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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2024
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         
Commission File Number: 001-36092
Premier, Inc.
(Exact name of registrant as specified in its charter)
Delaware 35-2477140
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
13034 Ballantyne Corporate Place
Charlotte,
North Carolina
 28277
(Address of principal executive offices) (Zip Code)
(704357-0022
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 Par ValuePINCNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒     No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒ No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filerNon-accelerated filer
Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ☐ No  
As of May 2, 2024, there were 104,820,281 shares of the registrant’s Class A common stock, par value $0.01 per share outstanding.



TABLE OF CONTENTS




CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements made in this Quarterly Report on Form 10-Q for the nine months ended March 31, 2024 for Premier, Inc. (this “Quarterly Report”) that are not statements of historical or current facts, such as those under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” 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 our actual results, performance or achievements to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in 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 our beliefs and expectations regarding future events and trends affecting our business and are necessarily subject to uncertainties, many of which are outside our control. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:
competition which could limit our ability to maintain or expand market share within our industry;
our reliance on administrative fees that we receive from suppliers to our group purchasing organization (“GPO”) programs;
our ability to maintain and add new members for our GPO programs, which will depend in part on competitive pressure to increase the administrative fee share we pay to members;
consolidation in the healthcare industry;
potential delays in recognizing or increasing revenue if the sales cycle or implementation period takes longer than expected;
the impact to our business if members of our GPO programs reduce activity levels or terminate or elect not to renew their contracts on substantially similar terms or at all;
the rate at which the markets for our software as a service (“SaaS”) or licensed-based clinical analytics products and services develop;
the dependency of our members on payments from third-party payers;
our ability to maintain third-party provider and strategic alliances or enter into new alliances;
our ability to timely offer new and innovative products and services;
the portion of our revenues that we receive from our largest members and other customers;
risks and expenses related to future acquisition opportunities and integration of previous or future acquisitions;
the impact on our business and stock price due to our evaluation of potential strategic alternatives;
financial and operational risks associated with non-controlling investments in other businesses or other joint ventures that we do not control, particularly early-stage companies;
pending and potential litigation;
our reliance on Internet infrastructure, bandwidth providers, data center providers and other third parties and our own systems for providing services to our users;
data loss or corruption due to failures or errors in our systems and service disruptions at our data centers, or breaches or failures of our security measures;
the financial, operational, legal and reputational consequences of cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our members or other third parties;
our ability to use, disclose, de-identify or license data and to integrate third-party technologies;
our use of “open source” software;
our dependency on contract manufacturing facilities located in various parts of the world;
inventory risk we face in the event of a potential material decline in demand or price for the personal protective equipment or other products we may have purchased at elevated market prices or fixed prices;
our ability to attract, hire, integrate and retain key personnel;
the impact of continuing uncertain economic conditions to our business operations due to, but not limited to, inflation and the risk of global recession;
the impact of the continuing financial and operational uncertainty due to pandemics, epidemics or public health emergencies and associated supply chain disruptions;
3


the financial and operational uncertainty due to global economic and political instability and conflicts;
the impact of global climate change or by regulatory responses to such change;
changes and uncertainty in the political, economic or regulatory environment affecting healthcare organizations, including with respect to the status of the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010 and pandemic-related public health and reimbursement measures;
our compliance with complex international, federal and state laws, rules and regulations governing financial relationships among healthcare providers and the submission of false or fraudulent healthcare claims;
interpretation and enforcement of current or future antitrust laws and regulations;
compliance with complex federal, state and international privacy, security and breach notification laws;
compliance with current or future laws, rules or regulations relating to information blocking provisions of the 21st Century Cures Act issued by the Office of the National Coordinator for Health Information Technology (the “ONC Rules”) that may cause our certified Health Information Technology products to be regulated by the ONC Rules;
compliance with current or future laws, rules and regulations adopted by the Food and Drug Administration applicable to our software applications that may be considered medical devices;
adequate protection of our intellectual property and potential claims against our use of the intellectual property of third parties;
potential sales and use, franchise and income tax liability in certain jurisdictions;
changes in tax laws that materially impact our tax rate, income tax expense, anticipated tax benefits, deferred tax assets, cash flows and profitability and potential material tax disputes;
the impact of payments required under notes payable to former limited partners related to the early termination of the Unit Exchange and Tax Receivable Acceleration Agreements (the “Unit Exchange Agreements”) issued in connection with our August 2020 Restructuring on our overall cash flow and our ability to fully realize the expected tax benefits to match such fixed payment obligations under those notes payable;
provisions in our certificate of incorporation and bylaws and provisions of Delaware law and other applicable laws that discourage or prevent strategic transactions, including a takeover of us;
our indebtedness and our ability to obtain additional financing on favorable terms, including our ability to renew or replace our existing long-term credit facility at or before maturity;
fluctuation of our quarterly cash flows, revenues and results of operations;
failure to maintain an effective system of internal controls over financial reporting or an inability to remediate any weaknesses identified and the related costs of remediation;
the impact on the price of our Class A common stock (“common stock”) if we cease paying dividends or reduce dividend payments from current levels;
the number of shares of our common stock repurchased by us pursuant to any then existing common stock repurchase program and the timing of any such repurchases;
the number of shares of common stock eligible for sale after the issuance of common stock in our August 2020 Restructuring and the potential impact of such sales; and
the risk factors discussed under the heading “Risk Factors” under Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2023 (the “2023 Annual Report”) filed with the Securities and Exchange Commission (“SEC”), as updated by our Quarterly Reports on Form 10-Q (including this Quarterly Report) filed with the SEC.
More information on potential factors that could affect our 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” or similarly captioned sections of this Quarterly Report and our other periodic and current filings made from time to time with the SEC, which are available on our website at http://investors.premierinc.com (the contents of which are not part of this Quarterly Report). You should not place undue reliance on any of our forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Furthermore, we cannot guarantee future results, events, levels of activity, performance or achievements.
Certain Definitions
For periods on or after August 11, 2020, references to “members” are references to health systems and other customers that utilize any of our programs or services, some of which were formerly member owners who participated in our GPO programs and were also limited partners of Premier Healthcare Alliance L.P. (“Premier LP”).
4


References to the “August 2020 Restructuring” are references to our corporate restructuring on August 11, 2020 in which we (i) eliminated our dual-class ownership structure through an exchange under which member owners who were limited partners of Premier LP converted their Class B common units in Premier LP and corresponding Class B common shares of Premier, Inc. into our common stock, on a one-for-one basis, and (ii) exercised our right to terminate the Tax Receivable Agreement (the “TRA”) by providing all former limited partners a notice of termination and the amount of the expected payment to be made to each limited partner pursuant to the early termination provisions of the TRA with a determination date of August 10, 2020. For additional information and details regarding the August 2020 Restructuring, see our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.
References to the “Subsidiary Reorganization” are references to an internal legal reorganization of our corporate subsidiaries in December 2021 for the purpose of simplifying our subsidiary reporting structure. For additional information and details regarding the Subsidiary Reorganization, see our Quarterly Report on Form 10-Q for the period ended December 31, 2021.
References to “adjacent markets” are references to the non-provider healthcare markets penetrated by Premier, Inc.’s businesses and brands that are designed to diversify revenue for the Company. This includes PINC AI Clinical Decision Support serving providers and payers; PINC AI Applied Sciences serving biotech, pharmaceutical and medical device companies; Contigo Health that serves self-insured employers, including healthcare providers that are also payers (“payviders”); and Remitra that serves healthcare suppliers and providers.
5


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PREMIER, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
March 31, 2024June 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 
Inventory77,795 76,932 
Prepaid expenses and other current assets79,633 60,387 
Total current assets674,699 641,626 
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 
Goodwill995,852 1,012,355 
Deferred income tax assets805,741 653,629 
Deferred compensation plan assets52,754 50,346 
Investments in unconsolidated affiliates228,511 231,826 
Operating lease right-of-use assets21,700 29,252 
Other assets99,057 110,115 
Total assets$3,363,730 $3,371,487 
Liabilities and stockholders' equity
Accounts payable$67,341 $54,375 
Accrued expenses69,492 47,113 
Revenue share obligations291,762 262,288 
Accrued compensation and benefits77,780 60,591 
Deferred revenue20,502 24,311 
Current portion of notes payable to former limited partners101,059 99,665 
Line of credit and current portion of long-term debt1,008 216,546 
Current portion of liability related to the sale of future revenues36,615  
Other current liabilities60,120 50,574 
Total current liabilities725,679 815,463 
Long-term debt, less current portion 734 
Liability related to the sale of future revenues, less current portion569,042  
Notes payable to former limited partners, less current portion25,555 101,523 
Deferred compensation plan obligations52,754 50,346 
Operating lease liabilities, less current portion13,074 21,864 
Other liabilities54,328 47,202 
Total liabilities1,440,432 1,037,132 
Commitments and contingencies (Note 14)
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 capital2,104,916 2,178,134 
Retained earnings67,400 405,102 
Accumulated other comprehensive loss(1)(8)
Total stockholders' equity1,923,298 2,334,355 
Total liabilities and stockholders' equity$3,363,730 $3,371,487 
See accompanying notes to the unaudited condensed consolidated financial statements.
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PREMIER, INC.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
(In thousands, except per share data)
Three Months EndedNine Months Ended
March 31,March 31,
2024202320242023
Net revenue:
Net administrative fees$156,819 $148,441 $455,409 $452,870 
Software licenses, other services and support129,187 116,579 377,728 359,795 
Services and software licenses286,006 265,020 833,137 812,665 
Products56,590 57,212 162,956 183,066 
Net revenue342,596 322,232 996,093 995,731 
Cost of revenue:
Services and software licenses70,336 54,149 200,458 163,428 
Products51,927 49,013 143,437 168,507 
Cost of revenue122,263 103,162 343,895 331,935 
Gross profit220,333 219,070 652,198 663,796 
Operating expenses:
Selling, general and administrative286,121 143,587 566,331 416,165 
Research and development661 1,001 2,452 2,976 
Amortization of purchased intangible assets12,280 11,916 37,480 35,415 
Operating expenses299,062 156,504 606,263 454,556 
Operating (loss) income(78,729)62,566 45,935 209,240 
Equity in net income (loss) of unconsolidated affiliates753 4,630 (1,639)14,547 
Interest (expense) income, net(1,763)(4,269)870 (11,759)
Other income, net14,913 2,954 18,500 3,720 
Other income, net13,903 3,315 17,731 6,508 
(Loss) income before income taxes(64,826)65,881 63,666 215,748 
Income tax (benefit) expense(15,664)17,232 17,552 59,766 
Net (loss) income(49,162)48,649 46,114 155,982 
Net loss (income) attributable to non-controlling interest8,967 (1,848)12,754 (2,419)
Net (loss) income attributable to stockholders$(40,195)$46,801 $58,868 $153,563 
Comprehensive (loss) income:
Net (loss) income$(49,162)$48,649 $46,114 $155,982 
Comprehensive loss (income) attributable to non-controlling interest8,967 (1,848)12,754 (2,419)
Foreign currency translation (loss) gain(16)1 7 (8)
Comprehensive (loss) income attributable to stockholders$(40,211)$46,802 $58,875 $153,555 
Weighted average shares outstanding:
Basic111,156 118,872 116,754 118,668 
Diluted111,156 119,816 117,323 119,832 
(Loss) earnings per share attributable to stockholders:
Basic$(0.36)$0.39 $0.50 $1.29 
Diluted$(0.36)$0.39 $0.50 $1.28 
See accompanying notes to the unaudited condensed consolidated financial statements.
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PREMIER, INC.
Condensed Consolidated Statements of Stockholders' Equity
Nine Months Ended March 31, 2024 and 2023
(Unaudited)
(In thousands, except per share data)
Class A
Common Stock
Treasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive (Loss) IncomeTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at June 30, 2023119,158 $1,256 6,429 $(250,129)$2,178,134 $405,102 $(8)$2,334,355 
Issuance of Class A common stock under equity incentive plan514 5 — —  — — 5 
Stock-based compensation expense— — — — 6,692 — — 6,692 
Repurchase of vested restricted units for employee tax-withholding— — — — (5,178)— — (5,178)
Net income— — — — — 42,410 — 42,410 
Net loss attributable to non-controlling interest— — — — (2,351)2,351 —  
Change in ownership of consolidated entity— — — — 27 — — 27 
Dividends ($0.21 per share)
— — — — — (25,603)— (25,603)
Foreign currency translation adjustment— — — — — — (3)(3)
Balance at September 30, 2023119,672 1,261 6,429 (250,129)2,177,324 424,260 (11)2,352,705 
Issuance of Class A common stock under equity incentive plan56 — — —  — —  
Issuance of Class A common stock under employee stock purchase plan88 1 — — 1,975 — — 1,976 
Stock-based compensation expense— — — — 8,378 — — 8,378 
Repurchase of vested restricted units for employee tax-withholding— — — — (151)— — (151)
Net income— — — — — 52,866 — 52,866 
Net loss attributable to non-controlling interest— — — — (1,436)1,436 —  
Change in ownership of consolidated entity— — — — 25 — — 25 
Dividends ($0.21 per share)
— — — — — (25,616)— (25,616)
Foreign currency translation adjustment— — — — — — 26 26 
Balance at December 31, 2023119,816 1,262 6,429 (250,129)2,186,115 452,946 15 2,390,209 
Issuance of Class A common stock under equity incentive plan35 — — —  — —  
Treasury stock(15,031)— 15,031 (322,992)(80,000)— — (402,992)
Retirement of Class A common stock— (150)(15,031)322,992 — (322,842)—  
Stock-based compensation expense— — — — 8,145 — — 8,145 
Repurchase of vested restricted units for employee tax-withholding— — — — (403)— — (403)
Net loss— — — — — (49,162)— (49,162)
Net loss attributable to non-controlling interest— — — — (8,967)8,967 —  
Change in ownership of consolidated entity— — — — 26 — — 26 
Dividends ($0.21 per share)
— — — — — (22,509)— (22,509)
Foreign currency translation adjustment— — — — — — (16)(16)
Balance at March 31, 2024104,820 $1,112 6,429 $(250,129)$2,104,916 $67,400 $(1)$1,923,298 
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Class A
Common Stock
Treasury StockAdditional Paid-In CapitalRetained EarningsAccumulated Other Comprehensive (Loss) IncomeTotal Stockholders' Equity
SharesAmountSharesAmount
Balance at June 30, 2022118,052 $1,245 6,429 $(250,129)$2,166,047 $331,690 $(3)$2,248,850 
Issuance of Class A common stock under equity incentive plan694 7 — — 637 — — 644 
Stock-based compensation expense— — — — 7,136 — — 7,136 
Repurchase of vested restricted units for employee tax-withholding— — — — (13,089)— — (13,089)
Net income— — — — — 42,959 — 42,959 
Net income attributable to non-controlling interest— — — — 243 (243)—  
Change in ownership of consolidated entity— — — — 26 — — 26 
Dividends ($0.21 per share)
— — — — — (25,097)— (25,097)
Foreign currency translation adjustment— — — — — — (10)(10)
Balance at September 30, 2022118,746 1,252 6,429 (250,129)2,161,000 349,309 (13)2,261,419 
Issuance of Class A common stock under equity incentive plan54 — — — 60 — — 60 
Issuance of Class A common stock under employee stock purchase plan67 1 — — 2,267 — — 2,268 
Stock-based compensation expense— — — — 2,679 — — 2,679 
Repurchase of vested restricted units for employee tax-withholding— — — — (41)— — (41)
Net income— — — — — 64,374 — 64,374 
Net income attributable to non-controlling interest— — — — 328 (328)—  
Change in ownership of consolidated entity— — — — 26 — — 26 
Dividends ($0.21 per share)
— — — — — (25,303)— (25,303)
Foreign currency translation adjustment— — — — — — 1 1 
Other— — — — 590 — — 590 
Balance at December 31, 2022118,867 1,253 6,429 (250,129)2,166,909 388,052 (12)2,306,073 
Issuance of Class A common stock under equity incentive plan13 — — — — — —  
Stock-based compensation expense— — — — 6,560 — — 6,560 
Repurchase of vested restricted units for employee tax-withholding— — — — (297)— — (297)
Net income— — — — — 48,649 — 48,649 
Net income attributable to non-controlling interest— — — — 1,848 (1,848)—  
Change in ownership of consolidated entity— — — — 28 — — 28 
Dividends ($0.21 per share)
— — — — — (25,223)— (25,223)
Foreign currency translation adjustment— — — — — — 1 1 
Balance at March 31, 2023118,880 $1,253 6,429 $(250,129)$2,175,048 $409,630 $(11)$2,335,791 
See accompanying notes to the unaudited condensed consolidated financial statements.
9


PREMIER, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended March 31,
20242023
Operating activities
Net income$46,114 $155,982 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization98,572 100,568 
Equity in net loss (income) of unconsolidated affiliates1,639 (14,547)
Deferred income taxes(152,112)2,083 
Stock-based compensation23,215 16,375 
Impairment of assets140,053  
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 payable15,673 8,641 
Revenue share obligations29,474 12,717 
Accrued expenses, deferred revenue and other liabilities40,383 30,879 
Net cash provided by operating activities190,270 331,178 
Investing activities
Purchases of property and equipment(67,626)(58,464)
Sale of investment in unconsolidated affiliates12,753  
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 revenues629,820  
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 flows7 (8)
Net (decrease) increase in cash and cash equivalents(27,937)5,350 
Cash and cash equivalents at beginning of period89,793 86,143 
Cash and cash equivalents at end of period$61,856 $91,493 
See accompanying notes to the unaudited condensed consolidated financial statements.
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PREMIER, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) ORGANIZATION AND BASIS OF PRESENTATION
Organization
Premier, Inc. (“Premier” or the “Company”) is a publicly held, for-profit Delaware corporation located in the United States. The Company is a holding company with no material business operations of its own. The Company’s primary asset is its equity interest in its wholly owned subsidiary Premier Healthcare Solutions, Inc., a Delaware corporation (“PHSI”). The Company conducts substantially all of its business operations through PHSI and its other consolidated subsidiaries. The Company, together with its subsidiaries and affiliates, is a leading technology-driven healthcare improvement company that unites hospitals, health systems, physicians, employers, product suppliers, service providers, and other healthcare providers and organizations to improve and innovate in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry and continues to expand its capabilities to more fully address and coordinate care improvement and standardization in the employer, payer and life sciences markets. Additionally, the Company also provides some of the various products and services noted above to non-healthcare businesses, including through its direct sourcing activities as well as continued access to its group purchasing organization (“GPO”) programs for non-healthcare members whose contracts were sold to OMNIA Partners, LLC (“OMNIA”) (see Note 9 - Liability Related to the Sale of Future Revenues).
The Company’s business model and solutions are designed to provide its members and other customers access to scale efficiencies, spread the cost of their development, provide actionable intelligence derived from anonymized data in the Company’s enterprise data warehouse, mitigate the risk of innovation and disseminate best practices to help the Company’s members and other customers succeed in their transformation to higher quality and more cost-effective healthcare.
The Company, together with its subsidiaries and affiliates, delivers its integrated platform of solutions through two business segments: Supply Chain Services and Performance Services. See Note 15 - Segments for further information related to the Company’s reportable business segments. The Company has no significant foreign operations or revenues. The Supply Chain Services segment includes one of the largest national healthcare GPO programs in the United States, serving acute and continuum of care sites and providing supply chain co-management, purchased services and direct sourcing activities. The Performance Services segment consists of three sub-brands: PINC AITM, the Company’s technology and services platform with offerings that help optimize performance in three main areas – clinical intelligence, margin improvement and value-based care – using advanced analytics to identify improvement opportunities, consulting and managed services for clinical and operational design, and workflow solutions to hardwire sustainable change in the provider, payer and life sciences markets; Contigo Health®, the Company’s direct-to-employer business which provides third-party administrator services and management of health-benefit programs that enable healthcare providers that are also payers (e.g., payviders) and employers to contract directly with healthcare providers as well as partner with healthcare providers to provide employers access to a specialized care network through Contigo Health’s centers of excellence program and cost containment and wrap network; and Remitra®, the Company’s digital invoicing and payables automation business which provides financial support services to healthcare suppliers and providers.
Principles of Consolidation
The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC and in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries over which the Company exercised control and when applicable, entities for which the Company had a controlling financial interest or was the primary beneficiary. All intercompany transactions have been eliminated upon consolidation. Accordingly, certain information and disclosures normally included in annual financial statements have been condensed or omitted. The accompanying condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, consisting of normal recurring adjustments, unless otherwise disclosed. Certain amounts in prior periods have been reclassified to conform to the current period presentation. The Company believes that the disclosures are adequate to make the information presented not misleading and should be read in conjunction with the audited consolidated financial statements and related footnotes contained in the 2023 Annual Report.
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Supplementary Cash Flows Information
The following table presents supplementary cash flows information for the nine months ended March 31, 2024 and 2023 (in thousands):
Nine Months Ended March 31,
20242023
Supplemental schedule of non-cash investing and financing activities:
Non-cash additions to property and equipment$24 $5 
Accrued dividend equivalents1,459 778 
Accrued excise taxes related to repurchase of Class A common stock2,992  
Non-cash investment in unconsolidated affiliates 7,800 
Use of Estimates in the Preparation of Financial Statements
The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Significant estimates are evaluated on an ongoing basis, including, but not limited to, estimates for net administrative fees revenue, software licenses, other services and support revenue, contract assets, deferred revenue, contract costs, allowances for credit losses, reserves for net realizable value of inventory, obsolete inventory, useful lives of property and equipment, stock-based compensation, deferred tax balances including valuation allowances on deferred tax assets, uncertain tax positions, values of investments not publicly traded, projected future cash flows used in the evaluation of asset impairments, values of call rights, values of earn-out liabilities and the allocation of purchase prices. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
(2) SIGNIFICANT ACCOUNTING POLICIES
There have been no material changes to the Company’s significant accounting policies as described in the 2023 Annual Report, except as described below.
Liability Related to the Sale of Future Revenues
The Company accounts for the sale of future revenues as a liability, with both current and non-current portions. In order to determine the timing of the reduction in debt associated with the sale of future revenues, the Company estimates the total future revenues expected to be remitted to the purchaser. The Company recognizes interest expense based on an estimated effective annual interest rate. The Company determines the effective interest rate based on recognized and expected future revenue and maintains a consistent interest rate throughout the life of the agreement. This estimate contains significant assumptions that impact both the amount of debt and the interest expense recorded over the life of the agreement. To the extent the amount or timing of future payments varies materially from the original estimate, the Company will make a cumulative adjustment to the carrying amount of the debt, which will be recorded as a non-cash gain or loss in other income in the Condensed Consolidated Statements of Income and Comprehensive Income.
Treasury Stock and Share Retirement
Treasury stock purchases are recorded at cost. As the Company retires treasury shares acquired through share repurchases, the Company returns those shares to the status of authorized but unissued. When treasury shares are retired, the Company’s policy is to allocate the excess of the repurchase price over the par value of shares acquired to retained earnings.
(3) BUSINESS ACQUISITIONS
Acquisition of TRPN Direct Pay, Inc. and Devon Health, Inc. Assets
On October 13, 2022, the Company, through its consolidated subsidiary Contigo Health, LLC (“Contigo Health”), acquired certain assets (the “TRPN Transferred Assets”) of TRPN Direct Pay, Inc. and Devon Health, Inc. (collectively, “TRPN”), including contracts with more than 900,000 providers (collectively, the “Assumed Contracts”), and agreed to assume certain liabilities and obligations of TRPN with regard to the Assumed Contracts (referred to as the “TRPN acquisition”). The TRPN Transferred Assets relate to businesses of TRPN focused on improving access to quality healthcare and reducing the cost of medical claims through pre-negotiated discounts with network providers, including acute care hospitals, surgery centers,
12


physicians and other continuum of care providers in the United States. Contigo Health also agreed to license proprietary cost containment technology of TRPN.
The purchase price paid by the Company to complete the TRPN acquisition consisted of cash of $177.5 million, funded with borrowings under the Company’s Credit Facility (as defined in Note 8 - Debt and Notes Payable) and cash on hand, of which $17.8 million was placed in escrow to satisfy indemnification obligations of TRPN to Contigo Health and its affiliates and other parties related thereto under the purchase agreement governing the TRPN acquisition.
The Company has accounted for the TRPN acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values. The total fair value initially assigned to intangible assets acquired was $116.6 million, consisting primarily of the provider network.
The TRPN acquisition resulted in the initial recognition of $60.9 million of goodwill attributable to the anticipated profitability of TRPN, based on the purchase price paid in the acquisition compared to the fair value of the net assets acquired. The TRPN acquisition was considered an asset acquisition for income tax purposes. Accordingly, the Company expects tax goodwill to be deductible for tax purposes. As of March 31, 2024, the intangible assets and goodwill recognized as a result of the TRPN acquisition were fully impaired (see Note 7 - Goodwill and Intangible Assets).
TRPN has been integrated within Premier under Contigo Health and is reported as part of the Performance Services Segment. Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to the Company’s historical consolidated financial statements.
(4) INVESTMENTS
Investments in Unconsolidated Affiliates
The Company’s investments in unconsolidated affiliates consisted of the following (in thousands):
Equity in Net Income (Loss)
Three Months EndedNine Months Ended
Carrying ValueMarch 31,March 31,
March 31, 2024June 30, 20232024202320242023
FFF$136,080 $136,080 $ $1,370 $ $9,075 
Exela31,724 32,905 869 2,865 (1,181)3,635 
Qventus16,000 16,000     
Prestige15,749 15,503 284 139 246 610 
Other investments28,958 31,338 (400)256 (704)1,227 
Total investments$228,511 $231,826 $753 $4,630 $(1,639)$14,547 
The Company, through its indirect, wholly owned subsidiary Premier Supply Chain Improvement, Inc. (“PSCI”), held a 49% interest in FFF Enterprises, Inc. (“FFF”) through its ownership of stock of FFF at March 31, 2024 and June 30, 2023. On March 3, 2023, the Company and the majority shareholder of FFF amended the FFF shareholders’ agreement and as of the date of the amendment, the Company accounts for its investment in FFF at cost less impairments, if any, plus or minus any observable changes in fair value (refer to the 2023 Annual Report for additional information and details regarding the March 2023 amendment). The Company accounts for its investment in FFF as part of the Supply Chain Services segment.
The Company, through its consolidated subsidiary, ExPre Holdings, LLC (“ExPre”), held an approximate 6% interest in Exela Holdings, Inc. (“Exela”) through ExPre’s ownership of Exela Class A common stock at March 31, 2024 and June 30, 2023. At March 31, 2024 and June 30, 2023, the Company owned approximately 15% of the membership interest of ExPre, with the remainder of the membership interests held by 11 member health systems or their affiliates. The Company accounts for its investment in Exela using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.
The Company, through PHSI, held an approximate 7% interest in Qventus, Inc. (“Qventus”) through PHSI’s ownership of Qventus Series C preferred stock at March 31, 2024 and June 30, 2023. The Company accounts for its investment in Qventus at cost less impairments, if any, plus or minus any observable changes in fair value. The Company includes Qventus as part of the Performance Services segment.
The Company, through its consolidated subsidiary, PRAM Holdings, LLC (“PRAM”), held an approximate 20% interest in Prestige Ameritech Ltd. (“Prestige”) through PRAM’s ownership of Prestige limited partnership units at March 31, 2024 and June 30, 2023. At March 31, 2024 and June 30, 2023, the Company owned approximately 26% of the membership interest of
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PRAM, with the remainder of the membership interests held by 16 member health systems or their affiliates. The Company accounts for its investment in Prestige using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.
(5) FAIR VALUE MEASUREMENTS
Recurring Fair Value Measurements
The following table represents the Company’s financial assets and liabilities, which are measured at fair value on a recurring basis (in thousands):
Fair Value of Financial Assets and LiabilitiesQuoted Prices in Active Markets for Identical Assets (Level 1)Significant Other Observable Inputs (Level 2)Significant Unobservable Inputs
(Level 3)
March 31, 2024
Deferred compensation plan assets$59,435 $59,435 $ $ 
Total assets59,435 59,435   
Earn-out liabilities28,167   28,167 
Total liabilities$28,167 $ $ $28,167 
June 30, 2023
Cash equivalents$77 $77 $ $ 
Deferred compensation plan assets55,566 55,566   
Total assets55,643 55,643   
Earn-out liabilities26,603   26,603 
Total liabilities$26,603 $ $ $26,603 
Deferred compensation plan assets consisted of highly liquid mutual fund investments, which were classified as Level 1. The current portion of deferred compensation plan assets ($6.7 million and $5.2 million at March 31, 2024 and June 30, 2023, respectively) was included in prepaid expenses and other current assets in the accompanying Condensed Consolidated Balance Sheets.
Financial Instruments Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)
Earn-out liabilities
Earn-out liabilities have been established in connection with certain acquisitions, including the acquisition of substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc. (the “Acurity and Nexera asset acquisition”) in February 2020. The earn-out liability related to the Acurity and Nexera asset acquisition was based upon the Company’s achievement of a range of member renewals on terms agreed to by the Company and Greater New York Hospital Association based on prevailing market conditions in December 2023. Earn-out liabilities are classified as Level 3 of the fair value hierarchy.
Acurity and Nexera Earn-out (a)
The earn-out liability arising from expected earn-out payments related to the Acurity and Nexera asset acquisition was measured on the acquisition date using a probability-weighted expected payment model and is remeasured periodically due to changes in management’s estimates of the number of transferred member renewals and market conditions. In determining the fair value of the contingent liabilities, management reviews the current results of the acquired business, along with projected results for the remaining earn-out period, to calculate the expected earn-out payment to be made based on the contractual terms set out in the acquisition agreement. The Acurity and Nexera earn-out liability utilized a credit spread of 1.0% at March 31, 2024 and 1.6% at June 30, 2023. At March 31, 2024, the most likely outcome was determined to be $30.0 million from an undiscounted range of outcomes between $0 and $30.0 million. The fair value of the Acurity and Nexera earn-out liability at March 31, 2024 and June 30, 2023 was $28.2 million and $23.1 million, respectively.
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Input assumptionsAs of March 31, 2024As of June 30, 2023
Probability of transferred member renewal percentage < 50% %5.0 %
Probability of transferred member renewal percentage between 50% and 65% %10.0 %
Probability of transferred member renewal percentage between 65% and 80% %25.0 %
Probability of transferred member renewal percentage > 80%100.0 %60.0 %
Credit spread1.0 %1.6 %
_________________________________
(a)The Acurity and Nexera earn-out liability was initially valued as of February 28, 2020.
A reconciliation of the Company’s earn-out liabilities is as follows (in thousands):
Beginning Balance
Purchases (Settlements) (a)
(Gain)/Loss (b)
Ending Balance
Three Months Ended March 31, 2024
Earn-out liabilities$27,876 $ $291 $28,167 
Total Level 3 liabilities$27,876 $ $291 $28,167 
Three Months Ended March 31, 2023
Earn-out liabilities$24,098 $ $3,076 $27,174 
Total Level 3 liabilities$24,098 $ $3,076 $27,174 
Nine Months Ended March 31, 2024
Earn-out liabilities$26,603 $(1,375)$2,939 $28,167 
Total Level 3 liabilities$26,603 $(1,375)$2,939 $28,167 
Nine Months Ended March 31, 2023
Earn-out liabilities$22,789 $1,460 $2,925 $27,174 
Total Level 3 liabilities$22,789 $1,460 $2,925 $27,174 
_________________________________
(a)Settlements for the nine months ended March 31, 2024 represent payments on earn-out liabilities. Purchases for the nine months ended March 31, 2023 includes an earn-out which had not been earned or paid as of March 31, 2023.
(b)Gains on level 3 liability balances will decrease the liability ending balance, and losses on level 3 liability balances will increase the liability ending balance.
Non-Recurring Fair Value Measurements
As a result of the August 2020 Restructuring, the Company recorded non-interest bearing notes payable to former limited partners during the first quarter of fiscal year 2021. Although these notes are non-interest bearing, they include a Level 2 input associated with an implied fixed annual interest rate of 1.8% (see Note 8 - Debt and Notes Payable). As of March 31, 2024 and June 30, 2023, the notes payable to former limited partners were recorded net of discounts of $1.7 million and $4.2 million, respectively.
During the three months ended March 31, 2024, in conjunction with the Company’s assessment to determine whether it was more likely than not that the fair values of any of its reporting units were below their carrying amounts, the Company recorded pre-tax impairment charges in selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Income and Comprehensive Income of $9.8 million for property and equipment and $0.3 million for operating lease right-of-use assets related to the Contigo Health reporting unit. Goodwill and intangible assets related to the Contigo Health reporting unit were also impaired as a result of this analysis (see Note 7 - Goodwill and Intangible Assets).
Financial Instruments For Which Fair Value Only is Disclosed
The fair values of non-interest bearing notes payable, classified as Level 2, were equal to the carrying value at both March 31, 2024 and June 30, 2023 based on an assumed market interest rate of 1.6%.
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Other Financial Instruments
The fair values of cash, accounts receivable, accounts payable, accrued liabilities and the Credit Facility (as defined in Note 8 - Debt and Notes Payable) approximated carrying value due to the short-term nature of these financial instruments.
(6) CONTRACT BALANCES
Deferred Revenue
Revenue recognized during the nine months ended March 31, 2024 that was included in the opening balance of deferred revenue at June 30, 2023 was $20.7 million, which is a result of satisfying certain performance obligations.
Performance Obligations
A performance obligation is a contractual obligation to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contracts may have a single performance obligation as the agreement to transfer individual goods or services is not separately identifiable from other contractual obligations and, therefore, not distinct, while other contracts may have multiple performance obligations, most commonly due to the contract covering multiple phases or deliverable arrangements (licensing fees, software-as-a-service (“SaaS”) subscription fees, maintenance and support fees, and professional fees for consulting services).
Refer to the Company’s significant accounting policies in the 2023 Annual Report for discussion of revenue recognition on contracts with customers.
Net revenue of $7.3 million and $7.9 million was recognized during the three and nine months ended March 31, 2024, respectively, from performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by increases of $6.2 million and $3.3 million, respectively, in net administrative fees revenue related to under-forecasted cash receipts received in the current period and increases of $1.1 million and $4.6 million, respectively, associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.
Net revenue of $5.4 million and $3.9 million was recognized during the three and nine months ended March 31, 2023, respectively, from performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by an increase of $6.1 million and $6.6 million, respectively, in net administrative fees revenue related to under-forecasted cash receipts received in the current period. These increases were partially offset by a reduction of $0.7 million and $2.7 million, respectively, associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.
Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of March 31, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $757.3 million. The Company expects to recognize approximately 37% of the remaining performance obligations over the next twelve months and an additional 22% over the following twelve months, with the remainder recognized thereafter.
(7) GOODWILL AND INTANGIBLE ASSETS
Fiscal 2024 Impairment
In connection with the preparation of its quarterly financial statements during the third quarter of fiscal 2024, the Company assessed changes in circumstances that occurred during the quarter to determine whether it was more likely than not that the fair values of any of its reporting units were below their carrying amounts. While there was no single determinative event or factor, potential triggering events during the third quarter of fiscal 2024 led the Company to conclude that when considering the events and factors in totality, it was more likely than not that the fair value of the Contigo Health reporting unit was below its carrying value at March 31, 2024. The fair value of the reporting unit was computed using a discounted cash flow analysis. The discounted cash flow model uses thirteen-year forecasted cash flows plus a terminal value based on capitalizing the last period’s cash flows using a perpetual growth rate. The Company’s significant assumptions in the discounted cash flow model include, but are not limited to, a discount rate utilizing a weighted average cost of capital, revenue growth rates (including perpetual growth rate), EBITDA margin percentages and debt-free net cash flows of the reporting unit’s business. These assumptions were developed in consideration of current market conditions and future expectations, which include, but were not limited to, new product offerings, market demand and impacts from competition. As a result, during the three and nine months ended March 31, 2024, the Company recorded an impairment charge related to the Contigo Health reporting unit recorded in selling, general and administrative expense in the accompanying Condensed Consolidated Statements of Income and Comprehensive
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Income. The pre-tax impairment charges comprised of $16.5 million for goodwill, $96.1 million for the provider network, $11.9 million for customer relationships, $0.6 million for technology, $0.3 million for non-compete agreements and $4.6 million for other intangible assets.
Fiscal 2023 Impairment
During the year ended June 30, 2023, the Company recorded pre-tax goodwill impairment charges of $54.4 million and $2.3 million related to the Contigo Health and Direct Sourcing reporting units, respectively. At March 31, 2024, the Contigo Health reporting unit’s goodwill and intangible assets were fully impaired.
Goodwill
A reconciliation of goodwill by segment is as follows (in thousands):
Supply Chain ServicesPerformance ServicesTotal
June 30, 2023$386,206 $626,149 $1,012,355 
Impairment (16,503)(16,503)
March 31, 2024$386,206 $609,646 $995,852 
At March 31, 2024, the Company had accumulated impairment losses to goodwill at Supply Chain Services and Performance Services of $2.3 million and $70.9 million, respectively. At June 30, 2023, the Company had accumulated impairment losses to goodwill at Supply Chain Services and Performance Services of $2.3 million and $54.4 million, respectively.
Intangible Assets, Net
Intangible assets, net consisted of the following (in thousands):
March 31, 2024June 30, 2023
Useful LifeGrossAccumulated AmortizationNetGrossAccumulated AmortizationNet
Member relationships14.7 years$386,100 $(156,370)$229,730 $386,100 $(136,751)$249,349 
Provider network15.0 years   106,500 (5,029)101,471 
Technology7.1 years98,517 (71,984)26,533 99,317 (67,581)31,736 
Customer relationships9.3 years41,430 (30,959)10,471 57,930 (31,846)26,084 
Trade names6.8 years18,420 (13,052)5,368 18,920 (11,983)6,937 
Non-compete agreements5.2 years17,315 (11,528)5,787 17,715 (9,738)7,977 
Other (a)
4.1 years3,432 (2,268)1,164 9,232 (2,756)6,476 
Total$565,214 $(286,161)$279,053 $695,714 $(265,684)$430,030 
_________________________________
(a)Includes a $1.0 million indefinite-lived asset as of June 30, 2023.
The net carrying value of intangible assets by segment was as follows (in thousands):
March 31, 2024June 30, 2023
Supply Chain Services$246,271 $269,710 
Performance Services (a)
32,782 160,320 
Total intangible assets, net$279,053