Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

PREMIER INC. REPORTS FISCAL 2019 FOURTH-QUARTER AND

FULL-YEAR RESULTS

CHARLOTTE, N.C., Aug. 20, 2019 – Premier Inc. (NASDAQ: PINC) today reported financial results for the fiscal 2019 fourth quarter and full year ended June 30, 2019.

The company adopted new revenue recognition standard ASC 606 on July 1, 2018, in conjunction with the beginning of fiscal 2019, using the modified retrospective approach and did not restate prior periods. Therefore, fiscal 2019 results of operations under the new revenue standard ASC 606 are compared with fiscal 2018 results under the previous revenue standard ASC 605 in the body of this press release, and the comparisons are not necessarily meaningful. However, solely for informational purposes, current period results under the previous standard are included in the tables at the back of this press release.

On May 6, 2019, the company announced that it committed to a plan to sell certain assets of its specialty pharmacy business and to discontinue operations of, and wind down and exit from the specialty pharmacy business. On June 7, 2019, the company closed the transaction. As such, and unless stated otherwise, all results presented in the following release reflect those of continuing operations. A table showing the quarterly impact of discontinued operations is included in this press release.

Full-Year 2019 Highlights of Continuing Operations:

 

   

GAAP net revenue was $1.22 billion, compared with $1.18 billion a year ago; Supply Chain Services segment revenue was $855.2 million, compared with $824.0 million a year ago; and Performance Services segment revenue was $362.5 million, compared with $360.7 million a year ago.

 

   

GAAP net income was $334.7 million, compared with $258.0 million a year ago; diluted net income was $0.27 per share, compared with $1.37 per share a year ago.

 

   

Non-GAAP adjusted EBITDA* was $561.0 million, compared with $539.5 million a year ago.

 

   

Non-GAAP adjusted fully distributed net income* was $349.1 million, or $2.66 per diluted share, compared with $315.4 million, or $2.30 per diluted share a year ago.

 

   

For the fiscal year ended June 30, 2019, the company generated cash flow from operations of $511.9 million. Non-GAAP free cash flow* for the fiscal year of $342.8 million and represented 61% of full-year non-GAAP adjusted EBITDA.

 

   

Premier completed the acquisition of Stanson Health, Inc. as well as the exit of the specialty pharmacy business during fiscal 2019.

 

   

Premier completed its previous $250.0 million stock repurchase plan implemented during fiscal 2019 and received Board authorization for a $300.0 million stock repurchase plan for fiscal 2020.


Premier, Inc. FY’19 Q4 Results

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Q4 2019 Highlights of Continuing Operations:

 

   

GAAP net revenue was $316.2 million, compared with $312.6 million a year ago; Supply Chain Services segment revenue was $227.0 million, compared with $217.8 million a year ago; and Performance Services segment revenue was $89.2 million, compared with $94.8 million a year ago.

 

   

GAAP net income was $70.2 million, compared with $101.0 million a year ago; diluted net loss was $4.28 per share, compared with a loss of $6.17 per share a year ago.

 

   

Non-GAAP adjusted EBITDA* was $139.9 million, compared with $147.7 million a year ago.

 

   

Non-GAAP adjusted fully distributed net income* was $86.3 million, or $0.68 per diluted share, compared with $94.7 million, or $0.70 per diluted share a year ago.

 

*

Descriptions of non-GAAP financial measures are provided in “Use and Definition of Non-GAAP Financial Measures,” and reconciliations are provided in the tables at the end of this release.

“Premier’s financial performance met management’s expectations for the fourth quarter and full year as we continued our close collaboration with more than 4,000 member hospitals and health systems and approximately 175,000 other providers and organizations, working together to reduce costs, improve quality and safety and prepare for America’s ongoing transition to value-based healthcare,” said Susan DeVore, chief executive officer. “Operationally, we remain focused on providing our member health systems with best-in-class solutions and compelling value, underscored by our 97% retention rate and more than $61 billion in contract volume in our group purchasing (GPO) business for the year. We also achieved a 96% SaaS institutional renewal rate within our Performance Services segment, demonstrating the continued strength of our unique and value-added offerings.

“Looking ahead, we expect the challenging environment and market uncertainties to persist through fiscal 2020 as the nation enters a presidential election year,” DeVore continued. “We have factored these continuing uncertainties into our fiscal 2020 guidance, which projects modest year-over-year consolidated growth, and we are focused on appropriately managing our businesses and expenses as we continue to invest in the future. Importantly, we believe Premier, as a trusted partner to the nation’s largest health systems, and with strong, diverse and innovative capabilities, is well positioned for continued success. We are operating from a position of financial strength, characterized by our flexible balance sheet and strong free cash flow. We are committed to growing and expanding our relationships with member health systems, further refining our supply chain and performance services offerings to deliver additional value for our customers, while creating long-term value for our stockholders.”


Premier, Inc. FY’19 Q4 Results

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Results of Continuing Operations for the Fourth Quarter and Full Year of Fiscal 2019

Consolidated Fourth-Quarter and Full Year Financial Highlights

 

     Three Months Ended June 30,     Year Ended June 30,  
     2019     2018           2019     2018        
(in thousands, except per share data)    New revenue
standard
    Previous revenue
standard
    % Change     New revenue
standard
    Previous revenue
standard
    % Change  

Net Revenue (a):

            

Supply Chain Services:

            

Net administrative fees

   $ 170,234     $ 171,893       (1 )%    $ 662,462     $ 643,839       3

Other services and support

     2,042       2,086       (2 )%      8,561       7,812       10
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Services

     172,276       173,979       (1 )%      671,023       651,651       3

Products

     54,715       43,833       25     184,157       172,327       7
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Supply Chain Services (a)

     226,991       217,812       4     855,180       823,978       4

Performance Services (a)

     89,243       94,792       (6 )%      362,458       360,679       —  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (a)

   $ 316,234     $ 312,604       1   $ 1,217,638     $ 1,184,657       3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations

   $ 70,229     $ 101,000       (30 )%    $ 334,677     $ 258,007       30

Net income from continuing operations attributable to stockholders

   $ (264,421   $ (323,068     18   $ 15,706     $ 191,040       (92 )% 

Adjusted net (loss) income from continuing operations (b)

   $ (264,421   $ (323,068     18   $ 15,706     $ 187,750       (92 )% 

Weighted average shares outstanding:

            

Basic

     61,725       52,412       18     59,188       53,518       11

Diluted

     61,725       52,412       18     60,269       137,340       (57 )% 

(Loss) earnings from continuing operations per share attributable to stockholders:

            

Basic

   $ (4.28   $ (6.17     31   $ 0.27     $ 3.57       (92 )% 

Diluted (b)

   $ (4.28   $ (6.17     31   $ 0.27     $ 1.37       (80 )% 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NON-GAAP FINANCIAL MEASURES:

            
 

Adjusted EBITDA (a) (c):

            

Supply Chain Services

   $ 141,892     $ 142,053       —     $ 548,029     $ 531,851       3

Performance Services

     28,236       37,564       (25 )%      129,147       123,429       5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total segment adjusted EBITDA

     170,128       179,617       (5 )%      677,176       655,280       3

Corporate

     (30,272     (31,917     5     (116,134     (115,760     —  
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (a)

   $ 139,856     $ 147,700       (5 )%    $ 561,042     $ 539,520       4
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted fully distributed net income (c)

   $ 86,330     $ 94,700       (9 )%    $ 349,052     $ 315,411       11
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share on adjusted fully distributed net income - diluted (a) (c)

   $ 0.68     $ 0.70       (3 )%    $ 2.66     $ 2.30       16
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Bolded measures correspond to company guidance.

(b)

Earnings per share attributable to stockholders excludes the adjustment of redeemable limited partners’ capital to redemption amount and the net income attributable to non-controlling interest in Premier LP if Class B common stock is determined to be dilutive. Likewise, earnings per share attributable to stockholders includes the adjustment of redeemable limited partners’ capital to redemption amount and the net income attributable to non-controlling interest in Premier LP if Class B common stock is determined to be antidilutive.

(c)

See attached supplemental financial information for reconciliation of reported GAAP results to Non-GAAP results.

For the fiscal fourth quarter ended June 30, 2019, Premier generated GAAP net revenue of $316.2 million, compared to net revenue of $312.6 million for the same period a year ago.

GAAP net income for the fiscal fourth quarter was $70.2 million, compared with $101.0 million a year ago. In accordance with GAAP, fiscal 2019 and 2018 fourth-quarter net income attributable to stockholders includes non-cash adjustments of $(297.0) million and $(353.7) million, respectively, to reflect the change in the redemption value of limited partners’ Class B common unit ownership at the end of each period. These non-cash adjustments result primarily from changes in the number of Class B common units outstanding and the company’s stock price between periods and do not reflect results of the company’s business operations. After these non-cash adjustments, the company reported a net loss attributable to stockholders of $264.4 million, or $4.28 per diluted share, compared with $323.1 million, or $6.17 per diluted share, a year ago. See “Calculation of GAAP Earnings per Share” in the income statement section of this press release.


Premier, Inc. FY’19 Q4 Results

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Fiscal fourth-quarter non-GAAP adjusted EBITDA of $139.9 million compared to $147.7 million for the same period the prior year.

Non-GAAP adjusted fully distributed net income for the fiscal fourth quarter of $86.3 million compared to $94.7 million for the same period a year ago. Non-GAAP adjusted fully distributed earnings per share totaled $0.68, compared with $0.70 for the same period a year ago. Adjusted fully distributed earnings per share is a non-GAAP financial measure that represents net income, adjusted for non-recurring and non-cash items, attributable to all stockholders as if all Class B stockholders exchanged their Class B common units and associated Class B common shares for Class A common shares.

Segment Results

Supply Chain Services

For the fiscal fourth quarter ended June 30, 2019, Supply Chain Services segment net revenue was $227.0 million, compared with $217.8 million a year ago. Net administrative fees revenue of $170.2 million increased from the preceding quarter while decreasing 1% from the year-ago period, which benefited from higher-than-anticipated recoveries of past-due net administrative fees and the timing of cash collections ahead of the July 1, 2018 adoption of the new ASC 606 revenue recognition standard. Net administrative fees revenue in the fiscal 2019 fourth quarter under the previous revenue recognition standard totaled $172.3 million, basically unchanged from a year ago.

Products revenue was $54.7 million, compared with $43.8 million a year ago, primarily driven by growth in certain commodity product categories of the direct sourcing business as well as sales associated with aggregated purchasing of products.

Supply Chain Services segment non-GAAP adjusted EBITDA for the fiscal 2019 fourth quarter was $141.9 million, compared with $142.1 million for the same period a year ago. Direct sourcing gross profit growth resulting primarily from increased sales of higher-margin products was primarily offset by increased investments in the company’s recently launched E-Commerce initiative to develop a more efficient integrated delivery system ordering platform.

Performance Services

For the fiscal fourth quarter ended June 30, 2019, Performance Services segment net revenue was $89.2 million, compared with $94.8 million for the same quarter last year. The decrease was due to lower consulting revenue related to cost management and quality and safety engagements. This was partially offset by growth in the clinical surveillance, cost management and clinical decision support areas of the technology business.

Performance Services segment non-GAAP adjusted EBITDA was $28.2 million for the fiscal 2019 fourth quarter, compared with $37.6 million for the same quarter last year. The decrease was primarily the result of lower revenue and ongoing investments in the company’s clinical decision support technology and in the development of the company’s high-value care network, a strategy intended to link employers and payers with providers to enable better clinical outcomes at reduced cost.


Premier, Inc. FY’19 Q4 Results

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Results of Continuing Operations for the Twelve Months Ended June 30, 2019

For the fiscal year ended June 30, 2019, GAAP net revenue was $1.22 billion, compared with $1.18 billion in the prior year. GAAP net income totaled $334.7 million, compared with $258.0 million a year ago. Fiscal 2019 and 2018 full-year GAAP net income attributable to stockholders required non-cash adjustments of $(118.1) million and $157.6 million, respectively, to reflect changes in redemption value of the limited partners Class B common unit ownership at the end of each period. These non-cash adjustments result primarily from changes in the number of Class B common units outstanding and the company’s stock price between periods and do not reflect results of the company’s business operations. After these non-cash adjustments, the company reported net income attributable to stockholders of $15.7 million, or $0.27 per diluted share, compared with net income of $191.0 million, or $1.37 per diluted share, in the prior year. See “Calculation of GAAP Earnings per Share” in the income statement section of this press release.

For fiscal year ended June 30, 2019, non-GAAP adjusted EBITDA was $561.0 million, compared with $539.5 million in the prior year. Non-GAAP adjusted fully distributed net income was $349.1 million, compared with $315.4 million a year ago, while non-GAAP adjusted fully distributed earnings per share was $2.66, compared with $2.30.

Supply Chain Services segment net revenue was $855.2 million for fiscal 2019, compared with $824.0 million a year ago. Segment adjusted EBITDA was $548.0 million, compared with $531.9 million for the prior year.

Performance Services segment net revenue was $362.5 million for fiscal 2019, compared with $360.7 million a year ago. Segment adjusted EBITDA was $129.1 million, compared with $123.4 million.

Cash Flows and Liquidity

Net cash provided by operating activities was $511.9 million for the fiscal year ended June 30, 2019, compared with $505.3 million for the same period last year. The increase was primarily driven by increases in net administrative fees and services revenue and an increase in cash collections on accounts receivable, partially offset by increased cash paid for taxes primarily related to a refund received in the prior year, and increased selling, general and administrative expenses. At June 30, 2019, the company’s cash and cash equivalents totaled $141.1 million, compared with $152.4 million at June 30, 2018. At June 30, 2019, the company had an outstanding balance of $25.0 million on its five-year, $1.0 billion revolving credit facility. On July 15, 2019, the company repaid the outstanding balance.

Non-GAAP free cash flow for the fiscal year ended June 30, 2019 was $342.8 million, compared with $333.6 million for the same period a year ago and was primarily impacted by a decrease in distributions to limited partners as well as by the same factors that contributed to an increase in net cash provided by operating activities partially offset by the $18.0 million Tax Receivable Agreement (TRA) payment made to member owners in the current year. Timing of the TRA payment shifted to July in the current year from June in previous years due to a change in the company’s federal tax filing deadline. Free cash flow equaled 61% of non-GAAP adjusted EBITDA for fiscal 2019. The company defines free cash flow as cash provided by operating activities less quarterly tax distributions and annual TRA payments to limited partners and purchases of property and equipment (see free cash flow reconciliation to net cash provided by operating activities in the tables section of this press release).


Premier, Inc. FY’19 Q4 Results

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As previously announced, the company completed its $250.0 million Class A stock repurchase program in March 2019. Under the program, the company repurchased approximately 6.7 million shares of Class A common stock, which had the impact of adding approximately $0.06 to diluted per-share results for fiscal year ended June 30, 2019.

Fiscal 2020 Outlook and Guidance

The statements in this “Fiscal 2020 Outlook and Guidance” discussion are “forward-looking statements.” For additional information regarding the use and limitations of such statements, see “Forward-Looking Statements” below and the “Risk Factors” section of the company’s most recent Form 10-K filed with the Securities and Exchange Commission (SEC), as updated from time to time in the company’s other filings with the SEC.

Premier believes it remains well positioned financially and operationally for fiscal 2020, and is introducing financial guidance for the fiscal year based on the following key assumptions:

 

   

Net administrative fees revenue growth of 1% to 5%.

 

   

Revenue growth of the company’s products business of 5% to 9%.

 

   

Extension of the Hospital Improvement Innovation Network contract with CMS at rates approximating 45% of the $14.4 million generated in fiscal 2019.

 

   

Performance consistent with the company’s current visibility into its annual revenue stream. Assuming the continuation of historical GPO retention and SaaS institutional renewal rates that are consistent with fiscal 2019 results, approximately 88% to 93% of Premier’s fiscal 2020 consolidated net revenue guidance range is available under contract.

 

   

A consolidated non-GAAP adjusted EBITDA margin of 43% to 47%.

 

   

Capital expenditures of approximately $95 million to $100 million.

 

   

An effective tax rate of approximately 26%.

 

   

Stock-based compensation of $28 million to $32 million.

 

   

Amortization of purchased intangible assets of approximately $50 million.

 

   

Non-GAAP free cash flow approximating 55% to 65% of non-GAAP adjusted EBITDA

 

   

Per-share guidance does not include the impact of share repurchases under the previously authorized $300 million stock repurchase plan. The timing and amount of any share repurchases will be determined by management based on market conditions, share price and other factors.

 

   

Guidance does not contemplate the impact of any future significant acquisitions.


Premier, Inc. FY’19 Q4 Results

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Based on the company’s current outlook, and the realization of the assumptions discussed above in all material respects, Premier has established the following financial guidance for the fiscal year ending June 30, 2020:

Fiscal 2020 Financial Guidance *

Premier, Inc. introduces full-year fiscal 2020 financial guidance, as follows:

 

(in millions, except per share data)

   FY 2020      % YoY Increase  

Net Revenue:

     

Supply Chain Services segment

   $ 872.0 - $907.0        2% - 6%  

Performance Services segment

   $ 359.0 - $373.0        (1)% - 3%  
  

 

 

    

 

 

 

Total Net Revenue

   $ 1,231.0 - $1,280.0        1% - 5%  

Non-GAAP adjusted EBITDA

   $ 566.0 - $589.0        1% - 5%  

Non-GAAP adjusted fully distributed EPS

   $ 2.76 - $2.89        4% - 9%  

 

*

The company does not meaningfully reconcile guidance for non-GAAP adjusted EBITDA and non-GAAP adjusted fully distributed earnings per share to net income attributable to stockholders or earnings per share attributable to stockholders because the company cannot provide guidance for more significant reconciling items between net income attributable to stockholders and adjusted EBITDA and between earnings per share attributable to stockholders and non-GAAP adjusted fully distributed earnings per share without unreasonable effort. This is due to two primary reasons:

 

   

Reasonable guidance cannot be provided for reconciling the adjustment of redeemable limited partners’ capital to redemption amount – historically the largest adjustment in the reconciliation from non-GAAP to GAAP amounts – due to the fact that the increase or decrease in this item is based on the change in the number of shares of Class B stock outstanding and change in stock price between quarters, which the company cannot predict, control or reasonably estimate.

 

   

Reasonable guidance cannot be provided for earnings per share attributable to stockholders because the ongoing quarterly member-owner exchange of Class B common stock and corresponding Class B units into shares of Class A common stock impacts the number of shares of Class A common stock outstanding each quarter, which the company cannot predict, control or reasonably estimate. Member owners have the right, but not the obligation, to exchange shares on a quarterly basis, and the company has the discretion to settle any exchanged shares for Class A common stock, cash, or a combination thereof, neither of which can be predicted, controlled or reasonably estimated at this time.

Impact of Discontinued Operations on Fiscal 2019 Financial Results

On May 6, 2019, the company announced that it committed to a plan to sell certain assets of its specialty pharmacy business and to discontinue operations of, and wind down and exit from the specialty pharmacy business. On June 7, 2019, the company closed the transaction. The table below shows the impact of discontinued operations by quarter and full fiscal year:

Supplemental Financial Information

Selected Financial Information for Discontinued Operations

(Unaudited)

(In thousands, except per share data)

 

     First     Second     Third     Fourth        
Fiscal Year 2019 Discontinued Operations Results:    Quarter     Quarter     Quarter     Quarter     Full Year  

Net revenue

   $ 108,944     $ 114,268     $ 121,662     $ 83,619     $ 428,493  

Gross profit

   $ 3,090     $ 3,496     $ 3,720     $ 663     $ 10,969  

Loss from discontinued operations, net of tax

   $ (1,399   $ (1,000   $ (1,463   $ (46,736   $ (50,598
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NON-GAAP FINANCIAL MEASURES:

          

Adjusted EBITDA

   $ (904   $ (946   $ (1,137   $ (5,063   $ (8,050

Adjusted fully distributed net loss

   $ (858   $ (852   $ (985   $ (3,864   $ (6,559

Loss per share on adjusted fully distributed net income - diluted

   $ (0.01   $ —       $ (0.01   $ (0.03   $ (0.05
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Conference Call

Premier management will host a conference call and live audio webcast on Tuesday, Aug. 20, 2019, at 8:00 a.m. ET, to discuss the company’s financial results. The conference call can be accessed through a link provided on the investor relations page on Premier’s website at investors.premierinc.com. Those wanting to participate by phone may do so by dialing 844.296.7719 and providing the operator with conference ID number: 2739956. International callers should dial 574.990.1041 and provide the same passcode. The company encourages callers to dial in at least five minutes before the start of the call to register. The archived webcast will be accessible on Premier’s investor relations page.


Premier, Inc. FY’19 Q4 Results

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About Premier Inc.

Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of more than 4,000 U.S. hospitals and health systems and approximately 175,000 other providers and organizations to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and consulting and other services, Premier enables better care and outcomes at a lower cost. Premier plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites on www.premierinc.com; as well as Twitter, Facebook, LinkedIn, YouTube, Instagram and Premier’s blog for more information about the company.

Use and Definition of Non-GAAP Measures

Premier uses EBITDA, adjusted EBITDA, segment adjusted EBITDA, adjusted fully distributed net income, adjusted fully distributed earnings per share, and free cash flow to facilitate a comparison of the company’s operating performance on a consistent basis from period to period and to provide measures that, when viewed in combination with its results prepared in accordance with GAAP, allow for a more complete understanding of factors and trends affecting the company’s business than GAAP measures alone. The company believes adjusted EBITDA and segment adjusted EBITDA assist its board of directors, management and investors in comparing the company’s operating performance on a consistent basis from period to period by removing the impact of the company’s asset base (primarily depreciation and amortization) and items outside the control of management (taxes), as well as other non-cash (impairment of intangible assets and purchase accounting adjustments) and non-recurring items, from operating results.

In addition, adjusted fully distributed net income and adjusted fully distributed earnings per share eliminate the variability of non-controlling interest as a result of member owner exchanges of Class B common units and corresponding Class B common stock into shares of Class A common stock and other potentially dilutive equity transactions which are outside of management’s control. Adjusted fully distributed net income is defined as net income attributable to Premier (i) excluding income tax expense, (ii) excluding the impact of adjustment of redeemable limited partners’ capital to redemption amount, (iii) excluding the effect of non-recurring and non-cash items, (iv) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination of non-controlling interest in Premier LP, and (v) reflecting an adjustment for income tax expense on non-GAAP fully distributed net income before income taxes at the company’s estimated effective income tax rate. We define adjusted fully distributed earnings per share as adjusted fully distributed net income divided by diluted weighted average shares. These measures assist our board of directors, management and investors in comparing our net income and earnings per share on a consistent basis from period to period because these measures remove non-cash and non-recurring items, and eliminate the variability of non-controlling interest that results from member owner exchanges of Class B common units into shares of Class A common stock.

EBITDA is defined as net income before loss from discontinued operations, net of tax, interest and investment income, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets. Adjusted EBITDA is defined as EBITDA before merger and acquisition related expenses and non-recurring, non-cash or non-operating items, and including equity in net income of unconsolidated affiliates. For all Non-GAAP financial measures, we consider non-recurring items to be income or expenses


Premier, Inc. FY’19 Q4 Results

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and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Such items include certain strategic and financial restructuring expenses. Non-operating items include gains or losses on the disposal of assets and interest and investment income or expense.

Segment adjusted EBITDA is defined as the segment’s net revenue less cost of revenue and operating expenses directly attributable to the segment, excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expenses and non-recurring or non-cash items, and including equity in net income of unconsolidated affiliates. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative, and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of segment adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.

Adjusted EBITDA is a supplemental financial measure used by the company and by external users of the company’s financial statements.

Management considers adjusted EBITDA an indicator of the operational strength and performance of the company’s business. Adjusted EBITDA allows management to assess performance without regard to financing methods and capital structure and without the impact of other matters that management does not consider indicative of the operating performance of the business. Segment adjusted EBITDA is the primary earnings measure used by management to evaluate the performance of the company’s business segments.

Free cash flow is defined as net cash provided by operating activities from continuing operations less distributions and tax receivable agreement payments to limited partners and purchases of property and equipment. Free cash flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments. Management believes free cash flow is an important measure because it represents the cash that the company generates after payment of tax distributions to limited partners and capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth. Free cash flow is important because it allows the company to enhance stockholder value through acquisitions, partnerships, joint ventures, investments in related or complimentary businesses and/or debt reduction.

To properly and prudently evaluate our business, readers are urged to review the reconciliation of these non-GAAP financial measures, as well as the other financial tables, included at the end of this release. Readers should not rely on any single financial measure to evaluate the company’s business. In addition, the non-GAAP financial measures used in this release are susceptible to varying calculations and may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.

Further information on Premier’s use of non-GAAP financial measures is available in the “Our Use of Non-GAAP Financial Measures” section of Premier’s Form 10-K for the year ended June 30, 2018.

Forward-Looking Statements

Statements made in this release that are not statements of historical or current facts, such as those related to the current market environment and uncertainties, expected financial performance, non-GAAP free cash flow generation, the impact of the new revenue recognition standards, share repurchases, if any, under our


Premier, Inc. FY’19 Q4 Results

Page 10 of 17

 

current and future stock repurchase program, the success of our incremental investments in growth opportunities, the financial and strategic impact of our decision to exit the specialty pharmacy business and the statements related to fiscal 2020 outlook and guidance and the assumptions underlying such guidance, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Premier to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on any forward looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to Premier’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside Premier’s control. More information on potential factors that could affect Premier’s financial results is included from time to time in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Premier’s periodic and current filings with the SEC, including those discussed under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” section of Premier’s Form 10-K for the year ended June 30, 2019, expected to be filed with the SEC shortly after the date of this release, and also made available on Premier’s website at investors.premierinc.com. Forward-looking statements speak only as of the date they are made, and Premier undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events that occur after that date, or otherwise.

Contacts

 

Investor contact:    Media contact:
Jim Storey    Amanda Forster
Vice President, Investor Relations    Vice President, Public Relations
704.816.5958    202.879.8004
jim_storey@premierinc.com    amanda_forster@premierinc.com

(Tables Follow)


Premier, Inc. FY’19 Q4 Results

Page 11 of 17

 

Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

 

    Three Months Ended June 30,     Year Ended June 30,  
    2019     2019     2019     2018     2019     2019     2019     2018  
    New revenue
standard
    Impact of new
revenue standard
    Previous revenue
standard
    Previous revenue
standard
    New revenue
standard
    Impact of new
revenue standard
    Previous revenue
standard
    Previous revenue
standard
 

Net revenue:

               

Net administrative fees

  $ 170,234     $ (2,080   $ 172,314     $ 171,893     $ 662,462     $ 8,150     $ 654,312     $ 643,839  

Other services and support

    91,285       (3,353     94,638       96,878       371,019       12,552       358,467       368,491  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Services

    261,519       (5,433     266,952       268,771       1,033,481       20,702       1,012,779       1,012,330  

Products

    54,715       6,246       48,469       43,833       184,157       3,924       180,233       172,327  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net revenue

    316,234       813       315,421       312,604       1,217,638       24,626       1,193,012       1,184,657  

Cost of revenue:

               

Services

    49,269       (927     50,196       46,171       182,375       (6,769     189,144       187,363  

Products

    49,230       —         49,230       39,976       173,255       —         173,255       154,634  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue

    98,499       (927     99,426       86,147       355,630       (6,769     362,399       341,997  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

    217,735       1,740       215,995       226,457       862,008       31,395       830,613       842,660  

Other operating income:

               

Remeasurement of tax receivable agreement liabilities

    —         —         —         —         —         —         —         177,174  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other operating income

    —         —         —         —         —         —         —         177,174  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses:

               

Selling, general and administrative

    118,787       (2,544     121,331       107,056       438,985       (5,959     444,944       425,251  

Research and development

    296       —         296       318       1,224       —         1,224       1,423  

Amortization of purchased intangible assets

    13,498       —         13,498       13,172       53,285       —         53,285       52,801  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

    132,581       (2,544     135,125       120,546       493,494       (5,959     499,453       479,475  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    85,154       4,284       80,870       105,911       368,514       37,354       331,160       540,359  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Equity in net income of unconsolidated affiliates

    971       —         971       604       5,658       —         5,658       1,174  

Interest and investment income (loss), net

    157       —         157       (1,061     (2,471     —         (2,471     (5,300

Loss on disposal of long-lived assets

    (6,378     —         (6,378     (651     (6,681     —         (6,681     (2,376

Other (expense) income

    (2,004     —         (2,004     (1,838     3,119       —         3,119       (16,324
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Other (expense) income, net

    (7,254     —         (7,254     (2,946     (375     —         (375     (22,826
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

    77,900       4,284       73,616       102,965       368,139       37,354       330,785       517,533  

Income tax expense

    7,671       (2,135     9,806       1,965       33,462       1,872       31,590       259,526  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations

    70,229       6,419       63,810       101,000       334,677       35,482       299,195       258,007  

Loss from discontinued operations, net of tax

    (46,736     (1,329     (45,407     (364     (50,598     —         (50,598     (437
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income

    23,493       5,090       18,403       100,636       284,079       35,482       248,597       257,570  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations attributable to noncontrolling interest

    (37,676     (3,800     (33,876     (70,348     (200,907     (22,427     (178,480     (224,548

Net loss from discontinued operations attributable to noncontrolling interest

    23,849       677       23,172       221       25,948       (10     25,958       279  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to non-controlling interest in Premier LP

    (13,827     (3,123     (10,704     (70,127     (174,959     (22,437     (152,522     (224,269

Adjustment of redeemable limited partners’ capital to redemption amount

    (296,974     1,744       (298,718     (353,720     (118,064     16,045       (134,109     157,581  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to stockholders

  $ (287,308   $ 3,711     $ (291,019   $ (323,211   $ (8,944   $ 29,090     $ (38,034   $ 190,882  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Calculation of GAAP Earnings (Loss) per Share

               

Numerator for basic earnings (loss) per share:

               

Net (loss) income from continuing operations attributable to stockholders

  $ (264,421   $ 4,363     $ (268,784   $ (323,068   $ 15,706     $ 29,100     $ (13,394   $ 191,040  

Net loss from discontinued operations attributable to stockholders

    (22,887     (652     (22,235     (143     (24,650     (10     (24,640     (158
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to stockholders

  $ (287,308   $ 3,711     $ (291,019   $ (323,211   $ (8,944   $ 29,090     $ (38,034   $ 190,882  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Numerator for diluted earnings (loss) per share:

               

Net (loss) income from continuing operations attributable to stockholders

  $ (264,421   $ 4,363     $ (268,784   $ (323,068   $ 15,706     $ 29,100     $ (13,394   $ 191,040  

Adjustment of redeemable limited partners’ capital to redemption amount

    —         —         —         —         —         —         —         (157,581

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

    —         —         —         —         —         —         —         224,548  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income from continuing operations

    (264,421     4,363       (268,784     (323,068     15,706       29,100       (13,394     258,007  

Tax effect on Premier, Inc. net income

    —         —         —         —         —         —         —         (70,257
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net (loss) income from continuing operations

  $ (264,421   $ 4,363     $ (268,784   $ (323,068   $ 15,706     $ 29,100     $ (13,394   $ 187,750  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net loss from discontinued operations attributable to stockholders

  $ (22,887   $ (652   $ (22,235   $ (143   $ (24,650   $ (10   $ (24,640   $ (158

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

    —         —         —         —         —         —         —         (279
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net loss from discontinued operations

  $ (22,887   $ (652   $ (22,235   $ (143   $ (24,650   $ (10   $ (24,640   $ (437
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted net (loss) income

  $ (287,308   $ 3,711     $ (291,019   $ (323,211   $ (8,944   $ 29,090     $ (38,034   $ 187,313  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Denominator for basic earnings (loss) per share:

               

Weighted average shares

    61,725       61,725       61,725       52,412       59,188       59,188       59,188       53,518  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Denominator for diluted earnings (loss) per share:

               

Weighted average shares

    61,725       61,725       61,725       52,412       59,188       59,188       59,188       53,518  

Effect of dilutive stock based awards

    —         —         —         —         1,081       1,081       —         822  

Class B shares outstanding

    —         —         —         —         —         —         —         83,000  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares and assumed conversions

    61,725       61,725       61,725       52,412       60,269       60,269       59,188       137,340  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings (loss) per share:

               

Basic (loss) earnings per share from continuing operations

  $ (4.28   $ 0.07     $ (4.35   $ (6.17   $ 0.27     $ 0.49     $ (0.22   $ 3.57  

Basic loss per share from discontinued operations

    (0.37     (0.01     (0.36     —         (0.42     —         (0.42     —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic (loss) earnings per share attributable to stockholders

  $ (4.65   $ 0.06     $ (4.71   $ (6.17   $ (0.15   $ 0.49     $ (0.64   $ 3.57  

Diluted earnings (loss) per share:

               

Diluted (loss) earnings per share from continuing operations

  $ (4.28   $ 0.07     $ (4.35   $ (6.17   $ 0.27     $ 0.48     $ (0.22   $ 1.37  

Diluted loss per share from discontinued operations

    (0.37     (0.01     (0.36     —         (0.42     —         (0.42     (0.01
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted (loss) earnings per share attributable to stockholders

  $ (4.65   $ 0.06     $ (4.71   $ (6.17   $ (0.15   $ 0.48     $ (0.64   $ 1.36  


Premier, Inc. FY’19 Q4 Results

Page 12 of 17

 

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

 

     June 30, 2019     June 30, 2019     June 30, 2019     June 30, 2018  
     New revenue
standard
    Impact of new
revenue standard
    Previous revenue
standard
    Previous revenue
standard
 

Assets

        

Cash and cash equivalents

   $ 141,055     $ —       $ 141,055     $ 152,386  

Accounts receivable (net of $4,327 and $1,841 allowance for doubtful accounts, respectively)

     189,298       (11,664     200,962       186,768  

Contract assets

     205,509       205,509       —         —    

Inventory

     51,032       —         51,032       52,635  

Prepaid expenses and other current assets

     23,765       (5,110     28,875       22,437  

Current assets held for sale

     3,385       —         3,385       14,392  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current assets

     614,044       188,735       425,309       428,618  

Property and equipment (net of $359,235 and $293,5641 accumulated depreciation, respectively)

     205,108       —         205,108       205,349  

Intangible assets (net of $197,858 and $144,574 accumulated amortization, respectively)

     270,722       —         270,722       300,386  

Goodwill

     880,709       (98     880,807       843,170  

Deferred income tax assets

     422,014       (10,348     432,362       305,624  

Deferred compensation plan assets

     45,466       —         45,466       44,577  

Investments in unconsolidated affiliates

     99,636       —         99,636       94,053  

Other assets

     31,868       16,754       15,114       3,892  

Long-term assets held for sale

     —         —         —         86,547  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total assets

   $ 2,569,567     $ 195,043     $ 2,374,524     $ 2,312,216  
  

 

 

   

 

 

   

 

 

   

 

 

 

Liabilities, redeemable limited partners’ capital and stockholders’ deficit

        

Accounts payable

   $ 54,540     $ —       $ 54,540     $ 47,954  

Accrued expenses

     82,476       —         82,476       60,137  

Revenue share obligations

     137,359       51,087       86,272       78,999  

Limited partners’ distribution payable

     13,202       6,391       6,811       15,465  

Accrued compensation and benefits

     70,799       —         70,799       63,326  

Deferred revenue

     35,623       (10,489     46,112       39,785  

Current portion of tax receivable agreements

     17,505       —         17,505       17,925  

Current portion of long-term debt

     27,608       —         27,608       100,250  

Other liabilities

     7,113       —         7,113       7,732  

Current liabilities held for sale

     11,797       —         11,797       17,309  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total current liabilities

     458,022       46,989       411,033       448,882  

Long-term debt, less current portion

     6,003       —         6,003       6,962  

Tax receivable agreements, less current portion

     326,607       —         326,607       237,176  

Deferred compensation plan obligations

     45,466       —         45,466       44,577  

Deferred tax liabilities

     4,766       (2,981     7,747       17,569  

Other liabilities

     67,683       —         67,683       63,384  

Long-term liabilities held for sale

     —         —         —         320  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities

     908,547       44,008       864,539       818,870  

Redeemable limited partners’ capital

     2,523,270       —         2,523,270       2,920,410  

Stockholders’ deficit:

        

Class A common stock, $0.01 par value, 500,000,000 shares authorized; 64,357,305 shares issued and 61,938,157 shares outstanding at June 30, 2019 and 57,530,733 shares issued and 52,761,177 shares outstanding at June 30, 2018

     644       —         644       575  

Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 64,548,044 and 80,335,701 shares issued and outstanding at June 30, 2019 and June 30, 2018, respectively

     —         —         —         —    

Treasury stock, at cost; 2,419,148 and 4,769,556 shares at June 30, 2019 and June 30, 2018, respectively

     (87,220     —         (87,220     (150,058

Additional paid-in-capital

     —         —         —         —    

Accumulated deficit

     (775,674     151,035       (926,709     (1,277,581
  

 

 

   

 

 

   

 

 

   

 

 

 

Total stockholders’ deficit

     (862,250     151,035       (1,013,285     (1,427,064
  

 

 

   

 

 

   

 

 

   

 

 

 

Total liabilities, redeemable limited partners’ capital and stockholders’ deficit

   $ 2,569,567     $ 195,043     $ 2,374,524     $ 2,312,216  
  

 

 

   

 

 

   

 

 

   

 

 

 


Premier, Inc. FY’19 Q4 Results

Page 13 of 17

 

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

     Year Ended June 30,  
     2019     2019     2019     2018  
     New revenue
standard
    Impact of new
revenue standard
    Previous revenue
standard
    Previous revenue
standard
 

Operating activities

        

Net income

   $ 284,079     $ 35,482     $ 248,597     $ 257,570  

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

        

Loss from discontinued operations, net of tax

     50,598       —         50,598       437  

Depreciation and amortization

     140,164       —         140,164       123,065  

Equity in net income of unconsolidated affiliates

     (5,658     —         (5,658     (1,174

Deferred income taxes

     11,878       (3,238     15,116       233,282  

Stock-based compensation

     29,001       —         29,001       28,844  

Remeasurement of tax receivable agreement liabilities

     —         —         —         (177,174

Loss on disposal of long-lived assets

     6,681       —         6,681       2,376  

Loss on FFF put and call rights

     17       —         17       22,036  

Changes in operating assets and liabilities:

        

Accounts receivable, prepaid expenses and other current assets

     (6,699     11,353       (18,052     (13,590

Contract assets

     (36,549     (36,549     —         —    

Inventories

     1,603       —         1,603       (12,849

Other assets

     (6,004     (1,363     (4,641     (725

Accounts payable, deferred revenue and other current liabilities

     17,920       (5,685     23,605       20,138  

Accrued expenses

     22,202       —         22,202       10,028  

Long-term liabilities

     (57     —         (57     6,787  

Other operating activities

     2,762       —         2,762       6,207  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities from continuing operations

     511,938       —         511,938       505,258  

Net cash (used in) provided by operating activities from discontinued operations

     (6,599     —         (6,599     2,448  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by operating activities

   $ 505,339     $ —       $ 505,339     $ 507,706  

Investing activities

        

Purchases of property and equipment

   $ (93,385   $ —       $ (93,385   $ (92,425

Acquisition of Stanson Health, Inc., net of cash acquired

     (50,854     —         (50,854     —    

Proceeds from sale of assets

     22,731       —         22,731       —    

Investments in convertible notes

     (11,500     —         (11,500     —    

Convertible note redemption

     3,624       —         3,624       —    

Other investing activities

     110       —         110       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities from continuing operations

     (129,274     —         (129,274     (92,425

Net cash used in investing activities from discontinued operations

     (196     —         (196     (255
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

   $ (129,470   $ —       $ (129,470   $ (92,680

Financing activities

        

Proceeds from credit facility

   $ 50,000     $ —       $ 50,000     $ 30,000  

Payments on credit facility

     (125,000     —         (125,000     (150,000

Payments made on notes payable

     (676     —         (676     (8,002

Redemption of limited partner of Premier LP

     256       —         256       —    

Proceeds from exercise of stock options under equity incentive plan

     19,429       —         19,429       8,019  

Proceeds from issuance of Class A common stock under stock purchase plan

     2,858       —         2,858       2,619  

Repurchase of vested restricted units for employee tax-withholding

     (8,134     —         (8,134     (5,965

Distributions to limited partners of Premier LP

     (57,825     —         (57,825     (79,255

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

     (17,975     —         (17,975     —    

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

     (250,133     —         (250,133     (200,129

Earn-out liability payment to GNYHA Holdings

     —         —         —         (16,662
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash used in financing activities

     (387,200     —         (387,200     (419,375

Net decrease in cash and cash equivalents

     (11,331     —         (11,331     (4,349

Cash and cash equivalents at beginning of year

     152,386       —         152,386       156,735  
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 141,055     $ —       $ 141,055     $ 152,386  
  

 

 

   

 

 

   

 

 

   

 

 

 


Premier, Inc. FY’19 Q4 Results

Page 14 of 17

 

Supplemental Financial Information

Reconciliation of Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow

(Unaudited)

(In thousands)

 

     Three Months Ended
June 30,
    Year Ended June 30,  
     2019     2018     2019     2018  

Net cash provided by operating activities from continuing operations

   $ 161,268     $ 137,666     $ 511,938     $ 505,258  

Purchases of property and equipment

     (23,479     (27,420     (93,385     (92,425

Distributions to limited partners of Premier LP

     (13,079     (13,157     (57,825     (79,255

Payments to limited partners under tax receivable agreements (1)

     —         —         (17,975     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Free Cash Flow

   $ 124,710     $ 97,089     $ 342,753     $ 333,578  
  

 

 

   

 

 

   

 

 

   

 

 

 

 

(1)

The timing of the annual tax receivable agreement payments has shifted to July from June due to the change in the company’s federal tax filing deadline. As a result, Premier did not make a tax receivable agreement payment in fiscal 2018, but made the payment in July of fiscal 2019 and will make future annual payments in July.


Premier, Inc. FY’19 Q4 Results

Page 15 of 17

 

Supplemental Financial Information

Reconciliation of Net Income to Adjusted EBITDA

Reconciliation of Operating Income to Segment Adjusted EBITDA

Reconciliation of Net Income Attributable to Stockholders to Non-GAAP Adjusted Fully Distributed Net Income

(Unaudited)

(In thousands)

 

    Three Months Ended June 30,     Year Ended June 30,  
    2019     2019     2019     2018     2019     2019     2019     2018  
    New revenue
standard
    Impact of new
revenue standard
    Previous revenue
standard
    Previous revenue
standard
    New revenue
standard
    Impact of new
revenue standard
    Previous revenue
standard
    Previous revenue
standard
 

Net income from continuing operations

  $ 70,229     $ 6,419     $ 63,810     $ 101,000     $ 334,677     $ 35,482     $ 299,195     $ 258,007  

Interest and investment (income) loss, net

    (157     —         (157     1,061       2,471       —         2,471       5,300  

Income tax expense

    7,671       (2,135     9,806       1,965       33,462       1,872       31,590       259,526  

Depreciation and amortization

    23,351       —         23,351       18,666       86,879       —         86,879       70,264  

Amortization of purchased intangible assets

    13,498       —         13,498       13,172       53,285       —         53,285       52,801  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

    114,592       4,284       110,308       135,864       510,774       37,354       473,420       645,898  

Stock-based compensation

    8,747       —         8,747       4,431       29,396       —         29,396       29,235  

Acquisition and disposition related expenses

    6,364       —         6,364       2,022       13,154       —         13,154       8,335  

Strategic and financial restructuring expenses

    7       —         7       859       7       —         7       2,512  

Remeasurement of tax receivable agreement liabilities

    —         —         —         —         —         —         —         (177,174

ERP implementation expenses

    259       —         259       468       872       —         872       1,000  

Acquisition related adjustment - deferred revenue

    34       —         34       43       141       —         141       300  

Loss on disposal of long-lived assets

    6,378       —         6,378       651       6,681       —         6,681       2,376  

Loss on FFF put and call rights

    3,475       —         3,475       3,362       17       —         17       22,036  

Impairment on investments

    —         —         —         —         —         —         —         5,002  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 139,856     $ 4,284     $ 135,572     $ 147,700     $ 561,042     $ 37,354     $ 523,688     $ 539,520  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

  $ 77,900     $ 4,284     $ 73,616     $ 102,965     $ 368,139     $ 37,354     $ 330,785     $ 517,533  

Equity in net income of unconsolidated affiliates

    (971     —         (971     (604     (5,658     —         (5,658     (1,174

Interest and investment (income) loss, net

    (157     —         (157     1,061       2,471       —         2,471       5,300  

Loss on disposal of long-lived assets

    6,378       —         6,378       651       6,681       —         6,681       2,376  

Other expense (income)

    2,004       —         2,004       1,838       (3,119     —         (3,119     16,324  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

    85,154       4,284       80,870       105,911       368,514       37,354       331,160       540,359  

Depreciation and amortization

    23,351       —         23,351       18,666       86,879       —         86,879       70,264  

Amortization of purchased intangible assets

    13,498       —         13,498       13,172       53,285       —         53,285       52,801  

Stock-based compensation

    8,747       —         8,747       4,431       29,396       —         29,396       29,235  

Acquisition and disposition related expenses

    6,364       —         6,364       2,022       13,154       —         13,154       8,335  

Strategic and financial restructuring expenses

    7       —         7       859       7       —         7       2,512  

Remeasurement of tax receivable agreement liabilities

    —         —         —         —         —         —         —         (177,174

ERP implementation expenses

    259       —         259       468       872       —         872       1,000  

Acquisition related adjustment - deferred revenue

    34       —         34       43       141       —         141       300  

Equity in net income of unconsolidated affiliates

    971       —         971       604       5,658       —         5,658       1,174  

Impairment on investments

    —         —           —         —         —         —         5,002  

Deferred compensation plan income

    1,470       —         1,470       957       2,546       —         2,546       3,960  

Other income

    —         —         —         567       590       —         590       1,752  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 139,856     $ 4,284     $ 135,572     $ 147,700     $ 561,042     $ 37,354     $ 523,688     $ 539,520  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment Adjusted EBITDA:

               

Supply Chain Services

  $ 141,892     $ (2,025   $ 143,917     $ 142,053     $ 548,029     $ 9,492     $ 538,537     $ 531,851  

Performance Services

    28,236       6,309       21,927       37,564       129,147       27,862       101,285       123,429  

Corporate

    (30,272     —         (30,272     (31,917     (116,134     —         (116,134     (115,760
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

  $ 139,856     $ 4,284     $ 135,572     $ 147,700     $ 561,042     $ 37,354     $ 523,688     $ 539,520  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net (loss) income attributable to stockholders

  $ (287,308   $ 3,711     $ (291,019   $ (323,211   $ (8,944   $ 29,090     $ (38,034   $ 190,882  

Adjustment of redeemable limited partners’ capital to redemption amount

    296,974       (1,744     298,718       353,720       118,064       (16,045     134,109       (157,581

Net income attributable to non-controlling interest in Premier LP

    13,827       3,123       10,704       70,127       174,959       22,437       152,522       224,269  

Loss from discontinued operations, net of tax

    46,736       1,329       45,407       364       50,598       —         50,598       437  

Income tax expense

    7,671       (2,135     9,806       1,965       33,462       1,872       31,590       259,526  

Amortization of purchased intangible assets

    13,498       —         13,498       13,172       53,285       —         53,285       52,801  

Stock-based compensation

    8,747       —         8,747       4,431       29,396       —         29,396       29,235  

Acquisition and disposition related expenses

    6,364       —         6,364       2,022       13,154       —         13,154       8,335  

Strategic and financial restructuring expenses

    7       —         7       859       7       —         7       2,512  

Remeasurement of tax receivable agreement liabilities

    —         —         —         —         —         —         —         (177,174

ERP implementation expenses

    259       —         259       468       872       —         872       1,000  

Acquisition related adjustment - deferred revenue

    34       —         34       43       141       —         141       300  

Loss on disposal of long-lived assets

    6,378       —         6,378       651       6,681       —         6,681       2,376  

Loss on FFF put and call rights

    3,475       —         3,475       3,362       17       —         17       22,036  

Impairment on investments

    —         —         —         —         —         —         —         5,002  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted fully distributed income before income taxes

    116,662       4,284       112,378       127,973       471,692       37,354       434,338       463,956  

Income tax expense on fully distributed income before income taxes

    30,332       1,114       29,218       33,273       122,640       9,712       112,928       148,545  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Adjusted Fully Distributed Net Income

  $ 86,330     $ 3,170     $ 83,160     $ 94,700     $ 349,052     $ 27,642     $ 321,410     $ 315,411  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 


Premier, Inc. FY’19 Q4 Results

Page 16 of 17

 

Supplemental Financial Information

Reconciliation of GAAP EPS to Non-GAAP EPS on Adjusted Fully Distributed Net Income

(Unaudited)

(In thousands, except per share data)

 

    Three Months Ended June 30,     Year Ended June 30,  
    2019     2019     2019     2018     2019     2019     2019     2018  
    New revenue
standard
    Impact of new
revenue standard
    Previous revenue
standard
    Previous revenue
standard
    New revenue
standard
    Impact of new
revenue standard
    Previous revenue
standard
    Previous revenue
standard
 

Net (loss) income attributable to stockholders

  $ (287,308   $ 3,711     $ (291,019   $ (323,211   $ (8,944   $ 29,090     $ (38,034   $ 190,882  

Adjustment of redeemable limited partners’ capital to redemption amount

    296,974       (1,744     298,718       353,720       118,064       (16,045     134,109       (157,581

Net income attributable to non-controlling interest in Premier LP

    13,827       3,123       10,704       70,127       174,959       22,437       152,522       224,269  

Loss from discontinued operations, net of tax

    46,736       1,329       45,407       364       50,598       —         50,598       437  

Income tax expense

    7,671       (2,135     9,806       1,965       33,462       1,872       31,590       259,526  

Amortization of purchased intangible assets

    13,498       —         13,498       13,172       53,285       —         53,285       52,801  

Stock-based compensation

    8,747       —         8,747       4,431       29,396       —         29,396       29,235  

Acquisition and disposition related expenses

    6,364       —         6,364       2,022       13,154       —         13,154       8,335  

Strategic and financial restructuring expenses

    7       —         7       859       7       —         7       2,512  

Remeasurement of tax receivable agreement liabilities

    —         —         —         —         —         —         —         (177,174

ERP implementation expenses

    259       —         259       468       872       —         872       1,000  

Acquisition related adjustment - deferred revenue

    34       —         34       43       141       —         141       300  

Loss on disposal of long-lived assets

    6,378       —         6,378       651       6,681       —         6,681       2,376  

Loss on FFF put and call rights

    3,475       —         3,475       3,362       17       —         17       22,036  

Impairment on investments

    —         —         —         —         —         —         —         5,002  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted fully distributed income before income taxes

    116,662       4,284       112,378       127,973       471,692       37,354       434,338       463,956  

Income tax expense on fully distributed income before income taxes

    30,332       1,114       29,218       33,273       122,640       9,712       112,928       148,545  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Adjusted Fully Distributed Net Income

  $ 86,330     $ 3,170     $ 83,160     $ 94,700     $ 349,052     $ 27,642     $ 321,410     $ 315,411  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted Average:

               

Common shares used for basic and diluted earnings (loss) per share

    61,725       61,725       61,725       52,412       59,188       59,188       59,188       53,518  

Potentially dilutive shares

    1,522       1,522       1,522       1,636       1,081       1,081       1,081       822  

Conversion of Class B common units

    64,405       64,405       64,405       80,548       70,827       70,827       70,827       83,000  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average fully distributed shares outstanding - diluted

    127,652       127,652       127,652       134,596       131,096       131,096       131,096       137,340  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

GAAP (loss) earnings per share

  $ (4.65   $ 0.06     $ (4.71   $ (6.17   $ (0.15   $ 0.49     $ (0.64   $ 3.57  

Adjustment of redeemable limited partners’ capital to redemption amount

    4.81       (0.03     4.84       6.75       1.99       (0.28     2.27       (2.94

Net income attributable to non-controlling interest in Premier LP

    0.22       0.05       0.17       1.34       2.96       0.38       2.58       4.19  

Loss from discontinued operations, net of tax

    0.76       0.02       0.74       0.01       0.85       —         0.85       0.01  

Income tax expense

    0.12       (0.04     0.16       0.04       0.57       0.04       0.53       4.85  

Amortization of purchased intangible assets

    0.22       —         0.22       0.25       0.90       —         0.90       0.99  

Stock-based compensation

    0.14       —         0.14       0.08       0.50       —         0.50       0.55  

Acquisition and disposition related expenses

    0.10       —         0.10       0.04       0.22       —         0.22       0.16  

Strategic and financial restructuring expenses

    —         —         —         0.02       —         —         —         0.05  

Remeasurement of tax receivable agreement liabilities

    —         —         —         —         —         —         —         (3.31

ERP implementation expenses

    —         —         —         0.01       0.01       —         0.01       0.02  

Acquisition related adjustment - deferred revenue

    —         —         —         —         —         —         —         0.01  

Loss on disposal of long-lived assets

    0.10       —         0.10       0.01       0.11       —         0.11       0.04  

Loss on FFF put and call rights

    0.06       —         0.06       0.06       —         —         —         0.41  

Impairment on investments

    —         —         —         —         —         —         —         0.09  

Impact of corporation taxes

    (0.49     (0.02     (0.47     (0.63     (2.07     (0.17     (1.90     (2.78

Impact of dilutive shares

    (0.71     (0.01     (0.70     (1.11     (3.23     (0.25     (2.98     (3.61
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP EPS on Adjusted Fully Distributed Net Income

  $ 0.68     $ 0.03     $ 0.65     $ 0.70     $ 2.66     $ 0.21     $ 2.45     $ 2.30  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
       


Premier, Inc. FY’19 Q4 Results

Page 17 of 17

 

Consolidated Fourth-Quarter and Full Year Financial Highlights

 

    Three Months Ended June 30,     Year Ended June 30,  
    2019     2019     2019     2018     2019     2019     2019     2018  
(in thousands, except per
share data)
  New revenue
standard
    Impact of new
revenue standard
    Previous revenue
standard
    Previous revenue
standard
    New revenue
standard
    Impact of new
revenue standard
    Previous revenue
standard
    Previous revenue
standard
 

Net Revenue (a):

               

Supply Chain Services:

               

Net administrative fees

  $ 170,234     $ (2,080   $ 172,314     $ 171,893     $ 662,462     $ 8,150     $ 654,312     $ 643,839  

Other services and support

    2,042       (8,571     10,613       2,086       8,561       (11,442     20,003       7,812  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Services

    172,276       (10,651     182,927       173,979       671,023       (3,292     674,315       651,651  

Products

    54,715       6,246       48,469       43,833       184,157       3,924       180,233       172,327  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Supply Chain Services (a)

    226,991       (4,405     231,396       217,812       855,180       632       854,548       823,978  

Performance Services (a)

    89,243       5,218       84,025       94,792       362,458       23,994       338,464       360,679  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (a)

  $ 316,234     $ 813     $ 315,421     $ 312,604     $ 1,217,638     $ 24,626     $ 1,193,012     $ 1,184,657  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net income from continuing operations

  $ 70,229     $ 6,419     $ 63,810     $ 101,000     $ 334,677     $ 35,482     $ 299,195     $ 258,007  

Net income from continuing operations attributable to stockholders

  $ (264,421   $ 4,363     $ (268,784   $ (323,068   $ 15,706     $ 29,100     $ (13,394   $ 191,040  

Adjusted net (loss) income from continuing operations (b)

  $ (264,421   $ 4,363     $ (268,784   $ (323,068   $ 15,706     $ 29,100     $ (13,394   $ 187,750  

Weighted average shares outstanding:

               

Basic

    61,725       61,725       61,725       52,412       59,188       59,188       59,188       53,518  

Diluted

    61,725       61,725       61,725       52,412       60,269       60,269       59,188       137,340  

Earnings (loss) from continuing operations per share attributable to stockholders:

               

Basic

  $ (4.28   $ 0.07     $ (4.35   $ (6.17   $ 0.27     $ 0.50     $ (0.23   $ 3.57  

Diluted (b)

  $ (4.28   $ 0.07     $ (4.35   $ (6.17   $ 0.27     $ 0.50     $ (0.23   $ 1.37  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

NON-GAAP FINANCIAL MEASURES:

               
 

Adjusted EBITDA (a) (c):

               

Supply Chain Services

  $ 141,892     $ (2,025   $ 143,917     $ 142,053     $ 548,029     $ 9,492     $ 538,537     $ 531,851  

Performance Services

    28,236       6,309       21,927       37,564       129,147       27,862       101,285       123,429  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total segment adjusted EBITDA

    170,128       4,284       165,844       179,617       677,176       37,354       639,822       655,280  

Corporate

    (30,272     —         (30,272     (31,917     (116,134     —         (116,134     (115,760
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total (a)

  $ 139,856     $ 4,284     $ 135,572     $ 147,700     $ 561,042     $ 37,354     $ 523,688     $ 539,520  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted fully distributed net income (c)

  $ 86,330     $ 3,170     $ 83,160     $ 94,700     $ 349,052     $ 27,642     $ 321,410     $ 315,411  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share on adjusted fully distributed net income - diluted (a) (c)

  $ 0.68     $ 0.03     $ 0.65     $ 0.70     $ 2.66     $ 0.21     $ 2.45     $ 2.30  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

(a)

Bolded measures correspond to company guidance.

(b)

Earnings per share attributable to stockholders excludes the adjustment of redeemable limited partners’ capital to redemption amount and the net income attributable to non-controlling interest in Premier LP if Class B common stock is determined to be dilutive. Likewise, earnings per share attributable to stockholders includes the adjustment of redeemable limited partners’ capital to redemption amount and the net income attributable to non-controlling interest in Premier LP if Class B common stock is determined to be antidilutive.

(c)

See attached supplemental financial information for reconciliation of reported GAAP results to Non-GAAP results.

# # #

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