Exhibit 99.1
FOR IMMEDIATE RELEASE
PREMIER INC. REPORTS FISCAL 2018 SECOND-QUARTER RESULTS
CHARLOTTE, NC, Feb. 5, 2018 – Premier Inc. (NASDAQ: PINC) today reported financial results for the fiscal 2018 second quarter ended Dec. 31, 2017.
Q2 2018 Highlights:
| | • | | Net revenue increased 15% to $411.4 million from the same period last year; Supply Chain Services segment revenue rose 19% and Performance Services segment revenue increased 1% from the same period last year. |
| | • | | Due almost entirely to aone-time remeasurement of deferred taxes resulting from the Tax Cuts and Jobs Act, which increased income tax expense to $231.5 million from $37.4 million a year ago, net income declined 92% to $19.8 million from the same period a year ago. Diluted net loss per share totaled $1.66 per share, compared with diluted net income of $1.50 per share in the prior year. |
| | • | | Non-GAAP adjusted EBITDA* of $133.5 million increased 9% from the same period last year. |
| | • | | Non-GAAP adjusted fully distributed net income* increased 7% to $70.0 million, representingnon-GAAP adjusted fully distributed earnings per share* of $0.50, an increase of 9% over $0.46 per share from a year ago. |
| | • | | The guidance range for fiscal 2018non-GAAP adjusted fully distributed earnings per share is raised to $2.24 - $2.37 per share to reflect the expected increase from tax reform and the company’s stock repurchase program. |
| * | Descriptions ofnon-GAAP financial measures are provided in “Use and Definition ofNon-GAAP Financial Measures,” and reconciliations are provided in the tables at the end of this release. |
“Premier delivered a successful fiscal 2018 second quarter,” said Susan DeVore, president and chief executive officer. “We met or exceeded management expectations for the overall business as well as for the segments. On a consolidated basis, year-over-year net revenue increased 15% andnon-GAAP adjusted EBITDA rose 9%. Supply Chain Services segment revenue increased 19% from a year ago, with legacy group purchasing delivering 5% growth in net administrative fees revenue. The products business produced double-digit revenue growth across both the integrated pharmacy and direct sourcing businesses. We continue to expect revenue growth in the Performance Services segment to increase sequentially in the second half of the fiscal year, specifically driven by expected sales of ambulatory quality solutions linked to regulatory reporting that will occur in the third quarter, and as we recognize revenue from performance-based advisory services engagements.
“We are continually looking for ways to improve the efficiency of our businesses and deliver value to our stockholders,” DeVore continued. “During the quarter, we announced and launched a $200 million
Premier, Inc. FY’18 Q2 Results
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stock repurchase program. We expect this program, combined with the anticipated benefits from federal tax reform, to meaningfully impact full-yearnon-GAAP adjusted fully distributed earnings per share, and we are increasing this guidance range accordingly. We are affirming our other guidance ranges, based on theyear-to-date performance and our outlook for the remainder of fiscal 2018.
“To further optimize efficiencies, realize ongoing integration synergies, and realign resources for future growth areas, management is implementing certain personnel adjustments, including a modest reduction in force, that we expect to producepre-tax cost savings approximating $13 million to $14 million on an annualrun-rate basis,” DeVore continued.
“Looking forward, we believe Premier’s integrated supply chain, technology and analytics capabilities and wrap-around advisory services continue to uniquely differentiate our healthcare performance improvement company as we partner with providers and suppliers to manage total costs, improve quality and safety and navigate the continuing evolution to value-based care,” DeVore said. “We further believe that our comprehensive approach and multiple business drivers enable Premier to achieve successful growth through changing marketplace conditions, as we continue to deliver a compelling value proposition to our members and seek to build long-term value for our stockholders.”
Results of Operations for the Second Quarter of Fiscal 2018
Consolidated Second-Quarter Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31, | | | Six Months Ended December 31, | |
(in thousands, except per share data) | | 2017 | | | 2016 | | | % Change | | | 2017 | | | 2016 | | | % Change | |
Net Revenue(a): | | | | | | | | | | | | | | | | | | | | | | | | |
Supply Chain Services: | | | | | | | | | | | | | | | | | | | | | | | | |
Net administrative fees | | $ | 159,343 | | | $ | 129,071 | | | | 23 | % | | $ | 310,334 | | | $ | 255,047 | | | | 22 | % |
Other services and support | | | 3,421 | | | | 1,201 | | | | 185 | % | | | 5,570 | | | | 2,846 | | | | 96 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Services | | | 162,764 | | | | 130,272 | | | | 25 | % | | | 315,904 | | | | 257,893 | | | | 22 | % |
Products | | | 162,101 | | | | 142,378 | | | | 14 | % | | | 314,764 | | | | 248,507 | | | | 27 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total Supply Chain Services(a) | | | 324,865 | | | | 272,650 | | | �� | 19 | % | | | 630,668 | | | | 506,400 | | | | 25 | % |
Performance Services(a) | | | 86,533 | | | | 85,850 | | | | 1 | % | | | 171,294 | | | | 165,372 | | | | 4 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total(a) | | $ | 411,398 | | | $ | 358,500 | | | | 15 | % | | $ | 801,962 | | | $ | 671,772 | | | | 19 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Net income | | $ | 19,769 | | | $ | 246,184 | | | | (92 | )% | | $ | 80,385 | | | $ | 304,279 | | | | (74 | )% |
Net income attributable to stockholders | | $ | 281,200 | | | $ | 400,275 | | | | (30 | )% | | $ | 617,630 | | | $ | 470,577 | | | | 31 | % |
Adjusted net income (loss)(b) | | $ | (231,316 | ) | | $ | 211,688 | | | | (209 | )% | | $ | (181,251 | ) | | $ | 248,831 | | | | (173 | )% |
Weighted average shares outstanding: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | | 55,209 | | | | 49,445 | | | | 12 | % | | | 54,059 | | | | 48,330 | | | | 12 | % |
Diluted | | | 139,237 | | | | 141,308 | | | | (1 | )% | | | 139,641 | | | | 142,133 | | | | (2 | )% |
Earnings per share attributable to stockholders: | | | | | | | | | | | | | | | | | | | | | | | | |
Basic | | $ | 5.09 | | | $ | 8.10 | | | | (37 | )% | | $ | 11.43 | | | $ | 9.74 | | | | 17 | % |
Diluted(b) | | $ | (1.66 | ) | | $ | 1.50 | | | | (211 | )% | | $ | (1.30 | ) | | $ | 1.75 | | | | (174 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
NON-GAAP FINANCIAL MEASURES: | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | |
Adjusted EBITDA (a) (c): | | | | | | | | | | | | | | | | | | | | | | | | |
Supply Chain Services | | $ | 132,045 | | | $ | 119,022 | | | | 11 | % | | $ | 257,665 | | | $ | 236,326 | | | | 9 | % |
Performance Services | | | 27,929 | | | | 28,603 | | | | (2 | )% | | | 49,150 | | | | 50,914 | | | | (3 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total segment adjusted EBITDA | | | 159,974 | | | | 147,625 | | | | 8 | % | | | 306,815 | | | | 287,240 | | | | 7 | % |
Corporate | | | (26,432 | ) | | | (25,616 | ) | | | (3 | )% | | | (54,102 | ) | | | (54,458 | ) | | | 1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Total (a) | | $ | 133,542 | | | $ | 122,009 | | | | 9 | % | | $ | 252,713 | | | $ | 232,782 | | | | 9 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Adjusted fully distributed net income(c) | | $ | 69,982 | | | $ | 65,242 | | | | 7 | % | | $ | 131,695 | | | $ | 124,170 | | | | 6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
Earnings per share on adjusted fully distributed net income - diluted(a) (c) | | $ | 0.50 | | | $ | 0.46 | | | | 9 | % | | $ | 0.94 | | | $ | 0.87 | | | | 8 | % |
| | | | | | | | | | | | | | | | | | | | | | | | |
| (a) | Bolded measures correspond to company guidance. |
| (b) | Earnings per share attributable to stockholders excludes the adjustment of redeemable limited partners’ capital to redemption amount and the net income attributable tonon-controlling interest in Premier LP if Class B common stock is determined to be dilutive. Likewise, earnings per share attributable to stockholders includes the adjustment of redeemable limited partners’ capital to redemption amount and the net income attributable tonon-controlling interest in Premier LP if Class B common stock is determined to be antidilutive. |
| (c) | See attached supplemental financial information for reconciliation of reported GAAP results toNon-GAAP results. |
Premier, Inc. FY’18 Q2 Results
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For the fiscal second-quarter ended Dec. 31, 2017, Premier generated net revenue of $411.4 million, an increase of 15%, from net revenue of $358.5 million for the same period a year ago.
Due almost entirely to aone-time remeasurement of deferred taxes resulting from the Tax Cuts and Jobs Act, net income for the fiscal second-quarter was $19.8 million, compared with $246.2 million for the same period a year ago. In accordance with GAAP, fiscal 2018 and 2017 second-quarter net income attributable to stockholders includednon-cash adjustments of $317.9 million and $335.3 million, respectively, to reflect the change in the redemption value of limited partners’ Class B common unit ownership at the end of each period. Thesenon-cash adjustments result primarily from changes in the number of Class B common shares outstanding and the company’s stock price between periods and do not reflect results of the company’s business operations. After thesenon-cash adjustments, the company reported net income attributable to stockholders of $281.2 million, compared with $400.3 million for the same period a year ago. Second-quarter net loss per diluted share, which is based on net income adjusted in accordance with GAAP for the tax expense related to Premier Inc. retaining the portion of net income attributable to income fromnon-controlling interest in Premier LP, was $1.66 compared with diluted net income of $1.50 per share for the same period a year ago. Second-quarter net loss per share was also negatively impacted by the same factors that impacted net income.See “Calculation of GAAP Earnings per Share” in the income statement section of this press release.
Fiscal second-quarternon-GAAP adjusted EBITDA of $133.5 million increased 9% from $122.0 million for the same period the prior year. Adjusted EBITDA growth was primarily driven by growth in net administrative fees revenue, including contributions related to the Innovatix and Essensa acquisition, net of the reduction in equity in net income of unconsolidated affiliates due to acquiring the remaining 50% of Innovatix, along with an increase in product revenue. These results were partially offset by increased cost of products and selling, general and administrative expenses resulting from higher salaries and benefits expenses as a result of acquisitions and to support growth.
Non-GAAP adjusted fully distributed net income for the fiscal second-quarter increased 7% to $70.0 million from $65.2 million for the same period a year ago. Adjusted fully distributed earnings per share increased to $0.50 from $0.46 for the same period a year ago. Adjusted fully distributed earnings per share is anon-GAAP financial measure that represents net income, adjusted fornon-recurring andnon-cash items, attributable to all stockholders as if all Class B stockholders exchanged their Class B common units and associated Class B common shares for Class A common shares.
Segment Results
Supply Chain Services
For the fiscal second-quarter ended Dec. 31, 2017, the Supply Chain Services segment generated net revenue of $324.9 million, an increase of 19% from $272.7 million a year ago. The revenue increase was driven by growth in the company’s group purchasing organization (GPO) and products businesses. GPO net administrative fees revenue of $159.3 million increased $30.3 million, or 23%, from a year ago, primarily driven by contributions from the Innovatix and Essensa businesses, which were acquired in December 2016. Legacy year-over-year net administrative fee revenue growth in the second quarter was 5%, resulting from a supplier revenue recovery settlement and contract penetration of existing members. Product revenues of $162.1 million increased 14% from $142.4 million a year ago, attributable to double-digit growth from both the integrated pharmacy and direct sourcing businesses.
Premier, Inc. FY’18 Q2 Results
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Supply Chain Services segment adjusted EBITDA of $132.0 million for the fiscal 2018 second-quarter increased 11% from $119.0 million for the same period a year ago. The increase largely reflects growth in net administrative fees revenue. Growth was partially offset by incremental salaries and benefits associated with the prior-year acquisition of Innovatix and Essensa. Additionally, adjusted EBITDA from the prior year included a $5.6 million non-cash adjustment for cash collections not recognized as revenue on a GAAP basis due to a purchase accounting adjustment, and included $4.1 million in equity in net income of Innovatix, as it was historically accounted for as an unconsolidated affiliate through the date of acquisition.
Performance Services
For the fiscal second-quarter ended Dec. 31, 2017, the Performance Services segment generated net revenue of $86.5 million, a 1% increase from $85.9 million for the same quarter last year, primarily due to growth in the company’s informatics and technology services business primarily related to cost management solutions as well as growth in ambulatory quality solutions.
Performance Services segment adjusted EBITDA of $27.9 million for the fiscal 2018 second-quarter decreased 2% from $28.6 million for the same quarter last year. Growth was impacted by an increase in cost of sales, primarily related to an increase in staffing and costs to support growth and performance-based engagements and was impacted on a comparable basis due to higher revenue recognition from performance-based engagements in the prior year.
Results of Operations for the Six Months Ended Dec. 31, 2017
For the six months ended Dec. 31, 2017, Premier generated net revenue of $802.0 million, a 19% increase from net revenue of $671.8 million for the same period a year ago.
Due almost entirely to aone-time remeasurement of deferred taxes resulting from the Tax Cuts and Jobs Act, net income for thesix-month period totaled $80.4 million, compared with $304.3 million for the same period a year ago. Fiscal 2018 and 2017six-month net income attributable to stockholders requirednon-cash adjustments of $638.3 million and $397.1 million, respectively, to reflect changes in redemption value of the limited partners Class B common unit ownership at the end of each period. Thesenon-cash adjustments result primarily from changes in the number of Class B common shares outstanding and the company’s stock price between periods and do not reflect results of the company’s business operations. After thesenon-cash adjustments, the company reported net income attributable to stockholders of $617.6 million, compared with $470.6 million a year ago. On a dilutedper-share basis, which is based on net income adjusted in accordance with GAAP for the tax expense related to Premier Inc. retaining the portion of net income attributable to income fromnon-controlling interest in Premier LP, the net loss was $1.30 compared with diluted net income of $1.75 for the same period a year ago. Net loss per share for the six months ended Dec. 31, 2017 was also negatively impacted by the same factors that impacted net income.See “Calculation of GAAP Earnings per Share” in the income statement section of this press release.
For the six months ended Dec. 31, 2017,non-GAAP adjusted EBITDA of $252.7 million increased 9% from $232.8 million for the same period last year.Non-GAAP adjusted fully distributed net income for the six months rose 6% to $131.7 million from $124.2 million for the same period a year ago, while non-GAAP adjusted fully distributed earnings per share increased to $0.94 from $0.87.
Premier, Inc. FY’18 Q2 Results
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Supply Chain Services segment net revenue for the first six months of fiscal 2018 increased 25% to $630.7 million from $506.4 million a year earlier. Supply Chain Services segment adjusted EBITDA increased 9% to $257.7 million from $236.3 million for the prior year.
Performance Services segment net revenue for the six months of fiscal 2018 increased 4% to $171.3 million from $165.4 million a year earlier. Segment adjusted EBITDA decreased 3% to $49.2 million from $50.9 million.
Cash Flows and Liquidity
Cash provided by operating activities was $206.5 million for thesix-month period ended Dec. 31, 2017, compared with $138.4 million for the same period last year. The increase in cash flow from operations was primarily driven by an increase in net administrative fees as well as decreased outflows related to working capital needs. At Dec. 31, 2017, the company’s cash and cash equivalents totaled $163.0 million, compared with $156.7 million at June 30, 2017. At Dec. 31, 2017, the company had an outstanding balance of $200.0 million on its five-year, $750 million revolving credit facility.
Through Dec. 31, 2017, the company repurchased approximately 2.6 million shares of Class A common stock for $74.7 million, using the trading date (approximately 2.5 million shares for $71.0 million using the settlement date). The repurchases took place under the company’s ongoing $200.0 million stock repurchase program announced Oct. 31, 2017, which authorizes shares to be repurchased through June 30, 2018. Assuming full completion of the program by the end of the fiscal year, the company expects fiscal 2018non-GAAP adjusted fully distributed earnings per share to be positively impacted by approximately $0.03 to $0.05 per share.
Non-GAAP free cash flow for thesix-month period ended December 31, 2017 was $122.2 million, compared with $59.4 million for the same period a year ago. The increase in free cash flow results from the same factors driving the growth in cash flow from operations.(See free cash flow definition in “Use and Definition ofNon-GAAP Financial Measures,” and reconciliation to net cash provided by operating activities is provided in the tables section of this press release).
Fiscal 2018 Outlook and Guidance
Based on results for the six months ended Dec. 31, 2017, management’s current expectations for the remainder of fiscal 2018 and the realization of previously disclosed underlying assumptions, the company reaffirms its full fiscal-year 2018 guidance range for consolidated net revenue, Supply Chain Services and Performance Services segment revenue, andnon-GAAP adjusted EBITDA. Within Supply Chain Services, products revenue is expected to grow 14% to 18% for the full fiscal year, compared with the previous assumption of 9% to 13%. The guidance range fornon-GAAP adjusted fully distributed earnings per share is being increased to reflect expectations of the beneficial impacts of the federal corporate income tax reform and the full implementation of the company’s previously announced $200 million stock repurchase program. Tax reform is expected to positively impact fiscal 2018non-GAAP adjusted fully distributed EPS by approximately $0.23, while the share repurchase is expected to add $0.03 to $0.05. As a result, the guidance range for fiscal 2018non-GAAP adjusted fully distributed earnings per share is being increased to $2.24 - $2.37.
Premier, Inc. FY’18 Q2 Results
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Fiscal 2018 Financial Guidance(1)
Premier, Inc. adjusts full-year fiscal 2018 financial guidance, as follows:
| | | | | | | | | | | | |
(in millions, except per share data) | | Current*
FY 2018 | | | % YoY Increase | | | Previous
FY 2017 | |
Net Revenue: | | | | | | | | | | | | |
Supply Chain Services segment | | | $1,200.0 - $1,266.0 | | | | 9% - 15 | % | | | $1,200.0 - $1,266.0 | |
Performance Services segment | | | $364.0 - $382.0 | | | | 3% - 8 | % | | | $364.0 - $382.0 | |
| | | | | | | | | | | | |
Total Net Revenue | | | $1,564.0 - $1,648.0 | | | | 8% - 13 | % | | | $1,564.0 - $1,648.0 | |
| | | |
Non-GAAP adjusted EBITDA | | | $532.0 - $557.0 | | | | 6% - 11 | % | | | $532.0 - $557.0 | |
| | | |
Non-GAAP adjusted fully distributed EPS | | | $2.24 - $2.37 | | | | 19% - 25 | % | | | $1.98 - $2.09 | |
| | | | | | | | | | | | |
| * | Guidance adjustments as of Feb 5, 2018, adds $0.26 to low end and $0.28 to high end ofnon-GAAP adjusted fully distributed EPS range for expected $0.23 impact from tax reform and$0.03-$0.05 impact from share repurchase program, assuming program is completed by fiscal year end. |
| (1) | The company does not meaningfully reconcile guidance fornon-GAAP adjusted EBITDA andnon-GAAP adjusted fully distributed earnings per share to net income attributable to stockholders or earnings per share attributable to stockholders because the company cannot provide guidance for more significant reconciling items between net income attributable to stockholders and adjusted EBITDA and between earnings per share attributable to stockholders andnon-GAAP adjusted fully distributed earnings per share without unreasonable effort. This is due to two primary reasons: |
| | • | | Reasonable guidance cannot be provided for reconciling the adjustment of redeemable limited partners’ capital to redemption amount – historically the largest adjustment in the reconciliation fromnon-GAAP to GAAP amounts – due to the fact that the increase or decrease in this item is based on the change in the number of shares of Class B stock outstanding and change in stock price between quarters, which the company cannot predict, control or reasonably estimate. |
| | • | | Reasonable guidance cannot be provided for earnings per share attributable to stockholders because the ongoing quarterly member-owner exchange of Class B common stock and corresponding Class B units into shares of Class A common stock impacts the number of shares of Class A common stock outstanding each quarter, which the company cannot predict, control or reasonably estimate. Member owners have the right, but not the obligation, to exchange shares on a quarterly basis, and the company has the discretion to settle any exchanged shares for Class A common stock, cash, or a combination thereof, neither of which can be predicted, controlled or reasonably estimated at this time. |
Realignment of Resources
As part of the company’s ongoing integration synergies and efforts to realign resources for future growth areas, management is implementing certain personnel adjustments, including a modest workforce reduction, that are expected to producepre-tax cost savings approximating $13.0 million to $14.0 million on an annualrun-rate basis.Pre-tax cash restructuring charges of approximately $5.2 million related to the workforce reduction, which is expected to be substantially completed in February 2018, will be expensed in the current quarter ending March 31, 2018. These personnel adjustments impact approximately 75 positions, or 3% of total employees.
Conference Call
Premier management will host a conference call and live audio webcast on Monday, Feb. 5, 2018, at 5:00 p.m. ET, to discuss the company’s financial results. The conference call can be accessed through a link provided on the investor relations page on Premier’s website atinvestors.premierinc.com. Those wanting to participate by phone may do so by dialing 844.296.7719 and providing the operator with conference ID number: 5799398. International callers should dial 574.990.1041 and provide the same passcode. The company encourages callers to dial in at least five minutes before the start of the call to register. The archived webcast will be accessible on Premier’s investor relations page.
Premier, Inc. FY’18 Q2 Results
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About Premier Inc.
Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of approximately 3,900 U.S. hospitals and health systems and approximately 150,000 other providers and organizations to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and advisory and other services, Premier enables better care and outcomes at a lower cost. Premier plays a critical role in the rapidly evolving healthcare industry, collaborating with members toco-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites onwww.premierinc.com; as well asTwitter,Facebook,LinkedIn,YouTube,Instagram,Foursquare andPremier’s blog for more information about the company.
Use and Definition ofNon-GAAP Financial Measures
Premier uses EBITDA, adjusted EBITDA, segment adjusted EBITDA, adjusted fully distributed net income, adjusted fully distributed earnings per share, and free cash flow to facilitate a comparison of the company’s operating performance on a consistent basis from period to period and to provide measures that, when viewed in combination with its results prepared in accordance with GAAP, allow for a more complete understanding of factors and trends affecting the company’s business than GAAP measures alone. The company believes adjusted EBITDA and segment adjusted EBITDA assist its board of directors, management and investors in comparing the company’s operating performance on a consistent basis from period to period by removing the impact of the company’s asset base (primarily depreciation and amortization) and items outside the control of management (taxes), as well as othernon-cash (impairment of intangible assets and purchase accounting adjustments) andnon-recurring items, from operating results.Non-recurring items are income or expenses or other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Such items include certain strategic and financial restructuring expenses.
In addition, adjusted fully distributed net income and adjusted fully distributed earnings per share eliminate the variability ofnon-controlling interest as a result of member owner exchanges of Class B common stock and corresponding Class B units into shares of Class A common stock (which exchanges are a member owner’s cumulative right, but not obligation, which began on October 31, 2014, and occur each quarter thereafter, and are limited toone-seventh of the member owner’s initial allocation of Class B common units per year) and other potentially dilutive equity transactions which are outside of management’s control. Adjusted fully distributed net income is defined as net income attributable to Premier (i) excluding income tax expense, (ii) excluding the impact of adjustment of redeemable limited partners’ capital to redemption amount, (iii) excluding the effect ofnon-recurring andnon-cash items, (iv) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination ofnon-controlling interest in Premier LP, and (v) reflecting an adjustment for income tax expense onnon-GAAP fully distributed net income before income taxes at the company’s estimated effective income tax rate. We define adjusted fully distributed earnings per share as adjusted fully distributed net income divided by diluted weighted average shares. These measures 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 removenon-cash andnon-recurring items, and eliminate the variability ofnon-controlling interest that results from member owner exchanges of Class B common units into shares of Class A common stock.
Premier, Inc. FY’18 Q2 Results
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EBITDA is defined as net income before interest and investment income, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets. Adjusted EBITDA is defined as EBITDA before merger and acquisition related expenses andnon-recurring,non-cash ornon-operating items, and including equity in net income of unconsolidated affiliates.Non-recurring items include certain strategic and financial restructuring expenses.Non-operating items include gain or loss on the disposal of assets. Segment adjusted EBITDA is defined 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 andnon-recurring ornon-cash items, and including equity in net income of unconsolidated affiliates. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of segment adjusted EBITDA. Adjusted EBITDA is a supplemental financial measure used by the company and by external users of the company’s financial statements.
Management considers adjusted EBITDA an indicator of the operational strength and performance of the company’s business. Adjusted EBITDA allows management to assess performance without regard to financing methods and capital structure and without the impact of other matters that management does not consider indicative of the operating performance of the business. Segment adjusted EBITDA is the primary earnings measure used by management to evaluate the performance of the company’s business segments.
Free cash flow is defined as net cash provided by operating activities less distributions and tax receivable agreement payments to limited partners and purchases of property and equipment. Free cash flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments. Management believes free cash flow is an important measure because it represents the cash that the company generates after payment of tax distributions to limited partners and capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth. Free cash flow is important because it allows the company to enhance stockholder value through acquisitions, partnerships, joint ventures, investments in related or complimentary businesses and/or debt reduction.
Readers are urged to review the reconciliation of thesenon-GAAP financial measures included at the end of this release. To properly and prudently evaluate our business, readers are encouraged to review the financial tables included at the end of this release. Readers should not rely on any single financial measure to evaluate the company’s business. In addition, thenon-GAAP financial measures used in this release are susceptible to varying calculations and may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.
Forward-Looking Statements
Statements made in this release that are not statements of historical or current facts, such as those related to expected financial performance and growth trends in our Supply Chain and Performance Services business segments and their respective business units, the impact and length of the lower utilization and patient volume trends and regulatory uncertainty and our ability to manage through these issues, the success of our cost reduction and savings measures, expected financial contributions from our acquired businesses, the statements related to fiscal 2018 outlook and guidance and the
Premier, Inc. FY’18 Q2 Results
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assumptions underlying such guidance, the expected completion and financial impact of Premier’s Class A common stock repurchase program, and the expected financial impact of the federal corporate income tax reform, 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 the actual results, performance or achievements 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. In addition to statements that explicitly describe such risks and uncertainties, 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 factors that could affect Premier’s 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” sections of Premier’s periodic and current filings with the SEC, including those discussed under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” section of Premier’s Form10-K for the year ended June 30, 2017, as well as the Form10-Q for the quarter ended Dec. 31, 2017, expected to be filed with the SEC shortly after the date of this release, and also made available on Premier’s website atinvestors.premierinc.com. Forward-looking statements speak only as of the date they are made, and Premier undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events that occur after that date, or otherwise.
| | |
Contacts | | |
Investor contact: Jim Storey Vice President, Investor Relations 704.816.5958 jim_storey@premierinc.com | | Media contact: Amanda Forster Vice President, Public Relations 202.879.8004 amanda_forster@premierinc.com |
(Tables Follow)
Premier, Inc. FY’18 Q2 Results
Page 10 of 15
Condensed Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Six Months Ended
December 31, | |
| | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
Net revenue: | | | | | | | | | | | | | | | | |
Net administrative fees | | $ | 159,343 | | | $ | 129,071 | | | $ | 310,334 | | | $ | 255,047 | |
Other services and support | | | 89,953 | | | | 87,051 | | | | 176,864 | | | | 168,218 | |
| | | | | | | | | | | | | | | | |
Services | | | 249,296 | | | | 216,122 | | | | 487,198 | | | | 423,265 | |
Products | | | 162,102 | | | | 142,378 | | | | 314,764 | | | | 248,507 | |
| | | | | | | | | | | | | | | | |
Net revenue | | | 411,398 | | | | 358,500 | | | | 801,962 | | | | 671,772 | |
Cost of revenue: | | | | | | | | | | | | | | | | |
Services | | | 47,255 | | | | 44,856 | | | | 94,191 | | | | 87,546 | |
Products | | | 153,272 | | | | 131,158 | | | | 297,712 | | | | 226,971 | |
| | | | | | | | | | | | | | | | |
Cost of revenue | | | 200,527 | | | | 176,014 | | | | 391,903 | | | | 314,517 | |
| | | | | | | | | | | | | | | | |
Gross profit | | | 210,871 | | | | 182,486 | | | | 410,059 | | | | 357,255 | |
Other operating income: | | | | | | | | | | | | | | | | |
Remeasurement of tax receivable agreement liabilities | | | 177,174 | | | | — | | | | 177,174 | | | | 5,722 | |
| | | | | | | | | | | | | | | | |
Other operating income: | | | 177,174 | | | | — | | | | 177,174 | | | | 5,722 | |
| | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Selling, general and administrative | | | 108,620 | | | | 95,927 | | | | 222,941 | | | | 193,887 | |
Research and development | | | 324 | | | | 767 | | | | 813 | | | | 1,573 | |
Amortization of purchased intangible assets | | | 13,817 | | | | 11,151 | | | | 27,715 | | | | 20,360 | |
| | | | | | | | | | | | | | | | |
Operating expenses | | | 122,761 | | | | 107,845 | | | | 251,469 | | | | 215,820 | |
| | | | | | | | | | | | | | | | |
Operating income | | | 265,284 | | | | 74,641 | | | | 335,764 | | | | 147,157 | |
| | | | | | | | | | | | | | | | |
Remeasurement gain attributable to acquisition of Innovatix, LLC | | | — | | | | 204,833 | | | | — | | | | 204,833 | |
Equity in net income of unconsolidated affiliates | | | 1,257 | | | | 5,127 | | | | 5,509 | | | | 14,706 | |
Interest and investment loss, net | | | (1,508 | ) | | | (857 | ) | | | (3,003 | ) | | | (1,009 | ) |
Loss on disposal of long-lived assets | | | (400 | ) | | | — | | | | (1,720 | ) | | | (1,518 | ) |
Other income (expense) | | | (13,356 | ) | | | (131 | ) | | | (11,893 | ) | | | 875 | |
| | | | | | | | | | | | | | | | |
Other income (expense), net | | | (14,007 | ) | | | 208,972 | | | | (11,107 | ) | | | 217,887 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | | 251,277 | | | | 283,613 | | | | 324,657 | | | | 365,044 | |
Income tax expense | | | 231,508 | | | | 37,429 | | | | 244,272 | | | | 60,765 | |
| | | | | | | | | | | | | | | | |
Net income | | | 19,769 | | | | 246,184 | | | | 80,385 | | | | 304,279 | |
Net income attributable tonon-controlling interest in Premier LP | | | (56,485 | ) | | | (181,173 | ) | | | (101,095 | ) | | | (230,774 | ) |
Adjustment of redeemable limited partners’ capital to redemption amount | | | 317,916 | | | | 335,264 | | | | 638,340 | | | | 397,072 | |
| | | | | | | | | | | | | | | | |
Net income attributable to stockholders | | $ | 281,200 | | | $ | 400,275 | | | $ | 617,630 | | | $ | 470,577 | |
| | |
Calculation of GAAP Earnings (Loss) per Share | | | | | | | | | |
| | | | |
Numerator for basic earnings per share: | | | | | | | | | | | | | | | | |
Net income attributable to stockholders | | $ | 281,200 | | | $ | 400,275 | | | $ | 617,630 | | | $ | 470,577 | |
| | | | | | | | | | | | | | | | |
Numerator for diluted earnings (loss) per share: | | | | | | | | | | | | | | | | |
Net income attributable to stockholders | | $ | 281,200 | | | $ | 400,275 | | | $ | 617,630 | | | $ | 470,577 | |
Adjustment of redeemable limited partners’ capital to redemption amount | | | (317,916 | ) | | | (335,264 | ) | | | (638,340 | ) | | | (397,072 | ) |
Net income attributable tonon-controlling interest in Premier LP | | | 56,485 | | | | 181,173 | | | | 101,095 | | | | 230,774 | |
| | | | | | | | | | | | | | | | |
Net income | | | 19,769 | | | | 246,184 | | | | 80,385 | | | | 304,279 | |
Tax effect on Premier, Inc. net income | | | (251,085 | ) | | | (34,496 | ) | | | (261,636 | ) | | | (55,448 | ) |
| | | | | | | | | | | | | | | | |
Adjusted net income (loss) | | $ | (231,316 | ) | | $ | 211,688 | | | $ | (181,251 | ) | | $ | 248,831 | |
| | | | | | | | | | | | | | | | |
Denominator for basic earnings per share: | | | | | | | | | | | | | | | | |
Weighted average shares | | | 55,209 | | | | 49,445 | | | | 54,059 | | | | 48,330 | |
| | | | | | | | | | | | | | | | |
Denominator for diluted earnings (loss) per share: | | | | | | | | | | | | | | | | |
Weighted average shares | | | 55,209 | | | | 49,445 | | | | 54,059 | | | | 48,330 | |
Effect of dilutive stock based awards | | | 450 | | | | 401 | | | | 553 | | | | 437 | |
Class B shares outstanding | | | 83,578 | | | | 91,462 | | | | 85,029 | | | | 93,366 | |
| | | | | | | | | | | | | | | | |
Weighted average shares and assumed conversions | | | 139,237 | | | | 141,308 | | | | 139,641 | | | | 142,133 | |
| | | | | | | | | | | | | | | | |
Basic earnings per share | | $ | 5.09 | | | $ | 8.10 | | | $ | 11.43 | | | $ | 9.74 | |
Diluted earnings (loss) per share | | $ | (1.66 | ) | | $ | 1.50 | | | $ | (1.30 | ) | | $ | 1.75 | |
Premier, Inc. FY’18 Q2 Results
Page 11 of 15
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
| | | | | | | | |
| | | December 31, 2017 | | | June 30, 2017 | |
Assets | | | | | | | | |
Cash and cash equivalents | | $ | 163,014 | | | $ | 156,735 | |
Accounts receivable (net of $2,384 and $1,812 allowance for doubtful accounts, respectively) | | | 171,354 | | | | 159,745 | |
Inventory | | | 62,067 | | | | 50,426 | |
Prepaid expenses and other current assets | | | 24,021 | | | | 35,164 | |
Due from related parties | | | 381 | | | | 6,742 | |
| | | | | | | | |
Total current assets | | | 420,837 | | | | 408,812 | |
Property and equipment (net of $264,173 and $236,460 accumulated depreciation, respectively) | | | 190,815 | | | | 187,365 | |
Intangible assets (net of $125,903 and $99,198 accumulated amortization, respectively) | | | 349,847 | | | | 377,962 | |
Goodwill | | | 906,545 | | | | 906,545 | |
Deferred income tax assets | | | 305,549 | | | | 482,484 | |
Deferred compensation plan assets | | | 42,779 | | | | 41,518 | |
Investments in unconsolidated affiliates | | | 98,388 | | | | 92,879 | |
Other assets | | | 5,403 | | | | 10,271 | |
| | | | | | | | |
Total assets | | $ | 2,320,163 | | | $ | 2,507,836 | |
| | | | | | | | |
Liabilities, redeemable limited partners’ capital and stockholders’ deficit | | | | | | | | |
Accounts payable | | $ | 49,626 | | | $ | 42,815 | |
Accrued expenses | | | 46,090 | | | | 55,857 | |
Revenue share obligations | | | 74,651 | | | | 72,078 | |
Limited partners’ distribution payable | | | 20,396 | | | | 24,951 | |
Accrued compensation and benefits | | | 41,725 | | | | 53,506 | |
Deferred revenue | | | 45,699 | | | | 44,443 | |
Current portion of tax receivable agreements | | | 17,925 | | | | 17,925 | |
Current portion of long-term debt | | | 201,139 | | | | 227,993 | |
Other liabilities | | | 9,106 | | | | 32,019 | |
| | | | | | | | |
Total current liabilities | | | 506,357 | | | | 571,587 | |
Long-term debt, less current portion | | | 6,544 | | | | 6,279 | |
Tax receivable agreements, less current portion | | | 229,291 | | | | 321,796 | |
Deferred compensation plan obligations | | | 42,779 | | | | 41,518 | |
Deferred tax liabilities | | | 30,942 | | | | 48,227 | |
Other liabilities | | | 55,183 | | | | 42,099 | |
| | | | | | | | |
Total liabilities | | | 871,096 | | | | 1,031,506 | |
| | | | | | | | |
Redeemable limited partners’ capital | | | 2,398,640 | | | | 3,138,583 | |
Stockholders’ deficit: | | | | | | | | |
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 57,263,627 shares issued and 54,685,668 shares outstanding at December 31, 2017 and 51,943,281 shares issued and outstanding at June 30, 2017 | | | 573 | | | | 519 | |
Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 82,282,748 and 87,298,888 shares issued and outstanding at December 31, 2017 and June 30, 2017, respectively | | | — | | | | — | |
Treasury stock, at cost; 2,577,959 shares | | | (74,698 | ) | | | — | |
Additionalpaid-in-capital | | | — | | | | — | |
Accumulated deficit | | | (875,448 | ) | | | (1,662,772 | ) |
Accumulated other comprehensive loss | | | — | | | | — | |
| | | | | | | | |
Total stockholders’ deficit | | | (949,573 | ) | | | (1,662,253 | ) |
| | | | | | | | |
Total liabilities, redeemable limited partners’ capital and stockholders’ deficit | | $ | 2,320,163 | | | $ | 2,507,836 | |
| | | | | | | | |
Premier, Inc. FY’18 Q2 Results
Page 12 of 15
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
| | | | | | | | |
| | | Six Months Ended December 31, | |
| | | 2017 | | | 2016 | |
Operating activities | | | | | | | | |
Net income | | $ | 80,385 | | | $ | 304,279 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation and amortization | | | 61,532 | | | | 48,576 | |
Equity in net income of unconsolidated affiliates | | | (5,509 | ) | | | (14,706 | ) |
Deferred income taxes | | | 235,648 | | | | 48,705 | |
Stock-based compensation | | | 17,699 | | | | 12,066 | |
Remeasurement of tax receivable agreement liabilities | | | (177,174 | ) | | | (5,722 | ) |
Remeasurement gain attributable to acquisition of Innovatix, LLC | | | — | | | | (204,833 | ) |
Loss on disposal of long-lived assets | | | 1,720 | | | | 1,518 | |
Changes in operating assets and liabilities: | | | | | | | | |
Accounts receivable, prepaid expenses and other current assets | | | (467 | ) | | | (11,888 | ) |
Other assets | | | 1,060 | | | | 274 | |
Inventories | | | (11,641 | ) | | | (31,832 | ) |
Accounts payable, accrued expenses, and other current liabilities | | | (20,238 | ) | | | (4,136 | ) |
Long-term liabilities | | | 1,287 | | | | (4,100 | ) |
Loss on FFF put and call rights | | | 15,607 | | | | 174 | |
Other operating activities | | | 6,606 | | | | (11 | ) |
| | | | | | | | |
Net cash provided by operating activities | | | 206,515 | | | | 138,364 | |
| | | | | | | | |
Investing activities | | | | | | | | |
Purchases of property and equipment | | | (38,622 | ) | | | (34,325 | ) |
Proceeds from sale of marketable securities | | | — | | | | 48,013 | |
Acquisition of Innovatix, LLC and Essensa Ventures, LLC, net of cash acquired | | | — | | | | (222,217 | ) |
Acquisition of Acro Pharmaceuticals, net of cash acquired | | | — | | | | (68,745 | ) |
Investments in unconsolidated affiliates | | | — | | | | (65,660 | ) |
Distributions received on equity investments in unconsolidated affiliates | | | — | | | | 6,550 | |
Other investing activities | | | — | | | | 26 | |
| | | | | | | | |
Net cash used in investing activities | | | (38,622 | ) | | | (336,358 | ) |
| | | | | | | | |
Financing activities | | | | | | | | |
Payments made on notes payable | | | (6,858 | ) | | | (1,338 | ) |
Proceeds from credit facility | | | 30,000 | | | | 327,500 | |
Payments on credit facility | | | (50,000 | ) | | | — | |
Proceeds from exercise of stock options under equity incentive plan | | | 2,808 | | | | 2,909 | |
Proceeds from issuance of Class A common stock under stock purchase plan | | | 1,388 | | | | 1,256 | |
Repurchase of vested restricted units for employeetax-withholding | | | (5,743 | ) | | | (17,629 | ) |
Settlement of exchange of Class B units by member owners | | | — | | | | (99,999 | ) |
Distributions to limited partners of Premier LP | | | (45,703 | ) | | | (44,630 | ) |
Repurchase of Class A common stock (held as treasury stock) | | | (70,844 | ) | | | — | |
Earn-out liability payment to GNYHA Holdings | | | (16,662 | ) | | | — | |
| | | | | | | | |
Net cash provided by (used in) financing activities | | | (161,614 | ) | | | 168,069 | |
| | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | 6,279 | | | | (29,925 | ) |
Cash and cash equivalents at beginning of year | | | 156,735 | | | | 248,817 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 163,014 | | | $ | 218,892 | |
| | | | | | | | |
Premier, Inc. FY’18 Q2 Results
Page 13 of 15
Supplemental Financial Information
Reconciliation of Net Cash Provided by Operating Activities toNon-GAAP Free Cash Flow
(Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Six Months Ended
December 31, | |
| | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
Net cash provided by operating activities | | $ | 131,482 | | | $ | 96,537 | | | $ | 206,515 | | | $ | 138,364 | |
Purchases of property and equipment | | | (21,975 | ) | | | (17,359 | ) | | | (38,622 | ) | | | (34,325 | ) |
Distributions to limited partners of Premier LP | | | (20,752 | ) | | | (22,137 | ) | | | (45,703 | ) | | | (44,630 | ) |
| | | | | | | | | | | | | | | | |
Non-GAAP Free Cash Flow | | $ | 88,755 | | | $ | 57,041 | | | $ | 122,190 | | | $ | 59,409 | |
| | | | | | | | | | | | | | | | |
Premier, Inc. FY’18 Q2 Results
Page 14 of 15
Supplemental Financial Information
Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Operating Income to Segment Adjusted EBITDA
Reconciliation of Net Income Attributable to Stockholders toNon-GAAP Adjusted Fully Distributed Net Income
(Unaudited)
(In thousands)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Six Months Ended
December 31, | |
| | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
Net income | | $ | 19,769 | | | $ | 246,184 | | | $ | 80,385 | | | $ | 304,279 | |
Interest and investment loss, net | | | 1,508 | | | | 857 | | | | 3,003 | | | | 1,009 | |
Income tax expense | | | 231,508 | | | | 37,429 | | | | 244,272 | | | | 60,765 | |
Depreciation and amortization | | | 17,310 | | | | 14,198 | | | | 33,817 | | | | 28,216 | |
Amortization of purchased intangible assets | | | 13,817 | | | | 11,151 | | | | 27,715 | | | | 20,360 | |
| | | | | | | | | | | | | | | | |
EBITDA | | | 283,912 | | | | 309,819 | | | | 389,192 | | | | 414,629 | |
Stock-based compensation | | | 8,951 | | | | 6,423 | | | | 17,908 | | | | 12,319 | |
Acquisition related expenses | | | 1,674 | | | | 4,216 | | | | 4,773 | | | | 7,153 | |
Remeasurement of tax receivable agreement liabilities | | | (177,174 | ) | | | — | | | | (177,174 | ) | | | (5,722 | ) |
ERP implementation expenses | | | 156 | | | | 432 | | | | 491 | | | | 1,526 | |
Acquisition related adjustment - revenue | | | 87 | | | | 5,813 | | | | 192 | | | | 5,964 | |
Remeasurement gain attributable to acquisition of Innovatix, LLC | | | — | | | | (204,833 | ) | | | — | | | | (204,833 | ) |
Loss on disposal of long-lived assets | | | 400 | | | | — | | | | 1,720 | | | | 1,518 | |
Loss on FFF put and call rights | | | 15,587 | | | | — | | | | 15,607 | | | | — | |
Other expense | | | (51 | ) | | | 139 | | | | 4 | | | | 228 | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 133,542 | | | $ | 122,009 | | | $ | 252,713 | | | $ | 232,782 | |
| | | | | | | | | | | | | | | | |
Income before income taxes | | $ | 251,277 | | | $ | 283,613 | | | $ | 324,657 | | | $ | 365,044 | |
Remeasurement gain attributable to acquisition of Innovatix, LLC | | | — | | | | (204,833 | ) | | | — | | | | (204,833 | ) |
Equity in net income of unconsolidated affiliates | | | (1,257 | ) | | | (5,127 | ) | | | (5,509 | ) | | | (14,706 | ) |
Interest and investment loss, net | | | 1,508 | | | | 857 | | | | 3,003 | | | | 1,009 | |
Loss on disposal of long-lived assets | | | 400 | | | | — | | | | 1,720 | | | | 1,518 | |
Other income | | | 13,356 | | | | 131 | | | | 11,893 | | | | (875 | ) |
| | | | | | | | | | | | | | | | |
Operating income | | | 265,284 | | | | 74,641 | | | | 335,764 | | | | 147,157 | |
Depreciation and amortization | | | 17,310 | | | | 14,198 | | | | 33,817 | | | | 28,216 | |
Amortization of purchased intangible assets | | | 13,817 | | | | 11,151 | | | | 27,715 | | | | 20,360 | |
Stock-based compensation | | | 8,951 | | | | 6,423 | | | | 17,908 | | | | 12,319 | |
Acquisition related expenses | | | 1,674 | | | | 4,216 | | | | 4,773 | | | | 7,153 | |
Remeasurement of tax receivable agreement liabilities | | | (177,174 | ) | | | — | | | | (177,174 | ) | | | (5,722 | ) |
ERP implementation expenses | | | 156 | | | | 432 | | | | 491 | | | | 1,526 | |
Acquisition related adjustment - revenue | | | 87 | | | | 5,813 | | | | 192 | | | | 5,964 | |
Equity in net income of unconsolidated affiliates | | | 1,257 | | | | 5,127 | | | | 5,509 | | | | 14,706 | |
Deferred compensation plan income | | | 1,577 | | | | 8 | | | | 3,116 | | | | 1,103 | |
Other income | | | 603 | | | | — | | | | 602 | | | | — | |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 133,542 | | | $ | 122,009 | | | $ | 252,713 | | | $ | 232,782 | |
| | | | | | | | | | | | | | | | |
Segment Adjusted EBITDA: | | | | | | | | | | | | | | | | |
Supply Chain Services | | $ | 132,045 | | | $ | 119,022 | | | $ | 257,665 | | | $ | 236,326 | |
Performance Services | | | 27,929 | | | | 28,603 | | | | 49,150 | | | | 50,914 | |
Corporate | | | (26,432 | ) | | | (25,616 | ) | | | (54,102 | ) | | | (54,458 | ) |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 133,542 | | | $ | 122,009 | | | $ | 252,713 | | | $ | 232,782 | |
| | | | | | | | | | | | | | | | |
Net income attributable to stockholders | | $ | 281,200 | | | $ | 400,275 | | | $ | 617,630 | | | $ | 470,577 | |
Adjustment of redeemable limited partners’ capital to redemption amount | | | (317,916 | ) | | | (335,264 | ) | | | (638,340 | ) | | | (397,072 | ) |
Net income attributable tonon-controlling interest in Premier LP | | | 56,485 | | | | 181,173 | | | | 101,095 | | | | 230,774 | |
Income tax expense | | | 231,508 | | | | 37,429 | | | | 244,272 | | | | 60,765 | |
Amortization of purchased intangible assets | | | 13,817 | | | | 11,151 | | | | 27,715 | | | | 20,360 | |
Stock-based compensation | | | 8,951 | | | | 6,423 | | | | 17,908 | | | | 12,319 | |
Acquisition related expenses | | | 1,674 | | | | 4,216 | | | | 4,773 | | | | 7,153 | |
Remeasurement of tax receivable agreement liabilities | | | (177,174 | ) | | | — | | | | (177,174 | ) | | | (5,722 | ) |
ERP implementation expenses | | | 156 | | | | 432 | | | | 491 | | | | 1,526 | |
Acquisition related adjustment - revenue | | | 87 | | | | 5,813 | | | | 192 | | | | 5,964 | |
Remeasurement gain attributable to acquisition of Innovatix, LLC | | | — | | | | (204,833 | ) | | | — | | | | (204,833 | ) |
Loss on disposal of long-lived assets | | | 400 | | | | — | | | | 1,720 | | | | 1,518 | |
Loss on FFF put and call rights | | | 15,587 | | | | — | | | | 15,607 | | | | — | |
Other expense | | | (51 | ) | | | 139 | | | | 4 | | | | 228 | |
| | | | | | | | | | | | | | | | |
Non-GAAP adjusted fully distributed income before income taxes | | | 114,724 | | | | 106,954 | | | | 215,893 | | | | 203,557 | |
Income tax expense on fully distributed income before income taxes | | | 44,742 | | | | 41,712 | | | | 84,198 | | | | 79,387 | |
| | | | | | | | | | | | | | | | |
Non-GAAP Adjusted Fully Distributed Net Income | | $ | 69,982 | | | $ | 65,242 | | | $ | 131,695 | | | $ | 124,170 | |
| | | | | | | | | | | | | | | | |
Premier, Inc. FY’18 Q2 Results
Page 15 of 15
Supplemental Financial Information
Reconciliation of GAAP EPS toNon-GAAP EPS on Adjusted Fully Distributed Net Income
(Unaudited)
(In thousands, except per share data)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
December 31, | | | Six Months Ended
December 31, | |
| | | 2017 | | | 2016 | | | 2017 | | | 2016 | |
Net income attributable to stockholders | | $ | 281,200 | | | $ | 400,275 | | | $ | 617,630 | | | $ | 470,577 | |
Adjustment of redeemable limited partners’ capital to redemption amount | | | (317,916 | ) | | | (335,264 | ) | | | (638,340 | ) | | | (397,072 | ) |
Net income attributable tonon-controlling interest in Premier LP | | | 56,485 | | | | 181,173 | | | | 101,095 | | | | 230,774 | |
Income tax expense | | | 231,508 | | | | 37,429 | | | | 244,272 | | | | 60,765 | |
Amortization of purchased intangible assets | | | 13,817 | | | | 11,151 | | | | 27,715 | | | | 20,360 | |
Stock-based compensation | | | 8,951 | | | | 6,423 | | | | 17,908 | | | | 12,319 | |
Acquisition related expenses | | | 1,674 | | | | 4,216 | | | | 4,773 | | | | 7,153 | |
Remeasurement of tax receivable agreement liabilities | | | (177,174 | ) | | | — | | | | (177,174 | ) | | | (5,722 | ) |
ERP implementation expenses | | | 156 | | | | 432 | | | | 491 | | | | 1,526 | |
Acquisition related adjustment—revenue | | | 87 | | | | 5,813 | | | | 192 | | | | 5,964 | |
Remeasurement gain attributable to acquisition of Innovatix, LLC | | | — | | | | (204,833 | ) | | | — | | | | (204,833 | ) |
Loss on disposal of long-lived assets | | | 400 | | | | — | | | | 1,720 | | | | 1,518 | |
Loss on FFF put and call rights | | | 15,587 | | | | — | | | | 15,607 | | | | — | |
Other expense | | | (51 | ) | | | 139 | | | | 4 | | | | 228 | |
| | | | | | | | | | | | | | | | |
Non-GAAP adjusted fully distributed income before income taxes | | | 114,724 | | | | 106,954 | | | | 215,893 | | | | 203,557 | |
Income tax expense on fully distributed income before income taxes | | | 44,742 | | | | 41,712 | | | | 84,198 | | | | 79,387 | |
| | | | | | | | | | | | | | | | |
Non-GAAP Adjusted Fully Distributed Net Income | | $ | 69,982 | | | $ | 65,242 | | | $ | 131,695 | | | $ | 124,170 | |
| | | | | | | | | | | | | | | | |
Weighted Average: | | | | | | | | | | | | | | | | |
Common shares used for basic and diluted earnings (loss) per share | | | 55,209 | | | | 49,445 | | | | 54,059 | | | | 48,330 | |
Potentially dilutive shares | | | 450 | | | | 401 | | | | 553 | | | | 437 | |
Conversion of Class B common units | | | 83,578 | | | | 91,462 | | | | 85,029 | | | | 93,366 | |
| | | | | | | | | | | | | | | | |
Weighted average fully distributed shares outstanding - diluted | | | 139,237 | | | | 141,308 | | | | 139,641 | | | | 142,133 | |
| | | | | | | | | | | | | | | | |
GAAP earnings (loss) per share | | $ | 5.09 | | | $ | 8.10 | | | $ | 11.43 | | | $ | 9.74 | |
Adjustment of redeemable limited partners’ capital to redemption amount | | | (5.76 | ) | | | (6.79 | ) | | | (11.81 | ) | | | (8.22 | ) |
Net income attributable tonon-controlling interest in Premier LP | | | 1.02 | | | | 3.66 | | | | 1.87 | | | | 4.77 | |
Income tax expense | | | 4.19 | | | | 0.76 | | | | 4.52 | | | | 1.26 | |
Amortization of purchased intangible assets | | | 0.25 | | | | 0.23 | | | | 0.51 | | | | 0.42 | |
Stock-based compensation | | | 0.16 | | | | 0.13 | | | | 0.33 | | | | 0.25 | |
Acquisition related expenses | | | 0.03 | | | | 0.09 | | | | 0.09 | | | | 0.15 | |
Remeasurement of tax receivable agreement liabilities | | | (3.21 | ) | | | — | | | | (3.28 | ) | | | (0.12 | ) |
ERP implementation expenses | | | — | | | | 0.01 | | | | 0.01 | | | | 0.03 | |
Acquisition related adjustment—revenue | | | — | | | | 0.12 | | | | — | | | | 0.12 | |
Remeasurement gain attributable to acquisition of Innovatix, LLC | | | — | | | | (4.14 | ) | | | — | | | | (4.24 | ) |
Loss on disposal of long-lived assets | | | 0.01 | | | | — | | | | 0.03 | | | | 0.03 | |
Loss on FFF put and call rights | | | 0.28 | | | | — | | | | 0.29 | | | | — | |
Impact of corporation taxes | | | (0.80 | ) | | | (0.84 | ) | | | (1.56 | ) | | | (1.63 | ) |
Impact of dilutive shares | | | (0.76 | ) | | | (0.87 | ) | | | (1.49 | ) | | | (1.69 | ) |
| | | | | | | | | | | | | | | | |
Non-GAAP EPS on Adjusted Fully Distributed Net Income | | $ | 0.50 | | | $ | 0.46 | | | $ | 0.94 | | | $ | 0.87 | |
| | | | | | | | | | | | | | | | |
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