SEC Form 10-Q filed by Premier Inc.

11/5/24 4:09:44 PM ET

$PINC

Other Consumer Services

Consumer Discretionary

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pinc-20240930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-36092

Premier, Inc.

(Exact name of registrant as specified in its charter)


Delaware		35-2477140
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

13034 Ballantyne Corporate Place
Charlotte,	North Carolina	28277
(Address of principal executive offices)		(Zip Code)

(704) 357-0022

(Registrant’s telephone number, including area code)

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

Title of each class

Trading Symbol(s)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 31, 2024, there were 96,108,595 shares of the registrant’s Class A common stock, par value $0.01 per share outstanding.

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION		6
Item 1.	Financial Statements	6
	Condensed Consolidated Balance Sheets (Unaudited)	6
	Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)	7
	Condensed Consolidated Statements of Stockholders' Equity (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows (Unaudited)	9
	Notes to Condensed Consolidated Financial Statements (Unaudited)	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	43
PART II. OTHER INFORMATION		44
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 5.	Other Information	45
Item 6.	Exhibits	46
	Signatures	47

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Statements made in this Quarterly Report on Form 10-Q for the three months ended September 30, 2024 for Premier, Inc. (this “Quarterly Report”) that are not statements of historical or current facts, such as those under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to our beliefs and expectations regarding future events and trends affecting our business and are necessarily subject to risks and uncertainties, many of which are outside our control. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:

•competition which could limit our ability to maintain or expand market share within our industry;

•our reliance on administrative fees that we receive from suppliers to our group purchasing organization (“GPO”) and our ability to maintain and add new GPO members, which will depend in part on competitive pressure to increase the administrative fee share we pay to members;

•consolidation in the healthcare industry;

•potential delays in recognizing or increasing revenue if the sales cycle or implementation period takes longer than expected;

•the impact to our business if members of our GPO programs reduce activity levels or terminate or elect not to renew their contracts on substantially similar terms or at all;

•the rate at which the markets for our software as a service (“SaaS”) or licensed-based clinical analytics products and services develop and the potential for existing licensed-based customers to convert to SaaS subscriptions;

•the dependency of our members on payments from third-party payers;

•our ability to maintain third-party provider and strategic alliances or enter into new alliances;

•our ability to timely offer new and innovative products and services, including the integration of artificial intelligence and the risks associated with artificial intelligence due to the evolving nature of the technology and legal and regulatory framework;

•the portion of our revenues that we receive from our largest members and other customers;

•risks and expenses related to future acquisition opportunities and integration of previous or future acquisitions, including the potential for impairments resulting from acquisitions;

•financial and operational risks associated with non-controlling investments in other businesses or other joint ventures that we do not control, particularly early-stage companies;

•pending and potential litigation;

•our reliance on Internet infrastructure, bandwidth providers, data center providers and other third parties and our own systems for providing services to our users;

•data loss or corruption due to failures or errors in our systems and service disruptions at our data centers, or breaches or failures of our security measures;

•the financial, operational, legal and reputational consequences of cyber-attacks or other data security breaches that disrupt our operations or result in the dissemination of proprietary or confidential information about us or our members or other third parties;

•our ability to use, disclose, de-identify or license data and to integrate third-party technologies;

•our use of “open source” software;

•our dependency on contract manufacturing facilities located in various parts of the world;

•inventory risk we face in the event of a potential material decline in demand or price for the personal protective equipment or other products we may have purchased at elevated market prices or fixed prices;

•our ability to attract, hire, integrate and retain key personnel;

•the impact of continuing uncertain economic conditions to our business operations due to, but not limited to, inflation and recessionary fears;

•the financial and operational uncertainty due to global macroeconomic, geopolitical, and business conditions, trends and events and the impact of any associated supply chain challenges;

•the impact of global climate change or by regulatory responses to such change;

•changes and uncertainty in the political, economic or regulatory environment affecting healthcare organizations, including with respect to the status of the Patient Protection and Affordable Care Act, as amended by the Healthcare and Education Reconciliation Act of 2010;

•our compliance with complex international, federal and state laws, rules and regulations governing financial relationships among healthcare providers and the submission of false or fraudulent healthcare claims;

•interpretation and enforcement of current or future antitrust laws and regulations;

•compliance with complex federal, state and international privacy, security and breach notification laws;

•compliance with current or future laws, rules and regulations relating to information blocking provisions of the 21st Century Cures Act issued by the Office of the National Coordinator for Health Information Technology (the “ONC Rules”) that may cause our certified Health Information Technology products to be regulated by the ONC Rules;

•compliance with current or future laws, rules and regulations adopted by the Food and Drug Administration applicable to our software applications that may be considered medical devices;

•adequate protection of our intellectual property and potential claims against our use of the intellectual property of third parties;

•potential for additional indirect tax liabilities, such as gross receipts and sales and use taxes, in certain jurisdictions;

•changes in tax laws that materially impact our tax rate, income tax expense, anticipated tax benefits, deferred tax assets, cash flows and profitability and potential material tax disputes;

•the impact of payments required under notes payable to former limited partners related to the early termination of the Unit Exchange and Tax Receivable Acceleration Agreements (the “Unit Exchange Agreements”) issued in connection with our August 2020 Restructuring on our overall cash flow and our ability to fully realize the expected tax benefits to match such fixed payment obligations under those notes payable;

•provisions in our certificate of incorporation and bylaws and provisions of Delaware law and other applicable laws that discourage or prevent strategic transactions, including a takeover of us;

•our indebtedness and our ability to obtain additional financing on favorable terms, including our ability to renew or replace our long-term credit facility at or before maturity;

•fluctuation of our quarterly cash flows, revenues and results of operations;

•failure to maintain an effective system of internal controls over financial reporting or an inability to remediate any weaknesses identified and the related costs of remediation;

•the impact on the price of our Class A common stock (“Common Stock”) if we cease paying dividends or reduce dividend payments from current levels;

•the number of shares of our Common Stock repurchased by us pursuant to any then existing Common Stock repurchase program and the timing of any such repurchases;

•the number of shares of Common Stock eligible for sale after the issuance of Common Stock in our August 2020 Restructuring and the potential impact of such sales; and

•the risk factors discussed under the heading “Risk Factors” under Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the “2024 Annual Report”) filed with the Securities and Exchange Commission (“SEC”), as updated by our Quarterly Reports on Form 10-Q (including this Quarterly Report) filed with the SEC.

More information on potential factors that could affect our financial results is included from time to time in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or similarly captioned sections of this Quarterly Report and our other periodic and current filings made from time to time with the SEC, which are available from the SEC at www.sec.gov or our website at http://investors.premierinc.com (the contents of which are not part of this Quarterly Report). You should not place undue reliance on any of our forward-looking statements, which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Furthermore, we cannot guarantee future results, events, levels of activity, performance or achievements.

Certain Definitions

References to the “August 2020 Restructuring” are references to our corporate restructuring on August 11, 2020 in which we (i) eliminated our dual-class ownership structure and (ii) exercised our right to terminate the Tax Receivable Agreement (the “TRA”). For additional information and details regarding the August 2020 Restructuring, see our Annual Report on Form 10-K for the fiscal year ended June 30, 2021.

References to “operating income from revenues sold to OMNIA” are references to operating income from revenues sold to OMNIA Partners, LLC (“OMNIA”) in connection with the sale of non-healthcare GPO member contracts in July 2024, less royalty fees retained.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

PREMIER, INC.

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 (Note 14)
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

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Income and Comprehensive 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

Comprehensive income:
Net income	$	71,336	$	42,410
Comprehensive (income) loss attributable to non-controlling interest	(552)		2,351
Foreign currency translation gain (loss)	21		(3)
Comprehensive income attributable to stockholders	$	70,805	$	44,758

Weighted average shares outstanding:
Basic	100,380		119,344
Diluted	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

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

Condensed Consolidated Statements of Stockholders' Equity

Three Months Ended September 30, 2024 and 2023

(Unaudited)

(In thousands, except per share data)


	Class A Common Stock			Treasury Stock			Additional Paid-In Capital		(Accumulated Deficit) Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at June 30, 2024	105,027	$	1,115	6,429	$	(250,129)	$	2,105,684	$	105,590	$	(29)	$	1,962,231
Issuance of Class A common stock under equity incentive plan	491	5		—	—		—		—		—		5
Treasury stock	(7,723)	—		7,723	(139,207)		80,000		—		—		(59,207)
Retirement of Class A common stock	—	(142)		(14,152)	389,336		—		(389,194)		—		—
Stock-based compensation expense	—	—		—	—		6,931		—		—		6,931
Repurchase of vested restricted units for employee tax-withholding	—	—		—	—		(4,985)		—		—		(4,985)
Net income	—	—		—	—		—		71,336		—		71,336
Net income attributable to non-controlling interest	—	—		—	—		552		(552)		—		—
Change in ownership of consolidated entity	—	—		—	—		26		—		—		26
Dividends ($0.21 per share)	—	—		—	—		—		(21,590)		—		(21,590)
Distribution of investment in unconsolidated affiliate to non-controlling interests	—	—		—	—		—		(585)		—		(585)

Foreign currency translation adjustment	—	—		—	—		—		—		21		21

Balance at September 30, 2024	97,795	$	978	—	$	—	$	2,188,208	$	(234,995)	$	(8)	$	1,954,183


	Class A Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Shares	Amount		Shares	Amount
Balance at June 30, 2023	119,158	$	1,256	6,429	$	(250,129)	$	2,178,134	$	405,102	$	(8)	$	2,334,355
Issuance of Class A common stock under equity incentive plan	514	5		—	—		—		—		—		5


Stock-based compensation expense	—	—		—	—		6,692		—		—		6,692
Repurchase of vested restricted units for employee tax-withholding	—	—		—	—		(5,178)		—		—		(5,178)
Net income	—	—		—	—		—		42,410		—		42,410
Net loss attributable to non-controlling interest	—	—		—	—		(2,351)		2,351		—		—
Change in ownership of consolidated entity	—	—		—	—		27		—		—		27
Dividends ($0.21 per share)	—	—		—	—		—		(25,603)		—		(25,603)


Foreign currency translation adjustment	—	—		—	—		—		—		(3)		(3)

Balance at September 30, 2023	119,672	$	1,261	6,429	$	(250,129)	$	2,177,324	$	424,260	$	(11)	$	2,352,705

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

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 (income) loss 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) provided by financing activities	(88,140)		302,865
Effect of exchange rate changes on cash flows	21		(3)
Net (decrease) increase in cash and cash equivalents	(38,190)		363,468
Cash and cash equivalents at beginning of period	125,146		89,793
Cash and cash equivalents at end of period	$	86,956	$	453,261

See accompanying notes to the unaudited condensed consolidated financial statements.

PREMIER, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) ORGANIZATION AND BASIS OF PRESENTATION

Organization

Premier, Inc. (“Premier” or the “Company”) is a publicly held, for-profit Delaware corporation located in the United States. The Company is a holding company with no material business operations of its own. The Company’s primary asset is its equity interest in its wholly owned subsidiary Premier Healthcare Solutions, Inc., a Delaware corporation (“PHSI”). The Company conducts substantially all of its business operations through PHSI and its other consolidated subsidiaries. The Company, together with its subsidiaries and affiliates, is a leading technology-driven healthcare improvement company that unites hospitals, health systems, physicians, employers, product suppliers, service providers, and other healthcare providers and organizations to improve and innovate in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry and continues to expand its capabilities to more fully address and coordinate care improvement and standardization in the employer, payer and life sciences markets. Additionally, the Company also provides some of the various products and services noted above to non-healthcare businesses, including through its direct sourcing activities as well as continued access to its group purchasing organization (“GPO”) programs for non-healthcare members whose contracts were sold to OMNIA Partners, LLC (“OMNIA”) (see Note 9 - Liability Related to the Sale of Future Revenues).

The Company’s business model and solutions are designed to provide its members and other customers access to scale efficiencies, spread the cost of their development, provide actionable intelligence derived from anonymized data in the Company’s enterprise data warehouse, mitigate the risk of innovation and disseminate best practices to help the Company’s members and other customers succeed in their transformation to higher quality and more cost-effective healthcare.

The Company, together with its subsidiaries and affiliates, delivers its integrated platform of solutions through two business segments: Supply Chain Services and Performance Services. See Note 15 - Segments for further information related to the Company’s reportable business segments. The Company has no significant foreign operations or revenues. The Supply Chain Services segment includes one of the largest national healthcare GPO programs in the United States, serving acute and continuum of care sites and providing supply chain co-management and purchased services activities. In fiscal year 2025, Remitra®, the Company’s digital invoicing and payables automation business which provides financial support services to healthcare suppliers and providers, began to be reported as a component of the Supply Chain Services segment to align with the Company’s strategy and operations. For comparability purposes, fiscal year 2024 financial measures are presented with Remitra as a component of Supply Chain Services. The Performance Services segment consists of two sub-brands: PINC AITM, the Company’s technology and services platform with offerings that help optimize performance in three main areas – clinical intelligence, margin improvement and value-based care – using advanced analytics to identify improvement opportunities, consulting and managed services for clinical and operational design, and workflow solutions to hardwire sustainable change in the provider, payer and life sciences markets; and Contigo Health®, the Company’s direct-to-employer business which provides third-party administrator services and management of health-benefit programs that enable healthcare providers that are also payers (e.g., payviders) and employers to contract directly with healthcare providers as well as partner with healthcare providers to provide employers access to a specialized care network through Contigo Health’s centers of excellence program and cost containment and wrap network.

Divestiture of Direct Sourcing Business - Discontinued Operations

On September 30, 2024, the Company’s wholly owned subsidiary, Premier Supply Chain Improvement, Inc. (“PSCI”), entered into a Contribution and Exchange Agreement (“CEA”) to exchange all outstanding interests in its direct sourcing subsidiary, SVS LLC d/b/a S2S Global (“S2S Global”), to Prestige Ameritech, Ltd. (“Prestige”) for 9,375,000 limited partnership units, or a 20% minority interest, in Prestige. The transaction closed on October 1, 2024.

The Company met the criteria for classifying certain assets and liabilities of the direct sourcing business as a discontinued operation as of September 30, 2024. Accordingly, unless otherwise indicated, information in the notes to the condensed consolidated financial statements has been retrospectively adjusted to reflect continuing operations for all periods presented. See Note 3 - Discontinued Operations and Exit Activities for further information.

Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC and in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and

include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries over which the Company exercised control and when applicable, entities for which the Company had a controlling financial interest or was the primary beneficiary. All intercompany transactions from continuing operations have been eliminated upon consolidation. Accordingly, certain information and disclosures normally included in annual financial statements have been condensed or omitted. The accompanying condensed consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the interim periods shown, consisting of normal recurring adjustments, unless otherwise disclosed. Certain amounts in prior periods have been reclassified to conform to the current period presentation. The Company believes that the disclosures are adequate to make the information presented not misleading and should be read in conjunction with the audited consolidated financial statements and related footnotes contained in the 2024 Annual Report.

Supplementary Cash Flows Information

The following table presents supplementary cash flows information for the three months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended September 30,
	2024		2023



Supplemental schedule of non-cash investing and financing activities:
Non-cash additions to property and equipment	$	191	$	—
Accrued dividend equivalents	450		472
Increase in treasury stock related to a payable as a result of applying trade date accounting when recording the repurchase of Class A common stock	1,602		—
Accrued excise taxes related to repurchase of Class A common stock	1,165		—

Use of Estimates in the Preparation of Financial Statements

The preparation of the Company’s condensed consolidated financial statements in accordance with GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Significant estimates are evaluated on an ongoing basis, including, but not limited to, estimates for net administrative fees revenue, software licenses, other services and support revenue, contract assets, deferred revenue, contract costs, allowances for credit losses, reserves for net realizable value of inventory, obsolete inventory, useful lives of property and equipment, stock-based compensation, deferred tax balances including valuation allowances on deferred tax assets, uncertain tax positions, values of investments not publicly traded, projected future cash flows used in the evaluation of asset impairments, values of call rights, values of earn-out liabilities and the allocation of purchase prices. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

(2) SIGNIFICANT ACCOUNTING POLICIES

There have been no material changes to the Company’s significant accounting policies as described in the 2024 Annual Report.

(3) DISCONTINUED OPERATIONS AND EXIT ACTIVITIES

In connection with the sale of certain assets and wind down and exit from the direct sourcing business (see Note 1 - Organization and Basis of Presentation), the Company met the criteria for classifying certain assets and liabilities of S2S Global as a discontinued operation as of September 30, 2024. Prior to its classification as a discontinued operation, S2S Global was included as part of the Supply Chain Services segment.

The Company’s consolidated subsidiary, PRAM Holdings, LLC (“PRAM”), held an approximate 20% interest in Prestige through PRAM’s ownership of Prestige limited partnership units at September 30, 2024 (see Note 4 – Investments). During the three months ended September 30, 2024 and 2023, the Company recorded net income of $0.3 million and $0.1 million, respectively, within equity in net income (loss) of unconsolidated affiliates. Following the CEA transaction, PRAM’s interest in Prestige will be diluted by an approximate 4% as a result of the additional issuance of limited partnership units to the Company. Premier, through its direct ownership interest in Prestige resulting from the CEA and indirect ownership through PRAM, will hold an aggregate 24% membership interest in Prestige. The ongoing ownership interest represents a continuing involvement which the Company has preliminarily concluded represents an equity method investment.

In order to affect the exchange and provide for the relationship between Premier and Prestige, the Company entered into various agreements, including, among others, the CEA and a transition services agreement. As part of the agreements, the Company has agreed to provide certain transitional services as detailed within respective transition services agreements for a period of time not to exceed one year after the sale. Income related to these transitional services will be immaterial. As part of the CEA, Prestige will remit the first $4.0 million of sales associated with a certain international manufacturing facility back to Premier. Any incremental revenue will be retained by Prestige.

During the three months ended September 30, 2024 and 2023, the Company recorded revenue of $0.6 million and $0.9 million, respectively, within net administrative fees generated through administrative fees resulting from GPO members’ purchases on S2S Global’s supplier contracts. The Company expects this relationship to continue subsequent to Premier’s disposal of S2S Global.

The following table summarizes the major classes of assets and liabilities classified as discontinued operations at September 30, 2024 and June 30, 2024 (in thousands):


	September 30, 2024		June 30, 2024
Assets
Accounts receivable	$	18,345	$	25,730
Inventory	72,496		79,799
Prepaid expenses and other current assets	6,876		6,893
Deferred income tax assets	3,200		—
Other assets	3,976		4,040
Current assets of discontinued operations	$	104,893	$	116,462

Liabilities
Accounts payable	$	14,712	$	37,750
Accrued expenses	4,573		7,003
Accrued compensation and benefits	878		971
Current liabilities of discontinued operations	$	20,163	$	45,724

The following table summarizes the major components of net (loss) income from discontinued operations for the three months ended September 30, 2024 and 2023 (in thousands):


	Three Months Ended September 30,
	2024		2023
Net revenue	$	50,485	$	49,726
Cost of revenue	46,055		44,038
Gross profit	4,430		5,688
Operating expenses:
Selling, general and administrative expense	6,761		4,922
Amortization of purchased intangible assets	—		135
Operating expenses	6,761		5,057
Operating (loss) income from discontinued operations	(2,331)		631
Other (expense) income	(54)		217
Net (loss) income from discontinued operations before income taxes	(2,385)		848
Income tax (benefit) expense	(781)		207
Net (loss) income from discontinued operations, net of tax, attributable to stockholders	$	(1,604)	$	641

(4) INVESTMENTS

Investments in Unconsolidated Affiliates

The Company’s investments in unconsolidated affiliates consisted of the following (in thousands):


					Equity in Net Income (Loss)

	Carrying Value				Three Months Ended September 30,
	September 30, 2024		June 30, 2024		2024		2023
FFF	$	136,080	$	136,080	$	—	$	—
Exela	33,458		32,259		1,198		(1,419)
Qventus	16,000		16,000		—		—
Prestige	15,157		14,850		308		119
Other investments	29,700		29,373		327		(426)
Total investments	$	230,395	$	228,562	$	1,833	$	(1,726)

The Company’s wholly owned subsidiary, Premier Supply Chain Improvement, Inc. (“PSCI”), held a 49% interest in FFF Enterprises, Inc. (“FFF”) through its ownership of stock of FFF at September 30, 2024 and June 30, 2024. On March 3, 2023, the Company and the majority shareholder of FFF amended the FFF shareholders’ agreement and as of the date of the amendment, the Company accounts for its investment in FFF at cost less impairments, if any, plus or minus any observable changes in fair value (refer to the Annual Report on Form 10-K for the fiscal year ended June 30, 2023 for additional information and details regarding the March 2023 amendment). The Company accounts for its investment in FFF as part of the Supply Chain Services segment.

The Company’s consolidated subsidiary, ExPre Holdings, LLC (“ExPre”), held an approximate 6% interest in Exela Holdings, Inc. (“Exela”) through ExPre’s ownership of Exela Class A common stock at September 30, 2024 and June 30, 2024. At September 30, 2024 and June 30, 2024, the Company owned approximately 15% of the membership interest of ExPre, with the remainder of the membership interests held by 11 member health systems or their affiliates. The Company accounts for its investment in Exela using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.

The Company’s wholly owned subsidiary, PHSI, held an approximate 7% interest in Qventus, Inc. (“Qventus”) through PHSI’s ownership of Qventus Series C preferred stock at September 30, 2024 and June 30, 2024. The Company accounts for its investment in Qventus at cost less impairments, if any, plus or minus any observable changes in fair value. The Company includes Qventus as part of the Performance Services segment.

The Company’s consolidated subsidiary, PRAM Holdings, LLC (“PRAM”), held an approximate 20% interest in Prestige Ameritech Ltd. (“Prestige”) through PRAM’s ownership of Prestige limited partnership units at September 30, 2024 and June 30, 2024. At September 30, 2024 and June 30, 2024, the Company owned approximately 26% of the membership interest of PRAM, with the remainder of the membership interests held by 16 member health systems or their affiliates. The Company accounts for its investment in Prestige using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.

On September 30, 2024, the Company’s wholly owned subsidiary, PSCI, entered into a contribution and exchange agreement with Prestige. The transaction closed on October 1, 2024, at which time PSCI exchanged all of its holdings in S2S Global for a 20% minority interest in Prestige. As of October 1, 2024, the Company held an approximate 24% interest in Prestige, comprised of the 20% direct ownership interest through its sale of S2S Global (see Note 3 - Discontinued Operations and Exit Activities) as well as its indirect ownership interest through PRAM.

(5) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

The following table represents the Company’s financial assets and liabilities, which are measured at fair value on a recurring basis (in thousands):


	Fair Value of Financial Assets and Liabilities		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
September 30, 2024

Deferred compensation plan assets	$	58,222	$	58,222	$	—	$	—
Total assets	58,222		58,222		—		—

Earn-out liabilities	30,000		—		—		30,000
Total liabilities	$	30,000	$	—	$	—	$	30,000

June 30, 2024

Deferred compensation plan assets	$	61,198	$	61,198	$	—	$	—
Total assets	61,198		61,198		—		—

Earn-out liabilities	28,549		—		—		28,549
Total liabilities	$	28,549	$	—	$	—	$	28,549

Deferred compensation plan assets consisted of highly liquid mutual fund investments, which were classified as Level 1. The current portion of deferred compensation plan assets ($10.8 million and $6.8 million at September 30, 2024 and June 30, 2024, respectively) was included in prepaid expenses and other current assets in the accompanying Condensed Consolidated Balance Sheets.

Financial Instruments Measured at Fair Value on a Recurring Basis Using Significant Unobservable Inputs (Level 3)

Earn-out liabilities

Earn-out liabilities have been established in connection with certain acquisitions, including the acquisition of substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc. (the “Acurity and Nexera asset acquisition”) in February 2020. The earn-out liability related to the Acurity and Nexera asset acquisition was based upon the Company’s achievement of a range of member renewals on terms agreed to by the Company and Greater New York Hospital Association based on prevailing market conditions in December 2023. Earn-out liabilities are classified as Level 3 of the fair value hierarchy.

Acurity and Nexera Earn-out (a)

The earn-out liability arising from expected earn-out payments related to the Acurity and Nexera asset acquisition was measured on the acquisition date using a probability-weighted expected payment model and was remeasured periodically due to changes in management’s estimates of the number of transferred member renewals and market conditions. In determining the fair value of the contingent liabilities, management reviewed the current results of the acquired business, along with projected results for the remaining earn-out period, to calculate the expected earn-out payment to be made based on the contractual terms set out in the acquisition agreement. The Acurity and Nexera earn-out liability did not utilize a credit spread at September 30, 2024. At June 30, 2024, the Acurity and Nexera earn-out liability utilized a credit spread of 1.0%. At September 30, 2024, the maximum number of transferred member renewals had been achieved. As a result, the earn-out payment was determined to be $30.0 million, which is expected to be paid in the third quarter of fiscal year 2025. The fair value of the Acurity and Nexera earn-out liability at September 30, 2024 and June 30, 2024 was $30.0 million and $28.5 million, respectively.

A reconciliation of the Company’s Level 3 earn-out liabilities is as follows (in thousands):


	Three Months Ended September 30,
	2024		2023
Beginning balance	$	28,549	$	26,603
Purchases (settlements)	—		—
(Gains) losses (a)	1,451		3,258
Ending balance	$	30,000	$	29,861

_________________________________

(a)Gains on level 3 liability balances will decrease the liability ending balance, and losses on level 3 liability balances will increase the liability ending balance.

Non-Recurring Fair Value Measurements

As a result of the August 2020 Restructuring, the Company recorded non-interest bearing notes payable to former limited partners during the first quarter of fiscal year 2021. Although these notes are non-interest bearing, they include a Level 2 input associated with an implied fixed annual interest rate of 1.8% (see Note 8 - Debt and Notes Payable). As of September 30, 2024 and June 30, 2024, the notes payable to former limited partners were recorded net of discounts of $0.7 million and $1.2 million, respectively.

Financial Instruments for Which Fair Value is Only Disclosed

At September 30, 2024, the Company had no non-interest bearing notes payable. At June 30, 2024, the fair values of non-interest bearing notes payable, classified as Level 2, were equal to the carrying value based on an assumed market interest rate of 1.6%.

Other Financial Instruments

The fair values of cash, accounts receivable, accounts payable, accrued liabilities and the Credit Facility (as defined in Note 8 - Debt and Notes Payable) approximated carrying value due to the short-term nature of these financial instruments.

(6) CONTRACT BALANCES

Deferred Revenue

Revenue recognized during the three months ended September 30, 2024 that was included in the opening balance of deferred revenue at June 30, 2024 was $10.0 million, which is a result of satisfying certain performance obligations.

Performance Obligations

A performance obligation is a contractual obligation to transfer a distinct good or service to a customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contracts may have a single performance obligation as the agreement to transfer individual goods or services is not separately identifiable from other contractual obligations and, therefore, not distinct, while other contracts may have multiple performance obligations, most commonly due to the contract covering multiple phases or deliverable arrangements (licensing fees, software-as-a-service (“SaaS”) subscription fees, maintenance and support fees, and professional fees for consulting services).

Refer to the Company’s significant accounting policies in the 2024 Annual Report for discussion of revenue recognition on contracts with customers.

Net revenue of $4.7 million was recognized during the three months ended September 30, 2024 from performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by an increase of $4.5 million in net administrative fees revenue related to under-forecasted cash receipts received in the current period and an increase of $0.2 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.

Net revenue of $5.3 million was recognized during the three months ended September 30, 2023 from performance obligations that were satisfied or partially satisfied in prior periods. The net revenue recognized was driven by an increase of $3.8 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business and an increase of $1.5 million in net administrative fees revenue related to under-forecasted cash receipts received in the current period.

Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of September 30, 2024, the aggregate amount of the transaction price allocated to remaining performance obligations was $724.8 million. The Company expects to recognize approximately 39% of the remaining performance obligations over the next twelve months, an additional 22% over the following twelve months and an additional 28% over the following 36 months, with the remainder recognized thereafter.

(7) GOODWILL AND INTANGIBLE ASSETS

Beginning in fiscal year 2025, Remitra is reported as a component of the Supply Chain Services segment. For comparability purposes, fiscal year 2024 financial measures are presented with Remitra as a component of Supply Chain Services.

Fiscal Year 2024 Impairment

During the year ended June 30, 2024, the Company recorded pre-tax goodwill and intangible asset impairment charges of $16.5 million and $113.5 million, respectively, related to the Contigo Health reporting unit. At September 30, 2024 and June 30, 2024, the Contigo Health reporting unit’s goodwill and intangible assets were fully impaired.

Goodwill

At both September 30, 2024 and June 30, 2024, the Company had goodwill balances recorded at Supply Chain Services and Performance Services of $408.3 million and $587.5 million, respectively. At both September 30, 2024 and June 30, 2024, the Company had accumulated impairment losses to goodwill at Performance Services of $70.9 million, all of which related to the Contigo Health reporting unit.

Intangible Assets, Net

Intangible assets, net consisted of the following (in thousands):


		September 30, 2024						June 30, 2024
	Useful Life	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net
Member relationships	14.7 years	$	386,100	$	(169,449)	$	216,651	$	386,100	$	(162,910)	$	223,190

Technology	7.1 years	98,517		(74,898)		23,619		98,517		(73,441)		25,076
Customer relationships	9.3 years	41,430		(32,107)		9,323		41,430		(31,612)		9,818
Trade names	6.8 years	18,420		(14,097)		4,323		18,420		(13,574)		4,846
Non-compete agreements	5.2 years	17,315		(12,597)		4,718		17,315		(12,063)		5,252
Other	5.1 years	1,810		(822)		988		1,810		(733)		1,077
Total		$	563,592	$	(303,970)	$	259,622	$	563,592	$	(294,333)	$	269,259

The net carrying value of intangible assets by segment was as follows (in thousands):


	September 30, 2024		June 30, 2024
Supply Chain Services	$	249,783	$	258,480
Performance Services	9,839		10,779
Total intangible assets, net	$	259,622	$	269,259

The estimated amortization expense for each of the next five fiscal years and thereafter is as follows (in thousands):


2025 (a)	$	28,552
2026	36,945
2027	34,294
2028	30,681
2029	28,687
Thereafter	100,463
Total amortization expense	$	259,622

(a)As of September 30, 2024, estimated amortization expense is for the period from October 1, 2024 to June 30, 2025.

(8) DEBT AND NOTES PAYABLE

Long-term debt and notes payable consisted of the following (in thousands):


	September 30, 2024		June 30, 2024

Notes payable to former limited partners, net of discount	$	76,317	$	101,523
Other notes payable	—		1,008
Total debt and notes payable	76,317		102,531
Less: current portion	(76,317)		(102,531)
Total long-term debt and notes payable	$	—	$	—

Credit Facility

PHSI, along with its consolidated subsidiaries, Premier LP and PSCI (“Co-Borrowers”), and certain domestic subsidiaries of the Co-Borrowers, as guarantors, entered into a senior unsecured Amended and Restated Credit Agreement, dated as of December 12, 2022, subsequently amended by a First Amendment to Credit Agreement dated as of September 23, 2024 (the “Credit Facility”). The Credit Facility has a maturity date of December 12, 2027, subject to up to two one-year extensions, and provides for borrowings of up to $1.0 billion with (i) a $50.0 million sub-facility for standby letters of credit and (ii) a $100.0 million sub-facility for swingline loans. The Credit Facility also provides that Co-Borrowers may from time to time (i) incur incremental term loans and (ii) request an increase in the revolving commitments under the Credit Facility, together up to an aggregate of $350.0 million, subject to the approval of the lenders providing such term loans or revolving commitment increase. The Credit Facility contains an unconditional and irrevocable guaranty of all obligations of Co-Borrowers under the Credit Facility by the current and future guarantors. Premier is not a guarantor under the Credit Facility.

At both September 30, 2024 and June 30, 2024, the Company had no outstanding borrowings under the Credit Facility with $995.0 million of available borrowing capacity after reductions for outstanding letters of credit. For the three months ended September 30, 2024, the Company had no new borrowings or repayments under the Credit Facility. At both September 30, 2024 and June 30, 2024, the annual commitment fee, based on the actual daily unused amount of commitments under the Credit Facility, was 0.125%.

On September 23, 2024, the Credit Facility was amended to revise certain definitions related to the Company’s sale of non-healthcare GPO member contracts to OMNIA (see Note 9 - Liability Related to the Sale of Future Revenues). The Company was in compliance with all covenants at September 30, 2024 and June 30, 2024.

Notes Payable

Notes Payable to Former Limited Partners

At September 30, 2024 and June 30, 2024, the Company had $76.3 million and $101.5 million of notes payable to former limited partners (“LP”), net of discounts on notes payable of $0.7 million and $1.2 million, respectively, recorded to current portion of notes payable to former limited partners in the accompanying Condensed Consolidated Balance Sheets. The notes payable to former LPs were issued in connection with the early termination of the TRA as part of the August 2020 Restructuring. Although the notes payable to former LPs are non-interest bearing, pursuant to GAAP requirements, they were recorded net of imputed interest at a fixed annual rate of 1.8%.

Other

At June 30, 2024, the Company had $1.0 million in other notes payable, which was included in current portion of long-term debt in the accompanying Condensed Consolidated Balance Sheets. Other notes payable do not bear interest and generally have stated maturities of three to five years from their date of issuance.

(9) LIABILITY RELATED TO THE SALE OF FUTURE REVENUES

Sale of Non-Healthcare GPO Member Contracts

On July 25, 2023 (the “Closing Date”), the Company sold the equity interest in its wholly-owned subsidiary, Non-Healthcare Holdings, LLC, pursuant to an equity purchase agreement with OMNIA (“Equity Purchase Agreement”) for a total purchase price of $723.8 million, all of which has been received as of September 30, 2024. Pursuant to the terms of the Equity Purchase Agreement, OMNIA acquired Premier’s non-healthcare GPO member agreements which includes the associated net cash flows generated from administrative fees from purchasing on supplier contracts and in conjunction with the execution of the Equity Purchase Agreement, the Company and OMNIA entered into a 10-year channel partnership agreement (the “Channel

Agreement”). Additionally, the Company has the right to retain royalty fees over the term of the Channel Agreement based on the continued growth of the non-healthcare GPO member agreements.

As payments for administrative fees are remitted to OMNIA, the balance of Premier’s obligation will effectively be repaid over the term of the Channel Agreement. The Company calculated the effective interest rate based on future expected revenue, which resulted in an effective annual interest rate of 2.5% which will remain consistent throughout the life of the Channel Agreement.

Changes to several factors that could materially affect the amount and timing of payments to OMNIA could result in an increase or decrease to expected future revenue and interest expense related to the sale of future revenues. To the extent the amount or timing of future payments varies materially from the original estimate, the Company will make a cumulative adjustment to the carrying amount of the liability, which will be recorded as a non-cash gain or loss in other income in the Condensed Consolidated Statements of Income and Comprehensive Income. For the three months ended September 30, 2024 and 2023, the Company did not record cumulative adjustments to the carrying amount of the liability.

At September 30, 2024, the Company had $672.6 million of debt related to the sale of non-healthcare GPO member contracts and associated future revenues, of which $41.3 million was recorded to current portion of the liability related to the sale of future revenues in the accompanying Condensed Consolidated Balance Sheets. For the three months ended September 30, 2024, the Company recorded $15.7 million in revenue that was sold to OMNIA in net administrative fees, net of royalty fees retained, and $4.4 million in interest expense related to the sale of future revenues in interest expense, net in the Condensed Consolidated Statements of Income and Comprehensive Income.

A reconciliation of the liability related to the sale of future revenues was as follows (in thousands):




Beginning balance as of June 30, 2024	$	651,221
Proceeds from the sale of future revenues	42,325
Imputed interest expense associated with the sale of future revenues	4,351
Payments against the liability related to the sale of future revenues	(25,300)
Ending balance as of September 30, 2024	$	672,597

(10) STOCKHOLDERS' EQUITY

As of September 30, 2024, there were 97,794,635 shares of the Company’s Class A common stock (“Common Stock”), par value $0.01 per share, outstanding.

Share Repurchase Authorization

In February 2024, the Company announced that its Board of Directors approved a new share repurchase authorization for up to $1.0 billion of its Common Stock (the “Share Repurchase Authorization”) and that the Company entered into an accelerated share repurchase agreement (the “ASR Agreement”) with Bank of America, N.A. (“Bank of America”) pursuant to the Share Repurchase Authorization to repurchase an aggregate of $400.0 million of shares of the Company’s Common Stock, excluding fees and expenses. Under the terms of the ASR Agreement, the Company made a payment of $400.0 million to Bank of America and, in February 2024, received initial deliveries of an aggregate of 15.0 million shares of the Company’s Common Stock, or $320.0 million. On July 11, 2024, as final settlement of the share repurchase transaction under the ASR Agreement, the Company received from Bank of America an additional 4.8 million shares of the Company’s Common Stock. In total, the Company repurchased 19.9 million shares of its Common Stock under the ASR Agreement at $20.12 per share, which represents the volume-weighted average share price of the Company’s Common Stock during the term of the ASR Agreement less a discount. The shares delivered were recorded in treasury stock and immediately retired and recorded to retained earnings in the Company’s Condensed Consolidated Balance Sheet.

On August 20, 2024, the Company announced that the Company’s Board of Directors approved the execution of another $200.0 million of Common Stock repurchases under the Share Repurchase Authorization. As of September 30, 2024, the Company had repurchased 2.9 million shares of Common Stock at an average price of $20.18 per share for a total purchase price of $58.0 million. There can be no assurances regarding the timing or number of shares of Common Stock purchased under this authorization. The repurchase authorization may be suspended, delayed or discontinued at any time at the discretion of the Company’s Board of Directors.

During the three months ended September 30, 2024, the Company paid cash dividends of $0.21 per share on outstanding shares of the Company’s Common Stock to stockholders on September 15, 2024. On October 24, 2024, the Board of Directors

declared a quarterly cash dividend of $0.21 per share, payable on December 15, 2024 to stockholders of record on December 1, 2024.

(11) EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income attributable to stockholders by the weighted average number of shares of Common Stock outstanding for the period. Except when the effect would be anti-dilutive, the diluted earnings per share calculation, which is calculated using the treasury stock method, includes the impact of all potentially issuable dilutive shares of Common Stock.

The following table provides a reconciliation of the numerator and denominator used for basic and diluted earnings per share (in thousands, except per share amounts):


	Three Months Ended September 30,
	2024		2023
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 (a)	$	70,784	$	44,761

Denominator for earnings per share:
Basic weighted average shares outstanding	100,380		119,344
Effect of dilutive securities: (b)

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

_________________________________

(a)Net income from continuing operations attributable to stockholders was calculated as follows (in thousands):


	Three Months Ended September 30,
	2024		2023
Net income from continuing operations	$	72,940	$	41,769
Net (income) loss from continuing operations attributable to non-controlling interest	(552)		2,351
Net income from continuing operations attributable to stockholders	$	72,388	$	44,120

(b)Stock options and restricted stock units excluded from diluted weighted average shares outstanding as their effects were anti-dilutive totaled 1.6 million for the three months ended September 30, 2024. Additionally, performance share awards excluded from diluted weighted average shares outstanding as the awards had not satisfied the applicable performance criteria at the end of the period were 0.3 million for the three months ended September 30, 2024.

Stock options and restricted stock units excluded from diluted weighted average shares outstanding as their effects were anti-dilutive totaled 1.3 million for the three months ended September 30, 2023. Additionally, performance share awards excluded from diluted weighted average shares outstanding as the awards had not satisfied the applicable performance criteria at the end of the period were 0.2 million for the three months ended September 30, 2023.

(12) STOCK-BASED COMPENSATION

Stock-based compensation expense is recognized over the requisite service period, which generally equals the stated vesting period. The associated deferred tax benefit was calculated at a tax rate of 25% for the three months ended September 30, 2024 and 2023, which represents the expected effective income tax rate at the time of the compensation expense deduction and

differs from the Company’s current effective income tax rate. See Note 13 - Income Taxes for further information related to income taxes.

Stock-based compensation expense and the resulting deferred tax benefits were as follows (in thousands):


	Three Months Ended September 30,
	2024		2023
Pre-tax stock-based compensation expense	$	6,931	$	6,692
Less: deferred tax benefit (a)	1,255		1,544
Total stock-based compensation expense, net of tax	$	5,676	$	5,148

_________________________________

(a)For the three months ended September 30, 2024 and 2023, the deferred tax benefit was reduced by $0.5 million and $0.2 million, respectively, attributable to stock-based compensation expense that is nondeductible for tax purposes pursuant to Section 162(m) as amended by the Tax Cuts and Jobs Act of 2017.

Premier 2013 Equity Incentive Plan

The Premier 2013 Equity Incentive Plan, as amended and restated (and including any further amendments thereto, the “2013 Equity Incentive Plan”), provided for grants of up to 14.8 million shares of Common Stock, all of which were eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units or performance share awards. On September 24, 2023, the 2013 Equity Incentive Plan expired; no new grants will be issued under the plan.

Premier 2023 Equity Incentive Plan

The Premier 2023 Equity Incentive Plan (the “2023 Equity Incentive Plan”), which became effective December 1, 2023, provides for grants of up to 6.0 million shares of the Company’s Common Stock, all of which are eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted shares, restricted stock units or performance share awards. As of September 30, 2024, there were approximately 4.1 million shares available for grant under the 2023 Equity Incentive Plan.

The following table includes information related to restricted stock, performance share awards and stock options granted under either the 2013 Equity Incentive Plan or the 2023 Equity Incentive Plan for the three months ended September 30, 2024:


	Restricted Stock			Performance Share Awards			Stock Options
	Number of Awards	Weighted Average Fair Value at Grant Date		Number of Awards	Weighted Average Fair Value at Grant Date		Number of Options	Weighted Average Exercise Price
Outstanding at June 30, 2024	2,201,729	$	28.23	1,578,203	$	28.14	443,580	$	33.17
Granted	970,035	20.50		469,847	18.21		—	—
Vested/exercised	(733,180)	31.61		—	—		—	—
Forfeited	(70,082)	24.93		(63,003)	22.29		(139,761)	32.06
Outstanding at September 30, 2024	2,368,502	$	24.11	1,985,047	$	22.40	303,819	$	33.68

Stock options outstanding and exercisable at September 30, 2024							303,819	$	33.68

Restricted stock units and restricted stock awards issued prior to June 1, 2023 generally vest in full at the end of a three-year period for employees and a one-year period for directors. Beginning June 1, 2023, restricted stock units and restricted stock awards issued to employees generally vest in equal annual installments over a three-year period. Performance share awards issued and outstanding generally vest at the end of a three-year period subject to whether and to what extent performance targets are met. Stock options generally vest in equal annual installments over a three-year period. Stock options have a term of ten years from the date of grant. Vested stock options will generally expire on the earlier of the scheduled expiration date and twelve months after an employee’s termination with the Company; however, in certain termination circumstances, vested stock options will expire on the earlier of the scheduled expiration date and 90 days after an employee’s termination with the Company.

Unrecognized stock-based compensation expense at September 30, 2024 was as follows (in thousands):


	Unrecognized Stock-Based Compensation Expense		Weighted Average Amortization Period
Restricted stock	$	43,530	2.2 years
Performance share awards	20,126		2.5 years
Total unrecognized stock-based compensation expense	$	63,656	2.3 years

At September 30, 2024, there was no unrecognized stock-based compensation expense for outstanding stock options. There were no options exercised during the three months ended September 30, 2024, and the stock options outstanding and exercisable at September 30, 2024 had zero aggregate intrinsic value.

(13) INCOME TAXES

Income tax expense on continuing operations for the three months ended September 30, 2024 and 2023 was $22.7 million and $13.7 million, respectively. This reflects effective tax rates of 24% and 25% for the three months ended September 30, 2024 and 2023, respectively. The change in the effective tax rate is primarily attributable to changes in stock-based compensation expense, state law repricing and statute of limitation release on uncertain tax positions.

(14) COMMITMENTS AND CONTINGENCIES

Operating Leases

Operating lease expense for the three months ended September 30, 2024 and 2023 was $2.0 million and $2.4 million, respectively. As of September 30, 2024, the weighted average remaining lease term was 1.9 years and the weighted average discount rate was 6%.

Future minimum lease payments under noncancellable operating leases with initial lease terms in excess of one year were as follows (in thousands):


	September 30, 2024		June 30, 2024
2025 (a)	$	9,525	$	12,938
2026	9,469		9,469
2027	1,486		1,486
2028	166		166
2029	170		170
Thereafter	309		309
Total future minimum lease payments	21,125		24,538
Less: imputed interest	1,143		1,110
Total operating lease liabilities (b)	$	19,982	$	23,428

_________________________________

(a)As of September 30, 2024, future minimum lease payments are for the period from October 1, 2024 to June 30, 2025.

(b)As of September 30, 2024, the Company had $11.9 million of operating lease liabilities within other current liabilities in the accompanying Condensed Consolidated Balance Sheets.

During the three months ended September 30, 2024, the Company had commitments arising from a lease that had not yet commenced related to a lease modification for its corporate headquarters, which is expected to commence in fiscal year 2026 with an initial lease term of approximately eight years.

Other Matters

The Company is not currently involved in any litigation it believes to be material. The Company is periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include stockholder derivative or other similar litigation, claims relating to commercial, product liability, tort and personal injury, employment, antitrust, intellectual property, or other regulatory matters. If current or future government regulations, including but not limited to those with respect to antitrust or healthcare laws, are interpreted or enforced in a manner adverse to the Company or its business, the

Company may be subject to regulatory inquiries or investigations, enforcement actions, penalties and other material limitations which could have a material adverse effect on the Company’s business, financial condition and results of operations.

(15) SEGMENTS

The Company delivers its solutions and manages its business through two reportable business segments, the Supply Chain Services segment and the Performance Services segment. The Supply Chain Services segment includes the Company’s GPO, supply chain co-management, purchased services activities and Remitra, the Company’s digital invoicing and payables automation business. The Performance Services segment consists of two sub-brands: PINC AI, the Company’s technology and services platform, and Contigo Health, the Company’s direct-to-employer business.

The following table presents disaggregated revenue by business segment and underlying source (in thousands):


	Three Months Ended September 30,
	2024		2023
Net revenue:
Supply Chain Services
Net administrative fees	$	132,625	$	149,886
Software licenses, other services and support	18,763		13,390


Total Supply Chain Services (a)	151,388		163,276
Performance Services
Software licenses, other services and support
SaaS-based products subscriptions	38,911		45,340
Consulting services	19,689		23,768
Software licenses	20,947		14,738
Other (b)	17,207		21,904
Total Performance Services (a)	96,754		105,750


Net revenue	$	248,142	$	269,026

_________________________________

(a)Includes intersegment revenue that is eliminated in consolidation. Intersegment revenue is not separately identified in Segments as the amounts are not material.

(b)Includes revenue from Contigo Health and certain revenue from PINC AI.

Additional segment information related to depreciation and amortization expense, capital expenditures and total assets was as follows (in thousands):


	Three Months Ended September 30,
	2024		2023
Depreciation and amortization expense (a):
Supply Chain Services	$	15,577	$	14,893
Performance Services	12,223		15,887
Corporate	1,488		2,101
Total depreciation and amortization expense	$	29,288	$	32,881

Capital expenditures:
Supply Chain Services	$	7,335	$	12,237
Performance Services	10,326		8,118
Corporate	57		915
Total capital expenditures	$	17,718	$	21,270


	September 30, 2024		June 30, 2024
Total assets (b):
Supply Chain Services	$	1,543,392	$	1,629,042
Performance Services	1,021,640		986,993
Corporate	748,561		785,408
Total assets before eliminations	3,313,593		3,401,443
Eliminations (c)	5		6
Total assets	$	3,313,598	$	3,401,449

_________________________________

(a)Includes amortization of purchased intangible assets.

(b)As of September 30, 2024 and June 30, 2024, Supply Chain Services total assets included $104.9 million and $116.5 million, respectively, in assets of discontinued operations related to S2S Global.

(c)Includes eliminations of intersegment transactions which occur during the ordinary course of business.

The Company uses Segment Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles (“Non-GAAP”)) as its primary measure of profit or loss to assess segment performance and to determine the allocation of resources. The Company also uses Segment Adjusted EBITDA to facilitate the comparison of the segment operating performance on a consistent basis from period to period. The Company defines Segment Adjusted EBITDA 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 expense 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.

The Company has revised the definition for Segment Adjusted EBITDA from the definition reported in the 2024 Annual Report to exclude the operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty fees retained. For comparability purposes, prior year Non-GAAP measures are presented based on the current definition.

For more information on Segment Adjusted EBITDA and the use of Non-GAAP financial measures, see “Our Use of Non-GAAP Financial Measures” within Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.

A reconciliation of income before income taxes to unaudited Segment Adjusted EBITDA, a Non-GAAP financial measure, is as follows (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 (a)	(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 (b)	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) (c)	2,692		(1,125)

Other reconciling items, net	709		34
Total Non-GAAP Adjusted EBITDA (d)	$	62,428	$	93,308

Non-GAAP Adjusted EBITDA (d):
Supply Chain Services (e)	$	77,511	$	101,387
Performance Services (e)	14,949		22,930
Segment Adjusted EBITDA	92,460		124,317
Corporate	(30,032)		(31,009)
Total Non-GAAP Adjusted EBITDA	$	62,428	$	93,308

_________________________________

(a)Refer to Note 4 - Investments for more information.

(b)Includes non-cash employee stock-based compensation expense and stock purchase plan expense of $0.2 million for both the three months ended September 30, 2024 and 2023.

(c)Represents changes in deferred compensation plan obligations resulting from realized and unrealized gains and losses and dividend income on deferred compensation plan assets.

(d)The definition for Non-GAAP Adjusted EBITDA was revised from the definition reported in the 2024 Annual Report to exclude the operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty fees retained. For comparability purposes, prior year Non-GAAP financial measures are presented based on the current definition.

(e)Includes intersegment revenue which is eliminated in consolidation.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our condensed consolidated financial statements and the notes thereto included elsewhere in this Quarterly Report. This discussion is designed to provide the reader with information that will assist in understanding our condensed consolidated financial statements, the changes in certain key items in those financial statements from quarter to quarter, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our condensed consolidated financial statements. In addition, the following discussion includes certain forward-looking statements. For a discussion of important factors, including the continuing development of our business and other factors which could cause actual results to differ materially from the results referred to in the forward-looking statements, see the discussions under “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” herein and in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024 (the “2024 Annual Report”), filed with the Securities and Exchange Commission (“SEC”).

Business Overview

Our Business

Premier, Inc. (“Premier,” the “Company,” “we” or “our”) is a leading technology-driven healthcare improvement company, uniting an alliance of U.S. hospitals, health systems and other providers and organizations to transform healthcare. We partner with hospitals, health systems, physicians, employers, product suppliers, service providers, payers and other healthcare providers and organizations with the common goal of improving and innovating in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry. We deliver value through a comprehensive technology-enabled platform that offers critical supply chain services, clinical, financial, operational and value-based care software-as-a-service (“SaaS”) as well as clinical and enterprise analytics licenses, consulting services, performance improvement collaborative programs, third-party administrator services, access to our centers of excellence program, cost containment and wrap network and digital invoicing and payment automation processes for healthcare suppliers and providers. We also continue to expand our capabilities to more fully address and coordinate care improvement and standardization in the employer, payer and life sciences markets. We also provide some of the various products and services noted above to non-healthcare businesses.

We generated net revenue, net income from continuing operations and Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles (“Non-GAAP”)) for the periods presented as follows (in thousands):


	Three Months Ended September 30,
	2024		2023
Net revenue	$	248,142	$	269,026
Net income from continuing operations	72,940		41,769
Non-GAAP Adjusted EBITDA	62,428		93,308

See “Our Use of Non-GAAP Financial Measures” and “Results of Operations” below for a discussion of our use of Non-GAAP Adjusted EBITDA and a reconciliation of net (loss) income from continuing operations to Non-GAAP Adjusted EBITDA.

Strategic Review

In February 2024, we announced that our Board of Directors concluded its exploration of strategic alternatives. As part of the strategic review process, the Board of Directors authorized us to seek partners for some or all of our holdings in Contigo Health, LLC (“Contigo Health”), our subsidiary focused on providing comprehensive services that optimize employee health benefits, and SVS LLC d/b/a S2S Global (“S2S Global”), our direct sourcing subsidiary. On September 30, 2024, our wholly owned subsidiary, Premier Supply Chain Improvement, Inc. (“PSCI”), entered into a contribution and exchange agreement with Prestige Ameritech, Ltd. (“Prestige”) pursuant to which PSCI exchanged all of its holdings in S2S Global for 9,375,000 limited partnership units, or a 20% minority interest, in Prestige. This minority interest ownership is in addition to an existing indirect investment made in Prestige in 2020, increasing our total ownership (direct and indirect) interest in Prestige to approximately 24% in the aggregate. The transaction closed on October 1, 2024. See Note 3 - Discontinued Operations and Exit Activities to the accompanying condensed consolidated financial statements for further information.

Additionally, on February 2, 2024, our Board of Directors authorized the repurchase of up to $1.0 billion of our outstanding Class A common stock (“Common Stock”) (“Share Repurchase Authorization”). On February 5, 2024, under the Share Repurchase Authorization, we entered into an accelerated share repurchase agreement (the “ASR Agreement”) with Bank of America, N.A. (“Bank of America”) to repurchase an aggregate of $400.0 million of shares of our Common Stock. Final

settlement of the accelerated share repurchase transaction pursuant to the ASR Agreement was completed on July 11, 2024. On August 20, 2024, we announced that our Board of Directors approved execution of another $200.0 million of Common Stock repurchases under the Share Repurchase Authorization. Refer to “Share Repurchase Authorization” within “Contractual Obligations” section of Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations for more information.

Our Business Segments

Our business model and solutions are designed to provide our members and other customers access to scale efficiencies, spread the cost of their development, provide actionable intelligence derived from anonymized data in our enterprise data warehouse, mitigate the risk of innovation and disseminate best practices that will help our members and other customers succeed in their transformation to higher quality and more cost-effective healthcare. We deliver our integrated platform of solutions that address the areas of clinical intelligence, margin improvement and value-based care through two business segments: Supply Chain Services and Performance Services.

Segment net revenue for the three months ended September 30, 2024 and 2023 was as follows (in thousands):


	Three Months Ended September 30,								% of Net Revenue
Net revenue:	2024		2023		Change				2024		2023
Supply Chain Services	$	151,388	$	163,276	$	(11,888)	(7)	%	61	%	61	%
Performance Services	96,754		105,750		(8,996)		(9)	%	39	%	39	%
Segment net revenue	$	248,142	$	269,026	$	(20,884)	(8)	%	100	%	100	%

Our Supply Chain Services segment includes one of the largest national healthcare group purchasing organization (“GPO”) programs in the United States, serving acute and continuum of care sites and providing supply chain co-management and purchased services activities. In fiscal year 2025, Remitra®, our digital invoicing and payables automation business which provides financial support services to healthcare suppliers and providers, is reported as a component of our Supply Chain Services segment to align with our strategy and operations. For comparability purposes, fiscal year 2024 financial measures are presented with Remitra as a component of Supply Chain Services.

Our Performance Services segment consists of two sub-brands: PINC AITM, our technology and services platform with offerings that help optimize performance in three main areas – clinical intelligence, margin improvement and value-based care – using advanced analytics to identify improvement opportunities, consulting and managed services for clinical and operational design, and workflow solutions to hardwire sustainable change in the provider, payer and life sciences markets; and Contigo Health®, our direct-to-employer business which provides third-party administrator services and management of health benefit programs that enable healthcare providers that are also payers (e.g. payviders) and employers to contract directly with healthcare providers as well as partner with the healthcare providers to provide employers access to a specialized care network through Contigo Health’s centers of excellence program and cost containment and wrap network.

Sales and Divestitures

Sale of Non-Healthcare GPO Member Contracts

On July 25, 2023, we sold substantially all of our non-healthcare GPO member contracts pursuant to an equity purchase agreement with OMNIA Partners, LLC (“OMNIA”) for a purchase price of $723.8 million. For a period of at least 10 years following the closing, the non-healthcare GPO members will continue to be able to make purchases through our group purchasing contracts. See Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information.

Divestiture of Direct Sourcing Business - Discontinued Operations

On September 30, 2024, our wholly owned subsidiary, PSCI, entered into a contribution and exchange agreement with Prestige Ameritech, Ltd., pursuant to which PSCI exchanged all of its holdings in S2S Global for a 20% minority interest in Prestige. This new minority interest ownership is in addition to an existing indirect investment made in Prestige in 2020, increasing our total ownership (direct and indirect) interest in Prestige to approximately 24% in the aggregate.

We met the criteria for classifying certain assets and liabilities of the direct sourcing business as a discontinued operation as of September 30, 2024. Accordingly, unless otherwise indicated, information in this Quarterly Report has been retrospectively adjusted to reflect continuing operations for all periods presented. See Note 3 - Discontinued Operations and Exit Activities to the accompanying condensed consolidated financial statements for further information.

Market and Industry Trends and Outlook

We expect that certain trends and economic or industrywide factors will continue to affect our business, in both the short- and long-term. We have based our expectations described below on assumptions made by us and on information currently available to us. To the extent our underlying assumptions about, or interpretation of, available information prove to be incorrect, our actual results may vary materially from our expected results. See “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” herein and in the 2024 Annual Report.

Trends in the U.S. healthcare market as well as the broader U.S. and global economy affect our revenues and costs in the Supply Chain Services and Performance Services segments. The trends we see affecting our current business include the impact of inflation on the broader economy, the significant increase to input costs in healthcare, including the rising cost of labor, and the impact of the implementation of current or future healthcare legislation. Implementation of healthcare legislation could be disruptive for Premier and our customers, impacting revenue, reporting requirements, payment reforms, shift in care to the alternate site market and increased data availability and transparency. To meet the demands of this environment, there will be increased focus on scale and cost containment and healthcare providers will need to measure and report on and bear financial risk for outcomes. Over the long-term, we believe these trends will result in increased demand for our Supply Chain Services and Performance Services solutions in the areas of cost management, quality and safety, and value-based care; however, there are uncertainties and risks that may affect the actual impact of these anticipated trends, expected demand for our services or related assumptions on our business.

Impact of Inflation

While the U.S. inflation rate has declined from its peak in calendar year 2022, the U.S. economy is still experiencing elevated rates of inflation compared to the recent past. We believe that we have continued to limit the impact of inflation on our members and believe that we maintain significantly lower inflation impacts across our diverse product portfolio than national levels. However, in certain areas of our business, there is still some level of risk and uncertainty for our members and other customers as labor costs, raw material costs and availability, higher interest rates and inflation continue to pressure supplier pricing as well as apply significant pressure on our margin.

We continue to evaluate the contributing factors which have led to adjustments to selling prices. We are continuously working to manage price increases as market conditions change. The impact of inflation on our aggregated product portfolio is partially mitigated by contract term price protection for a large portion of our portfolio. See Item 1A “Risk Factors” in our 2024 Annual Report.

Furthermore, while the Federal Reserve may seek to reduce market interest rates, they may continue to be elevated, increasing the cost of borrowing under our Credit Facility (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) as well as impacting our results of operations, financial condition and cash flows.

Geopolitical Tensions

Geopolitical tensions continue to affect the global economy and financial markets, as well as exacerbate ongoing economic challenges, including issues such as rising inflation, energy costs, logistics costs, tariffs and global supply-chain disruption.

We continue to monitor the impacts of geopolitical tensions on macroeconomic conditions and prepare for any implications they may have on member demand, our suppliers’ ability to deliver products, cybersecurity risks and our liquidity and access to capital. See Item 1A “Risk Factors” in our 2024 Annual Report.

Critical Accounting Policies and Estimates

Refer to Note 1 - Organization and Basis of Presentation and Note 2 - Significant Accounting Policies to the accompanying condensed consolidated financial statements for more information related to our use of estimates in the preparation of financial statements as well as information related to material changes in our significant accounting policies that were included in our 2024 Annual Report.

Goodwill

We perform goodwill impairment testing on an annual basis as well as when impairment indicators are present. On a quarterly basis, we perform a qualitative assessment to determine if an impairment is more likely than not to have occurred and evaluate whether the fair value for one or more reporting units is greater than their carrying value. The results of the fiscal year 2024 annual goodwill impairment testing indicated that our Informatics and Technology Services (“ITS”) reporting unit had a heightened risk of future impairments if any assumptions, estimates or market factors unfavorably change in the future. No triggering events were identified during the three months ended September 30, 2024 that would indicate the fair value of the

ITS reporting unit was below its carrying value. As a result of the ongoing heightened risk of future impairments, we continue to closely monitor any events, circumstances or changes in this business that might imply a reduction in the estimated fair value and may lead to goodwill impairment.

New Accounting Standards

There were no new accounting standards adopted by the Company during the three months ended September 30, 2024.

Key Components of Our Results of Operations

Net Revenue

Net revenue consists of net administrative fees revenue, software licenses, other services and support revenue and products revenue.

Supply Chain Services

Supply Chain Services revenue is comprised of:

•net administrative fees revenue which consists of gross administrative fees received from suppliers, reduced by the amount of revenue share paid to members;

•software licenses, other services and support revenue which consist of supply chain co-management and purchased services revenue; and

•fees from healthcare suppliers and providers associated with Remitra.

The success of our Supply Chain Services revenue streams is influenced by our ability to negotiate favorable contracts with suppliers and members, the number of members that utilize our GPO supplier contracts and the volume of their purchases, the impact of changes in the defined allowable reimbursement amounts determined by Medicare, Medicaid and other managed care plans and the impact of competitive pricing. We believe that some of our GPO competitors may offer higher revenue share arrangements to some of their customers compared to our average arrangements. As we have renewed certain GPO member contracts during fiscal years 2024 and 2025, competitive pressure has resulted in increases to our average fee share paid to members, a trend that is expected to continue, particularly as we continue to renew GPO member contracts that were extended at the time of our August 2020 Restructuring. In fiscal year 2025, we are targeting additional member agreements for renewal that would result in a cumulative total of more than 75% of the gross administrative fees associated with the member agreements extended in 2020 being through the renewal process by the end of fiscal year 2025. We expect to target the remaining associated member agreements for renewal in fiscal years 2026 and 2027. Also refer to “Impact of Inflation” within “Liquidity and Capital Resources” section of Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations for discussion of inflation and its impact on our Supply Chain Services’ businesses.

Performance Services

Performance Services revenue is comprised of the following software licenses, other services and support revenue:

•healthcare information technology license and SaaS-based clinical intelligence, margin improvement and value-based care products subscriptions, license fees, professional fees for consulting services, PINC AI data licenses, performance improvement collaborative and other service subscriptions and insurance services management fees and commissions from endorsed commercial insurance programs under our PINC AI technology and services platform; and

•third-party administrator fees, fees from the centers of excellence program and cost containment and wrap network fees for Contigo Health.

Our Performance Services growth will depend upon the expansion of services to new and existing members and other customers, renewal of existing subscriptions to our SaaS and licensed software products and the shift from recurring subscription-based agreements to enterprise analytics licenses at a sufficient rate to offset reductions in recurring SaaS-based revenue.

Cost of Revenue

Cost of revenue consists of cost of services and software licenses revenue.

Cost of services and software licenses revenue includes expenses related to employees, consisting of compensation- and benefits-related costs, and outside consultants who directly provide services related to revenue-generating activities, including consulting services to members and other customers, third-party administrator services and implementation services related to our SaaS and licensed software products along with associated amortization of certain capitalized contract costs. Amortization

of contract costs represent amounts that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract including costs related to implementing SaaS informatics tools. Cost of services and software licenses revenue also includes expenses related to hosting services, related data center capacity costs, third-party product license expenses and amortization of the cost of internally developed software applications.

Refer to “Impact of Inflation” within “Liquidity and Capital Resources” section of Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations for discussion of inflation and its impact on our business.

Operating Expenses

Operating expenses includes selling, general and administrative (“SG&A”) expenses, research and development expenses and amortization of purchased intangible assets.

SG&A expenses are directly associated with selling and administrative functions and support of revenue-generating activities including expenses to support and maintain our software-related products and services. SG&A expenses primarily consist of: compensation- and benefits-related costs; travel-related expenses; business development expenses, including costs for business acquisition opportunities; non-recurring strategic initiative and financial restructuring-related expenses; indirect costs such as insurance, professional fees and other general overhead expenses; and amortization of certain contract costs. Amortization of contract costs represent amounts, including sales commissions, that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract. SG&A expenses can also include impairment of assets which includes goodwill impairment charges recognized when the reporting unit’s carrying amount exceeds its fair value and impairment losses on intangibles and other long-lived assets when the carrying value of the asset subject to amortization may not be recoverable from the estimated cash flows expected to result from its use and eventual disposition (see Note 5 - Fair Value Measurements and Note 7 - Goodwill and Intangible Assets to the accompanying condensed consolidated financial statements for further information).

Research and development expenses consist of employee-related compensation and benefit expenses and third-party consulting fees of technology professionals, net of capitalized labor, incurred to develop our software-related products and services prior to reaching technological feasibility.

Amortization of purchased intangible assets includes the amortization of all identified intangible assets.

Other Income (Expense), Net

Other income (expense), net, primarily includes interest income and expense and equity in net income of unconsolidated affiliates that is generated from our equity method investments. Other income, net, may also include, but is not limited to, realized and unrealized gains or losses on deferred compensation plan assets, gains or losses on the disposal of assets and other non-operating gains or losses.

•Interest income is primarily related to interest earned on investments in money market funds while interest expense is primarily related to funds borrowed through our Credit Facility as well as imputed interest on non-interest bearing debt (see Note 8 - Debt and Notes Payable and Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information).

•Our equity method investments primarily consist of our interests in Exela Holdings, Inc. (“Exela”) and Prestige Ameritech Ltd. (“Prestige”). As of March 3, 2023, our investment in FFF Enterprises, Inc. (“FFF”) was no longer accounted for under the equity method of accounting (see Note 4 - Investments to the accompanying condensed consolidated financial statements for further information).

•Other non-operating gains primarily consist of the $57.0 million in cash received in July 2024 as the result of the settlement of a shareholder derivative complaint (see Part II, Item 1. Legal Proceedings within this Quarterly Report for additional information).

Income Tax Expense

See Note 13 - Income Taxes to the accompanying condensed consolidated financial statements for discussion of income tax expense.

Loss from Discontinued Operations, Net of Tax

Loss from discontinued operations, net of tax represents the net loss associated with the sale of certain assets and wind down and exit of the direct sourcing business. See Note 3 - Discontinued Operations and Exit Activities to the accompanying condensed consolidated financial statements for further information.

Net Income/Loss Attributable to Non-Controlling Interest

We recognize net income/loss attributable to non-controlling interest for non-Premier ownership in our consolidated subsidiaries which hold interest in our equity method investments (see Note 4 - Investments to the accompanying condensed consolidated financial statements for further information). At September 30, 2024, we recognized net income attributable to non-controlling interests held by member health systems or their affiliates in the consolidated subsidiaries holding our equity method investments, including but not limited to the 74% and 85% interest held in PRAM Holdings, LLC (“PRAM”) and ExPre Holdings, LLC (“ExPre”), respectively. In partnership with member health systems or their affiliates, these investments are part of our long-term supply chain resiliency program to promote domestic and geographically diverse manufacturing and to help ensure a robust and resilient supply chain for essential medical products.

As of September 30, 2024, we owned 93% of the equity interest in Contigo Health and recognized net loss attributable to non-controlling interest for the 7% of equity held by certain customers of Contigo Health.

Our Use of Non-GAAP Financial Measures

The other key business metrics we consider are EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share and Free Cash Flow, which are all Non-GAAP financial measures. Non-GAAP financial measures are not an alternative to GAAP and may be different from Non-GAAP financial measures used by other companies, but we believe they are useful for understanding our performance for the reasons described below.

We define EBITDA 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. We define Adjusted EBITDA as EBITDA before merger and acquisition-related expenses and non-recurring, non-cash or non-operating items. For all Non-GAAP financial measures, we consider non-recurring items to be income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Non-recurring items include certain strategic initiative and financial restructuring-related expenses. Non-cash items include share-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 fees retained.

We define Segment Adjusted EBITDA 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 fees retained.

We define Adjusted Net Income 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, (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 fees retained, imputed interest expense and associated income tax expense. Non-recurring items include certain strategic initiative and financial restructuring-related expenses. Non-cash items include share-based compensation expense and asset impairments. We define Adjusted Earnings Per Share as Adjusted Net Income divided by diluted weighted average shares (see Note 11 - Earnings Per Share to the accompanying condensed consolidated financial statements for further information).

We define Free Cash Flow 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 and Tax Receivable Acceleration Agreement (“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.

We have 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, Segment Adjusted EBITDA and Adjusted Net Income were revised to exclude the operating income from revenues sold to OMNIA in connection with the sale of non-

healthcare GPO member contracts. Adjusted Net Income was also revised to exclude the related imputed interest and tax expense in connection with the sale of non-healthcare GPO member contracts to OMNIA. Free Cash Flow was revised to exclude 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 definition.

Adjusted EBITDA and Free Cash Flow are supplemental financial measures used by us 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.

We use Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income and Adjusted Earnings Per Share to facilitate a comparison of our operating performance on a consistent basis from period to period and to provide measures that, when viewed in combination with our results prepared in accordance with GAAP, we believe allows for a more complete understanding of factors and trends affecting our business than GAAP measures alone. We believe Adjusted EBITDA and Segment Adjusted EBITDA assist our Board of Directors, management and investors in comparing our operating performance on a consistent basis from period to period because they remove the impact of earnings elements attributable to our asset base (primarily depreciation and amortization), certain items outside the control of our management team, 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 our operating results. We believe Adjusted Net Income and Adjusted Earnings Per Share assist our Board of Directors, management and investors in comparing our net income and earnings per share on a consistent basis from period to period because these measures remove non-cash 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. We believe Free Cash Flow is an important measure because it represents the cash that we generate after payments to certain former limited partners that elected to execute a 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 enables us to seek enhancement of stockholder value through acquisitions, partnerships, joint ventures, investments in related or complementary businesses and/or debt reduction.

Despite the importance of these Non-GAAP financial measures in analyzing our business, determining compliance with certain financial covenants in our Credit Facility, measuring and determining incentive compensation and evaluating our operating performance relative to our competitors, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share and Free Cash Flow are not measurements of financial performance under GAAP, may have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income, net cash provided by operating activities, or any other measure of our performance derived in accordance with GAAP.

Some of the limitations of the EBITDA, Adjusted EBITDA and Segment Adjusted EBITDA measures include that they do not reflect: our capital expenditures or our future requirements for capital expenditures or contractual commitments; changes in, or cash requirements for, our working capital needs; the interest expense or the cash requirements to service interest or principal payments under our Credit Facility; income tax payments we are required to make; and any cash requirements for replacements of assets being depreciated or amortized. In addition, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA and Free Cash Flow are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash flows from operating activities.

Some of the limitations of the Adjusted Net Income and Adjusted Earnings Per Share measures are that they do not reflect income tax expense or income tax payments we are required to make. In addition, Adjusted Net Income and Adjusted Earnings Per Share are not measures of profitability under GAAP.

We also urge you to review the reconciliation of these Non-GAAP financial measures included elsewhere in this Quarterly Report. To properly and prudently evaluate our business, we encourage you to review the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report and to not rely on any single financial measure to evaluate our business. In addition, because the EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share and Free Cash Flow measures are susceptible to varying calculations, such Non-GAAP financial measures may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.

Non-recurring and non-cash items excluded in our calculation of Adjusted EBITDA, Segment Adjusted EBITDA and Adjusted Net Income consist of stock-based compensation, acquisition- and disposition-related expenses, strategic initiative and financial

restructuring-related expenses, income and expense that has been classified as discontinued operations and other reconciling items. More information about certain of the more significant items follows below.

Income tax expense on adjusted income

Adjusted Net Income, a Non-GAAP financial measure as defined above in “Our Use of Non-GAAP Financial Measures”, is calculated net of taxes based on our estimated annual effective tax rate for federal and state income tax, adjusted for unusual or infrequent items, as we are a consolidated group for tax purposes with all of our subsidiaries’ activities included. The tax rate used to compute the Adjusted Net Income was 25% and 27% for the three months ended September 30, 2024 and 2023, respectively.

Stock-based compensation

In addition to non-cash employee stock-based compensation expense, this item includes non-cash stock purchase plan expense of $0.2 million for both the three months ended September 30, 2024 and 2023 (see Note 12 - Stock-Based Compensation to the accompanying condensed consolidated financial statements for further information).

Acquisition- and disposition-related expenses

Acquisition-related expenses include legal, accounting and other expenses related to acquisition activities, one-time integration expenses and gains and losses on the change in fair value of earn-out liabilities. Disposition-related expenses include severance and retention benefits and financial advisor fees, legal fees and other expenses related to disposition activities.

Strategic initiative and financial restructuring-related expenses

Strategic initiative and financial restructuring-related expenses include legal, accounting and other expenses related to strategic initiative and financial restructuring-related activities.

Operating income from revenues sold to OMNIA

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

Other reconciling items

Other reconciling items include, but are not limited to, gains and losses on disposal of long-lived assets, imputed interest on non-interest bearing debt and any impact from non-controlling interest on adjustments to net income (loss) attributable to stockholders.

Results of Operations

Results of operations for all periods presented have been retrospectively adjusted to reflect continuing operations unless otherwise indicated.

The following table presents our results of operations for the periods presented (in thousands, except per share data):


	Three Months Ended September 30,
	2024			2023
	Amount		% of Net Revenue	Amount		% of Net Revenue
Net revenue:
Net administrative fees	$	132,625	53%	$	149,886	56%
Software licenses, other services and support	115,517		47%	119,140		44%


Net revenue	248,142		100%	269,026		100%
Cost of revenue:
Services and software licenses	67,724		27%	64,132		24%

Cost of revenue	67,724		27%	64,132		24%
Gross profit	180,418		73%	204,894		76%
Operating expenses	145,103		58%	146,554		54%
Operating income	35,315		14%	58,340		22%
Other income (expense), net	60,336		24%	(2,840)		(1)%
Income before income taxes	95,651		39%	55,500		21%
Income tax expense	22,711		9%	13,731		5%
Net income from continuing operations	72,940		29%	41,769		16%
Net (loss) income from discontinued operations, net of tax	(1,604)		(1)%	641		—%
Net income	71,336		29%	42,410		16%
Net (income) loss attributable to non-controlling interest	(552)		—%	2,351		1%
Net income attributable to stockholders	$	70,784	29%	$	44,761	17%

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

For the following Non-GAAP financial measures and reconciliations of our performance derived in accordance with GAAP to the Non-GAAP financial measures, refer to “Our Use of Non-GAAP Financial Measures” for further information regarding items excluded in our calculation of Adjusted EBITDA, Segment Adjusted EBITDA, Non-GAAP Adjusted Net Income and Non-GAAP Adjusted Earnings Per Share. The definitions for Adjusted EBITDA and Non-GAAP Adjusted Net Income were revised from those reported in the 2024 Annual Report. For comparability purposes, prior year Non-GAAP financial measures are presented based on the current definitions in the above section “Our Use of Non-GAAP Financial Measures”.

The following table provides certain Non-GAAP financial measures for the periods presented (in thousands, except per share data):


	Three Months Ended September 30,
	2024			2023
Certain Non-GAAP Financial Data:	Amount		% of Net Revenue	Amount		% of Net Revenue
Adjusted EBITDA	$	62,428	25%	$	93,308	35%
Non-GAAP Adjusted Net Income	34,739		14%	56,165		21%
Non-GAAP Adjusted Earnings Per Share	0.34		nm	0.47		nm

nm = Not meaningful

The following tables provide the reconciliation of net income from continuing operations to Adjusted EBITDA and the reconciliation of income before income taxes to Segment Adjusted EBITDA (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 (a)	386		1
Total Adjusted EBITDA	$	62,428	$	93,308

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 (b)	709		34
Total Adjusted EBITDA	$	62,428	$	93,308


	Three Months Ended September 30,
	2024		2023
Adjusted EBITDA:
Supply Chain Services	$	77,511	$	101,387
Performance Services	14,949		22,930
Segment Adjusted EBITDA	92,460		124,317
Corporate	(30,032)		(31,009)
Total Adjusted EBITDA	$	62,428	$	93,308

_________________________________

(a)Other reconciling items, net is primarily attributable to loss on disposal of long-lived assets.

(b)Other reconciling items, net is attributable to other miscellaneous expenses.

The following table provides the reconciliation of net income attributable to stockholders to Non-GAAP Adjusted Net Income and the reconciliation of the numerator and denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings Per Share for the periods presented (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 (a)	6,236		1,630
Non-GAAP adjusted income before income taxes	46,319		76,938
Income tax expense on adjusted income before income taxes (b)	11,580		20,773
Non-GAAP Adjusted Net Income	$	34,739	$	56,165

Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings Per Share
Weighted average:
Basic weighted average shares outstanding	100,380		119,344
Dilutive securities	611		789
Weighted average shares outstanding - diluted	100,991		120,133

_________________________________

(a)Other reconciling items, net is primarily attributable to loss on disposal of long-lived assets, imputed interest on non-interest bearing debt and the impact from non-controlling interest on adjustments to net income attributable to stockholders.

(b)Reflects income tax expense at an estimated effective income tax rate of 25% of Non-GAAP adjusted net income before income taxes for the three months ended September 30, 2024 and 27% of Non-GAAP adjusted net income before income taxes for the three months ended September 30, 2023.

The following table provides the reconciliation of earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings Per Share for the periods presented:


	Three Months Ended September 30,
	2024		2023
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 (a)	0.05		0.01
Impact of corporation taxes (b)	(0.12)		(0.17)

Non-GAAP Adjusted Earnings Per Share	$	0.34	$	0.47

_________________________________

Consolidated Results - Comparison of the Three Months Ended September 30, 2024 to 2023

The variances in the material factors contributing to the changes in the consolidated results are discussed further in “Segment Results” below.

Net Revenue

Net revenue decreased by $20.9 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to a decrease of $11.9 million, or 7%, in Supply Chain Services. This decrease was primarily due to a decrease of $17.3 million in net administrative fees primarily as a result of higher fee share in the current year, partially offset with an increase of $5.4 million in software licenses and other support due to growth in supply chain co-management. Additionally, Performances Services revenue decreased by $9.0 million due to lower software licenses and other services and support revenue primarily due to non-recurring revenue from agreements in the prior year.

Cost of Revenue

Cost of revenue increased by $3.6 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to an increase of $3.5 million in Supply Chain Services cost of services and software licenses primarily due to an increase in personnel costs associated with headcount in direct support of new engagements within our supply chain co-management business.

Operating Expenses

Operating expenses decreased by $1.5 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily driven by a decrease of $2.9 million in amortization of purchased intangible assets due to the prior year third quarter impairment of Contigo Health intangible assets, partially offset by an increase of $1.7 million in SG&A expenses primarily due to an increase in employee-related expenses and timing of conference costs, partially offset by a decrease in acquisition- and disposition-related expenses.

Other Income (Expense), Net

Other income (expense), net increased by $63.2 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to a non-operating gain of $57.0 million from the settlement of a shareholder derivative complaint (see Part II, Item 1. Legal Proceedings within this Quarterly Report for additional information) as well as increases in deferred compensation plan income in the current period due to market changes and in income from equity in net income of unconsolidated affiliates.

Income Tax Expense

For the three months ended September 30, 2024, we recorded tax expense of $22.7 million compared to $13.7 million during the three months ended September 30, 2023. The tax expense recorded during the three months ended September 30, 2024 and 2023 resulted in effective tax rates of 24% and 25%, respectively. The change in the effective tax rate is primarily due to changes in stock-based compensation expense, state law repricing and statute of limitation release on uncertain tax positions. Excluding these factors, the effective tax rate would have been 25% for the three months ended September 30, 2024.

Net Loss/Income from Discontinued Operations, Net of Tax

Net loss/income from discontinued operations, net of tax was a net loss of $1.6 million during the three months ended September 30, 2024 compared to net income of $0.6 million during the three months ended September 30, 2023. This $2.2 million decrease was primarily related to lower gross margin in the current year primarily due to higher product freight costs as well as current year disposition-related expenses primarily related to legal fees.

Net Income/Loss Attributable to Non-Controlling Interest

Net income attributable to non-controlling interest of $0.6 million during the three months ended September 30, 2024 changed by $2.9 million from net loss attributable to non-controlling interest of $2.4 million during the three months ended September 30, 2023, primarily due to our consolidated subsidiaries with non-controlling interests incurring net income in the current year period.

Adjusted EBITDA

Adjusted EBITDA decreased by $30.9 million during the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily driven by decreases of $23.9 million and $8.0 million in Supply Chain Services and Performance Services Adjusted EBITDA, respectively, partially offset by a decrease of $1.0 million in corporate expenses.

Segment Results

Supply Chain Services

The following table presents our results of operations and Adjusted EBITDA in the Supply Chain Services segment for the periods presented (in thousands):


	Three Months Ended September 30,
	2024		2023		Change
Net revenue:
Net administrative fees	$	132,625	$	149,886	$	(17,261)	(12)%
Software licenses, other services and support	18,763		13,390		5,373		40%
Services and software licenses	151,388		163,276		(11,888)		(7)%

Net revenue	151,388		163,276		(11,888)		(7)%
Cost of revenue:
Services and software licenses	15,932		12,408		3,524		28%

Cost of revenue	15,932		12,408		3,524		28%
Gross profit	135,456		150,868		(15,412)		(10)%
Operating expenses:
Selling, general and administrative	50,813		45,393		5,420		12%
Research and development	156		180		(24)		(13)%
Amortization of purchased intangible assets	8,697		8,844		(147)		(2)%
Operating expenses	59,666		54,417		5,249		10%
Operating income	75,790		96,451		(20,661)		(21)%
Depreciation and amortization	6,880		6,050
Amortization of purchased intangible assets	8,697		8,843
Acquisition- and disposition-related expenses	1,859		1,675
Operating income from revenues sold to OMNIA	(15,710)		(11,666)
Other reconciling items, net	(5)		34
Segment Adjusted EBITDA	$	77,511	$	101,387	$	(23,876)	(24)%

Comparison of the Three Months Ended September 30, 2024 to 2023

Net Revenue

Supply Chain Services segment net revenue decreased by $11.9 million, or 7%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to a decrease of $17.3 million in net administrative fees revenue partially offset by an increase of $5.4 million in software licenses, other services and support revenue.

Net Administrative Fees

Net administrative fees decreased by $17.3 million, or 12%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This decrease was primarily due to an increase in the aggregate blended fee share paid to members as a result of renewal of GPO contracts at a higher fee share than provided in historical agreements due to market dynamics. This decrease was partially offset by increased utilization and further penetration of our contracts by existing members.

Software Licenses, Other Services and Support Revenue

Software licenses, other services and support revenue increased by $5.4 million, or 40%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to an increase in supply chain co-management fees driven by new agreements.

Cost of Revenue

Supply Chain Services segment cost of revenue increased by $3.5 million, or 28%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily attributable to an increase in personnel costs associated with increased headcount in support of new engagements within our supply chain co-management business.

Operating Expenses

Supply Chain Services segment operating expenses increased by $5.2 million, or 10%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023 due to an increase in SG&A expenses primarily due to an increase in one-time bad debt expense, certain employee-related expenses and timing of conference related costs.

Segment Adjusted EBITDA

Supply Chain Services Segment Adjusted EBITDA decreased by $23.9 million, or 24%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily due to the aforementioned decrease in net revenue, increases in cost of revenue and operating expenses.

Performance Services

The following table presents our results of operations and Adjusted EBITDA in the Performance Services segment for the periods presented (in thousands):


	Three Months Ended September 30,
	2024		2023		Change
Net revenue:
Software licenses, other services and support
SaaS-based products subscriptions	$	38,911	$	45,340	$	(6,429)	(14)%
Consulting services	19,689		23,768		(4,079)		(17)%
Software licenses	20,947		14,738		6,209		42%
Other	17,207		21,904		(4,697)		(21)%
Net revenue	96,754		105,750		(8,996)		(9)%
Cost of revenue:
Services and software licenses	51,792		51,724		68		—%
Cost of revenue	51,792		51,724		68		—%
Gross profit	44,962		54,026		(9,064)		(17)%
Operating expenses:
Selling, general and administrative	41,891		47,121		(5,230)		(11)%
Research and development	430		683		(253)		(37)%
Amortization of purchased intangible assets	940		3,709		(2,769)		(75)%
Operating expenses	43,261		51,513		(8,252)		(16)%
Operating income	1,701		2,513		(812)		(32)%
Depreciation and amortization	11,283		12,177
Amortization of purchased intangible assets	940		3,710
Acquisition- and disposition-related expenses	1,025		4,530


Segment Adjusted EBITDA	$	14,949	$	22,930	$	(7,981)	(35)%

Comparison of the Three Months Ended September 30, 2024 to 2023

Net Revenue

Net revenue in our Performance Services segment decreased by $9.0 million, or 9%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily attributable to decreases of $6.4 million in SaaS-based products subscription revenue primarily due to conversion of SaaS-based products to licensed-based products in recent periods as well as contract expirations, $4.7 million in other revenue primarily related to lower Contigo Health revenue for third party administrator fees in the current year and lower other PINC AI revenue primarily due to agreements in the prior year that did not recur in the current year, and $4.1 million in consulting services primarily due to prior year agreements that did not reoccur in the current year. These decreases were partially offset by an increase of $6.2 million in

software licenses driven by an increase in enterprise analytics license revenue during the current year period compared to the prior year period.

Cost of Revenue

Performance Services segment cost of revenue was flat for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

Operating Expenses

Performance Services segment operating expenses decreased by $8.3 million, or 16%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The decrease was primarily driven by decreases of $5.2 million in SG&A expenses primarily due to a decrease in acquisition- and disposition-related expenses primarily related to a prior year adjustment of an anticipated earn-out payment and a decrease in legal and professional fees and $2.8 million decrease in amortization of purchased intangible assets due to the prior year third quarter impairment of Contigo Health intangible assets.

Segment Adjusted EBITDA

Performance Services Segment Adjusted EBITDA decreased by $8.0 million, or 35%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023, primarily due to the aforementioned decrease in net revenue, partially offset by a decrease in operating expenses for legal and professional fees.

Corporate

The following table presents corporate expenses and Adjusted EBITDA for the periods presented (in thousands):


	Three Months Ended September 30,
	2024		2023		Change
Operating expenses:
Selling, general and administrative	$	42,176	$	40,624	$	1,552	4%

Operating expenses	42,176		40,624		1,552		4%
Operating loss	(42,176)		(40,624)		(1,552)		4%
Depreciation and amortization	1,488		2,101
Stock-based compensation	7,140		6,893
Strategic initiative and financial restructuring-related expenses	110		1,746
Deferred compensation plan expense (income)	2,692		(1,125)
Other reconciling items, net	714		—
Adjusted EBITDA	$	(30,032)	$	(31,009)	$	977	3%

Comparison of the Three Months Ended September 30, 2024 to 2023

Operating Expenses

Corporate operating expenses increased by $1.6 million, or 4%, during the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This increase was primarily due to an increase of $3.8 million in deferred compensation plan expense as a result of market changes, partially offset by a decrease in professional fees as well as a decrease in legal expenses related to strategic initiative and financial restructuring-related activities due to the prior year strategic review process.

Adjusted EBITDA

Corporate adjusted EBITDA increased by $1.0 million, or 3%, for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. This increase was primarily due to the aforementioned decrease in professional fees.

Off-Balance Sheet Arrangements

As of September 30, 2024, we did not have any off-balance sheet arrangements.

Liquidity and Capital Resources

Our principal source of cash has been primarily cash provided by operating activities. From time to time we have used, and expect to use in the future, borrowings under our Credit Facility (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) as a source of liquidity to fund acquisitions and related business investments as well as general corporate activities. Our primary cash requirements include operating expenses, working capital fluctuations, revenue share obligations, tax payments, capital expenditures, dividend payments on our Common Stock, if and when declared, repurchases of our Common Stock pursuant to stock repurchase programs in place from time to time, acquisitions and related business investments and general corporate activities. Our capital expenditures typically consist of internally developed software costs, software purchases and computer hardware purchases.

As of September 30, 2024 and June 30, 2024, we had cash and cash equivalents of $87.0 million and $125.1 million, respectively.

Credit Facility

At both September 30, 2024 and June 30, 2024, we had no outstanding borrowings under our Credit Facility. During the three months ended September 30, 2024, we had no new borrowings or repayments under the Credit Facility.

We expect cash generated from operations and borrowings under our Credit Facility to provide us with adequate liquidity to fund our anticipated working capital requirements, revenue share obligations, tax payments, capital expenditures, notes payable, including notes payable to former limited partners (“LP”), dividend payments on our Common Stock, if and when declared, repurchases of our Common Stock pursuant to stock repurchase programs in place from time to time and to fund business acquisitions. Our capital requirements depend on numerous factors, including funding requirements for our product and service development and commercialization efforts, our information technology requirements, and the amount of cash generated by our operations. We believe that we have adequate capital resources at our disposal to fund currently anticipated capital expenditures, business growth and expansion, and current and projected debt service requirements. However, strategic growth initiatives will likely require the use of one or a combination of various forms of capital resources including available cash on hand, cash generated from operations, borrowings under our Credit Facility and other long-term debt and, potentially, proceeds from the issuance of additional equity or debt securities.

Cash Dividends

In September 2024, we paid a cash dividend of $0.21 per share on outstanding shares of our Common Stock. On October 24, 2024, our Board of Directors declared a quarterly cash dividend of $0.21 per share, payable on December 15, 2024 to stockholders of record on December 1, 2024.

Sale of Non-Healthcare GPO Member Contracts

On July 25, 2023, we sold substantially all of our non-healthcare GPO member contracts pursuant to an equity purchase agreement with OMNIA for a purchase price of $723.8 million, all of which has been received as of September 30, 2024. See Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information.

Discussion of Cash Flows for the Three Months Ended September 30, 2024 and 2023

A summary of net cash flows is as follows (in thousands):


	Three Months Ended September 30,
	2024		2023
Net cash provided by (used in):
Operating activities from continuing operations	$	80,043	$	62,650
Investing activities	(17,718)		(21,270)
Financing activities	(88,140)		302,865
Operating activities from discontinued operations	(12,396)		19,226
Effect of exchange rate changes on cash flows	21		(3)
Net (decrease) increase in cash and cash equivalents	$	(38,190)	$	363,468

Net cash provided by operating activities from continuing operations increased by $17.4 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase was primarily due to the $57.0 million received in the current year period in connection with the settlement of a shareholder complaint (see Part II, Item 1. Legal Proceedings within this Quarterly Report for additional information) and an increase of $6.0 million in cash receipts due to higher collections during the current period. These increases to cash were partially offset by an increase of $46.1 million in cash paid for costs for operating expenses primarily due to an increase in performance-related compensation relating to the prior fiscal year performance.

Net cash used in investing activities decreased by $3.6 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 primarily due to a decrease in purchases of property and equipment.

Net cash used in financing activities changed by $391.0 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The change in net cash used in financing activities was primarily driven by a decrease in net proceeds from the sale of future revenues of $553.3 million (see Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information) and the Common Stock repurchases of $56.4 million under the $200.0 million Share Repurchase Authorization. These changes are offset by the prior year repayment of $215.0 million under our Credit Facility.

Net cash used in operating activities attributable to discontinued operations changed by $31.6 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The change in net cash used in operating activities attributable to discontinued operations was primarily driven by an increase in cash paid to suppliers in the current year period related to inventory purchases and paying down associated payables.

Discussion of Non-GAAP Free Cash Flow for the Three Months Ended September 30, 2024 and 2023

We define Non-GAAP Free Cash Flow 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 of the sale of future revenues including earnings from future revenues (less royalty fees retained) and associated income taxes. Non-GAAP Free Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments under our Credit Facility.

A summary of Non-GAAP Free Cash Flow and reconciliation to net cash provided by operating activities from continuing operations for the periods presented is as follows (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)
Non-GAAP 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 our August 2020 Restructuring are presented in our Condensed Consolidated Statements of Cash Flows under “Payments made on notes payable.” During the three months ended September 30, 2024, we 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, we 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. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for further information.

(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 our Condensed Consolidated Statements of Cash Flows under “Payments on liability related to the sale of future revenues.” During the three months ended September 30, 2024, we 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 we 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. See Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed financial statements for further information.

Non-GAAP Free Cash Flow increased by $3.9 million for the three months ended September 30, 2024 compared to the three months ended September 30, 2023. The increase in Non-GAAP Free Cash Flow was primarily due to the aforementioned $17.4 million increase in net cash provided by operating activities from continuing operations and $3.6 million decrease in purchases of property and equipment, partially offset by an increase of $16.6 million in the cash payments to OMNIA for the sale of future revenues due to the timing of the completion of the purchase agreement in the prior year.

See “Our Use of Non-GAAP Financial Measures” above for additional information regarding our use of Non-GAAP Free Cash Flow.

Contractual Obligations

Credit Facility

Outstanding borrowings under the Credit Facility (as defined in Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements) bear interest on a variable rate structure. At September 30, 2024, we had no outstanding borrowings under our Credit Facility and the commitment fee for unused capacity was 0.125%. We were in compliance with all covenants at September 30, 2024.

Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, repurchases of our Common Stock pursuant to stock repurchase programs, in place from time to time, dividend payments, if and when declared, and other general corporate activities. At September 30, 2024, we had no outstanding borrowings under the Credit Facility with $995.0 million of available borrowing capacity after reductions for outstanding letters of credit.

The above summary does not purport to be complete, and is subject to, and qualified in its entirety by reference to, the complete text of the Credit Facility, which is filed as Exhibit 10.24 to the 2024 Annual Report. See also Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements.

Notes Payable to Former Limited Partners

At September 30, 2024, $77.0 million remains to be paid without interest in three equal quarterly installments to former limited partners that elected to execute Unit Exchange Agreements ending with the quarter ended June 30, 2025. See Note 8 - Debt and Notes Payable to the accompanying condensed consolidated financial statements for further information.

Sale of Non-Healthcare GPO Member Contracts

At September 30, 2024, we had non-recourse commitments of $672.6 million for the sale of future revenues due to OMNIA in connection to the sale of non-healthcare GPO member contracts. The liability will be paid, without interest, in monthly payments from net administrative fees received in connection with the sold contracts. These payments commenced during the first quarter of fiscal year 2024 for a period of at least 10 years. See Note 9 - Liability Related to the Sale of Future Revenues to the accompanying condensed consolidated financial statements for further information.

Cash Dividends

In September 2024 we paid a cash dividend of $0.21 per share on outstanding shares of our Common Stock. On October 24, 2024, our Board of Directors declared a quarterly cash dividend of $0.21 per share, payable on December 15, 2024 to stockholders of record on December 1, 2024.

We currently expect quarterly dividends to continue to be paid on or about December 15, March 15, June 15 and September 15, respectively. However, the actual declaration of any future cash dividends, and the setting of record and payment dates as well as the per share amounts, will be at the discretion of our Board of Directors each quarter after consideration of various factors, including our results of operations, financial condition and capital requirements, earnings, general business conditions, restrictions imposed by our current Credit Facility and any future financing arrangements, legal restrictions on the payment of dividends and other factors our Board of Directors deems relevant.

Share Repurchase Authorization

On February 2, 2024, our Board of Directors authorized the repurchase of up to $1.0 billion of our outstanding Common Stock. On February 5, 2024, under the Share Repurchase Authorization, we entered into an ASR Agreement with Bank of America to repurchase an aggregate of $400.0 million of shares of our Common Stock. Under the terms of the ASR Agreement, we made a payment of $400.0 million to Bank of America and in February 2024, received initial deliveries of 15.0 million shares of our Common Stock (and then retired). On July 11, 2024, as final settlement of the share repurchase transaction under the ASR Agreement, we received from Bank of America an additional 4.9 million shares of our Common Stock. In total, we repurchased 19.9 million shares of our Common Stock under the ASR Agreement at $20.12 per share, which represents the volume-weighted average share price of our Common Stock during the term of the ASR Agreement less a discount.

On August 20, 2024, we announced that our Board of Directors approved execution of another $200.0 million of Common Stock repurchases under the Share Repurchase Authorization. At September 30, 2024, we had repurchased 2.9 million shares of

our Common Stock at an average price of $20.18 in open market transactions for a total purchase price of $58.0 million pursuant to a trading plan entered into with a financial institution intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c). The purchase authorization may be suspended, delayed, or discontinued at any time at the discretion of our Board of Directors. Repurchases are subject to compliance with applicable federal securities laws and our management may, at its discretion, suspend, delay, or discontinue repurchases at any time, based on market conditions, alternate uses of capital, or other factors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

Our exposure to market risk relates primarily to the increase or decrease in the amount of any interest expense we must pay with respect to outstanding variable-rate debt instruments. At September 30, 2024, we had no outstanding borrowings under our Credit Facility.

We invest our excess cash in a portfolio of individual cash equivalents. We do not hold any material derivative financial instruments. We do not expect changes in interest rates to have a material impact on our results of operations or financial position. We plan to mitigate default, market, and investment risks of our invested funds by investing in low-risk securities.

Foreign Currency Risk

Substantially all of our financial transactions are conducted in U.S. dollars. We do not have significant foreign operations and, accordingly, do not believe we have market risk associated with foreign currencies.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

As of September 30, 2024, the end of the period covered by this Quarterly Report, we carried out an evaluation under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, of the effectiveness of our disclosure controls and procedures. Based upon our evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were effective as of September 30, 2024.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We operate businesses that are subject to substantial litigation from time to time. We are periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include claims relating to contractual disputes, product liability, tort or personal injury, employment, antitrust, intellectual property or other commercial or regulatory matters. If current or future government regulations are interpreted or enforced in a manner adverse to us or our business, including without limitation those with respect to antitrust or healthcare laws, we may be subject to enforcement actions, penalties, damages and material limitations on our business.

From time to time we have been named as a defendant in class action antitrust lawsuits brought by suppliers or purchasers of medical products. Typically, these lawsuits have alleged the existence of a conspiracy among manufacturers of competing products, distributors and/or operators of group purchasing organizations (“GPO”), including us, to deny the plaintiff access to a market for certain products, to raise the prices for products and/or limit the plaintiff’s choice of products to buy. We believe that we have at all times conducted our business affairs in an ethical and legally compliant manner and have successfully resolved all such actions. No assurance can be given that we will not be subjected to similar actions in the future or that any such existing or future matters will be resolved in a manner satisfactory to us or which will not harm our business, financial condition or results of operations.

On March 4, 2022, a shareholder derivative complaint captioned City of Warren General Employees’ Retirement System v. Michael Alkire, et al., Case No. 2022-0207-JTL, purportedly brought on behalf of Premier, was filed in the Delaware Court of Chancery (the “Court”) against our current and former Chief Executive Officers and current and certain former directors. We were named as a nominal defendant in the complaint. The lawsuit alleged that the named officers and directors breached their fiduciary duties and committed corporate waste by approving agreements between Premier and certain of the former limited partners (“LP”) that provided for accelerated payments as consideration for the early termination of the TRA with such LPs. The complaint asserted that the aggregate early termination payment amounts of $473.5 million exceeded the alleged value of the tax assets underlying the TRA by approximately $225.0 million.

The complaint sought unspecified damages, costs and expenses, including attorney fees, and declaratory and other equitable relief. Since the lawsuit was purportedly brought on behalf of Premier, and we were only a nominal defendant, the alleged damages were allegedly suffered by us. We and the individual defendants denied the allegations in the complaint. On February 16, 2024, the parties to the litigation entered into a settlement agreement, which was approved by the Court at a hearing on June 25, 2024. Pursuant to the settlement agreement, in consideration of a full and final release and discharge of claims in the complaint without any admission of fault, in July 2024 we received $71.0 million in cash from our directors’ and officers’ insurance carriers, which included a $14.0 million fee and expense award to the plaintiff’s counsel that reduced the amount of the net cash settlement retained by Premier to $57.0 million. Because the derivative complaint was brought on behalf of us and for our benefit, stockholders will not receive any direct payment of the cash settlement amount but will indirectly benefit from the settlement being paid by the insurance carriers to us.

Additional information relating to certain legal proceedings in which we are involved is included in Note 14 - Commitments and Contingencies to the accompanying condensed consolidated financial statements, which is incorporated herein by reference.

Item 1A. Risk Factors

There were no material changes to the risk factors disclosed in Item 1A “Risk Factors” in the 2024 Annual Report since the filing of that report.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Purchases of Equity Securities

On February 5, 2024, we announced that our Board of Directors approved a share repurchase authorization for up to $1.0 billion of our Common Stock (the “Share Repurchase Authorization”) and that we entered into a $400.0 million accelerated share repurchase transaction agreement (the “ASR Agreement”) with Bank of America, N.A. (“Bank of America”) under the Share Repurchase Authorization. Final settlement of the accelerated repurchase transaction under the ASR Agreement was completed on July 11, 2024. On August 20, 2024, we announced that our Board of Directors approved the execution of another $200.0 million of Common Stock repurchases under the Share Repurchase Authorization (the “Market Repurchases”).

The following table summarizes information relating to repurchases of our Common Stock during the quarter ended September 30, 2024, all of which were pursuant to the ASR Agreement or Market Repurchases under the Share Repurchase Authorization. Share price information below is presented exclusive of any excise tax due on stock repurchases under the Inflation Reduction Act, which does not impact the amount of the Share Repurchase Authorization.


Period	Total Number of Shares Purchased		Average Price Paid per Share ($)			Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Program (in millions) (c)
July 1 through July 31, 2024	4,848,900	(a)	$	20.12	(a)	4,848,900	(a)	$	600.0
August 1 through August 31, 2024	324,607	(b)	$	20.22	(b)	324,607	(b)	$	593.4
September 1 through September 30, 2024	2,548,708	(b)	$	20.18	(b)	2,548,708	(b)	$	542.0
Total	7,722,215		$	20.14		7,722,215

_________________________________

(a)Pursuant to the ASR Agreement, on February 8, 2024, we made a payment of $400.0 million to Bank of America, and on February 8 and 9, 2024, we received from Bank of America initial deliveries of (and then retired) 15,030,531 shares of our common stock. On July 11, 2024, as final settlement of the share repurchase transaction under the ASR Agreement, we received from Bank of America (and then retired) an additional 4,848,900 shares of our common stock. In total, we repurchased 19,879,431 shares of our common stock under the ASR Agreement at $20.12 per share, the price set forth in the table, which represents the volume-weighted average share price of our common stock during the term of the ASR Agreement less a discount.

(b)Market Repurchases pursuant to a trading plan entered into with a financial institution intended to satisfy the affirmative defense conditions of SEC Rule 10b5-1(c). Prices reported are exclusive of commissions.

(c)Reflects the remaining amount under the Share Repurchase Authorization as of the end of the period presented, exclusive of commissions. Repurchases of our common stock under the Share Repurchase Authorization may occur from time to time through June 30, 2025, in open market purchases, privately negotiated transactions, accelerated or other structured repurchase programs or other means, subject to compliance with applicable securities laws and other legal requirements.

Item 5. Other Information

The table below sets forth SEC Rule 10b5-1 trading plans adopted by certain directors and executive officers (as defined in SEC Rule 16a-(f)) during the quarter ended September 30, 2024. Each plan listed in the table was adopted during the quarterly trading window under our Insider Trading Policy. Other than as set forth in the table, during the three months ended September 30, 2024, none of our directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of our securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement” (as defined in Item 408(c) of Regulation S-K).

Trading Arrangement

Name and Title

Action

Date

Rule 10b5-1(a)

Non-Rule 10b5-1(b)

Total Shares to be Sold(c)

Scheduled Expiration Date(f)

Craig S. McKasson, Chief Administrative and Financial Officer

Adopt

09/09/2024

165,000

06/30/2025

_________________________________

(a) Insider trading plan intended to satisfy the affirmative defense of SEC Rule 10b5-1(c).

(b) “Non-Rule 10b5-1 trading arrangement” as defined in Item 408(c) of Regulation S-K.

(c) The numbers in this column represent the maximum number of shares of our Common Stock that may be sold pursuant to each trading plan. The actual number of shares sold pursuant to each trading plan will depend on the satisfaction of certain conditions set forth therein prior to expiration or termination of the plan.

(d) Each trading plan terminates on the earlier to occur of: (i) the expiration date listed in the table above; (ii) the first date on which all trades set forth in the plan have been executed; or (iii) such date the plan otherwise terminates according to its terms.

Item 6. Exhibits


Exhibit No.						Description

10.1						Form of Performance Share Award Agreement under the Premier, Inc. 2023 Equity Incentive Plan *+

10.2						Form of Restricted Stock Unit Agreement under the Premier, Inc. 2023 Equity Incentive Plan *+

10.3						Premier, Inc. Annual Incentive Compensation Plan, amended and restated effective September 6 , 2024 *+

10.4						First Amendment to Amend ed and R estated Credit Agreement, dated as of S eptember 23, 2024, by and among Premier Healthcare Alliance, L.P., Premier Supply Chain Improvement, Inc. and Premier Healthcare Solutions, Inc., as Co-Borrowers, certain domestic subsidiaries of Premier Services, LLC, as Guarantors, certain le nders, and Wells Fargo Bank, National Association, as Administrative Agent and a Lender*

10.5						First Amendment to Senior Executive Employment Agreement dated August 15, 2024 between Premier Healthcare Solutions, Inc. and Craig McKasson (Incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K filed on August 20, 2024)+

10.6						Master Consulting Services Agreement dated August 15, 2024 between Premier Healthcare Solutions, Inc. and Craig McKasson (Incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K filed on August 20, 2024)+

10.7						Executive Employment and Restrictive Covenant Agreement dated August 15, 2024 between Premier Healthcare Solutions, Inc. and Glenn Coleman (Incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K filed on August 20, 2024)+

10.8						Signing Bonus Agreement dated August 15, 2024, between Premier Healthcare Solutions, Inc. and Glenn Coleman (Incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K filed on August 20, 2024)+

31.1						Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

31.2						Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*

32.1						Certification of principal executive officer pursuant to 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002‡

32.2						Certification of principal financial officer pursuant to 18 United States Code Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002‡

101						Sections of the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in iXBRL (Inline eXtensible Business Reporting Language), submitted in the following files:

101.INS						Inline XBRL Instance Document*

101.SCH						Inline XBRL Taxonomy Extension Schema Document*

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document*

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document*

104						The cover page from the Premier, Inc. Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, formatted in Inline XBRL (included in Exhibit 101)*

* Filed herewith

+ Indicates a management contract or compensatory plan or arrangement

‡ Furnished herewith

SIGNATURES

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

PREMIER, INC.

Date:

November 5, 2024

By:

/s/ Craig S. McKasson

Name:

Craig S. McKasson

Title:

Chief Administrative and Financial Officer and Senior Vice President

On behalf of the registrant and as principal financial officer

Date:

November 5, 2024

By:

/s/ Crystal B. Climer

Name:

Crystal B. Climer

Title:

Chief Accounting Officer and Senior Vice President, Finance

On behalf of the registrant and as principal accounting officer

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Date	Price Target	Rating	Analyst
8/26/2024		Buy → Hold	The Benchmark Company
5/8/2024	$27.00 → $21.00	Buy → Hold	Canaccord Genuity
2/26/2024	$22.50	Market Perform	Leerink Partners
1/3/2024	$22.00	Equal Weight	Barclays
8/23/2023	$44.00 → $25.00	Overweight → Neutral	Piper Sandler
5/3/2023	$43.00 → $30.00	Outperform → Neutral	Robert W. Baird
5/2/2023		Outperform → Mkt Perform	Raymond James
1/27/2023	$38.00	Underperform → Neutral	Credit Suisse

SEC Form 10-Q filed by Premier Inc.

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