- Reaffirming fiscal 2024 financial guidance ranges
- Executed $400 million accelerated share repurchase
transaction
Premier, Inc. (NASDAQ: PINC), a leading technology-driven
healthcare improvement company, today reported financial results
for the fiscal-year 2024 third quarter ended March 31, 2024.
Third-quarter results:
- Total net revenue of $342.6 million; growth of 6% over the
prior-year period
- GAAP net loss of $49.2 million, or $(0.36) per fully diluted
share, which includes a $140.1 million goodwill, intangible and
other long-lived assets impairment related to the company's Contigo
Health business
- Adjusted earnings per share* of $0.55; flat compared to the
prior-year period
"Our third quarter results, which exceeded our expectations for
profitability, reflect ongoing adoption of our products and
services by members and other customers,” said Michael J. Alkire,
Premier’s President and CEO. “Consolidated net revenue increased
from the prior-year period driven by growth in both our Supply
Chain Services and Performance Services segments. We are
reaffirming our fiscal 2024 guidance and also continue to return
capital to stockholders as we implemented our $400 million
accelerated share repurchase transaction during the quarter, which
we expect to be fully settled by the first quarter of fiscal
2025.”
Consolidated Financial
Highlights
Three Months Ended March
31,
Nine Months Ended March
31,
(in thousands, except per share data)
2024
2023
% Change
2024
2023
% Change
Net revenue:
Supply Chain Services:
Net administrative fees
$
156,819
$
148,441
6
%
$
455,409
$
452,870
1
%
Software licenses, other services and
support
14,257
11,032
29
%
37,954
35,963
6
%
Services and software licenses
171,076
159,473
7
%
493,363
488,833
1
%
Products
56,590
57,212
(1
%)
162,956
183,066
(11
%)
Total Supply Chain Services
227,666
216,685
5
%
656,319
671,899
(2
%)
Performance Services
115,003
105,556
9
%
339,972
323,860
5
%
Total segment net revenue
342,669
322,241
6
%
996,291
995,759
—
%
Eliminations
(73
)
(9
)
711
%
(198
)
(28
)
607
%
Net revenue
$
342,596
$
322,232
6
%
$
996,093
$
995,731
—
%
Net (loss) income
$
(49,162
)
$
48,649
(201
%)
$
46,114
$
155,982
(70
%)
Net (loss) income attributable to
stockholders
$
(40,195
)
$
46,801
(186
%)
$
58,868
$
153,563
(62
%)
Diluted (loss) earnings per share
attributable to stockholders
$
(0.36
)
$
0.39
(192
%)
$
0.50
$
1.28
(61
%)
Consolidated Financial
Highlights
Three Months Ended March
31,
Nine Months Ended March
31,
(in thousands, except per share data)
2024
2023
% Change
2024
2023
% Change
NON-GAAP FINANCIAL MEASURES*:
Adjusted EBITDA:
Supply Chain Services
$
114,021
$
117,474
(3
%)
$
343,486
$
356,978
(4
%)
Performance Services
27,039
24,954
8
%
79,768
87,290
(9
%)
Total segment adjusted EBITDA
141,060
142,428
(1
%)
423,254
444,268
(5
%)
Corporate
(33,778
)
(29,772
)
(13
%)
(96,105
)
(91,613
)
(5
%)
Adjusted EBITDA
$
107,282
$
112,656
(5
%)
$
327,149
$
352,655
(7
%)
Adjusted net income
$
61,191
$
66,357
(8
%)
$
192,279
$
207,391
(7
%)
Adjusted earnings per share
(EPS)
$
0.55
$
0.55
—
%
$
1.64
$
1.73
(5
%)
*These are non-GAAP financial measures.
Refer to "Premier's Use and Definition of Non-GAAP Measures" below
and the supplemental financial information at the end of this
release for information on the company's use of non-GAAP measures
and a reconciliation of reported GAAP results to non-GAAP
results.
Fiscal 2024 Guidance
Certain statements in this release, including without
limitation, those in this section, are forward-looking statements.
For additional information regarding the use and limitations of
such statements, refer to "Cautionary Note Regarding
Forward-Looking Statements" below.
Based on its financial results for the nine months ended March
31, 2024, current visibility into the macro environment, and
expectations for the remainder of this fiscal year, the company is
reaffirming the following fiscal 2024 guidance ranges:
Guidance Metric
Fiscal 2024 Guidance Range** (as of May
7, 2024)
Segment Net Revenue:
Supply Chain Services
$840 million to $880 million
Performance Services
$425 million to $445 million
Total Net Revenue
$1.265 billion to $1.325 billion
Adjusted EBITDA
$405 million to $425 million
Adjusted EPS
$2.06 to $2.18
Fiscal 2024 guidance is based on the
realization of the following key assumptions:
- Net administrative fees revenue of $588 million to $603
million
- Direct sourcing products revenue of $207 million to $222
million
- Supply Chain Services segment software licenses, other services
and support revenue of $45 million to $55 million
- Capital expenditures of $93 million to $103 million
- Effective income tax rate in the range of 26-28%
- Free cash flow of 45% to 55% of adjusted EBITDA, excluding the
impact of tax payments related to the sale of non-healthcare GPO
operations
- Includes the estimated fiscal 2024 impact of the initial $400
million accelerated share repurchase transaction under the $1
billion share repurchase authorization
- Does not include the impact of any significant acquisitions or
divestitures
** Adjusted EBITDA, adjusted EPS and free
cash flow presented in this financial guidance are forward-looking
non-GAAP measures. Refer to "Premier's Use and Definition of
Non-GAAP Measures" below for information on the company's use of
non-GAAP measures. Premier, Inc. 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 "Premier's
Use of Forward-Looking Non-GAAP Measures" below for additional
explanation.
Results of Operations for the Three Months Ended March 31,
2024 (As compared with the three months ended March 31,
2023)
GAAP net revenue of $342.6 million increased 6% from $322.2
million in the prior-year period. Refer to "Supply Chain Services"
and "Performance Services" sections below for further discussion on
the factors that impacted each segment during the quarter.
GAAP net loss of $49.2 million decreased 201% from net income of
$48.6 million in the prior-year period primarily as a result of the
$140.1 million impairment charge to goodwill, intangibles and other
long-lived assets related to the company's Contigo Health business
in the current-year period, lower equity earnings and an increase
in employee-related expenses driven by increased headcount,
primarily to support growth in our supply chain co-management
business, and higher forecasted performance-related compensation
expense as compared to the prior-year period which was lower as
fiscal 2023 performance was below targeted expectations. These
decreases were partially offset by higher net revenue, a decrease
in interest expense in the current-year period and a gain from the
sale of one of the company's minority investments.
GAAP diluted EPS of $(0.36) decreased 192% from $0.39 in the
prior-year period due to the aforementioned drivers affecting GAAP
net income offset by a decrease in the diluted weighted average
shares outstanding as a result of the $400 million accelerated
share repurchase transaction ("ASR").
Adjusted EBITDA of $107.3 million decreased 5% from $112.7
million in the prior-year period. Refer to "Supply Chain Services"
and "Performance Services" sections below for further discussion on
the factors that impacted each segment during the quarter.
Adjusted net income of $61.2 million decreased 8% from $66.4
million in the prior-year period primarily as a result of the same
factors that impacted adjusted EBITDA as well as an increase in our
effective income tax rate as a result of the $140.1 million
impairment of assets partially offset by a decrease in interest
expense in the current-year period. Adjusted EPS of $0.55 was flat
compared to $0.55 in the prior-year period primarily due to a
decrease in the diluted weighted average shares outstanding as a
result of the ASR partially offset by the aforementioned drivers
affecting adjusted net income.
Segment Results (For the fiscal third quarter of 2024 as
compared with the fiscal third quarter of 2023)
Supply Chain Services
Supply Chain Services segment net revenue of $227.7 million
increased 5% from $216.7 million in the prior-year period,
primarily reflecting higher net administrative fees revenue and
software license, other services and support revenue.
Net administrative fees revenue of $156.8 million increased 6%
from $148.4 million in the prior-year period driven by continued
growth in member purchasing in both the acute and Continuum of Care
group purchasing organization ("GPO") programs and one-time
contractual payments received from certain GPO members due to early
termination in breach of their contracts partially offset by an
expected increase in the aggregate blended member fee share.
Products revenue of $56.6 million was relatively flat compared
to $57.2 million in the prior-year period as further expansion and
growth of the business was offset by lower pricing for certain
products compared to the prior-year period.
Segment adjusted EBITDA of $114.0 million decreased 3% from
$117.5 million in the prior-year period primarily due to an
increase in expenses in support of the GPO program and supply chain
co-management business and lower profit margin in the company's
direct sourcing business driven by higher logistics costs compared
to the prior-year period, partially offset by the aforementioned
increase in net revenue.
Performance Services
Performance Services segment net revenue of $115.0 million
increased 9% from $105.6 million in the prior-year period,
primarily due to an increase in revenue from enterprise license
agreements in the current-year period compared with the prior-year
period partially offset by a decrease in the applied sciences
business compared to the prior-year period.
Segment adjusted EBITDA of $27.0 million increased 8% from $25.0
million in the prior-year period mainly due to the aforementioned
increase in net revenue, partially offset by an increase in
expenses primarily related to higher performance-related
compensation in the current-year period as well as investments to
support continued growth in the company's adjacent markets
businesses.
Result of Operations for the Nine Months Ended March 31,
2024 (As compared with the nine months ended March 31,
2023)
GAAP net revenue of $996.1 million was flat compared with the
prior-year period primarily due to increases in Performance
Services segment net revenue and net administrative fees revenue
offset by a decrease in products revenue.
GAAP net income of $46.1 million decreased 70% from net income
of $156.0 million in the prior-year period primarily as a result of
the $140.1 million impairment charge to goodwill, intangibles and
other long-lived assets related to the company's Contigo Health
business in the current-year period, lower equity earnings, an
increase in certain operating expenses, including costs associated
with the sale of the company's non-healthcare GPO member contracts
and higher performance-related compensation expense in the
current-year period, partially offset by an increase in interest
income and a decrease in income tax expense in the current-year
period.
GAAP diluted EPS of $0.50 decreased 61% from $1.28 in the
prior-year period primarily due to the aforementioned drivers
affecting GAAP net income partially offset by a decrease in the
diluted weighted average shares outstanding as a result of the
ASR.
Adjusted EBITDA of $327.1 million decreased 7% from $352.7
million in the prior-year period primarily due to decreases in each
segment's adjusted EBITDA.
Adjusted net income of $192.3 million decreased 7% from $207.4
million in the prior-year period primarily as a result of the
decrease in adjusted EBITDA as well as an increase in our effective
income tax rate as a result of the $140.1 million impairment of
assets partially offset by an increase in interest income in the
current-year period. Adjusted EPS of $1.64 decreased 5% from $1.73
in the prior-year period primarily due to the aforementioned
drivers affecting adjusted net income partially offset by a
decrease in the diluted weighted average shares outstanding as a
result of the ASR.
Supply Chain Services segment net revenue of $656.3 million
decreased 2% from $671.9 million for the same period a year ago.
Segment adjusted EBITDA of $343.5 million decreased 4% from $357.0
million for the same period a year ago.
Performance Services segment net revenue of $340.0 million
increased 5% from $323.9 million for the same period a year ago.
Segment adjusted EBITDA of $79.8 million decreased 9% from $87.3
million for the same period a year ago.
Cash Flows and Liquidity
Net cash provided by operating activities ("operating cash
flow") for the nine months ended March 31, 2024 of $190.3 million
decreased from $331.2 million in the prior-year period primarily
due to $148.6 million in tax payments in the current-year period
related to the sale of non-healthcare GPO operations and an
increase in expenses to support continued growth in certain areas
of the Supply Chain Services and Performance Services segments.
These decreases were partially offset by lower fiscal 2023
performance-related compensation payments during the fiscal first
quarter compared to the fiscal 2022 payments in the prior-year
period and increased cash inflows from continued growth in the
Performance Services business.
Net cash used in investing activities and net cash used in
financing activities for the nine months ended March 31, 2024, were
$54.9 million and $163.3 million, respectively. As of March 31,
2024, cash and cash equivalents were $61.9 million compared with
$89.8 million as of June 30, 2023, and the company's five-year,
$1.0 billion revolving credit facility had no outstanding
balance.
Free cash flow for the nine months ended March 31, 2024 was
$48.1 million compared with $199.5 million in the prior-year
period. The decrease was primarily due to the same factors that
impacted operating cash flow, including the aforementioned $148.6
million in tax payments, and an increase in purchases of property
and equipment. Refer to "Premier's Use and Definition of Non-GAAP
Measures" below and the supplemental financial information at the
end of this release for information on the company's use of
non-GAAP measures and a reconciliation of reported GAAP results to
non-GAAP results.
During the first nine months of fiscal 2024, the company paid
aggregate dividends of $73.1 million to holders of its Class A
common stock.
Conference Call and Webcast
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, along
with the accompanying presentation, will be available at the
following link: Premier Events. 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 asking to join the Premier, Inc. call:
Domestic participant dial-in number
(toll-free):
(833) 953-2438
International participant dial-in
number:
(412) 317-5767
About Premier, Inc.
Premier, Inc. (NASDAQ: PINC) is a leading healthcare improvement
company, uniting an alliance of more than 4,350 U.S. hospitals and
health systems and approximately 300,000 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 X, Facebook, LinkedIn, YouTube,
Instagram and Premier’s blog 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, adjusted earnings per share, and free cash
flow. These are non-GAAP financial measures that are not in
accordance with, or an alternative to, GAAP, and may be different
from non-GAAP financial measures used by other companies. We
include these non-GAAP financial measures 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, we believe 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, payments to
certain former limited partners that elected to execute a Unit
Exchange and Tax Receivable Agreement (“Unit Exchange Agreement")
in connection with our August 2020 restructuring and purchases of
property and equipment 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 enables the company to seek
enhancement of stockholder value through acquisitions,
partnerships, joint ventures, investments in related or
complimentary businesses and/or debt reduction.
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, strategic initiative- and
financial restructuring-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 or expense, 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.
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. 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 effect of non-recurring or non-cash items, including certain
strategic initiative- and financial restructuring-related expenses,
(iv) reflecting an adjustment for income tax expense on Non-GAAP
net income before income taxes at our estimated annual effective
income tax rate, adjusted for unusual or infrequent items and (v)
excluding the equity in net income of unconsolidated
affiliates.
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 Tax Receivable Agreement payments to limited partners, early
termination payments to certain former limited partners that
elected to execute a Unit Exchange Agreement in connection with our
August 2020 restructuring 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.
The Company has revised the definitions for Adjusted EBITDA,
Segment Adjusted EBITDA and Adjusted Net Income from the
definitions reported in the 2023 Annual Report. Adjusted EBITDA and
segment Adjusted EBITDA definitions were revised to exclude the
impact of equity earnings in unconsolidated affiliates. The
Adjusted Net Income definition was revised (1) remove the exclusion
of the impact of adjustment of redeemable limited partners’ capital
to redemption amount, (2) remove the impact of the exchange of all
Class B common units for shares of Class A common stock for periods
prior to our August 2020 Restructuring and the resulting
elimination of non-controlling interest in Premier LP, and (3) add
the exclusion of equity earnings in unconsolidated affiliates. For
comparability purposes, prior year non-GAAP financial measures are
presented based on the current definitions in the above
section.
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-Q for the quarter ended
December 31, 2023, expected to be filed with the SEC shortly after
this release, and which will also be made available on Premier's
website at investors.premierinc.com.
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, but are not limited to,
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 is 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, including, but not limited to those
related to our ability to advance our long-term strategies and
develop innovations for, transform and improve healthcare, our
ability to find partners for our S2S Global and Contigo Health
businesses and the potential benefits thereof, our ability to fund
and conduct share repurchases pursuant to the share repurchase
authorization and the potential benefits thereof (including the
accelerated share repurchase transaction, which could be affected
by volatility or disruptions in the capital markets or other
factors), the payment of dividends at current levels or at all,
guidance on expected future financial performance and assumptions
underlying that guidance, and our expected effective income tax
rate, 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 risks and
uncertainties, many of which are outside Premier’s control. More
information on risks and uncertainties that could affect Premier’s
business, achievements, performance, financial condition, and
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 the information in those sections
of Premier’s Form 10-K for the year ended June 30, 2023 and
subsequent Quarterly Reports on Form 10-Q, including the Form 10-Q
for the quarter ended March 31, 2024, expected to be filed with the
SEC shortly after the date of this release, all of which are 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
Nine Months Ended
March 31,
March 31,
2024
2023
2024
2023
Net revenue:
Net administrative fees
$
156,819
$
148,441
$
455,409
$
452,870
Software licenses, other services and
support
129,187
116,579
377,728
359,795
Services and software licenses
286,006
265,020
833,137
812,665
Products
56,590
57,212
162,956
183,066
Net revenue
342,596
322,232
996,093
995,731
Cost of revenue:
Services and software licenses
70,336
54,149
200,458
163,428
Products
51,927
49,013
143,437
168,507
Cost of revenue
122,263
103,162
343,895
331,935
Gross profit
220,333
219,070
652,198
663,796
Operating expenses:
Selling, general and administrative
286,121
143,587
566,331
416,165
Research and development
661
1,001
2,452
2,976
Amortization of purchased intangible
assets
12,280
11,916
37,480
35,415
Operating expenses
299,062
156,504
606,263
454,556
Operating (loss) income
(78,729
)
62,566
45,935
209,240
Equity in net income (loss) of
unconsolidated affiliates
753
4,630
(1,639
)
14,547
Interest (expense) income, net
(1,763
)
(4,269
)
870
(11,759
)
Other income, net
14,913
2,954
18,500
3,720
Other income, net
13,903
3,315
17,731
6,508
(Loss) income before income taxes
(64,826
)
65,881
63,666
215,748
Income tax (benefit) expense
(15,664
)
17,232
17,552
59,766
Net (loss) income
(49,162
)
48,649
46,114
155,982
Net loss (income) attributable to
non-controlling interest
8,967
(1,848
)
12,754
(2,419
)
Net (loss) income attributable to
stockholders
$
(40,195
)
$
46,801
$
58,868
$
153,563
Calculation of GAAP (Loss) Earnings per
Share
Numerator for basic and diluted (loss)
earnings per share:
Net (loss) income attributable to
stockholders
$
(40,195
)
$
46,801
$
58,868
$
153,563
Denominator for (loss) earnings per
share:
Basic weighted average shares
outstanding
111,156
118,872
116,754
118,668
Effect of dilutive securities:
Stock options
—
76
—
103
Restricted stock units
—
528
484
519
Performance share awards
—
340
85
542
Diluted weighted average shares
111,156
119,816
117,323
119,832
(Loss) earnings per share attributable
to stockholders:
Basic
$
(0.36
)
$
0.39
$
0.50
$
1.29
Diluted
$
(0.36
)
$
0.39
$
0.50
$
1.28
Condensed Consolidated Balance
Sheets
(Unaudited)
(In thousands, except share
data)
March 31, 2024
June 30, 2023
Assets
Cash and cash equivalents
$
61,856
$
89,793
Accounts receivable (net of $2,027 and
$2,878 allowance for credit losses, respectively)
121,159
115,295
Contract assets (net of $1,217 and $885
allowance for credit losses, respectively)
334,256
299,219
Inventory
77,795
76,932
Prepaid expenses and other current
assets
79,633
60,387
Total current assets
674,699
641,626
Property and equipment (net of $721,427
and $662,554 accumulated depreciation, respectively)
206,363
212,308
Intangible assets (net of $286,161 and
$265,684 accumulated amortization, respectively)
279,053
430,030
Goodwill
995,852
1,012,355
Deferred income tax assets
805,741
653,629
Deferred compensation plan assets
52,754
50,346
Investments in unconsolidated
affiliates
228,511
231,826
Operating lease right-of-use assets
21,700
29,252
Other assets
99,057
110,115
Total assets
$
3,363,730
$
3,371,487
Liabilities and stockholders'
equity
Accounts payable
$
67,341
$
54,375
Accrued expenses
69,492
47,113
Revenue share obligations
291,762
262,288
Accrued compensation and benefits
77,780
60,591
Deferred revenue
20,502
24,311
Current portion of notes payable to former
limited partners
101,059
99,665
Line of credit and current portion of
long-term debt
1,008
216,546
Current portion of liability related to
the sale of future revenues
36,615
—
Other current liabilities
60,120
50,574
Total current liabilities
725,679
815,463
Long-term debt, less current portion
—
734
Liability related to the sale of future
revenues, less current portion
569,042
—
Notes payable to former limited partners,
less current portion
25,555
101,523
Deferred compensation plan obligations
52,754
50,346
Operating lease liabilities, less current
portion
13,074
21,864
Other liabilities
54,328
47,202
Total liabilities
1,440,432
1,037,132
Commitments and contingencies
Stockholders' equity:
Class A common stock, $0.01 par value,
500,000,000 shares authorized; 111,249,656 shares issued and
104,820,281 shares outstanding at March 31, 2024 and 125,587,858
shares issued and 119,158,483 shares outstanding at June 30,
2023
1,112
1,256
Treasury stock, at cost; 6,429,375 shares
at both March 31, 2024 and June 30, 2023
(250,129
)
(250,129
)
Additional paid-in capital
2,104,916
2,178,134
Retained earnings
67,400
405,102
Accumulated other comprehensive loss
(1
)
(8
)
Total stockholders' equity
1,923,298
2,334,355
Total liabilities and stockholders'
equity
$
3,363,730
$
3,371,487
Condensed Consolidated
Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended March
31,
2024
2023
Operating activities
Net income
$
46,114
$
155,982
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
98,572
100,568
Equity in net loss (income) of
unconsolidated affiliates
1,639
(14,547
)
Deferred income taxes
(152,112
)
2,083
Stock-based compensation
23,215
16,375
Impairment of assets
140,053
—
Other, net
(7,653
)
3,066
Changes in operating assets and
liabilities, net of the effects of acquisitions:
Accounts receivable
(5,864
)
483
Contract assets
(37,693
)
(31,975
)
Inventory
(863
)
25,221
Prepaid expenses and other assets
(668
)
21,685
Accounts payable
15,673
8,641
Revenue share obligations
29,474
12,717
Accrued expenses, deferred revenue and
other liabilities
40,383
30,879
Net cash provided by operating
activities
$
190,270
$
331,178
Investing activities
Purchases of property and equipment
$
(67,626
)
$
(58,464
)
Sale of investment in unconsolidated
affiliates
12,753
—
Acquisition of businesses and equity
method investments, net of cash acquired
—
(187,750
)
Other
(30
)
(3,570
)
Net cash used in investing
activities
$
(54,903
)
$
(249,784
)
Financing activities
Payments on notes payable
$
(75,846
)
$
(76,024
)
Proceeds from credit facility
—
350,000
Payments on credit facility
(215,000
)
(265,000
)
Proceeds from sale of future revenues
629,820
—
Payments on liability related to the sale
of future revenues
(24,163
)
—
Cash dividends paid
(73,074
)
(75,227
)
Repurchase of Class A common stock
(400,000
)
—
Other, net
(5,048
)
(9,785
)
Net cash used in financing
activities
$
(163,311
)
$
(76,036
)
Effect of exchange rate changes on cash
flows
7
(8
)
Net (decrease) increase in cash and cash
equivalents
(27,937
)
5,350
Cash and cash equivalents at beginning of
year
89,793
86,143
Cash and cash equivalents at end of
period
$
61,856
$
91,493
Supplemental Financial
Information
Reconciliation of Net Cash
Provided by Operating Activities to Free Cash Flow
(Unaudited)
(In thousands)
Nine Months Ended
March 31,
2024
2023
Net cash provided by operating
activities
$
190,270
$
331,178
Early termination payments to certain
former limited partners that elected to execute a Unit Exchange
Agreement (a)
(74,574
)
(73,180
)
Purchases of property and equipment
(67,626
)
(58,464
)
Free Cash Flow
$
48,070
$
199,534
_________________________________
(a)
Early termination payments to certain
former limited partners that elected to execute a Unit Exchange
Agreement in connection with Premier's August 2020 restructuring
are presented in the Condensed Consolidated Statements of Cash
Flows under “Payments made on notes payable." During the nine
months ended March 31, 2024, the company paid $77.0 million to
members including imputed interest of $2.4 million which is
included in net cash provided by operating activities. During the
nine months ended March 31, 2023, the company paid $77.0 million to
members, including imputed interest of $3.8 million which is
included in net cash provided by operating activities.
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
Nine Months Ended
March 31,
March 31,
2024
2023
2024
2023
Net (loss) income
$
(49,162
)
$
48,649
$
46,114
$
155,982
Interest expense (income), net
1,763
4,269
(870
)
11,759
Income tax (benefit) expense
(15,664
)
17,232
17,552
59,766
Depreciation and amortization
20,497
20,275
61,092
65,153
Amortization of purchased intangible
assets
12,280
11,916
37,480
35,415
EBITDA
(30,286
)
102,341
161,368
328,075
Stock-based compensation
8,283
6,709
23,671
16,859
Acquisition- and disposition-related
expenses
1,092
6,294
8,495
11,592
Strategic initiative and financial
restructuring-related expenses
(61
)
1,942
2,969
10,988
Equity in net (income) loss of
unconsolidated affiliates
(753
)
(4,630
)
1,639
(14,547
)
Gain on sale of investment in
unconsolidated affiliates
(11,046
)
—
(11,046
)
—
Impairment of assets
140,053
—
140,053
—
Other reconciling items, net
—
—
—
(312
)
Adjusted EBITDA
$
107,282
$
112,656
$
327,149
$
352,655
(Loss) income before income
taxes
$
(64,826
)
$
65,881
$
63,666
$
215,748
Equity in net (income) loss of
unconsolidated affiliates
(753
)
(4,630
)
1,639
(14,547
)
Interest expense (income), net
1,763
4,269
(870
)
11,759
Other income, net
(14,913
)
(2,954
)
(18,500
)
(3,720
)
Operating (loss) income
(78,729
)
62,566
45,935
209,240
Depreciation and amortization
20,497
20,275
61,092
65,153
Amortization of purchased intangible
assets
12,280
11,916
37,480
35,415
Stock-based compensation
8,283
6,709
23,671
16,859
Acquisition- and disposition-related
expenses
1,092
6,294
8,495
11,592
Strategic initiative and financial
restructuring-related expenses
(61
)
1,942
2,969
10,988
Deferred compensation plan expense
3,889
2,859
7,369
3,148
Impairment of assets
140,053
—
140,053
—
Other reconciling items, net
(22
)
95
85
260
Adjusted EBITDA
$
107,282
$
112,656
$
327,149
$
352,655
SEGMENT ADJUSTED EBITDA
Supply Chain Services
$
114,021
$
117,474
$
343,486
$
356,978
Performance Services
27,039
24,954
79,768
87,290
Corporate
(33,778
)
(29,772
)
(96,105
)
(91,613
)
Adjusted EBITDA
$
107,282
$
112,656
$
327,149
$
352,655
Net (loss) income attributable to
stockholders
$
(40,195
)
$
46,801
$
58,868
$
153,563
Income tax (benefit) expense
(15,664
)
17,232
17,552
59,766
Amortization of purchased intangible
assets
12,280
11,916
37,480
35,415
Stock-based compensation
8,283
6,709
23,671
16,859
Acquisition- and disposition-related
expenses
1,092
6,294
8,495
11,592
Strategic initiative and financial
restructuring-related expenses
(61
)
1,942
2,969
10,988
Equity in net (income) loss of
unconsolidated affiliates
(753
)
(4,630
)
1,639
(14,547
)
Gain on sale of investment in
unconsolidated affiliates
(11,046
)
—
(11,046
)
—
Impairment of assets
140,053
—
140,053
—
Other reconciling items, net
(7,805
)
3,408
(8,866
)
6,622
Adjusted income before income taxes
86,184
89,672
270,815
280,258
Income tax expense on adjusted income
before income taxes
24,993
23,315
78,536
72,867
Adjusted net income
$
61,191
$
66,357
$
192,279
$
207,391
Supplemental Financial
Information
Reconciliation of GAAP EPS to
Adjusted EPS
(Unaudited)
(In thousands, except per
share data)
Three Months Ended
Nine Months Ended
March 31,
March 31,
2024
2023
2024
2023
Net (loss) income attributable to
stockholders
$
(40,195
)
$
46,801
$
58,868
$
153,563
Income tax (benefit) expense
(15,664
)
17,232
17,552
59,766
Amortization of purchased intangible
assets
12,280
11,916
37,480
35,415
Stock-based compensation
8,283
6,709
23,671
16,859
Acquisition- and disposition-related
expenses
1,092
6,294
8,495
11,592
Strategic initiative and financial
restructuring-related expenses
(61
)
1,942
2,969
10,988
Equity in net (income) loss of
unconsolidated affiliates
(753
)
(4,630
)
1,639
(14,547
)
Gain on sale of investment in
unconsolidated affiliates
(11,046
)
—
(11,046
)
—
Impairment of assets
140,053
—
140,053
—
Other reconciling items, net
(7,805
)
3,408
(8,866
)
6,622
Adjusted income before income taxes
86,184
89,672
270,815
280,258
Income tax expense on adjusted income
before income taxes
24,993
23,315
78,536
72,867
Adjusted net income
$
61,191
$
66,357
$
192,279
$
207,391
Weighted average:
Basic weighted average shares
outstanding
111,156
118,872
116,754
118,668
Dilutive shares
564
944
569
1,164
Weighted average shares outstanding -
diluted
111,720
119,816
117,323
119,832
Basic (loss) earnings per share
attributable to stockholders
$
(0.36
)
$
0.39
$
0.50
$
1.29
Income tax (benefit) expense
(0.14
)
0.14
0.15
0.50
Amortization of purchased intangible
assets
0.11
0.10
0.32
0.30
Stock-based compensation
0.07
0.06
0.20
0.14
Acquisition- and disposition-related
expenses
0.01
0.05
0.07
0.10
Strategic initiative and financial
restructuring-related expenses
—
0.02
0.03
0.09
Equity in net (income) loss of
unconsolidated affiliates
(0.01
)
(0.04
)
0.01
(0.12
)
Gain on sale of investment in
unconsolidated affiliates
(0.10
)
—
(0.09
)
—
Impairment of assets
1.26
—
1.20
—
Other reconciling items, net
(0.07
)
0.03
(0.07
)
0.06
Impact of corporation taxes
(0.22
)
(0.20
)
(0.67
)
(0.61
)
Impact of dilutive shares
—
—
(0.01
)
(0.02
)
Adjusted earnings per share
$
0.55
$
0.55
$
1.64
$
1.73
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240507280917/en/
Investor contact: Ben Krasinski Senior Director, Investor
Relations 704.816.5644 ben_krasinski@premierinc.com
Media contact: Amanda Forster Vice President, Public
Relations 202.879.8004 amanda_forster@premierinc.com
Premier (NASDAQ:PINC)
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