SECOND-QUARTER FISCAL 2015 FINANCIAL RESULTS AND UPDATE February 9, 2015 Exhibit 99.3 |
Forward-looking statements and Non-GAAP financial measures 2 PREMIER, INC. Forward-looking statements—Certain statements included in this presentation, including, but not limited to, those related to our financial and business outlook, strategy and growth drivers, member retention rates and revenue visibility, cross and upsell opportunities, acquisition activities and pipeline, revenue available under contract, and 2015 financial guidance and related assumptions, are “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results of Premier to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on any forward looking statements. Readers are urged to consider statements in the 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 Premier’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside Premier’s control. More information on potential risks and other factors that could affect Premier’s financial results is included, and updated, from time to time, in Premier’s periodic and current filings with the SEC, including Premier’s most recent Form 10-K for the year ended June 30, 2014. Forward-looking statements speak only as of the date they are made. Premier undertakes no obligation to publicly update or revise any forward-looking statements. Non-GAAP financial measures—This presentation includes certain “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934. Schedules are attached that reconcile the non-GAAP financial measures included in this presentation to the most directly comparable financial measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United States. Our Form 10-Q for the quarter ended December 31, 2014, to be filed shortly hereafter, provides further explanation and disclosure regarding our use of non-GAAP financial measures and should be read in conjunction with this presentation. |
Overview and Business Update Susan DeVore President & CEO PREMIER, INC. 3 |
Second-quarter highlights 1 (1) Comparisons are with year-ago non-GAAP pro forma information that reflects the impact of the company’s reorganization and initial public offering. See Adjusted EBITDA, Segment Adjusted EBITDA and Adjusted Fully Distributed Net Income reconciliations to GAAP equivalents in Appendix. 4 Strong overall financial performance; raising full-year consolidated guidance Net revenue up 19% from prior year, driven by double- digit growth in both business segments SCS revenue exceeded and PS revenue in-line with company expectations Adjusted EBITDA rose 18% from prior year Adjusted fully distributed earnings per share of $0.36, increased 18% from prior year Acquired assets providing value and growth PREMIER, INC. |
Supply Chain Services revenue growth drivers » Strong GPO net administrative fees revenue growth, up 10.3% year-over-year on a pro forma non-GAAP basis » Products revenue up 37% year-over year 5 PREMIER, INC. |
Performance Services revenue growth drivers » 20% revenue growth consistent with second-quarter expectations, driven by: » SaaS-based subscription growth, particularly from PremierConnect ® Enterprise and Population Health Management » First full quarter of revenue from TheraDoc and Aperek acquisitions 6 PREMIER, INC. |
Raising fiscal 2015 full-year financial outlook* Increasing full-year consolidated net revenue outlook and raising lower end of original ranges for consolidated adjusted EBITDA and adjusted fully distributed earnings per share PREMIER, INC. 7 » Raised outlook for Supply Chain Services segment based on net administrative fee and product revenue growth expectations » Continuing contract penetration » Contract conversion of new members » Higher utilization trends » More moderate growth in Performance Services driven by two factors confined within Advisory Services » Remainder of Performances Services expected to perform in-line with original expectations » SaaS-based business remains strong » PremierConnect ® Enterprise and population health management on track *As provided in 2Q’15 earnings press release dated February 9, 2015 |
Positioned to address industry needs PREMIER, INC. 8 Scale Co-innovation Intelligence to transform from the inside Leadership in population health Shared infrastructure Total cost reduction Quality improvement across the continuum Evolving delivery and payment models Actionable data and information Member and Industry Needs Premier Strategic Differentiation “U.S. Department of Health and Human Services’ recent announcement to accelerate Medicare reimbursement to alternate payment models… is the clearest signal to date of the transformative changes gaining momentum within our industry.” – Susan Devore, Premier CEO |
Recognized leader in population health management » Premier Population Health Management Advisory Services and Theradoc clinical surveillance solution ranked #1 by KLAS » Pioneered performance improvement collaboratives focused on: » Alternate payment models » Accountable Care Organizations » Close partnerships with federal healthcare programs and government policy makers to build and demonstrate pay-for-performance models 9 PREMIER, INC. |
Unique business model drives innovation and growth PREMIER, INC. 10 INTEGRATED SALES/FIELD FORCE & PLATFORM Become the data analytics “backbone” with wrap-around services for cost and quality improvement over the short term and population health management solutions over the long term Change the game in supply chain, uncover unmatched savings and value, and lead the disruption of the industry » SaaS-based offerings » PremierConnect ® Enterprise » Advisory services » Performance improvement collaboratives » Group purchasing » Direct sourcing » Specialty pharmacy » Capital planning Supply Chain Services Performance Services |
Targeted and disciplined acquisition strategy PREMIER, INC. 11 » Acquisition strategy plays a major role in providing solutions that position member health systems to thrive in the healthcare environment of tomorrow » Financial performance and capital structure provide access to more than $1.2 billion in cash and debt for acquisitions and growth strategy » Continue to evaluate larger, transformative acquisitions in areas that closely align with the needs of our member health systems |
Operations Update Michael Alkire Chief Operating Officer PREMIER, INC. 12 |
Second-quarter operational highlights » Winning and expanding member relationships » Continued momentum with larger offerings » Acquired assets providing value and growth 13 PREMIER, INC. |
Winning and expanding member relationships » MultiCare Health Systems » “All-in” engagement » Unity Point Health » PremierConnect Quality » Catholic Health Initiatives » PremierConnect Quality » PremierConnect Theradoc Safety » The Medicines Company » Advisory Services 14 PREMIER, INC. |
PremierConnect ® Enterprise & Data Alliance Collaborative » Clinical utilization effectiveness » Harm reporting » Community health & equity reporting » Ambulatory quality measures » Claims analytics » Total cost of care » Operational reporting » Predictive model for readmissions » Population health analytics » ACO reporting » Referral analytics » H&V procedural analytics » Readmissions metrics & management » Population health » Throughput analytics » Operations & throughput modeling » Population stratification » Disease modeling PREMIER, INC. 15 Texas Health Resources Carolinas HealthCare System Carilion Clinic Phytel Verisk Health UNCC IBM Bon Secours Health System University Hospitals Baystate Innovation Center Doctors Hospital at Renaissance Mercy Health Baystate Health Fairview Health Services PCE Private Warehouse Partners *PremierConnect Enterprise and Data Alliance Collaborative as of September 30, 2014. |
16 Strategic acquisitions address member needs (Closed July 2013) (Closed October 2013) (Closed April 2014) (Closed August 2014) (Closed September 2014) Company Clinical & physician preference cost reduction Data acquisition from multiple technologies Health system capital expenditure cost reduction Supply chain technology enablement Quality & safety improvement Strategic Need Direct sourcing (Closed February 2015 1 ) (1) Purchased initial 60% ownership in 2011. Remaining 40% minority interest purchased on February 2, 2015. PREMIER, INC. |
Financial Review Craig McKasson Chief Financial Officer PREMIER, INC. 17 |
the Second-quarter consolidated and segment highlights 1 Consolidated Net revenue (millions) Supply Chain Services Net revenue (millions) Performance Services Net revenue (millions) Adjusted EBITDA (millions) Adjusted EBITDA (millions) Adjusted EBITDA (millions) 18 $208.9 $249.4 Q2'14 Q2'15 19% $150.9 $179.6 Q2'14 Q2'15 19% 20% Q2'14 Q2'15 $58.0 $69.8 $83.4 $98.8 $85.1 $97.3 $17.7 $23.2 18% 14% 31% Q2'14 Q2'15 Q2'14 Q2'15 Q2'14 Q2'15 Supply Chain Services (1) See non-GAAP Adjusted EBITDA and non-GAAP Segment Adjusted EBITDA reconciliations to GAAP equivalents in Appendix. PREMIER, INC. |
Second-quarter non-GAAP adjusted fully distributed net income 1 $0.31 $0.36 Non-GAAP earnings per share on fully distributed net income (1) See non-GAAP adjusted fully distributed net income and non-GAAP earnings per share on fully distributed net income reconciliations to GAAP equivalents in Appendix » Calculates income taxes at 40% on pre-tax income, assuming taxable C corporate structure » Calculates adjusted fully distributed earnings per share, assuming total Class A and B common shares held by public 19 Q2'14 Q2'15 (in millions, except per share data) $44.4 $52.1 17% PREMIER, INC. |
Cash flow and capital flexibility at December 31, 2014 PREMIER, INC. 20 » Year-to-date cash flow from operations of $153.7 million » Second-quarter free cash flow of $67.1 million 1 » Cash, cash equivalents and marketable securities of $469.5 million » No outstanding borrowings on $750 million five-year unsecured revolving credit facility (1) Three months ended December 31, 2014. Company defines free cash flow as cash provided by operating activities less distributions to limited partners and purchases of property and equipment. See non-GAAP free cash flow reconciliation to GAAP equivalent in Appendix. AMPLE CAPITAL FLEXIBILITY FOR FUTURE ACQUISITIONS AND BUSINESS GROWTH CONSIDERABLE CASH AND DEBT CAPACITY AVAILABLE |
Fiscal 2015 annual guidance 1 PREMIER, INC. 21 Financial guidance for year ending June 30, 2015: Moderating net administrative fee revenue growth Continuation of high GPO retention rates 20% - 30% product growth Guidance Assumptions: Continued demand for integrated offerings of SaaS-based subscription and licensed products, advisory services and collaboratives Continuation of high SaaS institutional renewal rates Reduction in advisory services revenue expectations tied to Partnership for Patients contract and repositioning of research business Updated Pro Forma Previous (in millions, except per share data) FY 2015 % YoY Change FY 2015 Net Revenue: Supply Chain Services segment $706 - $725 11% - 14% $688 - $707 Performance Services segment $268 - $275 15% - 18% $281 - $288 Total Net Revenue $974 - $1,000 12% - 15% $969 - $995 Non-GAAP adjusted EBITDA $382 - $390 9% - 11% $379 - $390 Non-GAAP adjusted fully distributed EPS $1.40 - $1.44 8% - 11% $1.39 - $1.44 Performance Services growth driven by: Supply Chain Services growth driven by: Guidance is based on comparisons with prior-year non-GAAP pro forma results, which have been adjusted to reflect the impact of the company’s reorganization and IPO. The Company does not reconcile guidance for adjusted EBITDA and non-GAAP adjusted fully distributed net income per-share to net income (loss) or GAAP earnings per share because the Company does not provide guidance for reconciling items between net income (loss) and adjusted EBITDA and non-GAAP adjusted fully distributed earnings per share. The Company is unable to provide guidance for these reconciling items since certain items that impact net income (loss) are outside of the Company’s control and cannot be reasonably predicted. Accordingly, a reconciliation to net income (loss) or GAAP earnings per share is not available without unreasonable effort. (1) |
Exchange update » Approximately 398,800 Class B units initially indicated for exchange into Class A shares on February 2, 2015 » Following right to retract intention to exchange and right of first refusal, approximately 257,000 Class B Units were exchanged for Class A common shares on 1-for-1 basis » Next exchange on April 30 th , 2015 22 PREMIER, INC. |
Well positioned to lead in a world of constant and rapid change » Premier plays a critical role in helping health systems achieve improvements in cost, quality, safety and population health management » Diverse revenue drivers enable Premier to capitalize on evolving industry dynamics » Size, scale and aligned member channel provide opportunities to lead » Uniquely positioned to innovate and drive change 23 PREMIER, INC. |
Thank you FOR MORE INFORMATION CONTACT: Jim Storey Vice President, Investor Relations Premier, Inc. 704-816-5958 jim_storey@premierinc.com PREMIER, INC. 24 |
Questions PREMIER, INC. 25 |
Appendix PREMIER, INC. 26 |
Fiscal 2015 and fiscal 2014 non-GAAP reconciliations PREMIER, INC. 27 2014* 2013* 2014* 2013 Reconciliation of Pro Forma Net Revenue to Net Revenue: Pro Forma Net Revenue 249,445 $ 208,909 $ 478,753 $ 408,222 $ Pro forma adjustment for revenue share post-IPO — — — 41,263 Net Revenue 249,445 $ 208,909 $ 478,753 $ 449,485 $ Net income 65,808 $ 51,477 $ 130,695 $ 164,005 $ Pro forma adjustment for revenue share post-IPO — — — (41,263) Interest and investment income, net (122) (21) (313) (241) Income tax expense 4,270 14,284 10,081 15,048 Depreciation and amortization 11,262 9,198 21,570 17,556 Amortization of purchased intangible assets 3,141 755 4,044 1,356 EBITDA 84,359 75,693 166,077 156,461 Stock-based compensation 7,405 6,494 13,844 6,819 Acquisition related expenses 2,267 177 3,545 319 Strategic and financial restructuring expenses 1,183 1,041 1,279 2,881 Adjustment to tax receivable agreement liability — — (1,073) — Acquisition related adjustment - deferred revenue 3,596 — 5,661 — Other income, net (2) — (7) (4) Adjusted EBITDA 98,808 $ 83,405 $ 189,326 $ 166,476 $ Segment Adjusted EBITDA: Supply Chain Services 97,342 $ 85,119 $ 188,610 $ 210,599 $ Pro forma adjustment for revenue share post-IPO — — — (41,263) Supply Chain Services (including pro forma adjustment) 97,342 $ 85,119 $ 188,610 $ 169,336 $ Performance Services 23,189 17,731 41,551 34,060 Corporate (21,723) (19,445) (40,835) (36,920) Adjusted EBITDA 98,808 $ 83,405 $ 189,326 $ 166,476 $ Depreciation and amortization (11,262) (9,198) (21,570) (17,556) Amortization of purchased intangible assets (3,141) (755) (4,044) (1,356) Stock-based compensation (7,405) (6,494) (13,844) (6,819) Acquisition related expenses (2,267) (177) (3,545) (319) Strategic and financial restructuring expenses (1,183) (1,041) (1,279) (2,881) Adjustment to tax receivable agreement liability — — 1,073 — Acquisition related adjustment - deferred revenue (3,596) — (5,661) — Equity in net income of unconsolidated affiliates (4,749) (4,491) (9,615) (8,605) Deferred compensation plan expense 460 — 969 — 65,665 61,249 131,810 128,940 Pro forma adjustment for revenue share post-IPO — — — 41,263 Operating income 65,665 $ 61,249 $ 131,810 $ 170,203 $ Equity in net income of unconsolidated affiliates 4,749 4,491 9,615 8,605 Interest and investment income, net 122 21 313 241 Other (expense) income, net (458) — (962) 4 Income before income taxes 70,078 $ 65,761 $ 140,776 $ 179,053 $ Three Months Ended December 31, Six Months Ended December 31, Supplemental Financial Information - Reporting of Pro Forma Adjusted EBITDA (Unaudited) (In thousands) Reconciliation of Selected Non-GAAP Measures to GAAP Measures and Non-GAAP Adjusted Fully Distributed Net Income Reconciliation of Net Income to Adjusted EBITDA and Reconciliation of Segment Adjusted EBITDA to Income Before Income Taxes: |
Fiscal 2015 and fiscal 2014 non-GAAP reconciliations PREMIER, INC. 28 2014* 2013* 2014* 2013 Reconciliation of Non-GAAP Pro Forma Adjusted Fully Distributed Net Income: Net income attributable to shareholders 9,271 $ 6,404 $ 18,544 $ 5,928 $ Pro forma adjustment for revenue share post-IPO — — — (41,263) Income tax expense 4,270 14,284 10,081 15,048 Stock-based compensation 7,405 6,494 13,844 6,819 Acquisition related expenses 2,267 177 3,545 319 Strategic and financial restructuring expenses 1,183 1,041 1,279 2,881 Adjustment to tax receivable agreement liability — — (1,073) — Acquisition related adjustment - deferred revenue 3,596 — 5,661 — Amortization of purchased intangible assets 3,141 755 4,044 1,356 Net income attributable to noncontrolling interest in Premier LP 55,751 44,916 110,567 158,130 Non-GAAP pro forma adjusted fully distributed income before income taxes 86,884 74,071 166,492 149,218 Income tax expense on fully distributed income before income taxes 34,754 29,628 66,597 59,687 Non-GAAP Pro Forma Adjusted Fully Distributed Net Income 52,130 $ 44,443 $ 99,895 $ 89,531 $ * Note that no pro forma adjustments were made for the three and six months ended December 31, 2014 and the three months ended December 31, 2013; as such, actual results are presented for each of these periods. Three Months Ended December 31, Six Months Ended December 31, Supplemental Financial Information - Reporting of Pro Forma Adjusted EBITDA (Unaudited) (In thousands) Reconciliation of Selected Non-GAAP Measures to GAAP Measures and Non-GAAP Adjusted Fully Distributed Net Income |
Fiscal 2015 and fiscal 2014 non-GAAP reconciliations PREMIER, INC. 29 2014 2013 Reconciliation of Non-GAAP Free Cash Flow to Net Cash Provided by Operating Activities: Net cash provided by operating activities 107,842 $ 131,726 $ Purchases of property and equipment (18,051) (13,720) Distributions to limited partners (22,691) (72,645) Non-GAAP free cash flow 67,100 $ 45,361 $ Supplemental Financial Information - Reporting of Non-GAAP Free Cash Flow Reconciliation of Selected Non-GAAP Measures to GAAP Measures (Unaudited) (In thousands) Three Months Ended December 31, |
Fiscal 2015 and fiscal 2014 non-GAAP reconciliations PREMIER, INC. 30 2014* 2013* 2014* 2013 Reconciliation of numerator for GAAP EPS to Non-GAAP EPS on Adjusted Fully Distributed Net Income Net loss attributable to shareholders after adjustment of redeemable limited partners' capital to redemption amount (32,979) $ (3,713,408) $ (406,363) $ (3,713,884) $ Adjustment of redeemable limited partners' capital to redemption amount 42,250 3,719,812 424,907 3,719,812 Net income attributable to shareholders 9,271 6,404 18,544 5,928 Pro forma adjustment for revenue share post-IPO — — — (41,263) Income tax expense 4,270 14,284 10,081 15,048 Stock-based compensation 7,405 6,494 13,844 6,819 Acquisition related expenses 2,267 177 3,545 319 Strategic and financial restructuring expenses 1,183 1,041 1,279 2,881 Adjustment to tax receivable agreement liability — — (1,073) — Acquisition related adjustment - deferred revenue 3,596 — 5,661 — Amortization of purchased intangible assets 3,141 755 4,044 1,356 Net income attributable to noncontrolling interest in Premier LP 55,751 44,916 110,567 158,130 Non-GAAP pro forma adjusted fully distributed income before income taxes 86,884 74,071 166,492 149,218 Income tax expense on fully distributed income before income taxes 34,754 29,628 66,597 59,687 Non-GAAP pro forma adjusted fully distributed net income 52,130 $ 44,443 $ 99,895 $ 89,531 $ Reconciliation of denominator for GAAP EPS to Non-GAAP Adjusted Fully Distributed Net Income Weighted Average: Common shares used for basic and diluted earnings per share 35,589 32,375 33,965 19,001 Potentially dilutive shares 948 110 785 58 Class A common shares outstanding - - - 13,374 Conversion of Class B common units 108,674 112,608 110,396 112,608 Weighted average fully distributed shares outstanding - diluted 145,211 145,093 145,146 145,041 Reconciliation of GAAP EPS to Adjusted Fully Distributed EPS GAAP loss per share $ (0.93) $ (114.70) $ (11.96) $ (195.46) Impact of adjustment of redeemable limited partners' capital to redemption amount $ 1.19 $ 114.90 $ 12.51 $ 195.77 Impact of additions: Pro forma adjustment for revenue share post-IPO $ - $ - $ - $ (2.17) Income tax expense $ 0.12 $ 0.44 $ 0.30 $ 0.79 Stock-based compensation $ 0.21 $ 0.20 $ 0.41 $ 0.36 Acquisition related expenses $ 0.06 $ 0.01 $ 0.10 $ 0.02 Strategic and financial restructuring expenses $ 0.03 $ 0.03 $ 0.04 $ 0.15 Adjustment to tax receivable agreement liability $ - $ - $ (0.03) $ - Acquisition related adjustment - deferred revenue $ 0.10 $ - $ 0.17 $ - Amortization of purchased intangible assets $ 0.09 $ 0.02 $ 0.12 $ 0.07 Net income attributable to noncontrolling interest in Premier LP $ 1.57 $ 1.39 $ 3.25 $ 8.32 Impact of corporation taxes $ (0.98) $ (0.92) $ (1.96) $ (3.14) Impact of increased share count $ (1.11) $ (1.07) $ (2.26) $ (4.09) Non-GAAP earnings per share on adjusted fully distributed net income - diluted $ 0.36 $ 0.31 $ 0.69 $ 0.62 * Note that no pro forma adjustments were made for the three and six months ended December 31, 2014 and the three months ended December 31, 2013; as such, actual results are presented for each of these periods. Three Months Ended December 31, Six Months Ended December 31, Supplemental Financial Information - Reporting of Net Income and Earnings Per Share (Unaudited) (In thousands, except per share data) Reconciliation of Selected Non-GAAP Measures to GAAP Measures |