UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

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

For the quarterly period ended ~~March~~December 31, 2023

☐

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~~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) 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. Yes ☒ No ☐

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). Yes ☒ No ☐

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth 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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~April 27, 2023,~~February 1, 2024, there were ~~119,078,357~~119,817,876 shares of the registrant’s Class A common stock, par value $0.01 per share outstanding.

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made in this Quarterly Report on Form 10-Q for the ~~nine~~six months ended ~~March~~December 31, 2023 for Premier, Inc. (this “Quarterly Report”) that are not statements of historical or current facts, such as those under the heading “Management’s 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 pandemic and/or other pandemics, associated supply chain disruptions and inflation;~~

•global economic and political instability and conflicts, such as the ongoing conflict between Russia and Ukraine, could adversely affect our business, financial condition or results of operations, including issues such as rising inflation and global supply-chain disruption;

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

•~~continued~~ consolidation in the healthcare industry;

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

•the impact to our business if members of our group purchasing organization (“GPO”) programs reduce activity levels or terminate or elect not to renew their contracts on substantially similar terms or at all;

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

•the rate at which the markets for our software as a service (“SaaS”) or licensed-based clinical analytics products and services develop;

•the dependency of our members on payments from third-party ~~payors;~~

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

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

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

•the portion of our revenues that we receive from our largest ~~members;~~members and other customers;

•risks and expenses related to future acquisition opportunities ~~and/or~~and integration of previous or future acquisitions;

•the impact on our business and stock price due to our evaluation of potential strategic alternatives;

•financial and operational risks associated with non-controlling investments in other businesses or other joint ventures that we do not control, particularly early-stage companies;

•pending and potential litigation;

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

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

•the financial, operational, legal and reputational consequences of cyber-attacks or other data security breaches that disrupt our operations ~~and/~~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/or effectively~~and to integrate third-party technologies;

•our use of “open source” software;

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

•inventory risk we face in the event of a potential material decline in demand or price for the personal protective equipment or other products we may have purchased at elevated market prices or fixed prices;

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

•~~adequate protection~~the impact of continuing uncertain economic conditions to our ~~intellectual property~~business operations due to, but not limited to, inflation and ~~potential claims against our use~~the risk of ~~the intellectual property of third parties;~~global recession;

•~~potential sales~~the impact of the continuing financial and ~~use tax liabilities in certain jurisdictions;~~operational uncertainty due to pandemics, epidemics or public health emergencies and associated supply chain disruptions;

•~~changes in tax laws that materially impact our tax rate, income tax expense, anticipated tax benefits, deferred tax assets, cash flows~~the financial and ~~profitability;~~operational uncertainty due to global economic and political instability and conflicts;

•~~our indebtedness and our ability~~the impact of global climate change or by regulatory responses to ~~obtain additional financing on favorable terms, including our ability to renew or replace our existing long-term credit facility at maturity;~~such change;

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

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

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

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

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

•compliance with current or future laws, rules and regulations adopted by the Food and Drug Administration applicable to our software applications that may be considered medical devices;

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

•potential sales and use, franchise and income tax liability in certain jurisdictions;

•changes in tax laws that materially impact our tax rate, income tax expense, anticipated tax benefits, deferred tax assets, cash flows and profitability and potential material tax disputes;

•the impact of payments required under notes payable to former limited partners related to the early termination of the Unit Exchange and Tax Receivable Acceleration Agreements (the “Unit Exchange Agreements”) issued in connection with our August 2020 Restructuring ~~(as defined below)~~ on our overall cash flow and our ability to fully realize the expected tax benefits to match such fixed payment obligations under those notes payable;

•provisions in our certificate of incorporation and bylaws and provisions of Delaware law and other applicable laws that discourage or prevent strategic transactions, including a takeover of us;

•our indebtedness and our ability to obtain additional financing on favorable terms, including our ability to renew or replace our existing long-term credit facility at or before maturity;

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

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

•the impact on the price of our Class A common stock if we cease paying dividends or reduce dividend payments from current levels;

•the number of shares of Class A common stock repurchased by us pursuant to any ~~then-existing~~then existing Class A common stock repurchase program and the timing of any such repurchases;

•the number of shares of Class A common stock eligible for sale after the issuance of Class A common stock in our August 2020 Restructuring and the potential impact of such sales; and

•the risk factors discussed under the heading “Risk Factors” under Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2022~~2023 (the ~~“2022~~“2023 Annual Report”) filed with the Securities and Exchange Commission (“SEC”) ~~and~~, as updated by our Quarterly Reports on Form 10-Q (including this Quarterly ~~Report.~~Report) filed with the SEC.

More information on potential factors that could affect our financial results is included from time to time in the “Cautionary 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 (the

contents of which are not part of this Quarterly Report). You should not place undue reliance on any of our forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Furthermore, we cannot guarantee future results, events, levels of activity, performance or achievements.

Certain Definitions

For periods prior to August 11, 2020, references to “member owners” are references to participants in our GPO programs that were also limited partners of Premier Healthcare Alliance L.P. (“Premier LP”), sometimes referred to as “LPs” or “former limited partners,” that held Class B common units of Premier LP and shares of our Class B common stock.

~~For periods~~ on or after August 11, 2020, references to “members” are references to health systems and other customers that utilize any of our programs or services, some of which were formerly member ~~owners.~~owners who participated in our GPO programs and were also limited partners of Premier Healthcare Alliance L.P. (“Premier LP”).

References to the “August 2020 Restructuring” are references to our corporate restructuring on August 11, 2020 in which we (i) eliminated our dual-class ownership structure through an exchange under which member owners who were limited partners of

Premier LP converted their Class B common units in Premier LP and corresponding Class B common shares of Premier, Inc. into our Class A common stock, on a one-for-one basis, and (ii) exercised our right to terminate the Tax Receivable Agreement (the “TRA”) by providing all former limited partners a notice of termination and the amount of the expected payment to be made to each limited partner pursuant to the early termination provisions of the TRA with a determination date of August 10, 2020. For additional information and details regarding the August 2020 Restructuring, see our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

References to the “Subsidiary Reorganization” are references to an internal legal reorganization of our corporate subsidiaries in December 2021 for the purpose of simplifying our subsidiary reporting structure. For additional information and details regarding the Subsidiary Reorganization, see our Quarterly Report on Form 10-Q for the period ended December 31, 2021.

References to ~~“Prior Premier GP”~~“adjacent markets” are references to ~~our former wholly owned subsidiary~~the non-provider healthcare markets penetrated by Premier, ~~Services, LLC, which was merged with~~Inc.’s businesses and ~~into Premier, Inc., with Premier, Inc. being~~brands that are designed to diversify revenue for the ~~surviving entity as part of the Subsidiary Reorganization.~~Company. This includes PINC AI Clinical Decision Support serving providers and payers; PINC AI Applied Sciences serving biotech, pharmaceutical and medical device companies; Contigo Health that serves self-insured employers, including healthcare providers that are also payers (“payviders”); and Remitra that serves healthcare suppliers and providers.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PREMIER, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)


		March 31, 2023		June 30, 2022
	December 31, 2023						December 31, 2023	June 30, 2023
Assets	Assets
Cash and cash equivalents	Cash and cash equivalents	$	91,493	$	86,143
Accounts receivable (net of $2,747 and $2,043 allowance for credit losses, respectively)		115,289		114,129
Contract assets (net of $808 and $755 allowance for credit losses, respectively)		290,824		260,061
Cash and cash equivalents
Cash and cash equivalents
Accounts receivable (net of $2,394 and $2,878 allowance for credit losses, respectively)
Contract assets (net of $1,137 and $885 allowance for credit losses, respectively)
Inventory	Inventory	94,431		119,652
Prepaid expenses and other current assets	Prepaid expenses and other current assets	59,091		65,581
Total current assets	Total current assets	651,128		645,566
Property and equipment (net of $642,684 and $578,644 accumulated depreciation, respectively)		206,687		213,379
Intangible assets (net of $252,997 and $217,582 accumulated amortization, respectively)		442,718		356,572
Property and equipment (net of $703,148 and $662,554 accumulated depreciation, respectively)
Intangible assets (net of $290,884 and $265,684 accumulated amortization, respectively)
Goodwill	Goodwill	1,069,073		999,913
Deferred income tax assets	Deferred income tax assets	722,949		725,032
Deferred compensation plan assets	Deferred compensation plan assets	47,699		47,436
Investments in unconsolidated affiliates	Investments in unconsolidated affiliates	230,300		215,545
Operating lease right-of-use assets	Operating lease right-of-use assets	31,658		39,530
Other assets	Other assets	110,305		114,154
Total assets	Total assets	$	3,512,517	$	3,357,127

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

Deferred consideration, less current portion		29,189		28,702

Operating lease liabilities, less current portion

Operating lease liabilities, less current portion

Operating lease liabilities, less current portion	Operating lease liabilities, less current portion	25,468		32,960
Other liabilities	Other liabilities	46,416		42,574
Total liabilities	Total liabilities	1,176,726		1,108,277
Commitments and contingencies (Note 13)
Commitments and contingencies (Note 14)						Commitments and contingencies (Note 14)
Stockholders' equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 126,245,859 shares issued and 119,816,484 shares outstanding at December 31, 2023 and 125,587,858 shares issued and 119,158,483 shares outstanding at June 30, 2023
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 126,245,859 shares issued and 119,816,484 shares outstanding at December 31, 2023 and 125,587,858 shares issued and 119,158,483 shares outstanding at June 30, 2023
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 126,245,859 shares issued and 119,816,484 shares outstanding at December 31, 2023 and 125,587,858 shares issued and 119,158,483 shares outstanding at June 30, 2023
Treasury stock, at cost; 6,429,375 shares at both December 31, 2023 and June 30, 2023
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income (loss)
Total stockholders' equity
Total liabilities and stockholders' equity

See accompanying notes to the unaudited condensed consolidated financial statements.

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

Condensed Consolidated Statements of Income and Comprehensive Income

(Unaudited)

(In thousands, except per share data)


	Three Months Ended				Six Months Ended
	December 31,				December 31,
	2023		2022		2023		2022
Net revenue:
Net administrative fees	$	149,563	$	154,423	$	298,590	$	304,429
Software licenses, other services and support	129,401		138,210		248,541		243,216
Services and software licenses	278,964		292,633		547,131		547,645
Products	55,781		66,993		106,366		125,854
Net revenue	334,745		359,626		653,497		673,499
Cost of revenue:
Services and software licenses	65,990		55,265		130,122		109,279
Products	47,472		61,620		91,510		119,494
Cost of revenue	113,462		116,885		221,632		228,773
Gross profit	221,283		242,741		431,865		444,726
Operating expenses:
Selling, general and administrative	142,150		140,528		280,210		272,578
Research and development	928		1,000		1,791		1,975
Amortization of purchased intangible assets	12,512		13,047		25,200		23,499
Operating expenses	155,590		154,575		307,201		298,052
Operating income	65,693		88,166		124,664		146,674
Equity in net (loss) income of unconsolidated affiliates	(666)		1,674		(2,392)		9,917
Interest income (expense), net	2,438		(4,631)		2,633		(7,490)
Other income, net	4,679		2,930		3,587		766
Other income (expense), net	6,451		(27)		3,828		3,193
Income before income taxes	72,144		88,139		128,492		149,867
Income tax expense	19,278		23,765		33,216		42,534
Net income	52,866		64,374		95,276		107,333
Net loss (income) attributable to non-controlling interest	1,436		(328)		3,787		(571)
Net income attributable to stockholders	$	54,302	$	64,046	$	99,063	$	106,762

Comprehensive income:
Net income	$	52,866	$	64,374	$	95,276	$	107,333
Comprehensive loss (income) attributable to non-controlling interest	1,436		(328)		3,787		(571)
Foreign currency translation gain (loss)	26		1		23		(9)
Comprehensive income attributable to stockholders	$	54,328	$	64,047	$	99,086	$	106,753

Weighted average shares outstanding:
Basic	119,702		118,787		119,523		118,569
Diluted	120,057		119,652		120,095		119,842

Earnings per share attributable to stockholders:
Basic	$	0.45	$	0.54	$	0.83	$	0.90
Diluted	$	0.45	$	0.54	$	0.82	$	0.89

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of ~~Income~~Stockholders' Equity

Six Months Ended December 31, 2023 and ~~Comprehensive Income~~2022

(Unaudited)

(In thousands, except per share data)

Three Months Ended Nine Months Ended
March 31, March 31,
2023 2022 2023 2022
Net revenue:
Net administrative fees $ 148,441 $ 148,396 $ 452,870 $ 448,261
Software licenses, other services and support 116,579 105,808 359,795 320,109
Services and software licenses 265,020 254,204 812,665 768,370
Products 57,212 93,629 183,066 323,825
Net revenue 322,232 347,833 995,731 1,092,195
Cost of revenue:
Services and software licenses 54,149 46,735 163,428 136,326
Products 49,013 88,621 168,507 294,916
Cost of revenue 103,162 135,356 331,935 431,242
Gross profit 219,070 212,477 663,796 660,953
Operating expenses:
Selling, general and administrative 143,587 143,676 416,165 418,330
Research and development 1,001 826 2,976 2,666
Amortization of purchased intangible assets 11,916 11,151 35,415 32,890
Operating expenses 156,504 155,653 454,556 453,886
Operating income 62,566 56,824 209,240 207,067
Equity in net income of unconsolidated affiliates 4,630 3,991 14,547 17,165
Interest expense, net (4,269) (2,804) (11,759) (8,465)
Gain on FFF Put and Call Rights — — — 64,110
Other income (expense), net 2,954 (4,248) 3,720 (2,176)
Other income (expense), net 3,315 (3,061) 6,508 70,634
Income before income taxes 65,881 53,763 215,748 277,701
Income tax expense 17,232 14,694 59,766 40,094
Net income 48,649 39,069 155,982 237,607
Net income attributable to non-controlling interest (1,848) (654) (2,419) (1,643)
Net income attributable to stockholders $ 46,801 $ 38,415 $ 153,563 $ 235,964
Comprehensive income:
Net income $ 48,649 $ 39,069 $ 155,982 $ 237,607
Comprehensive income attributable to non-controlling interest (1,848) (654) (2,419) (1,643)
Foreign currency translation gain (loss) 1 4 (8) 3
Comprehensive income attributable to stockholders $ 46,802 $ 38,419 $ 153,555 $ 235,967
Weighted average shares outstanding:
Basic 118,872 118,697 118,668 120,957
Diluted 119,816 119,813 119,832 122,302
Earnings per share attributable to stockholders:
Basic $ 0.39 $ 0.32 $ 1.29 $ 1.95
Diluted $ 0.39 $ 0.32 $ 1.28 $ 1.94


	Class A Common Stock			Treasury Stock		Additional Paid-In Capital			Retained Earnings		Accumulated Other Comprehensive (Loss) Income		Total Stockholders' Equity
	Shares	Amount			Shares			Amount
Balance at June 30, 2023	119,158	$	1,256		6,429	$	(250,129)		$	2,178,134	$	405,102	$	(8)	$	2,334,355
Issuance of Class A common stock under equity incentive plan	514	5			—	—			—		—		—		5

Stock-based compensation expense	—	—			—	—			6,692		—		—		6,692
Repurchase of vested restricted units for employee tax-withholding	—	—			—	—			(5,178)		—		—		(5,178)
Net income	—	—			—	—			—		42,410		—		42,410
Net loss attributable to non-controlling interest	—	—			—	—			(2,351)		2,351		—		—
Change in ownership of consolidated entity	—	—			—	—			27		—		—		27
Dividends ($0.21 per share)	—	—			—	—			—		(25,603)		—		(25,603)

Foreign currency translation adjustment	—	—			—	—			—		—		(3)		(3)
Balance at September 30, 2023	119,672	1,261			6,429	(250,129)			2,177,324		424,260		(11)		2,352,705
Issuance of Class A common stock under equity incentive plan	56	—			—	—			—		—		—		—
Issuance of Class A common stock under employee stock purchase plan	88	1			—	—			1,975		—		—		1,976

Stock-based compensation expense	—	—			—	—			8,378		—		—		8,378
Repurchase of vested restricted units for employee tax-withholding	—	—			—	—			(151)		—		—		(151)
Net income	—	—			—	—			—		52,866		—		52,866
Net loss attributable to non-controlling interest	—	—			—	—			(1,436)		1,436		—		—
Change in ownership of consolidated entity	—	—			—	—			25		—		—		25
Dividends ($0.21 per share)	—	—			—	—			—		(25,616)		—		(25,616)






Foreign currency translation adjustment	—	—			—	—			—		—		26		26

Balance at December 31, 2023	119,816	$	1,262		6,429	$	(250,129)		$	2,186,115	$	452,946	$	15	$	2,390,209


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


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





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

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





Foreign currency translation adjustment	—	—			—	—			—		—		1		1
Other	—	—			—	—			590		—		—		590
Balance at December 31, 2022	118,867	$	1,253		6,429	$	(250,129)		$	2,166,909	$	388,052	$	(12)	$	2,306,073

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of ~~Stockholders' Equity~~

~~Nine Months Ended March 31, 2023 and 2022~~Cash Flows

(Unaudited)

(In thousands)

Class A
Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Stockholders' Equity
Shares Amount Shares Amount
Balance at June 30, 2022 118,052 $ 1,245 6,429 $ (250,129) $ 2,166,047 $ 331,690 $ (3) $ 2,248,850
Issuance of Class A common stock under equity incentive plan 694 7 — — 637 — — 644
Stock-based compensation expense — — — — 7,136 — — 7,136
Repurchase of vested restricted units for employee tax-withholding — — — — (13,089) — — (13,089)
Net income — — — — — 42,959 — 42,959
Net income attributable to non-controlling interest — — — — 243 (243) — —
Change in ownership of consolidated entity — — — — 26 — — 26
Dividends ($0.21 per share) — — — — — (25,097) — (25,097)
Foreign currency translation adjustment — — — — — — (10) (10)
Balance at September 30, 2022 118,746 1,252 6,429 (250,129) 2,161,000 349,309 (13) 2,261,419
Issuance of Class A common stock under equity incentive plan 54 — — — 60 — — 60
Issuance of Class A common stock under employee stock purchase plan 67 1 — — 2,267 — — 2,268
Stock-based compensation expense — — — — 2,679 — — 2,679
Repurchase of vested restricted units for employee tax-withholding — — — — (41) — — (41)
Net income — — — — — 64,374 — 64,374
Net income attributable to non-controlling interest — — — — 328 (328) — —
Change in ownership of consolidated entity — — — — 26 — — 26
Dividends ($0.21 per share) — — — — — (25,303) — (25,303)
Foreign currency translation adjustment — — — — — — 1 1
Other — — — — 590 — — 590
Balance at December 31, 2022 118,867 1,253 6,429 (250,129) 2,166,909 388,052 (12) 2,306,073
Issuance of Class A common stock under equity incentive plan 13 — — — — — — —
Stock-based compensation expense — — — — 6,560 — — 6,560
Repurchase of vested restricted units for employee tax-withholding — — — — (297) — — (297)
Net income — — — — — 48,649 — 48,649
Net income attributable to non-controlling interest — — — — 1,848 (1,848) — —
Change in ownership of consolidated entity — — — — 28 — — 28
Dividends ($0.21 per share) — — — — — (25,223) — (25,223)
Foreign currency translation adjustment — — — — — — 1 1
Balance at March 31, 2023 118,880 $ 1,253 6,429 $ (250,129) $ 2,175,048 $ 409,630 $ (11) $ 2,335,791

Class A
Common Stock Treasury Stock Additional Paid-In Capital Retained Earnings Accumulated Other Comprehensive (Loss) Income Total Stockholders' Equity
Shares Amount Shares Amount
Balance at June 30, 2021 122,533 $ 1,225 — $ — $ 2,059,194 $ 169,474 $ — $ 2,229,893
Issuance of Class A common stock under equity incentive plan 1,239 13 — — 22,851 — — 22,864
Treasury stock (1,091) — 1,091 (42,628) — — — (42,628)
Stock-based compensation expense — — — — 7,554 — — 7,554
Repurchase of vested restricted units for employee tax-withholding — — — — (9,171) — — (9,171)
Net income — — — — — 121,306 — 121,306
Net loss attributable to non-controlling interest — — — — (698) 698 — —
Dividends ($0.20 per share) — — — — — (24,877) — (24,877)
Non-controlling interest related to acquisition — — — — 23,145 — — 23,145
Balance at September 30, 2021 122,681 1,238 1,091 (42,628) 2,102,875 266,601 — 2,328,086
Issuance of Class A common stock under equity incentive plan 579 5 — — 14,398 — — 14,403
Issuance of Class A common stock under employee stock purchase plan 52 1 — — 1,976 — — 1,977
Treasury stock (3,377) — 3,377 (133,396) — — — (133,396)
Stock-based compensation expense — — — — 16,234 — — 16,234
Repurchase of vested restricted units for employee tax-withholding — — — — (1,495) — — (1,495)
Net income — — — — — 77,232 — 77,232
Net income attributable to non-controlling interest — — — — 1,687 (1,687) — —
Change in ownership of consolidated entity — — — — 12 — — 12
Dividends ($0.20 per share) — — — — — (24,250) — (24,250)
Foreign currency translation adjustment — — — — — — (1) (1)
Balance at December 31, 2021 119,935 1,244 4,468 (176,024) 2,135,687 317,896 (1) 2,278,802
Issuance of Class A common stock under equity incentive plan 12 — — — 118 — — 118
Treasury stock (1,961) — 1,961 (74,105) — — — (74,105)
Stock-based compensation expense — — — — 14,004 — — 14,004
Repurchase of vested restricted units for employee tax-withholding — — — — (174) — — (174)
Net income — — — — — 39,069 — 39,069
Net income attributable to non-controlling interest — — — — 654 (654) — —
Change in ownership of consolidated entity — — — — 24 — — 24
Dividends ($0.20 per share) — — — — — (24,140) — (24,140)
Foreign currency translation adjustment — — — — — — 4 4
Balance at March 31, 2022 117,986 $ 1,244 6,429 $ (250,129) $ 2,150,313 $ 332,171 $ 3 $ 2,233,602


	Six Months Ended December 31,
	2023		2022
Operating activities
Net income	$	95,276	$	107,333
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	65,795		68,377
Equity in net loss (income) of unconsolidated affiliates	2,392		(9,917)
Deferred income taxes	(154,933)		1,959
Stock-based compensation	15,070		9,815

Other, net	2,966		10,167
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable	(7,005)		(5,145)
Contract assets	(33,178)		(26,458)
Inventory	4,166		3,231
Prepaid expenses and other assets	(10,624)		17,685
Accounts payable	2,608		16,707
Revenue share obligations	17,567		9,974
Accrued expenses, deferred revenue and other liabilities	35,280		(7,003)
Net cash provided by operating activities	35,380		196,725
Investing activities
Purchases of property and equipment	(49,068)		(38,416)
Acquisition of businesses and equity method investments, net of cash acquired	—		(187,750)

Other	—		(1,300)
Net cash used in investing activities	(49,068)		(227,466)
Financing activities
Payments on notes payable	(50,872)		(51,049)
Proceeds from credit facility	—		285,000
Payments on credit facility	(215,000)		(135,000)
Proceeds from sale of future revenues	629,820		—
Payments on liability related to the sale of future revenues	(14,611)		—

Cash dividends paid	(51,059)		(50,205)

Other, net	(3,296)		(9,516)
Net cash provided by financing activities	294,982		39,230
Effect of exchange rate changes on cash flows	23		(9)
Net increase in cash and cash equivalents	281,317		8,480
Cash and cash equivalents at beginning of period	89,793		86,143
Cash and cash equivalents at end of period	$	371,110	$	94,623

See accompanying notes to the unaudited condensed consolidated financial statements.

~~PREMIER, INC.~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

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

~~See accompanying notes to the unaudited condensed consolidated financial statements.~~

119

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 located in the United States. The Company is a holding company with no material business operations of its own. The Company’s primary asset is its equity interest in its wholly owned subsidiary Premier Healthcare Solutions, Inc., a Delaware corporation (“PHSI”). The Company conducts substantially all of its business operations through PHSI and its other consolidated subsidiaries. The Company, together with its subsidiaries and affiliates, is a leading technology-driven healthcare ~~performance~~ improvement company that unites hospitals, health systems, physicians, employers, product suppliers, service providers, and other healthcare providers and organizations to improve and innovate in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry and continues to expand its capabilities to more fully address and coordinate care improvement and standardization in the employer, ~~payor~~payer and life sciences markets. ~~The~~Additionally, the Company also provides some of the various products and services noted above to ~~other~~non-healthcare businesses, including ~~food service, schools and universities.~~through its direct sourcing activities as well as continued access to its group purchasing organization (“GPO”) programs for non-healthcare members whose contracts were sold to OMNIA Partners, LLC (“OMNIA”) (see Note 9 - Liability Related to the Sale of Future Revenues).

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

The Company, together with its subsidiaries and affiliates, delivers its integrated platform of solutions through two business segments: Supply Chain Services and Performance Services. See Note 1415 - Segments for further information related to the Company’s reportable business segments. The Company has no significant foreign operations or revenues. The Supply Chain Services segment includes one of the largest national healthcare ~~group purchasing organization (“GPO”)~~GPO programs in the United States and provides supply chain co-management, purchased services and direct sourcing activities. The Performance Services segment consists of three sub-brands: PINC AITM, the Company’s technology and services platform with offerings that help optimize performance in three main areas – clinical intelligence, margin improvement and value-based care – using advanced analytics to identify improvement opportunities, consulting and managed services for clinical and operational design, and workflow solutions to hardwire sustainable change in the provider, payer and life sciences ~~and payer~~ markets; Contigo Health®, the Company’s direct-to-employer business which provides third-party administrator services and management of health-benefit programs that ~~allow~~enable healthcare providers that are also payers (e.g., payviders) and employers to contract directly with healthcare providers as well as partner with healthcare providers to provide employers access to a specialized care network through Contigo Health’s centers of excellence program and cost containment and wrap network; and RemitraTM®, the Company’s digital invoicing and payables automation business which provides financial support services to healthcare ~~providers~~suppliers and ~~suppliers.~~providers.

Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC and in accordance with U.S. generally accepted accounting principles (“GAAP”) 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, consisting of normal recurring adjustments, unless otherwise disclosed. Certain amounts in prior periods have been reclassified to conform to the current period presentation. The Company believes that the disclosures are adequate to make the information presented not misleading and should be read in conjunction with the audited consolidated financial statements and related footnotes contained in the ~~2022~~2023 Annual Report.

1210

Supplementary Cash Flows Information

The following table presents supplementary cash flows information for the ~~nine~~six months ended ~~March~~December 31, 2023 and 2022 (in thousands):


	Six Months Ended December 31,						Six Months Ended December 31,
	2023					2023		2022

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

Supplemental schedule of non-cash investing and financing activities:

Supplemental schedule of non-cash investing and financing activities:
Accrued dividend equivalents
Accrued dividend equivalents
Accrued dividend equivalents
Non-cash additions to property and equipment	Non-cash additions to property and equipment	$	5	$	129
Non-cash investment in unconsolidated affiliates		7,800		—
Accrued dividend equivalents		778		738

Use of Estimates in the Preparation of Financial Statements

The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Significant estimates are evaluated on an ongoing basis, including, but not limited to, estimates for net administrative fees revenue, software licenses, other services and support revenue, contract assets, deferred revenue, contract costs, allowances for credit losses, reserves for net realizable value of inventory, obsolete inventory, useful lives of property and equipment, stock-based compensation, 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 impairments, values of 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.

(2) SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company’s significant accounting policies as described in the ~~2022~~2023 Annual ~~Report.~~Report, except as described below.

~~Recently Adopted Accounting Standards~~Liability Related to the Sale of Future Revenues

In October 2021, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2021-08 Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, (“ASU 2021-08”), which requires that an acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606, Revenue from Contracts with Customers. The Company ~~adopted ASU 2021-08 during~~accounts for the ~~second quarter~~sale of ~~fiscal 2023.~~future revenues as a liability, with both current and non-current portions. In order to determine the timing of the reduction in debt associated with the sale of future revenues, the Company estimates the total future revenues expected to be remitted to the purchaser. The ~~standard did not have~~Company recognizes interest expense based on an estimated effective annual interest rate. The Company determines the effective interest rate based on recognized and expected future revenue and maintains a ~~material~~consistent interest rate throughout the life of the agreement. This estimate contains significant assumptions that impact onboth the ~~Company’s financial statements nor its related disclosures.~~amount of debt and the interest expense recorded over the life of the agreement. To the extent the amount or timing of future payments varies materially from the original estimate, the Company will make a cumulative adjustment to the carrying amount of the debt, which will be recorded as a non-cash gain or loss in other income in the Condensed Consolidated Statements of Income and Comprehensive Income.

(3) BUSINESS ACQUISITIONS

Acquisition of TRPN Direct Pay, Inc. and Devon Health, Inc. Assets

On October 13, 2022, the Company, through its consolidated subsidiary Contigo Health, LLC (“Contigo Health”), acquired certain assets (the “TRPN Transferred Assets”) of TRPN Direct Pay, Inc. and Devon Health, Inc. (collectively, “TRPN”), including contracts with more than 900,000 providers (collectively, the “Assumed Contracts”), and agreed to assume certain liabilities and obligations of TRPN with regard to the Assumed Contracts (referred to as the “TRPN acquisition”). The TRPN Transferred Assets relate to businesses of TRPN focused on improving access to quality healthcare and reducing the cost of medical claims through pre-negotiated discounts with network providers, including ~~acute-care~~acute care hospitals, surgery centers, physicians and other ~~non-acute~~continuum of care providers in the United States. Contigo Health also agreed to license proprietary cost containment technology of TRPN.

The purchase price paid by the Company to complete the TRPN acquisition consisted of cash of $177.5 million, funded with borrowings under the Company’s Credit Facility (as defined in Note 8 - Debt and Notes Payable) and cash on hand, of which $17.8 million was placed in escrow to satisfy indemnification obligations of TRPN to Contigo Health and its affiliates and other parties related thereto under the purchase agreement governing the TRPN acquisition.

The Company has accounted for the TRPN acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values. The total fair value assigned to intangible assets acquired was $116.6 million, consisting primarily of the provider network.

The TRPN acquisition resulted in the initial recognition of $60.9 million of goodwill attributable to the anticipated profitability of TRPN, based on the purchase price paid in the acquisition compared to the fair value of the net assets acquired. The TRPN acquisition was considered an asset acquisition for income tax purposes. Accordingly, the Company expects tax goodwill to be deductible for tax purposes. ~~The initial purchase price allocation for~~In fiscal year 2023, the Company recorded a pre-tax goodwill impairment charge of $54.4 million related to the Contigo Health reporting unit including goodwill recognized as a result of the TRPN ~~acquisition is preliminary and subject to changes in the valuation of the assets acquired and liabilities assumed.~~acquisition. TRPN ~~is being~~has been integrated within Premier under Contigo Health and is reported as part of the Performance Services Segment.

Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to the Company’s historical consolidated financial statements.

(4) INVESTMENTS

Investments in Unconsolidated Affiliates

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


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

The Company, through its indirect, wholly owned subsidiary Premier Supply Chain Improvement, Inc. (“PSCI”), held a 49% interest in FFF Enterprises, Inc. (“FFF”) through its ownership of stock of FFF at ~~March~~December 31, 2023 and June 30, ~~2022. The Company accounts for its investment in FFF as part of the Supply Chain Services segment.~~

2023. On March 3, 2023, the Company and the majority shareholder of FFF amended the FFF shareholders’ agreement and in lieu of a distribution, the Company received an increase of $24.8 million to the its liquidation preferences on the Class B common stock in FFF, bringing the Company’s total liquidation preference in FFF to $32.3 million. In the event of liquidation or dissolution of FFF, the Company will receive the liquidation preference of $32.3 million prior to any pro rata distribution of FFF’s proportional equity value between the Company and the majority shareholder of FFF. As a result of the increase to the liquidation preference and priority of the Company’s Class B common stock in FFF in the event of liquidation or dissolution of FFF, the Company will no longer account for its investment in FFF using the equity method of accounting. Asas of the date of the amendment, the Company ~~will account~~accounts for its investment in FFF at cost less impairments, if any, plus or minus any observable changes in fair ~~value.~~value (refer to the 2023 Annual Report for additional information and details regarding the March 2023 amendment). The Company accounts for its investment in FFF as part of the Supply Chain Services segment.

The Company, through its consolidated subsidiary, ExPre Holdings, LLC (“ExPre”), held an approximate 6% interest in Exela Holdings, Inc. (“Exela”) through its ownership of Exela Class A common stock at ~~March~~December 31, 2023 and June 30, 2023. At ~~March~~December 31, 2023 and June 30, 2023, the Company owned approximately 15% of the membership interest of ExPre, with the remainder of the membership interests held by 11 member health systems or their affiliates.

The Company, through its consolidated subsidiary, PRAM Holdings, LLC (“PRAM”), held an approximate 20% interest in Prestige Ameritech Ltd. (“Prestige”) through its ownership of Prestige limited partnership units at ~~March~~December 31, 2023 and June 30, 2023. At ~~March~~December 31, 2023 and June 30, 2023, the Company owned approximately 26% of the membership interest of PRAM, with the remainder of the membership interests held by 16 member health systems or their affiliates.

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

The Company, through PHSI, ~~purchased~~held an approximate 7% interest in Qventus, Inc. (“Qventus”) through its ownership of Qventus Series C preferred ~~stock.~~stock at December 31, 2023 and June 30, 2023. The Company accounts for its investment in Qventus at cost less impairments, if any, plus or minus any observable changes in fair value. The Company includes Qventus as part of the Performance Services segment.

1412

(5) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table represents the Company’s financial assets and liabilities, which are measured at fair value on a recurring basis (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)
March 31, 2023
	Fair Value of Financial Assets and Liabilities									Fair Value of Financial Assets and Liabilities	Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)	Significant Unobservable Inputs (Level 3)
December 31, 2023
Cash equivalents
Cash equivalents
Cash equivalents	Cash equivalents	$	76	$	76	$	—	$	—
Deferred compensation plan assets	Deferred compensation plan assets	52,787		52,787		—		—
Total assets	Total assets	52,863		52,863		—		—

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

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

June 30, 2022
June 30, 2023
June 30, 2023
June 30, 2023
Cash equivalents
Cash equivalents
Cash equivalents	Cash equivalents	$	75	$	75	$	—	$	—
Deferred compensation plan assets	Deferred compensation plan assets	52,718		52,718		—		—
Total assets	Total assets	52,793		52,793		—		—

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

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

Deferred compensation plan assets consisted of highly liquid mutual fund investments, which were classified as Level 1. The current portion of deferred compensation plan assets ($~~5.1~~6.4 million and ~~$5.3~~$5.2 million at ~~March~~December 31, 2023 and June 30, ~~2022,~~2023, respectively) was included in prepaid expenses and other current assets 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~~

~~On July 29, 2021, the FFF shareholders’ agreement was amended resulting in the termination of the FFF Put Right and the derecognition of the FFF Put Right liability.~~

In the event of a Key Man Event (generally defined in the FFF shareholders’ agreement as the resignation, termination for cause, death or disability of the majority shareholder), the Company has a call right that requires the majority shareholder to sell its remaining interest in FFF to the Company, and is exercisable at any time within 180 calendar days after the date of a Key Man Event (the “Call Right”, together with the FFF Put Right, the “Put and Call Rights”). As of March 31, 2023 and June 30, 2022, the Call Right had zero value. In the event that the Call Right is exercised, the purchase price for the additional interest in FFF will be at a per share price equal to FFF’s earnings before interest, taxes, depreciation and amortization (“FFF EBITDA”) over the twelve calendar months prior to the purchase date multiplied by a market adjusted multiple, adjusted for any outstanding debt and cash and cash equivalents, divided by the number of shares of FFF common stock then outstanding (“Equity Value per Share”).

Earn-out liabilities

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

Acurity and Nexera Earn-out (a)

The earn-out liability arising from expected earn-out payments related to the Acurity and Nexera asset acquisition was measured on the acquisition date using a probability-weighted expected payment model and is remeasured periodically due to changes in management’s estimates of the number of transferred member renewals and market conditions. In determining the fair value of the contingent liabilities, management reviews the current results of the acquired business, along with projected results for the remaining earn-out period, to calculate the expected earn-out payment to be made based on the contractual terms set out in the acquisition agreement. The Acurity and Nexera earn-out liability utilized a credit spread of ~~1.8%~~1.1% at ~~March~~December 31, 2023 and 1.6% at June 30, ~~2022. As of March~~2023. At December 31, 2023, ~~and June 30, 2022,~~ the most likely outcome was determined to be $30.0 million from an undiscounted range of outcomes is between $0 and $30.0 million. ~~A significant decrease in the probability could result in a significant decrease in the value of the earn-out liability.~~ The fair value of the Acurity and Nexera earn-out liability at ~~March~~December 31, 2023 and June 30, ~~2022~~2023 was ~~$23.0~~$27.9 million and ~~$22.8~~$23.1 million, respectively.


Input assumptions	Input assumptions	As of March 31, 2023		As of June 30, 2022		Input assumptions	As of December 31, 2023		As of June 30, 2023
Probability of transferred member renewal percentage < 50%	Probability of transferred member renewal percentage < 50%	5.0	%	5.0	%	Probability of transferred member renewal percentage < 50%	—	%	5.0	%
Probability of transferred member renewal percentage between 50% and 65%	Probability of transferred member renewal percentage between 50% and 65%	10.0	%	10.0	%	Probability of transferred member renewal percentage between 50% and 65%	—	%	10.0	%
Probability of transferred member renewal percentage between 65% and 80%	Probability of transferred member renewal percentage between 65% and 80%	25.0	%	25.0	%	Probability of transferred member renewal percentage between 65% and 80%	—	%	25.0	%
Probability of transferred member renewal percentage > 80%	Probability of transferred member renewal percentage > 80%	60.0	%	60.0	%	Probability of transferred member renewal percentage > 80%	100.0	%	60.0	%
Credit spread	Credit spread	1.8	%	1.6	%	Credit spread	1.1	%	1.6	%

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

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


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

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

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

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

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

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

Nine Months Ended March 31, 2022
Six Months Ended December 31, 2022
Six Months Ended December 31, 2022
Six Months Ended December 31, 2022
Earn-out liabilities	Earn-out liabilities	$	24,249	$	��	$	(1,055)	$	23,194
FFF put right		64,110		(64,110)		—		—
Earn-out liabilities
Earn-out liabilities

Total Level 3 liabilities	Total Level 3 liabilities	$	88,359	$	(64,110)	$	(1,055)	$	23,194
Total Level 3 liabilities
Total Level 3 liabilities

(a)Settlements for the three and six months ended December 31, 2023 represent payments on earn-out liabilities. Purchases for the ~~nine~~three and six months ended ~~March~~December 31, ~~2023~~2022 includes an earn-out which ~~has~~had not been earned or paid as of ~~March~~December 31, ~~2023. Settlements for the nine months ended March 31, 2022 includes non-cash gain recognized as a result the termination of the FFF Put Right and the derecognition of the FFF Put Right liability.~~2022.

(b)~~A gain~~Gains on level 3 liability balances will decrease the liability ending balance, ~~whereas a loss~~and losses on level 3 liability ~~balance~~balances will increase the liability ending balance.

Non-Recurring Fair Value Measurements

As a result of the August 2020 Restructuring, the Company recorded non-interest bearing notes payable to former limited partners during the ~~three months ended September 30, 2020.~~first quarter of fiscal year 2021. Although these notes are non-interest bearing, they include a Level 2 input associated with an implied fixed annual interest rate of 1.8% (see Note 8 - Debt and Notes Payable). As of ~~March~~December 31,

2023 and June 30, ~~2022,~~2023, the notes payable to former limited partners were recorded net of discounts of ~~$5.2~~$2.4 million and ~~$9.1~~$4.2 million, respectively.

During the ~~nine~~six months ended ~~March~~December 31, 2023, 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 TRPN acquisition 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 equal to the carrying value at ~~March~~both December 31, 2023 and ~~$0.1 million less than the carrying value at~~ June 30, ~~2022~~2023 based on an assumed market interest rate of 1.6%.

Other Financial Instruments

The fair values of cash, accounts receivable, accounts payable, accrued liabilities and the Credit Facility (as defined in Note 8 - Debt and Notes Payable) approximated carrying value due to the short-term nature of these financial instruments.

(6) CONTRACT BALANCES

Deferred Revenue

Revenue recognized during the ~~nine~~six months ended ~~March~~December 31, 2023 that was included in the opening balance of deferred revenue at June 30, ~~2022~~2023 was ~~$25.5~~$18.9 million, which is a result of satisfying certain performance obligations.

Performance Obligations

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

Refer to the Company’s significant accounting policies in the ~~2022~~2023 Annual Report for discussion of revenue recognition on contracts with customers.

~~Net~~A reduction to net revenue of ~~$5.4 million and $3.9~~$0.8 million was recognized during the three ~~and nine~~ months ended ~~March~~December 31, 2023 ~~respectively,~~ from ~~certain~~ performance obligations that were satisfied or partially satisfied in prior periods. The ~~net revenue recognized~~reduction was driven by ~~an increase of $6.1~~a $1.3 million ~~and $6.6 million, respectively,~~decrease in net administrative fees revenue related to ~~under-forecasted~~over-forecasted cash receipts received in the current ~~period. These increases were~~period partially offset by ~~a reduction~~an increase of ~~$0.7~~$0.5 million ~~and $2.7 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.

Net revenue of ~~$5.7 million and $3.6~~$3.2 million was recognized during the ~~three and nine~~six months ended ~~March~~December 31, ~~2022, respectively,~~2023 from ~~certain~~ performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by an increase of ~~$5.4~~$3.9 million ~~and $3.3~~associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business. This increase was partially offset by a reduction of $0.7 million ~~respectively,~~in net administrative fees revenue related to over-forecasted cash receipts received in the current period.

A reduction to net revenue of $0.4 million was recognized during the three months ended December 31, 2022 from performance obligations that were satisfied or partially satisfied in prior periods. The reduction was driven by a $0.8 million decrease associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business. This decrease was partially offset by an increase of $0.4 million in net administrative fees revenue related to under-forecasted cash receipts received in the current period. ~~In addition,~~

Net revenue of $2.5 million was recognized during the six months ended December 31, 2022 from performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized ~~in both periods~~ was driven by an increase of ~~$0.3~~$4.6 million in net administrative fees revenue related to under-forecasted cash receipts received in the current period partially offset by a reduction of $2.1 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.

Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of ~~March~~December 31, 2023, the aggregate amount of the transaction price allocated to remaining performance obligations was ~~$701.7~~$771.6 million. The Company expects to recognize approximately ~~40%~~38% of the remaining performance obligations over the next 12twelve months and an additional 23% over the following 12twelve months, with the remainder recognized thereafter.

(7) GOODWILL AND INTANGIBLE ASSETS

Goodwill

At December 31, 2023 and June 30, 2023, the Company had goodwill balances recorded at Supply Chain Services and Performance Services of $386.2 million and $626.1 million, respectively. At December 31, 2023 and June 30, 2023, the Company had accumulated impairment losses to goodwill at Supply Chain Services and Performance Services of $2.3 million and $54.4 million, respectively.

Fiscal 2023 Goodwill ~~consisted~~Impairment

During the year ended June 30, 2023, the Company recorded pre-tax goodwill impairment charges of ~~the following (in thousands):~~

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

~~Goodwill increased primarily due~~$54.4 million and $2.3 million related to the ~~TRPN acquisition (see Note 3 - Business Acquisitions). The initial purchase price allocation for the TRPN acquisition is preliminary~~Contigo Health and ~~subject to change in the valuation of the assets acquired and the liabilities assumed.~~Direct Sourcing reporting units, respectively.

Intangible Assets, Net

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

Useful Life

March 31, 2023

June 30, 2022

December 31, 2023

June 30, 2023

Useful Life

Gross

Accumulated Amortization

Net

Gross

Accumulated Amortization

Net

Member relationships

14.7 years

386,100

Provider network

15.0 years

106,500

—

Technology

7.1 years

99,317

98,017

Customer relationships

9.4 years

57,930

47,830

Trade names

Non-compete agreements

5.2 years

17,715

17,315

Trade names

6.7 years

18,920

17,210

Other (a)

9.3 years

9,233

7,682

Total intangible assets

695,715

574,154

Accumulated amortization

(252,997)

(217,582)

Total intangible assets, net

442,718

356,572

Total

(a)Includes a $1.0 million indefinite-lived asset.

The net carrying value of intangible assets by segment was as follows (in thousands):


		March 31, 2023		June 30, 2022
	December 31, 2023					December 31, 2023	June 30, 2023
Supply Chain Services	Supply Chain Services	$	277,641	$	301,611
Performance Services (a)	Performance Services (a)	165,077		54,961
Total intangible assets, net	Total intangible assets, net	$	442,718	$	356,572

(a)Includes a $1.0 million indefinite-lived asset.

Total intangible assets increased primarily due to the TRPN acquisition (see Note 3 - Business Acquisitions). As part of the TRPN acquisition, the total fair value assigned to intangible assets acquired was $116.6 million, consisting primarily of the provider network of $106.5 million. The weighted average useful life of the acquired intangible assets is 14.1 years, with the provider network having a useful life of 15.0 years.

Intangible asset amortization was $11.9 million and $11.2 million for the three months ended March 31, 2023 and 2022, respectively, and $35.4 million and $32.9 million for the nine months ended March 31, 2023 and 2022, respectively.

The estimated amortization expense for each of the next five fiscal years and thereafter is as follows (in thousands):


2023 (a)		$	12,688
2024		49,761
2024 (a)
2025	2025	48,136
2026	2026	46,892
2027	2027	44,240
2028
Thereafter	Thereafter	240,001
Total amortization expense	Total amortization expense	$	441,718

(a)As of ~~March~~December 31, 2023, estimated amortization expense is for the period from ~~April~~January 1, ~~2023~~2024 to June 30, ~~2023.~~2024.

(8) DEBT AND NOTES PAYABLE

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


		March 31, 2023		June 30, 2022
Credit facility		$	235,000	$	150,000
Notes payable to members, net of discount		225,814		298,994
	December 31, 2023					December 31, 2023	June 30, 2023
Credit Facility
Notes payable to former limited partners, net of discount
Other notes payable	Other notes payable	2,280		5,333
Total debt and notes payable	Total debt and notes payable	463,094		454,327
Less: current portion	Less: current portion	(335,472)		(250,859)
Total long-term debt and notes payable	Total long-term debt and notes payable	$	127,622	$	203,468

Credit Facility

PHSI, along with its consolidated subsidiaries, Premier LP and PSCI (“Co-Borrowers”), and certain domestic subsidiaries of the Co-Borrowers, as guarantors, entered into ana senior unsecured Amended and Restated Credit Agreement, dated as of December 12, 2022 (the “Credit Facility”). The Credit Facility has a maturity date of December 12, 2027, subject to up to two one-year extensions, ~~at the request of the Co-Borrowers~~ and ~~approval of a majority of the lenders under the Credit Facility. The Credit Facility~~ provides for borrowings of up to $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 increase. The Credit Facility contains an unconditional and irrevocable guaranty of all obligations of Co-Borrowers under the Credit Facility by the current and future guarantors. Premier is not a guarantor under the Credit Facility.

The Credit Facility refinanced the Credit Agreement, dated as of November 9, 2018, as amended (the “Prior Loan Agreement”), and the Prior Loan Agreement, which was scheduled to mature on November 9, 2023, was terminated onAt December 12, 2022. The Prior Loan Agreement included a $1.0 billion unsecured revolving credit facility. At the time of its termination, outstanding borrowings, accrued interest and fees and expenses under the Prior Loan Agreement totaled $331.3 million, which was repaid with cash on hand and borrowings under the Credit Facility.

At the Company’s option, committed loans under the Credit Facility may be in the form of secured overnight financing rate loans (“SOFR Loans”) or base rate loans. SOFR Loans bear interest at Term SOFR plus an adjustment of 0.100% (“Adjusted Term SOFR”) 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 0.500%, the one-month Adjusted Term SOFR plus 1.000%, and 0.000%), plus the Applicable Rate. The Applicable Rate ranges from 1.250% to 1.750% for SOFR Loans and 0.250% to 0.750% for base rate loans. At March 31, 2023, the interest rates for SOFR Loans and base rate loans were 6.152% and 8.250%, respectively. Co-Borrowers are required to pay a commitment fee ranging from 0.125% to 0.225% per annum on the actual daily unused amount of commitments under the Credit Facility. At March 31, 2023, the weighted average interest rate onCompany had no outstanding borrowings under the Credit Facility ~~was 6.195%~~with $995.0 million of available borrowing capacity after reductions for outstanding letters of credit. At June 30, 2023, the Company had $215.0 million in outstanding borrowings under the Credit Facility with $785.0 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. For the six months ended December 31, 2023, the Company had no new borrowings and repaid $215.0 million of outstanding borrowings under the Credit Facility. At both December 31, 2023 and June 30, 2023, the annual commitment fee, based on the actual daily unused amount of commitments under the Credit Facility, was 0.125%.

~~The~~ At June 30, 2023, the weighted average interest rate on outstanding borrowings under 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.was 6.470%. The Company was in compliance with all ~~such~~ covenants at ~~March 31, 2023. The Credit Facility also contains~~

customary events of default, including a cross-default of any indebtedness or guarantees in excess of $75.0 million. If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request of a majority of the 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 had $235.0 million in outstanding borrowings under the Credit Facility at March~~December 31, 2023 ~~with $765.0 million of available borrowing capacity after reductions for outstanding borrowings~~ and outstanding letters of credit. For the nine months ended March 31, 2023, the Company borrowed $285.0 million and repaid $135.0 million of outstanding borrowings under the Prior Loan Agreement. For the nine months ended March 31, 2023, the Company borrowed $65.0 million and repaid $130.0 million of outstanding borrowings under the Credit Facility. In April 2023, the Company repaid $60.0 million of outstanding borrowings under the Credit Facility.June 30, 2023.

Notes Payable

Notes Payable to Former Limited Partners

At ~~March~~December 31, 2023, the Company had ~~$225.8~~$151.6 million of notes payable to former LPs, net of discounts on notes payable of ~~$5.2~~$2.4 million, of which ~~$99.2~~$100.6 million was recorded to current portion of notes payable to former limited partners in the accompanying Condensed Consolidated Balance Sheets. At June 30, ~~2022,~~2023, the Company had ~~$299.0~~$201.2 million of notes payable to former LPs, net of discounts on notes payable of ~~$9.1~~$4.2 million, of which ~~$97.8~~$99.7 million was recorded to current portion of notes payable to former limited partners in the accompanying Condensed Consolidated Balance Sheets. The notes payable to former LPs were issued in connection with the early termination of the TRA as part of the August 2020 Restructuring. Although the notes payable to former LPs are non-interest bearing, pursuant to GAAP requirements, they were recorded net of imputed interest at a fixed annual rate of 1.8%.

Other

At ~~March~~December 31, 2023 and June 30, ~~2022,~~2023, the Company had ~~$2.3~~$1.0 million and ~~$5.3~~$2.3 million in other notes payable, respectively, of which ~~$1.3~~$1.0 million and ~~$3.1~~$1.5 million, respectively, were included in current portion of long-term debt in the accompanying Condensed Consolidated Balance Sheets. Other notes payable do not bear interest and generally have stated maturities of three to five years from their date of issuance.

(9) LIABILITY RELATED TO THE SALE OF FUTURE REVENUES

Sale of Non-Healthcare GPO Member Contracts

On July 25, 2023 (the “Closing Date”), the Company sold the equity interest in its wholly-owned subsidiary, Non-Healthcare Holdings, LLC, pursuant to an equity purchase agreement with OMNIA (“Equity Purchase Agreement”) for an initial base purchase price of $689.2 million. The initial base purchase price was subject to certain post-closing purchase price adjustments, and pursuant to the Equity Purchase Agreement at closing, OMNIA paid the company $523.2 million in cash and deposited $166.0 million in cash into escrow. The release of the escrow and determination of the final total purchase price is subject to certain members agreeing to certain consents and certain related business performance measurements. As of December 31, 2023, the Company has received cash of $629.8 million, including the closing payment and payments out of escrow based on post-closing adjustments through that date. The Company is estimating the final total purchase price to be up to $740.0 million through the continued release of funds from escrow and additional payments from OMNIA based on subsequent post-closing adjustments. The final total estimated purchase price has been reduced from previous estimates taking into account certain post-closing adjustments and remains subject to additional adjustments. See Note 13 - Income Taxes for further income tax considerations on cash proceeds received as of December 31, 2023.

Pursuant to the terms of the Equity Purchase Agreement, OMNIA acquired Premier’s non-healthcare GPO member agreements which includes the associated net cash flows generated from administrative fees from purchasing on supplier contracts. In conjunction with the execution of the Equity Purchase Agreement, the Company and OMNIA entered into a 10 year channel partnership agreement (the “Channel Agreement”) pursuant to which OMNIA’s existing and newly acquired members will

have access to Premier’s supplier portfolio in which 100% of the administrative fees generated will be remitted to OMNIA. Under the terms of the Channel Agreement, although the Company sold the rights to retain future net administrative fees from the non-healthcare GPO member agreements, the Company continues to maintain significant involvement in the generation of the gross administrative fees through its supplier portfolio. Additionally, the Company has the right to retain an “Access Fee” over the term of the Channel Agreement based on the continued growth of the non-healthcare GPO member agreements. Due to the Company’s continued involvement, the Company will continue to record net administrative fees from the non-healthcare agreements as revenue. The Company recorded the net proceeds from this transaction as a liability related to the sale of future revenues on the accompanying Condensed Consolidated Balance Sheets, which will be amortized using the effective interest method over the remaining contractual life of the Channel Agreement. The Company has no obligation to pay OMNIA any principal or interest balance on the sale of future revenues liability outside of the cash flows generated for administrative fees from the Channel Agreement.

As payments for administrative fees are remitted to OMNIA, the balance of Premier’s obligation will effectively be repaid over the term of the Channel Agreement. To determine the amortization of the liability related to the sale of future revenues, the Company estimated the total future revenues expected to be remitted over the life of the Channel Agreement less any Access Fees retained by the Company. Future payments will result in the reduction of the liability related to the sale of future revenues less interest expense. The Company calculated the effective interest rate based on future expected revenue, which resulted in an effective annual interest rate of 2.5%. The Company will maintain a consistent interest rate throughout the life of the Channel Agreement. This estimate contains significant assumptions that impact both the amount of liability and interest expense recorded over the life of the Channel Agreement. The Company will assess the estimated future cash flows related to the sale of future revenues for material changes at each reporting period. There are several factors that could materially affect the amount and timing of payments to OMNIA, and correspondingly, the amount of interest expense recorded, most of which are outside the Company’s control. Such factors include, but are not limited to, retention by OMNIA of the non-healthcare GPO members, growing the existing portfolio of non-healthcare members and general competition of GPOs.

Changes to any of these factors could result in an increase or decrease to expected future revenue and interest expense related to the sale of future revenues. To the extent the amount or timing of future payments varies materially from the original estimate, the Company will make a cumulative adjustment to the carrying amount of the liability, which will be recorded as a non-cash gain or loss in other income in the Condensed Consolidated Statements of Income and Comprehensive Income. For the three and six months ended December 31, 2023, the Company did not record cumulative adjustments to the carrying amount of the liability.

At December 31, 2023, the Company had $615.2 million of debt related to the sale of non-healthcare GPO member contracts and associated future revenues, of which $35.8 million was recorded to current portion of the liability related to the sale of future revenues in the accompanying Condensed Consolidated Balance Sheets. For the three and six months ended December 31, 2023, the Company recorded $14.8 million and $26.5 million in revenue that was sold to OMNIA in net administrative fees and $3.9 million and $6.4 million in interest expense related to the sale of future revenues in interest expense, net in the Condensed Consolidated Statements of Income and Comprehensive Income.

The following table shows the activity of the liability related to the sale of future revenues since the transaction inception through December 31, 2023 (in thousands):


	December 31, 2023
Proceeds from the sale of future revenues	$	523,198
Proceeds from the release of escrow funds	106,622
Imputed interest expense associated with the sale of future revenues	6,408
Payments against the liability related to the sale of future revenues	(21,019)
Liability related to the sale of future revenues	$	615,209

(10) STOCKHOLDERS' EQUITY

As of ~~March~~December 31, 2023, there were ~~118,880,307~~119,816,484 shares of the Company’s Class A common stock, par value $0.01 per share, outstanding.

During the ~~nine~~six months ended ~~March~~December 31, 2023, the Company paid cash dividends of $0.21 per share on outstanding shares of Class A common stock to stockholders on each of September 15, ~~2022,~~2023 and December ~~15, 2022 and March~~ 15, 2023. On ~~April 27, 2023,~~January 25, 2024, the Board of Directors declared a quarterly cash dividend of $0.21 per share, payable on ~~June~~March 15, ~~2023~~2024 to stockholders of record on ~~June~~March 1, ~~2023.~~2024.

~~(10)~~

(11) EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income attributable to stockholders by the weighted average number of shares of common stock outstanding for the period. Except when the effect would be anti-dilutive, the diluted earnings per share calculation, which is calculated using the treasury stock method, includes the impact of all potentially issuable dilutive shares of Class A common stock.

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


	Three Months Ended December 31,										Three Months Ended December 31,			Six Months Ended December 31,
	2023									2023		2022	2023		2022
Numerator for basic and diluted earnings per share:
Net income attributable to stockholders (a)
Net income attributable to stockholders (a)
Net income attributable to stockholders (a)

		Three Months Ended March 31,				Nine Months Ended March 31,
		2023		2022		2023		2022
Numerator for basic earnings per share:
Net income attributable to stockholders (a)		$	46,801	$	38,415	$	153,563	$	235,964

Numerator for diluted earnings per share:
Net income attributable to stockholders (a)		$	46,801	$	38,415	$	153,563	$	235,964
Net loss attributable to non-controlling interest		—		—		—		1,643
Net income for diluted earnings per share		$	46,801	$	38,415	$	153,563	$	237,607

Denominator for earnings per share:	Denominator for earnings per share:
Basic weighted average shares outstanding (b)		118,872		118,697		118,668		120,957
Effect of dilutive securities: (c)

Denominator for earnings per share:

Denominator for earnings per share:
Basic weighted average shares outstanding
Basic weighted average shares outstanding
Basic weighted average shares outstanding
Effect of dilutive securities: (b)
Stock options	Stock options	76		98		103		225
Restricted stock		528		465		519		499
Stock options
Stock options
Restricted stock units
Performance share awards	Performance share awards	340		553		542		621
Diluted weighted average shares and assumed conversions		119,816		119,813		119,832		122,302
Diluted weighted average shares

Earnings per share attributable to stockholders:	Earnings per share attributable to stockholders:
Earnings per share attributable to stockholders:
Earnings per share attributable to stockholders:
Basic
Basic
Basic	Basic	$	0.39	$	0.32	$	1.29	$	1.95
Diluted	Diluted	$	0.39	$	0.32	$	1.28	$	1.94

(a)Net income attributable to stockholders was calculated as follows (in thousands):


		Three Months Ended March 31,				Nine Months Ended March 31,
		2023		2022		2023		2022
	Three Months Ended December 31,										Three Months Ended December 31,			Six Months Ended December 31,
	2023									2023		2022	2023		2022
Net income	Net income	$	48,649	$	39,069	$	155,982	$	237,607
Net income attributable to non-controlling interest		(1,848)		(654)		(2,419)		(1,643)
Net loss (income) attributable to non-controlling interest
Net income attributable to stockholders	Net income attributable to stockholders	$	46,801	$	38,415	$	153,563	$	235,964

(b)~~Weighted average number of common shares used for basic earnings per share excludes the impact of all potentially issuable dilutive shares of Class A common stock for~~For both the three and ~~nine~~six months ended ~~March~~December 31, 2023, ~~and 2022.~~

~~(c)The effect of 0.3~~1.3 million stock options and restricted stock units were excluded from diluted weighted average shares outstanding as ~~it had an anti-dilutive effect~~their effects were anti-dilutive. Additionally, for both the three and ~~nine~~six months ended ~~March~~December 31, ~~2023.~~2023, 0.1 million performance share awards were excluded from diluted weighted average shares outstanding as the awards had not satisfied the applicable performance criteria at the end of the period.

For the three and six months ended December 31, 2022, the effect of 0.5 million and 0.7 million stock options and restricted stock units, respectively, was excluded from diluted weighted average shares outstanding as it had an anti-dilutive effect. Additionally, for the three and ~~nine~~six months ended ~~March~~December 31, ~~2023,~~2022, the effect of ~~0.4~~0.2 million and 0.3 million performance share awards, respectively, was excluded from diluted weighted average shares outstanding as the awards had not satisfied the applicable performance criteria at the end of the period.

For the three and nine months ended March 31, 2022, the effect of 0.3 million and 0.6 million stock options and restricted stock units, respectively, was excluded from diluted weighted average shares outstanding as it had an anti-dilutive effect. Additionally, for the nine months ended March 31, 2022, the effect of 0.3 million performance share awards was excluded from diluted weighted average shares outstanding as the awards had not satisfied the applicable performance criteria at the end of the period.

~~(11)~~(12) 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 tax rate of 25% and 26% for the ~~nine~~six months ended ~~March~~December 31, 2023 and 2022, respectively, which represents the expected effective income tax rate at the time of the compensation expense deduction and differs from the Company’s current effective income tax rate. See Note 1213 - Income Taxes for further ~~information.~~information related to income taxes.

2119

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,
		2023		2022		2023		2022
	Three Months Ended December 31,										Three Months Ended December 31,			Six Months Ended December 31,
	2023									2023		2022	2023		2022
Pre-tax stock-based compensation expense	Pre-tax stock-based compensation expense	$	6,560	$	14,004	$	16,375	$	37,792
Less: deferred tax benefit (a)	Less: deferred tax benefit (a)	2,400		3,288		4,407		8,013
Total stock-based compensation expense, net of tax	Total stock-based compensation expense, net of tax	$	4,160	$	10,716	$	11,968	$	29,779

(a)For the three ~~and nine~~ months ended ~~March~~December 31, 2023 and 2022, the deferred tax benefit was reduced by ~~$0.7~~$0.8 million and ~~$0.2~~increased by $0.4 million, respectively, attributable to stock-based compensation expense that is nondeductible for tax purposes pursuant to Section 162(m) as amended by the Tax Cuts and Jobs Act of 2017.

For the six months ended December 31, 2023 and 2022, the deferred tax benefit was reduced by $0.9 million and $0.5 million, respectively, attributable to stock-based compensation expense that is nondeductible for tax purposes pursuant to Section 162(m) as amended by the Tax Cuts and Jobs Act of 2017.

Premier 2013 Equity Incentive Plan

The Premier 2013 Equity Incentive Plan, as amended and restated (and including any further amendments thereto, the “2013 Equity Incentive Plan”) provided for grants of up to 14.8 million shares of Class A common stock, all of which were eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units or performance share awards. On September 24, 2023, the 2013 Equity Incentive Plan expired; no new grants will be issued under the plan.

Premier 2023 Equity Incentive Plan

The Premier 2023 Equity Incentive Plan (the “2023 Equity Incentive Plan”), which became effective December 1, 2023 upon approval of Premier’s stockholders, provides for grants of up to ~~14.8~~6.0 million shares of Class A common stock, all of which are eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted ~~stock,~~shares, restricted stock units or performance share awards. As of ~~March~~December 31, 2023, there were ~~3.9~~approximately 5.9 million shares available for grant under the ~~2013~~2023 Equity Incentive Plan.

The following table includes information related to restricted stock, performance share awards and stock options granted under either the 2013 Equity Incentive Plan or the 2023 Equity Incentive Plan for the ~~nine~~six months ended ~~March~~December 31, 2023:


		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, 2022		1,201,130	$	35.59	1,578,795	$	33.66	896,354	$	30.38
	Restricted Stock											Restricted Stock			Performance Share Awards		Stock Options
	Number of Awards										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, 2023
Granted	Granted	419,519	36.69		823,009	35.34		—	—
Vested/exercised	Vested/exercised	(257,571)	36.37		(826,743)	36.35		(24,351)	32.84
Forfeited	Forfeited	(72,268)	35.81		(81,350)	33.41		(2,906)	35.65
Outstanding at March 31, 2023		1,290,810	$	35.78	1,493,711	$	33.09	869,097	$	30.30
Outstanding at December 31, 2023

Stock options outstanding and exercisable at March 31, 2023								869,097	$	30.30
Stock options outstanding and exercisable at December 31, 2023
Stock options outstanding and exercisable at December 31, 2023
Stock options outstanding and exercisable at December 31, 2023

Restricted stock units and restricted stock awards issued ~~and outstanding~~prior to June 1, 2023 generally vest over a three-year period for employees and a one-year period for directors. Beginning June 1, 2023, restricted stock units and restricted stock awards issued to employees generally vest annually over the service period. Performance share awards issued and outstanding generally vest ~~over~~at the end of a three-year period ifsubject to whether and to what extent performance targets are met. Stock options generally vest in equal annual installments over three years. Stock options have a term of ten years from the date of grant. Vested stock options will generally expire ~~either~~ twelve months after an employee’s termination with the ~~Company or~~Company; however, in certain termination circumstances, vested stock options will expire 90 days after an employee’s termination with the ~~Company, depending on the termination circumstances.~~Company.

Unrecognized stock-based compensation expense at ~~March~~December 31, 2023 was as follows (in thousands):


	Unrecognized Stock-Based Compensation Expense		Weighted Average Amortization Period
Restricted stock	$	~~23,381~~42,883	~~1.8~~2.2 years
Performance share awards	~~22,830~~20,721		~~1.8~~2.1 years
Total unrecognized stock-based compensation expense	$	~~46,211~~63,604	~~1.8~~2.2 years

At ~~March~~December 31, 2023, there was no unrecognized stock-based compensation expense for outstanding stock options.

~~The~~ There were no options exercised during the six months ended December 31, 2023, and the stock options outstanding and exercisable at December 31, 2023 had zero aggregate intrinsic ~~value of stock options at March 31, 2023 was as follows (in thousands):~~


	~~Intrinsic Value of Stock Options~~
~~Outstanding and exercisable~~	$	~~2,325~~
~~Exercised during the nine months ended March 31, 2023~~	78

value.

~~(12)~~(13) INCOME TAXES

Income tax expense for the three months ended ~~March~~December 31, 2023 and 2022 was ~~$17.2~~$19.3 million and ~~$14.7~~$23.8 million, respectively, which reflects effective tax rates of 27% for both periods.

Income tax expense for the six months ended December 31, 2023 and 2022 was $33.2 million and $42.5 million, respectively, which reflects effective tax rates of 26% and ~~27%~~28%, respectively. The change in the effective tax rate for the ~~three~~six months ended ~~March~~December 31, 2023 compared to the prior year period is primarily related to changes in stock-based compensation ~~expense.~~

~~Income~~expense, state law repricing and statute of limitation release on uncertain tax expense for the nine months ended March 31, 2023 and 2022 was $59.8 million and $40.1 million, respectively, which reflects effective tax rates of 28% and 14%, respectively. The change in the effective tax rate for the nine months ended March 31, 2023, is primarily driven by the prior year valuation allowance release resulting from the Subsidiary Reorganization. Excluding the valuation allowance release, the effective tax rate would have been 25% for the nine months ended March 31, 2022 with the remaining difference primarily related to repricing due to the Subsidiary Reorganization and state legislative changes.positions.

As of ~~March~~December 31, 2023, total tax liabilities included ~~$52.3~~$46.9 million within other current liabilities in the accompanying Condensed Consolidated Balance Sheets. During the three and six months ended December 31, 2023, the Company recorded $10.1 million and $154.0 million cash tax obligations, respectively, associated with the sale of non-healthcare GPO member contracts and associated future revenues to OMNIA. As of December 31, 2023, the Company has made payments of $138.5 million for taxes related to the proceeds received from the sale of future revenues to OMNIA. The remaining $15.5 million will be paid during the remainder of fiscal year 2024. Additionally, during the three and six months ended December 31, 2023, the Company recorded offsetting deferred tax assets of $10.4 million and $154.7 million to be recorded to income tax expense as the Company recognizes revenue associated with non-healthcare GPO member contracts.

~~(13)~~(14) COMMITMENTS AND CONTINGENCIES

Operating Leases

Operating lease expense for ~~both~~ the three months ended ~~March~~December 31, 2023 and 2022 was $2.4 million and $2.5 ~~million.~~million, respectively. Operating lease expense for the ~~nine~~six months ended ~~March~~December 31, 2023 and 2022 was ~~$7.5~~$4.9 million and ~~$7.6~~$5.0 million, respectively. As of ~~March~~December 31, 2023, the weighted average remaining lease term was ~~3.1~~2.4 years, and the weighted average discount rate was 4%.

Future minimum lease payments under noncancellable operating leases with initial lease terms in excess of one year were as follows (in thousands):


		March 31, 2023		June 30, 2022
2023 (a)		$	2,406	$	12,131
2024		12,381		12,267
	December 31, 2023					December 31, 2023	June 30, 2023
2024 (a)
2025	2025	12,389		12,301
2026	2026	9,005		9,005
2027		1,324		1,323
2027 (b)

Total future minimum lease payments
Total future minimum lease payments
Total future minimum lease payments	Total future minimum lease payments	37,505		47,027
Less: imputed interest	Less: imputed interest	2,281		3,445
Total operating lease liabilities (b)		$	35,224	$	43,582
Total operating lease liabilities (c)

(a)As of ~~March~~December 31, 2023, future minimum lease payments are for the period from ~~April~~January 1, ~~2023~~2024 to June 30, ~~2023.~~2024.

(b)There are no future lease payment obligations after 2027.

(c)As of ~~March~~December 31, 2023, total operating lease liabilities included ~~$9.8~~$11.6 million within other current liabilities in the Condensed Consolidated Balance Sheets.

Other Matters

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

~~(14)~~(15) SEGMENTS

The Company delivers its solutions and manages its business through two reportable business segments, the Supply Chain Services segment and the Performance Services segment. The Supply Chain Services segment includes the Company’s GPO, supply chain co-management, purchased services and direct sourcing activities. The Performance Services segment consists of three sub-brands: PINC AI, the Company’s technology and services platform; Contigo Health, the Company’s direct-to-employer business; and Remitra, the Company’s digital invoicing and payables automation business.

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


		Three Months Ended March 31,				Nine Months Ended March 31,
		2023		2022		2023		2022
	Three Months Ended December 31,										Three Months Ended December 31,			Six Months Ended December 31,
	2023									2023		2022	2023		2022
Net revenue:	Net revenue:
Supply Chain Services	Supply Chain Services
Supply Chain Services
Supply Chain Services
Net administrative fees
Net administrative fees
Net administrative fees	Net administrative fees	$	148,441	$	148,396	$	452,870	$	448,261
Software licenses, other services and support	Software licenses, other services and support	11,032		8,914		35,963		27,165
Services and software licenses	Services and software licenses	159,473		157,310		488,833		475,426
Products	Products	57,212		93,629		183,066		323,825
Total Supply Chain Services (a)	Total Supply Chain Services (a)	216,685		250,939		671,899		799,251
Performance Services	Performance Services
Software licenses, other services and support	Software licenses, other services and support
Software licenses, other services and support
Software licenses, other services and support
SaaS-based products subscriptions
SaaS-based products subscriptions
SaaS-based products subscriptions	SaaS-based products subscriptions	44,685		49,347		142,097		144,357
Consulting services	Consulting services	22,087		16,342		57,963		46,440
Software licenses	Software licenses	14,400		12,169		51,197		44,033
Other(b)	Other(b)	24,384		19,045		72,603		58,132
Total Performance Services (a)	Total Performance Services (a)	105,556		96,903		323,860		292,962
Total segment net revenue	Total segment net revenue	322,241		347,842		995,759		1,092,213
Eliminations (a)	Eliminations (a)	(9)		(9)		(28)		(18)
Net revenue	Net revenue	$	322,232	$	347,833	$	995,731	$	1,092,195

(a)Includes intersegment revenue that is eliminated in consolidation. Intersegment revenue is not separately identified in Segments as the amounts are not material.

(b)Includes revenue from Contigo Health, Remitra and other PINC AI revenue.

2422

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,
		2023		2022		2023		2022
	Three Months Ended December 31,										Three Months Ended December 31,			Six Months Ended December 31,
	2023									2023		2022	2023		2022
Depreciation and amortization expense (a):	Depreciation and amortization expense (a):
Supply Chain Services
Supply Chain Services
Supply Chain Services	Supply Chain Services	$	13,002	$	14,114	$	40,862	$	40,710
Performance Services	Performance Services	17,189		16,163		53,407		48,349
Corporate	Corporate	2,000		2,282		6,299		6,705
Total depreciation and amortization expense	Total depreciation and amortization expense	$	32,191	$	32,559	$	100,568	$	95,764

Capital expenditures:	Capital expenditures:
Capital expenditures:
Capital expenditures:
Supply Chain Services
Supply Chain Services
Supply Chain Services	Supply Chain Services	$	6,571	$	6,740	$	19,586	$	22,212
Performance Services	Performance Services	13,311		10,926		38,576		34,312
Corporate	Corporate	166		735		302		4,537
Total capital expenditures	Total capital expenditures	$	20,048	$	18,401	$	58,464	$	61,061


		March 31, 2023		June 30, 2022
	December 31, 2023					December 31, 2023	June 30, 2023
Total assets:	Total assets:
Supply Chain Services
Supply Chain Services
Supply Chain Services	Supply Chain Services	$	1,355,552	$	1,406,108
Performance Services	Performance Services	1,261,241		1,054,687
Corporate	Corporate	896,047		896,336
Total assets	Total assets	3,512,840		3,357,131
Eliminations (b)	Eliminations (b)	(323)		(4)
Total assets, net	Total assets, net	$	3,512,517	$	3,357,127

(a)Includes amortization of purchased intangible assets.

(b)Includes eliminations of intersegment transactions which occur during the ordinary course of business.

The Company uses Segment Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles (“Non-GAAP”)) 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 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 expense and non-recurring or non-cash ~~items and including equity in net income of unconsolidated affiliates.~~items. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.

The Company has revised the definition for Segment Adjusted EBITDA from the definition reported in the 2023 Annual Report to exclude the impact of equity earnings in unconsolidated affiliates. For comparability purposes, prior year non-GAAP measures are presented based on the current definition.

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

2523

A reconciliation of income before income taxes to unaudited Segment Adjusted EBITDA, a Non-GAAP financial measure, is as follows (in thousands):


	Three Months Ended December 31,										Three Months Ended December 31,			Six Months Ended December 31,
	2023									2023		2022	2023		2022
Income before income taxes
Equity in net loss (income) of unconsolidated affiliates (a)
Interest (income) expense, net
		Three Months Ended March 31,				Nine Months Ended March 31,
		2023		2022		2023		2022
Income before income taxes		$	65,881	$	53,763	$	215,748	$	277,701
Equity in net income of unconsolidated affiliates (a)		(4,630)		(3,991)		(14,547)		(17,165)
Interest expense, net		4,269		2,804		11,759		8,465
Gain on FFF Put and Call Rights (b)		—		—		—		(64,110)
Other (income) expense, net		(2,954)		4,248		(3,720)		2,176
Other income, net
Other income, net
Other income, net
Operating income	Operating income	62,566		56,824		209,240		207,067
Depreciation and amortization	Depreciation and amortization	20,275		21,408		65,153		62,874
Amortization of purchased intangible assets	Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
Stock-based compensation (c)		6,709		14,149		16,859		38,229
Stock-based compensation (b)
Acquisition- and disposition-related expenses	Acquisition- and disposition-related expenses	6,294		3,115		11,592		10,282
Strategic initiative and financial restructuring-related expenses	Strategic initiative and financial restructuring-related expenses	1,942		5,540		10,988		9,314
Equity in net income of unconsolidated affiliates (a)		4,630		3,991		14,547		17,165
Deferred compensation plan expense (income) (d)		2,859		(3,994)		3,148		(1,923)
Deferred compensation plan expense (c)
Other reconciling items, net	Other reconciling items, net	95		4		260		9
Non-GAAP Adjusted EBITDA		$	117,286	$	112,188	$	367,202	$	375,907
Non-GAAP Adjusted EBITDA (d)

Segment Non-GAAP Adjusted EBITDA:	Segment Non-GAAP Adjusted EBITDA:
Segment Non-GAAP Adjusted EBITDA:
Segment Non-GAAP Adjusted EBITDA:
Supply Chain Services (e)
Supply Chain Services (e)
Supply Chain Services (e)	Supply Chain Services (e)	$	122,040	$	118,034	$	371,228	$	381,586
Performance Services (e)	Performance Services (e)	25,018		26,552		87,587		89,277
Corporate	Corporate	(29,772)		(32,398)		(91,613)		(94,956)
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907

(a)Refer to Note 4 - Investments for more information.

(b)~~Refer to Note 5 - Fair Value Measurements for more information.~~

~~(c)~~Includes non-cash employee stock-based compensation expense and stock purchase plan expense of $0.1 million for both the three months ended ~~March~~December 31, 2023 and 2022 and ~~$0.5 million and $0.4~~$0.3 million for both the ~~nine~~six months ended ~~March~~December 31, 2023 and ~~2022, respectively.~~2022.

~~(d)~~(c)Represents changes in deferred compensation plan liabilities resulting from realized and unrealized gains and ~~(losses)~~losses and dividend income on deferred compensation plan assets.

(d)The definition for Non-GAAP Adjusted EBITDA was revised from the definition reported in the 2023 Annual Report to exclude the impact of equity earnings in unconsolidated affiliates. For comparability purposes, prior year non-GAAP financial measures are presented based on the current definition.

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

(16) SUBSEQUENT EVENTS

On February 5, 2024, the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with Bank of America, N.A. (“Bank of America”) to repurchase an aggregate of $400.0 million of shares of the Company’s Class A common stock (“common stock”). Under the terms of the ASR Agreement, the Company will make a payment of $400.0 million to Bank of America and, by February 9, 2024, will receive initial deliveries of approximately $320.0 million in common stock based on the closing price on February 7, 2024, with the final settlement expected to be completed in the first quarter of fiscal year 2025.

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 Annual Report on Form 10-K for the fiscal year ended June 30, ~~2022~~2023 (the ~~“2022~~“2023 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 technology-driven healthcare improvement company, uniting an alliance of U.S. hospitals, health systems and other providers and organizations to transform healthcare. We partner with hospitals, health systems, physicians, employers, product suppliers, service providers, payers and other healthcare providers and organizations

with the common goal of improving and innovating in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry. We deliver value through a comprehensive technology-enabled platform that offers critical supply chain services, clinical, financial, operational and value-based care software-as-a-service (“SaaS”) as well as clinical and enterprise analytics licenses, consulting services, performance improvement collaborative programs, third-party administrator services, access to our centers of excellence program, ~~and~~ cost containment and wrap network and digital invoicing and payment automation processes for healthcare ~~providers~~suppliers and ~~suppliers.~~providers. We also continue to expand our capabilities to more fully address and coordinate care improvement and standardization in the employer, ~~payor~~payer and life sciences markets. We also provide some of the various products and services noted above to ~~other businesses including food service, schools and universities.~~non-healthcare businesses.

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


		Three Months Ended March 31,				Nine Months Ended March 31,
		2023		2022		2023		2022
	Three Months Ended December 31,										Three Months Ended December 31,			Six Months Ended December 31,
	2023									2023		2022	2023		2022
Net revenue	Net revenue	$	322,232	$	347,833	$	995,731	$	1,092,195
Net income	Net income	48,649		39,069		155,982		237,607
Non-GAAP Adjusted EBITDA	Non-GAAP Adjusted EBITDA	117,286		112,188		367,202		375,907

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

Strategic Review

On February 5, 2024, we announced that our Board of Directors has concluded its exploration of strategic alternatives. As part of the strategic review process, the Board of Directors has authorized us to seek partners for some or all of our holdings in Contigo Health, LLC (“Contigo Health”), our subsidiary focused on providing comprehensive services that optimize employee health benefits; and S2S Global, our direct sourcing subsidiary.

Additionally, on February 2, 2024, our Board of Directors authorized the repurchase of up to $1.0 billion of our outstanding Class A common stock and on February 5, 2024, under the share repurchase authorization, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with Bank of America, N.A. (“Bank of America”) to repurchase an aggregate of $400.0 million of shares of the Company’s Class A common stock (“common stock”). Refer to “Share Repurchase Authorization” within “Contractual Obligations” section of Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations for more information.

Our Business Segments

Our business model and solutions are designed to provide our members and other customers access to scale efficiencies, ~~while focusing on optimization~~spread the cost of ~~information resources and cost containment,~~their development, provide actionable intelligence derived from anonymized data in our enterprise data warehouse, ~~provided by our members,~~ mitigate the risk of innovation and disseminate best practices that will help our ~~member organizations~~members and other customers succeed in their

transformation to higher quality and more cost-effective healthcare. We deliver our integrated platform of solutions that address the areas of clinical intelligence, margin improvement and value-based care through two business segments: Supply Chain Services and Performance Services.

Segment net revenue for the three months ended ~~March~~December 31, 2023 and 2022 was as follows (in thousands):


		Three Months Ended March 31,								% of Net Revenue
	Three Months Ended December 31,																			Three Months Ended December 31,																% of Net Revenue
Net revenue:	Net revenue:	2023		2022		Change				2023		2022		Net revenue:	2023			2022					Change								2023				2022
Supply Chain Services	Supply Chain Services	$	216,685	$	250,939	$	(34,254)	(14)	%	67	%	72	%	Supply Chain Services	$	217,855	$	$	235,520		$		$	(17,665)		(8)		(8)	%			65	%				65	%
Performance Services	Performance Services	105,556		96,903		8,653		9	%	33	%	28	%	Performance Services	116,963		124,115		124,115			(7,152)			(7,152)		(6)		(6)	%			35	%				35	%
Segment net revenue	Segment net revenue	$	322,241	$	347,842	$	(25,601)	(7)	%	100	%	100	%	Segment net revenue	$	334,818	$	$	359,635		$		$	(24,817)		(7)		(7)	%			100	%				100	%

Segment net revenue for the ~~nine~~six months ended ~~March~~December 31, 2023 and 2022 was as follows (in thousands):


		Nine Months Ended March 31,								% of Net Revenue
	Six Months Ended December 31,																			Six Months Ended December 31,																% of Net Revenue
Net revenue:	Net revenue:	2023		2022		Change				2023		2022		Net revenue:	2023			2022					Change								2023				2022
Supply Chain Services	Supply Chain Services	$	671,899	$	799,251	$	(127,352)	(16)	%	67	%	73	%	Supply Chain Services	$	428,653	$	$	455,214		$		$	(26,561)		(6)		(6)	%			66	%				68	%
Performance Services	Performance Services	323,860		292,962		30,898		11	%	33	%	27	%	Performance Services	224,969		218,304		218,304			6,665			6,665		3		3	%			34	%				32	%
Segment net revenue	Segment net revenue	$	995,759	$	1,092,213	$	(96,454)	(9)	%	100	%	100	%	Segment net revenue	$	653,622	$	$	673,518		$		$	(19,896)		(3)		(3)	%			100	%				100	%

Our Supply Chain Services segment includes one of the largest national healthcare group purchasing organization (“GPO”) programs in the United States, serving acute ~~non-acute~~ and ~~non-healthcare~~continuum of care sites and providing supply chain co-management, purchased services and direct sourcing activities. We generate revenue in our Supply Chain Services segment from administrative fees received from suppliers based on the total dollar volume of goods and services purchased by our members and other customers, service fees from supply chain co-management, subscription fees from purchased services and product sales in connection with our direct sourcing activities.

Our Performance Services segment consists of three sub-brands: PINC AITM, our technology and services platform with offerings that help optimize performance in three main areas – clinical intelligence, margin improvement and value-based care – using advanced analytics to identify improvement opportunities, consulting and managed services for clinical and operational design, and workflow solutions to hardwire sustainable change in the provider, payer and life sciences ~~and payor~~ markets; Contigo Health®, our direct-to-employer business which provides third-party administrator services and management of health benefit programs that

~~allow~~ enable healthcare providers that are also payers (e.g. payviders) and employers to contract directly with healthcare providers as well as partner with the healthcare providers to provide employers access to a specialized care network through Contigo Health’s centers of excellence program and cost containment and wrap network; and Remitra®, our digital invoicing and payables automation business which provides financial support services to healthcare ~~providers~~suppliers and ~~suppliers.~~providers. Each sub-brand serves different markets but are all united in our vision to optimize provider performance and accelerate industry innovation for better, smarter healthcare.

~~Acquisitions~~Sales and ~~Divestitures~~Acquisitions

Acquisition of TRPN Direct Pay, Inc. and Devon Health, Inc. Assets

On October 13, 2022, we acquired, through our consolidated subsidiary, Contigo Health, ~~LLC (“Contigo Health”),~~ certain assets and assumed certain liabilities of TRPN Direct Pay, Inc. and Devon Health, Inc. (collectively, “TRPN”) for an adjusted purchase price of $177.5 ~~million which was paid at closing with borrowings under our Credit Facility (as defined in Note 8 - Debt~~million. The assets acquired and ~~Notes Payable~~liabilities assumed relate to ~~the accompanying condensed consolidated financial statements) and cash on hand, of which $17.8 million was placed in escrow to satisfy indemnification obligations~~businesses of TRPN focused on improving access to quality healthcare and reducing the cost of medical claims through pre-negotiated discounts with network providers, including acute care hospitals, surgery centers, physicians and other continuum of care providers in the U.S. Contigo Health ~~and its affiliates and other parties related thereto under the purchase agreement governing the transaction (“~~also agreed to license proprietary cost containment technology of TRPN. TRPN ~~acquisition”). TRPN is being~~has been integrated ~~within Premier~~ under Contigo Health and is reported as part of the Performance Services segment. See Note 3 - Business Acquisitions to the accompanying condensed consolidated financial statements for further information.

Sale of Non-Healthcare GPO Member Contracts

On July 25, 2023, we sold substantially all of our non-healthcare GPO member contracts pursuant to an equity purchase agreement with OMNIA Partners, LLC (“OMNIA”) for a purchase price estimated to be up to $740.0 million, which has been reduced from previous estimates taking into account certain post-closing adjustments and remains subject to additional adjustments. For a period of at least 10 years following the closing, the non-healthcare GPO members will continue to be able to make purchases through our group purchasing contracts. See Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information.

Market and Industry Trends and Outlook

We expect that certain trends and economic or industrywide factors will continue to affect our business, in both the short- and long-term. We have based our expectations described below on assumptions made by us and on information currently available to us. To the extent our underlying assumptions about, or interpretation of, available information prove to be incorrect, our actual results may vary materially from our expected results. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” herein and in the ~~2022~~2023 Annual Report.

Trends in the U.S. healthcare market as well as the broader U.S. and global economy affect our revenues and costs in the Supply Chain Services and Performance Services segments. The trends we see affecting our current business include the impact of inflation on the broader economy, the significant increase to input costs in healthcare, including the rising cost of labor, and the impact of the implementation of current or future healthcare legislation. Implementation of healthcare legislation could be disruptive for Premier and our customers, impacting revenue, reporting requirements, payment reforms, shift in care to the alternate site market and increased data availability and transparency. To meet the demands of this environment, there will be increased focus on scale and cost containment and healthcare providers will need to measure and report on and bear financial risk for outcomes. Over the long-term, we believe these trends will result in increased demand for our Supply Chain Services and Performance Services solutions in the areas of cost management, quality and safety, and value-based care; however, there are uncertainties and risks that may affect the actual impact of these anticipated trends, expected demand for our services or related assumptions on our business. See “Cautionary Note Regarding Forward-Looking Statements” for more information.

Impact of Inflation

~~The~~While the U.S. inflation rate continues to decline from its peak in calendar year 2022, the U.S. economy is still experiencing ~~the highest~~elevated rates of ~~inflation since the 1980s. Through March 31, 2023, we~~inflation. We have continued to limit the impact of inflation on our members and believe that we maintain significantly lower inflation impacts across our diverse product portfolio than national levels. However, in certain areas of our business, there is still some level of risk and uncertainty for our members and other customers as labor costs, raw material costs and availability, rising interest rates and inflation continue to pressure supplier pricing as well as apply significant pressure on our margin.

We continue to evaluate the contributing factors, specifically ~~transportation and freight,~~logistics, raw materials and labor, that have led to ~~temporary~~ adjustments to selling prices. We have ~~begun to see~~seen logistics costs normalize ~~to pre-pandemic levels~~ as well as some reductions in the costs of specific raw ~~materials;~~materials compared to pre-pandemic levels; however, the cost of labor remains high. We are continuously working to ~~lower these~~manage price increases as market conditions change. The impact of inflation toon our aggregated product portfolio is partially mitigated by contract term price protection for a large portion of our portfolio, as well as price reductions in certain product categories such as pharmaceuticals. See Item 1A. “Risk Factors” in our 2023 Annual Report.

Furthermore, as the Federal Reserve seeks to ~~curb rising~~further reduce inflation, market interest rates ~~have steadily risen, and~~ may continue to ~~rise,~~be elevated, increasing the cost of borrowing under our Credit Facility (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) as well as impacting our results of operations, financial condition and cash flows.

Geopolitical Tensions

~~Russia-Ukraine War~~

In February 2022, Russia invaded Ukraine which resulted in sanctions, export controls and other measures imposed against Russia, Belarus and specific areas within Ukraine. As the war endures, it continuesGeopolitical tensions continue to affect the global economy and financial markets, as well as exacerbate ongoing economic challenges, including issues such as rising inflation, energy costs, logistics costs and global supply-chain disruption.

We continue to monitor the impacts of ~~the Russia-Ukraine war~~geopolitical tensions on macroeconomic conditions and prepare for any implications ~~that the war~~they may have on member demand, our suppliers’ ability to deliver products, cybersecurity risks and our liquidity and access to capital. See Item 1A. “Risk Factors” in our ~~2022~~2023 Annual Report.

~~COVID-19 Pandemic, Variants Thereof, Recurrences~~Pandemics, Epidemics or ~~Similar Pandemics~~Public Health Emergencies

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~~the impact on the ~~overall economy,~~healthcare industry continues to impact our sales, operations and supply chains, our members and other customers, and workforce and ~~suppliers, and countries.~~suppliers. As a result of ~~the COVID-19 pandemic, variants thereof, and potential future pandemic outbreaks,~~pandemics, epidemics or public health emergencies, we may face ~~significant~~material risks including, but not limited to:

•~~Overall economic and capital markets decline.~~ ~~The impact of~~Labor shortages in the ~~COVID-19 pandemic and variants thereof and associated supply chain disruptions could~~healthcare workforce which may result in ~~a prolonged recession or depression~~increased in the United States or globally that could harm the banking system, limit demand for many products and services and cause other foreseen and unforeseen events and circumstances, all of which could negatively impact us. The continued spread of COVID-19 and variants thereof has led to and could continue to lead to severe disruption and volatility in the United States and global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. In addition, trading prices on the public stock market, as well as that of our Class A common stock, have been highly volatile as a result of the COVID-19 pandemic.labor costs.

•Changes in the demand for our products and ~~services.~~ ~~We experienced and~~services may ~~continue to experience~~create demand uncertainty from both material increases and decreases in demand and pricing for our products and services as our members continue to recover from the impact of the COVID-19 pandemic and subsequent financial challenges. There was a material increase in demand for personal protective equipment (“PPE”), drugs and other supplies directly related to treating and preventing the spread of COVID-19 and variants thereof during fiscal 2020 and 2021. In the second half of fiscal 2022 through the current period of fiscal 2023, demand and pricing for PPE, drugs and other supplies decreased due to members’ excess inventory levels resulting in a decline in revenue relative to the previous two fiscal years. Patients, hospitals and other medical facilities may continue to defer some elective procedures and routine medical visits due to ongoing and continuing uncertainty from COVID-19 outbreaks or variants thereof, or as a result of restrictive government orders or advisories. While demand for many supplies and services not related to COVID-19 may continue to decline in fiscal 2023, rolling shortages of products and drugs needed for routine procedures, such as contrast media and flush syringes, could have an impact on demand for hospital services and the financial conditions of providers, particularly those forced to procure such products through resellers.services.

•
~~Increased labor costs.~~ Labor shortages and the resulting increases to the cost of labor are an ongoing challenge to the healthcare providers we serve. Limited availability of staff resources and rolling staff shortages may continue to impair the ability of existing staff to manage product and service procurement. While our non-acute and non-healthcare businesses, such as education and hospitality customers, experienced a rebound in fiscal 2022, the recovery may be hampered by future COVID-19 outbreaks or variants, which are highly uncertain and cannot be accurately predicted.

•Limited access to our members’ facilities ~~that impacts~~as well as travel restrictions limits our ability ~~to fulfill our contractual requirements.~~ While some of our hospital customers have allowed increased access to their facilities by non-patients, including our field teams, consultants and other professionals, there are many that still are not permitting onsite access outside of their staff. Hospital imposed travel restrictions are also impacting some customers’ ability to participate in face-to-face events with ~~us,~~them, such as committee meetings and conferences, ~~which~~and limits our ability to ~~build on customer relationships. The long-term continuation, or any future recurrence of these circumstances, may negatively impact the ability of our employees to~~foster relationships and effectively deliver existing or sell new products and services to our ~~members and could negatively affect the performance of our existing contracts.~~members.

•~~Materials and personnel shortages and disruptions in supply chain, including manufacturing and shipping.~~ ~~The~~Disruption to the global supply chain, has been materially disrupted due to personnel shortages associated with ongoing COVID-19 rates of infection, stay-at-home orders, rapidly escalating shipping costs, raw material availability, material logistical delays due to port congestion and general labor constraints. Stay-at-home orders and other restrictions in response to the COVID-19 pandemic, particularly in China, ~~have impacted and continue to impact our access to products for our members. Staffing or personnel shortages due to stay-at-home orders and quarantines, or other public health measures,~~

~~have impacted and, in the future,~~ may impact us and our members, other customers or suppliers. In addition, due to unprecedented demand during the COVID-19 pandemic, there have been widespread shortages in certain product categories. If the supply chain for materials used in the products purchased by our members through our GPO or products contract manufactured through our direct sourcing ~~business continue to be adversely impacted by the COVID-19 pandemic, our supply chain may continue to be disrupted.~~business. Failure of our suppliers, contract manufacturers, distributors, contractors and other business partners to meet their obligations to our members, other customers or to us, or material disruptions in their ability to do so due to their own financial or operational difficulties, may adversely impact our operations.

•Requests ~~for contract modifications, payment deferrals or exercises of force majeure clauses.~~ ~~We have and may continue to receive requests~~ for contract modifications, payment waivers and deferrals, payment reductions or amended payment terms from our contract ~~counterparties. We have and may continue to receive~~counterparties, requests to delay service or payment on performance service ~~contracts. In addition, we have~~contracts and ~~may continue to receive~~ requests from our suppliers for increases to their contracted prices, and such requests may be implemented in the future. Inflation in such contract prices may impact member utilization of items and services available through our GPO contracts, which could adversely impact our net administrative fees revenue and direct sourcing revenue. In addition, several pharmacy suppliers have exercised force majeure clauses related to failure to supply clauses in their contracts with us because they are unable to obtain raw materials for manufacturing from India and China. The standard failure to supply language in our contracts contains financial penalties to suppliers if they are unable to supply products, which such suppliers may not be able to pay. In addition, we may not be able to source products from alternative suppliers on commercially reasonable terms, or at all.prices.

•~~Managing~~A general decline in the ~~evolving regulatory environment.~~ ~~On April 10, 2023,~~overall economic and capital markets could increase our cost of capital and adversely affect our ability to access the ~~Biden administration signed legislation to~~capital markets in the future.

While both the U.S. and the World Health Organization declared an end ~~the national emergency for COVID-19. Additional federal, state and local governments’ rules, regulations, orders and advisories, which were issued in response~~ to the COVID-19 pandemic as a public health emergency in May 2023, the risks associated with a pandemic remains and ~~variants thereof, are also expected to expire. These government actions can~~the resulting impact ~~us and our members, other customers and suppliers.~~

~~The ultimate impact of COVID-19, variants thereof, recurrences, or similar pandemics~~ on our business, results of operations, financial ~~condition~~conditions and cash flows ~~is dependent on future developments, including~~as well as the ~~duration of any pandemic and the related length of its impact on the United States~~U.S. and global economies ~~which are~~is uncertain and cannot be predicted at this time. The impact of ~~the COVID-19~~another pandemic, ~~variants thereof, recurrences,~~epidemic or ~~future similar pandemics~~public health emergency may also exacerbate many of the other risks described in the Item 1A. “Risk Factors” section of the ~~2022~~2023 Annual Report. Despite our efforts to manage these impacts, their ultimate impact depends on factors beyond our knowledge or control, including the duration and severity of any outbreak and actions taken to contain its spread and mitigate its public health effects. The foregoing and other continued disruptions in our business as a result of ~~the COVID-19 pandemic, variants thereof, recurrences~~pandemics, epidemics or ~~similar pandemics~~public health emergencies could result in a material adverse effect on our business, results of operations, financial condition, cash flows, prospects and the trading prices of our securities in the near-term and through fiscal ~~2023~~2024 and beyond.

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 ~~2022~~2023 Annual Report.

New Accounting Standards

~~New~~There were no new accounting standards ~~that we have recently~~ adopted ~~are included in Note 2 - Significant Accounting Policies to~~by the ~~accompanying condensed consolidated financial statements, which is incorporated herein by reference.~~Company during the six months ended December 31, 2023.

Key Components of Our Results of Operations

Net Revenue

Net revenue consists of net administrative fees revenue, software licenses, other services and support revenue and products revenue.

Supply Chain Services

Supply Chain Services revenue is comprised of:

•net administrative fees revenue which consists of gross administrative fees received from suppliers, reduced by the amount of revenue share paid to members;

•software licenses, other services and support revenue which consist of supply chain co-management and purchased services revenue; and

•products revenue which consists of inventory sales.

The success of our Supply Chain Services revenue streams is 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 impact of changes in the defined allowable reimbursement amounts determined by Medicare, Medicaid and other managed care plans, ~~and~~ the number of members and other customers that purchase products through our direct sourcing activities, the continued impact of members’ and other customers’ elevated inventory levels on our direct sourcing business and the impact of competitive pricing. Refer to “Impact of Inflation” within “Liquidity and Capital Resources” section of Item 2 - Management's

Discussion and Analysis of Financial Condition and Results of Operations for discussion of inflation and its impact on our Supply Chain Services’ businesses.

Performance Services

Performance Services revenue is comprised of the following software licenses, other services and support revenue:

•healthcare information technology license and SaaS-based clinical intelligence, margin improvement and value-based care products subscriptions, license fees, professional fees for consulting services, PINC AI data licenses, performance improvement collaborative and other service subscriptions and insurance services management fees and commissions from endorsed commercial insurance programs under our PINC AI technology and services platform;

•third-party administrator fees, fees from the centers of excellence program and cost containment and wrap network fees ~~pursuant to the TRPN acquisition~~ for Contigo Health; and

•fees from healthcare ~~product~~ suppliers and ~~service~~ providers for Remitra.

Our Performance Services growth will depend upon the expansion ~~of our PINC AI technology and advisory services platform~~ to new and existing members and other customers, renewal of existing subscriptions to our SaaS and licensed software products ~~our ability~~and the shift from recurring subscription-based agreements to ~~sell~~ enterprise analytics licenses ~~to new and existing customers~~ at ~~rates~~a sufficient rate to offset ~~the loss of~~reductions in recurring SaaS-based ~~revenue due to the conversion to an enterprise analytics license, expansion into new markets and expansion of our Contigo Health and Remitra businesses to new and existing members.~~revenue.

Cost of Revenue

Cost of revenue consists of cost of services and software licenses revenue and cost of products revenue.

Cost of services and software licenses revenue includes expenses related to employees, consisting of compensation and benefits, and outside consultants who directly provide services related to revenue-generating activities, including consulting services to members and other customers, third-party administrator services and implementation services related to our SaaS and licensed software products along with associated amortization of certain capitalized contract costs. Amortization of contract costs represent amounts that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract including costs related to implementing SaaS informatics tools. Cost of services and software licenses revenue also includes expenses related to hosting services, related data center capacity costs, third-party product license expenses and amortization of the cost of internally developed software applications.

Cost of products revenue consists of purchase and ~~shipment~~logistics costs for direct sourced medical products and commodity products and is influenced by the manufacturing and transportation costs associated with direct sourced medical and commodity products. Refer to “Impact of Inflation” within “Liquidity and Capital Resources” section of Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations for discussion of inflation and its impact on our Supply Chain Services’ businesses.

Operating Expenses

Operating expenses includes selling, general and administrative (“SG&A”) expenses, research and development expenses and amortization of purchased intangible assets.

SG&A expenses are directly associated with selling and administrative functions and support of revenue-generating activities including expenses to support and maintain our software-related products and services. SG&A expenses primarily consist of compensation- and benefits-related costs; travel-related expenses; business development expenses, including costs for business acquisition opportunities; non-recurring strategic initiative and financial restructuring-related ~~expenses,~~expenses; indirect costs such as insurance, professional fees and other general overhead ~~expenses,~~expenses; and amortization of certain contract costs. Amortization of contract costs represent amounts, including sales commissions, that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract.

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

Amortization of purchased intangible assets includes the amortization of all identified intangible assets.

Other Income, Net

Other income, net, includes equity in net income of unconsolidated affiliates that is generated from our equity method investments. Our equity method investments primarily consist of our interests in Exela Holdings, Inc. (“Exela”) and Prestige Ameritech Ltd. (“Prestige”). AtAs of March ~~31,~~3, 2023, our investment in FFF Enterprises, Inc. (“FFF”) was no longer accounted for

under the equity method of accounting as a result of the March 3, 2023 amendment. Prior to the March 3, 2023 amendment, our investment in FFF was accounted for as an equity method investment and a pro rata portion of the equity in net income was included in other income, net (see Note 4 - ~~Investments)~~Investments to the accompanying condensed consolidated financial statements for further information). Other income, net, includes interest income primarily related to interest earned on investments in money market funds and interest expense primarily related to funds borrowed through our Credit Facility and imputed interest expense associated with the liability related to the sale of future revenues (see Note 8 - Debt and Notes Payable and Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information). Other income, net, also includes, but is not limited to, ~~the fiscal year 2022 gain recognized due to the termination of the FFF Put Right and derecognition of the associated liability (see Note 5 - Fair Value Measurements),~~ interest income and expense, realized and unrealized gains or losses on deferred compensation plan assets, gains or losses on the disposal of assets, and any impairment on our assets or held-to-maturity investments.

Income Tax Expense

See Note 1213 - Income Taxes to the accompanying condensed consolidated financial statements for discussion of income tax expense.

Net ~~Income~~Income/Loss Attributable to Non-Controlling Interest

We recognize net ~~income~~income/loss attributable to non-controlling interest for non-Premier ownership in our consolidated subsidiaries which hold interest in our equity method investments (see Note 4 - ~~Investments)~~Investments to the accompanying condensed consolidated financial statements for further information). At ~~March~~December 31, 2023, we recognized net ~~income~~loss attributable to non-controlling interests held by member health systems or their affiliates in the consolidated subsidiaries holding our equity method investments, including but not limited to the 74% and 85% interest held in PRAM Holdings, LLC (“PRAM”) and ExPre Holdings, LLC (“ExPre”), respectively. In partnership with ~~our~~ member health systems or their affiliates, these investments are part of our long-term supply chain resiliency program to promote domestic and geographically diverse manufacturing and to help ensure a robust and resilient supply chain for essential medical products.

As of ~~March~~December 31, 2023, we owned 93% of the equity interest in Contigo Health and recognized net ~~income~~loss attributable to non-controlling interest for the 7% of equity held by certain customers of Contigo Health.

Our Use of Non-GAAP Financial Measures

The other key business metrics we consider are EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings ~~per~~Per Share and Free Cash Flow, which are all Non-GAAP financial measures. Non-GAAP financial measures are not an alternative to GAAP and may be different from Non-GAAP financial measures used by other companies, but we believe they are useful for understanding our performance for the reasons described below.

We define EBITDA as net income before income or loss from discontinued operations, net of tax, interest and investment income or expense, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets. We define Adjusted EBITDA as EBITDA before merger and acquisition-related expenses and non-recurring, non-cash or non-operating ~~items and including equity in net income of unconsolidated affiliates.~~items. For all Non-GAAP financial measures, we consider non-recurring items to be income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Such items include certain strategic initiative and financial restructuring-related 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.~~items. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative, and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.

We have revised the definitions for Adjusted EBITDA and Segment Adjusted EBITDA from the definitions reported in the 2023 Annual Report to exclude the impact of equity earnings in unconsolidated affiliates. For comparability purposes, prior year non-GAAP financial measures are presented based on the current definitions.

We define Adjusted Net Income as net income attributable to Premier (i) excluding income or loss from discontinued operations, net, (ii) excluding income tax expense, (iii) excluding the ~~impact of adjustment of redeemable limited partners’ capital to redemption amount, (iv) excluding the~~ effect of non-recurring or non-cash items, including certain strategic initiative and financial restructuring-related expenses, ~~(v) assuming, for periods prior to our August 2020 Restructuring, 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 (vi)~~(iv) reflecting an adjustment for income tax expense on Non-GAAP net income before income taxes at our estimated annual effective income tax rate, adjusted for unusual or infrequent ~~items.~~items and (v) excluding the equity in net income of unconsolidated affiliates. We define Adjusted Earnings ~~per~~Per Share as Adjusted Net Income divided by diluted weighted average shares (see Note 1011 - Earnings Per ~~Share)~~Share to the accompanying condensed consolidated financial statements for further information). We have revised the definition for Adjusted Net Income

from the definition reported in the 2023 Annual Report to (1) remove the exclusion of the impact of adjustment of redeemable limited partners’ capital to redemption amount, (2) remove the impact of the exchange of all Class B common units for shares of Class A common stock for periods prior to our August 2020 Restructuring and the resulting elimination of non-controlling interest in Premier LP, and (3) add the exclusion of equity earnings in unconsolidated affiliates. For comparability purposes, prior year Adjusted Net Income is presented based on the current definition.

We define Free Cash Flow as net cash provided by operating activities from continuing operations less (i) early termination payments to certain former limited partners that elected to execute a Unit Exchange and Tax Receivable Acceleration Agreement (“Unit Exchange Agreement”) in connection with our August 2020 Restructuring and (ii) purchases of property and equipment. Free Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments.

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

We use Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings ~~per~~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), certain items outside the control of our management team, e.g. taxes, other non-cash items (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation), non-recurring items (such as strategic initiative and financial restructuring-related expenses) and income and expense that has been classified as discontinued operations from our operating results. We believe Adjusted Net Income and Adjusted Earnings ~~per~~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 initiative and financial restructuring-related expenses), and eliminate the variability of non-controlling interest ~~that primarily resulted from member owner exchanges~~and equity in net income of ~~Class B common units for shares of Class A common stock.~~unconsolidated affiliates. We believe Free Cash Flow is an important measure because it represents the cash that we generate after payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring and capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth. Our Free Cash Flow ~~allows~~enables us to ~~enhance~~seek enhancement of stockholder value through acquisitions, partnerships, joint ventures, investments in related businesses and debt reduction.

Despite the importance of these Non-GAAP financial measures in analyzing our business, determining compliance with certain financial covenants in our Credit Facility, measuring and determining incentive compensation and evaluating our operating performance relative to our competitors, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings ~~per~~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 Net Income and Adjusted Earnings ~~per~~Per Share measures are that they do not reflect income tax expense or income tax payments we are required to make. In addition, Adjusted Net Income and Adjusted Earnings ~~per~~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 Net

3331

Income, Adjusted Earnings ~~per~~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 Net Income consist of stock-based compensation, acquisition- and disposition-related expenses, strategic initiative and financial restructuring-related expenses, ~~gain or loss on FFF Put and Call Rights,~~ income and expense that has been classified as discontinued operations and other reconciling items. More information about certain of the more significant items follows below.

Income tax expense on adjusted income

Adjusted Net Income, a Non-GAAP financial measure as defined ~~below~~above in “Our Use of Non-GAAP Financial Measures”, is calculated net of taxes based on our estimated annual effective tax rate for federal and state income tax, adjusted for unusual or infrequent items, as we are a consolidated group for tax purposes with all of our subsidiaries’ activities included. The tax rate used to compute the Adjusted Net Income was 27% for the three and six months ended December 31, 2023 and 26% for the three and ~~nine~~six months ended March 31, 2023 and 24% for the three and nine months ended March 31, 2022, respectively. The 24% tax rate in fiscal year 2022 was primarily due to the benefit from the release of $32.3 million of valuation allowance of our deferred tax asset as a result of the Subsidiary Reorganization.

Of the $32.3 million valuation allowance released in fiscal year 2022, $10.6 million was included in the estimated annual effective tax rate calculation to the extent such carryforwards were projected to offset fiscal year 2022 ordinary income. The remaining $21.7 million of valuation allowance released was included as a discrete item in the nine months ended MarchDecember 31, 2022.

Stock-based compensation

In addition to non-cash employee stock-based compensation expense, this item includes non-cash stock purchase plan expense of $0.1 million for both the three months ended ~~March~~December 31, 2023 and 2022 and ~~$0.5 million and $0.4~~$0.3 million for both the ~~nine~~six months ended ~~March~~December 31, 2023 and 2022 ~~respectively~~ (see Note 1112 - Stock-Based Compensation to the accompanying condensed consolidated financial ~~statements)~~statements for further information).

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.

Strategic initiative and financial restructuring-related expenses

Strategic initiative and financial restructuring-related expenses include legal, accounting and other expenses related to strategic initiative and financial restructuring-related activities.

~~Gain on FFF Put and Call Rights~~

~~See Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements.~~

Other reconciling items

Other reconciling items include, but are not limited to, gains and losses on disposal of long-lived assets and imputed interest on notes payable to former limited partners.

3432

Results of Operations

The following table presents our results of operations for the periods presented (in thousands, except per share data):


		Three Months Ended March 31,						Nine Months Ended March 31,
		2023			2022			2023			2022
		Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue
	Three Months Ended December 31,																												Three Months Ended December 31,																Six Months Ended December 31,
	2023																					2023									2022									2023								2022
	Amount																			Amount			% of Net Revenue						Amount						% of Net Revenue					Amount					% of Net Revenue					Amount						% of Net Revenue
Net revenue:	Net revenue:
Net administrative fees
Net administrative fees
Net administrative fees	Net administrative fees	$	148,441	46%	$	148,396	43%	$	452,870	45%	$	448,261	41%	$	149,563			45%			45%			$	154,423			43%					43%				$	298,590			46%			46%					$	304,429			45%				45%
Software licenses, other services and support	Software licenses, other services and support	116,579		36%	105,808		30%	359,795		36%	320,109		30%	Software licenses, other services and support		129,401			39%			39%				138,210				38%				38%					248,541			38%				38%					243,216				36%			36%
Services and software licenses	Services and software licenses	265,020		82%	254,204		73%	812,665		82%	768,370		70%	Services and software licenses		278,964			83%			83%				292,633				81%				81%					547,131			84%				84%					547,645				81%			81%
Products	Products	57,212		18%	93,629		27%	183,066		18%	323,825		30%	Products		55,781			17%			17%				66,993				19%				19%					106,366			16%				16%					125,854				19%			19%
Net revenue	Net revenue	322,232		100%	347,833		100%	995,731		100%	1,092,195		100%	Net revenue		334,745			100%			100%				359,626				100%				100%					653,497			100%				100%					673,499				100%			100%
Cost of revenue:	Cost of revenue:
Services and software licenses
Services and software licenses
Services and software licenses	Services and software licenses	54,149		17%	46,735		13%	163,428		16%	136,326		12%	65,990				20%			20%			55,265				15%					15%				130,122				20%			20%					109,279				16%				16%
Products	Products	49,013		15%	88,621		25%	168,507		17%	294,916		27%	Products		47,472			14%			14%				61,620				17%				17%					91,510			14%				14%					119,494				18%			18%
Cost of revenue	Cost of revenue	103,162		32%	135,356		39%	331,935		33%	431,242		39%	Cost of revenue		113,462			34%			34%				116,885				33%				33%					221,632			34%				34%					228,773				34%			34%
Gross profit	Gross profit	219,070		68%	212,477		61%	663,796		67%	660,953		61%	Gross profit		221,283			66%			66%				242,741				67%				67%					431,865			66%				66%					444,726				66%			66%
Operating expenses	Operating expenses	156,504		49%	155,653		45%	454,556		46%	453,886		42%	Operating expenses		155,590			46%			46%				154,575				43%				43%					307,201			47%				47%					298,052				44%			44%
Operating income	Operating income	62,566		19%	56,824		16%	209,240		21%	207,067		19%	Operating income		65,693			20%			20%				88,166				25%				25%					124,664			19%				19%					146,674				22%			22%
Other income (expense), net	Other income (expense), net	3,315		1%	(3,061)		(1)%	6,508		1%	70,634		6%	Other income (expense), net		6,451			2%			2%				(27)				—%				—%					3,828			1%				1%					3,193				—%			—%
Income before income taxes	Income before income taxes	65,881		20%	53,763		15%	215,748		22%	277,701		25%	Income before income taxes		72,144			22%			22%				88,139				25%				25%					128,492			20%				20%					149,867				22%			22%
Income tax expense	Income tax expense	17,232		5%	14,694		4%	59,766		6%	40,094		4%	Income tax expense		19,278			6%			6%				23,765				7%				7%					33,216			5%				5%					42,534				6%			6%
Net income	Net income	48,649		15%	39,069		11%	155,982		16%	237,607		22%	Net income		52,866			16%			16%				64,374				18%				18%					95,276			15%				15%					107,333				16%			16%
Net income attributable to non-controlling interest		(1,848)		(1)%	(654)		—%	(2,419)		—%	(1,643)		—%
Net loss (income) attributable to non-controlling interest														Net loss (income) attributable to non-controlling interest		1,436					—%			(328)								—%				3,787							1%				(571)							—%
Net income attributable to stockholders	Net income attributable to stockholders	$	46,801	15%	$	38,415	11%	$	153,563	15%	$	235,964	22%	Net income attributable to stockholders		$	54,302		16%			16%				$	64,046			18%				18%					$	99,063		15%				15%					$	106,762			16%			16%

Earnings per share attributable to stockholders:	Earnings per share attributable to stockholders:
Earnings per share attributable to stockholders:
Earnings per share attributable to stockholders:
Basic
Basic
Basic	Basic	$	0.39		$	0.32		$	1.29		$	1.95
Diluted	Diluted	$	0.39		$	0.32		$	1.28		$	1.94
Diluted
Diluted

For the following Non-GAAP financial measures and reconciliations of our performance derived in accordance with GAAP to the Non-GAAP financial measures, refer to “Our Use of Non-GAAP Financial Measures” for further information regarding items excluded in our calculation of Adjusted EBITDA, Segment Adjusted EBITDA, Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Earnings Per Share. The definitions for Adjusted EBITDA and Non-GAAP Adjusted Net Income were revised from those reported in the 2023 Annual Report. For comparability purposes, prior year non-GAAP financial measures are presented based on the current definitions in the above section “Our Use of Non-GAAP Financial Measures”.

The following table provides certain Non-GAAP financial measures for the periods presented (in thousands, except per share data):


		Three Months Ended March 31,						Nine Months Ended March 31,
		2023			2022			2023			2022
	Three Months Ended December 31,																						Three Months Ended December 31,										Six Months Ended December 31,
	2023																		2023						2022					2023						2022
Certain Non-GAAP Financial Data:	Certain Non-GAAP Financial Data:	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Amount		% of Net Revenue	Certain Non-GAAP Financial Data:	Amount			% of Net Revenue		Amount						% of Net Revenue		Amount				% of Net Revenue			Amount				% of Net Revenue
Adjusted EBITDA	Adjusted EBITDA	$	117,286	36%	$	112,188	32%	$	367,202	37%	$	375,907	34%	Adjusted EBITDA	$	114,128	34%		34%		$	138,862		39%			39%		$	219,867	34%			34%			$	239,999		36%	36%
Non-GAAP Adjusted Net Income	Non-GAAP Adjusted Net Income	69,488		22%	68,098		20%	217,650		22%	235,444		22%	Non-GAAP Adjusted Net Income	71,940		21%		21%		84,168			23%			23%		136,827		21%			21%			140,400			21%	21%
Non-GAAP Adjusted Earnings Per Share	Non-GAAP Adjusted Earnings Per Share	0.58		nm	0.57		nm	1.82		nm	1.93		nm	Non-GAAP Adjusted Earnings Per Share	0.60		nm		nm		0.70			nm			nm		1.14		nm			nm			1.17			nm	nm

nm = Not meaningful

3533

The following tables provide the reconciliation of net income to Adjusted EBITDA and the reconciliation of income before income taxes to Segment Adjusted EBITDA (in thousands):


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

Other reconciling items, net (a)
Other reconciling items, net (a)
Other reconciling items, net (a)	Other reconciling items, net (a)	—		258		(312)		262
Adjusted EBITDA	Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907

Income before income taxes	Income before income taxes	$	65,881	$	53,763	$	215,748	$	277,701
Equity in net income of unconsolidated affiliates		(4,630)		(3,991)		(14,547)		(17,165)
Interest expense, net		4,269		2,804		11,759		8,465
Gain on FFF Put and Call Rights		—		—		—		(64,110)
Other (income) expense, net		(2,954)		4,248		(3,720)		2,176
Income before income taxes
Income before income taxes
Equity in net loss (income) of unconsolidated affiliates
Interest (income) expense, net

Other income, net
Other income, net
Other income, net
Operating income	Operating income	62,566		56,824		209,240		207,067
Depreciation and amortization	Depreciation and amortization	20,275		21,408		65,153		62,874
Amortization of purchased intangible assets	Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
Stock-based compensation	Stock-based compensation	6,709		14,149		16,859		38,229
Acquisition- and disposition-related expenses	Acquisition- and disposition-related expenses	6,294		3,115		11,592		10,282
Strategic initiative and financial restructuring-related expenses	Strategic initiative and financial restructuring-related expenses	1,942		5,540		10,988		9,314
Equity in net income of unconsolidated affiliates		4,630		3,991		14,547		17,165
Deferred compensation plan expense (income)		2,859		(3,994)		3,148		(1,923)
Deferred compensation plan income
Other reconciling items, net (b)	Other reconciling items, net (b)	95		4		260		9
Adjusted EBITDA	Adjusted EBITDA	$	117,286	$	112,188	$	367,202	$	375,907


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

(a)Other reconciling items, net is primarily attributable to ~~(gain)~~ loss on disposal of long-lived assets.

(b)Other reconciling items, net is attributable to other miscellaneous expenses.

3634

The following table provides the reconciliation of net income attributable to stockholders to Non-GAAP Adjusted Net Income and the reconciliation of the numerator and denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings ~~per~~Per Share for the periods presented (in thousands):


		Three Months Ended March 31,				Nine Months Ended March 31,
		2023		2022		2023		2022
	Three Months Ended December 31,										Three Months Ended December 31,			Six Months Ended December 31,
	2023									2023		2022	2023		2022
Net income attributable to stockholders	Net income attributable to stockholders	$	46,801	$	38,415	$	153,563	$	235,964
Net income attributable to non-controlling interest		1,848		654		2,419		1,643
Income tax expense	Income tax expense	17,232		14,694		59,766		40,094
Amortization of purchased intangible assets	Amortization of purchased intangible assets	11,916		11,151		35,415		32,890
Stock-based compensation	Stock-based compensation	6,709		14,149		16,859		38,229
Acquisition- and disposition-related expenses	Acquisition- and disposition-related expenses	6,294		3,115		11,592		10,282
Strategic initiative and financial restructuring-related expenses	Strategic initiative and financial restructuring-related expenses	1,942		5,540		10,988		9,314
Gain on FFF Put and Call Rights		—		—		—		(64,110)
Equity in net loss (income) of unconsolidated affiliates

Other reconciling items, net (a)
Other reconciling items, net (a)
Other reconciling items, net (a)	Other reconciling items, net (a)	1,161		1,885		3,520		5,489
Non-GAAP adjusted income before income taxes	Non-GAAP adjusted income before income taxes	93,903		89,603		294,122		309,795
Income tax expense on adjusted income before income taxes (b)	Income tax expense on adjusted income before income taxes (b)	24,415		21,505		76,472		74,351
Non-GAAP Adjusted Net Income	Non-GAAP Adjusted Net Income	$	69,488	$	68,098	$	217,650	$	235,444

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

(a)Other reconciling items, net is primarily attributable to loss on disposal of long-lived assets and imputed interest on notes payable to former limited partners.

(b)Reflects income tax expense at an estimated effective income tax rate of ~~26%~~27% of non-GAAP adjusted net income before income taxes for the three and ~~nine~~six months ended ~~March~~December 31, 2023 and ~~24%~~26% of non-GAAP adjusted net income before ~~income~~incomes taxes for the three and ~~nine~~six months ended ~~March~~December 31, 2022.

The following table provides the reconciliation of earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings ~~per~~Per Share for the periods presented:


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

(a)Other reconciling items, net is primarily attributable to loss on disposal of long-lived assets and imputed interest on notes payable to former limited partners.

3735

Consolidated Results - Comparison of the Three and Six Months Ended ~~March~~December 31, 2023 to 2022

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

Net Revenue

Net revenue decreased by ~~$25.6~~$24.9 million during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022, primarily due to ~~a decrease~~decreases of ~~$36.4~~$11.2 million in products revenue, $8.8 million in software licenses and other services and support revenue and $4.8 million in net administrative fees revenue.

Net revenue decreased by $20.0 million during the six months ended December 31, 2023 compared to the six months ended December 31, 2022, primarily due to decreases of $19.5 million in products revenue and $5.8 million in net administrative fees revenue, partially offset by an increase of ~~$10.8~~$5.3 million in software licenses and other services and support revenue.

Cost of Revenue

Cost of revenue decreased by ~~$32.2~~$3.4 million during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022, primarily due to a decrease of ~~$39.6~~$14.1 million in cost of products revenue, partially offset by an increase of ~~$7.4~~$10.7 million in cost of services and software licenses.

Cost of revenue decreased by $7.2 million during the six months ended December 31, 2023 compared to the six months ended December 31, 2022, primarily due to a decrease of $28.0 million in cost of products revenue, partially offset by an increase of $20.8 million in cost of services and software licenses.

Operating Expenses

Operating expenses ~~were flat for~~increased by $1.0 million during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, ~~2022.~~2022 primarily driven by an increase in SG&A expenses.

Operating expenses increased by $9.1 million during the six months ended December 31, 2023 compared to the six months ended December 31, 2022 primarily driven by increases of $7.6 million and $1.7 million in SG&A expenses and amortization of purchased intangible assets, respectively.

Other Income (Expense), Net

Other income (expense), net increased by ~~$6.4~~$6.5 million during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022, primarily due to an increase of $7.1 million in interest income, net and an increase in income of ~~$7.2~~$1.8 million in other income (expense), net, ~~and an increase~~partially offset by a decrease in income of ~~$0.6~~$2.3 million in equity in net income of unconsolidated affiliates. ~~These increases were partially offset by an increase of $1.5 million in interest expense, net.~~

Other income (expense), net was flat for the six months ended December 31, 2023 compared to the six months ended December 31, 2022.

Income Tax Expense

For the three months ended ~~March~~December 31, 2023 and 2022, we recorded tax expense of ~~$17.2~~$19.3 million and ~~$14.7~~$23.8 million, respectively. The tax expense recorded during the three months ended ~~March~~December 31, 2023 and 2022 resulted in an effective tax rate of 27% for both periods.

For the six months ended December 31, 2023 and 2022, we recorded tax expense of $33.2 million and $42.5 million, respectively. The tax expense recorded during the six months ended December 31, 2023 and 2022 resulted in effective tax rates of 26% and ~~27%~~28%, respectively. The change in the effective tax rate is primarily attributable to the impact of a decrease in stock-based compensation ~~expense. (See~~expense, state law repricing and the statute of limitation release on uncertain tax positions. See Note 1213 - Income Taxes to the accompanying condensed consolidated financial statements for ~~more~~further information.)

Net ~~Income~~Income/Loss Attributable to Non-Controlling Interest

Net income attributable to non-controlling interest ~~increased~~decreased by ~~$1.1~~$1.7 million to a net loss attributable to non-controlling interest of $1.4 million during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022, primarily due to ~~an increase~~our consolidated subsidiaries with non-controlling interests incurring a net loss in the ~~portion of net~~current quarter.

Net income attributable to non-controlling ~~interests in~~interest decreased by $4.4 million to a net loss attributable to non-controlling interest of $3.8 million during the six months ended December 31, 2023 compared to the six months ended December 31, 2022,

respectively, primarily due to our consolidated ~~subsidiaries.~~subsidiaries with non-controlling interests incurring a net loss in the current year period.

Adjusted EBITDA

Adjusted EBITDA ~~a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, increased~~decreased by ~~$5.1~~$24.8 million during the three months ended ~~March~~December 31, 2023 compared to the three months ended March 31, 2022, primarily driven by increases of $4.0 million and $2.6 million in Supply Chain Services and Corporate Adjusted EBITDA, respectively, partially offset by a decrease of $1.6 million in Performance Services Adjusted EBITDA.

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

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

~~Net Revenue~~

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

~~Cost of Revenue~~

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

~~Operating Expenses~~

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

~~Other Income, Net~~

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

~~Income Tax Expense~~

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

~~Net Income Attributable to Non-Controlling Interest~~

~~Net income attributable to non-controlling interest was flat for the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022.~~

~~Adjusted EBITDA~~

Adjusted EBITDA, a Non-GAAP financial measure as defined in “Our Use of Non-GAAP Financial Measures”, decreased by $8.7 million during the nine months ended March 31, 2023, compared to the nine months ended MarchDecember 31, 2022, primarily driven by decreases of ~~$10.4~~$12.3 million and ~~$1.7~~$11.8 million in Performance Services and Supply Chain Services Adjusted EBITDA, respectively.

Adjusted EBITDA decreased by $20.1 million during the six months ended December 31, 2023 compared to the six months ended December 31, 2022, primarily driven by decreases of $10.0 million and $9.6 million in Supply Chain Services and Performance Services ~~respectively. These decreases were partially offset by an increase of $3.4 million in Corporate~~ Adjusted ~~EBITDA.~~EBITDA, respectively.

Segment Results

Supply Chain Services

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


		Three Months Ended March 31,							Nine Months Ended March 31,
		2023		2022		Change			2023		2022		Change
	Three Months Ended December 31,
		2023
		2023
		2023																						2022							Change								2023					2022							Change
Net revenue:	Net revenue:
Net administrative fees
Net administrative fees
Net administrative fees	Net administrative fees	$	148,441	$	148,396	$	45	—%	$	452,870	$	448,261	$	4,609	1%	$	149,563			$		$	154,423			$			$	(4,860)			(3)%			(3)%				$	298,590		$			$	304,429		$				$	(5,839)	(2)%					(2)%
Software licenses, other services and support	Software licenses, other services and support	11,032		8,914		2,118		24%	35,963		27,165		8,798		32%	Software licenses, other services and support		12,511			14,104				14,104			(1,593)					(1,593)		(11)%			(11)%					23,697		24,931					24,931			(1,234)			(1,234)			(5)%			(5)%
Services and software licenses	Services and software licenses	159,473		157,310		2,163		1%	488,833		475,426		13,407		3%	Services and software licenses		162,074			168,527				168,527			(6,453)					(6,453)		(4)%			(4)%					322,287		329,360					329,360			(7,073)			(7,073)			(2)%			(2)%
Products	Products	57,212		93,629		(36,417)		(39)%	183,066		323,825		(140,759)		(43)%	Products		55,781			66,993				66,993			(11,212)					(11,212)		(17)%			(17)%					106,366		125,854					125,854			(19,488)			(19,488)			(15)%			(15)%
Net revenue	Net revenue	216,685		250,939		(34,254)		(14)%	671,899		799,251		(127,352)		(16)%	Net revenue		217,855			235,520				235,520			(17,665)					(17,665)		(8)%			(8)%					428,653		455,214					455,214			(26,561)			(26,561)			(6)%			(6)%
Cost of revenue:	Cost of revenue:
Services and software licenses	Services and software licenses	4,134		3,835		299		8%	13,731		10,472		3,259		31%
Services and software licenses
Services and software licenses																		10,260						4,389							5,871					134%				20,659						9,597							11,062					115%
Products	Products	49,013		88,621		(39,608)		(45)%	168,507		294,916		(126,409)		(43)%	Products		47,472			61,620				61,620			(14,148)					(14,148)		(23)%			(23)%					91,510		119,494					119,494			(27,984)			(27,984)			(23)%			(23)%
Cost of revenue	Cost of revenue	53,147		92,456		(39,309)		(43)%	182,238		305,388		(123,150)		(40)%	Cost of revenue		57,732			66,009				66,009			(8,277)					(8,277)		(13)%			(13)%					112,169		129,091					129,091			(16,922)			(16,922)			(13)%			(13)%
Gross profit	Gross profit	163,538		158,483		5,055		3%	489,661		493,863		(4,202)		(1)%	Gross profit		160,123			169,511				169,511			(9,388)					(9,388)		(6)%			(6)%					316,484		326,123					326,123			(9,639)			(9,639)			(3)%			(3)%
Operating expenses:	Operating expenses:
Selling, general and administrative
Selling, general and administrative
Selling, general and administrative	Selling, general and administrative	52,033		49,954		2,079		4%	151,848		146,453		5,395		4%	56,630				49,792			49,792				6,838				6,838			14%			14%					105,281		99,815				99,815				5,466			5,466		5%				5%
Research and development	Research and development	77		65		12		18%	322		301		21		7%	Research and development		156			116				116			40					40		34%			34%					242		245					245			(3)			(3)			(1)%			(1)%
Amortization of purchased intangible assets	Amortization of purchased intangible assets	7,931		8,093		(162)		(2)%	23,970		24,344		(374)		(2)%	Amortization of purchased intangible assets		7,859			7,956				7,956			(97)					(97)		(1)%			(1)%					15,790		16,039					16,039			(249)			(249)			(2)%			(2)%
Operating expenses	Operating expenses	60,041		58,112		1,929		3%	176,140		171,098		5,042		3%	Operating expenses		64,645			57,864				57,864			6,781					6,781		12%			12%					121,313		116,099					116,099			5,214			5,214			4%			4%
Operating income	Operating income	103,497		100,371		3,126		3%	313,521		322,765		(9,244)		(3)%	Operating income		95,478			111,647				111,647			(16,169)					(16,169)		(14)%			(14)%					195,171		210,024					210,024			(14,853)			(14,853)			(7)%			(7)%
Depreciation and amortization	Depreciation and amortization	5,071		6,021					16,892		16,365
Amortization of purchased intangible assets	Amortization of purchased intangible assets	7,931		8,093					23,970		24,345
Amortization of purchased intangible assets
Amortization of purchased intangible assets
Acquisition- and disposition-related expenses	Acquisition- and disposition-related expenses	907		(180)					2,417		1,428
Equity in net income of unconsolidated affiliates		4,566		3,726					14,250		16,672
Acquisition- and disposition-related expenses
Acquisition- and disposition-related expenses
Other reconciling items, net
Other reconciling items, net
Other reconciling items, net	Other reconciling items, net	68		3					178		11
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	122,040	$	118,034	$	4,006	3%	$	371,228	$	381,586	$	(10,358)	(3)%
Segment Adjusted EBITDA
Segment Adjusted EBITDA																		$	114,491					$	126,315						$	(11,824)				(9)%				$	229,465					$	239,504						$	(10,039)				(4)%

Comparison of the Three and Six Months Ended ~~March~~December 31, 2023 to 2022

Net Revenue

Supply Chain Services segment net revenue decreased by ~~$34.3~~$17.7 million, or ~~14%~~8%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022 ~~driven by a decrease~~primarily due to decreases of ~~$36.4~~$11.2 million in products revenue, ~~partially offset~~$4.9 million in net administrative fees revenue and $1.6 million in software licenses, other services and support revenue.

Supply Chain Services segment net revenue decreased by ~~an increase~~$26.6 million, or 6%, during the six months ended December 31, 2023 compared to the six months ended December 31, 2022 primarily due to decreases of ~~$2.1~~$19.5 million in products revenue, $5.8 million in net administrative fees revenue and $1.2 million in software licenses, other services and support revenue.

Net Administrative Fees

Net administrative fees ~~were flat for~~decreased by $4.9 million, or 3%, and $5.8 million, or 2%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, ~~2022.~~2022 and the six months ended December 31, 2023 compared to the six months ended December 31, 2022, respectively. The decreases in both periods were primarily driven by an increase in the aggregate blended member fee share due to market dynamics, partially offset by increased utilization and further penetration of our contracts by existing members.

Products Revenue

Products revenue decreased by ~~$36.4~~$11.2 million, or ~~39%~~17%, and $19.5 million, or 15%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022 and the six months ended December 31, 2023 compared to the six months ended December 31, 2022, respectively. The decrease in products revenue is primarily a result of lower demand and pricing for commodity products and other previously high-demand supplies due to members’ and other customers’ elevated inventory levels and continued utilization of excess inventory by members purchased during the ~~COVID-19 pandemic.~~

pandemic as well as pricing constraints on certain commodity products due to an excess market supply.

Software Licenses, Other Services and Support Revenue

Software licenses, other services and support revenue ~~increased~~decreased by ~~$2.1~~$1.6 million, or ~~24%~~11%, and $1.2 million, or 5%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022 and the six months ended December 31, 2023 compared to the six months ended December 31, 2022, respectively. The decrease in software licenses, other services and support revenue is primarily due to ~~an increase~~a decrease in purchased services revenue, ~~and growth~~partially offset by an increase in ~~service fees associated with our committed purchasing programs.~~supply chain co-management fees.

Cost of Revenue

Supply Chain Services segment cost of revenue decreased by ~~$39.3~~$8.3 million, or ~~43%~~13%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022. The decrease was primarily attributable to the decrease in products cost of revenue ~~and~~of $14.1 million in relation to the ~~corresponding~~aforementioned decrease in ~~cost of~~ products revenue ~~of $39.6 million due to the prior year increase in demand~~ as well as lower logistics and products costs in the current period. This decrease was partially offset by an increase of $5.9 million in the cost of services and software licenses revenue due to an increase in personnel costs associated with increased headcount in support of our supply chain co-management business.

Supply Chain Services segment cost of revenue decreased by $16.9 million, or 13%, during the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The decrease was primarily attributable to the decrease in products cost of revenue of $28.0 million in relation to the aforementioned decrease in products revenue as well as lower logistics and products costs in the current period. This decrease was partially offset by an increase of $11.1 million in the cost of services and software licenses revenue due to an increase in personnel costs associated with increased headcount in support of our supply chain co-management business.

Operating Expenses

Supply Chain Services segment operating expenses increased by ~~$1.9~~$6.8 million, or 3%12%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022 ~~driven by~~due to an increase in SG&A expenses primarily due to ~~restructuring charges as a result of the cost-savings plan enacted during the current year period and~~an increase in acquisition- and disposition-related expenses driven by the change in the fair value of the Acurity and Nexera earn-out liability (see Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements) and an increase in employee-related expenses.

Supply Chain Services segment operating expenses increased by $5.2 million, or 4%, during the six months ended December 31, 2023 compared to the six months ended December 31, 2022 attributable to an increase in SG&A expenses primarily due to an increase in acquisition- and disposition-related expenses driven by the change in the fair value of the Acurity and Nexera earn-out liability (see Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements).

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA ~~increased~~decreased by ~~$4.0~~$11.8 million, or 9%, and $10.0 million, or 4%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022 ~~primarily due to higher equity earnings from our investments in unconsolidated affiliates as well as lower logistics costs in cost of products revenue.~~

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

~~Net Revenue~~

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

~~Net Administrative Fees~~

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

~~Products Revenue~~

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

~~Software Licenses, Other Services and Support Revenue~~

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

~~Cost of Revenue~~

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

4138

~~Operating Expenses~~

~~Supply Chain Services segment operating expenses increased by $5.0 million, or 3%, during the nine months ended March~~December 31, 2023 compared to the ~~nine~~six months ended ~~March~~December 31, 2022, driven by an increase in SG&A expenses primarily due to restructuring charges as a result of the cost-savings plan enacted during the current year period, increased headcount and employee travel and meeting expenses as a result of the easing of pandemic-related travel restrictions during the current year period.

~~Segment Adjusted EBITDA~~

~~Supply Chain Services Segment Adjusted EBITDA decreased by $10.4 million during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022,~~respectively. The decreases were primarily due to the aforementioned decrease in ~~products~~net revenue and ~~corresponding decrease in cost of products revenue,~~ higher ~~operating expenses due to~~personnel costs associated with increased headcount to support growth in our supply chain co-management business partially offset by lower logistics and ~~employee travel and meeting expenses as pandemic-related travel restrictions were lifted and a decrease~~products cost in ~~equity earnings from~~ our ~~investments in unconsolidated affiliates.~~direct sourcing business.

Performance Services

The following table presents our results of operations and Adjusted EBITDA in the Performance Services segment for the periods presented (in thousands):


		Three Months Ended March 31,							Nine Months Ended March 31,
		2023		2022		Change			2023		2022		Change
	Three Months Ended December 31,
		2023
		2023
		2023																						2022						Change						2023				2022					Change
Net revenue:	Net revenue:
Software licenses, other services and support	Software licenses, other services and support
Software licenses, other services and support
Software licenses, other services and support
SaaS-based products subscriptions
SaaS-based products subscriptions
SaaS-based products subscriptions	SaaS-based products subscriptions	$	44,685	$	49,347	$	(4,662)	(9)%	142,097		144,357		$	(2,260)	(2)%	$	43,565			$		$	49,664			$		$	(6,099)			(12)%		(12)%			88,905		97,412				97,412	$			$	(8,507)	(9)%				(9)%
Consulting services	Consulting services	22,087		16,342		5,745		35%	57,963		46,440		11,523		25%	Consulting services		21,921			18,514				18,514		3,407					3,407	18%		18%				45,689		35,876			35,876		9,813				9,813		27%		27%
Software licenses	Software licenses	14,400		12,169		2,231		18%	51,197		44,033		7,164		16%	Software licenses		20,868			30,804				30,804		(9,936)					(9,936)	(32)%		(32)%				35,809		36,797			36,797		(988)				(988)		(3)%		(3)%
Other	Other	24,384		19,045		5,339		28%	72,603		58,132		14,471		25%	Other		30,609			25,133				25,133		5,476					5,476	22%		22%				54,566		48,219			48,219		6,347				6,347		13%		13%
Net revenue	Net revenue	105,556		96,903		8,653		9%	323,860		292,962		30,898		11%	Net revenue		116,963			124,115				124,115		(7,152)					(7,152)	(6)%		(6)%				224,969		218,304			218,304		6,665				6,665		3%		3%
Cost of revenue:	Cost of revenue:
Services and software licenses	Services and software licenses	50,015		42,900		7,115		17%	149,697		125,854		23,843		19%
Services and software licenses
Services and software licenses																		55,730						50,876						4,854				10%			109,463					99,682				9,781					10%
Cost of revenue	Cost of revenue	50,015		42,900		7,115		17%	149,697		125,854		23,843		19%	Cost of revenue		55,730			50,876				50,876		4,854					4,854	10%		10%				109,463		99,682			99,682		9,781				9,781		10%		10%
Gross profit	Gross profit	55,541		54,003		1,538		3%	174,163		167,108		7,055		4%	Gross profit		61,233			73,239				73,239		(12,006)					(12,006)	(16)%		(16)%				115,506		118,622			118,622		(3,116)				(3,116)		(3)%		(3)%
Operating expenses:	Operating expenses:
Selling, general and administrative	Selling, general and administrative	48,281		43,354		4,927		11%	135,438		124,617		10,821		9%
Selling, general and administrative
Selling, general and administrative																		37,834						45,026						(7,192)				(16)%			86,671					87,157				(486)					(1)%
Research and development	Research and development	924		761		163		21%	2,654		2,366		288		12%	Research and development		772			884				884		(112)					(112)	(13)%		(13)%				1,549		1,730			1,730		(181)				(181)		(10)%		(10)%
Amortization of purchased intangible assets	Amortization of purchased intangible assets	3,985		3,059		926		30%	11,445		8,545		2,900		34%	Amortization of purchased intangible assets		4,653			5,091				5,091		(438)					(438)	(9)%		(9)%				9,410		7,460			7,460		1,950				1,950		26%		26%
Operating expenses	Operating expenses	53,190		47,174		6,016		13%	149,537		135,528		14,009		10%	Operating expenses		43,259			51,001				51,001		(7,742)					(7,742)	(15)%		(15)%				97,630		96,347			96,347		1,283				1,283		1%		1%
Operating (loss) income		2,351		6,829		(4,478)		(66)%	24,626		31,580		(6,954)		(22)%
Operating income																Operating income		17,974						22,238						(4,264)				(19)%			17,876					22,275				(4,399)					(20)%
Depreciation and amortization	Depreciation and amortization	13,204		13,104					41,962		39,804
Amortization of purchased intangible assets	Amortization of purchased intangible assets	3,985		3,059					11,445		8,545
Amortization of purchased intangible assets
Amortization of purchased intangible assets
Acquisition- and disposition-related expenses	Acquisition- and disposition-related expenses	5,387		3,295					9,175		8,854
Equity in net income of unconsolidated affiliates		64		265					297		494
Acquisition- and disposition-related expenses
Acquisition- and disposition-related expenses
Other reconciling items, net
Other reconciling items, net
Other reconciling items, net	Other reconciling items, net	27		—					82		—
Segment Adjusted EBITDA	Segment Adjusted EBITDA	$	25,018	$	26,552	$	(1,534)	(6)%	$	87,587	$	89,277	$	(1,690)	(2)%
Segment Adjusted EBITDA
Segment Adjusted EBITDA																		$	30,955					$	43,205					$	(12,250)			(28)%			$	52,729				$	62,336			$	(9,607)				(15)%

Comparison of the Three and Six Months Ended ~~March~~December 31, 2023 to 2022

Net Revenue

Net revenue in our Performance Services segment ~~increased~~decreased by ~~$8.7~~$7.2 million, or 9%6%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022. The ~~increase~~decrease was primarily attributable to ~~growth~~a decrease of ~~$5.7 million in consulting services under our PINC AI platform, an increase of $5.3 million in other revenue driven by growth in Contigo~~

~~Health primarily as a result of the TRPN acquisition and growth of $2.2~~$9.9 million in software licenses driven by ~~an increased~~a decreased number of enterprise analytics license agreements entered into during the current year ~~period.~~period compared to the prior year period and a decrease of $6.1 million in SaaS-based products subscription revenue due to conversion of SaaS-based products to licensed-based products in recent periods and contract expirations. These decreases were partially offset by increases of $5.5 million in other revenue related to data contracts in adjacent markets and $3.4 million in consulting services revenue through our PINC AI platform.

Net revenue in our Performance Services segment increased by $6.7 million, or 3%, during the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The increase was primarily attributable to growth of $9.8 million in consulting services driven by new agreements entered into during the current year period under our PINC AI platform, and an increase of $6.3 million in other revenue driven by increased data contracts in adjacent markets in the current year period and increases in Remitra revenue. These increases were partially offset by a decrease of $8.5 million in SaaS-based products subscription revenue primarily due to the conversion of SaaS-based products to licensed-based ~~products.~~products in recent periods and contract expirations.

Cost of Revenue

Performance Services segment cost of revenue increased by ~~$7.1~~$4.9 million, or ~~17%~~10%, and $9.8 million, or 10%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022 and the six months ended December 31, 2023 compared to the six months ended December 31, 2022, respectively. These increases were primarily due to an increase in consulting services expenses as well as higher costs associated with increased headcount to support ~~revenue growth in the area of clinical intelligence within~~ our PINC AI platform in adjacent markets and our Contigo Health ~~business.~~business, including incremental expenses attributable to the TRPN acquisition.

Operating Expenses

Performance Services segment operating expenses ~~increased~~decreased by ~~$6.0~~$7.7 million, or ~~13%~~15%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022. The ~~increase~~decrease was primarily driven by ~~an increase~~a decrease of ~~$4.9~~$7.2 million in SG&A expenses primarily due to ~~higher costs associated with increased headcount in our PINC AI platform and Contigo Health business and an increase~~a decrease in acquisition- and disposition-related ~~expenses. In addition,~~expenses primarily related to lower than anticipated payout of an earn-out liability (see Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements) and lower contractor costs associated with decreased net revenue.

Performance Services segment operating expenses increased by ~~$0.9~~$1.3 million, ~~due~~or 1%, during the six months ended December 31, 2023 compared to the six months ended December 31, 2022. The increase was primarily driven by an increase in amortization of purchased intangible assets primarily ~~associated with~~attributable to the TRPN ~~acquisition.~~acquisition and an increase in employee-related expenses. These increases were partially offset by a decrease in acquisition- and disposition-related expenses primarily related to lower than anticipated payout of an earn-out liability (see Note 5 - Fair Value Measurements to the accompanying condensed consolidated financial statements).

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA decreased by ~~$1.5~~$12.3 million, or 6%28%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022, primarily due to the aforementioned ~~higher cost~~decrease in net revenue and increase in costs of revenue, ~~driven by increases in consulting services and higher operating expenses related to increased headcount to support revenue growth. These decreases to adjusted EBITDA were~~ partially offset by ~~revenue growth in PINC AI and Contigo Health.~~

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

~~Net Revenue~~

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

~~Cost of Revenue~~

Performance Services segment cost of revenue increased by $23.8 million, or 19%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022, primarily due to an increase in consulting services as well as higher costs associated with increased headcount to support revenue growth in our PINC AI platform and Contigo Health business.

~~Operating Expenses~~

Performance Services segment operating expenses increased by $14.0 million, or 10%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022. The increase was driven by an increase of $10.8 million in SG&A expenses due to higher costs associated with increased headcount primarily in our PINC AI business and increased employee travel and meeting expenses as a result of the easing of pandemic-related travel restrictions during the current year period. In addition, operating expense increased by $2.9 million as a result of higher amortization of purchased intangible assets primarily attributable to the TRPN acquisition.

~~Segment Adjusted EBITDA~~contractor costs.

Performance Services Segment Adjusted EBITDA decreased by ~~$1.7~~$9.6 million, or 2%15%, during the ~~nine~~six months ended ~~March~~December 31, 2023 compared to the ~~nine~~six months ended ~~March~~December 31, 2022, primarily due to the aforementioned ~~higher cost~~increases in costs of revenue ~~driven by increases in consulting services~~ and ~~increases in operating~~employee-related expenses, ~~due to costs associated with increased headcount,~~ partially offset by ~~revenue growth~~the increase in ~~PINC AI and Contigo Health.~~net revenue.

Corporate

The following table presents corporate expenses and Adjusted EBITDA for the periods presented (in thousands):


		Three Months Ended March 31,							Nine Months Ended March 31,
		2023		2022		Change			2023		2022		Change
	Three Months Ended December 31,
		2023
		2023
		2023																				2022				Change								2023					2022						Change
Operating expenses:	Operating expenses:
Selling, general and administrative	Selling, general and administrative	$	43,282	$	50,376	$	(7,094)	(14)%	$	128,907	$	147,279	$	(18,372)	(12)%
Selling, general and administrative
Selling, general and administrative																	$	47,759				$	45,719			$	2,040				4%				$	88,383					$	85,625					$	2,758				3%

Operating expenses
Operating expenses
Operating expenses	Operating expenses	43,282		50,376		(7,094)		(14)%	128,907		147,279		(18,372)		(12)%	47,759			45,719		45,719			2,040		2,040			4%			4%					88,383		85,625				85,625			2,758			2,758		3%			3%
Operating loss	Operating loss	(43,282)		(50,376)		7,094		(14)%	(128,907)		(147,279)		18,372		(12)%	Operating loss	(47,759)			(45,719)			(45,719)		(2,040)			(2,040)		4%			4%					(88,383)		(85,625)				(85,625)			(2,758)			(2,758)			3%		3%
Depreciation and amortization	Depreciation and amortization	2,000		2,282					6,299		6,705
Stock-based compensation	Stock-based compensation	6,709		14,149					16,859		38,229
Stock-based compensation
Stock-based compensation
Strategic initiative and financial restructuring-related expenses	Strategic initiative and financial restructuring-related expenses	1,942		5,539					10,988		9,311
Deferred compensation plan expense (income)		2,859		(3,992)					3,148		(1,922)
Strategic initiative and financial restructuring-related expenses
Strategic initiative and financial restructuring-related expenses
Deferred compensation plan expense
Deferred compensation plan expense
Deferred compensation plan expense

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

Adjusted EBITDA

Adjusted EBITDA																	$	(31,318)				$	(30,658)			$	(660)				(2)%				$	(62,327)					$	(61,841)					$	(486)				(1)%

Comparison of the Three Months Ended ~~March~~December 31, 2023 to 2022

Operating Expenses

Corporate operating expenses ~~decreased~~increased by ~~$7.1~~$2.0 million, or ~~14%~~4%, and $2.8 million, or 3%, during the three months ended ~~March~~December 31, 2023 compared to the three months ended ~~March~~December 31, 2022 ~~primarily due to a decrease in performance-related compensation expense, a decrease in stock-based compensation expense due to lower forecasted achievement~~ and ~~lower professional fees related to strategic initiative and financial restructuring-related activities. These decreases were partially offset by a net increase in expenses as a result of~~ the ~~cost-savings plan enacted during the current year period and an increase in deferred compensation plan expense in the current period as a result of market changes.~~

~~Adjusted EBITDA~~

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

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

~~Operating Expenses~~

~~Corporate operating expenses decreased by $18.4 million, or 12%, during the nine months ended March 31, 2023 compared to the nine months ended March 31, 2022,~~were primarily due to a decrease in performance-related compensation expense, a decrease in stock-based compensation expense due to lower forecasted achievement of performance share awards and a net decrease in expenses as a result of the cost-savings plan enacted during the current year period. These decreases were partially offset by increases in deferred compensation plan expense as a result of market changes and stock-based compensation expense due to lower forecasted

achievement of performance share awards in the prior year period. These increases were partially offset by a decrease in professional fees related to strategic initiative and financial restructuring-related ~~activities.~~activities in the current period.

Adjusted EBITDA

Corporate adjusted EBITDA ~~increased by $3.3 million, or 4%,~~was flat for the ~~nine~~three months ended ~~March~~December 31, 2023 compared to the ~~nine~~three months ended ~~March~~December 31, 2022 ~~primarily as a result of decreases in performance-related compensation~~ and ~~stock-based compensation expenses partially offset by increases attributed~~the six months ended December 31, 2023 compared to the ~~aforementioned cost-savings plan.~~six months ended December 31, 2022.

Off-Balance Sheet Arrangements

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

Liquidity and Capital Resources

Our principal source of cash has been primarily cash provided by operating activities. From time to time we have used, and expect to use in the future, borrowings under our Credit Facility (as defined in Note 8 - Debt and Notes Payable to the

accompanying condensed consolidated financial statements) as a source of ~~liquidity.~~liquidity to fund acquisitions and related business investments as well as general corporate activities. In addition, at December 31, 2023, we had a higher cash balance due to cash proceeds received from the sale of our non-healthcare GPO member contracts in the first quarter of fiscal year 2024. Our primary cash requirements include operating expenses, working capital fluctuations, revenue share obligations, tax payments, capital expenditures, dividend payments on our Class A common stock, if and when declared, repurchases of Class A common stock pursuant to stock repurchase programs in place from time to time, acquisitions and related business investments and general corporate activities. Our capital expenditures typically consist of internally developed software costs, software purchases and computer hardware purchases.

As of ~~March~~December 31, 2023 and June 30, ~~2022,~~2023, we had cash and cash equivalents of ~~$91.5~~$371.1 million and ~~$86.1~~$89.8 million, respectively. ~~As of March~~

Credit Facility

At December 31, 2023, ~~and~~we had no outstanding borrowings under our Credit Facility. At June 30, ~~2022, there was $235.0~~2023, we had $215.0 million ~~and $150.0 million, respectively,~~ of outstanding borrowings under our Credit Facility. During the ~~nine~~six months ended ~~March~~December 31, 2023, we ~~borrowed $285.0 million~~had no borrowings and repaid ~~$135.0~~$215.0 million under our Prior Loan Agreement (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) and borrowed $65.0 million and repaid $130.0 million under the Credit Facility. Our Credit Facility may be used for acquisitions and related business investments as well as general corporate activities. Borrowings for the nine months ended March 31, 2023 under the Prior Loan Agreement were used to partially fund the TRPN acquisition (see Note 3 - Business Acquisitions for further information). In April 2023, we repaid $60.0 million of ~~outstanding~~ borrowings under the Credit Facility.

We expect cash generated from operations and borrowings under our Credit Facility to provide us with adequate liquidity to fund our anticipated working capital requirements, revenue share obligations, tax payments, capital expenditures, notes payable, including notes payable to former LPs, dividend payments on our Class A common stock, if and when declared, repurchases of Class A common stock pursuant to stock repurchase programs in place from time to time and to fund business acquisitions. Our capital requirements depend on numerous factors, including funding requirements for our product and service development and commercialization efforts, our information technology requirements, and the amount of cash generated by our operations. We believe that we have adequate capital resources at our disposal to fund currently anticipated capital expenditures, business growth and expansion, and current and projected debt service requirements. However, strategic growth initiatives will likely require the use of one or a combination of various forms of capital resources including available cash on hand, cash generated from operations, borrowings under our Credit Facility and other long-term debt and, potentially, proceeds from the issuance of additional equity or debt securities.

Cash Dividends

In each of September 2023 and December 2023, we paid a cash dividend of $0.21 per share on outstanding shares of Class A common stock. On January 25, 2024, our Board of Directors declared a quarterly cash dividend of $0.21 per share, payable on March 15, 2024 to stockholders of record on March 1, 2024.

Sale of Non-Healthcare GPO Member Contracts

On July 25, 2023, we sold substantially all of our non-healthcare GPO member contracts pursuant to an equity purchase agreement with OMNIA for a purchase price estimated to be up to $740.0 million, which has been reduced from previous estimates taking into account certain post-closing adjustments and remains subject to additional adjustments. As of December 31, 2023, we have received cash of $629.8 million, including the closing payment and payments out of escrow based on post-closing adjustments through that date. See Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information.

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

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


		Nine Months Ended March 31,
		2023		2022
	Six Months Ended December 31,						Six Months Ended December 31,
	2023					2023		2022
Net cash provided by (used in):	Net cash provided by (used in):
Operating activities
Operating activities
Operating activities	Operating activities	$	331,178	$	334,789
Investing activities	Investing activities	(249,784)		(113,061)
Financing activities	Financing activities	(76,036)		(171,369)
Effect of exchange rate changes on cash flows	Effect of exchange rate changes on cash flows	(8)		3
Net increase in cash and cash equivalents	Net increase in cash and cash equivalents	$	5,350	$	50,362

Net cash provided by operating activities decreased by ~~$3.6~~$161.3 million for the ~~nine~~six months ended ~~March~~December 31, 2023 compared to the ~~nine~~six months ended ~~March~~December 31, 2022. The decrease in net cash provided by operating activities was due to an increase of cash paid for taxes of $152.0 million primarily related to proceeds received from the sale of non-healthcare GPO member contracts and associated future revenues to OMNIA in the current year period, a decrease of ~~$163.7~~$21.0 million in cash receipts ~~from members and other customers~~ driven by ~~higher prior year products~~lower net revenue ~~to support member~~ and ~~other customer needs during~~collections in the ~~COVID-19 pandemic~~current period and an increase of $7.0 million in ~~revenue share~~cash paid primarily due to ~~members.~~an increase in payable payments partially offset by a decrease in inventory purchases. These were partially offset by a decrease of ~~$150.5 million in~~ cash paid for operating expenses of $19.8 million primarily due to a decrease in inventory purchases to support prior year products revenue growth and lower operating expenses driven by our cost-savings plan enacted during the current year period. Additionally, net operating cash flows increased by $9.6 million in miscellaneous cash receipts primarily due to dividends received on our investments in unconsolidated affiliates.performance-related compensation.

Net cash used in investing activities ~~increased~~decreased by ~~$136.7~~$178.4 million for the ~~nine~~six months ended ~~March~~December 31, 2023 compared to the ~~nine~~six months ended ~~March~~December 31, 2022. The ~~increase~~decrease in net cash used in investing activities was primarily due to the cash outlay for the TRPN acquisition in the ~~current year period,~~six months ended December 31, 2022, partially offset by ~~the cash outlay in the prior year period for the investment in Exela Holdings, Inc. in the nine months ended March 31, 2022 as well as decreases in other investing activities and~~an increase in purchases of property and equipment.

Net cash ~~used~~provided by financing activities ~~decreased~~increased by ~~$95.3~~$255.8 million for the ~~nine~~six months ended ~~March~~December 31, 2023 compared to the ~~nine~~six months ended ~~March~~December 31, 2022. The ~~decrease~~increase in net cash ~~used~~provided by financing activities was primarily driven by the ~~prior year~~

proceeds from the sale of future revenues of $629.8 million in the current period ~~cash outflow~~(see Note 9 - Liability Related to the Sale of ~~$250.1 million~~Future Revenues to the accompanying condensed consolidated financial statements for ~~the repurchase of Class A common stock under our fiscal 2022 stock repurchase program and~~further information). This increase was partially offset by a decrease of ~~$90.0~~$365.0 million in net borrowings under our Credit Facility. These changes were partially offset by $36.7 million less proceeds from the issuance of Class A common stock in connection with the exercise of outstanding stock options in the current year period as compared to the prior year period as well as a decrease of $24.8 million in other financing activities. The change in other financing activities was primarily driven by fiscal 2022 proceeds from member health systems that acquired membership interests in ExPre in fiscal year 2022.

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

We define Non-GAAP Free Cash Flow as net cash provided by operating activities from continuing operations less (i) early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring and (ii) purchases of property and equipment. Non-GAAP Free Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments under our Credit Facility.

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


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

(a)Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring are presented in our Condensed Consolidated Statements of Cash Flows under “Payments made on notes payable.” During the ~~nine~~six months ended ~~March~~December 31, 2023, we paid ~~$77.0~~$51.3 million to members including imputed interest of ~~$3.8~~$1.7 million which is included in net cash provided by operating activities. During the ~~nine~~six months ended ~~March~~December 31, 2022, we paid ~~$77.0~~$51.3 million to members including imputed interest of ~~$5.2~~$2.7 million which is included in net cash provided by operating activities. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for further information.

Non-GAAP Free Cash Flow decreased by ~~$2.4~~$172.9 million for the ~~nine~~six months ended ~~March~~December 31, 2023 compared to the ~~nine~~six months ended ~~March~~December 31, 2022. The decrease in Non-GAAP Free Cash Flow was primarily due to the aforementioned ~~$3.6~~

$161.3 million decrease in net cash provided by operating activities ~~partially offset by a decrease~~and an increase in purchases of property and equipment of ~~$2.6~~$10.7 million. The increase of $1.4 million in the early termination payments to certain former limited partners in connection with the August 2020 Restructuring is related to an increase in the principal payment on the outstanding note payable as noted in footnote (a) to the Non-GAAP Free Cash Flow reconciliation (imputed interest on the note payable is included in net cash provided by operating activities).

See “Our Use of Non-GAAP Financial Measures” above for additional information regarding our use of Non-GAAP Free Cash Flow.

Contractual Obligations

~~Notes Payable to Former Limited Partners~~

At March 31, 2023, $231.0 million remains to be paid without interest in nine equal quarterly installments to former limited partners that elected to execute Unit Exchange Agreements ending with the quarter ended June 30, 2025. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for more information.

~~Other Notes Payable~~

At March 31, 2023, we had commitments of $2.3 million for other obligations under notes payable. Other notes payable have stated maturities between three to five years from the date of issuance and are non-interest bearing. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for more information.

Credit Facility

Outstanding borrowings under the Credit Facility (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial ~~statements for more information)~~statements) bear interest on a variable rate ~~structure with borrowings~~

bearing interest at either the secured overnight financing rate (“SOFR”) plus an adjustment of 0.100% plus an applicable margin ranging from 1.250% to 1.750% or the prime lending rate plus an applicable margin ranging from 0.250% to 0.750%. We pay a commitment fee ranging from 0.125% to 0.225% for unused capacity under the Credit Facility.structure. At ~~March~~December 31, 2023, ~~the interest rate on~~we had no outstanding borrowings under ~~the~~our Credit Facility ~~was 6.195%~~ and the commitment fee for unused capacity was 0.125%.

~~The Credit Facility contains customary representations and warranties as well as customary affirmative and negative covenants.~~ We were in compliance with all ~~such~~ covenants at ~~March~~December 31, 2023. The Credit Facility also contains customary events of default, including a cross-default of any indebtedness or guarantees in excess of $75.0 million. If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request of a majority of the 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.

Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, repurchases of Class A common stock pursuant to stock repurchase programs, in place from time to time, dividend payments, if and when declared, and other general corporate activities. At ~~March~~December 31, 2023, we had no outstanding borrowings ~~of $235.0 million~~ under the Credit Facility with ~~$765.0~~$995.0 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. ~~In April 2023, we repaid $60.0 million of outstanding borrowings under the Credit Facility.~~

The above summary does not purport to be complete, and is subject to, and qualified in its entirety by reference to, the complete text of the Credit Facility, which is filed as Exhibit ~~10.1~~10.19 to ~~this quarterly report.~~the 2023 Annual Report. See also Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements.

Notes Payable to Former Limited Partners

At December 31, 2023, $154.0 million remains to be paid without interest in six equal quarterly installments to former limited partners that elected to execute Unit Exchange Agreements ending with the quarter ended June 30, 2025. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for further information.

Other Notes Payable

At December 31, 2023, we had commitments of $1.0 million for other obligations under notes payable. Other notes payable have stated maturities between three to five years from the date of issuance and are non-interest bearing. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for further information.

Sale of Non-Healthcare GPO Member Contracts

At December 31, 2023, we had commitments of $615.2 million, net of imputed interest of $87.5 million, for the sale of future revenues due to OMNIA in connection to the sale of non-healthcare GPO member contracts. The liability will be paid, without interest, in monthly payments from net administrative fees received in connection with the sold contracts commencing during the first quarter of fiscal year 2024 and continuing for at least 10 years. See Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information.

Cash Dividends

In each of September ~~2022~~2023 and December ~~2022,~~2023, we paid a cash dividend of $0.21 per share on outstanding shares of Class A common stock. On ~~April 27, 2023,~~January 25, 2024, our Board of Directors declared a quarterly cash dividend of $0.21 per share, payable on ~~June~~March 15, ~~2023~~2024 to stockholders of record on ~~June~~March 1, ~~2023.~~2024.

We currently expect quarterly dividends to continue to be paid on or about December 15, March 15, June 15 and September ~~15.~~15, respectively. However, the actual declaration of any future cash dividends, and the setting of record and payment dates as well as the per share amounts, will be at the discretion of our Board of Directors each quarter after consideration of various factors, including our results of operations, financial condition and capital requirements, earnings, general business conditions, restrictions imposed by our current ~~credit facility~~Credit Facility and any future financing arrangements, legal restrictions on the payment of dividends and other factors our Board of Directors deems relevant.

Share Repurchase Authorization

On February 2, 2024, our Board of Directors authorized the repurchase of up to $1.0 billion of our outstanding common stock. On February 5, 2024, under the share repurchase authorization, we entered into an ASR Agreement with Bank of America to repurchase an aggregate of $400.0 million of shares of our common stock. Under the terms of the ASR Agreement, we will

make a payment of $400.0 million to Bank of America and, by February 9, 2024, will receive initial deliveries of approximately $320.0 million in common stock based on the closing price on February 7, 2024. The final number of shares of common stock to be repurchased and retired under the share repurchase transaction under the ASR Agreement (the “ASR Transaction”) will be determined on completion of the ASR Transaction and will generally be based on the volume-weighted average share price of the common stock during the term of the ASR Transaction, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR Agreement. The final settlement of the ASR Transaction is expected to be completed in the first quarter of fiscal year 2025. At settlement, under certain circumstances, Bank of America may be required to deliver additional shares of common stock to us, or, under certain circumstances, we may be required to make a cash payment or to deliver shares of our common stock to Bank of America.

Fiscal ~~2023~~2024 Developments

Impact of Inflation

~~Russia-Ukraine War~~Geopolitical Tensions

markets, as well as exacerbate ongoing economic challenges, including issues such as rising inflation, energy costs and global supply-chain disruption.

We continue to monitor the impacts of the geopolitical tensions on macroeconomic conditions and prepare for any implications they may have on member demand, our suppliers’ ability to deliver products, cybersecurity risks and our liquidity and access to capital. Refer to Item 1A. “Risk Factors” in our ~~2022~~2023 Annual Report as well as “Market and Industry Trends and Outlook” within Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report for further discussion.

~~COVID-19 Pandemic, Variants Thereof, Recurrences~~Pandemics, Epidemics or ~~Similar Pandemics~~Public Health Emergencies

The ~~COVID-19~~outbreak of the novel coronavirus (“COVID-19”) and the resulting global pandemic and ~~its variants continue~~the impact on the healthcare industry continues to ~~create challenges throughout~~impact our sales, operations and supply chains, our members and other customers and workforce and suppliers. While both the ~~United States~~U.S. and the ~~rest of the world. The full extent~~World Health Organization declared an end to ~~which~~ the COVID-19 pandemic ~~may~~as a public health emergency in May 2023, the risks associated with a pandemic remains and the resulting impact on our business, ~~operating~~ results of operations, financial ~~condition~~conditions and ~~liquidity in~~cash flows as well as the ~~future will depend on future developments that are highly~~U.S. and global economies is uncertain and cannot be ~~accurately~~ predicted including new information that may emerge concerning COVID-19 and variants thereof, the continued actions to contain it and treat its impact, including the success of COVID-19 vaccination programs, or recurrences of COVID-19, variants thereof or similar pandemics. at this time.

Refer to Item 1A. “Risk Factors” in our ~~2022~~2023 Annual Report as well as “Market and Industry Trends and Outlook” within Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations of this Quarterly Report for further discussion of the material risks we face.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our exposure to market risk relates primarily to the increase or decrease in the amount of any interest expense we must pay with respect to outstanding variable-rate debt instruments. At ~~March~~December 31, 2023, we had ~~$235.0 million~~no outstanding borrowings under our Credit Facility. Based on the weighted average interest rate charged on outstanding borrowings under our Credit Facility at March 31, 2023, a one-percent change in the weighted average interest rate charged on outstanding borrowings would increase or decrease interest expense over the next twelve months by $2.4 million.

We invest our excess cash in a portfolio of individual cash equivalents. We do not hold any material derivative financial instruments. We do not expect changes in interest rates to have a material impact on our results of operations or financial position. We plan to mitigate default, market, and investment risks of our invested funds by investing in low-risk securities.

Foreign Currency Risk

Substantially all of our financial transactions are conducted in U.S. dollars. We do not have significant foreign operations and, accordingly, do not believe we have market risk associated with foreign currencies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As of December 31, 2023, the end of the period covered by this Quarterly Report, we carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of ~~March~~December 31, 2023.

Management’s quarterly evaluation of the disclosure controls and procedures did not include an assessment of and conclusion on the effectiveness of disclosure controls and procedures for certain assets of TRPN, which was acquired during the nine months ended March 31, 2023 and is included in our condensed consolidated financial statements as of March 31, 2023 and for the period from the acquisition date through March 31, 2023. The aggregate assets and total net revenues of TRPN accounted for 5.2% and 0.6%, respectively, of the condensed consolidated financial statements as of and for the nine months ended March 31, 2023.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended ~~March~~December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

4945

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We operate businesses that are subject to substantial litigation from time to time. We are periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include claims relating to contractual disputes, product liability, tort or personal injury, employment, antitrust, intellectual property or other commercial or regulatory matters. If current or future government regulations are interpreted or enforced in a manner adverse to us or our business, including without limitation those with respect to antitrust or healthcare laws, we may be subject to enforcement actions, penalties, damages and material limitations on our business.

From time to time we have been named as a defendant in class action ~~or other~~ antitrust lawsuits brought by suppliers or purchasers of medical products. Typically, these lawsuits have alleged the existence of a conspiracy among manufacturers of competing products, distributors and/or operators of GPOs, including us, to deny the plaintiff access to a market for certain products, to raise the prices for products and/or limit the plaintiff’s choice of products to buy. We believe that we have at all times conducted our business affairs in an ethical and legally compliant manner and have successfully resolved all such actions. No assurance can be given that we will not be subjected to similar actions in the future or that any such existing or future matters will be resolved in a manner satisfactory to us or which will not harm our business, financial condition or results of operations.

On March 4, 2022, a shareholder derivative complaint captioned City of Warren General Employees’ Retirement System v. Michael Alkire, et al., Case No. 2022-0207-JTL, purportedly brought on behalf of Premier, was filed in the Delaware Court of Chancery against our current and former Chief Executive Officers and certain current and former directors. We are named as a nominal defendant in the complaint. The lawsuit alleges that the named officers and directors breached their fiduciary duties and committed corporate waste by approving agreements between Premier and certain of the former LPs that provided for accelerated payments as consideration for the early termination of the TRA with such LPs. The complaint asserts that the aggregate early termination payment amounts of $473.5 million exceeded the alleged value of the tax assets underlying the TRA by approximately $225.0 million.

The complaint seeks unspecified damages, costs and expenses, including attorney fees, and declaratory and other equitable relief. Since the lawsuit is purportedly brought on behalf of Premier, and we are only a nominal defendant, the alleged damages were allegedly suffered by us. We and the individual defendants deny the allegations in the complaint and intend to vigorously defend the litigation. In light of the fact that the lawsuit is in an early stage and the claims do not specify an amount of damages, we cannot predict the ultimate outcome of the suit.

Additional information relating to certain legal proceedings in which we are involved is included in Note 1314 - Commitments and Contingencies to the accompanying condensed consolidated financial statements, which information is incorporated herein by reference.

Item 1A. Risk Factors

During the quarter ended ~~March~~December 31, 2023, there were no material changes to the risk factors disclosed in Item 1A. “Risk Factors” in the ~~2022~~2023 Annual Report.

Item 5. Other Information

During the three months ended December 31, 2023, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).

Item 6. Exhibits


Exhibit No.						Description
3.1						A mended and Restated Bylaws of Premier, Inc., effective as of January 25, 2024 (Incorporated by reference to Exhibit 3.1 to our Current Report on Form 8-K filed on January 26 , 2 024).
10.1						Premie r, Inc. 2023 Equity Incentive Plan (Incorporated by reference to Exhibit 99.1 to our Current Repo r t on Form 8-K filed on December 1, 2023).+
10.2						Form of Restricted Stock Unit Agreement for Non-Employee Directors under the Premier, Inc. 2023 Equity Incentive Plan*+
31.1						Certification ~~as adopted~~of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2						Certification ~~as adopted~~of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1						Certification ~~required by~~of principal executive officer pursuant to 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.‡
32.2						Certification ~~required by~~of principal financial officer pursuant to 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 ~~March~~December 31, 2023, formatted in iXBRL (Inline eXtensible Business Reporting Language), submitted in the following files:
101.INS						Inline 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~~December 31, 2023, formatted in Inline XBRL (included in Exhibit 101).*

* Filed herewith.

+ Indicates a management contract or compensatory plan or arrangement.

‡ Furnished herewith.

5147

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned, thereunto duly authorized.

PREMIER, INC.

Date:

~~May 2, 2023~~February 6, 2024

By:

/s/ Craig S. McKasson

Name:

Craig S. McKasson

Title:

Chief Administrative and Financial Officer and Senior Vice President

On behalf of the registrant and as principal financial and accounting officer

5248


		Page
PART I. FINANCIAL INFORMATION		6
Item 1.	Financial Statements	6
	Condensed Consolidated Balance Sheets (Unaudited)	6
	Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)	87
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	98
	Condensed Consolidated Statements of Cash Flows (Unaudited)	119
	Notes to Condensed Consolidated Financial Statements (Unaudited)	1210
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2625
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4845
Item 4.	Controls and Procedures	4845
PART II. OTHER INFORMATION		5046
Item 1.	Legal Proceedings	5046
Item 1A.	Risk Factors	5046
Item 5.	Other Information	46
Item 6.	Exhibits	5147
	Signatures	5248