units~~ and performance share awards and 81.4 million Class B common units exchangeable for Class A common shares were excluded from diluted weighted average shares outstanding due to the net loss attributable to stockholders sustained for the quarter and as including them would have had been anti-dilutive for the period. For the nine months ended March 31, ~~2018,~~2019, the effect of ~~1.7~~0.6 million stock options and restricted stock units was excluded from diluted weighted average shares outstanding as they had an anti-dilutive ~~effect, and~~effect. Additionally, the effect of ~~0.6~~0.7 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.

~~(e)~~

We have corrected prior period information within the current period financial statements related to a specific component used in calculating the tax effect on Premier, Inc. net income for purposes of diluted earnings per share. Diluted earnings (loss) per share for the nine months ended March 31, 2018 was previously stated at ($0.84) per share and has been corrected to $0.79 per share. We believe the correction is immaterial and the corrected amount had no impact on our overall financial condition, results of operations or cash flows.

Pursuant to the terms 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 10 - 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:

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, 2018 816,468
79,519,233
53,256,897
60%/40%
October 31, 2018 9,807,651
69,601,752
63,734,585
53%/47%
January 31, 2019 3,705,459
65,778,688
63,841,210
51%/49%
April 30, 2019 ^(c)
435,188
64,548,044
61,826,763
51%/49%



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, 2019	1,310,771	62,767,860	63,274,182	49.8%/50.2%
October 31, 2019	6,873,699	55,581,646	66,522,023	46%/54%
January 31, 2020	4,866,082	50,715,564	71,066,141	42%/58%
April 30, 2020 ^(c)	502,466	50,213,098	71,574,119	41%/59%


(a)	The number of Class B common shares retired or outstanding is equivalent to the number of Class B common units retired upon exchange or outstanding after the exchange, as applicable.


(b)	The number of Class A common shares outstanding after exchange also includes activity related to the Company's share repurchase program (see Note 11 - Stockholders' ~~Deficit~~Equity (Deficit)), and equity incentive plan (see Note 13 - Stock-Based Compensation) ~~and departed member owners (see Note 10 - Redeemable Limited Partners' Capital)~~.


(c)	As the quarterly exchange occurred on April 30, ~~2019,~~2020, the impact of the exchange is not reflected in the condensed consolidated financial statements for the quarter ended March 31, ~~2019. The Company utilized 435,188 treasury shares to facilitate this exchange, and as a result had 2,419,148 Class A common shares held in treasury as of April 30, 2019, after the exchange.~~2020.

(13) STOCK-BASED COMPENSATION

Stock-based compensation expense is recognized over the requisite service period, which generally equals the stated vesting period. The associated deferred tax benefit was calculated at a rate of 25%, for the three and nine months ended March 31, 2020 and 2019, which represents the expected effective income tax rate at the time of the compensation expense deduction primarily at PHSI, and differs from the Company's current effective income tax rate which includes the impact of partnership income not subject to federal and state income ~~taxes (see~~taxes. See Note 14 - Income ~~Taxes).~~

Taxes for further information.

Stock-based compensation expense and the resulting deferred tax benefits were as follows (in thousands):



	Three Months Ended March 31,				Nine Months Ended March 31,
	2020		2019		2020		2019
Pre-tax stock-based compensation expense ^(a)	$	7,568	$	6,666	$	19,048	$	20,354
Deferred tax benefit	1,915		1,647		4,819		5,027
Total stock-based compensation expense, net of tax	$	5,653	$	5,019	$	14,229	$	15,327

Three Months Ended March 31, Nine Months Ended March 31,
2019 2018 2019 2018
Pre-tax stock-based compensation expense $ 6,781
$ 7,231
$ 20,692
$ 24,930
Deferred tax benefit 1,675
1,787
5,111
6,160
Total stock-based compensation expense, net of tax $ 5,106
$ 5,444
$ 15,581
$ 18,770


(a)	Pre-tax stock based compensation expense attributable to discontinued operations of $0.1 million and $0.3 million, respectively, for the three and nine months ended March 31, 2019 is not included in the above table.

Premier 2013 Equity Incentive Plan

The Premier 2013 Equity Incentive Plan, as amended and restated (and including any further amendments thereto, the "2013 Equity Incentive Plan") provides for grants of up to 14.8 million shares of Class A common stock, all of which are eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units or performance share awards. As of March 31, ~~2019,~~2020, there were ~~6.6~~5.9 million shares available for grant under the 2013 Equity Incentive Plan.

The following table includes information related to restricted stock, performance share awards and stock options for the nine months ended March 31, ~~2019:~~2020:



	Restricted Stock				Performance Share Awards				Stock Options
	Number of Awards		Weighted Average Fair Value at Grant Date		Number of Awards		Weighted Average Fair Value at Grant Date		Number of Options		Weighted Average Exercise Price
Outstanding at June 30, 2019	589,550		$	37.06	1,439,815		$	36.38	2,798,673		$	30.22
Granted	350,700		$	36.73	738,118		$	36.06	—		$	—
Vested/exercised	(217,356	)	$	33.55	(493,759	)	$	31.58	(221,147	)	$	30.49
Forfeited	(32,989	)	$	38.65	(71,444	)	$	38.82	(18,121	)	$	32.90
Outstanding at March 31, 2020	689,905		$	37.92	1,612,730		$	37.59	2,559,405		$	30.18

Stock options outstanding and exercisable at March 31, 2020									2,428,055		$	30.04

Restricted Stock Performance Share Awards Stock Options

Number of Awards Weighted Average Fair Value at Grant Date Number of Awards Weighted Average Fair Value at Grant Date Number of Options Weighted Average Exercise Price
Outstanding at June 30, 2018 605,873
$ 33.25
1,318,047
$ 33.00
3,499,251
$ 30.53
Granted 279,973
$ 43.22
607,339
$ 43.16
—
$ —
Vested/exercised (238,206 ) $ 34.82
(359,751 ) $ 35.43
(548,455 ) $ 32.03
Forfeited (53,751 ) $ 36.15
(117,595 ) $ 36.27
(56,450 ) $ 32.66
Outstanding at March 31, 2019 593,889
$ 37.06
1,448,040
$ 36.39
2,894,346
$ 30.21

Stock options outstanding and exercisable at March 31, 2019 2,478,892
$ 29.83

Restricted stock units and restricted stock awards issued and outstanding generally vest over a three-year period for employees and a one-year period for directors. Performance share awards issued and outstanding generally vest over a three-year period if performance targets are met. Stock options have a term of ten years from the date of grant. Vested stock options will expire either ~~after~~ twelve months ofafter an employee's termination with Premier or immediately upon an employee's termination with Premier, depending on the termination circumstances. Stock options generally vest in equal annual installments over three years.

Unrecognized stock-based compensation expense at March 31, ~~2019~~2020 was as follows (in thousands):



	Unrecognized Stock-Based Compensation Expense		Weighted Average Amortization Period
Restricted stock	$	14,745	1.9 years
Performance share awards	29,777		1.9 years
Stock options	617		0.5 years
Total unrecognized stock-based compensation expense	$	45,139	1.9 years

Unrecognized Stock-Based Compensation Expense Weighted Average Amortization Period
Restricted stock $ 12,432
1.9 years
Performance share awards 26,567
1.9 years
Stock options 2,941
1.2 years
Total unrecognized stock-based compensation expense $ 41,940
1.9 years

The aggregate intrinsic value of stock options at March 31, ~~2019~~2020 was as follows (in thousands):



	Intrinsic Value of Stock Options
Outstanding and exercisable	$	7,762
Expected to vest	12
Total outstanding	$	7,774

Exercised during the nine months ended March 31, 2020	$	1,541

Intrinsic Value of Stock Options
Outstanding and exercisable $ 12,074
Expected to vest 851
Total outstanding $ 12,925

Exercised during the nine months ended March 31, 2019 $ 5,381

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:



	~~Nine Months Ended March 31, 2018~~
~~Expected life~~ ^(a)	~~6 years~~
~~Expected dividend~~ ^(b)	—
~~Expected volatility~~ ^(c)	~~29.44% - 32.26%~~
~~Risk-free interest rate~~ ^(d)	~~1.89% - 2.75%~~
~~Weighted average option grant date fair value~~	~~$9.48 - $11.42~~


~~(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.~~

(14) INCOME TAXES

The Company's income tax expense is attributable to the activities of the Company, PHSI, PSCI and ~~PSCI,~~Premier Marketplace, LLC ("PMLLC"), 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,~~statutes, Premier LP is not subject to federal and state income taxes, as the income realized by Premier LP is taxable to its partners.

On November 8, 2019, the State of North Carolina made significant changes to its income tax law, effective for tax years beginning on or after January 1, 2020. As a result, the Company remeasured its deferred tax assets and liabilities as of the enactment date and recorded an income tax expense of $38.6 million as a discrete item in the Company's income tax provision during the quarter ended December 31, 2019.

On March 27, 2020, in response to COVID-19, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The CARES Act is an emergency economic stimulus package which contains, among other things, changes to income tax law including a modification to the net operating loss ("NOL") carryback period. The NOL carryback provision will allow the Company to carry back $21.1 million of NOLs to offset taxable income in prior years. As a result of the ~~TCJA that was enacted on December 22, 2017,~~NOL carryback provision, the ~~U.S. federal corporate~~Company expects an income tax ~~rate was reduced from 35% to 21%. In accordance~~refund of $7.3 million with ~~U.S. GAAP, the impact of changes in tax rates and tax laws is recognized as~~ a ~~component of~~corresponding income tax ~~expense from continuing operations in~~benefit of $2.9 million for the ~~period of enactment. The Company has remeasured its~~rate differential between the cash benefit at 35% and the deferred tax balances and recorded net provisional tax expense of $210.4 million in fiscal year 2018. During the first quarter of fiscal year 2019, the Company evaluated the impact of the TCJA with respect to the amendments to Section 162(m) based on the issuance of additional guidance by the Internal Revenue Service. The Company concluded no adjustment to its deferred tax balances is required. During the second quarter of fiscal year 2019, the Company further analyzed state tax conformity with respect to the net operating losses as amended by the TCJA, and as a result, recorded $0.5 million of tax benefit attributable to valuation allowance release. During the second quarter of fiscal year 2019, the Company completed its accounting for the income tax effects of the TCJA. To date, the Company has recorded $209.9 million in income tax expense associated with the enactment of the TCJA.valued at 21%.

Income tax expense for the three months ended March 31, 2020 and 2019 ~~and 2018~~ was ~~$11.1~~$4.2 million and ~~$13.3~~$11.7 million, respectively, which reflects effective tax rates of ~~13%~~5% and ~~15%~~13%, respectively. Income tax expense for the nine months ended March 31, 2020 and 2019 ~~and 2018~~ was ~~$23.7~~$78.3 million and ~~$257.6~~$25.8 million, respectively, which reflects effective tax rates of 8%25% and ~~62%~~9%, respectively. The decrease in the effective tax ~~rates~~rate for the three months ended March 31, 2020 is primarily ~~attributable to~~driven by the ~~deferred~~income tax ~~remeasurement related to~~benefit associated with the ~~aforementioned decrease~~NOL carryback provisions under the CARES Act and the release of the valuation allowance. The increase in the ~~U.S. federal corporate income~~effective tax rate ~~from 35% to 21% during~~for the nine months ended March 31, ~~2018.~~ 2020 is largely attributable to the aforementioned remeasurement of deferred tax balances related to the change in North Carolina state income tax law. Excluding the deferred tax remeasurement, the effective tax rate is 13% for the nine months ended March 31, 2020.

The Company's effective tax rates differ from income taxes recorded using a statutory rate largely due to Premier LP income, which is not subject to federal, state or local income ~~taxes as well as reductions in valuation allowances associated with deferred tax assets at PHSI.~~

~~The Company's existing reserve for uncertain income tax positions decreased $12.2 million during the second quarter of fiscal year 2019, primarily due to the closing of certain audits.~~taxes.

Net deferred tax assets increased ~~$104.9~~by $5.7 million to ~~$393.0~~$422.9 million at March 31, ~~2019~~2020 from ~~$288.1~~$417.2 million at June 30, ~~2018. The current period balance was comprised of $413.5 million in deferred tax assets at Premier, Inc., partially offset by $20.5 million in deferred tax liabilities at PHSI and PSCI.~~2019. The increase in net deferred tax assets ~~from the prior period~~ was largely driven by ~~$131.2~~increase of $64.0 million in deferred tax assets ~~generated~~related to departures and quarterly exchanges of Class B common units of Premier LP by the member ~~exchanges that occurred~~owners during the nine months ended March 31, ~~2019.~~2020, partially offset by a decrease of $38.6 million from remeasurement of deferred tax balances related to the change in North Carolina state income tax law and $19.7 million attributable to the deferred tax impact of tax-deductible goodwill and the NOL carryback provision taken as a result of the CARES Act.

The Company's TRA liabilities represent a payable to the limited partners for 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) 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 (pursuant to the Exchange Agreement) and payments under the TRA. The election results in adjustments to the tax basis of the assets of Premier LP upon member owner exchanges of Class B common units of Premier LP for Class A common stock of Premier, Inc. or cash. TRA liabilities ~~increased $86.3~~decreased by $49.3 million to ~~$341.4~~$294.9 million at March 31, ~~2019~~2020 from ~~$255.1~~$344.1 million at June 30, ~~2018.~~2019. The change in TRA liabilities was driven ~~primarily~~ by ~~the $114.9~~$86.3 million ~~increase~~attributable to member departures, $24.6 million in TRA ~~liabilities~~remeasurements primarily due to the change in North Carolina state income tax law and $17.4 million in TRA payments during the nine months ended March 31, 2020. These decreases were partially offset by an increase of $79.0 million in connection with the quarterly member owner exchanges that occurred during the nine months ended March 31, ~~2019, partially offset by $18.0 million in TRA payments and $10.7 million attributable to member departures during the nine months ended March 31, 2019.~~2020.

(15) RELATED PARTY TRANSACTIONS

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 ~~(loss)~~ of unconsolidated affiliates in the accompanying Condensed Consolidated Statements of Income was ~~$0.5~~$4.3 million and ~~$0.1~~$0.5 million for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively, and ~~$4.4~~$10.8 million and ~~$5.7~~$4.4 million for the nine months ended March 31, ~~2019~~2020 and ~~2018,~~2019, 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 agreements was ~~$1.9~~$1.2 million ~~as presented~~ and ~~$2.1 million under the Previous Revenue Standard during the three months ended March 31, 2019, and $1.8~~$1.9 million during the three months ended March 31, ~~2018 under the Previous Revenue Standard. Net administrative fees revenue recorded from purchases under those agreements was~~2020 and 2019, respectively, and $5.8 million and $6.1 million ~~as presented and $5.9 million under the Previous Revenue Standard during~~for the nine months ended March 31, 2020 and 2019, respectively.

(16) COMMITMENTS AND CONTINGENCIES

Operating Leases

Operating lease expense for the three and ~~$5.8 million during the~~ nine months ended March 31, ~~2018 under the Previous Revenue Standard.~~

~~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 $2.02020 was $2.7 million and ~~$1.4~~$8.2 million, ~~during the three months ended March 31, 2019 and 2018, respectively, and $4.1 million and $4.2 million during the nine months ended March 31, 2019 and 2018,~~ respectively. As of March 31, ~~2019~~2020, the weighted average remaining lease term was 6.0 years and ~~June 30, 2018, $0.5 million and $0.9 million, respectively,~~the weighted average discount rate was 3.9%.

Future minimum lease payments under noncancelable operating leases with initial lease terms in ~~amounts receivable from AEIX are included in due from related parties in the accompanying Condensed Consolidated Balance Sheets.~~excess of one year were as follows (in thousands):

~~(16) COMMITMENTS AND CONTINGENCIES~~



	March 31, 2020		June 30, 2019^(a)
2020 ^(b)	$	3,091	$	12,130
2021	11,806		11,539
2022	11,735		11,468
2023	12,012		11,533
2024	12,145		11,510
Thereafter	22,348		20,645
Total future minimum lease payments	73,137		78,825
Less: imputed interest	8,114		—
Total operating lease liabilities^(c)	$	65,023	$	—


(a)	Presented in accordance with ASC Topic 840.


(b)	As of March 31, 2020, future minimum lease payments are for the period from April 1, 2020 to June 30, 2020.


(c)	As of March 31, 2020, total operating lease liabilities included $9.7 million within other liabilities, current in the Condensed Consolidated Balance Sheets.

Other Matters

The Company is not currently involved in any litigation it believes to be ~~significant.~~material. The Company is periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include claims relating to commercial, product liability, tort and personal injury, employment, antitrust, intellectual property, or other regulatory matters. If current or future government regulations, specifically, those with respect to antitrust or healthcare laws, are interpreted or enforced in a manner adverse to the Company or its business, the Company may be subject to enforcement actions, penalties and other material limitations which could have a material adverse effect on the Company's business, financial condition and results of operations.

(17) SEGMENTS

The Company delivers its solutions and manages its business through ~~two~~2 reportable business segments, the Supply Chain Services segment and the Performance Services segment. The Supply Chain Services segment includes the Company's GPO, ~~integrated pharmacy offerings~~ and direct sourcing activities. The Performance Services segment ~~provides technology and data analytics with wrap-around service offerings and~~ includes the Company's informatics, collaborative, consulting services ~~government services~~ and insurance services ~~offerings. The Company disaggregates revenue into categories that best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors.~~businesses.

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


	Three Months Ended March 31,						Nine Months Ended March 31,
	2019				2018		2019				2018		Three Months Ended March 31,				Nine Months Ended March 31,
	As presented		Previous revenue standard ^(a)				As presented		Previous revenue standard ^(a)				2020		2019		2020		2019
Net revenue:
Supply Chain Services
Net administrative fees	$	164,534	$	165,425	$	161,612	$	492,229	$	481,997	$	471,946	$	174,049	$	164,534	$	518,566	$	492,229
Other services and support	3,310		4,047		2,899		9,442		12,309		8,470		3,396		2,484		8,439		6,520
Services	167,844		169,472		164,511		501,671		494,306		480,416		177,445		167,018		527,005		498,749
Products	162,404		173,590		166,234		471,393		506,455		480,997		61,183		41,568		167,344		129,441
Total Supply Chain Services	330,248		343,062		330,745		973,064		1,000,761		961,413
Performance Services	92,627		89,640		94,593		273,214		254,440		265,887
Total Supply Chain Services ^(a)													238,628		208,586		694,349		628,190
Performance Services ^(a)													96,195		92,627		262,490		273,214
Net revenue	$	422,875	$	432,702	$	425,338	$	1,246,278	$	1,255,201	$	1,227,300	$	334,823	$	301,213	$	956,839	$	901,404


(a)	~~The Company adopted Topic 606 effective July 1, 2018, while comparative results~~Includes intersegment revenue that is eliminated in consolidation. Intersegment revenue is not separately identified in Segments as the amounts are ~~presented under Topic 605. Refer to Note 2 - Significant Accounting Policies for more information.~~not material.

Additional segment information related to depreciation and amortization expense, capital expenditures and total assets was as follows (in thousands):


	Three Months Ended March 31,				Nine Months Ended March 31,				Three Months Ended March 31,				Nine Months Ended March 31,
	2019		2018		2019		2018		2020		2019		2020		2019
Depreciation and amortization expense ^(a):
Supply Chain Services	$	5,472	$	5,500	$	16,541	$	16,166	$	6,896	$	4,616	$	16,592	$	13,905
Performance Services	27,977		24,541		81,208		71,093		30,950		27,977		91,862		81,208
Corporate	2,776		2,424		8,203		6,739		1,897		2,776		6,184		8,203
Total depreciation and amortization expense	$	36,225	$	32,465	$	105,952	$	93,998	$	39,743	$	35,369	$	114,638	$	103,316

Capital expenditures:
Supply Chain Services	$	501	$	390	$	1,516	$	1,238	$	2,485	$	469	$	4,571	$	1,305
Performance Services	20,437		24,077		59,267		57,368		20,840		20,437		57,956		59,267
Corporate	1,891		2,171		9,334		6,654		1,233		1,891		6,799		9,334
Total capital expenditures	$	22,829	$	26,638	$	70,117	$	65,260	$	24,558	$	22,797	$	69,326	$	69,906



	March 31, 2020			June 30, 2019
Total assets^(b):
Supply Chain Services	$	1,611,886		$	1,111,934
Performance Services	919,874			941,183
Corporate	532,743			516,450
Total assets	$	3,064,503		$	2,569,567
Eliminations ^(c)	(1,434		)	—
Total assets, net	$	3,063,069		$	2,569,567

March 31, 2019 March 31, 2019 June 30, 2018
Total assets: As presented
Previous revenue standard ^(b)
Previous revenue standard
Supply Chain Services $ 1,200,293
$ 1,046,854
$ 991,837
Performance Services 961,836
911,351
860,409
Corporate 522,044
532,211
459,970
Total assets $ 2,684,173
$ 2,490,416
$ 2,312,216


(a)	Includes amortization of purchased intangible assets.

(b)

~~The Company adopted Topic 606 effective July 1, 2018, while comparative results~~Total assets in Supply Chain Services includes $24.6 million as of June 30, 2019 for discontinued operations related to the specialty pharmacy business. There are ~~presented under Topic 605. Refer~~0 assets for discontinued operations related to ~~Note 2 - Significant Accounting Policies for more information.~~the specialty pharmacy business as of March 31, 2020.


(c)	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")) 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's net revenue and equity in net income of unconsolidated affiliates less operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expenses and non-recurring or non-cash items. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative and product development activities specific to the operation of each segment. Non-recurring items are income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.

For more information on Segment Adjusted EBITDA and the use of Non-GAAP financial measures, see "Our Use of Non-GAAP Financial Measures" within Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.

A reconciliation of income before income taxes to Segment Adjusted EBITDA is as follows (in thousands):

Three Months Ended March 31, Nine Months Ended March 31,
2019 2019 2018 2019 2019 2018
As presented
Previous revenue standard ^(a)
As presented
Previous revenue standard ^(a)
Income before income taxes $ 84,894
$ 81,953
$ 89,837
$ 284,275
$ 251,205
$ 414,494
Equity in net (income) loss of unconsolidated affiliates ^(b)
(553 ) (553 ) 4,939
(4,687 ) (4,687 ) (570 )
Interest and investment loss, net ^(c)
1,081
1,081
1,236
2,628
2,628
4,239
Loss on disposal of long-lived assets 303
303
5
303
303
1,725
Other expense (income) 135
135
2,593
(5,123 ) (5,123 ) 14,486
Operating income 85,860
82,919
98,610
277,396
244,326
434,374
Depreciation and amortization 21,992
21,992
18,584
64,182
64,182
52,401
Amortization of purchased intangible assets 14,233
14,233
13,881
41,770
41,770
41,597
Stock-based compensation ^(d)
6,851
6,851
7,333
20,988
20,988
25,241
Acquisition related expenses ^(e)
3,252
3,252
1,540
5,015
5,015
6,312
Strategic and financial restructuring expenses —
—
1,648
—
—
1,652
Remeasurement of tax receivable agreement liabilities —
—
—
—
—
(177,174 )
ERP implementation expenses ^(f)
225
225
40
612
612
531
Equity in net income (loss) of unconsolidated affiliates ^(b)
553
553
(4,939 ) 4,687
4,687
570
Impairment on investments —
—
5,002
—
—
5,002
Deferred compensation plan income (expense) ^(g)
3,974
3,974
(112 ) 1,076
1,076
3,004
Other expense, net 638
638
652
2,471
2,471
1,441
Non-GAAP Adjusted EBITDA $ 137,578
$ 134,637
$ 142,239
$ 418,197
$ 385,127
$ 394,951

Segment Non-GAAP Adjusted EBITDA:
Supply Chain Services $ 133,667
$ 134,519
$ 135,265
$ 403,149
$ 391,631
$ 392,930
Performance Services 33,235
29,442
36,715
100,910
79,358
85,865
Corporate (29,324 ) (29,324 ) (29,741 ) (85,862 ) (85,862 ) (83,844 )
Non-GAAP Adjusted EBITDA $ 137,578
$ 134,637
$ 142,239
$ 418,197
$ 385,127
$ 394,951



	Three Months Ended March 31,						Nine Months Ended March 31,
	2020			2019			2020			2019
Income before income taxes	$	77,377		$	87,002		$	314,062		$	290,239
Equity in net income of unconsolidated affiliates ^(a)	(4,442		)	(553		)	(11,038		)	(4,687		)
Interest and investment loss, net	9,966			1,081			9,849			2,628
Gain on FFF put and call rights ^(b)	13,906			4,109			(8,477		)	(3,458		)
Other expense (income)	5,005			(3,671		)	1,996			(1,362		)
Operating income	101,812			87,968			306,392			283,360
Depreciation and amortization	25,777			21,797			75,690			63,529
Amortization of purchased intangible assets	13,966			13,572			38,948			39,787
Stock-based compensation ^(c)	7,668			6,737			19,358			20,650
Acquisition and disposition related expenses	7,287			3,856			16,263			6,789
Remeasurement of tax receivable agreement liabilities ^(d)	(902		)	—			(24,584		)	—
Equity in net income of unconsolidated affiliates ^(a)	4,442			553			11,038			4,687
Deferred compensation plan (expense) income ^(e)	(5,476		)	3,975			(2,484		)	1,076
Other expense, net	1,315			259			3,929			1,309
Non-GAAP Adjusted EBITDA	$	155,889		$	138,717		$	444,550		$	421,187

Segment Non-GAAP Adjusted EBITDA:
Supply Chain Services ^(f)	$	149,212		$	134,805		$	447,081		$	406,139
Performance Services ^(f)	34,634			33,235			84,977			100,910
Corporate	(27,957		)	(29,323		)	(87,508		)	(85,862		)
Non-GAAP Adjusted EBITDA	$	155,889		$	138,717		$	444,550		$	421,187


(a)	~~The Company adopted Topic 606 effective July 1, 2018, while comparative results are presented under Topic 605.~~ Refer to Note 25 - ~~Significant Accounting Policies~~Investments for more information.


(b)	Refer to Note 46 - ~~Investments~~Fair Value Measurements for ~~further~~more information.


(c)	~~Represents interest expense, net and realized gains and losses on our marketable securities.~~


~~(d)~~	Represents non-cash employee stock-based compensation expense and stock purchase plan expense of $0.1 million during both of the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 and $0.3 million during both of the nine months ended March 31, ~~2019~~2020 and ~~2018.~~2019.


(d)	The adjustments to TRA liabilities for the three and nine months ended March 31, 2020 is primarily attributable to decreases in the Premier, Inc. effective tax rate related to state tax liabilities.


(e)	~~Includes legal, accounting and other expenses related to acquisition activities and gains and losses on the change in fair value of earn-out liabilities.~~


~~(f)~~	~~Represents implementation and other costs associated with the implementation of our enterprise resource planning ("ERP") system.~~


~~(g)~~	Represents realized and unrealized gains and losses and dividend income on deferred compensation plan assets.


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

(18) SUBSEQUENT EVENTS

On May ~~6, 2019,~~4, 2020, the Company, ~~and~~through its consolidated ~~subsidiaries, NS3~~subsidiary PHSI, entered into a unit purchase agreement (the "Unit Purchase Agreement"), and acquired 97% of the equity of Health Design Plus, LLC (“HDP”). Pursuant to the terms of the Unit Purchase Agreement, the Company agreed to pay an aggregate amount of $24.7 million, subject to certain purchase price adjustments. The amount paid at closing was $23.2 million and was funded with borrowings under the Credit Facility.

After closing, PHSI’s subsidiary, Contigo Health, LLC, ~~Commcare Pharmacy - FTL, LLC, and Acro Pharmaceutical Services LLC entered~~was merged into ~~an asset purchase and sale agreement~~HDP, with ~~ProCare Pharmacy, L.L.C. (“ProCare”)~~HDP as the surviving entity. HDP was then renamed Contigo Health, LLC. The seller, University Hospitals Holdings, Inc., an affiliate of CVS Health Corporation, in which ProCare agreed to purchase prescription files and records and certain other assets used in the Company’s specialty pharmacy business for a cash purchase price of $22.5 million plus up to $20.0 million for pharmaceutical inventory, subject in each case to certain adjustments. In addition, the Company finalized and committed to a plan to wind down and exit from the specialty pharmacy business and communicated this information to its impacted employees on May 6, 2019. The Company expects the transaction to close during the fiscal fourth quarter ending June 30, 2019.

~~The Company anticipates that it~~ will ~~recognize a non-cash impairment charge of approximately $87 million to $92 million related to goodwill, purchased intangibles, internally developed software and other assets~~retain 3% of the ~~specialty pharmacy business. In addition, the Company estimates that it will incur~~equity in Contigo Health, LLC.

HDP is a ~~total~~third-party administrator and arranges care for employees through its Centers of approximately $11 million to $15 million of expenses related to the sale of assets and exit of the specialty pharmacy business primarily related to severance and retention benefits and financial advisor and legal fees. On an after-tax basis, the total impairment charges and exit costs incurred in connection with the transactions described above are expected to be in the range of $75 million to $82 million. These expenses are expected to be recorded in the fiscal fourth quarter ending June 30, 2019.Excellence program.

Item 2. Management'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" and "Cautionary Note Regarding Forward-Looking Statements" herein and in our Form 10-K for the fiscal year ended June 30, ~~2018~~2019 (the ~~"2018~~"2019 Annual Report"), filed with the Securities and Exchange Commission ("SEC").

Business Overview

Our Business

Premier, Inc. ("Premier", the "Company", "we", or "our") is a leading healthcare ~~performance~~ improvement company, uniting an alliance of more than 4,000 U.S. hospitals and health systems and approximately ~~165,000~~175,000 other providers and organizations to transform healthcare. We partner with hospitals, health systems, physicians and other healthcare providers with the common goal of improving and innovating in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry. We deliver value through a comprehensive technology-enabled platform that offers critical supply chain services, clinical, financial, operational and ~~value-based care software as a service~~population health software-as-a-service ("SaaS") informatics products, consulting services and performance improvement collaborative programs.

As of March 31, ~~2019,~~2020, we were ~~majority-owned~~owned, in part, by ~~158~~155 U.S. hospitals, health systems and other healthcare organizations, which represented approximately ~~1,400~~1,450 owned, leased and managed acute care facilities and other non-acute care organizations, through their ownership of Class B common stock. As of March 31, ~~2019,~~2020, the outstanding Class A common stock and Class B common stock represented ~~approximately 49%~~58% and ~~51%~~42%, respectively, of our combined outstanding Class A and Class B common stock and accordingly, the Class B common stock held by member owners no longer represents the majority of our outstanding common stock. ~~All~~On July 31, 2019, as a result of the Class B common unit exchange process, we no longer qualified for the "controlled company" exemption under NASDAQ rules, and we must comply with all general NASDAQ rules regarding board and committee composition by July 31, 2020. We expect to comply with all NASDAQ rules in a timely manner, including having a majority of independent directors on the Board of Directors by July 31, 2020.

As of March 31, 2020, all of our Class B common stock was held beneficially by our member owners and all of our Class A common stock was held by public investors, which may include member owners that have received shares of our Class A common stock in connection with ~~previous~~ quarterly exchanges pursuant 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).

We generated net revenue, net income from continuing operations and Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles ("Non-GAAP")) for the periods presented as follows (in thousands):


	Three Months Ended March 31,						Nine Months Ended March 31,
	2019				2018		2019				2018		Three Months Ended March 31,				Nine Months Ended March 31,
	New Revenue Standard ^(a)		Previous Revenue Standard				New Revenue Standard^(a)		Previous Revenue Standard				2020		2019		2020		2019
Net revenue	$	422,875	$	432,702	$	425,338	$	1,246,278	$	1,255,201	$	1,227,300	$	334,823	$	301,213	$	956,839	$	901,404
Net income	$	73,802	$	69,622	$	76,549	$	260,586	$	230,194	$	156,934
Net income from continuing operations													$	73,212	$	75,265	$	235,726	$	264,448
Non-GAAP Adjusted EBITDA	$	137,578	$	134,637	$	142,239	$	418,197	$	385,127	$	394,951	$	155,889	$	138,717	$	444,550	$	421,187


~~(a)~~	We adopted Topic 606 effective July 1, 2018, while comparative results are presented under Topic 605. Refer to Note 2 - Significant Accounting Policies and Critical Accounting Policies and Estimates below for more information.

See "Our Use of Non-GAAP Financial Measures" and "Results of Operations" below for a discussion of our use of Non-GAAP Adjusted EBITDA and a reconciliation of net income from continuing operations to Non-GAAP Adjusted EBITDA.

Our Business Segments

Our business model and solutions are designed to provide our members access to scale efficiencies while focusing on optimization of information resources and cost containment, provide actionable intelligence derived from anonymized data in our data warehouse provided by our members, mitigate the risk of innovation and disseminate best practices that will help our member organizations succeed in their transformation to higher quality and more cost-effective healthcare. We deliver our integrated platform of solutions

that address the areas of total cost management, quality and safety improvement and ~~value-based care~~population health management through two business segments: Supply Chain Services and Performance Services.

Segment net revenue for the three months ended March 31, 2020 and 2019 was as follows (in thousands):



	Three Months Ended
	March 31,				Change				% of Net Revenue
Net revenue:	2020		2019		2020		2019		2020		2019
Supply Chain Services	$	238,628	$	208,586	$	30,042	14	%	71	%	69	%
Performance Services	96,195		92,627		3,568		4	%	29	%	31	%
Net revenue	$	334,823	$	301,213	$	33,610	11	%	100	%	100	%

Segment net revenue for the nine months ended March 31, 2020 and 2019 was as follows (in thousands):



	Nine Months Ended
	March 31,				Change					% of Net Revenue
Net revenue:	2020		2019		2020			2019		2020		2019
Supply Chain Services	$	694,349	$	628,190	$	66,159		11	%	73	%	70	%
Performance Services	262,490		273,214		(10,724		)	(4	)%	27	%	30	%
Net revenue	$	956,839	$	901,404	$	55,435		6	%	100	%	100	%

Our Supply Chain Services segment includes one of the largest healthcare group purchasing organization programs ("GPO") in the United States, serving acute, non-acute, ~~(or~~non-healthcare and alternate ~~site) providers~~sites, and ~~other non-healthcare organizations, and includes integrated pharmacy and~~our direct sourcing activities. Supply Chain Services net revenue declined from $330.7 million for the three months ended March 31, 2018 to $330.2 million for the three months ended March 31, 2019, and accounted for 78% of our overall net revenue for the three months ended March 31, 2019. Supply Chain Services net revenue grew from $961.4 million for the nine months ended March 31, 2018 to $973.1 million for the nine months ended March 31, 2019, and accounted for 78% of our overall net revenue for the nine months ended March 31, 2019.WeWe generate revenue in our Supply Chain Services segment from administrative fees received from suppliers based on the total dollar volume of supplies purchased by our members and through product sales in connection with our ~~integrated pharmacy and~~ direct sourcing activities.

~~The~~Our Performance Services segment ~~through its development, integration and delivery of technology and data analytics with wrap-around service offerings,~~ includes one of the largest informatics and consulting services businesses in the United States focused on healthcare providers. ~~More specifically, our~~Our software as a service ("SaaS") informatics products and technology licenses utilize our comprehensive data set to provide actionable intelligence to our members, enabling them to benchmark, analyze and identify areas of improvement across ~~the~~ three main ~~categories of~~categories: cost management, quality and safety, and value-based care. While leveraging these tools, we also combine our consulting services and performance improvement collaboratives to provide a more comprehensive and holistic customer value proposition and overall experience.population health management. The Performance Services segment also includes our ~~government~~technology-enabled performance improvement collaboratives, consulting services and insurance management services.

Acquisitions and Divestitures

Acquisition of Acurity and Nexera Assets

On February 28, 2020, we, through two newly formed consolidated subsidiaries, Prince A Purchaser, LLC ("PAP") and Prince N Purchaser, LLC ("PNP"), acquired substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc., for an aggregate amount of $291.5 million, of which $166.1 million was paid at closing with borrowings under our Credit Facility (as defined in Note 9 - Debt) (the "Acurity and Nexera asset acquisition"). An additional $120.0 million will be paid in four equal annual installments of $30.0 million on or about June 30, 2021, 2022, 2023 and 2024. An additional $5.4 million is expected to be paid during our second fiscal quarter of 2021. In addition to the aggregate amount of $291.5 million, the Purchase Agreement provides a graduated earn-out opportunity to Acurity, Inc. of up to $30.0 million based upon our achievement of a range of member renewals on terms to be agreed to by us and GNYHA based on prevailing market conditions in December 2023.

After closing of the transaction, PAP and PNP changed their names to Acurity, LLC ("Acurity") and Nexera, LLC ("Nexera"), respectively. Acurity is a regional group purchasing organization and has been a customer and strategic partner of ours for more than 24 years. Nexera is a hospital financial improvement consulting firm which partners with healthcare organizations to improve hospital and health system performance, with a significant focus on supply chain enhancement and transformation. We report the operations of Acurity and Nexera as part of the Supply Chain Services segment. See Note 3 - Business Acquisitions for further information.

Acquisition of Medpricer

On October 28, 2019, we acquired all of the outstanding capital stock in Medpricer.com, Inc. ("Medpricer") for an adjusted purchase price of $38.5 million with borrowings under the Credit Facility. Medpricer is a SaaS-based provider of technology solutions that enable hospitals and other organizations to analyze, benchmark and source purchased services contracts independent of any existing GPO affiliation. Medpricer is reported as part of the Supply Chain Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for further information.

Acquisition of Stanson

On November 9, 2018, we acquired all of the outstanding capital stock in Stanson Health, Inc. ("Stanson") for an adjusted purchase price of $55.4 million. Stanson is a SaaS-based provider of clinical decision support tools that are integrated directly into the electronic health record workflow, to help provide real-time, patient-specific best practices at the point of care. Stanson is reported as part of the Performance Services ~~net revenue declined from $94.6~~segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for further information.

Divestiture of Specialty Pharmacy Business - Discontinued Operations

On June 7, 2019, we completed the sale of prescription files and records and certain other assets used in our specialty pharmacy business for $22.3 million. On June 10, 2019, we received $7.6 million for the ~~three months ended March 31, 2018 to $92.6~~sale of a portion of our pharmaceutical inventory and on July 24, 2019, an additional $3.6 million ~~for~~primarily in connection with the ~~three months ended March~~sale of our remaining pharmaceutical inventory. As of December 31, 2019, we had substantially completed the wind down and ~~accounted~~exit from the specialty pharmacy business.

We met the criteria for ~~22%~~classifying certain assets and liabilities of ~~our overall net revenue~~the specialty pharmacy business as a discontinued operation as of June 30, 2019. Accordingly, unless otherwise indicated, information in this Quarterly Report has been retrospectively adjusted to reflect continuing operations for all periods presented. See Note 4 - Discontinued Operations and Exit Activities to the ~~three months ended March 31, 2019. Performance Services net revenue grew from $265.9 million~~accompanying condensed consolidated financial statements for ~~the nine months ended March 31, 2018 to $273.2 million for the nine months ended March 31, 2019, and accounted for 22% of our overall net revenue for the nine months ended March 31, 2019.~~further information.

Market and Industry Trends and Outlook

We expect that certain trends and economic or industry-wide factors will continue to affect our business, both in the short-term and long-term. We have based our expectations described below on assumptions made by us and on information currently available to us. To the extent our underlying assumptions about, or interpretation of, available information prove to be incorrect, our actual results may vary materially from our expected results. See "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors" in the 2019 Annual Report.

Trends in the U.S. healthcare market affect our revenues and costs in the Supply Chain Services and Performance Services segments. The trends we see affecting our current healthcare business include the impact of the implementation of current or future healthcare legislation, particularly the uncertainty regarding the status of the Affordable Care Act, its repeal, replacement, or other modification, the enactment of new regulatory and reporting requirements, expansion and contraction of insurance coverage and associated costs that may impact ~~the number of uninsured or level of bad debt for providers,~~subscriber elections, intense cost pressure, payment reform, provider ~~and supplier~~ consolidation, ~~vertical integration between payors, providers, and other organizations,~~ 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. Moreover,~~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 ~~comprehensive and integrated~~ Supply Chain Services and Performance Services solutions in the areas of cost management, quality and safety, and ~~value-based care. There~~population health management, however, there are ~~however,~~ 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 Note Regarding Forward-Looking Statements" for more information.

In addition to the trends in the U.S. healthcare market discussed above, we face known and unknown uncertainties arising from the outbreak of the novel coronavirus ("COVID-19") and the resulting global pandemic and financial and operational uncertainty, including its impact on the overall economy, our sales, operations and supply chains, our members, workforce and suppliers, and countries.

Critical Accounting Policies and Estimates

Refer to Note 1 - Organization and Basis of Presentation and Note 2 - Significant Accounting Policies to the accompanying condensed consolidated financial statements for 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 ~~2018~~2019 Annual Report.

New Accounting Standards

~~For the ensuing discussion, it is important to note that we adopted Topic 606 ("~~New Revenue Standard") effective for the fiscal year beginning July 1, 2018. The prior year information has not been adjusted and continues to be reported under Topic 605 ("Previous Revenue Standard"). However, for informational purposes, we have also included current period results under the Previous Revenue Standard. Refer to Note 2 - Significant Accounting Policies for further information on the impact of the New Revenue Standard on our condensed consolidated financial statements, which is incorporated herein by reference, as well as for

~~additional information on other new~~ accounting standards that we have recently adopted as well as those that have been recently issued but not yet ~~adopted.~~adopted by us are included in Note 2 - Significant Accounting Policies to the accompanying condensed consolidated financial statements, which is incorporated herein by reference.

Key Components of Our Results of Operations

Net Revenue

Net revenue consists of service revenue, which includes net administrative fees revenue and other services and support revenue, and product revenue. Net administrative fees revenue consists of GPO net 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, and consulting 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 net administrative fees (gross administrative fees received from suppliers, reduced by the amount of ~~any~~ revenue share paid to members)~~, specialty pharmacy revenue,~~ and direct sourcing ~~revenue and managed service~~ revenue.

The success of our Supply Chain Services revenue streams are influenced by our ability to negotiate favorable contracts with suppliers and members, the number of members that utilize our GPO supplier contracts and the volume of their purchases, ~~the number of members that utilize our integrated pharmacy,~~ as well as the impact of changes in the defined allowable reimbursement amounts determined by Medicare, Medicaid and other managed care plans and the number of members that purchase products through our direct sourcing activities and the impact of competitive pricing. Our managed services line of business is a fee for service model created to perform supply chain related services for members, including pharmacy benefit management ("PBM") services in partnership with a national PBM company.

Performance Services

Performance Services revenue consists of SaaS informatics products subscriptions, license fees, performance improvement collaborative and other service subscriptions, professional fees for consulting services, insurance services management fees and commissions from endorsed commercial insurance programs.

Our Performance Services growth will depend upon the expansion of our SaaS informatics products, performance improvement collaboratives and consulting services to new and existing members, renewal of existing subscriptions to our SaaS and licensed informatics products, ~~along with~~and our ability to generate additional applied sciences engagements and expand into new markets.

Cost of Revenue

Cost of revenue consists of cost of service revenue and cost of product revenue.

Cost of service revenue includes expenses related to employees (including compensation and benefits) and outside consultants who directly provide services related to revenue-generating activities, including consulting services to members and implementation services related to SaaS informatics along with associated amortization of certain capitalized contract costs. Amortization of contract costs represent amounts that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract. Amortization of contract costs included within cost of service revenue include costs related to implementing SaaS informatics tools. Cost of service revenue also includes expenses related to hosting services, related data center capacity costs, third-party product license expenses and amortization of the cost of ~~internal use software.~~internally-developed software applications.

Cost of product revenue consists of purchase and shipment costs for ~~specialty pharmaceuticals and~~ direct sourced medical products. Our cost of product revenue is influenced by ~~the cost and availability of specialty pharmaceuticals and~~ the manufacturing and transportation costs associated with direct sourced medical products.

Operating Expenses

Selling, general and administrative expenses are directly associated with selling and administrative functions and support of revenue-generating activities including expenses to support and maintain our software-related products and services. Selling, general and administrative expenses primarily consist of compensation and benefits related costs, travel-related expenses, business development expenses, including costs for business acquisition opportunities, business disposition related expenses, indirect costs such as insurance, professional fees and other general overhead expenses, and ~~adjustments to TRA liabilities.~~amortization of certain contract costs. Amortization of contract costs represent amounts that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract. ~~Such amounts include sales commissions and~~Amortization of contract costs ~~related to implementing SaaS informatics tools, which are components of~~included within selling, general and administrative expenses ~~and cost of revenue, respectively.~~include sales commissions.

Research and development expenses consist of employee-related compensation and benefit expenses and third-party consulting fees of technology professionals, net of capitalized labor, incurred to develop our software-related products and services.

Amortization of purchased intangible assets includes the amortization of all identified intangible ~~assets resulting from acquisitions.~~assets.

Other (Expense) Income, Net

Other (expense) income, net, includes equity in net income of unconsolidated affiliates that is generated from our equity method investments. Our equity method investments primarily consist of our 49% ownership in FFF Enterprises, Inc. ("FFF"). Other income, net, also includes ~~interest income and expense, gains and losses on~~ the change in fair value of our FFF put and call rights (see Note 56 - Fair Value ~~Measurements)~~Measurements to the accompanying condensed consolidated financial statements), interest income and expense, realized and unrealized gains or losses on deferred compensation plan assets, ~~and~~ gains or losses on the disposal of ~~assets.~~assets, and any impairment on our held-to-maturity investments.

Income Tax Expense

Our income tax expense is attributable to the activities of Premier, Inc., Premier Healthcare Solutions, Inc. ("PHSI") ~~and~~ ,Premier Supply Chain Improvement, Inc. ("PSCI") and Premier Marketplace, LLC ("PMLLC"), 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 ~~Healthcare Alliance, L.P. ("Premier LP")~~LP is taxable to its partners. Our 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 14 - Income ~~Taxes.~~Taxes to the accompanying condensed consolidated financial statements.

Given our 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 13 - Stock-Based ~~Compensation)~~Compensation to the accompanying condensed consolidated financial statements) is calculated based on the effective tax rate of PHSI, the legal entity where the majority of stock-based compensation expense is recorded. Our effective tax rate, as discussed in Note 14 - Income Taxes to the accompanying condensed consolidated financial statements, represents the effective tax rate computed in accordance with GAAP based on total income tax expense (reflected in income tax expense in the Condensed Consolidated Statements of Income) of Premier, Inc., PHSI and PSCI, divided by consolidated pre-tax income.

Non-GAAP Adjusted Fully Distributed Net Income is calculated net of taxes based on our fully distributed tax rate for federal and state income tax for us as a whole as if we were one taxable entity with all of our subsidiaries' activities included. ~~Prior to the enactment of the Tax Cuts and Jobs Act ("TCJA"), the~~The rate used to compute ~~the~~ Non-GAAP Adjusted Fully Distributed Net Income was ~~39%. Effective as~~26% for the three and nine months ended March 31, 2020 and 2019.

Income (Loss) from Discontinued Operations, Net of ~~January 1, 2018, we adjusted our fully distributed~~Tax

Income (loss) from discontinued operations, net of tax ~~rate~~represents the net income or loss associated with the sale of certain assets and wind down and exit of the specialty pharmacy business. See Note 4 - Discontinued Operations and Exit Activities to ~~26% to determine our Non-GAAP Adjusted Fully Distributed Net Income.~~the accompanying condensed consolidated financial statements for further information.

Net Income Attributable to Non-Controlling Interest

As of March 31, ~~2019,~~2020, we owned ~~an approximate 49%~~a 58% controlling general partner interest in Premier LP through our wholly-owned subsidiary, Premier Services, LLC ("Premier GP"). Net income attributable to non-controlling interest represents the portion of net income attributable to the limited partners of Premier LP, which was ~~approximately~~42% and 51% ~~and 60%~~ as of March 31, ~~2019~~2020 and June 30, ~~2018,~~2019, respectively (see Note 10 - Redeemable Limited Partners' ~~Capital)~~Capital to the accompanying condensed consolidated financial statements).

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 per Share and Free Cash Flow, which are all Non-GAAP financial measures.

We define EBITDA as net income before income or loss from discontinued operations, net of tax, interest and investment income, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets. We define Adjusted EBITDA as EBITDA before merger and acquisition related expenses and non-recurring, non-cash or non-operating items and including equity in net income of unconsolidated affiliates. For all Non-GAAP financial measures, we consider non-recurring items to be income or expenses and other items that have not been earned or incurred within the prior two years and are not expected

to recur within the next two years. Such items include certain strategic and financial restructuring expenses. Non-operating items include gains or losses on the disposal of assets and interest and investment income or expense.

We define Segment Adjusted EBITDA as the segment's net revenue less cost of revenue and operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expenses and non-recurring or non-cash items and including equity in net income of unconsolidated affiliates. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative, and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA.

Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.

We define Adjusted Fully Distributed Net Income as net income attributable to Premier (i) excluding income or loss from discontinued operations, net, (ii) excluding income tax expense, ~~(ii)~~(iii) excluding the impact of adjustment of redeemable limited partners' capital to redemption amount, ~~(iii)~~(iv) excluding the effect of non-recurring and non-cash items, ~~(iv)~~(v) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination of non-controlling interest in Premier LP and ~~(v)~~(vi) reflecting an adjustment for income tax expense on Non-GAAP fully distributed net income before income taxes at our estimated effective income tax rate. We define Adjusted Fully Distributed Earnings per Share as Adjusted Fully Distributed Net Income divided by diluted weighted average shares (see Note 12 - Earnings ~~(Loss)~~ Per Share).

We define Free Cash Flow as net cash provided by operating activities from continuing operations less distributions and TRA payments to limited partners and purchases of property and equipment. Free Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments.

Adjusted EBITDA and Free Cash Flow are supplemental financial measures used by us and by external users of our financial statements and are considered to be indicators of the operational strength and performance of our business. Adjusted EBITDA and Free Cash Flow measures allow us to assess our performance without regard to financing methods and capital structure and without the impact of other matters that we do not consider indicative of the operating performance of our business. More specifically, Segment Adjusted EBITDA is the primary earnings measure we use to evaluate the performance of our business segments.

We use Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings per Share to facilitate a comparison of our operating performance on a consistent basis from period to period that, when viewed in combination with our results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting our business. We believe Adjusted EBITDA and Segment Adjusted EBITDA assist our Board of Directors, management and investors in comparing our operating performance on a consistent basis from period to period because they remove the impact of earnings elements attributable to our asset base (primarily depreciation and amortization) ~~and~~, certain items outside the control of our management team, e.g. taxes, ~~as well as~~ other non-cash items (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation), and non-recurring items (such as strategic and financial restructuring expenses) and income and expense that has been classified as discontinued operations from our operating results. We believe Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings per Share assist our Board of Directors, management and investors in comparing our net income and earnings per share on a consistent basis from period to period because these measures remove non-cash (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation) and non-recurring items (such as strategic and financial restructuring expenses), and eliminate the variability of non-controlling interest that results from member owner exchanges of Class B common units for shares of Class A common stock. We believe Free Cash Flow is an important measure because it represents the cash that we generate after payment of tax distributions to limited partners and capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth. Our Free Cash Flow allows us to enhance stockholder value through acquisitions, partnerships, joint ventures, investments in related businesses and debt reduction.

Despite the importance of these Non-GAAP financial measures in analyzing our business, determining compliance with certain financial covenants in our Credit Facility, measuring and determining incentive compensation and evaluating our operating performance relative to our competitors, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income, Adjusted Fully Distributed Earnings per Share and Free Cash Flow are not measurements of financial performance under GAAP, may have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income, net cash provided by operating activities, or any other measure of our performance derived in accordance with GAAP.

Some of the limitations of the EBITDA, Adjusted EBITDA and Segment Adjusted EBITDA measures include that they do not reflect: our capital expenditures or our future requirements for capital expenditures or contractual commitments; changes in, or cash requirements for, our working capital needs; the interest expense or the cash requirements to service interest or principal payments under our Credit Facility; income tax payments we are required to make; and any cash requirements for replacements of assets being depreciated or amortized. In addition, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA and Free Cash Flow are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash flows from operating activities.

Some of the limitations of the Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings per Share measures are that they do not reflect income tax expense or income tax payments we are required to make. In addition, Adjusted Fully Distributed Net Income and Adjusted Fully Distributed Earnings per Share are not measures of profitability under GAAP.

We also urge you to review the reconciliation of these Non-GAAP financial measures included elsewhere in this Quarterly Report. To properly and prudently evaluate our business, we encourage you to review the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and to not rely on any single financial measure to evaluate our business. In addition, because the EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income, Adjusted Fully Distributed Earnings per Share and Free Cash Flow measures are susceptible to varying calculations, such

Non-GAAP financial measures may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.

Non-recurring and non-cash items excluded in our calculation of Adjusted EBITDA, Segment Adjusted EBITDA and Adjusted Fully Distributed Net Income consist of stock-based compensation, acquisition and disposition related expenses, remeasurement of TRA liabilities, ~~enterprise resource planning ("ERP") implementation expenses, acquisition related adjustment - revenue, remeasurement~~ gain ~~attributable to acquisition of Innovatix, LLC, loss on disposal of long-lived assets, loss (gain)~~ on FFF put and call rights, ~~impairment on investments~~income and expense that has been classified as discontinued operations and other expense. More information about certain of the more significant items follows below.

Stock-based compensation

In addition to non-cash employee stock-based compensation expense, this item includes non-cash stock purchase plan expense of $0.1 million for both of the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 and $0.3 million for both of the nine months ended March 31, ~~2019~~2020 and ~~2018~~2019 (see Note 13 - Stock-Based ~~Compensation)~~Compensation to the accompanying condensed consolidated financial statements).

Acquisition and disposition related expenses

Acquisition related expenses include legal, accounting and other expenses related to acquisition activities and gains and losses on the change in fair value of earn-out liabilities. Disposition related expenses include severance and retention benefits and financial advisor fees and legal fees related to disposition activities.

Remeasurement of TRA liabilities

We record TRA liabilities based on 85% of the estimated amount of tax savings we expect to receive, generally over a 15-year period, which are attributable to the initial purchase of Class B common units from the member owners made concurrently with the IPO and subsequent exchanges by member owners of Class B common units into Class A common stock or cash. Tax payments made under the TRA will be made to the member owners as we realize tax benefits. Determining the estimated amount of tax savings we expect to receive requires judgment as deductibility of goodwill amortization expense is not assured 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 are recorded as a component of selling, general and administrative expenses in the Condensed Consolidated Statements of Income. Changes in estimated TRA liabilities that are related to new basis changes as a result of the exchange of Class B common units for a like number of shares of Class A common stock or as a result of departed member owners are recorded as an increase to additional paid-in capital in the Condensed Consolidated Statements of Stockholders' Equity (Deficit).

The adjustments to TRA liabilities for the three months ended March 31, 2020 and the nine months ended March 31, 2020 are primarily attributable to increases in the Premier, Inc. effective tax rate related to state tax liabilities (see Note 14 - Income Taxes to the accompanying condensed consolidated financial statements).

Gain or loss on FFF put and call rights

See Note 56 - Fair Value ~~Measurements.~~Measurements to the accompanying condensed consolidated financial statements.

Results of Operations

We adopted the New Revenue Standard effective for the fiscal year beginning July 1, 2018. The prior year information has not been adjusted and continues to be reported under the Previous Revenue Standard. As result, our resultsResults of operations ~~under the New Revenue Standard are not indicative of what our results of~~for all periods presented have been retrospectively adjusted to reflect continuing operations were under the Previous Revenue Standard. However, for informational purposes, we have also included current period results under the Previous Revenue Standard. Refer to Note 2 - Significant Accounting Policies for further information on the impact of the New Revenue Standard on our condensed consolidated financial statements, which is incorporated herein by reference.

~~Results of Operations for the Three Months Ended March 31, 2019 and 2018~~unless otherwise indicated.

The following table ~~summarizes~~presents our results of operations for the ~~three months ended March 31, 2019 and 2018~~periods presented (in thousands, except per share data):


	Three Months Ended March 31,
	2019			2019			2018			Three Months Ended March 31,								Nine Months Ended March 31,
	As presented			Previous revenue standard			Previous revenue standard			2020				2019				2020				2019
	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount			% of Net Revenue	Amount			% of Net Revenue	Amount			% of Net Revenue	Amount			% of Net Revenue
Net revenue:
Net administrative fees	$	164,534	39%	$	165,425	38%	$	161,612	38%	$	174,049		52%	$	164,534		55%	$	518,566		54%	$	492,229		54%
Other services and support	95,937		23%	93,687		22%	97,492		23%	99,591			30%	95,111			32%	270,929			28%	279,734			31%
Services	260,471		62%	259,112		60%	259,104		61%	273,640			82%	259,645			86%	789,495			83%	771,963			86%
Products	162,404		38%	173,590		40%	166,234		39%	61,183			18%	41,568			14%	167,344			17%	129,441			14%
Net revenue	422,875		100%	432,702		100%	425,338		100%	334,823			100%	301,213			100%	956,839			100%	901,404			100%
Cost of revenue:
Services	46,545		11%	47,841		11%	47,037		12%	49,007			15%	46,545			16%	143,965			15%	133,107			14%
Products	157,438		37%	167,878		39%	156,511		37%	54,121			16%	39,496			13%	150,415			16%	124,024			14%
Cost of revenue	203,983		48%	215,719		50%	203,548		49%	103,128			31%	86,041			30%	294,380			31%	257,131			28%
Gross profit	218,892		52%	216,983		50%	221,790		51%	231,695			69%	215,172			70%	662,459			69%	644,273			72%
Operating expenses:
Selling, general and administrative										115,289			34%	113,336			38%	315,311			33%	320,198			36%
Research and development										628			—%	296			—%	1,808			—%	928			—%
Amortization of purchased intangible assets										13,966			4%	13,572			5%	38,948			4%	39,787			4%
Operating expenses										129,883			39%	127,204			42%	356,067			37%	360,913			40%
Operating income										101,812			30%	87,968			29%	306,392			32%	283,360			31%
Other income, net										(24,435		)	(7)%	(966		)	—%	7,670			1%	6,879			1%
Income before income taxes										77,377			23%	87,002			29%	314,062			33%	290,239			32%
Income tax expense										4,165			1%	11,737			4%	78,336			8%	25,791			3%
Net income from continuing operations										73,212			22%	75,265			25%	235,726			25%	264,448			29%
Income (loss) from discontinued operations, net of tax										5			—%	(1,463		)	—%	1,009			—%	(3,862		)	(1)%
Net income										73,217			22%	73,802			25%	236,735			25%	260,586			29%
Net income from continuing operations attributable to non-controlling interest in Premier LP										(35,055		)	(10)%	(44,135		)	(15)%	(132,189		)	(14)%	(163,230		)	(18)%
Net (income) loss from discontinued operations attributable to non-controlling interest in Premier LP										(3		)	—%	747			—%	(480		)	—%	2,098			—%
Net income attributable to non-controlling interest in Premier LP										(35,058		)	(10)%	(43,388		)	(14)%	(132,669		)	(14)%	(161,132		)	(18)%
Adjustment of redeemable limited partners' capital to redemption amount										302,569			nm	235,394			nm	516,725			nm	178,910			nm
Net income attributable to stockholders										$	340,728		nm	$	265,808		nm	$	620,791		nm	$	278,364		nm

Weighted average shares outstanding:
Basic										69,451				62,020				65,582				58,346
Diluted										122,470				129,072				124,030				132,249

Earnings per share attributable to stockholders:										Earnings per share attributable to stockholders:
Basic earnings per share

Three Months Ended March 31,
2019 2019 2018
As presented Previous revenue standard Previous revenue standard
Amount % of Net Revenue Amount % of Net Revenue Amount % of Net Revenue
Operating expenses:

Selling, general and administrative 118,503
28% 119,535
28% 109,007
26%
Research and development 296
—% 296
—% 292
—%
Amortization of purchased intangible assets 14,233
3% 14,233
3% 13,881
3%
Operating expenses 133,032
31% 134,064
31% 123,180
29%
Operating income 85,860
20% 82,919
19% 98,610
23%
Other expense, net (966 ) 1% (966 ) —% (8,773 ) (2)%
Income before income taxes 84,894
20% 81,953
19% 89,837
21%
Income tax expense 11,092
3% 12,331
3% 13,288
3%
Net income 73,802
17% 69,622
16% 76,549
18%
Net income attributable to non-controlling interest in Premier LP (43,388 ) (10)% (40,660 ) (9)% (53,047 ) (12)%
Adjustment of redeemable limited partners' capital to redemption amount 235,394
nm 233,713
nm (127,039 ) nm
Net income (loss) attributable to stockholders $ 265,808
nm $ 262,675
nm $ (103,537 ) nm

Weighted average shares outstanding:
Basic 62,020
62,020
53,529

Diluted 129,072
129,072
53,529

Earnings (loss) per share attributable to stockholders:
Basic $ 4.29
$ 4.24
$ (1.93 )
Diluted $ 0.48
$ 0.44
$ (1.93 )



	Three Months Ended March 31,							Nine Months Ended March 31,
	2020			2019				2020			2019
	Amount		% of Net Revenue	Amount			% of Net Revenue	Amount		% of Net Revenue	Amount			% of Net Revenue
Continuing operations	$	4.91		$	4.30			$	9.46		$	4.80
Discontinued operations	—			(0.01		)		0.01			(0.03		)
Basic earnings per share attributable to stockholders	$	4.91		$	4.29			$	9.47		$	4.77

Diluted earnings per share
Continuing operations	$	0.54		$	0.49			$	1.66		$	1.71
Discontinued operations	—			(0.01		)		—			(0.03		)
Diluted earnings per share attributable to stockholders	$	0.54		$	0.48			$	1.66		$	1.68

nm = Not meaningful

The following table provides certain Non-GAAP financial measures for the ~~three months ended March 31, 2019 and 2018~~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 March 31,
	2019			2019			2018
	As presented			Previous revenue standard			Previous revenue standard			Three Months Ended March 31,						Nine Months Ended March 31,
	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	2020			2019			2020			2019
Certain Non-GAAP Financial Data:										Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue
Adjusted EBITDA	$	137,578	33%	$	134,637	31%	$	142,239	33%	$	155,889	47%	$	138,717	46%	$	444,550	46%	$	421,187	47%
Non-GAAP Adjusted Fully Distributed Net Income	$	84,734	20%	$	82,557	19%	$	90,590	21%	$	88,908	27%	$	85,722	28%	$	265,668	28%	$	262,722	29%
Non-GAAP Adjusted Fully Distributed Earnings Per Share	$	0.66		$	0.64		$	0.67		$	0.73	nm	$	0.66	nm	$	2.14	nm	$	1.99	nm



	Impact of change in accounting principle
	June 30, 2018 As presented			Impact of new revenue standard			July 1, 2018 New revenue standard
Assets
Accounts receivable (net of $1,841 allowance for doubtful accounts)	$	185,874		$	(5,421	)	$	180,453
Contract assets	$	—		$	168,960		$	168,960
Total current assets	$	428,618		$	163,539		$	592,157
Deferred income tax assets	$	305,624		$	(7,106	)	$	298,518
Other assets	$	3,991		$	15,390		$	19,381
Total assets	$	2,312,216		$	171,823		$	2,484,039

Liabilities, redeemable limited partners' capital and stockholders' deficit
Revenue share obligations	$	78,999		$	43,880		$	122,879
Deferred revenue	$	39,785		$	2,401		$	42,186
Total current liabilities	$	448,882		$	46,281		$	495,163
Deferred tax liabilities	$	17,569		$	3,597		$	21,166
Total liabilities	$	818,870		$	49,878		$	868,748

Accumulated deficit	$	(1,277,581	)	$	121,945		$	(1,155,636	)
Total stockholders' deficit	$	(1,427,064	)	$	121,945		$	(1,305,119	)
Total liabilities, redeemable limited partners' capital and stockholders' deficit	$	2,312,216		$	171,823		$	2,484,039



	Impact of change in accounting principle
	Three Months Ended March 31, 2019							Nine Months Ended March 31, 2019
	As presented		Impact of new revenue standard			Previous revenue standard		As presented		Impact of new revenue standard			Previous revenue standard
Net revenue:
Net administrative fees	$	164,534	$	(891	)	$	165,425	$	492,229	$	10,232		$	481,997
Other services and support	95,937		2,250			93,687		282,656		15,907			266,749
Services	260,471		1,359			259,112		774,885		26,139			748,746
Products	162,404		(11,186		)	173,590		471,393		(35,062		)	506,455
Net revenue	$	422,875	$	(9,827	)	$	432,702	$	1,246,278	$	(8,923	)	$	1,255,201



	Carrying Value				Equity in Net Income (Loss)
					Three Months Ended March 31,					Nine Months Ended March 31,
	March 31, 2019		June 30, 2018		2019		2018			2019		2018
FFF	$	96,234	$	91,804	$	444	$	64		$	4,430	$	5,668
PharmaPoint	—		—		—		(4,073		)	—		(4,232		)
Other investments	2,408		2,249		109		(930		)	257		(866		)
Total investments	$	98,642	$	94,053	$	553	$	(4,939	)	$	4,687	$	570



	Useful Life	March 31, 2019			June 30, 2018
Member relationships	14.7 years	$	220,100		$	220,100
Technology	5.7 years	164,217			142,317
Customer relationships	8.2 years	49,320			48,120
Trade names	8.3 years	22,910			22,710
Distribution network	10.0 years	22,400			22,400
Favorable lease commitments	10.1 years	11,393			11,393
Non-compete agreements	5.8 years	9,030			8,710
Total intangible assets		499,370			475,750
Accumulated amortization		(195,404		)	(153,635		)
Intangible assets, net		$	303,966		$	322,115



	Commitment Amount		Due Date	March 31, 2019			June 30, 2018
Credit Facility	$	1,000,000	November 9, 2023	$	150,000		$	100,000
Notes payable	—		Various	8,234			7,212
Total debt				158,234			107,212
Less: current portion				(152,046		)	(100,250		)
Total long-term debt				$	6,188		$	6,962



Date	Distribution ^(a)
August 23, 2018	$	15,465
November 21, 2018	$	14,993
February 21, 2019	$	14,288



	Intrinsic Value of Stock Options
Outstanding and exercisable	$	12,074
Expected to vest	851
Total outstanding	$	12,925

Exercised during the nine months ended March 31, 2019	$	5,381


(a)	Reflects income tax expense at an estimated effective income tax rate of 26% of Non-GAAP adjusted fully distributed income before income ~~taxes for both the three months ended March 31, 2019 and 2018.~~taxes.


(b)	Reflects impact of dilutive shares, primarily attributable to the assumed conversion of all Class B common units for Class A common stock.


~~(b)~~	~~Reflects impact of dilutive shares, primarily attributable to the assumed conversion of all Class B common units for Class A common stock.~~


•	Managing the evolving regulatory environment. In response to COVID-19, federal, state and local governments are issuing new rules, regulations, orders and advisories on a regular basis. These government actions can impact us, our members and our suppliers.



Period	Total 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⁾
January 1 through January 31, 2019	1,286,252	$	38.89	1,286,252	$	91
February 1 through February 28, 2019	1,112,268	$	37.33	1,112,268	$	49
March 1 through March 31, 2019	1,419,978	$	34.50	1,419,978	$	—
Total	3,818,498	$	36.81	3,818,498	$	—


(1)	Average price paid per share excludes fees and commissions.


(2)	From the stock repurchase program's inception through March 31, ~~2019,~~2020, we purchased ~~approximately 6.7~~4.6 million shares of Class A common stock at an average price of ~~$37.38~~$32.28 per share for a total of ~~$250.0~~$150.0 million.



Exhibit No.		Description
2.1		Asset Purchase Agreement, dated as of February 3, 2020, by and among Prince A Purchaser, LLC, Prince N Purchaser, LLC, Acurity, Inc., Nexera, Inc., and the guarantors named therein, including Premier Healthcare Alliance, L.P. and GNYHA Management Corporation. (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on February 4, 2020 and incorporated herein by reference).
2.1.1		First Amendment to the Asset Purchase Agreement, dated February 26, 2020, by and among Prince A Purchaser, LLC and Prince N Purchaser, LLC, each a Delaware limited liability company, and Acurity Inc. and Nexera, Inc., each a New York corporation (filed as Exhibit 2.1.1 to the Current Report on Form 8-K filed on February 28, 2020 and incorporated herein by reference).
10.1		Premier, Inc. Directors’ Compensation Policy, as amended effective January 23, 2020 (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on January 23, 2020 and incorporated herein by reference).
31.1		Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2		Certification as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1		Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
32.2		Certification required by 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
101		Sections of the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2018,~~March 31, 2020, formatted in ~~XBRL (eXtensible~~iXBRL (Inline eXtensible Business Reporting Language), submitted in the following files:
~~101.INS~~		XBRL Instance Document.*
101.SCH		Inline XBRL Taxonomy Extension Schema Document.*
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.*
104		The cover page from the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL (included in Exhibit 101).*



			PREMIER, INC.

Date:	May ~~7, 2019~~5, 2020	By:	/s/ Craig S. McKasson
		Name:	Craig S. McKasson
		Title:	Chief Administrative and Financial Officer and Senior Vice President
			Signing on behalf of the registrant and as principal financial officer and principal accounting officer