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 22, 2023

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, NC28277

(Address of principal executive offices, including 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 (see General Instruction A.2. below):

☐ 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 or to be registered pursuant to Section 12(b) of the Act.

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

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

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 22, 2023, 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, 2023. 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 22, 2023. 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 22, 2023, to discuss the Company’s operating results for the three months and fiscal year ended June 30, 2023. 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 Form 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 22, 2023.
99.2	Transcript of conference call of Premier, Inc., dated August 22, 2023.
99.3	Supplemental slides referenced during the fiscal 2023 fourth-quarter and full-year earnings conference call of Premier, Inc.
104	Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)

SIGNATURES

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, thereunto duly authorized.

	Premier, Inc.
Date: August 23, 2023	By:	/s/ Michael J. Alkire
	Name:	Michael J. Alkire
	Title:	President and Chief Executive Officer

EX-99.1

Exhibit 99.1

Premier, Inc. Reports Fiscal-Year 2023 Fourth-Quarter and Full-Year Results

CHARLOTTE, N.C., August 22, 2023 - Premier, Inc. (NASDAQ: PINC), a leading technology-driven healthcare improvement company, today reported financial results for the fiscal year 2023 fourth quarter and full year ended June 30, 2023.

“I would like to express my gratitude to our employees for their hard work and ongoing commitment as we continue to serve our vital role as a trusted and embedded partner for our healthcare provider members and other customers as they navigate a very challenging market environment,” said Michael J. Alkire, Premier’s President and CEO. “Leveraging our unique vantage point at the intersection of providers, suppliers, employers, government agencies and other stakeholders, we continued to focus on innovating around the capabilities that our members and other customers will need in the future as they deliver high-quality, cost-effective healthcare to the communities they serve.”

“Our Board of Directors and management team continue to make progress related to our ongoing evaluation of potential strategic alternatives and I am pleased to announce that we closed on the sale of our non-healthcare GPO operations,” Alkire continued. “Through this transaction we were able to unlock substantial value for our stockholders by selling a non-core asset and we plan to evaluate the highest return opportunities for deploying the proceeds, including reinvesting in the business, acquisitions that enhance the value of our business and/or the potential to return capital to stockholders.”

Consolidated Financial Highlights

	Three Months Ended June 30,									Year Ended June 30,
(in thousands, except per share data)	2023			2022			% Change			2023			2022			% Change
Net revenue:
Supply Chain Services:
Net administrative fees	$	158,165		$	152,867			3	%	$	611,035		$	601,128			2	%
Software licenses, other services and support		8,298			10,146			(18	%)		44,261			37,312			19	%
Services and software licenses		166,463			163,013			2	%		655,296			638,440			3	%
Products		61,593			69,681			(12	%)		244,659			393,506			(38	%)
Total Supply Chain Services		228,056			232,694			(2	%)		899,955			1,031,946			(13	%)
Performance Services		112,317			108,021			4	%		436,177			400,983			9	%
Total segment net revenue		340,373			340,715			—	%		1,336,132			1,432,929			(7	%)
Eliminations		(9	)		(9	)		—	%		(37	)		(28	)		32	%
Net revenue	$	340,364		$	340,706			—	%	$	1,336,095		$	1,432,901			(7	%)
Net income	$	18,905		$	30,711			(38	%)	$	174,887		$	268,318			(35	%)
Net income attributable to stockholders	$	21,463		$	29,903			(28	%)	$	175,026		$	265,867			(34	%)
Diluted earnings per share attributable to stockholders	$	0.18		$	0.25			(28	%)	$	1.46		$	2.19			(33	%)

1

Consolidated Financial Highlights

	Three Months Ended June 30,									Year Ended June 30,
(in thousands, except per share data)	2023			2022			% Change			2023			2022			% Change
NON-GAAP FINANCIAL MEASURES*:
Adjusted EBITDA:
Supply Chain Services	$	128,203		$	119,269			7	%	$	499,431		$	500,854			—	%
Performance Services		36,272			37,661			(4	%)		123,859			126,938			(2	%)
Total segment adjusted EBITDA		164,475			156,930			5	%		623,290			627,792			(1	%)
Corporate		(31,894	)		(34,155	)		7	%		(123,507	)		(129,110	)		4	%
Total	$	132,581		$	122,775			8	%	$	499,783		$	498,682			—	%
Adjusted net income	$	81,680		$	73,490			11	%	$	299,330		$	302,738			(1	%)
Adjusted earnings per share (EPS)	$	0.68		$	0.61			11	%	$	2.50		$	2.49			—	%

* Refer to the supplemental financial information at the end of this release for reconciliation of reported GAAP results to non-GAAP results.

Results of Operations for the Three Months Ended June 30, 2023

(As compared with the three months ended June 30, 2022)

GAAP net revenue of $340.4 million was flat compared to $340.7 million in the year-ago period. GAAP net revenue was impacted by a decline in direct sourcing products revenue as a result of the impact of excess market supply and members’ and other customers’ inventory levels and the continued normalization of COVID-19 pandemic-driven demand and pricing for personal protective equipment (PPE) and other related supplies partially offset by growth in net administrative fees and Performance Services segment revenue.

GAAP net income of $18.9 million decreased 38% from $30.7 million in the prior-year period primarily due to the increase in impairment of assets as a result of the goodwill impairment in the current year period primarily attributable to Contigo Health. This decrease in net income was partially offset by lower stock-based compensation expense resulting from lower achievement of performance share awards, lower cost of revenue in the company’s direct sourcing business, primarily driven by logistics costs and reduction of inventory reserves, and the impact of the cost-savings plan enacted in the third quarter of fiscal 2023.

GAAP diluted EPS of $0.18 decreased 28% from $0.25 in the same period a year ago due to the aforementioned drivers affecting GAAP net income quarter-over-quarter growth.

Adjusted EBITDA of $132.6 million increased 8% from $122.8 million for the same period a year ago primarily due to an increase in Supply Chain Services adjusted EBITDA and lower corporate expenses partially offset by a decrease in Performance Services adjusted EBITDA. Refer to Supply Chain Services and Performance Services sections below for further discussion on the factors that impacted each segment during the quarter.

Adjusted net income of $81.7 million increased 11% from $73.5 million for the same period a year ago. Adjusted EPS of $0.68 increased 11% from $0.61 for the same period a year ago primarily as a result of the same factors that impacted adjusted EBITDA.

Segment Results

(For the fiscal fourth quarter of 2023 as compared with the fiscal fourth quarter of 2022)

Supply Chain Services

Supply Chain Services segment net revenue of $228.1 million decreased 2% from $232.7 million for the same quarter a year ago, primarily reflecting lower products revenue that was partially offset by higher net administrative fees revenue in the fourth quarter of fiscal 2023, as described below.

2

Net administrative fees revenue of $158.2 million increased 3% from the year ago quarter driven by growth in both Premier’s acute and non-acute, or “Continuum of Care,” group purchasing organization (“GPO”) programs primarily due to recovery of member volumes and further penetration of existing member spend. These increases were partially offset by the following factors: the continued normalization of demand and pricing across certain categories; continued regional variation in patient utilization trends affecting member purchasing; and an increase in aggregate blended member fee share due to market dynamics, including the impact from recent consolidation of certain member health systems.

Products revenue of $61.6 million decreased 12% from $69.7 million in the year-ago period primarily due to continued excess market supply and members’ and other customers’ inventory levels which contributed to lower demand and pricing in the current year period.

Segment adjusted EBITDA of $128.2 million increased 7% from $119.3 million in the same period a year ago primarily due to an increase in net administrative fees revenue and lower logistics costs in the company’s direct sourcing business compared to the prior year period.

Performance Services

Performance Services segment net revenue of $112.3 million increased 4% from $108.0 million for the same quarter a year ago, primarily due to growth in the company’s consulting services and certain of its adjacent markets businesses, including revenue contributions from the company’s acquisition of TRPN Direct Pay, Inc. and Devon Health, Inc. (collectively, “TRPN”) in October 2022.

Segment adjusted EBITDA of $36.3 million decreased 4% from $37.7 million for the same period a year ago mainly due to higher expenses as the company continued to invest in growth and scalability, primarily in the adjacent markets businesses.

Results of Operations for the Year Ended June 30, 2023

(As compared with the year ended June 30, 2022)

GAAP net revenue of $1,336.1 million decreased 7% from $1,432.9 million for the same period a year ago. The decrease was primarily due to a decline in direct sourcing products revenue, which the company expected, as a result of the impact of excess market supply and members’ and other customers’ inventory levels and the continued normalization of pandemic-driven demand and pricing for PPE and other related supplies in fiscal 2023 as compared with the prior year. The decrease was partially offset by increases to Performance Services consulting services revenue and revenue contributions from TRPN.

GAAP net income of $174.9 million decreased 35% from $268.3 million in the same period a year ago primarily due to the following factors:

1. a one-time gain of $64.1 million on the FFF put right in the prior-year period as a result of the termination and corresponding derecognition of the FFF Put Right liability in fiscal year 2022;

2. a $16.5 million increase in income tax expense primarily attributable to the prior year valuation allowance release resulting from the company’s subsidiary reorganization on the fiscal-year 2022 GAAP effective tax rate; and

3. a $37.9 million increase in impairment of assets as a result of a goodwill impairment in the current year period offset by the prior year impairment of certain capitalized software assets as well as certain intangible assets; partially offset by

4. a $32.5 million decrease in stock-based compensation expense as a result of lower achievement of performance share awards.

GAAP diluted EPS of $1.46 decreased 33% from $2.19 in the same period a year ago mainly due to the aforementioned decrease in net income.

3

Adjusted EBITDA of $499.8 million compared to $498.7 million in the same period a year ago.

Adjusted net income of $299.3 million decreased 1% from $302.7 million for the same period a year ago. Adjusted EPS of $2.50 compared to $2.49 for the same period a year ago. The company noted that adjusted net income and adjusted EPS reflect income tax expense at an effective rate of 26% for both fiscal 2023 and 2022.

Supply Chain Services segment net revenue of $900.0 million decreased 13% from $1,031.9 million for the same period a year ago. Segment adjusted EBITDA of $499.4 million compared to $500.9 million for the same period a year ago.

Performance Services segment net revenue of $436.2 million increased 9% from $401.0 million for the same period a year ago. Segment adjusted EBITDA of $123.9 million decreased 2% from $126.9 million for the same period a year ago.

Cash Flows and Liquidity

Net cash provided by operating activities (“operating cash flow”) for the year ended June 30, 2023 of $444.5 million was flat compared with the prior year.

Net cash used in investing activities and net cash used in financing activities for the year ended June 30, 2023, were $273.6 million and $167.3 million, respectively. As of June 30, 2023, cash and cash equivalents were $89.8 million compared with $86.1 million as of June 30, 2022, and the company’s five-year, $1.0 billion revolving credit facility had an outstanding balance of $215.0 million, of which the full outstanding balance was repaid in July and August 2023.

Free cash flow for the year ended June 30, 2023 was $264.4 million compared with $260.8 million for the same period a year ago. The increase was primarily due to a decrease in purchases of property and equipment.

During fiscal 2023, the company paid aggregate dividends of $100.2 million to holders of its Class A common stock.

Fiscal-2024 Guidance

As previously announced and considering its ongoing strategic review, the company will not be providing fiscal-2024 guidance at this time.

Sale of Non-Healthcare GPO Operations

As previously announced, the company entered into an equity purchase agreement with OMNIA Partners, a leading non-healthcare GPO, under which Premier will sell the contracts pursuant to which substantially all of our non-healthcare GPO members participate in our GPO program, for an estimated purchase price of approximately $800.0 million, subject to certain adjustments, including a true-up adjustment to the purchase price to be paid within approximately eight months following the closing date. On July 25, 2023, the transaction closed and the company subsequently received $689.2 million in cash consideration which includes $151.0 million in escrow subject to release upon certain members agreeing to consents.

Conference Call and Webcast

Premier will host a conference call to provide additional detail around the company’s performance and outlook today at 8:00 a.m. ET. The call will be webcast live from the company’s website and, along with the accompanying presentation, will be available at the following link: Premier Events. The webcast should be accessed 10 minutes prior to the conference call start time. A replay of the webcast will be available for one year following the conclusion of the live broadcast and will be accessible on the company’s website at https://investors.premierinc.com.

For those parties who do not have internet access, the conference call may be accessed by calling one of the below telephone numbers and asking to join the Premier, Inc. call:

Domestic participant dial-in number (toll-free):	(833) 953-2438
International participant dial-in number:	(412) 317-5767

4

About Premier, Inc.

Premier, Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of more than 4,350 U.S. hospitals and health systems and approximately 300,000 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.

Premier’s Use and Definition of Non-GAAP Measures

Premier uses EBITDA, adjusted EBITDA, segment adjusted EBITDA, adjusted net income, adjusted earnings per share, and free cash flow 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. Management believes EBITDA, adjusted EBITDA and segment adjusted EBITDA assist the company’s board of directors, management and investors in comparing the company’s operating performance on a consistent basis from period to period by removing the impact of the company’s 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. Adjusted EBITDA and segment adjusted EBITDA are supplemental financial measures 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.

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, payments to certain former limited partners that elected to execute a Unit Exchange and Tax Receivable Agreement (“Unit Exchange Agreement) in connection with our August 2020 restructuring and purchases of property and equipment 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.

Non-recurring items are items to be income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Such items include stock-based compensation, acquisition- and disposition-related expenses, strategic initiative- and financial restructuring-related expenses, remeasurement of TRA liabilities, loss on disposal of long-live assets, gain or loss on FFF put and call rights, income and expense that has been classified as discontinued operations and other expense.

Non-operating items include gains or losses on the disposal of assets and interest and investment income or expense.

EBITDA is defined as net income before income or loss from discontinued operations, net of tax, interest and investment income or expense, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets.

Adjusted EBITDA is defined as EBITDA before merger and acquisition-related expenses and non-recurring, non-cash or non-operating items and including equity in net income of unconsolidated affiliates.

5

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 net income is defined as net income attributable to Premier (i) excluding income or loss from discontinued operations, net, (ii) excluding income tax expense, (iii) excluding the impact of adjustment of redeemable limited partners’ capital to redemption amount, (iv) excluding the effect of non-recurring or non-cash items, including certain strategic initiative- and financial restructuring-related expenses, (v) 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 (vi) reflecting an adjustment for income tax expense on Non-GAAP net income before income taxes at our estimated annual effective income tax rate, adjusted for unusual or infrequent items.

Adjusted earnings per share is Adjusted Net Income divided by diluted weighted average shares.

Free cash flow is defined as net cash provided by operating activities from continuing operations less distributions and Tax Receivable Agreement payments to limited partners, early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 restructuring 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.

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, 2023, filed with the Securities and Exchange Commission (SEC), as may be updated in subsequent filings with the SEC.

Premier’s Use of Forward-Looking Non-GAAP Measures

The company does not meaningfully reconcile guidance for non-GAAP adjusted EBITDA and non-GAAP adjusted earnings per share to net income attributable to stockholders or earnings per share attributable to stockholders because the company cannot provide guidance for the more significant reconciling items between net income attributable to stockholders and adjusted EBITDA and between earnings per share attributable to stockholders and non-GAAP adjusted earnings per share without unreasonable effort. This is due to the fact that future period non-GAAP guidance includes adjustments for items not indicative of our core operations, which may include, without limitation, items included in the supplemental financial information for reconciliation of reported GAAP results to non-GAAP results. Such items include strategic and acquisition related expenses for professional fees; mark to market adjustments for put options and contingent liabilities; gains and losses on stock-based performance shares; adjustments to its income tax provision (such as valuation allowance adjustments and settlements of income tax claims); items related to corporate and facility restructurings; and certain other items the company believes to be non-indicative of its ongoing operations. Such adjustments may be affected by changes in ongoing assumptions, judgements, as well as nonrecurring, unusual or unanticipated charges, expenses or gains/losses or other items that may not directly correlate to the underlying performance of our business operations. The exact amount of these adjustments is not currently determinable but may be significant.

6

Cautionary Note Regarding Forward-Looking Statements

Statements made in this release that are not statements of historical or current facts, including, but not limited to those related to our ability to advance our multi-year growth strategy, the payment of dividends at current levels, or at all, and our expected effective income tax rate, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Premier to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on any forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to Premier’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to 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, 2023, 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.

Investor contact:	Media contact:
Ben Krasinski	Amanda Forster
Senior Director, Investor Relations	Vice President, Public Relations
704.816.5644	202.879.8004
ben_krasinski@premierinc.com	amanda_forster@premierinc.com

7

Consolidated Statements of Income

(In thousands, except per share data)

	Three Months Ended						Year Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net revenue:
Net administrative fees	$	158,165		$	152,867		$	611,035		$	601,128
Software licenses, other services and support		120,606			118,158			480,401			438,267
Services and software licenses		278,771			271,025			1,091,436			1,039,395
Products		61,593			69,681			244,659			393,506
Net revenue		340,364			340,706			1,336,095			1,432,901
Cost of revenue:
Services and software licenses		54,659			47,658			218,087			183,984
Products		53,212			68,962			221,719			363,878
Cost of revenue		107,871			116,620			439,806			547,862
Gross profit		232,493			224,086			896,289			885,039
Operating expenses:
Selling, general and administrative		185,389			158,549			601,554			576,879
Research and development		1,564			1,485			4,540			4,151
Amortization of purchased intangible assets		12,687			11,046			48,102			43,936
Operating expenses		199,640			171,080			654,196			624,966
Operating income		32,853			53,006			242,093			260,073
Equity in net income of unconsolidated affiliates		1,521			6,340			16,068			23,505
Interest expense, net		(2,711	)		(2,677	)		(14,470	)		(11,142	)
Gain on FFF Put and Call Rights		—			—			—			64,110
Other income (expense), net		2,587			(7,470	)		6,307			(9,646	)
Other income (expense), net		1,397			(3,807	)		7,905			66,827
Income before income taxes		34,250			49,199			249,998			326,900
Income tax expense		15,345			18,488			75,111			58,582
Net income		18,905			30,711			174,887			268,318
Net loss (income) attributable to non-controlling interest		2,558			(808	)		139			(2,451	)
Net income attributable to stockholders	$	21,463		$	29,903		$	175,026		$	265,867
Calculation of GAAP Earnings per Share
Numerator for earnings per share:
Net income attributable to stockholders	$	21,463		$	29,903		$	175,026		$	265,867
Denominator for earnings per share:
Basic weighted average shares outstanding		119,064			118,001			118,767			120,220
Effect of dilutive securities:
Stock options		14			150			81			206
Restricted stock		540			544			524			510
Performance share awards		443			1,065			517			732
Diluted weighted average shares and assumed conversions		120,061			119,760			119,889			121,668
Earnings per share attributable to stockholders:
Basic	$	0.18		$	0.25		$	1.47		$	2.21
Diluted	$	0.18		$	0.25		$	1.46		$	2.19

8

Consolidated Balance Sheets

(In thousands, except share data)

	June 30, 2023			June 30, 2022
Assets
Cash and cash equivalents	$	89,793		$	86,143
Accounts receivable (net of $2,878 and $2,043 allowance for credit losses, respectively)		115,295			114,129
Contract assets (net of $885 and $755 allowance for credit losses, respectively)		299,219			260,061
Inventory		76,932			119,652
Prepaid expenses and other current assets		60,387			65,581
Total current assets		641,626			645,566
Property and equipment (net of $662,554 and $578,644 accumulated depreciation, respectively)		212,308			213,379
Intangible assets (net of $265,684 and $217,582 accumulated amortization, respectively)		430,030			356,572
Goodwill		1,012,355			999,913
Deferred income tax assets		653,629			725,032
Deferred compensation plan assets		50,346			47,436
Investments in unconsolidated affiliates		231,826			215,545
Operating lease right-of-use assets		29,252			39,530
Other assets		110,115			114,154
Total assets	$	3,371,487		$	3,357,127
Liabilities and stockholders’ equity
Accounts payable	$	54,375		$	44,631
Accrued expenses		47,113			40,968
Revenue share obligations		262,288			245,395
Accrued compensation and benefits		60,591			93,638
Deferred revenue		24,311			30,463
Current portion of notes payable to former limited partners		99,665			97,806
Line of credit and current portion of long-term debt		216,546			153,053
Other current liabilities		50,574			47,183
Total current liabilities		815,463			753,137
Long-term debt, less current portion		734			2,280
Notes payable to former limited partners, less current portion		101,523			201,188
Deferred compensation plan obligations		50,346			47,436
Deferred consideration, less current portion		—			28,702
Operating lease liabilities, less current portion		21,864			32,960
Other liabilities		47,202			42,574
Total liabilities		1,037,132			1,108,277
Commitments and contingencies
Stockholders’ equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 125,587,858 shares issued and 119,158,483 shares outstanding at June 30, 2023 and 124,481,610 shares issued and 118,052,235 shares outstanding at June 30, 2022		1,256			1,245
Treasury stock, at cost; 6,429,375 shares at both June 30, 2023 and June 30, 2022		(250,129	)		(250,129	)
Additional paid-in capital		2,178,134			2,166,047
Retained earnings		405,102			331,690
Accumulated other comprehensive loss		(8	)		(3	)
Total stockholders’ equity		2,334,355			2,248,850
Total liabilities and stockholders’ equity	$	3,371,487		$	3,357,127

9

Consolidated Statements of Cash Flows

(In thousands)

	Year Ended June 30,
	2023			2022
Operating activities
Net income	$	174,887		$	268,318
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		133,793			129,107
Equity in net income of unconsolidated affiliates		(16,068	)		(23,505	)
Deferred income taxes		71,403			56,792
Stock-based compensation		13,734			46,229
Impairment of assets		56,718			18,829
Gain on FFF Put and Call Rights		—			(64,110	)
Other, net		6,501			5,803
Changes in operating assets and liabilities, net of the effects of acquisitions:
Accounts receivable, inventories, prepaid expenses and other assets		64,253			124,659
Contract assets		(41,088	)		(47,219	)
Accounts payable, accrued expenses, deferred revenue, revenue share obligations and other liabilities		(19,590	)		(70,669	)
Net cash provided by operating activities	$	444,543		$	444,234
Investing activities
Purchases of property and equipment	$	(82,302	)	$	(87,440	)
Acquisition of businesses and equity method investments, net of cash acquired		(187,750	)		(26,000	)
Investment in unconsolidated affiliates		(2,060	)		(16,000	)
Other		(1,510	)		(10,000	)
Net cash used in investing activities	$	(273,622	)	$	(139,440	)
Financing activities
Payments made on notes payable	$	(100,859	)	$	(99,243	)
Proceeds from credit facility		470,000			325,000
Payments on credit facility		(405,000	)		(250,000	)
Cash dividends paid		(100,233	)		(96,455	)
Payments on deferred consideration related to acquisition of business		(27,927	)		(28,586	)
Proceeds from exercise of stock options under equity incentive plan		6,078			37,766
Repurchase of Class A common stock (held as treasury stock)		—			(250,129	)
Other, net		(9,325	)		13,858
Net cash used in financing activities	$	(167,266	)	$	(347,789	)
Effect of exchange rate changes on cash flows		(5	)		(3	)
Net increase (decrease) in cash and cash equivalents		3,650			(42,998	)
Cash and cash equivalents at beginning of year		86,143			129,141
Cash and cash equivalents at end of period	$	89,793		$	86,143

10

Supplemental Financial Information

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

(Unaudited)

(In thousands)

	Year Ended June 30,
	2023			2022
Net cash provided by operating activities	$	444,543		$	444,234
Purchases of property and equipment		(82,302	)		(87,440	)
Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)		(97,806	)		(95,948	)
Free Cash Flow	$	264,435		$	260,846

(a) Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with Premier’s August 2020 restructuring are presented in Condensed Consolidated Statements of Cash Flows under “Payments made on notes payable.” During the year ended June 30, 2023, the company paid $102.7 million to members including imputed interest of $4.9 million which is included in net cash provided by operating activities. During the year ended June 30, 2022, the company paid $102.7 million to members, including imputed interest of $6.7 million which is included in net cash provided by operating activities.

11

Supplemental Financial Information

Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA

Reconciliation of Operating Income to Segment Adjusted EBITDA

Reconciliation of Net Income Attributable to Stockholders to Adjusted Net Income

(Unaudited)

(In thousands)

	Three Months Ended						Year Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net income	$	18,905		$	30,711		$	174,887		$	268,318
Interest expense, net		2,711			2,677			14,470			11,142
Income tax expense		15,345			18,488			75,111			58,582
Depreciation and amortization		20,538			22,297			85,691			85,171
Amortization of purchased intangible assets		12,687			11,046			48,102			43,936
EBITDA		70,186			85,219			398,261			467,149
Stock-based compensation		(2,504	)		8,580			14,355			46,809
Acquisition- and disposition-related expenses		5,559			1,171			17,151			11,453
Strategic initiative and financial restructuring-related expenses		2,843			8,691			13,831			18,005
Impairment of assets		56,718			18,829			56,718			18,829
Gain on FFF Put and Call Rights		—			—			—			(64,110	)
Other reconciling items, net		(221	)		285			(533	)		547
Adjusted EBITDA	$	132,581		$	122,775		$	499,783		$	498,682
Income before income taxes	$	34,250		$	49,199		$	249,998		$	326,900
Equity in net income of unconsolidated affiliates		(1,521	)		(6,340	)		(16,068	)		(23,505	)
Interest expense, net		2,711			2,677			14,470			11,142
Gain on FFF Put and Call Rights		—			—			—			(64,110	)
Other (income) expense, net		(2,587	)		7,470			(6,307	)		9,646
Operating income		32,853			53,006			242,093			260,073
Depreciation and amortization		20,538			22,297			85,691			85,171
Amortization of purchased intangible assets		12,687			11,046			48,102			43,936
Stock-based compensation		(2,504	)		8,580			14,355			46,809
Acquisition- and disposition-related expenses		5,559			1,171			17,151			11,453
Strategic initiative and financial restructuring-related expenses		2,843			8,691			13,831			18,005
Equity in net income of unconsolidated affiliates		1,521			6,340			16,068			23,505
Deferred compensation plan expense (income)		2,274			(7,478	)		5,422			(9,401	)
Impairment of assets		56,718			18,829			56,718			18,829
Other reconciling items, net		92			293			352			302
Adjusted EBITDA	$	132,581		$	122,775		$	499,783		$	498,682
SEGMENT ADJUSTED EBITDA
Supply Chain Services	$	128,203		$	119,269		$	499,431		$	500,854
Performance Services		36,272			37,661			123,859			126,938
Corporate		(31,894	)		(34,155	)		(123,507	)		(129,110	)
Adjusted EBITDA	$	132,581		$	122,775		$	499,783		$	498,682
Net income attributable to stockholders	$	21,463		$	29,903		$	175,026		$	265,867
Net income attributable to non-controlling interest		(2,558	)		808			(139	)		2,451
Income tax expense		15,345			18,488			75,111			58,582
Amortization of purchased intangible assets		12,687			11,046			48,102			43,936
Stock-based compensation		(2,504	)		8,580			14,355			46,809
Acquisition- and disposition-related expenses		5,559			1,171			17,151			11,453
Strategic initiative and financial restructuring-related expenses		2,843			8,691			13,831			18,005
Impairment of assets		56,718			18,829			56,718			18,829
Gain on FFF Put and Call Rights		—			—			—			(64,110	)
Other reconciling items, net		825			1,795			4,345			7,284
Adjusted income before income taxes		110,378			99,311			404,500			409,106
Income tax expense on adjusted income before income taxes		28,698			25,821			105,170			106,368
Adjusted Net Income	$	81,680		$	73,490		$	299,330		$	302,738

12

Supplemental Financial Information

Reconciliation of GAAP EPS to Adjusted EPS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended						Year Ended
	June 30,						June 30,
	2023			2022			2023			2022
Net income attributable to stockholders	$	21,463		$	29,903		$	175,026		$	265,867
Net income attributable to non-controlling interest		(2,558	)		808			(139	)		2,451
Income tax expense		15,345			18,488			75,111			58,582
Amortization of purchased intangible assets		12,687			11,046			48,102			43,936
Stock-based compensation		(2,504	)		8,580			14,355			46,809
Acquisition- and disposition-related expenses		5,559			1,171			17,151			11,453
Strategic initiative and financial restructuring-related expenses		2,843			8,691			13,831			18,005
Impairment of assets		56,718			18,829			56,718			18,829
Gain on FFF Put and Call Rights		—			—			—			(64,110	)
Other reconciling items, net		825			1,795			4,345			7,284
Adjusted income before income taxes		110,378			99,311			404,500			409,106
Income tax expense on adjusted income before income taxes		28,698			25,821			105,170			106,368
Adjusted Net Income	$	81,680		$	73,490		$	299,330		$	302,738
Weighted average:
Common shares used for basic and diluted earnings per share		119,064			118,001			118,767			120,220
Potentially dilutive shares		997			1,759			1,122			1,448
Weighted average shares outstanding - diluted		120,061			119,760			119,889			121,668
Basic earnings per share attributable to stockholders	$	0.18		$	0.25		$	1.47		$	2.21
Net income attributable to non-controlling interest		(0.02	)		0.01			—			0.02
Income tax expense		0.13			0.16			0.63			0.49
Amortization of purchased intangible assets		0.11			0.09			0.41			0.37
Stock-based compensation		(0.02	)		0.07			0.12			0.39
Acquisition- and disposition-related expenses		0.05			0.01			0.14			0.10
Strategic initiative and financial restructuring-related expenses		0.02			0.07			0.12			0.15
Impairment of assets		0.48			0.16			0.48			0.16
Gain on FFF Put and Call Rights		—			—			—			(0.53	)
Other reconciling items, net		0.01			0.02			0.04			0.06
Impact of corporation taxes		(0.24	)		(0.22	)		(0.89	)		(0.88	)
Impact of dilutive shares		(0.02	)		(0.01	)		(0.02	)		(0.05	)
Adjusted EPS	$	0.68		$	0.61		$	2.50		$	2.49

13

EX-99.2

Exhibit 99.2

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

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

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

Craig Steven McKasson Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Leigh T. Anderson Premier, Inc. - President of Performance Services

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

C O N F E R E N C E   C A L L   P A R T I C I P A N T S

Albert J. William Rice Crédit Suisse AG, Research Division - Research Analyst

Allen Charles Lutz BofA Securities, Research Division - Associate

Eric R. Percher Nephron Research LLC - Research Analyst

Eric White Coldwell Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

Jessica Elizabeth Tassan Piper Sandler & Co., Research Division - VP & Senior Research Analyst

John Park Guggenheim Securities, LLC, Research Division – Equity Research Associate

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

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

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

Operator

Good morning and welcome to Premier’s Fiscal Fourth Quarter and Full Year Earnings Conference Call. (Operator Instructions). Please note this event is being recorded. I would now like to turn the conference over to Ben Krasinski, Senior Director, Investor Relations. Please go ahead.

Ben Krasinski

Thank you and welcome to Premier’s Fiscal 2023 Fourth Quarter and Full Year Conference Call. Our speakers this morning are Mike Alkire, Premier’s President and CEO; and Craig McKasson, our Chief Administrative and Financial Officer. Before we get started, I want to remind everyone that our earnings release and the supplemental slides accompanying this conference call are available in the Investors section of our website at investors.premierinc.com.

Please be advised that management’s remarks today contain certain forward-looking statements 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 Form 10-K, which we expect to file soon. We encourage you to review these detailed safe harbor and risk factor disclosures. Also, where appropriate, we will refer to adjusted or other non-GAAP financial measures, such as free cash flow 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 Form 8-K, which we expect to furnish to the SEC soon.

I will now turn the call over to Mike Alkire.

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

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

Thank you, Ben. Good morning, everyone and thank you for joining us today. Today, we will highlight our progress in our fourth quarter and fiscal year 2023 and update you on our ongoing evaluation of strategic alternatives to unlock value for our stockholders. First, I am pleased to share that our team achieved total net revenue of $1.3 billion adjusted EBITDA of $499.8 million and $264.4 million in free cash flow that equated to 53% of adjusted EBITDA this fiscal year. These results reflect the agility and dedication of our people in an incredibly fluid health care environment. As a team, we are confident in our ability to effectively manage costs and grow Premier through the continued execution of our strategies to deliver technology-enabled better, smarter health care.

We are pleased with the continued strength of our member network this year with a 98% GPO retention rate and the 94% technology or SaaS institutional renewal rate, both evidence of the trusted long-term relationship we have with our members. Further, an overwhelming 99% of our C-suite members surveyed in recent months believe they are better positioned for the future with Premier by their side. We are moving forward with intention on our recent announcement that the Board and management team are evaluating potential strategic alternatives to unlock value for our stakeholders. The recent sale of our non-health care GPO operations to OMNIA Partners for approximately $800 million in cash, demonstrates the underlying value of one of many Premier businesses that when leveraged can create significant value that can be reinvested in high-return solutions or to return value to stockholders.

With the assistance of our outside advisers, our Board and management team continue to evaluate other potential actions to unlock value for our stakeholders. For us, technology enabling health care isn’t just nice to have and Premier continues to lead the market in AI-enabled health care technology solutions. I’m incredibly proud of the progress we have made this year and we are laser-focused on making transformative strides in the future. We are ensuring on-time payments for suppliers and unlocking working capital for providers through AI-enabling the entire purchasing to payments process with Remitra.

It isn’t a matter of if but when the next pandemic may arise. So we have technology enabled the predictability of supply chain shortages with 90% accuracy. We are doubling down on investments in domestic and nearshore manufacturing to ensure resiliency. For years, we have been AI-enabling smarter decisions in the workflow of hundreds of thousands of clinicians and are now expanding that offering to help them realize millions of dollars of value through accurate coding and documentation. We are also completely disrupting and automating the timely and manual prior authorization process. Lastly, our comprehensive network and vast data set are now being used upstream in the innovation process, to optimize the lengthy clinical trials process. I’m incredibly pleased that in Q4, our applied sciences business signed an end-to-end clinical trial with 1 of the top 10 largest pharmaceutical companies in the world.

Before I turn it over to Craig, I want to pause and recognize the Premier team for their tireless work this year, both in terms of their disciplined execution and their compassionate connection to our purpose. Premier employees are the boots on the ground for many of our members’ health care providers who serve as the heartbeat of their communities. This is especially true during natural and human-made disasters, including wildfires and hurricanes. These individuals make themselves available 24/7 to ensure our members have the resources to respond to and serve their communities. Passion for performance and innovation are 2 of our core values that I’ve seen demonstrated this year more than ever before. The Premier team recognizes that with change comes great opportunity that makes me incredibly proud and excited for the future of our company.

I will now turn the call over to Craig McKasson for a discussion of our operational and financial performance.

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Thanks, Mike. For the fourth quarter of 2023 and as compared with the same period a year ago, our results were total net revenue of $340.4 million, which was flat compared to the prior year. Supply Chain Services segment revenue of $228.1 million, a decrease of 2% and Performance Services segment revenue of $112.3 million, an increase of 4%.

In our Supply Chain Services segment, net administrative fees revenue increased 3% from the year ago quarter, driven by growth in both our acute and non-acute or continuum of care through purchasing programs. This was primarily due to recovery of member volumes and further penetration of existing member spend. These increases were partially impacted by the following factors: First, the continued normalization of demand and

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

pricing across certain categories, including pharmacy, staffing and personal protective equipment or PPE. Second, continued regional variation in patient utilization trends affecting member purchasing. And third, an increase in aggregate blended member fee share due to current market dynamics, including the impact from the consolidation of certain member health systems.

Within both our acute and continuum of care GPO portfolios, the food category produced another consecutive quarter of strong growth, primarily driven by increases in volume and the impact of inflation, which was partially offset by the continued normalization of demand and pricing across the other categories previously mentioned. As we look forward, we believe that we still have a significant opportunity to continue to expand and penetrate our members spend, as we continue to broaden our GPO contract portfolio with new suppliers and product categories, drive adoption of our high compliance purchasing programs, including SURPASS and AscenDrive, further expand into the largely untapped purchase services category of spend, leveraging technology and analytics through our conductive business, and modernize the health care supply chain by leveraging technology and AI enablement from purchasing to payments.

In our direct sourcing business, products revenue declined from the year ago quarter due to continued excess market supply and members and other customers’ inventory levels, which contributed to lower demand and pricing in the current year period. We believe member inventory levels are returning to more normalized levels, although some members continue to work through excess supply of certain products which may persist for the next few quarters. Through the ongoing management of this business, we were able to reduce our inventory significantly during fiscal 2023, down from the heightened levels associated with helping our members and other customers secure PPE and other critical items during the COVID-19 pandemic. In addition, our logistics costs have generally returned to more normalized pre-pandemic levels. On the domestic manufacturing front, we are beginning to see some initial uptake in our isolation gown initiative and we are planning to launch our exam glove initiative in the second quarter of fiscal 2024.

In our Performance Services segment, revenue increased 4% compared with last year’s fourth quarter, primarily due to growth in our consulting services and our adjacent markets businesses, including clinical decision support and Contigo Health. Compared to the prior year, fiscal 2023 Performance Services revenue of $436.2 million grew 9% year-over-year, including 22% growth in our combined adjacent markets businesses to more than $100 million in revenue. Within our adjacent markets businesses, applied sciences had another strong year with over 20% revenue growth, reflecting the differentiation of our research-ready data set and unique ability to link health systems to industry to help expedite innovation. As we look forward, we remain excited about the future growth potential for this business.

Our Contigo Health business also exhibited strong top line growth and expansion in fiscal 2023, creating a stable foundation for future growth. Despite this progress, the ramp, particularly in profitability, is lagging our original expectations, as we continue to scale and stand up the program, resulting in a goodwill impairment of $54.4 million. To be clear, we remain very excited about Contigo Health and its long-term growth prospects. In the years and months ahead, we will continue to expand our center of excellence programs with large employers and provide transparent out-of-network claims pricing management with more than 900,000 contracts across 4.1 million locations. We believe this will allow us to deliver growth in each functional area while also providing comprehensive employee benefit management to health system payviders and other employers, all while leveraging our existing TPA capabilities.

Turning to profitability. GAAP net income was $18.9 million for the quarter. Adjusted EBITDA increased 8% from the prior year period due to an increase in Supply Chain Services adjusted EBITDA, which was mainly due to growth in net administrative fees revenue and the benefit of lower logistics costs in our direct sourcing business compared to the prior year period. The increase in Supply Chain Services adjusted EBITDA was partially offset by a quarter-over-quarter decline in Performance Services adjusted EBITDA. This was mainly due to higher expenses as we continue to invest in growth and scalability primarily in our adjacent markets businesses.

Compared with the year ago quarter, adjusted net income and adjusted earnings per share each increased 11%, primarily as a result of the same items that impacted adjusted EBITDA. From a liquidity and balance sheet perspective, cash flow from operations for full year fiscal 2023 of $444.5 million was flat compared with the prior year. This was primarily impacted by increased net cash within our direct sourcing business, as we lowered inventory in the current fiscal year and a dividend from a minority investment. These items were offset by higher revenue share paid to members. Free cash flow for fiscal 2023 was $264.4 million or approximately 53% of adjusted EBITDA compared with $260.8 million for the same period a year ago. The increase was primarily due to a decrease in purchases of property and equipment as we continue to carefully manage overall capital expenditures.

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

From an income tax perspective, our effective tax rate for fiscal 2023 was 26%, which was in the 26% to 27% range we anticipated. From a cash tax rate perspective, we continue to benefit from our August 2020 restructuring and our fiscal 2022 second quarter subsidiary reorganization. As a result and consistent with our expectations, the cash tax rate for fiscal 2023 is estimated to be between 1% to 2%. In fiscal 2024, we expect our cash tax rate to be in the range of 1% to 5% excluding the one time impact of cash tax paid on proceeds from the sale of our non-health care GPO operations, which will be subject to a 25% tax rate. We anticipate our effective tax rate to be in a range of 26% to 28% in fiscal 2024.

Cash and cash equivalents totaled $89.8 million as of June 30, 2023, compared with $86.1 million as of June 30, 2022. We ended the quarter with an outstanding balance of $215 million on our 5-year $1 billion revolving credit facility, of which the full outstanding balance was repaid in July and August from the approximately $538 million in cash received upon the close of the sale of our non-health care GPO operations. We will continue to collect cash from the remaining escrow of $151 million and we expect additional cash proceeds upon completion of a true-up in accordance with the purchase agreement later this fiscal year. With respect to the remaining cash proceeds, we currently plan to maintain this cash on our balance sheet while we complete our evaluation of strategic alternatives. However, we plan to evaluate the highest return opportunities for eventual use of the proceeds, including reinvestments in the business, acquisitions that enhance the value of the business and returning capital to stockholders via share repurchase.

During fiscal 2023, we paid quarterly cash dividends to stockholders totaling $100.2 million. Recently, our Board of Directors declared a dividend of $0.21 per share payable on September 15, 2023, to stockholders of record as of September 1. As previously announced, given our Board and the management team’s ongoing evaluation of potential strategic alternatives, we are not providing our fiscal 2024 outlook or other formal guidance at this time. Nevertheless, I would like to provide some high-level perspectives on the overall business and discuss how persistent trends we are seeing in the market will likely impact our business in fiscal 2024. In our Performance Services segment, we continue to focus on our health care provider performance improvement capabilities while also expanding our presence in adjacent markets with life science companies, suppliers, employers and payers.

In fiscal 2024, we expect over 20% growth in our adjacent markets businesses, which will contribute to the mid- to high single-digit revenue growth we anticipate in our Performance Services segment. As I mentioned earlier, our group purchasing business continues to be impacted by market dynamics, including the overall state of the macro environment and the significant cost pressure that is placed on many of our health care provider members, the current and future impact from consolidation of member health systems and an always competitive market to retain and win new business.

Overall, we expect our GPO business will continue to experience growth in gross administrative fees with the acute side of the business growing in the low to mid-single-digit range and the continuum of care side growing in the high single-digit range prior to any impact related to changes in member fee share. However, given the previously mentioned market dynamics, we would expect there to be an increase in member fee share during fiscal 2024, resulting in the aggregate fee share across all members in our GPO increasing from the current low 50% range to the mid- to high 50% range.

Turning to our direct sourcing business. Given the ongoing impact of excess market supply and certain member excess inventory levels, we expect nominal growth in products revenue in fiscal 2024. As previously discussed, we implemented a cost savings plan and had lower performance incentive achievement in fiscal 2023 to help achieve our profitability expectations. While some of the cost savings will continue to benefit us in fiscal 2024, we do plan to invest resources in some of our higher growth areas to position the overall business for long-term sustainable growth and value creation.

Finally, with respect to fiscal 2024 expectations, we have determined that we will no longer include equity earnings from our minority investments in our adjusted EBITDA. This change results from the previously disclosed change in our minority investment in FFF Enterprises last quarter. As a result, we expect an additional headwind to adjusted EBITDA in fiscal 2024, given the elimination of equity earnings that were included during fiscal 2023. As a reminder, this change will not have an impact on cash flow. Consistent with fiscal 2023, we expect to generate free cash flow of 45% to 55% of adjusted EBITDA in fiscal 2024.

Before I conclude, I also wanted to take the opportunity to reiterate Mike’s appreciation of our team for their hard work and ongoing commitment as we continue to serve our vital role as a trusted and embedded partner for our health care provider members and other customers. Our employees

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

are our greatest asset and we will continue to focus on cultivating a high-performing culture and driving employee engagement as we position our business for future growth.

We appreciate your time today and we’ll now 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) The first question is from Eric Percher of Nephron Research. Please go ahead.

Eric R. Percher - Nephron Research LLC - Research Analyst

Thank you. Maybe to start with the macro, could you give us a perspective on some of the regional volume variability you’ve spoken to and whether you’ve seen changes and catch up in some of the geography or anything that looks like progress?

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

Yes. Thanks, Eric. This is Mike. So while we’ve seen some improvement in utilization overall, as you just said, it does continue to vary by geography with many of our providers not seeing a full return to the sort of the pre-pandemic level. We do have some data that, I guess, is probably a quarter or so old that showed some low single-digit increases for our acute volumes over the prior year period. And then from a non-acute standpoint, mid-single-digit increases over the prior year period. So we are seeing just – we are seeing the growth come back. But again, it’s incredibly regional, places in Florida and Texas are doing obviously much better than places in the Rust Belt. And so we’ll continue to track that.

Eric R. Percher - Nephron Research LLC - Research Analyst

And as we think about the guidance or - not guidance but the directional commentary you’ve given today, how much of the decision not to have formal guidance is, what’s going on in the marketplace, difficulty predicting the market versus the limitations on not knowing where the strategic effort will land you?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Yes, Eric, this is Craig. It’s really the latter. So as we think about the strategic alternatives and potential changes in the complexion of the business, we are just continuing to evaluate and assess how that could impact our potential expectations. So I wanted to provide perspective but without issuing guidance. One of the examples I would highlight is when we did announce our divestiture of the non-health care GPO operations, initially thinking there would be a pretty significant change in the way that our financial statements would look and then subsequently, because of the uniqueness of that transaction, it’s not having that impact. So we really – just really in discussions with the Board and the management team wanted to get through this about alternatives review and then plan to come out with more a formalized guidance post that exercise.

Eric R. Percher - Nephron Research LLC - Research Analyst

And last one here, just triangulating all the commentary, Craig, on cash flow. Can you guys, can you tie together a few of these items relative to free cash flow this year, understanding the net working capital improvement may not recur in the EBITDA – in the EBITDA guidance to the percentage of EBITDA, you expect expansion or contraction?

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Yes. I think broadly, what I would say, when you think about the commentary I provided around ‘24 expectations based on our current construction, I would say that there could likely be contraction in overall free cash flow. But again, it will continue to be in that 45% to 55% of adjusted EBITDA conversion rate.

Eric R. Percher - Nephron Research LLC - Research Analyst

Thank you.

Operator

The next question is from Richard Close of Canaccord Genuity. Please go ahead.

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

Yes, thanks for the questions. Craig, I was just – can you talk a little bit more about the member fee share and the increases there? And then maybe the timing of renewals from back in the restructuring previously several years ago. Just walk us through all that.

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Sure. So I think as I talked about in my prepared remarks, I mean, it does continue to be a competitive environment. Health care providers are under tremendous pressure. When we did the restructuring back in 2020, the majority of our members entered into 5-, 6-, 7-year contracts that did not have termination for convenience or out clauses, those remain intact. We did have, as we previously disclosed, a subset of members that either didn’t agree to the restructuring at that point in time or some that actually did maintain the ability to go to market or do renegotiations at points in time.

So as we’ve done those, we have seen some pressure on fee share. In some limited circumstances, we have seen members that are actually subject to a fixed firm contract have been willing to entertain a renewal process. And so that has had pressure on fee share at some points in time. And so we’ll continue to evaluate. And then we’re also being opportunistic when it makes sense in terms of talking about longer-term extensions with members as we think about all-in relationships, bundling in Performance Services capabilities with the GPO and things of that nature as we move forward. So all of those characteristics are what are causing our ‘24 fee share to likely increase from the current low 50s up to the mid- to high 50% range that I disclosed.

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

Okay. That’s helpful. And then with respect to the applied sciences, maybe a little bit more detail on the clinical trial win that you highlighted and really the opportunity for growth in that adjacent market would be helpful.

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

Yes. This is Mike. So let me just give a broader sort of perspective of what we’ve been doing in the clinical trial space. So I think you’re well aware, we have significant amounts of data. And obviously, in partnership with our health systems, we’re able to offer sort of this real-world evidence, kind of capability to life science organizations as well as medical devices. I think a couple of very, very unique things about our offering. First, we’re able to sort of flip the funnel, if you think about it in terms of identifying patients for trials, where we’re using our AI capability in looking at the unstructured data.

And we can look at inclusion and exclusion criteria before we actually select the site and the physician investigators. So that sort of is a reverse of what actually happens today where many times a site is picked and then a physician investigator is picked, so we can sort of flip that funnel. So I think that life science and medical device see that as something very, very interesting. As far as some interesting things we’ve been up to in the market, we have been doing some things from a Phase IV study standpoint, where we’re creating synthetic control arm. So what that allows, is it

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

allows for us not to have the whole placebo kind of comparators. And so when you’re able to do that using data and those kinds of things, it becomes a lot more efficient and obviously, incredibly accurate given that we have the data that we have. So we’re really excited about those 2 disruptive opportunities in the real-world evidence space for these trials.

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

Okay. Thank you.

Operator

The next question is from Kevin Caliendo of UBS. Please go ahead.

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

Thanks, and thanks for taking my question. The inventory level comment is similar to what you had said last quarter. And I’m just trying to, I guess, understand if you’ve seen any easing of the inventory levels in the channel quarter-over-quarter? You said, I think in the next few quarters, you expect it to abate a little bit. Maybe a little more color there on what you’re seeing and maybe what products are still sort of clogging up the channels or inventory levels?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Sure, Kevin. This is Craig. I’ll start and then Mike can add any additional perspective. But - so we definitely have seen improvement. We are seeing the levels come down and ordering patterns start to return. But there are some members, which was my commentary, that are continuing to hold on to a lot of excess inventory that they purchased at points in time, the primary things being gowns, I would say, and then some glove activity that they had purchased up during the pandemic as well. But the overall theme is that we’re seeing it improve. It’s just not all the way out. And so we think that we’ll continue to see it through the first half likely of fiscal 2024.

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

And can you size the magnitude of this, like normal ordering patterns for these categories versus what we’re seeing? Is it like a 10%, 20% impact? Is there any way to quantify it in any sort of way, shape or form to what it is now?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Really wish we could. It does vary by provider. So I don’t have an overall kind of aggregate I would provide you. I would say, generally, it is getting back - it’s probably to the 85% to 90% level of where it used to be, getting back to where it needs to be. But it’s just not all the way there yet with some of the members that really did over procure some of that stuff at the height of the pandemic.

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

Helpful. And on the fee share, can we - this increase from low to mid-50s to mid- to high 50% range, that’s helpful to understand. Should we now think about the fact that all of your members, generally speaking, are, I don’t say, locked up but are you going to be partners with for at least the next couple of years through 2025 or 2026?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

I mean, broadly, I would say, yes, I think generally speaking, there could be consolidation, which can create a situation where members have an opportunity to go to market or renegotiate. We do have a number of members that are not part of our historical restructuring that just always come up for contracts over a regular waterfall period. So we’ll have to evaluate those, although typically, those are already at a place that we wouldn’t see the sort of changes that we’ve been talking about. And then obviously, we’ll continue to recruit in the marketplace for new members.

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

But broadly, I would say, yes, that our existing member footprint absent sort of unique circumstances is in place through the time period that was contracted at the time of the restructuring.

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

Great. Thank you so much.

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Thank you.

Operator

The next question is from Eric Coldwell of Baird. Please go ahead.

Eric White Coldwell - Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

Thanks very much. I was hoping for some more discussion on the modeling of the OMNIA transaction, several questions here. First, could you talk about the $111 million true-up adjustment to purchase price expected in 8 months? What are the puts and takes on that? How will the and when will the $151 million escrow be released over time? And then I think there are some unique model dynamics on the balance sheet amortization of a debt treatment over 10 years and also interest expense, imputed interest expense impacts, things like that. There just seems like we could use some more help on the modeling dynamics of this unique transaction.

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Sure, Eric. This is Craig. So the $111 million or $100-plus million or so of true-up is a function of relooking at the baseline fees as of the close date. So when we closed the transaction in August, it was based on a look back, back a number of months. So when we get forward, we will look at the actual revenues that came in the door through the close date and then we’ll have the multiple applied to that. And so based on our expectations and monitoring, we believe that will be the additional proceeds that will come in at that point in time. So that’s the first question.

The second question on the escrow balance, we actually are receiving payments weekly as we go through the next couple of months. So we’ve already seen a couple of payments, reducing that $151 million down. So that’s progressing as the conversations with members to get their consents takes place. And feeling good about how those consents are going and the cash flow is coming in to relieve that escrow. #3, relative to the balance sheet and the debt balance, again, we - the proceeds that we received were recorded as debt on the balance sheet. That will be relieved over the term of the 10-year channel partnership agreement that we have, as we record revenue associated with OMNIA’s activity.

So each quarter, we will get the level of purchasing and administrative fee generation that comes from those members that will relieve the debt balance. And as talked about previously, we’ll get an incremental 30% of revenue associated with growth above the baseline at the time of the close. And then I’ll have to actually - I don’t have it at my fingertips, I apologize but we’ll be happy to follow up on the specifics around the imputed interest level. It’s a low-level imputed interest given the debt on the balance sheet but I don’t have those specifics at my fingertips, so we’ll have to follow up with that.

Eric White Coldwell - Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

Craig, if I might, 2 quick follow-ups. The debt, is that going to show up in the new line item? Where should we be building in the new model line item for this debt specific item?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

It will be a single stand-alone line item on the balance sheet.

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

Eric White Coldwell - Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

Yes. And then final one. There also is the transition of the associated free cash flow to OMNIA, I believe. So that is one of the headwinds to your free cash flow conversion rate in fiscal ‘24? Is it not? And if so, can you tell us what that magnitude might be in terms of thinking about modeling the free cash flow impact?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Yes. To your point, that we will now have that revenue that will not have cash flow associated with it because we received that cash flow initially at the time of the transaction.

Eric White Coldwell - Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

So could you tell us ballpark what that headwind is in fiscal ‘24, what you expect it to be?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

I’ll need to follow up specifically based on - because it will depend based on the growth that OMNIA has. I’ll go back — we’ll come back to you, Eric, with the specifics on the amount.

Eric White Coldwell - Robert W. Baird & Co. Incorporated, Research Division - Senior Research Analyst

Yes. Thank you very much.

Operator

The next question is from Allen Lutz of Bank of America. Please go ahead.

Allen Charles Lutz - BofA Securities, Research Division - Associate

Thanks for taking the questions. One for Craig. Can you bifurcate the relative growth rates you’re seeing in the acute and the non-acute GPO programs? And you mentioned there was market growth and then there was growth from further penetration. Can you break those 2 out? Thanks.

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Yes. So I think as I talked about and Mike mentioned what we’re continuing to see in the acute part of the business is recovery at the kind of low single-digit level year-over-year. And then non-acute is growing more at the mid- to high single-digit level and expectations that will continue into ‘24, low to mid-single-digit growth in acute overall gross activity and high single digit in the non-acute. In terms of market dynamics versus penetration, I don’t have a specific breakout but I would tell you that the majority of our growth comes from continuing to drive same-store growth through contract penetration.

Allen Charles Lutz - BofA Securities, Research Division - Associate

Great. And then last one for me. On the health system consolidation, can you talk about how that’s impacting the business this year versus maybe 1, 2 or 3 years ago? Is it sort of a similar impact to the business or is it getting weaker or stronger? Thanks.

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Yes. What I would highlight is that in fiscal 2023, there was a very large merger of 2 of our significant members with the Advocate Health merger. So I wouldn’t say that the overall activity is changing dramatically year-to-year but I do think it points in time, the size and the magnitude of potential

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

combinations can have a more significant impact 1 year over the other. So we’ll have to see as we look forward, which is why it’s — we don’t know who could be in conversations and what could happen. But the Advocate Health merger again, while both of them are Premier members and continue to be committed to Premier and engage with us in a lot of ways, it did have implications given the economics of those 2 accounts were different historically.

Allen Charles Lutz - BofA Securities, Research Division - Associate

Thank you.

Operator

The next question is from A.J. Rice of Crédit Suisse. Please go ahead.

Albert J. William Rice - Crédit Suisse AG, Research Division - Research Analyst

Hi everybody. Thanks for reviewing the history on the contract restructuring period. A lot of those contracts would seem to be coming up for renewal in the ‘25 to ‘27 time frame. Obviously, our modeling doesn’t necessarily go out that far. But if you’re in a strategic review process and people are trying to figure out what the long-term value of the entity is, it seems like to me, they’ve got to have a view on what’s going to happen in that ‘25 to ‘27 time period in terms of fee share changes or churn. I think, in the investment community, it’s sort of perceived to be an open-ended question but maybe you have a better perspective. I wonder if there’s any - I don’t expect you to quantify at this point but do you feel like, as you’re talking to people about different opportunities under the strategic review, you can give them some parameters so they can assess what that looks like?

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

Yes, just - this is Mike. Just a couple of things. And I think, A.J., you can appreciate this. It’s challenging to predict what’s going to happen 2 to 4 years from now. I mean, especially as it relates to health care, especially as we’re coming out of a pandemic. It’s just one of those things that’s really tough for us to like put our arms around. Having said that, there’s a whole bunch of stuff that, we continue to say and albeit Craig talked quite a bit about the pressures on the fee share from the macro environment and the different consolidation issues and some of those things that have then occurred.

Our focus has always been the technology-enabled supply chain, right? And so that — what that means is, we want to continue to expand really the top line revenue, that gross admin fee number. We think there’s incredible opportunity in the purchase service space, in the non-acute space. We do believe our Remitra offering is going to play a pretty significant role in terms of creating additional value for our health care systems. So – and just – in answer to your question, just in general, it is really hard for us given the puts and takes to put specific numbers out 2, 3, 4, 5 years from now.

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Yes, this is Craig. The only thing I think I would add, A.J., is that consistent with what we have told the marketplace, the market dynamics are challenging. There could be pressure on fee share in the future and that’s something we’re continuing to evaluate. We have strategies to, as Mike described, to try and mitigate that as much as possible. But that’s something that has been a dynamic in the marketplace we’ve been consistently referencing.

Albert J. William Rice - Crédit Suisse AG, Research Division - Research Analyst

Okay. Maybe my follow-up question. I’ll take the bait on the comment you made in the prepared remarks where you said you’re leveraging AI from purchasing to payments, looking at all the opportunities, maybe, because we hear AI thrown around a lot, are there some specific things that you’re using that for today to make the business more efficient or otherwise yield economics to you?

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

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

Yes. So a couple of different things. And Leigh is here as well and Leigh can certainly jump in with any other additional commentary. But I think what’s really unique in that space is sort of the optical character recognition stuff that we’re doing on the invoicing and really bringing a great deal of meaning to that. So today, lot of manual effort from a e-invoicing standpoint. We do think that we have some pretty unique algorithms sitting on our technologies that can actually automate a lot of those manual processes from a pricing accuracy standpoint, which is a significant burden for the health care system. So that’s one example. Leigh, I’m not sure if you have additional thoughts.

Leigh T. Anderson - Premier, Inc. - President of Performance Services

I’ll just piggyback on what Mike said. There’s a concept called computer vision, which is a field of artificial intelligence that enables computers and — to sort of look at digital images. It’s sort of like the next generation of OCR, optical character recognition that Mike was talking about. We’ve been able to effectively use that to drive invoice recognition and we’re trying to manage price for our members and that’s really where we’re driving down on the artificial intelligence model for procure-to-pay.

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

Thank you, Leigh.

Albert J. William Rice - Crédit Suisse AG, Research Division - Research Analyst

Thanks a lot.

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Thank you.

Operator

Your next question is from Jack Wallace of Guggenheim Securities. Please go ahead.

John Park - Guggenheim Securities, LLC, Research Division – Equity Research Associate

Hi, this is John Park on for Jack. I was wondering if you could comment on the competitive dynamics in the GPO market and if it’s changed since last quarter and if there’s any market share shift to call out?

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

Yes. This is Mike. Just in general, I’ll tell you, we’ve had a couple of nice wins over the last couple of quarters. As you know, these are very long-term sort of propositions when you’re recruiting new health systems. I feel really good about the funnel. I was actually in a couple of calls over the last couple of weeks with some new prospects. I do think our technology is a very, very significant differentiation along the lines of what Leigh and I spoke to, in terms of driving more efficiency, getting accurate pricing and those kinds of things. I think it’s just all additive to our ability to continue to drive — to get the most value from our - for our health systems to get the best value price in the market.

And then obviously, I think organizations are very, very intrigued with what we’re doing with our whole vertical integration strategy and looking at ways to create more resilient supply chain, looking at contract manufacturing for products here domestically, as well as offshore. So those messages are being incredibly well received in the market and more to come as this year progresses.

John Park - Guggenheim Securities, LLC, Research Division – Equity Research Associate

Got it. And could you give us any update on the Remitra and maybe the relative pace of adoption between health system and suppliers?

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

Yes, I would say that we are back on track in terms of our areas of focus, in terms of getting the adoption. We have mentioned this in the past. Many of our largest health systems are actually using the technology for various functions in their whole e-invoicing process. What we’re attempting to do is to bring all that utilization of that product to a network, trying to uphold all these health systems together at a more broad network from an invoicing standpoint. So that’s still sort of underway. As it relates to the supplier side, again, it is – we’re continuing to work through the whole process of creating additional value for the suppliers to participate in those networks. We’ve had some success with some of the very, very large

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

multinational companies in terms of their interest in participating. But more to come over the course of the next couple of quarters as we continue to build out that offering.

John Park - Guggenheim Securities, LLC, Research Division – Equity Research Associate

Great. And lastly, are you seeing any uptake in PPE demand this quarter or related to the uptick in COVID cases?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

I wouldn’t say we’ve seen a real uptick due to COVID cases per se. But yet — but as I mentioned earlier, we are seeing recovery in ordering patterns come back on PPE broadly but I haven’t specifically heard it tied to actual COVID cases. Although as an example, I did hear just yesterday that in New York, some of the facilities are mandating masking and something that again, some of those situations again, so something we need to keep an eye on.

John Park - Guggenheim Securities, LLC, Research Division – Equity Research Associate

Great. Thank you, team.

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

Thank you.

Operator

The next question is from Jessica Tassan of Piper Sandler. Please go ahead.

Jessica Elizabeth Tassan - Piper Sandler & Co., Research Division - VP & Senior Research Analyst

Hi, thank you guys for taking the question. So I was wondering within Supply Chain Services, what was the adjusted EBITDA margin profile of the direct sourcing business in FY ‘23? And then just would you expect that to kind of remain stable in ‘24 or retreat back to low single digit or breakeven in ‘24?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Yes. So broadly, for our direct sourcing business, again, we’ve typically talked about it being effectively a very low margin business on an adjusted EBITDA basis. So it did retract a little bit from ‘22 when we had elevated purchasing levels due to the pandemic but did have low single-digit EBITDA margins in the fourth quarter for that business. I think as we look forward, moving forward, we would continue to expect it to be gross margins, not EBITDA but gross margins in the high single-digit to low double-digit range and then adjusted EBITDA to continue to be in that low to mid-single-digit range.

Jessica Elizabeth Tassan - Piper Sandler & Co., Research Division - VP & Senior Research Analyst

Got it. That’s helpful. Can you help us understand what the admin fee share back rate for the non-health care GPO looks like, maybe on an absolute basis or even on a relative to the health care GPO?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Yes. What I would say broadly, not getting into specifics is that, clearly large integrated health systems, acute providers have more leverage and scale, so we typically see higher fee share with acute care health systems than we have broadly in the non-acute market. I think that would extend to the non-health care market where typically, it’s more about price and getting the savings through aggregation as opposed to having the maturity curve and the scale to actually negotiate higher fee shares.

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

Jessica Elizabeth Tassan - Piper Sandler & Co., Research Division - VP & Senior Research Analyst

Got it. And then just based on the incremental liability, does that imply that the non-health care GPO did about $65 million of net admin fee revenue in FY ‘23 versus the prior $57 million expectation?

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

We are still - in terms of the true-up, I was talking about this earlier, that we’ll wait to see that non-health care piece in order to actually determine what the true-up payment is. We would expect it to be higher. Yes. I don’t have a specific number to quote though, Jessica, in terms of where it came in.

Jessica Elizabeth Tassan - Piper Sandler & Co., Research Division - VP & Senior Research Analyst

Got it. And my last question is just, is your decision to invest in the Performance Services business, kind of motivated by your strategic conversation? Basically, just interested to know if you’re making these investments because you’re confident there’s a strategic alternative for this business. And then to the extent that you can share, where should those investments show up and what’s the magnitude? Thank you guys, again.

Craig Steven McKasson - Premier, Inc. - Chief Administrative Officer, CFO, Senior VP & Treasurer

Yes, thanks Jessica. This is Craig. I’ll start and then Mike can add color. So the decisions to continue to invest in the adjacent markets and the growth opportunities in Performance Services, I would not say, is tied to our strategic alternatives. It is an ongoing consistent diversification strategy that we’ve had for that business to actually look for opportunities and find sweet spots where there are other profit pools or markets with life sciences, employers, payers and suppliers in the case of Remitra, where we can actually extend things that we’re doing for the benefit of providers. But also provide benefit for those other stakeholders and there are growth opportunities there to actually scale those businesses to deliver greater revenue in the future.

As we’ve indicated, the 20-plus percent revenue growth in the adjacent markets that we’re experiencing versus the more low to mid-single-digit growth in the provider landscape. And so that’s the reason that we’re making those investments. And then in terms of the areas, the focus continues to be the applied sciences arena. And as Mike described, the things that we’re doing from a real-world evidence standpoint and the ability to help change the way that portions of the clinical trials are delivered in the marketplace, clinical decision support as we continue to look for opportunities to automate prior authorization and actually create efficiency in the system for both providers and payers through eliminating a lot of the manual effort and the clinical resource needs that actually take a lot of time and effort in that particular space.

And then in Contigo Health, as we continue to look to do the build-out of the national network for payviders, those are the real 3 primary areas. Remitra, as we talked about last — 2 quarters ago, we sort of have reset and will continue to be balanced in the way we think about making incremental investments in that business as it scales.

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

Yes, Jessica, the only other build I’ll add is that we sit in a very unique space in health care, in that we’ve got these very, very strong health care system partners and we love to innovate right alongside of them. We have committee structures that allow for us to understand what their business issues are and then for us to build on capabilities and technologies and services to support them, be it to be a labor extender or to help them as they think about ways to reduce costs and standardize the way they provide services.

In that same spirit because oftentimes, as we work with many suppliers from a GPO standpoint, both medical devices and pharmaceuticals, as we’re in those business line discussions, we’re understanding what the issues are that those organizations are dealing with as well and are able to work with them to think through, are there additional capabilities that we should be building out that could potentially be an exciting profit pool

AUGUST 22, 2023 / 12:00PM, PINC.OQ - Q4 2023 Premier Inc Earnings Call

for us to invest in? So I want to continue to drive that level of innovation just because we sit — where we sit in health care and I do think it’s very, very unique to Premier. But we appreciate the question. Thank you.

Operator

This concludes our question-and-answer session and Premier’s Fiscal 2023 Fourth Quarter and Full Year Earnings Conference Call. Thank you for attending today’s presentation. You may now disconnect.

EX-99.3

Fiscal 2023 Fourth-Quarter and Full-Year Earnings Conference Call /////// August 22, 2023 Exhibit 99.3

Forward-looking Statements and Non-GAAP Financial Measures Forward-looking statements – Statements made in this presentation and the accompanying webcast that are not statements of historical or current facts, such as those related to our ability to advance our long-term strategies, our ability to achieve multi-year compound annual growth targets for total net revenue, adjusted EBITDA and adjusted EPS, our continued ability to address the evolving healthcare and macro-economic trends in supply chain, staffing, technology-enablement and artificial intelligence, the impact of a shift to enterprise-level analytics agreements and our ability to replace converted SaaS-based revenue from existing members, the impact of our investments in adjacent markets businesses, our future organic growth and acquisition strategies, the impact of our subsidiary reorganization on our expected effective income tax rate, the payment of dividends at current levels, or at all, the timing and number of shares repurchased from time to time under our share repurchase programs, and our evaluation of strategic alternatives are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Premier to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on any forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “remains committed to,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to Premier’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to 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, 2023, which will be filed soon after this presentation. Premier’s periodic and current filings with the SEC are available on the company’s website at investors.premierinc.com. Forward-looking statements speak only as of the date they are made, and Premier undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events that occur after that date, or otherwise. Non-GAAP financial measures – This presentation and accompanying webcast includes certain “adjusted” or “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.

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

Agility and Dedication in an Incredibly Fluid Healthcare Environment Fiscal Year 2023 results reflect dedication of team in an incredibly fluid healthcare environment Achieved total net revenue of $1.3 billion, adjusted EBITDA of $499.8 million, and $264.4 million in free cash flow that equated to 53% of adjusted EBITDA this fiscal year. Continued strength of our member network, with a 98% GPO retention rate and a 94% technology, or SaaS Institutional, renewal rate. Overwhelming 99% of c-suite members surveyed “better positioned for the future with Premier by their side.” Moving forward with intention on strategic alternatives Sale of our non-healthcare GPO operations to OMNIA Partners for approximately $800 million in cash. Premier businesses can create significant value that can be reinvested in high-return solutions or to return value to stockholders. Outside advisors, our Board and Management team continue to evaluate other potential actions to unlock value for our stakeholders.

Fiscal 4Q23 Highlights: Technology-Enabling for Better, Smarter Healthcare Progress this year on artificial intelligence and technology-enablement: Ensuring on-time payments for suppliers and unlocking working capital for providers through AI-enabling the entire purchasing to payments process with Remitra. Technology-enabled the predictability of supply chain shortages with 90% accuracy. Expanding clinical decision support offering to help members realize millions of dollars of value through accurate coding and documentation. Disrupting and automating the timely and manual prior authorization process. Signed an end-to-end clinical trial with one of the top 10 largest pharmaceutical companies in the world.

Fiscal 4Q23 financial highlights Adjusted EBITDA* increased 8% to $132.6 million Performance Services segment net revenue increased 4% to $112.3 million, primarily driven by growth in consulting services and certain of the company’s adjacent markets businesses GAAP net income of $18.9 million; $0.18 per fully diluted share Adjusted net income* and adjusted EPS* each increased 11% to $81.7 million and $0.68, respectively Supply Chain Services segment net revenue of $228.1 million decreased 2% Net administrative fee revenue increased 3% Direct sourcing products revenue decreased 12% *Refer to Appendix for adjusted EBITDA, adjusted net income, adjusted earnings per share reconciliations to GAAP equivalents. (Compared with fiscal 4Q22) Total net revenue of $340.4 million was flat primarily due to the impact of excess market supply on direct sourcing products revenue offset by growth in net administrative fees and Performance Services revenue

Strong financial position with flexible balance sheet Cash flow from operations of $444.5 million Free cash flow* of $264.4 million Cash and cash equivalents of $89.8 million Outstanding borrowings of $215.0 million on $1.0 billion, five-year unsecured, revolving credit facility at June 30, 2023; repaid full outstanding balance in July and August 2023 *See free cash flow reconciliation to GAAP equivalent in Appendix. (As of and for the year ended June 30, 2023) Paid quarterly dividends to stockholders totaling $100.2 million in fiscal 2023

Remain focused on executing longer-term strategy Stable and resilient business Well-positioned through combination of deep member relationships and comprehensive and scalable technology platform powered by vast healthcare data to deliver meaningful solutions to members and market Generate significant cash flows with flexible balance sheet and strong financial position Focused on executing longer-term strategy to create value for stakeholders

Appendix

Use of Forward-looking Non-GAAP Financial Measures The company does not meaningfully reconcile guidance for non-GAAP adjusted EBITDA and non-GAAP adjusted earnings per share to net income attributable to stockholders or earnings per share attributable to stockholders because the company cannot provide guidance for the more significant reconciling items between net income attributable to stockholders and adjusted EBITDA and between earnings per share attributable to stockholders and non-GAAP adjusted earnings per share without unreasonable effort. This is due to the fact that future period non-GAAP guidance includes adjustments for items not indicative of our core operations, which may include, without limitation, items included in the supplemental financial information for reconciliation of reported GAAP results to non-GAAP results. Such items include strategic- and acquisition-related expenses for professional fees; mark to market adjustments for put options and contingent liabilities; gains and losses on stock-based performance shares; adjustments to its income tax provision (such as valuation allowance adjustments and settlements of income tax claims); items related to corporate and facility restructurings; and certain other items the company believes to be non-indicative of its ongoing operations. Such adjustments may be affected by changes in ongoing assumptions, judgements, as well as nonrecurring, unusual or unanticipated charges, expenses or gains/losses or other items that may not directly correlate to the underlying performance of our business operations. The exact amount of these adjustments is not currently determinable but may be significant.

Fiscal 2023 and 2022 Non-GAAP Reconciliations Supplemental Financial Information Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA Reconciliation of Operating Income to Segment Adjusted EBITDA Reconciliation of Net Income Attributable to Stockholders to Adjusted Net Income (Unaudited) (In thousands) Three Months Ended June 30, Year Ended June 30, 2023 2022 2023 2022 Net income $18,905 $30,711 $174,887 $268,318 Interest expense, net 2,711 2,677 14,470 11,142 Income tax expense 15,345 18,488 75,111 58,582 Depreciation and amortization 20,538 22,297 85,691 85,171 Amortization of purchased intangible assets 12,687 11,046 48,102 43,936 EBITDA 70,186 85,219 398,261 467,149 Stock-based compensation (2,504) 8,580 14,355 46,809 Acquisition- and disposition-related expenses 5,559 1,171 17,151 11,453 Strategic initiative and financial restructuring-related expenses 2,843 8,691 13,831 18,005 Impairment of assets 56,718 18,829 56,718 18,829 Gain on FFF Put and Call Rights — — — (64,110) Other reconciling items, net (221) 285 (533) 547 Adjusted EBITDA $132,581 $122,775 $499,783 $498,682

Fiscal 2023 and 2022 Non-GAAP Reconciliations Supplemental Financial Information Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA Reconciliation of Operating Income to Segment Adjusted EBITDA Reconciliation of Net Income Attributable to Stockholders to Adjusted Net Income (Unaudited) (In thousands) Three Months Ended June 30, Year Ended June 30, 2023 2022 2023 2022 Income before income taxes $34,250 $49,199 $249,998 $326,900 Equity in net income of unconsolidated affiliates (1,521) (6,340) (16,068) (23,505) Interest expense, net 2,711 2,677 14,470 11,142 Gain on FFF Put and Call Rights — — — (64,110) Other (income) expense, net (2,587) 7,470 (6,307) 9,646 Operating income 32,853 53,006 242,093 260,073 Depreciation and amortization 20,538 22,297 85,691 85,171 Amortization of purchased intangible assets 12,687 11,046 48,102 43,936 Stock-based compensation (2,504) 8,580 14,355 46,809 Acquisition- and disposition-related expenses 5,559 1,171 17,151 11,453 Strategic initiative and financial restructuring-related expenses 2,843 8,691 13,831 18,005 Equity in net income of unconsolidated affiliates 1,521 6,340 16,068 23,505 Deferred compensation plan expense (income) 2,274 (7,478) 5,422 (9,401) Impairment of assets 56,718 18,829 56,718 18,829 Other reconciling items, net 92 293 352 302 Adjusted EBITDA $132,581 $122,775 $499,783 $498,682 Segment Adjusted EBITDA Supply Chain Services $128,203 $119,269 $499,431 $500,854 Performance Services 36,272 37,661 123,859 126,938 Corporate (31,894) (34,155) (123,507) (129,110) Adjusted EBITDA $132,581 $122,775 $499,783 $498,682

Fiscal 2023 and 2022 Non-GAAP Reconciliations Supplemental Financial Information Reconciliation of Net Income from Continuing Operations to Adjusted EBITDA Reconciliation of Operating Income to Segment Adjusted EBITDA Reconciliation of Net Income Attributable to Stockholders to Adjusted Net Income (Unaudited) (In thousands) Three Months Ended June 30, Year Ended June 30, 2023 2022 2023 2022 Net income attributable to stockholders $21,463 $29,903 $175,026 $265,867 Net (loss) income attributable to non-controlling interest (2,558) 808 (139) 2,451 Income tax expense 15,345 18,488 75,111 58,582 Amortization of purchased intangible assets 12,687 11,046 48,102 43,936 Stock-based compensation (2,504) 8,580 14,355 46,809 Acquisition- and disposition-related expenses 5,559 1,171 17,151 11,453 Strategic initiative and financial restructuring-related expenses 2,843 8,691 13,831 18,005 Impairment of assets 56,718 18,829 56,718 18,829 Gain on FFF Put and Call Rights — — — (64,110) Other reconciling items, net 825 1,795 4,345 7,284 Adjusted income before income taxes 110,378 99,311 404,500 409,106 Income tax expense on adjusted income before income taxes 28,698 25,821 105,170 106,368 Adjusted Net Income $81,680 $73,490 $299,330 $302,738

Fiscal 2023 and 2022 Non-GAAP Reconciliations Supplemental Financial Information Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow (Unaudited) (In thousands) Year Ended June 30, 2023 2022 Net cash provided by operating activities $444,543 $444,234 Purchases of property and equipment (82,302) (87,440) Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (97,806) (95,948) Free Cash Flow $264,435 $260,846

Fiscal 2023 and 2022 Non-GAAP Reconciliations Supplemental Financial Information Reconciliation of GAAP EPS to Adjusted EPS (Unaudited) (In thousands, except per share data) Three Months Ended June 30, Year Ended June 30, 2023 2022 2023 2022 Net income attributable to stockholders $21,463 $29,903 $175,026 $265,867 Net (loss) income attributable to non-controlling interest (2,558) 808 (139) 2,451 Income tax expense 15,345 18,488 75,111 58,582 Amortization of purchased intangible assets 12,687 11,046 48,102 43,936 Stock-based compensation (2,504) 8,580 14,355 46,809 Acquisition- and disposition-related expenses 5,559 1,171 17,151 11,453 Strategic initiative and financial restructuring-related expenses 2,843 8,691 13,831 18,005 Impairment of assets 56,718 18,829 56,718 18,829 Gain on FFF Put and Call Rights — — — (64,110) Other reconciling items, net 825 1,795 4,345 7,284 Adjusted income before income taxes 110,378 99,311 404,500 409,106 Income tax expense on adjusted income before income taxes 28,698 25,821 105,170 106,368 Adjusted Net Income $81,680 $73,490 $299,330 $302,738

Fiscal 2023 and 2022 Non-GAAP Reconciliations Supplemental Financial Information Reconciliation of GAAP EPS to Adjusted EPS (Unaudited) (In thousands, except per share data) Three Months Ended June 30, Year Ended June 30, 2023 2022 2023 2022 Weighted average: Common shares used for basic and diluted earnings per share 119,064 118,001 118,767 120,220 Potentially dilutive shares 997 1,759 1,122 1,448 Weighted average shares outstanding - diluted 120,061 119,760 119,889 121,668 Basic earnings per share attributable to stockholders $0.18 $0.25 $1.47 $2.21 Net (loss) income attributable to non-controlling interest (0.02) 0.01 — 0.02 Income tax expense 0.13 0.16 0.63 0.49 Amortization of purchased intangible assets 0.11 0.09 0.41 0.37 Stock-based compensation (0.02) 0.07 0.12 0.39 Acquisition- and disposition-related expenses 0.05 0.01 0.14 0.10 Strategic initiative and financial restructuring-related expenses 0.02 0.07 0.12 0.15 Impairment of assets 0.48 0.16 0.48 0.16 Gain on FFF Put and Call Rights — — — (0.53) Other reconciling items, net 0.01 0.02 0.04 0.06 Impact of corporation taxes (0.24) (0.22) (0.89) (0.88) Impact of dilutive shares (0.02) (0.01) (0.02) (0.05) Adjusted EPS $0.68 $0.61 $2.50 $2.49

XML

Document and Entity Information	Aug. 22, 2023
Cover [Abstract]
Amendment Flag	false
Entity Central Index Key	0001577916
Document Type	8-K
Document Period End Date	Aug. 22, 2023
Entity Registrant Name	Premier, Inc.
Entity Incorporation State Country Code	DE
Entity File Number	001-36092
Entity Tax Identification Number	35-2477140
Entity Address, Address Line One	13034 Ballantyne Corporate Place
Entity Address, City or Town	Charlotte
Entity Address, State or Province	NC
Entity Address, Postal Zip Code	28277
City Area Code	(704)
Local Phone Number	357-0022
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Security 12b Title	Class A Common Stock, $0.01 Par Value
Trading Symbol	PINC
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false