8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): August 20, 2019

Premier, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-36092	35-2477140
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

13034 Ballantyne Corporate Place

Charlotte, NC 28277

(Address of Principal Executive Offices) (Zip Code)

(704) 357-0022

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

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

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

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

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

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

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

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02. Results of Operations and Financial Condition.

On August 20, 2019, Premier, Inc. (the “Company”) issued a press release reporting the financial results of the Company for the three months and fiscal year ended June 30, 2019. A copy of the press release is attached to this report as Exhibit 99.1 and is incorporated herein by this reference.

As discussed in the press release, the Company held a conference call and webcast on August 20, 2019. Supplemental slides referenced during the conference call and webcast were available on the Company’s website for viewing by call participants. A transcript of the call together with supplemental slides referenced during the conference call are attached as Exhibit 99.2 and Exhibit 99.3, respectively, to this Current Report on Form 8-K.

Item 7.01. Regulation FD Disclosure.

As noted above, the Company held a conference call and webcast on August 20, 2019, to discuss the Company’s operating results for the three months and year ended June 30, 2019. A copy of the press release, which contains additional information regarding how to access the conference call and webcast and how to listen to a recorded playback of the call, is attached as Exhibit 99.1 to this Current Report on From 8-K. A transcript of the call together with supplemental slides referenced during the conference call are attached as Exhibit 99.2 and Exhibit 99.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

* * * *

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

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1	Press release of Premier, Inc., dated August 20, 2019.
99.2	Transcript of conference call of Premier, Inc., dated August 20, 2019.
99.3	Supplemental slides referenced during the fourth quarter 2019 earnings call of Premier, Inc.

SIGNATURE

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

Premier, Inc.
By:	/s/ Susan D. DeVore
Name:	Susan D. DeVore
Title:	Chief Executive Officer

Date: August 22, 2019

EX-99.1

Exhibit 99.1

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).

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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.

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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.

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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.

# # #

EX-99.2

Exhibit 99.2

FISCAL 2019 FOURTH QUARTER CONFERENCE CALL TRANSCRIPT

August 20, 2019 / 08:00 AM EDT

On August 20, 2019, Premier, Inc. hosted a conference call to discuss financial results for the fiscal 2019 fourth quarter, ended June 30, 2019. The following transcript is an interpretation of the statements made on the call. The actual conference call may have differed slightly.

CORPORATE PARTICIPANTS

James R. Storey Premier, Inc. – VP of IR

Susan D. DeVore Premier, Inc. – CEO and Director

Michael J. Alkire Premier, Inc. – President

Craig S. McKasson Premier, Inc. – CFO, CAO, Senior VP & Treasurer

CONFERENCE CALL PARTICIPANTS

Alexander Yearley Draper SunTrust Robinson Humphrey, Inc., Research Division – MD of Equity Research

Charles Rhyee Cowen and Company, LLC, Research Division – MD & Senior Research Analyst

Dolph B. Warburton Nephron Research LLC – Research Analyst

James John Stockton Wells Fargo Securities, LLC, Research Division – Director & Senior Equity Research Analyst

John Wilson Ransom Raymond James & Associates, Inc., Research Division – MD of Equity Research & Director of Healthcare Research

Kevin Caliendo UBS Investment Bank, Research Division – Equity Research Analyst of Healthcare IT and Distribution

Lisa Christine Gill JP Morgan Chase & Co, Research Division – Senior Publishing Analyst

Michael Aaron Cherny BofA Merrill Lynch, Research Division – Director

Mohan A. Naidu Oppenheimer & Co. Inc., Research Division – MD and Senior Analyst

Richard Collamer Close Canaccord Genuity Corp., Research Division – MD & Senior Analyst

Ryan Scott Daniels William Blair & Company L.L.C., Research Division – Partner and Healthcare Analyst

Steven James Valiquette Barclays Bank PLC, Research Division – Research Analyst

Yueli Zhang Citigroup Inc, Research Division – Healthcare IT Senior Associate

P R E S E N T A T I O N

Operator

Good day, ladies and gentlemen, and welcome to the Premier, Inc. Fourth Quarter and Full Year 2019 Results and Conference Call. (Operator Instructions) As a reminder, this conference maybe recorded.

PREMIER, INC.

Fiscal 2019 Fourth Quarter Conference Call Transcript

Page 2 of 22

I would now like to turn the conference over to Jim Storey of Investor Relations. You may begin.

James R. Storey - Premier, Inc. - VP of IR

Thank you, Sonia, and welcome, everyone, to Premier, Inc.’s Fiscal 2019 Fourth Quarter Conference Call.

Our speakers today are Susan DeVore, Chief Executive Officer; Mike Alkire, President; and Craig McKasson, Chief Administrative and Financial Officer. Susan, Mike and Craig will review the year and quarter’s performance, provide an operations update and discuss our outlook for fiscal 2020.

Before we get started, I want to remind everyone that copies of our earnings release and supplemental slides accompanying this conference call are available in the Investor Relations section of our website at investors.premierinc.com.

Management’s remarks today contain certain forward-looking statements, and actual results could differ materially from those discussed today. These forward-looking statements speak as of today, and we undertake no obligation to update them.

Factors that might affect future results are discussed in our filings with the SEC, including our fiscal 2019 Form 10-K, which we expect to file soon. We encourage you to review these detailed safe harbor and risk factor disclosures.

Please also note that, where appropriate, we will refer to non-GAAP financial measures to evaluate our business. Reconciliations of non-GAAP financial measures to GAAP financial measures are included in our earnings release, in the appendix of the supplemental slides accompanying this presentation and in our earnings release Form 8-K, which we expect to furnish to the SEC soon.

Now let me turn the call over to Susan DeVore.

Susan Dodson DeVore - Premier, Inc. - CEO & Director

Thanks, Jim, and welcome, everyone, to our conference call. Today, we’ll recap our fourth quarter and fiscal 2019 performance, provide updates on our strategic objectives and discuss our outlook for fiscal 2020 in detail, leaving sufficient time for Q&A.

So I’ll start today with a quick overview of our performance and highlight the opportunities that we see ahead. Results from our continuing operations for both the quarter and fiscal year were consistent with our previous expectations, as we continue to collaborate with our large national footprint of member health systems and other providers to reduce cost and improve quality and safety.

A few quick highlights. Financially, we delivered 3% year-over-year growth in consolidated net revenue, 4% growth in non-GAAP adjusted EBITDA and achieved a 16% increase in non-GAAP adjusted fully distributed earnings per share.

We generated significant non-GAAP free cash flow in fiscal 2019 of $342.8 million, which equals 61% of non-GAAP adjusted EBITDA. We successfully completed the transaction to exit the specialty pharmacy business. And we maintained a strong balance sheet, which provides the ongoing flexibility to support our growth strategy, while also returning capital to our stockholders.

During the fiscal year, we completed our previously announced $250 million stock repurchase plan and announced Board authorization for a new $300 million stock repurchase plan for fiscal 2020.

PREMIER, INC.

Fiscal 2019 Fourth Quarter Conference Call Transcript

Page 3 of 22

Looking ahead, our financial outlook for fiscal 2020 anticipates a continued challenging market environment. Political and regulatory uncertainties, which continue to weigh on member decision-making in some areas, will likely intensify with the approaching presidential election, in which health care is already taking center stage.

Consistent with this market environment, we are experiencing some challenges in our Performance Services segment, where we also face uncertainty related to the significant reduction or elimination of the CMS hospital improvement project that we have participated in for the past 3 years.

At the same time, our Supply Chain Services segment has continued to deliver steady growth. In line with these factors, our financial guidance for fiscal 2020 projects modest year-over-year consolidated revenue and profitability growth.

As we begin the new fiscal year, we continue to operate from a position of financial strength, characterized by our flexible balance sheet and very strong free cash flow, and we are confident that Premier remains positioned to continue to successfully navigate the current environment, while positioning the company for the future.

Importantly, we continue to focus on expanding our supply chain business and improving the growth of our enterprise analytics and performance improvement capabilities. Our longer-term vision for these businesses remains consistent. In Supply Chain Services, our vision is to co-manage total supply chain costs by among other things, expanding our strong supply chain portfolio and technology-enabling all aspects of the supply chain spend.

In Performance Services, we are working to expand our market reach as a health care technology and data sciences business with wraparound implementation services, leveraging our capabilities to connect providers to payers, employers and life sciences companies to improve clinical outcomes and reduce costs.

We believe Premier has the right capabilities and offerings to continue delivering the unique and compelling value for our customers, which will help us deliver long-term growth and stockholder value.

Now let me turn the call over to Mike Alkire, our President, who will walk you through some of the initiatives that we’re pursuing.

Michael J. Alkire - Premier, Inc. - President & COO

Thank you, Susan, and thanks everyone for joining our call. Let me start with a few operational achievements for the year just ended. We continued to serve more than 4,000 hospitals and health systems across the U.S. and expanded the number of other providers and organizations with which we do business to approximately 175,000.

We increased the purchasing volume running through our GPO contracts to more than $61 billion. We maintained very high retention rates again this year, with a 97% retention rate for our group purchasing business and a 96% SaaS institutional renewal rate.

At the end of fiscal 2019, our member owner average tenure stood at approximately 20 years. And our annual member satisfaction survey showed we continue to be viewed by our members as a strategic partner or as an extension of their organization.

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Looking forward, we remain focused on continued growth and are currently recruiting and hiring additional sales professionals to capitalize on identified opportunities. At the same time, we are committed to rightsizing other businesses within our portfolio to align with shifting market demands and are continuing to diligently manage costs.

Now I want to review some of the specific actions we are taking to augment our core capabilities and drive growth and stability in the current market environment, while at the same time supporting the longer-term vision that Susan just discussed.

First, we are leveraging our unique combination of data assets, analytics and other capabilities to continue developing a high-value care network linking employers and payers directly with providers to enable better clinical outcomes at reduced costs.

We have been investing in this longer-term strategic initiative over the past year and are targeting to engage major employers during the current fiscal year. As part of this initiative, we have teamed up with 2 major health plans to develop an innovative automated prior authorization solution. With one of these, Magellan Health, we’re collaborating together to deploy this unique prior authorization solution within the electronic health record and physician workflow at the point of care and are piloting the project with Hawaii Pacific Health, one of the largest health care providers in Hawaii.

The acquisition of Stanson Health and its clinical decision support technology represents a key part of this developing strategy and it’s also an attractive business in its own right. We acquired Stanson last November and it has generated excitement and new sales opportunities. We continue to build and integrate Stanson’s functionality with other Premier data assets and capabilities and expect it to be modestly accretive to earnings in fiscal 2020.

Second, while the broader provider market continues to experience more modest growth, we are leveraging certain businesses within our existing portfolio to capitalize on opportunities in adjacent markets. One of these is our applied sciences research business, which leverages our best-in-class data, subject matter expertise and our provider channel to generate real-world evidence that supports health care transformation.

While still a relatively small contributor to Performance Services segment revenue, we are pleased with its rapid growth rate and see continuing potential in the coming year. Additionally, this business is partnering with industry leaders to develop, test and scale real-world interventions for health care improvement.

A few examples. We are collaborating with major diagnostic, imaging and pharmaceutical companies to accelerate oncology innovations. And we are working with major pharmaceutical and device companies in collaboration with health care systems to evaluate and impact large populations of patients with complex conditions.

As Susan noted earlier, strategic acquisitions have always been carefully considered as part of our disciplined capital deployment strategy. While Stanson represents the most recent example of an M&A opportunity that we acted on, we are exploring other potential acquisition opportunities to add to or augment our capabilities in targeted areas of the business.

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On the supply chain side, for instance, we’re looking at ways to further improve our member supply chain processes using technology. We believe this will continue to position Premier as an embedded and centralized partner within our member supply chain operations.

On the Performance Services side, we’re exploring opportunities that would allow us to better support and accelerate the delivery of our high-value network strategy as well as capabilities that further enable the strategic evolution of our emerging automated prior authorization offering.

Let me conclude by reiterating that we remain disciplined and opportunistic. We are focused on pursuing value-creating opportunities in our current markets as well as in new markets. Premier continues to partner with our members to explore new and innovative ways to better manage cost and improve the quality and safety of care delivery, while creating long-term value for our stakeholders.

At the same time, of course, we remain committed to maintaining a strong balance sheet while returning capital to stockholders as part of our balanced capital allocation program. Thank you for your time today.

Now let me turn the call over to Craig McKasson, our Chief Administrative and Financial Officer.

Craig Steven McKasson - Premier, Inc. - CFO, CAO, Senior VP & Treasurer

Thanks, Mike. As Susan highlighted, we completed the sale of certain assets related to the specialty pharmacy business and initiated activities to wind down and exit from that business in the fourth quarter. Accordingly and unless otherwise indicated, all results discussed during this call reflect our continuing operations.

Before we walk through the results, I do want to remind everyone that beginning in fiscal 2019, we adopted the new revenue recognition standard, ASC 606, using the modified retrospective approach, which means we did not restate prior year results under the new standard. As a result, we are comparing our fiscal 2019 fourth quarter and full year results using the new standard to prior year results under the previous revenue recognition standard, which means some of these comparisons may not be meaningful.

Before reviewing the quarter, I want to reiterate that our full fiscal year performance, excluding discontinued operations, met our expectations with consolidated net revenue of $1.22 billion, up 3% year-over-year; non-GAAP adjusted EBITDA of $561 million, up 4%; and non-GAAP adjusted fully distributed earnings per share of $2.66, up 16%.

Supply Chain Services revenue rose 4% year-over-year, driven by a 3% increase in net administrative fees revenue and a 7% rise in products revenue. And our Performance Services revenue growth was nominal.

Now let’s walk through the fourth quarter’s performance in more detail. As I discussed earlier in the year, we anticipated that fourth quarter year-over-year comparisons would be challenged, largely due to the timing of revenue recognition throughout the year under the new revenue standard, which resulted in stronger results in the first half of the year relative to the prior year under the previous standard, while setting up more difficult comparisons in the second half of fiscal 2019, particularly in the fourth quarter.

From a GAAP standpoint, consolidated fourth quarter net revenue of $316.2 million compared to $312.6 million a year ago. Supply Chain Services segment revenue was $227 million compared to $217.8 million from the same period a year ago. While net administrative fees revenue of $170.2 million increased from

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the preceding quarter, it decreased by 1% from the same period a year ago. This is consistent with the assumptions and cadence we have previously discussed, given higher-than-anticipated recoveries of past due administrative fees and the timing of cash collections, which benefited revenue under the previous standard in the prior year fourth quarter.

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

Turning to the Performance Services segment. Fourth quarter revenue was $89.2 million compared to $94.8 million for the same period a year ago. The decrease was due to lower consulting revenue from cost management and quality and safety engagements, which was partially offset by growth in the clinical surveillance, cost management and clinical decision support areas of the technology business.

More specifically, we are experiencing lower demand for large performance-based cost management consulting engagements relative to last year, as many health care providers appear to be taking more of a wait-and-see approach given the market uncertainty, upcoming election and slower adoption and movement to value-based care models.

Performance Services revenue did benefit in the second half of fiscal 2019 from 2 large licensed safety engagements. While the majority of our technology revenue is SaaS based, we do also sell licenses for our safety and infection prevention technology. Under the new revenue standard, the majority of revenue associated with license engagements is recognized at contract signing, whereas under the previous standard, revenue was more ratably spread over the term of the contract.

Looking at profitability. GAAP net income was $70.2 million for the quarter compared to $101 million a year ago. After a GAAP-required non-cash negative adjustment of $297 million to reflect the increase in the redemption value of limited partners’ Class B common unit ownership based on the increase in our stock price during the period, we reported a GAAP net loss of $4.28 per share. Consolidated non-GAAP adjusted EBITDA was $139.9 million for the quarter compared to $147.7 million for the same period a year ago.

During the year, we invested approximately $7 million in incremental operating expenses for future growth initiatives, including the build-out of our high-value network, the integration of our clinical decision support technology, the development of our ProvideGx program and our recently launched e-commerce initiative.

From a segment perspective, Supply Chain Services non-GAAP adjusted EBITDA was $141.9 million compared to $142.1 million a year ago. Gross profit growth in the direct sourcing business from increased sales of higher-margin products was primarily offset by increased investments in our e-commerce initiative.

In Performance Services, non-GAAP adjusted EBITDA was $28.2 million compared to $37.6 million for the same period a year ago. The decrease was primarily the result of the lower revenue compared to the prior period as well as the ongoing investments in our clinical decision support technology and the high-value network strategy.

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Fourth quarter non-GAAP adjusted fully distributed net income was $86.3 million compared to $94.7 million for the same period a year ago, representing non-GAAP adjusted fully distributed earnings per share of $0.68 compared with $0.70 a year ago.

From a liquidity and balance sheet perspective, cash flow from operations for fiscal 2019 was $511.9 million compared with $505.3 million last year. Non-GAAP free cash flow for the fourth quarter was $124.7 million, representing 89% of non-GAAP adjusted EBITDA and totaled $342.8 million or approximately 61% of non-GAAP adjusted EBITDA for the full fiscal year.

Our cash and cash equivalents totaled $141.1 million at June 30, 2019, compared with $152.4 million at June 30, 2018. We ended the year with an outstanding balance of $25 million on our 5-year $1 billion revolving credit facility, which we subsequently paid down on July 15.

And as previously reported, we completed our $250 million share repurchase program during fiscal 2019, repurchasing a total of approximately 6.7 million shares, which added approximately $0.06 to non-GAAP adjusted fully distributed per share results for the full year.

Now let’s turn to our financial guidance for fiscal 2020. We are introducing fiscal 2020 full year guidance based on our historical performance and current expectations for the fiscal year. This guidance incorporates certain key assumptions related to our business and an uncertain political and regulatory environment.

Consistent with prior years, it does not incorporate the impact of any future significant acquisitions that we may undertake. In developing our guidance, we factored in the expected realization of approximately $1.1 billion in estimated revenue that is available under contract for fiscal 2020. This represents approximately 88% to 93% of our consolidated net revenue guidance range, consistent with prior years and assumes the continuation of historical GPO retention and SaaS institutional renewal rates.

So with these key assumptions in mind, our specific fiscal 2020 full year guidance ranges are as follows: Supply Chain Services segment revenue of $872 million to $907 million, representing growth of 2% to 6%; Performance Services segment revenue of $359 million to $373 million, representing growth of negative 1% to positive 3%. Together, these produced consolidated net revenue of $1.231 billion to $1.28 billion, representing growth of 1% to 5% over the prior year.

We expect non-GAAP adjusted EBITDA to be in a range of $566 million to $589 million, reflecting a 1% to 5% increase for the year, and non-GAAP adjusted fully distributed earnings per share is estimated at $2.76 to $2.89, representing an increase of 4% to 9% over prior year results.

Our per share guidance does not reflect the impact of our previously authorized fiscal 2020 $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.

Given we had completed our $250 million share repurchase program in March 2019, we did not repurchase any shares in the fiscal fourth quarter, and we’ll provide updates regarding our share repurchase activities, if any, on a quarterly basis.

Our fiscal 2020 guidance is also based on additional assumptions and expectations as follows: Overall, we expect non-GAAP free cash flow will approximate 55% to 65% of non-GAAP adjusted EBITDA for the full fiscal year. In Supply Chain Services, our revenue guidance anticipates 1% to 5% net

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administrative fees revenue growth. Mid-range revenue growth assumes continuation of the generally flat patient utilization environment. Growth is expected to be achieved by further penetration of existing member spend, addition of new contracts and growth from new member conversions and ramp-up consistent with historical trends.

Our Supply Chain Services revenue guidance also anticipates 5% to 9% year-over-year growth in our products business. Mid-range for products revenue assumes continued steady member use of our product portfolio, stable product pricing that is not significantly impacted by potential tariffs and the continuation of our periodic aggregated purchasing programs.

In the Performance Services segment, mid-range guidance assumes continuation of our historically high SaaS institutional renewal rates and does incorporate the continuing challenge of hesitant demand in some areas.

Lastly, Performance Services revenue guidance also factors in uncertainty associated with the extension of our hospital improvement innovation network contract with CMS, which generated $14.4 million in fiscal 2019 revenue.

Our 3-year contract expired on June 27, and month-to-month funding has continued in July and August at a reduced level. However, the further continuation of this program is uncertain at this time. Accordingly, our fiscal 2020 guidance range anticipates a partial year contribution from the potential continuation of this program through March 2020, approximating 45% of the revenue contribution we experienced in fiscal 2019, impacting fiscal 2020 Performance Services revenue growth by over 2%.

Looking at the cadence of revenue flow for the year, we currently expect to generate approximately 48% of consolidated revenue in the first half of the year. From a segment perspective, we expect Supply Chain Services to generate approximately 49% and Performance Services to generate approximately 45% of their segment revenue in the first half of the year, respectively.

Looking at profitability. Approximately 48% of consolidated non-GAAP adjusted EBITDA is expected to be generated in the first half of the fiscal year. While Supply Chain Services adjusted EBITDA is relatively consistent across the first and second half of the fiscal year, Performance Services EBITDA is more heavily weighted in the second half of the year as planned revenue growth occurs from the investments in clinical decision support, the high-value network and incremental technology and consulting sales from the recruitment of additional sales professionals.

As a result, we anticipate Performance Services segment revenue to reflect negative year-over-year growth in the first and second quarters, with consolidated non-GAAP adjusted EBITDA showing negative year-over-year growth in the first quarter due to the factors previously discussed.

Our guidance contemplates capital expenditures, primarily capitalized internally developed software and other purchased capital, of approximately $95 million to $100 million for the year, representing 7% to 8% of projected consolidated net revenue. It also anticipates a consolidated non-GAAP adjusted EBITDA margin in the range of 43% to 47% of consolidated net revenue. And our non-GAAP adjusted fully distributed net income calculation will reflect an effective tax rate of 26%.

Finally, I would like to provide a brief update on our ongoing quarterly exchange process. On July 31, approximately 1.3 million Class B units were exchanged on a one-for-one basis for shares of Class A common stock. As a result, holders of our Class A common stock now hold more than 50% of the voting

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power for the election of directors, which means Premier no longer qualifies for the controlled company exemption as defined by NASDAQ.

Our company has been anticipating this change, and we expect to comply with all related NASDAQ guidelines in a timely manner, including having a majority of independent directors on our Nominating and Governance and Compensation Committees by the end of October and majority of independent directors on our Board within 1 year. Our Audit and Compliance Committee has always been fully independent. Our next quarterly exchange occurs on October 31.

Thank you for your time today. Now let me turn the call back over to Susan.

Susan Dodson DeVore - Premier, Inc. - CEO & Director

Thanks, Craig. I want to conclude our prepared remarks by reiterating that we believe Premier continues to be well positioned for long-term success. We remain a leader in our markets, generating growth across multiple revenue drivers, operating with a flexible, no-debt balance sheet and generating strong free cash flow.

As we pursue our growth strategies, we will continue to rigorously manage expenses, and we remain confident in our ability to further improve financial performance and drive growth and value creation.

Operator, could you please open the call for questions?

Q U E S T I O N S A N D A N S W E R S

Operator

(Operator Instructions) Our first question comes from Steven Valiquette of Barclays.

Steven James Valiquette - Barclays Bank PLC, Research Division - Research Analyst

So just in the Performance Services, you mentioned the lower demand for some of those larger consulting engagements. And just drilling a little bit deeper on that, I guess, I’m curious are you seeing any cancellation of contracts? Or is it more of the challenges related to getting customers to

pull the trigger on new contracts? And also, I’m just curious if there is any color on just rough ballpark what percent of your overall PS segment is comprised of these types of contracts?

Susan Dodson DeVore - Premier, Inc. - CEO & Director

So I’ll start and then Craig you can answer the second half of the question. From our perspective, what we are seeing is not any discontinuation of those consulting contracts. We have had a number of very large consulting engagements associated with several of the GPO pursuits that we’ve had over the last year or 2. We are in a more normal environment now around GPO recruiting, and so we just have slower growth in some of those large-scale consulting engagements. Craig, maybe you can answer the second half.

Craig Steven McKasson - Premier, Inc. - CFO, CAO, Senior VP & Treasurer

Sure. At a broad level, I would indicate that the cost management consulting arm of our Performance Services segment is typically in the range of — approximately probably 8% to 10% of our total Performance Services revenue.

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Operator

And our next question comes from Ryan Daniels of William Blair.

Ryan Scott Daniels - William Blair & Company L.L.C., Research Division - Partner and Healthcare Analyst

Maybe a follow-up on that. It was somewhat surprising to hear that in Performance Services, the cost management and quality and safety would be areas of focus or uncertainty. It seems like those would be kind of future-proof regardless of who’s in the office and if you’re moving to value-based care, the need to improve margins and cut costs, in particular, seems prescient. So curious what might be driving that weakness?

Susan Dodson DeVore - Premier, Inc. - CEO & Director

Yes. Ryan, I spend a lot of time and Mike and Craig do too out with our provider member customers. And what I would say is all this back-and-forth of regulatory programs and at the same time fee-for-service getting a 3% increase in the market basket payment rate has made sort of staying in fee-for-service a little bit easier in the short term because a lot of the programs, even though the providers know that long term, they’re going to need to assume more risk, they’re going to have to manage cost even more intensely, it’s just lengthening the decision-making and slowing the urgency and momentum around it. So we continue to invest strategically for the long term. We continue to pivot some of our assets to additional markets, but it’s just an urgency and momentum and decision-making thing in the provider segment right now.

Ryan Scott Daniels - William Blair & Company L.L.C., Research Division - Partner and Healthcare Analyst

Okay. That’s helpful color. And then, I don’t know if this will ever come to fruition, but I’m curious what your thoughts are on the Prescription Drug Pricing Reduction Act and the potential impact of Section 109 and how they define bona fide service fees and what impact that could have on the GPO, if anything?

Susan Dodson DeVore - Premier, Inc. - CEO & Director

Yes. So 2 different questions. We’ve seen a lot of regulatory proposals and programs, including that international pricing index kind of get rolled out, pulled back, rolled out again in a different form. And so we think that one is really hard to accomplish, politically. We do think the pressure on pharma pricing, which we have always supported pressure on pharma pricing because our goal is to lower the cost of pharmaceuticals for health care systems, but we think that particular proposal is going to be very challenging to get moved forward politically.

On the bona fide fee question, I think, we have a very active advocacy group in Washington. We’re very active in differentiating the GPO from PBMs and other things that they are trying to work on. And so for us, we’re working very hard to make sure everybody understands the difference between the GPO and the PBMs and others, and we are not anticipating the effect of that bona fide service fee impact on Premier.

Operator

And our next question comes from Lisa Gill of JPMorgan.

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Lisa Christine Gill - JP Morgan Chase & Co, Research Division - Senior Publishing Analyst

First, I just wanted to start with Mike’s comment around hiring additional sales people and some incremental sales opportunities. Were you talking around the GPO side of the business? Or are you talking about Performance Services or both of them? And then secondly, as we think about the GPO business, are you seeing anything that’s changing either competitively or structurally in the business today?

Michael J. Alkire - Premier, Inc. - President & COO

So Lisa, this is Mike. Just very quickly. So in general, we’re hiring more commercial assets across the entire business. So we are hiring additional folks to actually recruit new GPO members. But from a sales perspective, I think a majority of the investments we want to make are in these new areas of going after life sciences as well as in the high-value networks. So that’s where we’re making the big investments, that’s where we’re seeing obviously the bigger growth. So we’re going to continue to make the investments in the commercial space for those 2 parts of the organization.

Susan Dodson DeVore - Premier, Inc. - CEO & Director

From a GPO perspective, we don’t see structural changes in the way the GPOs are operating. We have had great success over the last 2 years and significant recruitment of academic health systems. We feel like the market is a more normalized market now for GPO pursuits. We did launch our high-compliance portfolio, which generates double-digit savings to health care systems, started that over a year ago. We will continue that launching several new contracts in that portfolio this year.

And so we continue with a pilot for our end-to-end supply chain management. And I guess, I would just describe it as our health systems really looking for deeper and end-to-end supply chain support. It’s a competitive market. It continues to be a competitive market, but we’re taking sort of that total supply chain value proposition to the customer base.

Lisa Christine Gill - JP Morgan Chase & Co, Research Division - Senior Publishing Analyst

And Susan, would you say that’s really where you differentiated? I mean, clearly, your ownership structure is something that differentiates you from some of the other players in the marketplace. But outside of that, would you say that’s really like your competitive advantage today in the market?

Susan Dodson DeVore - Premier, Inc. - CEO & Director

I think there are 2 big competitive advantages. One is that member retention renewal attachment long-term relationship, that Mike talked about, surrounding the end-to-end capabilities in Supply Chain and Performance Services. I think that’s one. I think the second one really is all of those data assets in Performance Services. When you’ve got data on 45% of the patients and you can connect that back to supply chain, connect that back to total cost improvement and use it to get ready for value-based care, those are the distinct advantages. We are having to deal with this CMS innovation project revenue stream that’s being reduced or it’s even uncertain in total, but I think that the overall relationship with members and all of the capabilities that we can bring long term, we think will continue to be a differentiator.

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Michael J. Alkire - Premier, Inc. - President & COO

Susan, if I could add just a couple of things on the technology. So Lisa, to answer your question, I think what differentiates us is we’ve been making a lot of investments in technology really to sort of control the point of order. So that is very, very unique to Premier. We’ve been making investments also to get all the spend under management. So think of all the purchase services and spend that we traditionally don’t really work on today. We’re making big investments - that’s very, very unique to us in terms of our capabilities. So we want to continue to differentiate along the lines of technology. And then secondly, I would also say our contract manufacturing or our direct sourcing capability is very unique to us as well, where we’re actually contract manufacturing products across the globe really to bring the best value back to our health care systems in the U.S.

Operator

And our next question comes from Michael Cherny with Bank of America Merrill Lynch.

Michael Aaron Cherny - BofA Merrill Lynch, Research Division - Director

Thinking about Performance Services again, you talked about some of the government programs that have run out. Is there any way to parse out what that revenue impact is in the outlook for next year versus what the underlying growth rate for Performance Services should be and could become over time?

Craig Steven McKasson - Premier, Inc. - CFO, CAO, Senior VP & Treasurer

Yes. I think, Michael, specifically, as I articulated in my comments, the government contract revenue was $14.4 million in fiscal 2019. There’s been nominal revenue through July and August. We have factored in an assumption that the continuation of that program will continue through March and that we will have approximately $6.5 million or so, which is about 45% of that $14.4 million in fiscal 2020. So that is a 2% headwind to the growth rate for Performance Services. Overall, the government services program was about 4% of our overall Performance Services revenue stream.

Michael Aaron Cherny - BofA Merrill Lynch, Research Division - Director

And then just turning back to the cash flow, very strong finish to the year. As you go forward, I know you don’t have any buyback built into the assumptions, I know you’ve talked about some M&A, is there anything more sizable that you think would make sense as part of the organization, whether it was helping to accelerate the value proposition of Performance Services? Are there any big GPOs that would make sense to drive scale for scale sake or, at this point, $60-plus billion of spend is more than enough to get you what you need?

Susan Dodson DeVore - Premier, Inc. - CEO & Director

No. I think we’re always looking for growth opportunity. So because we have such a wonderful balance sheet, we are continuing to look for anywhere that we can find revenue growth and synergies that make sense long term strategically. We’re going to be disciplined about that activity. I think that we continue with the current and additional sales people to be focused on GPO sales, Performance Services, technology sales, and we continue to look at potential acquisitions in both Supply Chain and Performance Services.

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Operator

And our next question comes from Jamie Stockton of Wells Fargo.

James John Stockton - Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Research Analyst

I guess, it sounds like there’s some headwind on the consulting business and you’ve talked about the CMS contract that’s creating a little bit of headwind as well. As far as, I guess, big regulatory issues that clients are focused on right now or things that are overhangs kind of other than the election that people are really focused on that you’re helping them work through, are there 1 or 2 big issues that it seems like your clients are focused on? And I guess maybe how are you helping them work through those issues? If you could just talk about that, that would be great.

Susan Dodson DeVore - Premier, Inc. - CEO & Director

Yes. So I think, Jamie, long term they are focused on eventually this movement to value-based care. What’s interesting is that a lot of the private payers follow what Medicare and Medicaid are doing. So if Medicare is slower in implementing some of those programs, the private payers are also slower in implementing some of those programs. We fully expect, when the pressure on Medicare and Medicaid continues from an overall cost perspective, that movement to accelerate long term. And so our health systems actually are continuing to participate and we’re growing our Bundled Payment Collaborative. They’re continuing to participate in our ACO collaborative. We’ve spoken before about MIPS and the new payment models for physicians being less aggressive than they have been in the past, and so we are seeing some softness in that space, which we have seen for the last year or 2 actually.

So I think it’s really what I said before, which is a question of urgency and momentum, not a belief that long term they’re not going to have to reduce cost, improve quality, take risk and have the infrastructure to support all that, which is what they will look to us for.

James John Stockton - Wells Fargo Securities, LLC, Research Division - Director & Senior Equity Research Analyst

Okay. That’s great. And then from an investment standpoint and maybe you gave a number and I just missed it, but as we think about the employer focus and some of the stuff that you guys are still doing on the prior authorization front or the sales force investments that Mike mentioned, is there a number that we should think about as kind of what you’re spending on incremental investments in 2020 versus 2019?

Craig Steven McKasson - Premier, Inc. - CFO, CAO, Senior VP & Treasurer

Sure. Jamie, this is Craig. So as I indicated in my remarks, we invested about $7 million in 2019 and for those initiatives, primarily the high-value network, the employer initiative and the continued integration of our clinical decision support activities, we anticipate we’ll incur about $12 million of operating expense and that’s factored into the guidance ranges that we’ve provided.

Operator

And our next question comes from Mohan Naidu of Oppenheimer.

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Mohan A. Naidu - Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst

Maybe a couple of questions on the performance segment, again. I guess on the high-value care network, can you elaborate on what you expect in the next couple of years? And if you compare high-value care network with this CDS and applied science research, which one of these segments should we anticipate to see more traction in the near term versus long term?

Michael J. Alkire - Premier, Inc. - President & COO

Yes. So this is Mike. So in the near term, we expect to see much more traction in life sciences. Obviously, we’ve been in that market for a number of years, and it’s really the evolution of what we’re offering into that market. So in the past, we’ve been offering retrospective kind of data slices and those kinds of things. And in the future, it’s going to be — it’s much more about real world evidence, it’s much more about predictive capabilities and the ability to support really the life sciences organizations as they’re thinking about launching new therapies.

I think what’s different today that we can offer versus in the past is really what we got through the acquisition with Stanson Health, which is our ability to sort of take protocols and actually embed them into the workflow, which is very, very unique for us. And so we do think that that’s a pretty substantial differentiation. It also will support the whole focus on drug trials. So we think that leveraging that technology, again, is very differential that — for us that life sciences might see some value in.

From a high-value network standpoint, obviously, we’re relatively new to this whole market. I think the initial opportunities really are going to be getting our health care systems prepared from a data analytics and an advisory services standpoint. So that’s where we think we’re going to see some initial revenue growth. Maybe longer terms, we see some opportunities from a PMPM standpoint, really supporting the benefit management of our large employers. So that’s the focus both short and long term.

Mohan A. Naidu - Oppenheimer & Co. Inc., Research Division - MD and Senior Analyst

One more quick follow-up, Craig. On the changes in the controlled company exemption, I guess, are the changes expected predominantly at the Board composition level? Or do you need to make any operational or other changes because of this?

Craig Steven McKasson - Premier, Inc. - CFO, CAO, Senior VP & Treasurer

No. Yes, thanks, Mohan. This is Craig. It’s more governance, so we will just — and have been planning for the recruitment of a couple of additional independent directors over time in order to get to a majority independent Board within the 1-year time frame.

Operator

And our next question comes from Sandy Draper of SunTrust.

Alexander Yearley Draper - SunTrust Robinson Humphrey, Inc., Research Division - MD of Equity Research

A lot of my questions have been asked and answered. But maybe just more broadly when I think about the segment Performance Services, you guys did somewhat of a portfolio evaluation on Supply Chain,

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decided to get out of a segment there, have you guys done the same thing on Performance Services? Are there any areas that you see are underperforming and, at some point, you’re like what’s down the road, this just doesn’t really fit for us, and we may need to exit. Are you willing to look at that? Then I guess the other question is, it sounds like most of this is not competitive, but I just wonder, are there any weak times where you say — or you see in the sales cycle that because you’re not one of the big EHR vendors that you may have a good product, but people want to get everything from somewhere like there? I’m just trying to understand is that a factor here? Or is it really just the consulting business, the choppy market? How much is competition a factor in the growth?

Susan Dodson DeVore - Premier, Inc. - CEO & Director

Two questions there. On the first question, we are always open to and evaluating the performance of all of our businesses, and we spoke about rightsizing as — because we’re a diversified business, as the market changes and some things are hotter some years than others, we flex the business. And we’ll always look at how they’re performing, and we did make the decision to exit specialty pharmacy. So I think you’ll continue to see us be disciplined about what we acquire and disciplined about how we manage the business going forward with an openness to any decisions that we need to make.

On the second question around EHRs and the competitive market, it’s interesting, I think, EHRs have been primarily workflow companies for health systems, and our stuff just on top of all the EHRs is EHR agnostic and really gives them the business intelligence they need and the learning and opportunities for improvement that they need. And what we’ve been doing with the acquisition of Stanson is embedding those analytics into the workflow.

And I think when you’re able to do that and you have not only the data from the health system from a workflow perspective but you have all of this data on health systems across the country and you can embed that in the workflow and help providers make decisions, that’s where we think our differentiation is. So we do see EHR vendors making investments, and it is a competitive market for HCIT and for services, but we think we’re differentiated in the depth and breadth of our analytics that sit on top of all those EHRs.

Michael J. Alkire - Premier, Inc. - President & COO

And Susan, if I can add one thing, I think we’ve got a long history of actually working with our health care systems to implement those changes. So the wraparound capabilities that we offer on top of those analytics are very, very unique to us as well and do differentiate us from the EHRs.

Operator

And our next question comes from Dolph Warburton of Nephron Research.

Dolph B. Warburton - Nephron Research LLC - Research Analyst

You mentioned some near-term regulatory uncertainty. However, over the long term, with the changes to the risk-sharing arrangements and the CMS ACOs, are you hearing any early signs from your customers as to whether or not they will continue in a 2-sided risk arrangement? And if so, how that would impact your engagements with these customers? And I have one follow-up.

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Susan Dodson DeVore - Premier, Inc. - CEO & Director

Yes, thanks, Dolph. Obviously, our providers taking 2-sided risk requires more infrastructure and it’s harder. We have seen maintenance and growth in our ACO collaborative, which includes folks who are moving down that path. And so what I would say is that it’s — we are retaining the customers we have there. We’re growing it some. It’s not growing at the rate that it was growing 2 or 3 years ago because I think it’s a bigger level of risk and because there’s more uncertainty in the political environment.

But we continue to see value-based care, double-sided risk, both public and private payers as being the ultimate model for the future, and we continue to make lots of operating and strategic investments in that infrastructure because we believe that’s the long-term future.

Dolph B. Warburton - Nephron Research LLC - Research Analyst

Okay. Great. And just quick housekeeping. Did you go over the cadence of investment throughout the year? And is there any way to qualitatively range kind of the segment EBITDA margins that we should be expecting for fiscal ’20?

Craig Steven McKasson - Premier, Inc. - CFO, CAO, Senior VP & Treasurer

Yes, this is Craig. So relative to the $12 million in incremental operating investments that we have factored into our guidance, that’s relatively consistent throughout the year, so I wouldn’t say there’s a tremendous ramp up or ramp down of that throughout the year, although probably a little bit more heavily weighted in the front half of the year because we’ll begin to get some of the revenue contributions that I highlighted in the back half of the year, which will offset some of the ongoing investment there.

Relative to EBITDA — segment EBITDA, I did talk about the proportion of the EBITDA throughout the year. If you’re asking about from an EBITDA margins perspective, we’d expect fairly consistent Supply Chain Services EBITDA margins in fiscal ’20, although with the slightly higher growth in our — growth rate in our direct sourcing business, we’re always going to have a little bit of a downward trajectory as time goes on relative to that. So if you think overall in the mid-60s — low to mid-60s EBITDA margin for Supply Chain, it will probably tip down a point as the year progresses.

From a Performance Services standpoint, I think the expectation would be we would continue to have EBITDA margins in the mid-30s, where we’ve been operating likely a little bit lower in the front half of the year given some of the lower revenue that we talked about and then you’ll see some of that improvement in the back half of the fiscal year.

Operator

And our next question comes from Stephanie Demko of Citi.

Yueli Zhang - Citigroup Inc, Research Division - Healthcare IT Senior Associate

This is Joy Zhang on for Stephanie. Could you provide some color on the early traction you’re seeing for Stanson Health and if there are any trends in the pipeline to call out?

Michael J. Alkire - Premier, Inc. - President & COO

Yes. I think the early traction really is, as Susan and I have both been mentioning, it’s really all about taking those analytics and embedding them into the workflow. So we’ve been working with a number of

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health care systems that have actually been leveraging our enterprise analytics service. And then working with them and for the most part it’s service line by service line, but really taking those analytics and the insights that our analytics are driving and then writing it — that information into the workflow. And so that’s really sort of the recipe in terms of how we’re doing that in the market.

Craig Steven McKasson - Premier, Inc. - CFO, CAO, Senior VP & Treasurer

And I think — this is Craig. Financially, the only thing I would add is that in fiscal ’19, it was — we were making an investment in that business. We had a couple of million dollars of revenue post acquisition. We are expecting significant growth in revenues in fiscal ’20 and, as indicated, do expect it to be modestly accretive financially in fiscal 2020.

Michael J. Alkire - Premier, Inc. - President & COO

Yes. And one other area that we’re focused on and that is the whole regulation around PAMA. So putting all those requirements into the workflow, that is another area of focus for us.

Yueli Zhang - Citigroup Inc, Research Division - Healthcare IT Senior Associate

Got it. That’s helpful. And you mentioned it in your opening remarks, but can you just provide more color on the Magellan Health collaboration?

Michael J. Alkire - Premier, Inc. - President & COO

So Magellan Health, we’re working with them on building out capabilities around prior authorization. So they have a lot of interest, obviously, of taking all the insights and the data and the capabilities that we’ve been building out and using it within their prior auth capability. And it’s primarily focused towards utilization management. So they are thinking about, obviously, what’s the most efficient way to actually provide care to a patient and they really love our ability to sort of help them work through the appropriate utilization of procedures within the clinical setting.

Susan Dodson DeVore - Premier, Inc. - CEO & Director

And this is our way into payers and employers and connecting providers to payers and employers. So when we talk about pivoting our assets to new markets, Stanson is definitely one of the ways that we’re going to do that.

Operator

And our next question comes from Richard Close of Canaccord Genuity.

Richard Collamer Close - Canaccord Genuity Corp., Research Division - MD & Senior Analyst

So just a follow-up on the Magellan. And Mike, I think you said this earlier in terms of some of the newer opportunities maybe per member per month. On Magellan, is that a pilot? Or will you just be — will you be getting any revenue from that? Just thoughts in and around that. And then, Susan, maybe on some of the high-value networks and opportunities there, what are you thinking in terms of the total addressable market opportunity on that side?

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Michael J. Alkire - Premier, Inc. - President & COO

So just really quickly, the Magellan, just to answer your question, is a pilot. So we’re just — we’re trying to help them with sort of utilization protocols, early, early stages. So we’re sort of working through the issues from a utilization standpoint. We are working with another large payer as well in prior authorization, doing some very, very similar stuff. But, again, these are all just in the pilot phase.

Susan Dodson DeVore - Premier, Inc. - CEO & Director

Yes. And as it relates to the high-value network, we are a new entrant into that market. We’re really trying to carve our piece, which is what Mike said earlier, and that’s how to help providers make sure they can be included in these centers of excellence and they can have the right cost profile and the right clinical outcomes. And so for us, we think this is a $3 billion or $4 billion addressable market for the piece of it that we think we can garner some revenue flow in. So we’re starting with prior authorization, we’re starting with centers of excellence concepts, we’re starting with how do we mobilize our footprint of providers to do some work directly with employers. It will also likely take the form of pilots in the short term with employers and then it will grow from there.

Operator

And our next question comes from Kevin Caliendo of UBS.

Kevin Caliendo - UBS Investment Bank, Research Division - Equity Research Analyst of Healthcare IT and Distribution

I always appreciate the amount of detail around the guidance, but I’d like to dig a little bit on that and ask

you to talk about which is — if you were to break down the segments in understanding sort of where — how you get to the midpoint of your guidance, but where do you think there is the most delta in any of the 4 business lines that you kind of provide an outlook for — upside, downside, what might drive that, and which one has the highest delta, which one do you think has the least amount of variability in it?

Craig Steven McKasson - Premier, Inc. - CFO, CAO, Senior VP & Treasurer

Sure, Kevin, this is Craig. Thanks for the question. What I would say is just — I’ll answer the delta kind of magnitude in a second. If you think about the lower and upper ends, what I would say is, I talked about the midpoint, the upper end of guidance, clearly, patient utilization trends impact our GPO. So to the extent that we were to see improved utilization over the slightly flat to declining inpatient and outpatient that we’ve kind of consistently been seeing and the improvement in nonacute that we’ve been seeing, that would help us be on the upper end, or if utilization were to significantly decline, which we don’t anticipate, that could push us to the lower end.

In the direct sourcing part of our business, it’s really kind of the steady demand we have. So if we see increased uptake from members for some of our commodity products, that could push us to the higher end. And the only variable, I would say, is the demand and the timing of some of those aggregated purchasing programs that we do can influence direct sourcing.

On the Performance Services side, probably the biggest volatility thing is the HIIN (CMS Hospital Improvement Innovation Network contract) extension because to the extent that, that does not get provided, that is a 2% headwind within that guidance range that we would need to make up. So that could

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push us to the lower end. And then obviously, the ongoing uncertain market and demand will dictate other opportunities and expansion into life sciences and the employer network and our ability to bring on a couple of employers in fiscal ’20. So with all of that background, I would answer, and I don’t think it would surprise you that I think the higher risk in terms of delta is on the Performance Services side of the business versus the Supply Chain Services side of our business.

Kevin Caliendo - UBS Investment Bank, Research Division - Equity Research Analyst of Healthcare IT and Distribution

That’s very helpful. Can you talk a little bit about the commodity products? Are you seeing increased

competition there from the wholesalers and distributors who all seem to be pushing to get more, higher percentage of their volume to be sort of white label or private label products?

Michael J. Alkire - Premier, Inc. - President & COO

Yes, it’s an interesting question. So we’ve obviously had pressure from the distributors since the inception of the program. Our focus is continuing to scale our program, figuring out who are the right partners to continue to vertically integrate with and continue to drive down the costs. So in some cases, we will partner with them where it makes sense, and in some cases, we’ll continue our strategy to contract manufacture of products.

Operator

And our next question comes from John Ransom of Raymond James.

John Wilson Ransom - Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Healthcare Research

Deep in the queue, it’s really hard to be clever, but let me — well, it’s hard for me anyway. Let me just step back. I’m just trying to reconcile mixed messages we hear kind of through the channel. So increasingly, when you talk to providers, they have soured on — at least the ones we’ve talked to, and this is overwhelmingly for profits, so you have a different slice of the world. But the 2 reasons I think they’ve soured on risk-taking: number one, these government programs take forever to get — let’s look at the dialysis industry, with ESCO and Fresenius had a bad experience with that, the pioneer ACOs. One thing is these government programs takes forever to get the data, and it’s hard to sustain a growing profit stream when the expectations on savings get ratcheted up every year. And like I said, the data is murky. So the government programs haven’t really worked out, I don’t think. And then not to mention what you talked about the pause in some of the orthopedic risk-sharing and whatnot.

And then with the commercial side, I’ve heard this expression, the capitation trap, okay, I’ve saved a $1 this year; next year, I’m going to save $1.20; next year, I’m going to save $1.40. And eventually, I guess, it’s a heck a lot easier to sustain some type of growth on a simple fee-for-service model; volume up, one; revenue up, two, than it is to try to squeeze out more savings to ever ratcheting demands of payers and regulators. So is that — could — is it possible 3 to 5 years from now you’re saying, “Gosh, we made a wrong bet on risk-sharing that it just really wasn’t a good set up for the providers and the world didn’t move like we thought it would? Or are we missing something there?

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Susan Dodson DeVore - Premier, Inc. - CEO & Director

I think it’s about time horizons, right? And I think that if you think about 10,000, 11,000 people joining Medicare every day and the Medicaid role has expanded and you think about the challenges of the overall cost of care with all of the new treatments, new drugs, it is going to continue to be a global, when I mean global, U.S. global budget problem for Medicare and Medicaid.

And so I think that 1 of 2 things is going to happen: either there are going to be fee-for-service cuts to death or there are going to be shifts to risk-based models where people truly figure out how to more efficiently deliver the care and get to better outcomes.

What we’re positioning the company for is the infrastructure to deal with a cost-pressured environment in the short term and some kind of payment model in the long term that actually leads to more efficient delivery of care. And the problem with fee-for-service is it doesn’t deliver more efficient and quality of care. And so we’re not saying that all eggs are in a basket of risk-based agreements, what we’re saying is it’s going to be cost-focused, outcomes-focused, efficiency-focused, and some form of various payment models to try to get there. And we think that when the economy is good and fee-for-service payments are going up, it’s easier to not do anything or to enjoy that time. But we strategically as a company continue to prepare for what we think the future is. But none of us have a crystal ball over exactly how long it’s going to take and the timing. Part of the reason that we’re focused on employers is we think employers are increasingly frustrated with the inability to control that cost. And they are seeking new ways to try to control that cost.

John Wilson Ransom - Raymond James & Associates, Inc., Research Division - MD of Equity Research & Director of Healthcare Research

And so do you think — let’s take a foreseeable time horizon, do you think the model evolves vertically or horizontally? What I mean by that is global capitation-type agreements where hospital systems service many insurance companies and just all you can eat care for $600 a member a month? Or do you think it’s going to be more vertical, let’s bundle this total joint for $22,000.57 and you carve out specific procedures and it goes that way?

Susan Dodson DeVore - Premier, Inc. - CEO & Director

I think you’re going to see both. I actually think that you’re going to end up seeing these broad-based risk overlay population health models, and within those models, you’re going to see bundled payment models or DRG-specific models or dialysis-specific models, oncology-specific models. And so I mean, the challenge we all have is that we’re going to live in a messy world of multiple payment models and multiple ways of trying to solve a problem.

I think at the end of the day, we keep saying the ultimate problem to be solved is overall total cost, is too much variation in care delivery, is clinical outcomes that are not as expected, and is access to care for the whole population. And so it’s going to take so many different forms, particularly when you have political administrations moving in and out. And so you’ve got — we just have to stay focused on what the core problem is that we’re trying to solve for the health care industry at large.

Operator

And our next question comes from Charles Rhyee of Cowen.

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Charles Rhyee - Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

Susan, maybe I’ll follow up with that. You’ve mentioned earlier on some of the expectations around some uncertainty as we prepare for election season here. But when you look at programs like the government’s efforts within value-based care, that tended to move forward regardless of the administration in the White House. And it sounds like from your expectation that, that trend regardless will continue to move forward. When you talk to the health plan client — health system clients, what is — is it really more just uncertainty around rhetoric and noise that there’s a little, you don’t want to hit the pause button a little bit? Or is it some view that there could be substantial changes that they don’t want to get in front of?

Susan Dodson DeVore - Premier, Inc. - CEO & Director

Well, I think it’s timing. I think that they know the overall concept is coming, but when the programs are specific and they’re very different, even with different administrations, the actual programs are different. They almost, in a way, I think, want to wait till they know what the program is to implement the infrastructure as opposed to what we’re trying to do in terms of working with them to say, let’s figure out how to build this infrastructure for cost management, quality outcomes and assuming risk, and then whatever form these models take, this infrastructure will work for.

But I think it’s just a question of momentum and timing and the urgency with which they think they need to do it versus the — I talk to all of them all the time, and I think they all think that some form of global model for payment is going to come, it has to because we have to get to a more predictable line item budget for Medicare, Medicaid and health care costs for employers. It’s just really a question of urgency and momentum.

Charles Rhyee - Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

Okay. That’s helpful. And then just to drill down — sorry, going back to Stanson real quick. When you’re talking about the efforts you’re doing with your health system clients to embed sort of the decision support into the workflow, is it right now just traditional sort of clinical decision rules that are being embedded into the workflow of EHR? Or is this where we’re trying to move costing information? Because you’ve kind of talked about line — service lines. Is that — and if that’s the case, which groups of doctors are we — are health systems targeting first? Is it like their orthopedic practices? Or is it their primary care? Any kind of sense in which direction they’re moving first would be helpful.

Susan Dodson DeVore - Premier, Inc. - CEO & Director

Yes. So what I would say is, think about it this way, think about it first being clinical content, meaning, clinical protocols and guidelines and how to make the right decision for all your physicians in the care that they are being delivered. So Stanson has over 400 sort of clinical protocol, clinical decision support use cases. Then from there, think about new regulatory programs like this PAMA thing, which is clinical guidelines for imaging, advanced imaging, and a regulatory requirement that you go through those clinical protocols, so we’re embedding that. Then think about what Mike talked about, which is prior authorization with Magellan, meaning, get to — what are the guidelines that payers have for what they’re going to approve or not approve and let’s get that in the workflow. So all of that is in process right now with Premier.

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Longer term, think about all of our cost benchmarking and all of our supply chain formularies and think about our ability to take those analytics that sit in separate apps today and embed those in the workflow so a doctor can see that he’s using 3 stents when the average is 1.2 or he can see that he’s getting ready to use a product that’s not on formulary. So we have big plans for where we want to take Stanson, but the stuff you describe is already there today.

Charles Rhyee - Cowen and Company, LLC, Research Division - MD & Senior Research Analyst

Okay. And that’s helpful. And then, Craig, maybe one just follow-up. When we talk about the Performance Services back half, it sounds like 55% of revenue is more in the back half we’re going to benefit from the investments we made this year — in the first half of this year. How much of that ramp would you say is more from overall investments bearing fruit versus some of what we talked about the — more meaningful contribution from Stanson?

Craig Steven McKasson - Premier, Inc. - CFO, CAO, Senior VP & Treasurer

Yes. It’s really a balance across really the 3 components I talked about. So we do believe we’ll begin to see contributions from the high-value network. We will see some incremental growth — we will see growth in the front half from Stanson as well, but we’ll see incremental growth in the back half of the year from Stanson. And then with the recruitment of sales professionals that we’ve been doing and we’ll continue to do, as they deliver sales, those will convert to revenue in the back half of the fiscal year.

Operator

And ladies and gentlemen, this does conclude our question-and-answer session. I would now like to turn the call back over to Susan DeVore for closing remarks.

Susan Dodson DeVore - Premier, Inc. - CEO & Director

Thanks, everyone, for your time today. I’m sure we’ll meet and we’ll talk with many of you in the weeks and months ahead. Our next quarterly update is currently scheduled for November 5. Thanks so much, and have a great day.

Operator

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect.

EX-99.3

Fourth-Quarter Fiscal 2019 Financial Results and Update August 20, 2019 Exhibit 99.3

Forward-looking statements and non-GAAP financial measures Forward-looking statements – Statements made in this presentation 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 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 presentation, 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. Non-GAAP financial measures – This presentation and accompanying webcast includes certain “non-GAAP financial measures” as defined in Regulation G under the Securities Exchange Act of 1934. Schedules are attached that reconcile the non-GAAP financial measures included in this presentation to the most directly comparable financial measures calculated and presented in accordance with Generally Accepted Accounting Principles in the United States. You should carefully read Premier’s periodic and current filings with the SEC for definitions and further explanation and disclosure regarding our use of non-GAAP financial measures and such filings should be read in conjunction with this presentation.

Susan DeVore Chief Executive Officer Premier, Inc. Overview and Business Update

*See non-GAAP Adjusted EBITDA, non-GAAP Adjusted Fully Distributed Earnings Per Share and non-GAAP Free Cash Flow reconciliations to GAAP equivalents in Appendix. Cash flow from operations of $511.9 million; non-GAAP free cash flow represented 61% of non-GAAP adjusted EBITDA for fiscal 2019* Non-GAAP adjusted EBITDA of $561.0 million increased 4% and non-GAAP adjusted fully distributed earnings per share of $2.66 increased 16% from a year ago* Completed the asset sale transaction to exit the specialty pharmacy business Maintained strong balance sheet, providing ongoing flexibility to support business strategy and provide shareholder return Completed previously announced $250 million stock repurchase plan and announced authorization for new $300 million stock repurchase plan Consolidated net revenue of $1.22 billion increased 3% from a year ago; GAAP net income of $334.7 million represented net income of $0.27 per fully diluted share *See non-GAAP adjusted EBITDA, non-GAAP adjusted fully distributed earnings per share and non-GAAP free cash flow reconciliations to GAAP equivalents in Appendix. Unless stated otherwise, results reference performance of continuing operations. Fiscal 2019 full-year highlights

Fiscal 2020 outlook: Modest consolidated growth Initial financial guidance ranges reflect anticipated impact of continued political and regulatory uncertainty Experiencing some ongoing challenges in Performance Services segment Uncertainty related to significant reduction or elimination of the CMS Hospital Improvement project that Premier has participated in for the last three years. Supply Chain Services segment expected to continue to deliver steady growth. Premier is focused on expanding our supply chain business and improving the growth of our enterprise analytics and performance improvement capabilities. Fiscal 2020 outlook

Mike Alkire President Premier, Inc. Operations Review

Annual member satisfaction survey showed that we continue to be viewed as strategic partner or extension of their own organization Increased GPO purchasing volume to more than $61 billion Achieved high retention rates again this year with a GPO Retention Rate of 97% and a SaaS Institutional Renewal Rate of 96% Continue to serve more than 4,000 hospitals and health systems and approximately 175,000 other providers and organizations Fiscal 2019 operational highlights

Operational initiatives High- value care network Clinical decision support technology Applied sciences research

Craig McKasson Chief Administrative and Financial Officer Premier, Inc. Financial Review

Adoption of new revenue recognition standard and discontinued operations The company adopted new revenue recognition standard ASC 606 on July 1, 2018 using the modified retrospective approach and did not restate prior periods. Accordingly, the year-over-year comparisons in this presentation compare fiscal 2019 fourth-quarter and full-year results under ASC 606 to fiscal 2018 fourth-quarter and full-year results under the previous revenue recognition standard ASC 605. 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 presentation reflect those of continuing operations.

*See non-GAAP Adjusted EBITDA, non-GAAP Adjusted Fully Distributed Earnings Per Share and non-GAAP Free Cash Flow reconciliations to GAAP equivalents in Appendix. Performance Services (PS) segment revenue of $89.2 million Supply Chain Services (SCS) segment revenue of $227.0 million; net administrative fees revenue of $170.2 million; products revenue of $54.7 million Non-GAAP adjusted EBITDA* of $139.9 million; SCS segment adjusted EBITDA* of $141.9 million; PS segment adjusted EBITDA* of $28.2 million Non-GAAP adjusted fully distributed net income* of $86.3 million Non-GAAP adjusted fully distributed earnings per share* of $0.68 Consolidated net revenue of $316.2 million; GAAP net income of $70.2 million representing a loss of $4.28 per fully diluted share after GAAP required non-cash negative adjustment *See non-GAAP Adjusted EBITDA, non-GAAP Segment Adjusted EBITDA, non-GAAP Adjusted Fully Distributed Net Income, non-GAAP Adjusted Fully Distributed Earnings Per Share reconciliations to GAAP equivalents in Appendix. Fiscal 2019 fourth-quarter financial highlights

Cash flow from operations of $511.9 million and non-GAAP free cash flow* of $342.8 million for fiscal year ended June 30, 2019 Non-GAAP free cash flow approximated 61% of non-GAAP adjusted EBITDA for the fiscal year Cash and cash equivalents of $141.1 million Outstanding borrowings of $25.0 million on $1.0 billion five-year unsecured revolving credit facility; repaid outstanding balance in July 2019 Fiscal 2019 fourth-quarter cash flows and liquidity CONSIDERABLE CASH AND DEBT CAPACITY AVAILABLE AMPLE CAPITAL FLEXIBILITY FOR FUTURE ACQUISITIONS AND STOCKHOLDER RETURN *See non-GAAP free cash flow reconciliation to GAAP equivalent in Appendix.

Fiscal 2020 financial guidance (1) For the year ending June 30, 2020. As of August 20, 2019. See accompanying page for fiscal 2020 notes and assumptions to guidance. Fiscal 2020 Financial Guidance (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%

Guidance Footnotes: * 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 Class B common units 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 units and corresponding Class B common stock 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 class B common units on a quarterly basis, and the company has the discretion to settle any exchanged units for Class A common stock, cash, or a combination thereof, neither of which can be predicted, controlled or reasonably estimated at this time. Fiscal 2020 financial guidance footnotes and key assumptions (for year ending June 30, 2020)* Key Assumptions*: Supply Chain Services assumptions: Net administrative fees revenue growth of 1% to 5% Products revenue growth of 5% to 9% Continued high GPO retention rates Performance Services assumptions: Continued high SaaS institutional renewal rates Continued challenge of hesitant demand in some areas, including quality and safety technology, and cost management and value-based care consulting related to political and regulatory uncertainty Extension of Hospital Improvement Innovation Network contract with CMS at rates approximating 45% of the $14.4 million generated in fiscal 2019 Other assumptions: Estimated revenue available under contract of approximately $1.1 billion, which represents approximately 88% to 93% of our consolidated net revenue guidance range Non-GAAP free cash flow expected to approximate 55% to 65% of non-GAAP adjusted EBITDA Capital expenditures of $95 million to $100 million, representing 7% to 8% of consolidated net revenue Consolidated non-GAAP adjusted EBITDA margin of 43% to 47% Stock-based compensation of $28 million to $32 million Non-GAAP adjusted fully distributed net income and earnings per share calculations to reflect an effective tax rate of 26% Amortization of purchased intangible assets of approximately $50 million Guidance does not contemplate any share repurchases or significant acquisitions *As of August 20, 2019.

Member owner Class B exchange update On July 31, 2019, approximately 1.3 million Class B units were exchanged for Class A common shares on 1-for-1 basis; equal number of Class B common shares retired. As a result, holders of our Class A common stock now hold more than 50 percent of the voting power for the election of directors, which means Premier no longer qualifies for the Controlled Company exemption as defined by NASDAQ. We expect to comply with all related NASDAQ guidelines in a timely manner, including having a majority of independent directors on our Nominating and Governance and Compensation committees by the end of October, and a majority of independent directors on our Board within one year. Our Audit and Compliance Committee has always been fully independent. Next quarterly exchange will occur on October 31, 2019.

Questions

Appendix

Fiscal 2019 and 2018 non-GAAP reconciliations

Fiscal 2019 and 2018 non-GAAP reconciliations

Fiscal 2019 and 2018 non-GAAP reconciliations

Fiscal 2019 and 2018 non-GAAP reconciliations

Fiscal 2019 and 2018 non-GAAP reconciliations

Fiscal 2019 and 2018 non-GAAP reconciliations