Form 8-K - Current report

false 0001577916 0001577916 2024-11-05 2024-11-05

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): November 5, 2024

 

 

Premier, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-36092		35-2477140
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

13034 Ballantyne Corporate Place

Charlotte, NC 28277

(Address of principal executive offices) (Zip Code)

[phone]

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol		Name of each exchange on which registered
Class A Common Stock, $0.01 Par Value		PINC		NASDAQ Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).

Emerging 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. ☐

 

 

 

---

Item 2.02.

Results of Operations and Financial Condition

On November 5, 2024, Premier, Inc. (the “Company”) issued a press release reporting the financial results of the Company for the three months ended September 30, 2024. A copy of the press release is attached to this report as Exhibit 99.1 and is incorporated herein by reference.

As discussed in the press release, the Company held a conference call and webcast on November 5, 2024. Supplemental slides referenced during the conference call and webcast were available on the Company’s website for viewing by participants. A transcript of the conference call and webcast together with the supplemental slides are attached as Exhibits 99.2 and 99.3, respectively, to this report and are incorporated herein by reference.

 

Item 7.01.

Regulation FD Disclosure

As noted in Item 2.02 of this report, the Company held a conference call and webcast on November 5, 2024, to discuss the Company’s financial results for the three months ended September 30, 2024, as reported in the Company’s November 5, 2024 press release. A copy of the press release, which contains additional information regarding how to access the conference call and webcast and how to listen to a recorded playback, is attached as Exhibit 99.1 to this report and is incorporated herein by reference. A transcript of the conference call and webcast together with supplemental slides referenced during the conference call and webcast are attached as Exhibits 99.2 and 99.3, respectively, to this report and are incorporated herein by reference.

* * * *

The information discussed under Item 2.02 and Item 7.01 above, including Exhibits 99.1, 99.2 and 99.3, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, or incorporated by reference in any filing by the Company under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

 

Item 9.01.

Financial Statements and Exhibits

 

(d)

Exhibits

 

Exhibit No.		Description
99.1		Press release of Premier, Inc. dated November 5, 2024.
99.2		Transcript of fiscal 2025 first quarter earnings call of Premier, Inc.
99.3		Supplemental slides referenced during fiscal 2025 first quarter earnings call of Premier, Inc.
104		Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document).

---

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Premier, Inc.
By:		/s/ Michael J. Alkire
Name:		Michael J. Alkire
Title:		President and Chief Executive Officer

Date: November 6, 2024

Exhibit 99.1

 

Premier, Inc. Reports Fiscal-Year 2025 First-Quarter Results

CHARLOTTE, N.C., November 5, 2024 - Premier, Inc. (NASDAQ: PINC), a leading technology-driven healthcare improvement company, today reported financial results for the fiscal-year 2025 first quarter ended September 30, 2024.

On October 1, 2024, the company announced that it had divested the S2S Global direct sourcing business. As such, and unless stated otherwise, all results presented in the following release reflect those of continuing operations. In addition, as the divestiture process for the Contigo Health business remains ongoing, results presented in this release will continue to include contributions from that business. Refer to supplemental financial tables below for a reconciliation of the impact of the Contigo Health business on certain financial measures in the quarter.

“I am pleased to report that our first quarter results slightly exceeded our expectations for revenue and profitability,” said Michael J. Alkire, Premier’s President and CEO. “As a result, we are reaffirming our previously released fiscal 2025 financial guidance ranges. In addition, we continued to return capital to stockholders during the quarter through our quarterly cash dividend and the repurchase of additional shares under our $1 billion share repurchase authorization.”

 

Consolidated Financial Highlights of Continuing Operations
		Three Months Ended September 30,
(in thousands, except per share data)		2024				2023				% Change
Net revenue:
Supply Chain Services:
Net administrative fees		$	132,625			$	149,886				(12	%)
Software licenses, other services and support			18,763				13,390				40	%
Total Supply Chain Services			151,388				163,276				(7	%)
Performance Services			96,754				105,750				(9	%)
Net revenue		$	248,142			$	269,026				(8	%)
Net income from continuing operations		$	72,940			$	41,769				75	%
Net income from continuing operations attributable to stockholders		$	72,388			$	44,120				64	%
Diluted earnings per share from continuing operations attributable to stockholders		$	0.72			$	0.37				95	%

 

Consolidated Non-GAAP Financial Highlights of Continuing Operations
		Three Months Ended September 30,
(in thousands, except per share data)		2024				2023				% Change
NON-GAAP FINANCIAL MEASURES*:
Adjusted EBITDA:
Supply Chain Services		$	77,511			$	101,387				(24	%)
Performance Services			14,949				22,930				(35	%)
Total segment adjusted EBITDA			92,460				124,317				(26	%)
Corporate			(30,032	)			(31,009	)			3	%
Adjusted EBITDA		$	62,428			$	93,308				(33	%)
Adjusted net income		$	34,739			$	56,165				(38	%)
Adjusted earnings per share (EPS)		$	0.34			$	0.47				(28	%)

 

*	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.

 

1

---

Fiscal 2025 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 results for the first quarter of fiscal 2025 and its current outlook for the remainder of the fiscal year, the company is reaffirming the following:

 

Guidance Metric		Fiscal 2025 Guidance Range [1] [2] (as of November 5, 2024)
Segment Net Revenue: Supply Chain Services Performance Services Excluding Contigo Health		$560 million to $610 million $370 million to $410 million
Total Net Revenue Excluding Contigo Health		$930 million to $1.02 billion
Adjusted EBITDA		$235 million to $255 million
Adjusted EPS		$1.16 to $1.28
Fiscal 2025 guidance is based on the realization of the following key assumptions:   •  Net administrative fees revenue of $495 million to $525 million, which includes $60 million to $75 million in revenue related to non-healthcare member purchasing   •  Supply Chain Services segment software licenses, other services and support revenue of $65 million to $85 million   •  Capital expenditures of $90 million to $100 million   •  Effective income tax rate in the range of 25% to 27%   •  Cash income tax rate of less than 5%   •  Free cash flow of 45% to 55% of adjusted EBITDA   •  Does not include the impact of any significant acquisitions or share repurchases subsequent to the completion of the $400 million accelerated share repurchase transaction (“ASR”) in July 2024

 

[1]

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 Definitions 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. Total Net Revenue Excluding Contigo Health is also a forward-looking non-GAAP measure. Refer to “Premier’s Use of Forward-Looking Non-GAAP Measures” below for additional explanation.

[2]	As a result of the company’s previously announced plan to divest a majority interest in the Contigo Health business, guidance is being presented excluding financial contributions from this business.

Results of Operations for the Three Months Ended September 30, 2024

(As compared with the three months ended September 30, 2023)

GAAP net revenue of $248.1 million decreased 8% from $269.0 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 income from continuing operations of $72.9 million increased 75% from $41.8 million in the prior-year period primarily due to a $57.0 million non-operating gain on the payment received as a result of the derivative lawsuit settlement in the current-year period, partially offset by lower revenue compared to the prior-year period.

GAAP diluted EPS from continuing operations of $0.72 increased 95% from $0.37 in the prior-year period due to the aforementioned drivers affecting GAAP net income and completion of the ASR.

 

2

---

Adjusted EBITDA of $62.4 million decreased 33% from $93.3 million in the prior-year period. Refer to “Supply Chain Services” and “Performance Services” sections below for further discussion on the factors that impacted the adjusted EBITDA of each segment during the quarter.

Adjusted net income of $34.7 million decreased 38% from $56.2 million in the prior-year period primarily as a result of the same factors that impacted adjusted EBITDA partially offset by a decrease in our effective income tax rate in the current-year period. Adjusted EPS of $0.34 decreased 28% from $0.47 in the prior-year period primarily due to the aforementioned drivers affecting adjusted net income partially offset by the ASR.

Segment Results

(For the fiscal first quarter of 2025 as compared with the fiscal first quarter of 2024)

Commencing in fiscal 2025, the company is reporting the Remitra business as part of the Supply Chain Services segment. On August 20, 2024, the company announced that it determined to make this change in conjunction with the evolution of the company’s digital supply chain strategy to more tightly align the Remitra business’ strategic and operational capabilities with the group purchasing organization (“GPO”). In addition, prior-year results have been restated to conform to the current-year presentation.

Supply Chain Services

Supply Chain Services segment net revenue of $151.4 million decreased 7% from $163.3 million in the prior-year period primarily reflecting lower net administrative fees revenue partially offset by higher software license, other services and support revenue.

Net administrative fees revenue of $132.6 million decreased 12% from $149.9 million in the prior-year period primarily driven by an expected increase in the aggregate blended member fee share to the low-60% range in the quarter partially offset by continued growth in member purchasing as a result of further penetration of existing member spend.

Software license, other services and support revenue of $18.8 million increased 40% from $13.4 million in the prior-year period primarily driven by new agreements for supply chain co-management that were signed in the second half of fiscal 2024.

Segment adjusted EBITDA of $77.5 million decreased 24% from $101.4 million in the prior-year period primarily due to the decrease in net administrative fees revenue and additional investments in the supply chain co-management business to support ongoing growth.

Performance Services

Performance Services segment net revenue of $96.8 million decreased 9% from $105.8 million in the prior-year period primarily due to lower demand in the consulting business compared to the prior-year period, continued pressure in the Contigo Health business and timing of engagements in the applied sciences business.

Segment adjusted EBITDA of $14.9 million decreased 35% from $22.9 million in the prior-year period mainly due to the decrease in net revenue in the consulting and applied sciences businesses.

Cash Flows and Liquidity

Net cash provided by operating activities from continuing operations (“operating cash flow”) for the three months ended September 30, 2024 of $80.0 million increased from $62.7 million in the prior-year period primarily due to cash received from the derivative lawsuit settlement of $57.0 million in the current-year period partially offset by higher performance-related compensation payments resulting from better fiscal 2024 performance against expectations than in the prior-year period where performance was lower than expectations.

 

3

---

Net cash used in investing activities for the three months ended September 30, 2024 of $17.7 million decreased from the prior-year period primarily due to a decrease in internally developed software. Net cash used in financing activities for the three months ended September 30, 2024 of $88.1 million decreased from the prior-year period primarily driven by net proceeds from the sale of the company’s non-healthcare GPO operations of $553.3 million in the prior-year period and the use of $56.4 million for market repurchases of Class A common stock (“Common Stock”) in the current-year period under the company’s $1 billion share repurchase authorization announced in February 2024 (“Share Repurchase Authorization”). These uses of cash were partially offset by payments of $215.0 million on the revolving credit facility in the prior-year period. As of September 30, 2024, cash and cash equivalents were $87.0 million compared with $125.1 million as of June 30, 2024, and the company’s five-year, $1.0 billion revolving credit facility had no outstanding balance.

Free cash flow for the three months ended September 30, 2024 was $16.2 million compared with $12.3 million in the prior-year period. The increase was primarily due to the same factors that impacted operating cash flow and the decrease in purchases of property and equipment. These were partially offset by a full quarter of cash payments in the current-year period to OMNIA related to the sale of future revenue compared to a partial quarter in the prior-year period due to the timing of the sale of the non-healthcare GPO operations. 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 this and other non-GAAP financial measures and a reconciliation of reported GAAP results to non-GAAP results.

Return of Capital to Stockholders

In February 2024, the company announced that its Board of Directors (“Board”) approved the Share Repurchase Authorization and that it entered into the ASR. Under the ASR, in February 2024, the company received initial deliveries of an aggregate of 15.0 million shares of Common Stock. On July 11, 2024, as final settlement, the company received an additional 4.8 million shares of Common Stock, resulting in a total of 19.9 million shares repurchased under the ASR.

On August 20, 2024, the Board approved execution of another $200.0 million of repurchases under the Share Repurchase Authorization. As of September 30, 2024, the Company had repurchased 2.9 million shares of Common Stock for $58.0 million in market transactions in addition to the ASR repurchases.

During the first quarter of fiscal 2025, the company paid aggregate dividends of $21.3 million to holders of its Common Stock. On October 24, 2024, the Board declared a quarterly cash dividend of $0.21 per share, payable on December 15, 2024 to stockholders of record on December 1, 2024.

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):		[phone]
		International participant dial-in number:		[phone]

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 325,000 other providers and organizations to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, 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, suppliers and other stakeholders to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. 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.

 

4

---

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 earnings elements attributable to the company’s asset base (primarily depreciation and amortization), certain items outside the control of management, e.g., taxes, other non-cash items (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation), non-recurring items (such as strategic initiative and financial restructuring-related expenses) and income and expense that have been classified as discontinued operations, from operating results.

Management believes adjusted net income and adjusted earnings per share assist the company’s board of directors, management and investors in comparing our net income and earnings per share on a consistent basis from period to period because these measures remove non-cash items (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation) and non-recurring items (such as strategic initiative and financial restructuring-related expenses), and eliminate the variability of non-controlling interest and equity in net income of unconsolidated affiliates.

Management believes free cash flow is an important measure because it represents the cash that the company generates after 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, capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth, and cash payments to OMNIA for the sale of future revenues and tax payments on proceeds received from the sale of future revenues. 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.

Also, adjusted EBITDA and free cash flow are supplemental financial measures used by the company and by external users of our financial statements and are considered to be indicators of the operational strength and performance of our business. Adjusted EBITDA and free cash flow measures allow us to assess our performance without regard to financing methods and capital structure and without the impact of other matters that we do not consider indicative of the operating performance of our business. More specifically, segment adjusted EBITDA is the primary earnings measure we use to evaluate the performance of our business segments.

Non-recurring items are 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 acquisition- and disposition-related expenses, strategic initiative- and financial restructuring-related expenses, loss on disposal of long-live assets, income and expense that has been classified as discontinued operations and other expense.

Non-cash items include stock-based compensation expense and asset impairments.

Non-operating items include gains or losses on the disposal of assets, interest and investment income or expense, equity in income of unconsolidated affiliates and operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty payments retained.

 

5

---

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 and operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty payments retained.

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, (v) excluding the equity in net income of unconsolidated affiliates and (vi) excluding operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty payments retained, imputed interest expense and associated income tax expense.

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 (i) early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 restructuring, (ii) purchases of property and equipment and (iii) cash payments to OMNIA for the sale of future revenues and tax payments on proceeds received from the sale of future revenues. 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, Adjusted Net Income and Free Cash Flow from the definitions reported in the 2024 Annual Report. Adjusted EBITDA and Segment Adjusted EBITDA definitions were revised to exclude operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty payments retained. The Adjusted Net Income definition was revised to exclude operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty payments retained, imputed interest expense and associated income tax expense. Free Cash Flow was revised to exclude the cash payments to OMNIA for the sale of future revenues and tax payments on proceeds received from the sale of future revenues. For comparability purposes, prior year non-GAAP financial measures are presented based on the current definitions in the above section.

In addition to the foregoing, the reconciliations of our non-GAAP financial measures included at the end of this release include the presentation of additional fiscal year 2025 non-GAAP financial measures including net revenue excluding Contigo Health and Adjusted EBITDA excluding Contigo Health. The company previously announced a plan to divest a majority interest in the Contigo Health business; however, as of September 30, 2024, the divestiture process for the Contigo Health business remains ongoing and our GAAP financial results for the first quarter of fiscal year 2025 presented in this release include contributions from that business. As the company expects that the Contigo Health business will be divested and moved into discontinued operations in fiscal 2025, guidance presented in this release excludes financial contributions from this business. Accordingly, we believe that providing supplemental non-GAAP financial measures that align with our fiscal 2025 guidance allow for a better understanding of that guidance.

 

6

---

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 September 30, 2024, 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.

As noted above, as result of the company’s previously announced plan to divest a majority interest in the Contigo Health business, the forward-looking guidance presented in this release (including Total Net Revenue Excluding Contigo Health, Adjusted EBITDA, Adjusted EPS, and free cash flow), excludes the financial contribution of this business, in addition to any applicable adjustments for non-GAAP financial measures described above under “Premier’s Use and Definitions of Non-GAAP Measures.”

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 a partner for our Contigo Health business and the potential benefits thereof, our ability to fund and conduct share repurchases pursuant to the outstanding share repurchase authorization and the potential benefits thereof, 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, 2024, and subsequent Quarterly Reports on Form 10-Q, including the Form 10-Q for the quarter ended September 30, 2024, expected to be filed with the SEC shortly after the date of this release. Premier’s periodic

 

7

---

and current filings with the SEC 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.

 

Investor contact:		Media contact:
Ben Krasinski		Amanda Forster
Senior Director, Investor Relations		Vice President, Integrated Communications
704.816.5644		202.879.8004
[e-mail]		[e-mail]

 

8

---

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

 

		Three Months Ended
		September 30,
		2024				2023
Net revenue:
Net administrative fees		$	132,625			$	149,886
Software licenses, other services and support			115,517				119,140
Net revenue			248,142				269,026
Cost of revenue:
Services and software licenses			67,724				64,132
Cost of revenue			67,724				64,132
Gross profit			180,418				204,894
Operating expenses:
Selling, general and administrative			134,880				133,138
Research and development			586				863
Amortization of purchased intangible assets			9,637				12,553
Operating expenses			145,103				146,554
Operating income			35,315				58,340
Equity in net income (loss) of unconsolidated affiliates			1,833				(1,726	)
Interest expense, net			(1,756	)			(22	)
Other income (expense), net			60,259				(1,092	)
Other income (expense), net			60,336				(2,840	)
Income before income taxes			95,651				55,500
Income tax expense			22,711				13,731
Net income from continuing operations			72,940				41,769
Net (loss) income from discontinued operations, net of tax			(1,604	)			641
Net income			71,336				42,410
Net (income) loss from continuing operations attributable to non-controlling interest			(552	)			2,351
Net income attributable to stockholders		$	70,784			$	44,761
Calculation of GAAP Earnings per Share
Numerator for basic and diluted earnings per share:
Net income from continuing operations attributable to stockholders		$	72,388			$	44,120
Net (loss) income from discontinued operations attributable to stockholders			(1,604	)			641
Net income attributable to stockholders		$	70,784			$	44,761
Denominator for earnings per share:
Basic weighted average shares outstanding			100,380				119,344
Effect of dilutive securities:
Restricted stock units			611				534
Performance share awards			—				255
Diluted weighted average shares			100,991				120,133
Earnings per share attributable to stockholders:
Basic earnings per share from continuing operations		$	0.72			$	0.37
Basic (loss) earnings per share from discontinued operations			(0.01	)			0.01
Basic earnings per share attributable to stockholders		$	0.71			$	0.38
Diluted earnings per share from continuing operations		$	0.72			$	0.37
Diluted loss per share from discontinued operations			(0.02	)			—
Diluted earnings per share attributable to stockholders		$	0.70			$	0.37

 

9

---

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

 

		September 30, 2024				June 30, 2024
Assets
Cash and cash equivalents		$	86,956			$	125,146
Accounts receivable (net of $2,431 and $1,455 allowance for credit losses, respectively)			98,749				100,965
Contract assets (net of $1,174 and $1,248 allowance for credit losses, respectively)			341,016				335,831
Prepaid expenses and other current assets			76,022				73,653
Current assets of discontinued operations			104,893				116,462
Total current assets			707,636				752,057
Property and equipment (net of $760,993 and $742,063 accumulated depreciation, respectively)			203,957				205,711
Intangible assets (net of $303,970 and $294,333 accumulated amortization, respectively)			259,622				269,259
Goodwill			995,852				995,852
Deferred income tax assets			748,048				776,202
Deferred compensation plan assets			47,380				54,422
Investments in unconsolidated affiliates			230,395				228,562
Operating lease right-of-use assets			17,845				20,635
Other assets			102,863				98,749
Total assets		$	3,313,598			$	3,401,449
Liabilities and stockholders’ equity
Accounts payable		$	24,655			$	22,610
Accrued expenses			47,408				58,482
Revenue share obligations			318,910				292,792
Accrued compensation and benefits			45,072				100,395
Deferred revenue			17,901				19,642
Line of credit and current portion of long-term debt			—				1,008
Current portion of notes payable to former limited partners			76,317				101,523
Current portion of liability related to the sale of future revenues			41,331				51,798
Other current liabilities			56,791				52,589
Current liabilities of discontinued operations			20,163				45,724
Total current liabilities			648,548				746,563
Liability related to the sale of future revenues, less current portion			631,266				599,423
Deferred compensation plan obligations			47,380				54,422
Operating lease liabilities, less current portion			8,067				11,170
Other liabilities			24,154				27,640
Total liabilities			1,359,415				1,439,218
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 97,794,635 shares issued and outstanding at September 30, 2024 and 111,456,454 shares issued and 105,027,079 shares outstanding at June 30, 2024			978				1,115
Treasury stock, at cost; 6,429,375 shares at June 30, 2024			—				(250,129	)
Additional paid-in capital			2,188,208				2,105,684
(Accumulated deficit) retained earnings			(234,995	)			105,590
Accumulated other comprehensive loss			(8	)			(29	)
Total stockholders’ equity			1,954,183				1,962,231
Total liabilities and stockholders’ equity		$	3,313,598			$	3,401,449

 

10

---

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

		Three Months Ended September 30,
		2024				2023
Operating activities
Net income		$	71,336			$	42,410
Adjustments to reconcile net income to net cash provided by operating activities:
Net loss (income) from discontinued operations, net of tax			1,604				(641	)
Depreciation and amortization			29,288				32,881
Equity in net loss (income) of unconsolidated affiliates			(1,833	)			1,726
Deferred income taxes			24,954				(143,435	)
Stock-based compensation			6,931				6,692
Other, net			1,672				3,458
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable			2,216				4,203
Contract assets			(10,566	)			(16,838	)
Prepaid expenses and other assets			8,730				10,241
Accounts payable			397				(6,023	)
Revenue share obligations			26,118				3,544
Accrued expenses, deferred revenue and other liabilities			(80,804	)			124,432
Net cash provided by operating activities from continuing operations			80,043				62,650
Net cash (used in) provided by operating activities from discontinued operations			(12,396	)			19,226
Net cash provided by operating activities		$	67,647			$	81,876
Investing activities
Purchases of property and equipment		$	(17,718	)		$	(21,270	)
Net cash used in investing activities		$	(17,718	)		$	(21,270	)
Financing activities
Payments on notes payable		$	(26,214	)		$	(25,823	)
Payments on credit facility			—				(215,000	)
Proceeds from sale of future revenues			42,325				578,983
Payments on liability related to the sale of future revenues			(20,949	)			(4,322	)
Cash dividends paid			(21,323	)			(25,827	)
Repurchase of Class A common stock			(56,440	)			—
Other, net			(5,539	)			(5,146	)
Net cash used in financing activities		$	(88,140	)		$	302,865
Effect of exchange rate changes on cash flows			21				(3	)
Net increase in cash and cash equivalents			(38,190	)			363,468
Cash and cash equivalents at beginning of year			125,146				89,793
Cash and cash equivalents at end of period		$	86,956			$	453,261

 

11

---

Supplemental Financial Information

Reconciliation of Net Cash Provided by Operating Activities from Continuing Operations to Free Cash Flow

(Unaudited)

(In thousands)

 

		Three Months Ended September 30,
		2024				2023
Net cash provided by operating activities from continuing operations		$	80,043			$	62,650
Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)			(25,206	)			(24,742	)
Purchases of property and equipment			(17,718	)			(21,270	)
Cash payments to OMNIA for the sale of future revenues (b)			(20,949	)			(4,322	)
Free Cash Flow		$	16,170			$	12,316

 

(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 Consolidated Statements of Cash Flows under “Payments made on notes payable.” During the three months ended September 30, 2024, the company paid $25.7 million to members including imputed interest of $0.5 million which is included in net cash provided by operating activities from continuing operations. During the three months ended September 30, 2023, the company paid $25.7 million to members, including imputed interest of $0.9 million which is included in net cash provided by operating activities from continuing operations.

(b)

Cash payments to OMNIA for the sale of future revenues in connection with our sale of non-healthcare contracts to OMNIA are presented in the Consolidated Statements of Cash Flows under “Payments on liability related to the sale of future revenues.” During the three months ended September 30, 2024, the company paid $25.3 million to OMNIA including imputed interest of $4.4 million which is included in net cash provided by operating activities from continuing operations. During the three months ended September 30, 2023, the company paid $6.9 million to OMNIA including imputed interest of $2.5 million which is included in net cash provided by operating activities from continuing operations.

 

12

---

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
		September 30,
		2024				2023
Net income from continuing operations		$	72,940			$	41,769
Interest expense, net			1,756				22
Income tax expense			22,711				13,731
Depreciation and amortization			19,651				20,328
Amortization of purchased intangible assets			9,637				12,553
EBITDA			126,695				88,403
Stock-based compensation			7,140				6,893
Acquisition- and disposition-related expenses			2,884				6,205
Strategic initiative and financial restructuring-related expenses			110				1,746
Operating income from revenues sold to OMNIA			(15,710	)			(11,666	)
Equity in net (income) loss of unconsolidated affiliates			(1,833	)			1,726
Other non-operating gain			(57,244	)			—
Other reconciling items, net			386				1
Adjusted EBITDA		$	62,428			$	93,308
Less: Contigo Health			2,227
Adjusted EBITDA excluding Contigo Health		$	64,655
Income before income taxes		$	95,651			$	55,500
Equity in net (income) loss of unconsolidated affiliates			(1,833	)			1,726
Interest expense, net			1,756				22
Other (income) expense, net			(60,259	)			1,092
Operating income			35,315				58,340
Depreciation and amortization			19,651				20,328
Amortization of purchased intangible assets			9,637				12,553
Stock-based compensation			7,140				6,893
Acquisition- and disposition-related expenses			2,884				6,205
Strategic initiative and financial restructuring-related expenses			110				1,746
Operating income from revenues sold to OMNIA			(15,710	)			(11,666	)
Deferred compensation plan expense (income)			2,692				(1,125	)
Other reconciling items, net			709				34
Adjusted EBITDA		$	62,428			$	93,308
SEGMENT ADJUSTED EBITDA
Supply Chain Services		$	77,511			$	101,387
Performance Services			14,949				22,930
Corporate			(30,032	)			(31,009	)
Adjusted EBITDA		$	62,428			$	93,308
Net income attributable to stockholders		$	70,784			$	44,761
Loss (income) from discontinued operations, net of tax			1,604				(641	)
Income tax expense			22,711				13,731
Amortization of purchased intangible assets			9,637				12,553
Stock-based compensation			7,140				6,893
Acquisition- and disposition-related expenses			2,884				6,205
Strategic initiative and financial restructuring-related expenses			110				1,746
Operating income from revenues sold to OMNIA			(15,710	)			(11,666	)
Equity in net (income) loss of unconsolidated affiliates			(1,833	)			1,726
Other non-operating gain			(57,244	)			—
Other reconciling items, net			6,236				1,630
Adjusted income before income taxes			46,319				76,938
Income tax expense on adjusted income before income taxes			11,580				20,773
Adjusted net income		$	34,739			$	56,165

 

13

---

Supplemental Financial Information

Reconciliation of GAAP EPS to Adjusted EPS

(Unaudited)

(In thousands, except per share data)

 

		Three Months Ended
		September 30,
		2024				2023
Net income attributable to stockholders		$	70,784			$	44,761
Loss (income) from discontinued operations, net of tax			1,604				(641	)
Income tax expense			22,711				13,731
Amortization of purchased intangible assets			9,637				12,553
Stock-based compensation			7,140				6,893
Acquisition- and disposition-related expenses			2,884				6,205
Strategic initiative and financial restructuring-related expenses			110				1,746
Operating income from revenues sold to OMNIA			(15,710	)			(11,666	)
Equity in net (income) loss of unconsolidated affiliates			(1,833	)			1,726
Other non-operating gain			(57,244	)			—
Other reconciling items, net			6,236				1,630
Adjusted income before income taxes			46,319				76,938
Income tax expense on adjusted income before income taxes			11,580				20,773
Adjusted net income		$	34,739			$	56,165
Weighted average:
Basic weighted average shares outstanding			100,380				119,344
Dilutive shares			611				789
Weighted average shares outstanding - diluted			100,991				120,133
Basic earnings per share attributable to stockholders		$	0.71			$	0.38
Loss (income) from discontinued operations, net of tax			0.02				(0.01	)
Income tax expense			0.23				0.12
Amortization of purchased intangible assets			0.10				0.11
Stock-based compensation			0.07				0.06
Acquisition- and disposition-related expenses			0.03				0.05
Strategic initiative and financial restructuring-related expenses			—				0.01
Operating income from revenues sold to OMNIA			(0.16	)			(0.10	)
Equity in net (income) loss of unconsolidated affiliates			(0.02	)			0.01
Other non-operating gain			(0.57	)			—
Other reconciling items, net			0.05				0.01
Impact of corporation taxes			(0.12	)			(0.17	)
Adjusted earnings per share		$	0.34			$	0.47

 

14

---

Supplemental Financial Information

Fiscal 2025 First Quarter Walk to Align to Fiscal 2025 Guidance Presentation

(Unaudited)

(In thousands)

 

		Three Months Ended September 30, 2024
Net revenue		$	248,142
Less: Contigo Health			(7,646	)
Net revenue excluding Contigo Health		$	240,496
Adjusted EBITDA		$	62,428
Less: Contigo Health (a)			2,227
Adjusted EBITDA excluding Contigo Health		$	64,655

 

(a)	Contigo Health Adjusted EBITDA for the fiscal 2025 first quarter was a loss and therefore added back to the total.

 

15

Exhibit 99.2

CORPORATE PARTICIPANTS

 

•

Michael Alkire Premier, Inc. - President, CEO & Director

 

•

Ben Krasinski Premier, Inc. - Senior Director, Investor Relations

 

•

Craig McKasson Premier, Inc. - Chief Administrative and Financial Officer & SVP

CONFERENCE CALL PARTICIPANTS

 

•

Eric Percher Nephron Research LLC - Analyst

 

•

Michael Cherny Leerink Partners LLC - Analyst

 

•

Jessica Tassan Piper Sandler & Co. - Analyst

 

•

Kevin Caliendo UBS - Analyst

 

•

John Pinney Canaccord Genuity Group Inc. - Analyst

 

•

Stephanie Davis Barclays Bank PLC - Analyst

 

 

PRESENTATION

 

 

Operator

Good morning and welcome to Premier’s fiscal 2025 first quarter conference call. (Operator Instructions) Please note this event is being recorded. I would now like to turn the conference over to Ben Krasinski, Senior Director, Investor Relations. Please go ahead.

 

 

Ben Krasinski Premier, Inc. - Senior Director, Investor Relations

Thank you and welcome to Premier’s fiscal 2025 first quarter conference call. Our speakers this morning are Mike Alkire, Premier’s President and CEO; and Craig McKasson, our Chief Administrative and Financial Officer. Before we get started, I want to remind everyone that our earnings release and the supplemental presentation accompanying this call are available in the investors section of our website at investors.premierinc.com.

Please be advised that management’s remarks today contain certain forward-looking statements such as statements regarding our strategies, plans, prospects, expectations and future performance and actual results could differ materially from those discussed today. These forward-looking statements speak as of today and we undertake no obligation to update them. Factors that might affect future results are discussed in our filings with the sec including our most recent form 10-K and our form 10-Q for the quarter, which we expect to file soon. We encourage you to review the detailed forward-looking statement and risk factor disclosures in these reports.

Also, during this presentation, we will refer to adjusted and other non-GAAP financial measures, including free cash flow, to evaluate our business. Information on why we use these measures in addition to GAAP financial measures and reconciliations of these measures to our GAAP financial measures are included in our earnings release and in the appendix of the supplemental presentation accompanying this call. Information on our non-GAAP financial measures will also be included in our form 10-Q for the quarter and our earnings Form 8-K, both of which we expect to file soon.

---

I will now turn the call over to Mike Alkire.

 

 

Michael Alkire Premier, Inc. - President, CEO & Director

Good morning everyone and thank you for joining us today.

I’m pleased to report that fiscal 2025 first quarter results slightly exceeded our expectations for total net revenue and profitability giving us confidence in reaffirming our fiscal 2025 guidance. From a segment perspective, Supply Chain Services revenue exceeded our expectations while performance services revenue fell slightly short of what we anticipated for the quarter. Craig will provide more details later in the call.

In addition, we returned capital to stockholders through our quarterly cash dividend and the repurchase of Class A common shares during the quarter under our previously announced $1 billion share repurchase authorization. Today marks election day in the United States. As a reminder, our strategies are designed to be less reliant on political and regulatory influences and more concentrated on addressing the core challenges faced by our members and other customers. Our strategies and member relationships are founded on the understanding that improving healthcare delivery for patients relies on reducing costs and improving outcomes through technologies. Regardless of the outcome, our commitment to improving the health of communities we serve remains unwavering.

Turning to our business, momentum continues to grow in the market for Premier’s technology driven supply chain strategy. By collaborating closely with our members and leveraging technology and services, we’re identifying additional cost savings opportunities for our members while enhancing contract penetration in our group purchasing programs.

Our strong member relationships have driven progress in contract renewals which are also opening the door for us to have deeper and more strategic data driven discussions with members on opportunities for improvement. Our high renewal rate reflects our commitment to collaboration and the trust we’ve built with our members over the years.

In addition, we continue to partner with our members, manufacturers, government agencies and other stakeholders to help mitigate the impact that recent hurricanes have had on supply chains and hospital operations across the American communities. With these challenges, the need for Premier to support our member hospitals and health systems remains at an all time high. Premier’s response to each disaster reinforces our commitment to enhancing the overall healthcare system’s predictability, resilience and response through technology enablement. These trying times have been particularly challenging for our health system members. Our job is to minimize the impact to be a vital ally in building the future of healthcare.

Turning to our performance services business, we continue to focus on opportunities to utilize our robust data and A I enabled technology to deliver unparalleled insights and efficiencies for our members and other customers. For example, we were pleased to renew and extend our engagement with a government agency that leverages Premier’s dataset and proprietary performance improvement methodologies to scale improvements in maternal and infant health outcomes in hospitals across the nation. We also extended our partnership with one of the top pharma companies in the world to include additional real world evidence and observational research related to their innovations and Alzheimer’s disease.

This work underscores our unique differentiation in the marketplace that facilitates better, smarter, faster healthcare. Better with national scale, smarter with real time actionable insights and faster with AI-enabled technologies.

We also continue to advance our sustainability efforts. A few weeks ago, we published our 2024 sustainability report and climate resilience plan, highlighting our many practices and initiatives aimed at improving healthcare, operating responsibly and positively impacting communities.

Before I hand it over to Craig, I want to take a moment to express our gratitude for his 27 years of service. He has been an incredible leader for Premier and exemplifies integrity in all he does.

We wish him the best in his retirement. We also look forward to introducing you to our new Chief Administrative and Financial Officer Glenn Coleman during our second quarter earnings call in February. Craig.

 

2

---

 

Craig McKasson Premier, Inc. - Chief Administrative and Financial Officer & SVP

Thanks Mike. I truly appreciate your kind words.

First. I would like to note that resulting from our divestiture of the S2S global direct sourcing business, unless otherwise indicated, all results discussed during this call reflect our continuing operations. In addition, as the divestiture process for the Contigo Health business remains ongoing, actual results will continue to include contributions from that business although it will be excluded from guidance given the expectation that it will be divested and moved to discontinued operations. As such, we have included a table in our earnings release and supplemental presentation that reconciles the impact of the Contigo Health business on certain financial measures for the quarter.

Now turning to our fiscal 2025 first quarter results, total net revenue of $248.1 million decreased 8% from the prior year period. In our Supply Chain Services segment, lower net administrative fees revenue was driven by an expected increase in the aggregate blended member fee share to the low 60% level in the quarter. However, gross administrative fees revenue was better than expected resulting from ongoing growth in member purchasing as we continue to drive higher penetration of our existing member spend. To provide an update, the group of GPO members that were part of the August 2020 restructure represent approximately 70% of our total gross administrative fees. As of September 30th, we have addressed members representing approximately 55% of this group’s associated gross administrative fees. We currently plan to address and finalize additional member renewals during the current fiscal year that would result in over three fourths of this group’s gross administrative fees being through the renewal process by the end of fiscal 2025 with the remainder occurring in fiscal 2026 and 2027.

Additionally, we experienced growth in our other Supply Chain Services revenue driven by new agreements in our supply chain co-management business where members continue to express interest in leveraging premier’s expertise to help manage their end to end supply chain operations.

In our Performance Services segment, the revenue decline was mainly driven by lower demand in the consulting business compared to the prior year period, continued pressure in the Contigo Health business and timing of engagements in the applied sciences business. Turning to profitability, GAAP net income was $72.9 million for the quarter which benefited from a $57 million non-operating gain from the derivative lawsuit settlement in the current year period. Total adjusted EBITDA of $62.4 million was better than expected in the quarter resulting from our GPO performance. However, compared to the prior year period, adjusted EBITDA declined due to the following factors. First, Supply Chain Services adjusted EBITDA declined mainly due to the decrease in net administrative fees revenue as a result of the expected increase in fee share as well as additional investments in the supply chain co-management business to support ongoing growth and second Performance Services adjusted EBITDA decreased mainly due to the decline in revenue in the consulting and applied sciences businesses. Adjusted net income decreased primarily as a result of the same factors that impacted adjusted EBITDA partially offset by a decrease in our effective income tax rate in the current year period.

Adjusted earnings per share was affected by the same factors as well as completion of the $400 million accelerated share repurchase transaction in July. Then in August and September, we repurchased an additional $58 million of shares in the open market. As of September 30th, we have repurchased and retired nearly 23 million Class A common shares under the $1 billion share repurchase authorization.

From a liquidity and balance sheet perspective, cash flow from continuing operations for the fiscal 2025 first quarter of $80 million increased from the prior year period primarily due to cash received from the derivative lawsuit settlement of $57 million in the current year period, partially offset by higher performance related compensation payments resulting from better fiscal 2024 performance against expectations than in the prior year period where performance was lower than expectations.

Free cash flow for fiscal 2025 first quarter of $16.2 million increased from the prior year period primarily due to the same factors that impacted cash flow from operations as well as a decrease in purchases of property and equipment. These were partially offset by a full quarter of cash payments in the current year period to Omnia related to the sale of future revenue compared to a partial quarter in the prior year due to timing of the sale of the non-healthcare GPO operations in fiscal 2024.

As a reminder, free cash flow is typically lowest in the first quarter since our fiscal year ends in June and payment of certain expenses including annual performance related compensation occurs in the first quarter.

Cash and cash equivalents totalled $87 million as of September 30, 2024 compared with $125.1 million as of June 30, 2024. The decrease was primarily driven by the use of cash for share repurchases. Our five year $1 billion revolving credit facility continued to have no balance as of the end of the quarter. With respect to the sale of the non-healthcare GPO operations, we received the final payment of $42.3 million in the first quarter resulting in cumulative proceeds of $723.8 million.

With respect to capital deployment, we continue to remain disciplined and focused on taking a balanced approach while also remaining focused on return of capital to stockholders in the near term. As a reminder, in August, we announced that our board approved execution of another share repurchase of $200 million under our $1 billion share repurchase authorization. We continue to repurchase shares under that program and, following completion, our board and management team will evaluate the remaining $400 million available under the current $1 billion authorization.

This augmented our quarterly cash dividend, which totalled $21.3 million in the first quarter of fiscal 2025.

 

3

---

In addition, our board recently declared a dividend of 21 cents per share payable in December.

We will continue to evaluate opportunities to invest in organic growth and potential acquisitions to differentiate our core offerings in the marketplace.

Turning to our fiscal 2025 guidance, based on performance for the first three months of the fiscal year and our outlook for the remainder of the year, we are reaffirming the guidance that we introduced on our earnings call in August. Please note that while we have begun to repurchase shares under the $200 million share repurchase program, we are not planning to update adjusted earnings per share guidance until we have completed the program.

From a cadence perspective, we currently expect the following. In our GPO business, we expect a sequential decline in net administrative fees revenue in the second quarter as we continue to work through the ongoing contract renewal process. In the back half of the year, we expect relatively comparable performance with the first half as the impact of contract renewals is offset by the ongoing impact of residual purchasing from departed members.

In our Performance Services business and based on the current expectations for the timing of engagements, we still anticipate revenue will be more back half weighted with the second quarter at or slightly above the first quarter. As a reminder, due to the timing and magnitude of enterprise license agreements and certain consulting arrangements, there may be periodic variability in the recognition of the revenue and profitability associated with these engagements between quarters.

From a profitability perspective, we continue to expect adjusted EBITDA and adjusted earnings per share to be more back half weighted mainly due to the revenue cadence in the Performance Services business.

In addition, we expect a sequential decline in the second quarter, mainly due to the impact of the GPO contract renewal process.

Before I conclude, I would like to remind everyone that this will be my last earnings call with Premier as I am retiring in December. It’s truly been an honor to work with such an amazing team, be part of our strong culture and to contribute to Premier’s mission to improve the health of communities. I’d also like to thank the financial community for their collaboration over the years. It has indubitably been a pleasure to work with you and I believe you will be in good hands going forward as I have full confidence in Glenn and the rest of the team.

We appreciate your time today and we’ll now open the call for questions.

 

 

QUESTIONS AND ANSWERS

 

 

Operator

(Operator Instructions) Eric Percher, Nephron Research.

 

 

Eric Percher Nephron Research LLC - Analyst

Thank you. And Craig, I’ll wish you luck and appreciate that you managed to fit the word indubitably into the last call here. I do want to ask about the admin fees. It’s been very difficult to get views from health system customers on where they believe this falls out. But we hear about the renewal process and it, it sounds like Q1 is relatively in line with expectations with the step down in Q2. I just want to check that assumption given where it appears you’re running for the year that there, there’s no change relative to the full year expectation of admin fees and any other nuances around that second half, first half?

 

 

Craig McKasson Premier, Inc. - Chief Administrative and Financial Officer & SVP

Yeah. Sure. Eric, thanks. First of all, relative to the GPO business, the renewal process is going right according to plan in terms of the renewals that we’re doing being in sync with our expectations of where the renewal renewed contracts would come out. What I’d say from a standpoint of the overall GPO is we actually had a stronger underlying performance in the actual purchasing from our health systems in the first quarter, which led to a stronger Q1 than we thought we are actually monitoring sort of elective procedures given the situation with Baxter and IV fluids and things like that. But, but overall, yes, on track and expect to continue to have fee share be in the low 60s throughout fiscal 2025 as we’ve guided to and would expect that we’ll continue to see good performance from our underlying purchasing through the Supply Chain Services business.

 

4

---

 

Eric Percher Nephron Research LLC - Analyst

Okay. And then Baxter was actually where I was going to go on the follow up. Can you give us an update on what you’ve been doing to help offset the shortages and where we stand today as they’re trying to get that up and running?

 

 

Michael Alkire Premier, Inc. - President, CEO & Director

Yeah, so thank you, Eric, a whole bunch of stuff. They actually have a website out where they keep the healthcare community up to speed.

And I think I saw something in the last couple of weeks where they got that factory back up and running, not necessarily back to 100% but it’s back up and running.

So there’s been a number of things that we’ve been focused on. First of all, we’ve been working obviously with the health systems, we’ve been working with the federal government as well to figure out ways to mitigate the overall issue. And those things include coordinating with, you know, the FDA and HHS and the White House and other agencies to look at ways to fast track the potential of bringing additional IV solution online. And that, so that, that obviously is a big part of our discussion.

Secondarily, we’ve been working with our health systems on looking at ways to conserve IV solution. And it’s really interesting in some of these cases, we might have found some opportunities where long term there might be some practices that we can leverage that can drive more effective utilization or more effective efficiency in the utilization of those IV solutions. So conservation obviously is the second.

And then the third is that we are working with other suppliers to look at where we can get IV solution that’s either produced or get a potentially additional lines up and running to support the needs of the health system.

So this is going to continue to play out over the end of this quarter and into the next quarter. But we’re going to, you know, be focused on all three of those phases working with the, you know, obviously the federal government, number two is looking at ways to conserve the supply that we have. And number three, we’re going to look for additional capacity.

 

 

Operator

Michael Cherny, Leerink.

 

 

Michael Cherny Leerink Partners LLC - Analyst

Good morning and I’ll echo Eric’s comments. Craig, it’s, it’s been a great run, very helpful since before the IPO and, and best of luck in your retirement and whatever you’re doing next.

Maybe just to touch on the underlying core. Great to see the pull through on better spending. Obviously, I don’t think anyone would disagree its a higher utilization environment. From a macro level beyond the renegotiations, what else do you feel like your customers are preparing for in terms of the sustainability of core utilization? How are they thinking through the impact both of proposed in place and potentially in place tariffs as they think through their purchasing decisions now and plan accordingly for whatever inventory levels they want to keep in a post COVID world?

 

 

Michael Alkire Premier, Inc. - President, CEO & Director

Yeah, so there’s a lot there. So let me see if I can unpack some of that. From a, you know, just a utilization standpoint of the health system in general, you know, we’re seeing pretty stable to slight increases of, of utilization. Now that is being tampered by this IV solution issue. So, you know, we’re keeping an eye on that to, you know, see how, you know, those the IV issue is having an impact on elective procedures and such.

 

5

---

As it as it relates to the utilization of our contracts, you know, one of the things Michael, you know, we’ve been making significant investments in technologies to identify those areas where there’s been, you know, spend that we don’t have contracts for. And so, you know, leveraging that information, leveraging that technology, you know, we’ve been building out different forms of advanced technologies to identify where those high areas of spend are and to put contracts around that. So we’re going to obviously continue to do that and drive up, obviously, the opportunity for us to continue to contract in areas that historically we’ve not done, or we’ve not, you know, delivered contracts.

So that’s number one, number two, health systems are really struggling right now with obviously the continual high cost of labor. And so what I am seeing is we’re out having conversations with health systems is this idea that revenue seems to be growing, especially in those, you know, strong economic areas, but the profit isn’t following. So we’re seeing sort of this marginal pressure on these health systems.

And so, you know, where we’re really doubling down on is what can we be creating and what can we be driving that are really labor extenders. So leveraging our technology to help them be more efficient in terms of their back office, leveraging our technologies to drive more throughput through the healthcare system, identifying where they’ve got gaps or maybe areas that they’ve got high cost that we could help them sort of manage through.

So all of those things are obviously, you know, building up into our strategy of how we’re driving performance improvement today. But make no mistake, it’s really all technology driven where we’re identifying these opportunities and then wrapping around services to help drive these performance improvement solutions.

 

 

Michael Cherny Leerink Partners LLC - Analyst

And Mike, you alluded to my thoughts on, on my second question and that’s the idea of technology development. As you think through the adjustments you made on the portfolio, the changes on divesture of S2S global, how do you think about your development pipeline, both for internal technology, making the core administrative fee capabilities and GPO better and also areas especially as health systems settle into this new normal, areas where you can be more helpful by further developing your Performance Services suite.

 

 

Michael Alkire Premier, Inc. - President, CEO & Director

That’s a great question. So as you think about the evolution of our organic capital investment, you know, we’re continuing to think through, especially in the areas of HCC and prior authorization, how are we extending our current offering? So we’re very, very good, for example, in radiology benefit management. And we’re looking at other areas where we’re now investing additional internal capital to grow where you know we have the opportunities to drive that technology into the health systems.

So that’s, that’s number one, number two, when you think about inorganic, you know, as, as Craig said, we’ve always got that balanced approach to, you know, capital utilization. Number one, in supply chain, we want to continue to make investments to expand the portfolio. So where are those areas that we’re not covering today? You know, you’ve heard us talk about PPI and purchased services in the past non acute areas. Those are areas that we’re going to continue to look for. Number two and in the supply chain is that the whole ordering platform, we do believe that to the degree that we can continue to evolve our offering there where we can tee up appropriate pricing and appropriate alternatives for products, that there’s a huge opportunity. So we’re going to continue to make investments there.

Performance Services, we talked a little bit about I, you know, as I open this up with HCC prior authorization, so we want to continue to, you know, make the appropriate investments there.

And then finally, as we think about what we’re doing in life science you know, continue to deploy, you know, capital to build out services around real world evidence and those kinds of things for our life science companies.

 

 

 

6

---

Craig McKasson Premier, Inc. - Chief Administrative and Financial Officer & SVP

Michael, this is Craig, one other point from an organic standpoint. As we’ve highlighted, we moved the historical Remitra platform into our Supply Chain Services business this year. And it really is about aligning our digital supply chain technology development to better align with the GPO and to technology enable the ability to get much tighter and fuller throughput of purchasing through the GPO as well as potentially getting to the point that we actually have an ability to invoice suppliers for the administrative fees due to Premier versus historically relying on a supplier paid model.

 

 

Operator

Jessica Tassan, Piper Sandler.

 

 

Jessica Tassan Piper Sandler & Co. - Analyst

Hi, thank you guys for taking the question. So I wanted to start with just the current portion of the liability related to the sale of future revenues to Omnia. Is that is that $41.3 million kind of reflecting the level above which Premier would be able to retain the associated operating income in FY 25? And then just is that outperformance relative to the to the current portion of the liability included in your guidance or would that be upside to that?

 

 

Craig McKasson Premier, Inc. - Chief Administrative and Financial Officer & SVP

Yeah, thanks Jessica this is Craig. So first of all, the current portion is just the anticipated amounts that we will need to actually pay back to Omnia during the given year during fiscal 2025 as a result of their purchasing. So it’s not above and beyond the expected purchasing.

I think what you’re referring to just so others understand is there’s a baseline of $50 to $55 million of purchasing that we would expect to come through Omnia. Anything above and beyond that, that comes through the Omnia purchasing off our portfolio, we get to retain 30% of that upside. We would anticipate that for this fiscal year depending on how performance goes, that’s only going to be a few million dollars in this initial year given that it’s early in the life of the Omnia relationship.

So that nominal amount of a few million dollars would have been factored into our expectations for fiscal 2025 guidance, but it’s not the magnitude of the whole current liability.

 

 

Jessica Tassan Piper Sandler & Co. - Analyst

Okay. Got it. And then just another quick clarification question and then a real one, why would the liability grow quarter over quarter in from four Q to one Q.

 

 

Craig McKasson Premier, Inc. - Chief Administrative and Financial Officer & SVP

It was due to the finalization of the Omnia transaction. So we actually, as I noted in my commentary and you’ll see in the, in the release, we had a final payment of $42.3 million when we actually put a bow around the transaction in July. So that’s why it went up. You would now expect to see it continue to come down quarter after quarter after quarter over the remaining life of the 10 year agreement.

 

 

Jessica Tassan Piper Sandler & Co. - Analyst

Got it. And then my, my question is, is the increased purchasing you saw in the first quarter kind of indicative of, of Premier having reached a level of, of the share back rate that customer that induces customer purchasing or was it really more a matter of expanding categories and diversification of purchasing? Thanks and congratulations on your retirement.

 

 

 

7

---

Craig McKasson Premier, Inc. - Chief Administrative and Financial Officer & SVP

Thank you Jessica, I appreciate it. The first quarter performance is really much more about driving contract penetration and just undergoing pull through leveraging our technology and our our field resources to identify opportunities for savings as opposed to it being tied to any change in the fee share percentage.

 

 

Operator

Kevin Caliendo, UBS.

 

 

Kevin Caliendo UBS - Analyst

Thank you. Thanks for taking my question and Craig, congratulations. Best of luck. And hopefully everything going forward will be relaxing, fun and enjoyable. Guys, my question really is on if there was any behavior ahead of tariffs or if you’re expecting any behavior in terms of purchasing, people building inventories, you building inventories, if that affects how you think about cadence or anything else for the business. That was my first one and we heard from a couple of supply chain companies that COVID impact came earlier this year because of timing FDA whatever was wondering if that had an undue benefit for you in any way, shape or form in the quarter and if that impacted cadence.

 

 

Michael Alkire Premier, Inc. - President, CEO & Director

This is Mike. Hey, let me hit the COVID first. Just as a reminder, we didn’t really see that kind of impact from COVID and, and part of that and, and this is why I was saying just as a reminder, flu doesn’t necessarily drive a significant amount of supplies. So we didn’t really see, you know, that impact from, from COVID this year. As it relates to COVID, the tariffs, that’s a bit more of a complex question. So as you think about what our strategies have been over the last number of years, it’s, it’s really as much as possible to try to reduce our dependence, obviously, in Southeast Asia and look for ways to, you know, create resiliency across the supply chain. And we did that. So, you know, we’ve created capabilities to produce masks. We’ve created, you know, domestically and near shore, we’ve done the same with isolation gowns and other products. So, you know, and to some degree, we’ve been sort of building out the capability where tariffs wouldn’t necessarily have a significant impact on a number of our categories.

Having said that we’ve not seen a significant, you know, pull on suppliers thinking through that, you know, there might be this, this, these tariffs that come out and that, you know, obviously increase the price of products. But instead, you know, what we’re seeing is, you know, organizations asking us to continue to look for, you know, more domestic and nearshore capabilities where the tariffs may not have that significant of an impact. But so far, we’ve not seen, you know, some of the, you know, you know, focus on building out inventory, you know, as a concern as it relates to tariffs.

 

 

Kevin Caliendo UBS - Analyst

Got it, if I can ask one quick follow up. You talked a little bit about the IV bags and, and the weather. But how, how did it actually, as you think about your, you know, the December quarter, how did it actually affect your numbers and then did it in any way, shape or form your guidance, your expectations? Like it was there a drag because of this like lower procedure volumes expected or anything like that?

 

 

Craig McKasson Premier, Inc. - Chief Administrative and Financial Officer & SVP

Yeah, Kevin, it really varies depending on the status of where each individual health system was and the amount of product they had in inventory to manage procedures regionally and in various locations, we are aware that they had to be a little more conservative in terms of some of their elective procedures, but, but we aren’t currently expecting that it will have a material impact on our second quarter performance.

 

 

 

8

---

Operator

Richard Close, Canaccord Genuity.

 

 

John Pinney Canaccord Genuity Group Inc.- Analyst

Hi, this is John Pinney on for Richard Close. Thanks for the question. I guess, first question with the GPO contract renewals, have you, can you discuss like how it’s been potentially trying to cross sell other services? And as the renewals come up in this quarter, any movement there in that regard?

 

 

Michael Alkire Premier, Inc. - President, CEO & Director

So thank you. You know, so while we’re going through this, obviously, it’s an opportunity for us to spend time with the executive teams to ensure they understand the value that we can create. And in fact, that’s actually what’s happening. So as you, as we’re entering through these contract renewals, you know, we, we see significant opportunities for us to cross sell, obviously, our technology and our advisory services, a very, very high percent of of these renewals are including that additional capability. Because at the end of the day, the healthcare systems are really looking for total value and we’ve been talking about that for years, but they’re looking for total value in terms of you know, what we can do to help them, you know, bend the cost of, of supplies for them. And also, you know, look at ways to use our technologies to help them be a lot more efficient in how they’re caring for patients.

 

 

John Pinney Canaccord Genuity Group Inc.- Analyst

Alright great, thanks. And then just one follow up. The supply chain segment adjusted EBITDA margin was if I’m getting this number correct, like around 50%. I believe last quarter, you’re talking supply chain adjusted EBITDA being in the low to mid 40s is like, is this like a sustainable level or is there anything any commentary there of why it was above your expectation?

 

 

Craig McKasson Premier, Inc. - Chief Administrative and Financial Officer & SVP

Yeah. As a reminder, we’ve discontinued the S2S Global business in the first quarter. So that was a low margin business so really affected the EBITDA margin for the segment. So the 51% that you saw in Q1 is indicative of sort of the range and level we would expect in fiscal 2025. So we would expect to have margins in that sort of 50% ballpark on a fiscal 2025 basis.

 

 

Operator

Stephanie Davis, Barclays

 

 

Stephanie Davis Barclays Bank PLC - Analyst

So, Mike, a lot of the prepared remarks you’re talking about AI you called out license sales upside in supply chain of all segments and then Craig having Remitra in SCS. So is it right to think that now that you’re kind of done with the reshuffling and gotten to the right businesses for your forward, you’re going to lean into the tech investments in the supply chain business. And if so, can you walk us through the top items? What’s your wish list?

 

 

Michael Alkire Premier, Inc. - President, CEO & Director

Technology supply chain. Yeah. So we’ve been making that significant investment in e-invoicing and e-payables. What the e-invoicing capability allows for us to do obviously is to look at everything that a healthcare system buys and you know, put contracts around that. So that’s really, really important. Number two, the last quarter, we talked about the Allspire win. So that was a win where there are a number of healthcare systems that came together to pool their, you know, volumes to look at ways to reduce overall supply costs. Well that technology can layer on top of these ERPs and identify where there’s opportunities, you know, from a price parity standpoint, off contract spend, all those kinds of things. So it is a critical differentiator we believe in the market, not only

 

9

---

to help us continue to drive and evolve, you know, obviously our contract penetration models and obviously, therefore, more revenue, but also differentiate us for those entities that pool together healthcare systems as well as large IDNs that are still struggling with managing their entire invoice, you know, process. So very excited about that investment and looking for that forward for that to continue to penetrate the market.

 

 

Stephanie Davis Barclays Bank PLC - Analyst

I guess a follow up on the supply chain side and the less tech heavy part of it. You are seeing, I’m acknowledging that there’s a coopetition dynamic between GPOs and distributors. But you’ve seen a lot of distributors on the medical side lean into this prime vendor relationship and trying to have more of their own branded product sales. So with that kind of going a little bit more head to head with your business, how are you thinking about those competitive dynamics and how are you working with these players as they try to be more of a direct relationship?

 

 

Michael Alkire Premier, Inc. - President, CEO & Director

Yeah. So actually we work very closely with the distributors, you know, as their, you know, and this has been going on for a number of years that they’ve been building out their private label programs and those kinds of things, obviously, many of those are on our current contracts. So, you know, we, we, obviously they’re very, very, very important partner of ours. Number two, as we think about other areas, you know, we, we really do lean into the distributor partnerships that we have in the food program, for example. It truly does differentiate the value that we can create for our healthcare systems.

And it’s similarly in the nonacute area, we have, you know, a very strong partnerships there with a distributor where we create differentiated value for those nonacute players in healthcare. So, you know, Stephanie, it’s kind of, it’s kind of interesting depending on where they play within the healthcare ecosystem. You know, we have a, you know, basically a different playbook, but we do want to leverage their scale where it makes sense.

 

 

Operator

This concludes our question-and-answer session and Premier’s fiscal 2025 first quarter conference call. Thank you for attending today’s presentation. You may now disconnect.

 

 

 

10

Fiscal 2025 First-Quarter Earnings Conference Call /////// November 5, 2024 Exhibit 99.3

---

Forward-looking Statements and Non-GAAP Financial Measures Forward-looking statements – Statements made in this presentation and the accompanying webcast that are not statements of historical or current facts, such as those related to our ability to advance our long-term strategies and develop innovations for, transform and improve healthcare, our ability to find a partner for our Contigo Health business and the potential benefits thereof, our ability to fund and conduct share repurchases pursuant to the outstanding share repurchase authorization and the potential benefits thereof, 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,” “remains committed to,” “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, 2024 as well as Premier’s subsequent Quarterly Reports on Form 10-Q, including the Form 10-Q for the quarter ended September 30, 2024, expected to be filed with the SEC shortly after this presentation. Premier’s periodic and current filings with the SEC are made available on the company’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. Non-GAAP financial measures – This presentation and accompanying webcast include certain “adjusted” and other “non-GAAP” financial measures, including free cash flow, as defined in the SEC’s Regulation G. These measures are not in accordance with, or an alternative to, GAAP. This presentation and the Appendix to this presentation include schedules that reconcile the historical non-GAAP financial measures included in this presentation to the most directly comparable GAAP financial measures. You should carefully read Premier’s earnings release and Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, expected to be filed shortly after this presentation, for definitions of Premier’s non-GAAP financial measures and further explanation and disclosure regarding Premier’s use of non-GAAP financial measures, and such information should be read in conjunction with this presentation. These materials are made available on the company’s website at investors.premierinc.com.

---

Overview Michael J. Alkire President and Chief Executive Officer Financial and Operational Review Craig McKasson Chief Administrative and Financial Officer

---

Fiscal 2025 first-quarter highlights Slightly exceeded expectations for total net revenue and profitability Reaffirming full-year fiscal 2025 guidance Continued to return value to stockholders through quarterly cash dividend and repurchase of shares under the $1 billion share repurchase authorization

---

Technology-enabled supply chain strategy Collaborating with members to identify additional cost savings opportunities Enhancing contract penetration in group purchasing programs Strong member relationships have driven progress in contract renewals, which are also opening the door to have deeper and more strategic discussions Continuing to support member hospitals and health systems that are recovering from recent hurricanes

---

AI-driven performance improvement strategy Renewed and extended engagement with a government agency that leverages Premier’s dataset and proprietary performance improvement methodology to scale improvements in materials and infant health outcomes Expanded partnership with one of the top pharmaceutical companies in the world to include additional real-world evidence and observational research related to their innovations in Alzheimer’s Disease

---

Fiscal 2025 first quarter financial highlights GAAP net income of $72.9 million; $0.72 per fully diluted share Performance Services segment net revenue decreased 9% to $96.8 million Adjusted EBITDA* decreased 33% to $62.4 million, adjusted net income* decreased 38% to $34.7 million and adjusted EPS* of $0.34 decreased 28% Supply Chain Services segment net revenue decreased 7% to $151.4 million GPO net administrative fees revenue decreased 12% Software licenses, other services and support revenue increased 40% *These are non-GAAP financial measures. Refer to the Appendix for adjusted EBITDA, adjusted net income, adjusted earnings per share reconciliations to the corresponding GAAP measures. (Compared with fiscal 2024 first quarter) Total net revenue decreased 8% to $248.1 million On October 1, 2024, the company announced that it had divested its ownership position in the S2S Global direct sourcing business. As such, and unless stated otherwise, all results presented in the following release reflect those of continuing operations. In addition, as the divestiture process for the Contigo Health business remains ongoing, results presented in this presentation will continue to include contributions from that business.

---

Strong financial position with flexible balance sheet Cash flow from operations of $80.0 million Free cash flow* of $16.2 million Cash and cash equivalents of $87.0 million No outstanding balance on $1.0 billion unsecured, revolving credit facility *This is a non-GAAP financial measure. Refer to the Appendix for a reconciliation of free cash flow to the corresponding GAAP measure. (As of and for the quarter ended September 30, 2024) Completed the following under the existing $1 billion share repurchase authorization: 1) completed the $400 million accelerated share repurchase transaction in July, which resulted in the receipt and retirement of approximately 19.9 million Class A common shares 2) repurchased 2.9 million Class A common shares for $58 million in market transactions in August and September – completion of remainder of current $200 million program expected by end of 2024 Paid dividends of $21.3 million to stockholders in fiscal 2025 first quarter Board declared a dividend of $0.21 per share, payable on December 15, 2024, to stockholders of record as of December 1, 2024

---

Company reaffirming fiscal 2025 guidance * Adjusted EBITDA, adjusted EPS and free cash flow presented in this financial guidance are forward-looking non-GAAP measures. Premier does not provide a reconciliation of non-GAAP forward-looking guidance as certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated. Refer to “Use of Forward-Looking Non-GAAP Measures” on slide 13 for additional explanation. Also, Total Net Revenue Excluding Contigo Health is a forward-looking non-GAAP measure. Refer to “Changes impacting fiscal 2025 reporting and guidance” on slide 11 for additional explanation. Guidance Metric Fiscal 2025 Guidance Range* (as of November 5, 2024) Segment Net Revenue: Supply Chain Services Performance Services Excluding Contigo Health   $560 million to $610 million $370 million to $410 million Total Net Revenue Excluding Contigo Health $930 million to $1.02 billion Adjusted EBITDA $235 million to $255 million Adjusted EPS $1.16 to $1.28 Fiscal 2025 guidance is based on the realization of the following key assumptions: Net administrative fees revenue of $495 million to $525 million, which includes $60 million to $75 million in revenue related to non-healthcare member purchasing Supply Chain Services segment software licenses, other services and support revenue of $65 million to $85 million Capital expenditures of $90 million to $100 million Effective income tax rate in the range of 25% to 27% Cash income tax rate of less than 5% Free cash flow of 45% to 55% of adjusted EBITDA Does not include the impact of any significant acquisitions or share repurchases subsequent to completion of the $400 million accelerated share repurchase transaction in July 2024

---

Appendix

---

Changes impacting fiscal 2025 reporting and guidance On October 1, 2024, the company announced that it had divested its ownership position in the S2S Global direct sourcing business. As such, and unless stated otherwise, all results presented in the following release reflect those of continuing operations. In addition, as the divestiture process for the Contigo Health business remains ongoing, results presented in this presentation will continue to include contributions from that business. As a result of our previously announced plan to divest majority interests in our Contigo Health, we are presenting guidance excluding any financial contributions from this business for fiscal 2025. In conjunction with the evolution of our digital supply chain strategy to more tightly align Remitra’s strategic and operational capabilities with our GPO, we have determined it is more appropriate to report the Remitra business as part of the Supply Chain Services segment beginning in fiscal 2025. Based upon shareholder and analyst feedback, we decided it is appropriate, following the close of the sale of our non-healthcare GPO operations, to exclude the impact of the OMNIA transaction including associated revenues sold, imputed interest expense and cash taxes paid on proceeds received from our non-GAAP profitability measures moving forward. We will present our adjusted EBITDA, adjusted net income, adjusted EPS and free cash flow on a comparable basis, excluding these impacts from the OMNIA transaction, effective in fiscal 2025.

---

Fiscal 2025 Non-GAAP Walk to Align to Fiscal 2025 Guidance Presentation Supplemental Financial Information Fiscal 2025 Non-GAAP Walk to Align to Fiscal 2025 Guidance Presentation (Unaudited) (In thousands) Performance Services Three Months Ended September 30, 2024 Total Premier, Inc. Three Months Ended September 30, 2024 Net Revenue (a) $96,754 Net Revenue $248,142 Less: Contigo Health (7,646) Less: Contigo Health (7,646) Net Revenue excluding Contigo Health (a) $89,108 Net Revenue excluding Contigo Health $240,496 Adjusted EBITDA $62,428 Less: Contigo Health (b) 2,227 Adjusted EBITDA excluding Contigo Health $64,655 Includes intersegment revenue that is eliminated in consolidation. Contigo Health Adjusted EBITDA for the fiscal 2025 first quarter was a loss and therefore added back to the total. Note: Net Revenue excluding Contigo Health, Adjusted EBITDA and Adjusted EBITDA Excluding Contigo Health are non-GAAP financial measures. Refer to slide 14 in the Appendix for a reconciliation of Adjusted EBITDA and Adjusted EBITDA Excluding Contigo Health to the corresponding GAAP measures.

---

Use of Forward-looking Non-GAAP Financial 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.

---

Fiscal 2025 and 2024 Non-GAAP Reconciliations 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 September 30, 2024 2023 Net income from continuing operations $72,940 $41,769 Interest expense, net 1,756 22 Income tax expense 22,711 13,731 Depreciation and amortization 19,651 20,328 Amortization of purchased intangible assets 9,637 12,553 EBITDA 126,695 88,403 Stock-based compensation 7,140 6,893 Acquisition- and disposition-related expenses 2,884 6,205 Strategic initiative and financial restructuring-related expenses 110 1,746 Operating income from revenues sold to OMNIA (15,710) (11,666) Equity in net (income) loss of unconsolidated affiliates (1,833) 1,726 Other non-operating gain (57,244) — Other reconciling items, net 386 1 Adjusted EBITDA $62,428 $93,308 Less: Contigo Health (a) 2,227 Adjusted EBITDA excluding Contigo Health $64,655 Contigo Health Adjusted EBITDA for the fiscal 2025 first quarter was a loss and therefore added back to the total.

---

Fiscal 2025 and 2024 Non-GAAP Reconciliations 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 September 30, 2024 2023 Income before income taxes $95,651 $55,500 Equity in net (income) loss of unconsolidated affiliates (1,833) 1,726 Interest expense, net 1,756 22 Other (income) expense, net (60,259) 1,092 Operating income 35,315 58,340 Depreciation and amortization 19,651 20,328 Amortization of purchased intangible assets 9,637 12,553 Stock-based compensation 7,140 6,893 Acquisition- and disposition-related expenses 2,884 6,205 Strategic initiative and financial restructuring-related expenses 110 1,746 Operating income from revenues sold to OMNIA (15,710) (11,666) Deferred compensation plan expense (income) 2,692 (1,125) Other reconciling items, net 709 34 Adjusted EBITDA $62,428 $93,308 SEGMENT ADJUSTED EBITDA Supply Chain Services $77,511 $101,387 Performance Services 14,949 22,930 Corporate (30,032) (31,009) Adjusted EBITDA $62,428 $93,308

---

Fiscal 2025 and 2024 Non-GAAP Reconciliations 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 September 30, 2024 2023 Net income attributable to stockholders $70,784 $44,761 Loss (income) from discontinued operations, net of tax 1,604 (641) Income tax expense 22,711 13,731 Amortization of purchased intangible assets 9,637 12,553 Stock-based compensation 7,140 6,893 Acquisition- and disposition-related expenses 2,884 6,205 Strategic initiative and financial restructuring-related expenses 110 1,746 Operating income from revenues sold to OMNIA (15,710) (11,666) Equity in net (income) loss of unconsolidated affiliates (1,833) 1,726 Other non-operating gain (57,244) — Other reconciling items, net 6,236 1,630 Adjusted income before income taxes 46,319 76,938 Income tax expense on adjusted income before income taxes 11,580 20,773 Adjusted net income $34,739 $56,165

---

Fiscal 2025 and 2024 Non-GAAP Reconciliations Supplemental Financial Information Reconciliation of Net Cash Provided by Operating Activities from Continuing Operations to Free Cash Flow (Unaudited) (In thousands) Three Months Ended September 30, 2024 2023 Net cash provided by operating activities from continuing operations $80,043 $62,650 Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (25,206) (24,742) Purchases of property and equipment (17,718) (21,270) Cash payments to OMNIA for the sale of future revenues (20,949) (4,322) Free Cash Flow $16,170 $12,316

---

Fiscal 2025 and 2024 Non-GAAP Reconciliations Supplemental Financial Information Reconciliation of GAAP EPS to Adjusted EPS (Unaudited) (In thousands, except per share data) Three Months Ended September 30, 2024 2023 Net income attributable to stockholders $70,784 $44,761 Loss (income) from discontinued operations, net of tax 1,604 (641) Income tax expense 22,711 13,731 Amortization of purchased intangible assets 9,637 12,553 Stock-based compensation 7,140 6,893 Acquisition- and disposition-related expenses 2,884 6,205 Strategic initiative and financial restructuring-related expenses 110 1,746 Operating income from revenues sold to OMNIA (15,710) (11,666) Equity in net (income) loss of unconsolidated affiliates (1,833) 1,726 Other non-operating gain (57,244) — Other reconciling items, net 6,236 1,630 Adjusted income before income taxes 46,319 76,938 Income tax expense on adjusted income before income taxes 11,580 20,773 Adjusted net income $34,739 $56,165

---

Fiscal 2025 and 2024 Non-GAAP Reconciliations Supplemental Financial Information Reconciliation of GAAP EPS to Adjusted EPS (Unaudited) (In thousands, except per share data) Three Months Ended September 30, 2024 2023 Weighted average: Basic weighted average shares outstanding 100,380 119,344 Dilutive shares 611 789 Weighted average shares outstanding - diluted 100,991 120,133 Basic earnings per share attributable to stockholders $0.71 $0.38 Loss (income) from discontinued operations, net of tax 0.02 (0.01) Income tax expense 0.23 0.12 Amortization of purchased intangible assets 0.10 0.11 Stock-based compensation 0.07 0.06 Acquisition- and disposition-related expenses 0.03 0.05 Strategic initiative and financial restructuring-related expenses — 0.01 Operating income from revenues sold to OMNIA (0.16) (0.10) Equity in net (income) loss of unconsolidated affiliates (0.02) 0.01 Other non-operating gain (0.57) — Other reconciling items, net 0.05 0.01 Impact of corporation taxes (0.12) (0.17) Adjusted earnings per share $0.34 $0.47

Document and Entity Information	Nov. 05, 2024
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0001577916
Document Type	8-K
Document Period End Date	Nov. 05, 2024
Entity Registrant Name	Premier, Inc.
Entity Incorporation State Country Code	DE
Entity File Number	001-36092
Entity Tax Identification Number	35-2477140
Entity Address, Address Line One	13034 Ballantyne Corporate Place
Entity Address, City or Town	Charlotte
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	28277
City Area Code	(704)
Local Phone Number	357-0022
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Class A Common Stock, $0.01 Par Value
Trading Symbol	PINC
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

---