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Premier Inc (PINC): 19.35 +0.24 +1.26% Volume: 476,260 October 11, 2024

Premier, Inc. Reports Fiscal-Year 2021 Third-Quarter Results and Raises Fiscal Year 2021 Guidance

May 4, 2021

CHARLOTTE, N.C.--(BUSINESS WIRE)-- Premier, Inc. (NASDAQ: PINC) today reported financial results for the fiscal year (FY) 2021 third quarter ended March 31, 2021 and raised its fiscal 2021 financial guidance.

"I am excited to take the reins as Premier's new CEO and am pleased with our fiscal 2021 third quarter performance. Our results demonstrate our continued focus on execution and the differentiated solutions we deliver to our members and other customers that help them deliver and provide access to higher quality, more cost-effective healthcare," said Michael J. Alkire, Premier's president and CEO. "Products revenue grew significantly quarter-over-quarter and helped mitigate the impact on our net administrative fees revenue from ongoing lower utilization as a result of the COVID-19 pandemic."

Alkire continued, "Based on our third quarter results and our outlook for the remainder of fiscal 2021, we are raising our fiscal 2021 guidance. As we look ahead, we believe we are well-positioned to continue executing our strategy, while at the same time helping our members navigate the challenges of the pandemic, to drive long-term, sustainable growth and value to all our stakeholders."

Fiscal Third-Quarter 2021 Results and Recent Highlights:
(Financial comparisons are for fiscal third quarter of 2021 vs. fiscal third quarter of 2020)

  • GAAP net revenue increased 40% to $469.9 million from $334.8 million a year ago.
    • Supply Chain Services segment revenue increased 56% to $371.2 million from $238.6 million a year ago.
    • Performance Services segment revenue increased 3% to $98.7 million from $96.2 million a year ago.
  • GAAP net income of $51.4 million decreased from $73.2 million a year ago.
  • GAAP diluted earnings per share (EPS) of $0.39 compared to $0.54 per share a year ago.
  • Adjusted EBITDA* of $121.2 million decreased 22% from $155.9 million a year ago primarily as a result of the impact of the amended GPO agreements that were effective on July 1, 2020 and the Acurity/Nexera asset acquisition.
  • Adjusted net income* of $78.5 million decreased 12% from $88.9 million a year ago and adjusted EPS* decreased 12% to $0.64 from $0.73 a year ago.
  • On March 1, 2021, Premier acquired substantially all the assets and certain liabilities of Invoice Delivery Services, LP for $80 million.
  • On April 23, 2021, Premier's Board of Directors declared a quarterly cash dividend of $0.19 per share, payable on June 15, 2021, to stockholders of record as of June 1, 2021.
  • On May 1, 2021, Michael J. Alkire assumed the chief executive officer role at Premier.

*Descriptions of consolidated and segment adjusted (non-GAAP) financial measures and non-GAAP free cash flow are provided below under “Use and Definition of Non-GAAP Financial Measures,” and reconciliations are provided in the tables at the end of this release.

All results presented in this press release reflect continuing operations following completion of the sale and exit of the Specialty Pharmacy business on June 7, 2019.

Consolidated Fiscal 2021 Third Quarter Financial Highlights

Consolidated Third-Quarter Financial Highlights

 

 

 

 

 

 

Three Months Ended March 31,

Nine Months Ended March 31,

(in thousands, except per share data)

2021

2020

% Change

2021

2020

% Change

Net Revenue:

 

 

 

 

 

 

Supply Chain Services:

 

 

 

 

 

 

Net administrative fees

$

146,553

 

$

174,049

 

(16)%

 

$

424,537

 

$

518,566

 

(18)%

 

Other services and support

8,630

 

3,396

 

154%

 

18,307

 

8,439

 

117%

 

Services

155,183

 

177,445

 

(13)%

 

442,844

 

527,005

 

(16)%

 

Products

215,995

 

61,183

 

253%

 

511,080

 

167,344

 

205%

 

Total Supply Chain Services

371,178

 

238,628

 

56 %

 

953,924

 

694,349

 

37%

 

Performance Services

98,745

 

96,195

 

3%

 

285,713

 

262,490

 

9%

 

Total

$

469,923

 

$

334,823

 

40 %

 

$

1,239,637

 

$

956,839

 

30%

 

 

 

 

 

 

 

 

Net income from continuing operations

$

51,444

 

$

73,212

 

(30)%

 

$

277,033

 

$

235,726

 

18%

 

Net income from continuing operations attributable to stockholders

$

48,321

 

$

340,726

 

nm

$

234,445

 

$

620,262

 

nm

Adjusted net income from continuing operations

$

48,321

 

$

66,145

 

nm

$

234,445

 

$

205,719

 

nm

 

 

 

 

 

 

 

NON-GAAP FINANCIAL MEASURES*:

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA:

 

 

 

 

 

 

Supply Chain Services

$

117,949

 

$

149,212

 

(21)%

 

$

339,538

 

$

447,081

 

(24)%

 

Performance Services

35,950

 

34,634

 

4%

 

109,675

 

84,977

 

29%

 

Total segment adjusted EBITDA

153,899

 

183,846

 

(16)%

 

449,213

 

532,058

 

(16)%

 

Corporate

(32,692)

 

(27,957)

 

17%

 

(92,445)

 

(87,508)

 

6%

 

Total

$

121,207

 

$

155,889

 

(22)%

 

$

356,768

 

$

444,550

 

(20)%

 

Adjusted net income

$

78,535

 

$

88,908

 

(12)%

 

$

232,023

 

$

265,668

 

(13)%

 

Earnings per share on adjusted net income - diluted

$

0.64

 

$

0.73

 

(12)%

 

$

1.89

 

$

2.14

 

(12)%

 

 

 

 

 

 

 

 

* Refer to the supplemental financial information at the end of this release for reconciliation of reported GAAP results to non-GAAP results.

Fiscal 2021 Outlook and Guidance

The statements in this section are forward-looking statements. For additional information regarding the use and limitations of such statements, refer to "Forward-Looking Statements" below and "Risk Factors" section of the company's most recent Form 10-K filed with the Securities and Exchange Commission ("SEC"), as updated from time to time in the company's other filings with the SEC.

Premier increased its financial guidance for fiscal year 2021. The company expects total net revenue to be in the range of $1.671 billion to $1.711 billion, adjusted EBITDA to be in the range of $460 million to $475 million, and adjusted EPS to be in the range of $2.42 to $2.51. The company also reiterated that, adjusted for the impact of the COVID-19 pandemic, beginning in fiscal year 2022, it expects to target a multi-year, compound annual growth rate in the mid-to-high single digits for consolidated net revenue, adjusted EBITDA and adjusted EPS.

Refer to the table below for specific fiscal 2021 guidance metrics and related footnotes. In addition, refer to the "Premier's Use and Definition of Non-GAAP Numbers" and "Premier's Use of Forward-Looking Non-GAAP Measures" at the end of this release for descriptions of consolidated and adjusted (non-GAAP) financial measures.

Guidance Metric

Fiscal 2021 Guidance Range*
(as of May 4, 2021)

Previous Fiscal 2021 Guidance Range
(as of February 2, 2021)

Segment Net Revenue:

 

 

Supply Chain Services

$1.300 billion to $1.330 billion

$1.242 billion to $1.272 billion

Performance Services

$371 million to $381 million

$366 million to $381 million

Total Net Revenue

$1.671 billion to $1.711 billion

$1.608 billion to $1.653 billion

Adjusted EBITDA

$460 million to $475 million

$445 million to $465 million

Adjusted EPS

$2.42 to $2.51

$2.26 to $2.39

Fiscal 2021 guidance assumes the realization of the following key assumptions:

  • Net administrative fees revenue of $565 million to $580 million
  • Direct sourcing products revenue of $700 million to $720 million
  • Capital expenditures of $100 million to $105 million
  • Effective tax rate of 22%
  • Does not include the effect of any potential future significant acquisitions

*The company does not provide forward-looking guidance on a GAAP basis as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. Refer to "Use of Forward-Looking Non-GAAP Measures" below for additional explanation.

Results of Operations for the Three Months Ended March 31, 2021
(As compared with the three months ended March 31, 2020)

GAAP net revenue of $469.9 million increased 40% from $334.8 million for the same period a year ago.

GAAP net income of $51.4 million decreased from $73.2 million a year ago primarily related to lower net administrative fees revenue as a result of the amended GPO agreements and non-cash amortization of prepaid contract administrative fees from the Acurity/Nexera asset acquisition, partially offset by a reduction in the loss on certain put and call rights in the current period associated with Premier's minority investment in FFF Enterprises.

Adjusted EBITDA of $121.2 million decreased 22% from $155.9 million for the same period a year ago primarily as a result of the impact of the aforementioned amended GPO agreements and the non-cash amortization of prepaid contract administrative fees from the Acurity/Nexera asset acquisition.

Adjusted net income of $78.5 million decreased 12% from $88.9 million for the same period a year ago. Adjusted earnings per share decreased 12% to $0.64 from $0.73 for the same period a year ago.

Segment Results
(For the fiscal third quarter of 2021 as compared with the fiscal third quarter of 2020)

Supply Chain Services

Supply Chain Services segment net revenue of $371.2 million increased 56% from $238.6 million for the same quarter a year ago.

Net administrative fees revenue of $146.6 million decreased $27.5 million, or 16%, from $174.0 million a year ago, primarily due to the amended GPO agreements, the non-cash amortization of prepaid contract administrative fees from the Acurity/Nexera asset acquisition and the ongoing impact of the COVID-19 pandemic. These decreases were partially offset by the addition of new members and further penetration of existing member spend.

Products revenue of $216.0 million increased $154.8 million, or 253%, from $61.2 million a year ago, primarily driven by growth in commodity products and aggregated purchasing of certain other products as well as the company's ongoing efforts to provide certain personal protective equipment (PPE) and other high-demand supplies for its members as a result of the COVID-19 pandemic.

Segment adjusted EBITDA of $117.9 million decreased 21% from $149.2 million for the same period a year ago, primarily as a result of the previously mentioned decline in net administrative fees revenue related to the amended GPO agreements and the non-cash amortization of prepaid contract administrative fees from the Acurity/Nexera asset acquisition.

Performance Services

Performance Services segment net revenue of $98.7 million increased 3% from $96.2 million for the same quarter a year ago, primarily driven by incremental revenue in the Contigo Health business related to the acquisition of Health Design Plus in May 2020, growth in life sciences business and growth in the cost management and performance improvement consulting businesses. These increases were partially offset by lower revenue associated with enterprise analytics license agreements executed during the current period as compared to the prior year period which included significant revenue from enterprise analytics license agreements entered into during the prior year quarter. In addition, the increases were partially offset by lower revenue as a result of the Centers for Medicare and Medicaid Services (CMS) planned discontinuation of the company’s former CMS government contract as part of the overall Hospital Improvement Innovation Network program that ended on March 31, 2020.

Segment adjusted EBITDA of $36.0 million increased 4% from $34.6 million for the same period a year ago primarily due to the aforementioned increase in revenue.

Results of Operations for the Nine Months Ended March 31, 2021
(As compared with the nine months ended March 31, 2020)

GAAP net revenue of $1,239.6 million increased 30% from $956.8 million for the same period a year ago.

GAAP net income was $277.0 million, an increase of 18%, compared with $235.7 million a year ago. In accordance with GAAP, fiscal 2021 and 2020 nine-month net income attributable to stockholders includes non-cash adjustments of $(26.7) million and $516.7 million, respectively, to reflect the change in the redemption value of limited partners’ Class B common unit ownership at the end of each period. These non-cash adjustments resulted primarily from changes in the number of Class B common units outstanding and the company’s stock price between periods and do not reflect results of the company’s business operations. The adjustment for nine months ended March 31, 2021 reflects the change in the redemption value of limited partners’ Class B common unit ownership for the period from July 1, 2020 through July 31, 2020, due to the Board of Directors being comprised of a majority of independent directors on July 31, 2020. As a result, Premier will no longer make this adjustment in subsequent periods.

After the previously mentioned non-cash adjustments, the company reported net income attributable to stockholders of $234.4 million compared with net income of $620.3 million a year ago. On a diluted per share basis, net income was $2.03 compared with $1.66 for the same period a year ago. See “Calculation of GAAP Earnings per Share” in the income statement section of this press release.

Adjusted EBITDA of $356.8 million decreased 20% from $444.6 million for the same period the prior year. Adjusted net income of $232.0 million decreased 13% from $265.7 million for the same period a year ago. Adjusted earnings per share decreased 12% to $1.89 from $2.14 for the same period a year ago.

Supply Chain Services segment net revenue of $953.9 million increased 37% from $694.3 million for the same quarter a year ago. Supply Chain Services segment adjusted EBITDA of $339.5 million decreased 24% from $447.1 million for the same period a year ago.

Performance Services segment net revenue of $285.7 million increased 9% from $262.5 million for the same quarter a year ago. Performance Services segment adjusted EBITDA of $109.7 million increased 29% from $85.0 million for the same period a year ago.

Cash Flows and Liquidity

Net cash provided by operating activities for the nine months ended March 31, 2021 was $192.4 million compared with $248.1 million for the same period last year. The decrease was primarily driven by lower net administrative fees revenue as a result of the amended GPO agreements and the impact of the COVID-19 pandemic. In addition, changes in working capital, including higher levels of inventory, primarily driven by the impact of aggregated purchasing of PPE as a result of the COVID-19 pandemic impacted net cash provided by operating activities.

Net cash used in investing activities and net cash provided by financing activities for the nine months ended March 31, 2021 were $149.3 million and $9.8 million, respectively. At March 31, 2021, cash and cash equivalents was $132.6 million compared with $99.3 million at June 30, 2020, and the company's five-year, $1.0 billion revolving credit facility had an outstanding balance of $200.0 million, of which $75 million was repaid in April 2021.

Free cash flow for the nine months ended March 31, 2021 was $91.3 million compared with $213.9 million for the same period a year ago. The decrease was primarily due to the same factors that impacted net cash provided by operating activities as well as payments made to former limited partners of Premier LP in connection with the termination of the Tax Receivable Agreement as part of the company's restructure in August 2020. These factors were partially offset by the elimination of tax distributions to limited partners also as a result of the restructure.

Conference Call

Premier will host a conference call to provide additional detail around the company's performance and outlook today at 8:00 a.m. ET. The call will be webcast live from the company's website and will be available at the following link: Premier Webcast Link. The webcast should be accessed 10 minutes prior to the conference call start time. A replay of the webcast will be available for one year following the conclusion of the live broadcast and will be accessible on the company's website at https://investors.premierinc.com.

For those parties who do not have internet access, the conference call may be accessed by calling one of the below telephone numbers and providing conference ID number 6698593:

Domestic participant dial-in number (toll-free):

(844) 296-7719

International participant dial-in number:

(574) 990-1041

Premier’s presentation that will accompany the conference call and webcast can be accessed via the following link: Premier Events.

About Premier, Inc.

Premier, Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of more than 4,100 U.S. hospitals and health systems and approximately 200,000 other providers and organizations to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and consulting 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 to co-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 on www.premierinc.com; as well as Twitter, Facebook, LinkedIn, YouTube and Instagram for more information about the company.

Premier’s Use and Definition of Non-GAAP Measures

Premier uses EBITDA, adjusted EBITDA, segment adjusted EBITDA, adjusted net income (historically referred to as "adjusted fully distributed net income"), adjusted earnings per share (historically referred to as "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. Management believes EBITDA, adjusted EBITDA and segment adjusted EBITDA assist the company’s 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 other non-cash (impairment of intangible assets and purchase accounting adjustments) and non-recurring items, from operating results. Adjusted EBITDA and segment adjusted EBITDA are supplemental financial measures 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.

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.

In addition, adjusted fully distributed net income and adjusted fully distributed earnings per share eliminate the variability of non-controlling interest as a result of member owner exchanges of Class B common units and corresponding Class B common stock into shares of Class A common stock and other potentially dilutive equity transactions which are outside of management’s control. 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 remove non-cash and non-recurring items and eliminate the variability of non-controlling interest that results from member owner exchanges of Class B common units into shares of Class A common stock.

Non-Recurring Items are items to be income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Such items include stock-based compensation, acquisition and disposition related expenses, remeasurement of TRA liabilities, loss on disposal of long-live assets, gain or loss on FFF put and call rights, income and expense that has been classified as discontinued operations and other expense.

Non-operating items include gains or losses on the disposal of assets and interest and investment income or expense.

EBITDA is defined as net income before income or loss from discontinued operations, net of tax, interest and investment income, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets.

Adjusted EBITDA is defined as EBITDA before merger and acquisition related expenses and non-recurring, non-cash or non-operating items and including equity in net income of unconsolidated affiliates.

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 and non-recurring or non-cash items and including equity in net income of unconsolidated affiliates. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative, and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.

Adjusted Net Income is defined as net income attributable to Premier (i) excluding income or loss from discontinued operations, net, (ii) excluding income tax expense, (iii) excluding the impact of adjustment of redeemable limited partners’ capital to redemption amount, (iv) excluding the effect of non-recurring or non-cash items, including certain strategic and financial restructuring expenses, (v) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination of non-controlling interest in Premier LP and (vi) reflecting an adjustment for income tax expense on Non-GAAP net income before income taxes at our estimated annual effective income tax rate, adjusted for unusual or infrequent items.

Adjusted Earnings per Share is Adjusted Net Income divided by diluted weighted average shares.

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

To properly and prudently evaluate our business, readers are urged to review the reconciliation of these non-GAAP financial measures, as well as the other 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, the non-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.

Further information on Premier’s use of non-GAAP financial measures is available in the “Our Use of Non-GAAP Financial Measures” section of Premier’s Form 10-K for the year ended June 30, 2020 filed with the Securities and Exchange Commission ("SEC"), as may be updated in subsequent filings with the SEC.

Premier's Use of Forward-Looking Non-GAAP Measures

The company does not meaningfully reconcile guidance for non-GAAP adjusted EBITDA and non-GAAP adjusted earnings per share to net income attributable to stockholders or earnings per share attributable to stockholders because the company cannot provide guidance for the more significant reconciling items between net income attributable to stockholders and adjusted EBITDA and between earnings per share attributable to stockholders and non-GAAP adjusted earnings per share without unreasonable effort. This is due to the fact that future period non-GAAP guidance includes adjustments for items not indicative of our core operations, which may include, without limitation, items included in the supplemental financial information for reconciliation of reported GAAP results to non-GAAP results. Such items include strategic and acquisition related expenses for professional fees; mark to market adjustments for put options and contingent liabilities; gains and losses on stock based performance shares; adjustments to its income tax provision (such as valuation allowance adjustments and settlements of income tax claims); items related to corporate and facility restructurings; and certain other items the company believes to be non-indicative of its ongoing operations. Such adjustments may be affected by changes in ongoing assumptions, judgements, as well as nonrecurring, unusual or unanticipated charges, expenses or gains/losses or other items that may not directly correlate to the underlying performance of our business operations. The exact amount of these adjustments are not currently determinable but may be significant.

Cautionary Note Regarding Forward-Looking Statements

Statements made in this release that are not statements of historical or current facts, such as those related to the timing and continuing impact of COVID-19, the ability to execute our strategy and drive long-term, sustainable growth and value to all our stakeholders, the statements related to fiscal 2021 outlook and guidance and the key assumptions underlying such guidance, and expected target multi-year, compound annual growth rate in the mid-to-high single digits for consolidated net revenue, adjusted EBITDA and adjusted EPS beginning in fiscal year 2022 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 Form 10-K for the year ended June 30, 2020 as well as the Form 10-Q for the quarter ended March 31, 2021, expected to be filed with the SEC shortly after the date of this release, and also made available on Premier’s website at investors.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.

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2021

2020

 

2021

2020

Net revenue:

 

 

 

 

 

Net administrative fees

$

146,553

 

$

174,049

 

 

$

424,537

 

$

518,566

 

Other services and support

107,375

 

99,591

 

 

304,020

 

270,929

 

Services

253,928

 

273,640

 

 

728,557

 

789,495

 

Products

215,995

 

61,183

 

 

511,080

 

167,344

 

Net revenue

469,923

 

334,823

 

 

1,239,637

 

956,839

 

Cost of revenue:

 

 

 

 

 

Services

46,980

 

49,007

 

 

125,852

 

143,965

 

Products

211,136

 

54,121

 

 

496,286

 

150,415

 

Cost of revenue

258,116

 

103,128

 

 

622,138

 

294,380

 

Gross profit

211,807

 

231,695

 

 

617,499

 

662,459

 

Operating expenses:

 

 

 

 

 

Selling, general and administrative

134,502

 

115,289

 

 

388,453

 

315,311

 

Research and development

715

 

628

 

 

2,013

 

1,808

 

Amortization of purchased intangible assets

10,400

 

13,966

 

 

33,864

 

38,948

 

Operating expenses

145,617

 

129,883

 

 

424,330

 

356,067

 

Operating income

66,190

 

101,812

 

 

193,169

 

306,392

 

Equity in net income of unconsolidated affiliates

5,524

 

4,442

 

 

16,023

 

11,038

 

Interest and investment loss, net

(3,225)

 

(9,966)

 

 

(8,742)

 

(9,849)

 

(Loss) gain on FFF put and call rights

(5,195)

 

(13,906)

 

 

(21,621)

 

8,477

 

Other income (expense), net

1,594

 

(5,005)

 

 

10,167

 

(1,996)

 

Other (expense) income, net

(1,302)

 

(24,435)

 

 

(4,173)

 

7,670

 

Income before income taxes

64,888

 

77,377

 

 

188,996

 

314,062

 

Income tax expense (benefit)

13,444

 

4,165

 

 

(88,037)

 

78,336

 

Net income from continuing operations

51,444

 

73,212

 

 

277,033

 

235,726

 

Income from discontinued operations, net of tax

 

5

 

 

 

1,009

 

Net income

51,444

 

73,217

 

 

277,033

 

236,735

 

Net income from continuing operations attributable to non-controlling interest

(3,123)

 

(35,055)

 

 

(15,903)

 

(132,189)

 

Net income from discontinued operations attributable to non-controlling interest

 

(3)

 

 

 

(480)

 

Net income attributable to non-controlling interest

(3,123)

 

(35,058)

 

 

(15,903)

 

(132,669)

 

Adjustment of redeemable limited partners' capital to redemption amount

 

302,569

 

 

(26,685)

 

516,725

 

Net income attributable to stockholders

$

48,321

 

$

340,728

 

 

$

234,445

 

$

620,791

 

 

 

 

 

 

 

Calculation of GAAP Earnings per Share

 

 

 

 

 

 

 

 

 

 

 

Numerator for basic earnings per share:

 

 

 

 

 

Net income from continuing operations attributable to stockholders

$

48,321

 

$

340,726

 

 

$

234,445

 

$

620,262

 

Net income from discontinued operations attributable to stockholders

 

2

 

 

 

529

 

Net income attributable to stockholders

$

48,321

 

$

340,728

 

 

$

234,445

 

$

620,791

 

 

 

 

 

 

 

Numerator for diluted earnings per share:

 

 

 

 

 

Net income from continuing operations attributable to stockholders

$

48,321

 

$

340,726

 

 

$

234,445

 

$

620,262

 

Adjustment of redeemable limited partners' capital to redemption amount

 

(302,569)

 

 

 

(516,725)

 

Net income from continuing operations attributable to non-controlling interest

 

35,055

 

 

 

132,189

 

Net income from continuing operations

$

48,321

 

$

73,212

 

 

$

234,445

 

$

235,726

 

Tax effect on Premier, Inc. net income

 

(7,067)

 

 

 

(30,007)

 

Adjusted net income from continuing operations

$

48,321

 

$

66,145

 

 

$

234,445

 

$

205,719

 

 

 

 

 

 

 

Net income from discontinued operations attributable to stockholders

$

 

$

2

 

 

$

 

$

529

 

Net income from discontinued operations attributable to non-controlling interest in Premier LP

 

3

 

 

 

480

 

Adjusted net income from discontinued operations

$

 

$

5

 

 

$

 

$

1,009

 

 

 

 

 

 

 

Adjusted net income

$

48,321

 

$

66,150

 

 

$

234,445

 

$

206,728

 

 

 

 

 

 

 

Denominator for basic earnings per share:

 

 

 

 

 

Weighted average shares

122,254

 

69,451

 

 

114,596

 

65,582

 

 

 

 

 

 

 

Denominator for diluted earnings per share:

 

 

 

 

 

Weighted average shares

122,254

 

69,451

 

 

114,596

 

65,582

 

Effect of dilutive securities:

 

 

 

 

 

Stock options

325

 

232

 

 

300

 

357

 

Restricted stock

373

 

216

 

 

336

 

239

 

Performance share awards

164

 

197

 

 

133

 

66

 

Class B shares outstanding

 

52,374

 

 

 

57,786

 

Weighted average shares and assumed conversions

123,116

 

122,470

 

 

115,365

 

124,030

 

 

 

 

 

 

 

Earnings per share attributable to stockholders:

 

 

 

 

 

Basic earnings per share attributable to stockholders

$

0.40

 

$

4.91

 

 

$

2.05

 

$

9.46

 

Diluted earnings per share attributable to stockholders

$

0.39

 

$

0.54

 

 

$

2.03

 

$

1.66

 

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

 

 

 

 

March 31, 2021

June 30, 2020

Assets

 

 

Cash and cash equivalents

$

132,584

 

$

99,304

 

Accounts receivable (net of $2,137 and $731 allowance for doubtful accounts, respectively)

188,519

 

135,063

 

Contract assets

259,331

 

215,660

 

Inventory

225,231

 

70,997

 

Prepaid expenses and other current assets

83,527

 

97,338

 

Total current assets

889,192

 

618,362

 

Property and equipment (net of $503,189 and $452,609 accumulated depreciation, respectively)

223,689

 

206,728

 

Intangible assets (net of $279,023 and $245,160 accumulated amortization, respectively)

407,531

 

417,422

 

Goodwill

999,777

 

941,965

 

Deferred income tax assets

821,439

 

430,025

 

Deferred compensation plan assets

55,952

 

49,175

 

Investments in unconsolidated affiliates

153,747

 

133,335

 

Operating lease right-of-use assets

50,556

 

57,823

 

Other assets

80,082

 

93,680

 

Total assets

$

3,681,965

 

$

2,948,515

 

 

 

 

Liabilities, redeemable limited partners' capital and stockholders' equity

 

Accounts payable

$

100,348

 

$

54,841

 

Accrued expenses

64,255

 

53,500

 

Revenue share obligations

216,054

 

145,777

 

Limited partners' distribution payable

 

8,012

 

Accrued compensation and benefits

80,234

 

73,262

 

Deferred revenue

35,933

 

35,446

 

Current portion of tax receivable agreements

 

13,689

 

Current portion of notes payable to members

95,483

 

 

Line of credit and current portion of long-term debt

203,964

 

79,560

 

Other liabilities

56,574

 

31,987

 

Total current liabilities

852,845

 

496,074

 

Long-term debt, less current portion

5,333

 

4,640

 

Tax receivable agreements, less current portion

 

279,981

 

Notes payable to members, less current portion

323,156

 

 

Deferred compensation plan obligations

55,952

 

49,175

 

Deferred tax liabilities

 

17,508

 

Deferred consideration, less current portion

83,700

 

112,917

 

Operating lease liabilities, less current portion

45,654

 

52,990

 

Other liabilities

100,758

 

75,658

 

Total liabilities

1,467,398

 

1,088,943

 

 

 

 

Commitments and contingencies

 

 

Redeemable limited partners' capital

 

1,720,309

 

Stockholders' equity:

 

 

Class A common stock, $0.01 par value, 500,000,000 shares authorized; 122,268,758 shares issued and outstanding at March 31, 2021 and 71,627,462 shares issued and outstanding at June 30, 2020

1,223

 

716

 

Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 0 and 50,213,098 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively

 

 

Additional paid-in-capital

2,046,836

 

138,547

 

Retained earnings

166,508

 

 

Total stockholders' equity

2,214,567

 

139,263

 

Total liabilities, redeemable limited partners' capital and stockholders' equity

$

3,681,965

 

$

2,948,515

 

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

 

 

 

Nine Months Ended March 31,

 

2021

2020

Operating activities

 

 

Net income

$

277,033

 

$

236,735

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Income from discontinued operations, net of tax

 

(1,009)

 

Depreciation and amortization

89,768

 

114,638

 

Equity in net income of unconsolidated affiliates

(16,023)

 

(11,038)

 

Deferred income taxes

(123,307)

 

60,394

 

Stock-based compensation

27,601

 

19,048

 

Remeasurement of tax receivable agreement liabilities

 

(24,584)

 

Impairment of held to maturity investments

 

8,500

 

Loss (gain) on FFF put and call rights

21,621

 

(8,477)

 

Other

537

 

2,078

 

Changes in operating assets and liabilities, net of the effects of acquisitions:

 

 

Accounts receivable, inventories, prepaid expenses and other assets

(181,263)

 

(95,953)

 

Contract assets

(43,733)

 

(28,909)

 

Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities

140,131

 

(23,341)

 

Net cash provided by operating activities from continuing operations

192,365

 

248,082

 

Net cash provided by operating activities from discontinued operations

 

9,338

 

Net cash provided by operating activities

$

192,365

 

$

257,420

 

Investing activities

 

 

Purchases of property and equipment

$

(66,911)

 

$

(69,326)

 

Acquisition of businesses, net of cash acquired

(81,152)

 

(96,346)

 

Investments in unconsolidated affiliates

 

(10,165)

 

Other

(1,228)

 

3,883

 

Net cash used in investing activities

$

(149,291)

 

$

(171,954)

 

Financing activities

 

 

Payments made on notes payable

$

(31,692)

 

$

(2,046)

 

Proceeds from credit facility

225,000

 

375,000

 

Payments on credit facility

(100,000)

 

(150,000)

 

Distributions to limited partners of Premier LP

(9,949)

 

(39,590)

 

Payments to limited partners of Premier LP related to tax receivable agreements

(24,218)

 

(17,425)

 

Cash dividends paid

(69,647)

 

 

Repurchase of Class A common stock (held as treasury stock)

 

(150,093)

 

Other

712

 

(633)

 

Net cash (used in) provided by financing activities

$

(9,794)

 

$

15,213

 

Net increase in cash and cash equivalents

33,280

 

100,679

 

Cash and cash equivalents at beginning of year

99,304

 

141,055

 

Cash and cash equivalents at end of period

$

132,584

 

$

241,734

 

Supplemental Financial Information

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

(Unaudited)

(In thousands)

 

 

 

 

Nine Months Ended March 31,

 

2021

2020

Net cash provided by operating activities from continuing operations (a)

$

192,365

 

$

340,228

 

Purchases of property and equipment

(66,911)

 

(69,326)

 

Distributions to limited partners of Premier LP

(9,949)

 

(39,590)

 

Payments to limited partners of Premier LP related to tax receivable agreements

(24,218)

 

(17,425)

 

Free Cash Flow

$

91,287

 

$

213,887

 

(a)

Net cash provided by operating activities from continuing operations excludes the impact of the prepaid contract administrative fee share for one-time rebates to certain Acurity, Inc. members, as agreed to by Acurity, Inc. prior to entering into the Purchase Agreement, which was excluded from the purchase price of the Acurity and Nexera asset acquisition.

Supplemental Financial Information

Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA

Reconciliation of Operating Income to Segment Adjusted EBITDA

Reconciliation of Net Income Attributable to Stockholders to Adjusted Net Income

(Unaudited)

(In thousands)

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2021

2020

 

2021

2020

Net income from continuing operations

$

51,444

 

$

73,212

 

 

$

277,033

 

$

235,726

 

Interest and investment loss, net

3,225

 

9,966

 

 

8,742

 

9,849

 

Income tax expense (benefit)

13,444

 

4,165

 

 

(88,037)

 

78,336

 

Depreciation and amortization

19,337

 

25,777

 

 

55,904

 

75,690

 

Amortization of purchased intangible assets

10,400

 

13,966

 

 

33,864

 

38,948

 

EBITDA

97,850

 

127,086

 

 

287,506

 

438,549

 

Stock-based compensation

13,180

 

7,668

 

 

27,970

 

19,358

 

Acquisition and disposition related expenses

4,126

 

7,287

 

 

14,889

 

16,263

 

Remeasurement of tax receivable agreement liabilities

 

(902)

 

 

 

(24,584)

 

Loss (gain) on FFF put and call rights

5,195

 

13,906

 

 

21,621

 

(8,477)

 

Other expense

856

 

844

 

 

4,782

 

3,441

 

Adjusted EBITDA

$

121,207

 

$

155,889

 

 

$

356,768

 

$

444,550

 

 

 

 

 

 

 

Income before income taxes

$

64,888

 

$

77,377

 

 

$

188,996

 

$

314,062

 

Equity in net income of unconsolidated affiliates

(5,524)

 

(4,442)

 

 

(16,023)

 

(11,038)

 

Interest and investment loss, net

3,225

 

9,966

 

 

8,742

 

9,849

 

Loss (gain) on FFF put and call rights

5,195

 

13,906

 

 

21,621

 

(8,477)

 

Other (income) expense

(1,594)

 

5,005

 

 

(10,167)

 

1,996

 

Operating income

66,190

 

101,812

 

 

193,169

 

306,392

 

Depreciation and amortization

19,337

 

25,777

 

 

55,904

 

75,690

 

Amortization of purchased intangible assets

10,400

 

13,966

 

 

33,864

 

38,948

 

Stock-based compensation

13,180

 

7,668

 

 

27,970

 

19,358

 

Acquisition and disposition related expenses

4,126

 

7,287

 

 

14,889

 

16,263

 

Remeasurement of tax receivable agreement liabilities

 

(902)

 

 

 

(24,584)

 

Equity in net income of unconsolidated affiliates

5,524

 

4,442

 

 

16,023

 

11,038

 

Deferred compensation plan income (expense)

1,521

 

(5,476)

 

 

9,231

 

(2,484)

 

Other expense

929

 

1,315

 

 

5,718

 

3,929

 

Adjusted EBITDA

$

121,207

 

$

155,889

 

 

$

356,768

 

$

444,550

 

 

 

 

 

 

 

SEGMENT ADJUSTED EBITDA

 

 

 

 

 

Supply Chain Services

$

117,949

 

$

149,212

 

 

$

339,538

 

$

447,081

 

Performance Services

35,950

 

34,634

 

 

109,675

 

84,977

 

Corporate

(32,692)

 

(27,957)

 

 

(92,445)

 

(87,508)

 

Adjusted EBITDA

$

121,207

 

$

155,889

 

 

$

356,768

 

$

444,550

 

 

 

 

 

 

 

Net income attributable to stockholders

$

48,321

 

$

340,728

 

 

$

234,445

 

$

620,791

 

Adjustment of redeemable limited partners' capital to redemption amount

 

(302,569)

 

 

26,685

 

(516,725)

 

Net income attributable to non-controlling interest

3,123

 

35,058

 

 

15,903

 

132,669

 

Income from discontinued operations, net of tax

 

(5)

 

 

 

(1,009)

 

Income tax expense (benefit)

13,444

 

4,165

 

 

(88,037)

 

78,336

 

Amortization of purchased intangible assets

10,400

 

13,966

 

 

33,864

 

38,948

 

Stock-based compensation

13,180

 

7,668

 

 

27,970

 

19,358

 

Acquisition and disposition related expenses

4,126

 

7,287

 

 

14,889

 

16,263

 

Remeasurement of tax receivable agreement liabilities

 

(902)

 

 

 

(24,584)

 

Loss (gain) on FFF put and call rights

5,195

 

13,906

 

 

21,621

 

(8,477)

 

Other expense

2,897

 

844

 

 

10,126

 

3,441

 

Adjusted income before income taxes

100,686

 

120,146

 

 

297,466

 

359,011

 

Income tax expense on adjusted income before income taxes

22,151

 

31,238

 

 

65,443

 

93,343

 

Adjusted Net Income

$

78,535

 

$

88,908

 

 

$

232,023

 

$

265,668

 

Supplemental Financial Information

Reconciliation of GAAP EPS to Adjusted EPS

(Unaudited)

(In thousands, except per share data)

 

 

 

 

 

 

 

Three Months Ended March 31,

 

Nine Months Ended March 31,

 

2021

2020

 

2021

2020

 

 

 

 

 

 

Net income attributable to stockholders

$

48,321

 

$

340,728

 

 

$

234,445

 

$

620,791

 

Adjustment of redeemable limited partners' capital to redemption amount

 

(302,569)

 

 

26,685

 

(516,725)

 

Net income attributable to non-controlling interest

3,123

 

35,058

 

 

15,903

 

132,669

 

Income from discontinued operations, net of tax

 

(5)

 

 

 

(1,009)

 

Income tax expense (benefit)

13,444

 

4,165

 

 

(88,037)

 

78,336

 

Amortization of purchased intangible assets

10,400

 

13,966

 

 

33,864

 

38,948

 

Stock-based compensation

13,180

 

7,668

 

 

27,970

 

19,358

 

Acquisition and disposition related expenses

4,126

 

7,287

 

 

14,889

 

16,263

 

Remeasurement of tax receivable agreement liabilities

 

(902)

 

 

 

(24,584)

 

Loss (gain) on FFF put and call rights

5,195

 

13,906

 

 

21,621

 

(8,477)

 

Other expense

2,897

 

844

 

 

10,126

 

3,441

 

Adjusted income before income taxes

100,686

 

120,146

 

 

297,466

 

359,011

 

Income tax expense on adjusted income before income taxes

22,151

 

31,238

 

 

65,443

 

93,343

 

Adjusted Net Income

$

78,535

 

$

88,908

 

 

$

232,023

 

$

265,668

 

 

 

 

 

 

 

Weighted average:

 

 

 

 

 

Common shares used for basic and diluted earnings per share

122,254

 

69,451

 

 

114,596

 

65,582

 

Potentially dilutive shares

862

 

645

 

 

769

 

662

 

Conversion of Class B common units

 

52,374

 

 

 

57,786

 

GAAP weighted average shares outstanding - diluted

123,116

 

122,470

 

 

115,365

 

124,030

 

Conversion of potentially dilutive shares

 

 

 

 

 

Conversion of Class B common units

 

 

 

7,511

 

 

Weighted average shares outstanding - diluted

123,116

 

122,470

 

 

122,876

 

124,030

 

 

 

 

 

 

 

GAAP earnings per share

$

0.40

 

$

4.91

 

 

$

2.05

 

$

9.47

 

Adjustment of redeemable limited partners' capital to redemption amount

 

(4.36)

 

 

0.23

 

(7.88)

 

Net income attributable to non-controlling interest

0.03

 

0.50

 

 

0.14

 

2.02

 

Income from discontinued operations, net of tax

 

 

 

 

(0.02)

 

Income tax expense (benefit)

0.11

 

0.06

 

 

(0.77)

 

1.19

 

Amortization of purchased intangible assets

0.09

 

0.20

 

 

0.30

 

0.59

 

Stock-based compensation

0.11

 

0.11

 

 

0.24

 

0.30

 

Acquisition and disposition related expenses

0.03

 

0.10

 

 

0.13

 

0.25

 

Remeasurement of tax receivable agreement liabilities

 

(0.01)

 

 

 

(0.37)

 

Loss (gain) on FFF put and call rights

0.04

 

0.20

 

 

0.19

 

(0.13)

 

Other expense, net

0.02

 

0.01

 

 

0.09

 

0.05

 

Impact of corporation taxes

(0.19)

 

(0.45)

 

 

(0.57)

 

(1.42)

 

Impact of dilutive shares

 

(0.54)

 

 

(0.14)

 

(1.91)

 

Adjusted EPS

$

0.64

 

$

0.73

 

 

$

1.89

 

$

2.14

 

 

Investor contact:
Angie McCabe
Vice President, Investor Relations
704.816.3888
angie_mccabe@premierinc.com

Media contact:
Amanda Forster
Vice President, Public Relations
202.879.8004
amanda_forster@premierinc.com

Source: Premier, Inc.