Third Quarter Fiscal 2015 Financial Results and Update May 11, 2015 Exhibit 99.3 |
2 © 2015 PREMIER, INC. Forward-looking statements and Non-GAAP financial measures |
Susan DeVore, President & CEO Overview and Business Update |
4 © 2015 PREMIER, INC. Third-quarter highlights * *See non-GAAP Adjusted EBITDA, Segment Adjusted EBITDA, and Adjusted Fully Distributed Earnings Per Share reconciliations to GAAP equivalents in Appendix. Strong overall financial performance Total net revenue up 16% YoY, driven by double-digit growth in both business segments Adjusted EBITDA up 14% YoY Adjusted fully distributed earnings per share of $0.38 up 13% YoY On track to achieve 99% GPO retention rate and 94% SaaS institutional renewal rate for FY2015 Raising full-year guidance |
5 © 2015 PREMIER, INC. Third-quarter revenue growth drivers Supply Chain Services revenue up 15% » Net administrative fees revenue up 9.1% » Products revenue up 25% Performance Services revenue up 19% » Continued growth of PremierConnect Saas-based subscriptions and renewals, and growth in Advisory Services » Finished quarter with solid bookings & strong sales pipeline |
6 © 2015 PREMIER, INC. Addressing member needs for continuous improvement Manage Populations Improve Quality and Safety Reduce Costs BILLING PURCHASING CLAIMS CLINICAL FINANCIAL Combines People, Process, and Technology |
7 © 2015 PREMIER, INC. Medicare payment reform – a watershed event Payment reform rewarding value, promoting population health and discouraging fee-for-service » » Bill permanently reforms the Medicare physician payment system (Sustainable Growth Rate formula) » Alters the economic incentives in market, pushing providers to embrace population health and risk-based contracts for cost and quality outcomes We believe Premier is well positioned to lead health systems through this transformation Congress passes Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) |
8 © 2015 PREMIER, INC. Recognized leader in population health management Premier Population Health Management Advisory Services ranked #1 by KLAS The PACT Population Health Collaborative is the model for integrated care delivery, bringing together approx. 400 hospitals in 30 states The Bundled Payment Collaborative works to reduce the cost of an episode of care, improve patient outcomes and redesign care delivery with approximately 120 hospitals in 27 states Pioneered data-driven performance improvement collaboratives and technologies focused on accountable care organizations and alternate payment models |
Michael Alkire, Chief Operating Officer Operations Update |
10 © 2015 PREMIER, INC. A platform for continuous performance improvement Manage Populations Improve Quality and Safety Reduce Costs BILLING PURCHASING CLAIMS CLINICAL FINANCIAL Combines People, Process, and Technology |
11 © 2015 PREMIER, INC. Third-quarter Supply Chain Services revenue Supply Chain Services revenue increased 15% » » Expanding contract penetration in both acute and alternate site » Continuing impact of the recruitment and conversion of new members » Improved utilization trends » Timing of cash receipts » » Ongoing member support for direct sourcing and specialty pharmacy businesses $108.1 $118.0 $58.7 $73.4 3Q'14 3Q'15 Net Admin Fees Products Other Services and Support 15% $167.0 $192.1 Supply Chain Services Net revenue (millions) GPO net admin fees revenue increased 9.1% Products revenue increased 25% |
12 © 2015 PREMIER, INC. High-growth Supply Chain Products businesses Direct sourcing » Helping our members achieve significant savings on basic commodity products Specialty pharmacy » Helping our members manage chronic, high-cost patients in a population health environment $ 58.7 $ 73.4 3Q'14 3Q'15 Supply Chain Products Net revenue (millions) 25% |
13 © 2015 PREMIER, INC. A platform for continuous performance improvement Manage Populations Improve Quality and Safety Reduce Costs BILLING PURCHASING CLAIMS CLINICAL FINANCIAL Combines People, Process, and Technology |
14 © 2015 PREMIER, INC. Supply Analytics Sourcing & Contract Management Catalog Management ERP / Materials Management PREMIERCONNECT SUPPLY CHAIN PremierConnect ® Supply Chain Supply Chain Workflow Plan Source Contract Buy Receive Pay Manage |
15 © 2015 PREMIER, INC. Supply Analytics Complete Visibility Categorize ALL transactions Contract Optimization Identify trends and variation Actionable Information Understand Why spend is changing Sourcing & Contract Management Optimize & Manage GPO, regional and local contracts Source of Truth Right product, right time, best price Data Integration Insights across all your facilities Catalog Management Drive Standardization Cleanse, standardize & control item master Customized Catalog Supports your standards across acute & non-acute Price Accuracy Maintains pricing across multiple ERPs ERP / Materials Management Manage Process Supply chain & operations End to End Procurement Financial, Fixed Assets & Purchasing Flexible & Scalable Cloud based – connect your growing facilities Technology enabled supply chain |
16 © 2015 PREMIER, INC. Expanding Population Health Advisory Services relationships Innovate Health Alliance – Albany NY North Shore-LIJ Health System – New York LifeBridge Health – Baltimore |
17 © 2015 PREMIER, INC. SYMMEDRx providing solutions for physician preference Physician preference contract management and data services Partnership with large academic member health system delivers savings of ~24% on medical devices related to just one disease state Three-year agreement with Greater New York Hospital Association to provide comprehensive data analysis and consultative support to drive savings across all disease states |
Craig McKasson, Chief Financial Officer Financial Review |
19 © 2015 PREMIER, INC. the Third-quarter consolidated and segment highlights * Consolidated Net revenue (millions) Supply Chain Services Net revenue (millions) Performance Services Net revenue (millions) Adjusted EBITDA (millions) Adjusted EBITDA (millions) Adjusted EBITDA (millions) *See non-GAAP Adjusted EBITDA and non-GAAP Segment Adjusted EBITDA reconciliations to GAAP equivalents in Appendix. 16% 15% 19% 14% 11% 29% $20.3 $26.2 3Q'14 3Q'15 $91.3 $103.7 3Q'14 3Q'15 $58.6 $69.6 3Q'14 3Q'15 $91.5 $101.6 3Q'14 3Q'15 $167.0 $192.1 3Q'14 3Q'15 $225.6 $261.7 3Q'14 3Q'15 |
20 © 2015 PREMIER, INC. Third-quarter Supply Chain Services revenue Supply Chain Services revenue increased 15% » GPO net admin fees revenue increased 9.1% » Expanding contract penetration in both acute and alternate site » Continuing impact of the recruitment and conversion of new members » Improved utilization trends » Timing of cash receipts » Products revenue increased 25% » Ongoing member support for direct sourcing and specialty pharmacy businesses $58.7 $73.4 3Q'14 3Q'15 Net Admin Fees Products Other Services and Support 15% $167.0 $192.1 Supply Chain Services Net revenue (millions) $108.1 $118.0 |
21 © 2015 PREMIER, INC. Third-quarter Performance Services revenue » Performance Services revenue increased 19% » Continued growth of PremierConnect SaaS-based subscriptions and renewals » Continued growth of Advisory Services led by engagements tied to: » Cost management » Population health » Physician preference » Capital equipment planning $58.6 $69.6 3Q'14 3Q'15 19% Performance Services Net revenue (millions) |
22 © 2015 PREMIER, INC. Third-quarter adjusted EBITDA* Consolidated adjusted EBITDA increased 14% » » Strong net admin fee revenue growth » Expanding direct sourcing activities » » New PremierConnect SaaS-based subscription sales » Contribution from Aperek and Theradoc acquisitions » Effective management of operating expenses Supply Chain Services adjusted EBITDA increased 11% Performance Services adjusted EBITDA increased 29% ($20.5) ($24.0) $91.5 $101.6 $20.3 $26.2 3Q'14 3Q'15 Corporate Supply Chain Services Performance Services 14% Adjusted EBITDA (millions) $91.3 $103.7 * 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 |
23 © 2015 PREMIER, INC. Third-quarter non-GAAP adjusted fully distributed net income* $0.34 $0.38 Non-GAAP earnings per share on adjusted fully distributed net income – diluted » 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 $49.1 $55.3 3Q'14 3Q'15 (in millions, except per share data) 13% * 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 |
24 © 2015 PREMIER, INC. Cash flow and capital flexibility at March 31, 2015 CONSIDERABLE CASH AND DEBT CAPACITY AVAILABLE AMPLE CAPITAL FLEXIBILITY FOR FUTURE ACQUISITIONS AND BUSINESS GROWTH *Three months ended March 31, 2015. 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. Year-to-date cash flow from operations of $255.6 million Third-quarter free cash flow of $59.5 million * Cash, cash equivalents & marketable securities of $503.3 million No outstanding borrowings on $750 million five- year unsecured revolving credit facility |
25 © 2015 PREMIER, INC. Fiscal 2015 annual guidance* * 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. Financial guidance for year ending June 30, 2015: » 6%-7% net administrative fee revenue growth » 27%-32% product revenue growth » Continued high GPO retention rates 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 Updated Pro Forma Previous (in millions, except per share data) FY 2015 % YoY Change FY 2015 Net Revenue: Supply Chain Services segment $720.0 - $733.0 13% - 15% $706.0 - $725.0 Performance Services segment $268.0 - $275.0 15% - 18% $268.0 - $275.0 Total Net Revenue $988.0 - $1008.0 14% - 16% $974.0 - $1000.0 Non-GAAP adjusted EBITDA $384.0 - $392.0 9% - 12% $382.0 - $390.0 Non-GAAP adjusted fully distributed EPS $1.40 - $1.44 8% - 11% $1.40 - $1.44 Premier, Inc. updates full-year fiscal 2015 financial guidance, as follows: Fiscal 2015 Financial Guidance Supply Chain Services growth driven by: Performance Services growth driven by: |
26 © 2015 PREMIER, INC. Exchange update On April 30, 2015, approximately 276,000 Class B units were exchanged for Class A common shares on 1-for-1 basis; equal number of Class B common shares retired Next exchange on July 31, 2015 |
27 © 2015 PREMIER, INC. Targeted and disciplined acquisition strategy We expect acquisitions to play major role in providing solutions for member health systems to thrive in the healthcare environment of tomorrow » Evaluating multiple opportunities » Seeking innovative and unique solutions » Employing well-defined, diligent process » Continue to evaluate all types of acquisitions, from strategic tuck-ins to transformational |
Questions |
Appendix |
30 © 2015 PREMIER, INC. Year-to-date nine-month financial highlights * Consolidated Supply Chain Services Net revenue (millions) Performance Services Net revenue (millions) Adjusted EBITDA (millions) Adjusted EBITDA (millions) Adjusted EBITDA (millions) *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. $633.8 $740.5 $464.1 $542.0 $169.8 $198.4 $257.8 $293.1 3Q'14 3Q'15 $260.8 $290.2 3Q'14 3Q'15 $54.4 $67.7 3Q'14 3Q'15 3Q'14 3Q'15 3Q'14 3Q'15 3Q'14 3Q'15 17% 17% 14% 17% 11% 25% Consolidated Net revenue (millions) |
31 © 2015 PREMIER, INC. Fiscal 2015 and fiscal 2014 non-GAAP reconciliations 2015* 2014* 2015* 2014 Reconciliation of Pro Forma Net Revenue to Net Revenue: Pro Forma Net Revenue 261,723 $ 225,598 $ 740,476 $ 633,820 $ Pro forma adjustment for revenue share post-IPO — — — 41,263 Net Revenue 261,723 $ 225,598 $ 740,476 $ 675,083 $ Net income 72,029 $ 101,980 $ 202,724 $ 265,985 $ Pro forma adjustment for revenue share post-IPO — — — (41,263) Interest and investment income, net (204) (400) (517) (641) Income tax expense 2,026 9,413 12,107 24,461 Depreciation and amortization 11,538 9,396 33,107 26,952 Amortization of purchased intangible assets 2,554 802 6,598 2,158 EBITDA 87,943 121,191 254,019 277,652 Stock-based compensation 7,285 6,299 21,129 13,118 Acquisition related expenses 2,863 984 6,408 1,303 Strategic and financial restructuring expenses 2 733 1,281 3,614 Loss (gain) on investment 1,000 (37,850) 1,000 (37,850) Adjustment to tax receivable agreement liability 1,073 — — — Acquisition related adjustment - deferred revenue 3,563 — 9,224 — Other expense (income), net 16 (52) 10 (56) Adjusted EBITDA 103,745 $ 91,305 $ 293,071 $ 257,781 $ Segment Adjusted EBITDA: Supply Chain Services 101,600 $ 91,477 $ 290,210 $ 302,076 $ Pro forma adjustment for revenue share post-IPO — — — (41,263) Supply Chain Services (including pro forma adjustment) 101,600 $ 91,477 $ 290,210 $ 260,813 $ Performance Services 26,166 20,307 67,717 54,367 Corporate (24,021) (20,479) (64,856) (57,399) Adjusted EBITDA 103,745 $ 91,305 $ 293,071 $ 257,781 $ Depreciation and amortization (11,538) (9,396) (33,107) (26,952) Amortization of purchased intangible assets (2,554) (802) (6,598) (2,158) Stock-based compensation (7,285) (6,299) (21,129) (13,118) Acquisition related expenses (2,863) (984) (6,408) (1,303) Strategic and financial restructuring expenses (2) (733) (1,281) (3,614) Adjustment to tax receivable agreement liability (1,073) — — — Acquisition related adjustment - deferred revenue (3,563) — (9,224) — Equity in net income of unconsolidated affiliates (5,197) (3,566) (14,812) (12,171) Deferred compensation plan (income) expense (759) — 209 — 68,911 69,525 200,721 198,465 Pro forma adjustment for revenue share post-IPO — — — 41,263 Operating income 68,911 $ 69,525 $ 200,721 $ 239,728 $ Equity in net income of unconsolidated affiliates 5,197 3,566 14,812 12,171 Interest and investment income, net 204 400 517 641 (Loss) gain on investment (1,000) 37,850 (1,000) 37,850 Other income (expense), net 743 52 (219) 56 Income before income taxes 74,055 $ 111,393 $ 214,831 $ 290,446 $ Three Months Ended March 31, Nine Months Ended March 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: * Note that no pro forma adjustments were made for the three and nine months ended March 31, 2015 and the three months ended March 31, 2014; as such, actual results are presented for each of these periods. |
32 © 2015 PREMIER, INC. Fiscal 2015 and fiscal 2014 non-GAAP reconciliations 2015* 2014* 2015* 2014 Reconciliation of Non-GAAP Pro Forma Adjusted Fully Distributed Net Income: Net income attributable to shareholders 12,209 $ 13,525 $ 30,753 $ 19,453 $ Pro forma adjustment for revenue share post-IPO — — — (41,263) Income tax expense 2,026 9,413 12,107 24,461 Stock-based compensation 7,285 6,299 21,129 13,118 Acquisition related expenses 2,863 984 6,408 1,303 Strategic and financial restructuring expenses 2 733 1,281 3,614 Loss (gain) on investment 1,000 (37,850) 1,000 (37,850) Adjustment to tax receivable agreement liability 1,073 — — — Acquisition related adjustment - deferred revenue 3,563 — 9,224 — Amortization of purchased intangible assets 2,554 802 6,598 2,158 Net income attributable to noncontrolling interest in Premier LP 59,568 87,925 170,135 246,055 Non-GAAP pro forma adjusted fully distributed income before income taxes 92,143 81,831 258,635 231,049 Income tax expense on fully distributed income before income taxes 36,857 32,732 103,454 92,420 Non-GAAP Pro Forma Adjusted Fully Distributed Net Income 55,286 $ 49,099 $ 155,181 $ 138,629 $ * Note that no pro forma adjustments were made for the three and nine months ended March 31, 2015 and the three months ended March 31, 2014; as such, actual results are presented for each of these periods. Three Months Ended March 31, Nine Months Ended March 31, (Unaudited) (In thousands) Reconciliation of Selected Non-GAAP Measures to GAAP Measures and Non-GAAP Adjusted Fully Distributed Net Income Supplemental Financial Information - Reporting of Pro Forma Adjusted EBITDA |
33 © 2015 PREMIER, INC. Fiscal 2015 and fiscal 2014 non-GAAP reconciliations 2015 2014 Reconciliation of Non-GAAP Free Cash Flow to Net Cash Provided by Operating Activities: Net cash provided by operating activities 101,860 $ 90,173 $ Purchases of property and equipment (18,653) (13,823) Distributions to limited partners (23,701) (17,419) Non-GAAP free cash flow 59,506 $ 58,931 $ Non-GAAP Adjusted EBITDA 103,745 $ 91,305 $ 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 March 31, |
34 © 2015 PREMIER, INC. Fiscal 2015 and fiscal 2014 non-GAAP reconciliations 2015* 2014* 2015* 2014 Reconciliation of numerator for GAAP EPS to Non-GAAP EPS on Adjusted Fully Distributed Net Income Net income (loss) attributable to shareholders after adjustment of redeemable limited partners' capital to redemption amount (374,853) $ 509,239 $ (781,216) $ (3,204,645) $ Adjustment of redeemable limited partners' capital to redemption amount 387,062 (495,714) 811,969 3,224,098 Net income attributable to shareholders 12,209 13,525 30,753 19,453 Pro forma adjustment for revenue share post-IPO — — — (41,263) Income tax expense 2,026 9,413 12,107 24,461 Stock-based compensation 7,285 6,299 21,129 13,118 Acquisition related expenses 2,863 984 6,408 1,303 Strategic and financial restructuring expenses 2 733 1,281 3,614 Loss (gain) on investment 1,000 (37,850) 1,000 (37,850) Adjustment to tax receivable agreement liability 1,073 — — — Acquisition related adjustment - deferred revenue 3,563 — 9,224 — Amortization of purchased intangible assets 2,554 802 6,598 2,158 Net income attributable to noncontrolling interest in Premier LP 59,568 87,925 170,135 246,055 Non-GAAP pro forma adjusted fully distributed income before income taxes 92,143 81,831 258,635 231,049 Income tax expense on fully distributed income before income taxes 36,857 32,732 103,454 92,420 Non-GAAP pro forma adjusted fully distributed net income 55,286 $ 49,099 $ 155,181 $ 138,629 $ 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 37,316 32,375 35,066 23,394 Potentially dilutive shares 1,148 181 845 100 Class A common shares outstanding - - - 8,981 Conversion of Class B common units 106,706 112,608 109,184 112,608 Weighted average fully distributed shares outstanding - diluted 145,170 145,164 145,095 145,083 Reconciliation of GAAP EPS to Adjusted Fully Distributed EPS GAAP earnings (loss) per share $ (10.05) $ 15.73 $ (22.28) $ (136.99) Impact of adjustment of redeemable limited partners' capital to redemption amount $ 10.37 $ (15.31) $ 23.16 $ 137.82 Impact of additions: Pro forma adjustment for revenue share post-IPO $ - $ - $ - $ (1.76) Income tax expense $ 0.05 $ 0.29 $ 0.35 $ 1.05 Stock-based compensation $ 0.20 $ 0.19 $ 0.60 $ 0.56 Acquisition related expenses $ 0.08 $ 0.03 $ 0.18 $ 0.06 Strategic and financial restructuring expenses $ 0.00 $ 0.02 $ 0.04 $ 0.15 Loss (gain) on investment $ 0.03 $ (1.17) $ 0.03 $ (1.62) Adjustment to tax receivable agreement liability $ 0.03 $ - $ - $ - Acquisition related adjustment - deferred revenue $ 0.10 $ - $ 0.26 $ - Amortization of purchased intangible assets $ 0.07 $ 0.02 $ 0.19 $ 0.09 Net income attributable to noncontrolling interest in Premier LP $ 1.60 $ 2.72 $ 4.85 $ 10.52 Impact of corporation taxes $ (0.99) $ (1.01) $ (2.95) $ (3.95) Impact of increased share count $ (1.11) $ (1.17) $ (3.36) $ (4.97) Non-GAAP earnings per share on adjusted fully distributed net income - diluted $ 0.38 $ 0.34 $ 1.07 $ 0.96 Three Months Ended March 31, Nine Months Ended March 31, (Unaudited) (In thousands, except per share data) Reconciliation of Selected Non-GAAP Measures to GAAP Measures * Note that no pro forma adjustments were made for the three and nine months ended March 31, 2015 and the three months ended March 31, 2014; as such, actual results are presented for each of these periods. Supplemental Financial Information - Reporting of Net Income and Earnings Per Share |