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•	the impact of the continuing financial and operational uncertainty due to the coronavirus ("COVID-19") pandemic or other pandemics;

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

•	consolidation in the healthcare industry;

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

•	the impact on us if members of our group purchasing organization ("GPO") programs reduce activity levels or terminate or elect not to renew their contracts on substantially similar terms or at all;

•	the rate at which the markets for our software-as-a-service ("SaaS") or licensed-based clinical analytics products and services develop;

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

•	our reliance on administrative fees that we receive from GPO suppliers;

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

•	our ability to timely offer new and innovative products and services;

•	the portion of revenues we receive from our largest members;

•	risks and expenses related to future acquisition opportunities and integration of acquisitions;

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

•	potential litigation;

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

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

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

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

•	our use of "open source" software;

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

•	inventory risk we face for the personal protective equipment ("PPE") products we may have purchased at elevated market prices in the event of a potential material price decline;

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

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

•	potential sales and use tax liability in certain jurisdictions;

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

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

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

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

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

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

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

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

•	our holding company structure and dependence on distributions from Premier Healthcare Alliance, L.P. ("Premier LP");

•	different interests among our GPO members or between us and our GPO members;

•	the ability of our GPO members to exercise significant influence over us;

•	the terms of agreements between us and our member owners;

•	the impact of payments required under the Unit Exchange and Tax Receivable Acceleration Agreements (the "Unit Exchange Agreements") on our cash overall cash flow and our ability to able to fully realize the expected tax benefits that correspond to our fixed payment obligations associated with the Unit Exchange Agreements;

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

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

•	the number of shares of Class A common stock that will be eligible for sale in the near future and the dilutive effect of such issuances;

•	the impact on our Class A common stock price in the event that we cease paying dividends at current levels or completely;

•	the timing and number of shares of Class A common stock re-purchased by the Company pursuant to any Class A common stock repurchase program that may exist from time to time;

•	the number of shares of Class A common stock eligible for sale in the near future and the potential effect on our Class A common stock price from such sales; and

•	the risk factors discussed under the heading "Risk Factors" in Item 1A herein.

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•	improve the efficiency and effectiveness of the healthcare supply chain;

•	deliver improvement in cost, quality and safety;

•	innovate and enable success in emerging healthcare delivery and payment models to manage the health of populations; and

•	utilize data and analytics to drive increased connectivity, and clinical, financial and operational improvement.

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•	We have experienced and may continue to experience demand uncertainty from both significant increases in demand for personal protective equipment ("PPE"), drugs and other products related to the treatment of COVID-19 and decreases in demand for non-COVID-19 related products.

•	Our GPO member hospitals and non-acute care sites have experienced reduced or limited access for non-patients, including our field teams, consultants and other professionals, and travel restrictions have impacted our employees' ability to travel to our members' facilities.

•	The global supply chain has been significantly disrupted due to stay at home orders, border closings and rapidly escalating shipping costs.

•	We have and may continue to receive requests for contract modifications, payment waivers and deferrals, payment reductions or amended payment terms from our contract counterparties. In addition, several pharmacy suppliers have exercised force majeure clauses related to failure to supply clauses in their contracts with us.

•	The impact of the COVID-19 pandemic could result in a prolonged recession or depression in the United States or globally that could harm the banking system, limit demand for all products and services and cause other seen and unforeseen events and circumstances, all of which could negatively impact us.

•	In response to COVID-19, federal, state and local governments are issuing new rules, regulations, changing reimbursement eligibility rules, orders and advisories on a regular basis. These government actions can impact us and our members and suppliers.

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(a)	The GPO retention rate is calculated based upon the aggregate purchasing volume among all members participating in our GPO for such fiscal year less the annualized GPO purchasing volume for departed members for such fiscal year, divided by the aggregate purchasing volume among all members participating in our GPO for such fiscal year.

(b)	The SaaS institutional renewal rate is calculated based upon the total number of members that have SaaS revenue in a given period that also have revenue in the corresponding prior year period divided by the total number of members that have SaaS revenue in the same period of the prior year.

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•	register our company and list our FDA-regulated products with the FDA;

•	obtain pre-market approval establishing the safety and efficacy of our regulated products or clearance from the FDA based on demonstration of substantial equivalence to a legally marketed device before marketing our regulated products;

•	obtain an investigational device exemption ("IDE") prior to conducting clinical trials with the regulated products;

•	obtain FDA approval by demonstrating the safety and effectiveness of the regulated products prior to marketing;

•	submit to inspections by the FDA; and

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comply with various FDA regulations, including the agency's quality system regulation, medical device reporting regulations, requirements for medical device modifications, increased rigor of the secure development life cycle in the development of medical devices and the interoperability of medical devices and electronic health records, requirements for clinical investigations or post-market studies, corrections and removal reporting regulations, and post-market surveillance regulations.

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•	product listing and establishment registration, which helps facilitate FDA inspections and other regulatory action;

•	QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, validation, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process;

•	labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved, or off-label use or indication;

•	clearance of product modifications that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared or approved devices;

•	notice or approval of product or manufacturing process modifications or deviations that affect the safety or effectiveness of one of our cleared or approved devices;

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•	post-approval restrictions or conditions, including post-approval study commitments;

•	post-market surveillance regulations, which apply, when necessary, to protect the public health or to provide additional safety and effectiveness data for the device;

•	the FDA's recall authority, whereby it can ask, or under certain conditions order, device manufacturers to recall from the market a product that is in violation of governing laws and regulations;

•	regulations pertaining to voluntary recalls; and

•	notices of corrections or removals.

•	untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;

•	customer notifications or repair, replacement, refunds, recall, detention or seizure of our products;

•	operating restrictions or partial suspension or total shutdown of production;

•	refusing or delaying requests for 510(k) clearance or PMA approvals of new products or modified products;

•	withdrawing 510(k) clearances or PMA approvals that have already been granted;

•	refusing to grant export approval for our products; or

•	criminal prosecution.

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(i)	as to how we will use and disclose the protected health information within certain allowable parameters established by HIPAA,

(ii)	that we will implement reasonable and appropriate administrative, organizational, physical and technical safeguards to protect such information from impermissible use or disclosure,

(iii)	that we will enter into similar agreements with our agents and subcontractors that have access to the information,

(iv)	that we will report breaches of unsecured protected health information, security incidents and other inappropriate uses or disclosures of the information, and

(v)	that we will assist the covered entity with certain of its duties under HIPAA.

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•

Changes in the demand for our products and services. We have experienced and may continue to experience demand uncertainty from both significant increases and decreases in demand as a result of COVID-19. There has been a significant increase in demand for personal protective equipment ("PPE"), drugs and other supplies directly related to treating and preventing the spread of COVID-19. However, either voluntarily or due to government orders or advisories, patients, hospitals and other medical facilities have deferred elective procedures and routine medical visits during the crisis, which created a significant decline in the demand for supplies and services not related to COVID-19 in the fourth quarter of fiscal 2020 and such lower demand is expected to continue into fiscal 2021. In addition, as a result of our members' focus on managing COVID-19 and its impacts, we have experienced a decrease in demand for our consulting and other performance service engagements. Furthermore, during the COVID-19 pandemic, many of our members' non-acute or non-healthcare facilities, such as education and hospitality businesses, closed, operated on a limited or reduced basis and have delayed re-opening, and, as a result, we may see a material reduction in product sales to those facilities. The extent to which these impacts on demand may continue, and the effect they may have on our business and operating results, will depend upon future developments that are highly uncertain and cannot be accurately predicted.

•

Limited access to our members' facilities that impacts our ability to fulfill our contractual requirements. Our member hospitals and non-acute care sites have experienced reduced or limited access for non-patients, including our field teams, consultants and other professionals, and travel restrictions have impacted our employees' ability to travel to our members' facilities and the resulting performance on contracts. The long-term continuation, or any future recurrence of these circumstances may negatively impact the ability of our employees to more effectively deliver existing or sell new products and services to our members and could affect our performance of our existing contracts.

•

Materials and personnel shortages and disruptions in supply chain, including manufacturing and shipping. The global supply chain has been significantly disrupted due to stay at home orders, border closings and rapidly escalating shipping costs. Borders closings and restrictions in response to COVID-19, particularly regarding China and India, have impacted our access to products for our members. Staffing or personnel shortages due to shelter-in-place orders and quarantines have impacted and, in the future, may impact us and our members or suppliers. In addition, due to unprecedented demand during the COVID-19 pandemic, there are widespread shortages in certain product categories. In the food service line, COVID-19 related illnesses have impacted food processing suppliers and led to plant closures. If the supply chain for materials used in the products purchased by our members through our GPO or products contract manufactured through our direct sourcing business continue to be adversely impacted by restrictions resulting from COVID-19, our supply chain may continue to be disrupted. Failure of our suppliers, contract manufacturers, distributors, contractors and other business partners to meet their obligations to our

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Requests for contract modifications, payment deferrals or exercises of force majeure clauses. We have and may continue to receive requests for contract modifications, payment waivers and deferrals, payment reductions or amended payment terms from our contract counterparties. We have and may continue to receive requests to delay service or payment on performance service contracts. In addition, we may receive requests from our suppliers for increases to their contracted prices, and such requests may be implemented in the future. In addition, several pharmacy suppliers have exercised force majeure clauses related to failure to supply clauses in their contracts with us because they are unable to obtain raw materials for manufacturing from India and China. The standard failure to supply language in our contracts contains financial penalties to suppliers if they are unable to supply products, which such suppliers may not be able to pay. In addition, we may not be able to source products from alternative suppliers on commercially reasonable terms, or at all.

•

Overall economic and capital markets decline. The impact of the COVID-19 pandemic could result in a prolonged recession or depression in the United States or globally that could harm the banking system, limit demand for all products and services and cause other foreseen and unforeseen events and circumstances, all of which could negatively impact us. The continued spread of COVID-19 has led to and could continue to lead to severe disruption and volatility in the United States and global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. In addition, trading prices on the public stock market, including our Class A common stock, have been highly volatile as a result of the COVID-19 pandemic.

•	Managing the evolving regulatory environment. In response to COVID-19, federal, state and local governments are issuing new rules, regulations, changing reimbursement eligibility rules, orders and advisories on a regular basis. These government actions can impact us and our members and suppliers.

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•	failing to integrate the operations and personnel of the acquired businesses in an efficient, timely manner, which can be exacerbated by pandemics, such as COVID-19;

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•	failure of a selling party to produce all material information during the pre-acquisition due diligence process, or to meet their obligations under post-acquisition agreements;

•	potential liabilities of or claims against an acquired company or its assets, some of which may not become known until after the acquisition;

•	an acquired company's lack of compliance with laws and governmental rules and regulations, and the related costs and expenses necessary to bring such company into compliance;

•	an acquired company's general information technology controls or their legacy third-party providers may not be sufficient to prevent unauthorized access or transactions, cyber-attacks or other data security breaches;

•	managing the potential disruption to our ongoing business;

•	distracting management focus from our existing core businesses;

•	encountering difficulties in identifying and acquiring products, technologies, or businesses that will help us execute our business strategy;

•	entering new markets in which we have little to no experience;

•	impairing relationships with employees, members, and strategic partners;

•	failing to implement or remediate controls, procedures and policies appropriate for a public company at acquired companies lacking such financial, disclosure or other controls, procedures and policies, potentially resulting in a material weakness in our internal controls over financial reporting;

•	unanticipated changes in market or industry practices that adversely impact our strategic and financial expectations of an acquired company, assets or business and require us to write-off or dispose of such acquired company, assets, or business;

•	the amortization of purchased intangible assets;

•	incurring expenses associated with an impairment of all or a portion of goodwill and other intangible assets due to the failure of certain acquisitions to realize expected benefits; and

•	diluting the share value and voting power of existing stockholders.

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•	damage from fire, power loss, and other natural disasters;

•	communications failures;

•	software and hardware errors, failures, and crashes;

•	security breaches and computer viruses and similar disruptive problems; and

•	other potential interruptions.

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•	finance unanticipated working capital requirements;

•	develop or enhance our technological infrastructure and our existing products and services;

•	fund strategic relationships;

•	respond to competitive pressures; and

•	acquire complementary businesses, assets, technologies, products or services.

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•	make it difficult for us to satisfy our obligations, including making interest payments on our other debt obligations;

•	limit our ability to obtain additional financing to operate our business;

•	require us to dedicate a substantial portion of our cash flow to payments on our debt, reducing our ability to use our cash flow to fund capital expenditures and working capital and other general operational requirements;

•	limit our flexibility to execute our business strategy and plan for and react to changes in our business and the healthcare industry;

•	place us at a competitive disadvantage relative to some of our competitors that have less debt than us;

•	limit our ability to pursue acquisitions; and

•	increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates or a downturn in our business or the economy.

•	our ability to offer new and innovative products and services;

•	regulatory changes, including changes in healthcare laws;

•	unforeseen legal expenses, including litigation and settlement costs;

•	the purchasing and budgeting cycles of our members;

•	the lengthy sales cycles for our products and services, which may cause significant delays in generating revenues or an inability to generate revenues;

•	pricing pressures with respect to our future sales;

•	the timing and success of new product and service offerings by us or by our competitors;

•	member decisions regarding renewal or termination of their contracts, especially those involving our larger member relationships;

•	the amount and timing of costs related to the maintenance and expansion of our business, operations and infrastructure;

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•	the amount and timing of costs related to the development, adaptation, acquisition, or integration of acquired technologies or businesses;

•	the financial condition of our current and potential new members;

•	general economic and market conditions and economic conditions specific to the healthcare industry; and

•	the impact of COVID-19 and future pandemics on the economy and healthcare industry.

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•	register our company and list our FDA-regulated products with the FDA;

•	obtain pre-market clearance from the FDA based on demonstration of substantial equivalence to a legally marketed device before marketing our regulated products;

•	obtain FDA approval by demonstrating the safety and effectiveness of the regulated products prior to marketing;

•	submit to inspections by the FDA; and

•

comply with various FDA regulations, including the agency's quality system regulation, medical device reporting regulations, requirements for medical device modifications, increased rigor of the secure development life cycle in the development of medical devices and the interoperability of medical devices and electronic health records, requirements for clinical investigations, corrections and removal reporting regulations, and post-market surveillance regulations.

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•	divide our Board of Directors into three classes with staggered three-year terms, which may delay or prevent a change of our management or a change in control;

•	authorize our Board of Directors to issue "blank check" preferred stock in order to increase the aggregate number of outstanding shares of capital stock and thereby make a takeover more difficult and expensive;

•	do not permit cumulative voting in the election of directors, which would otherwise allow less than a majority of stockholders to elect director candidates;

•	do not permit stockholders to take action by written consent;

•	provide that special meetings of the stockholders may be called only by or at the direction of the Board of Directors, the chair of our Board or the chief executive officer;

•	require advance notice to be given by stockholders of any stockholder proposals or director nominees;

•	require a super-majority vote of the stockholders to amend our certificate of incorporation; and

•	allow our Board of Directors to make, alter or repeal our bylaws but only allow stockholders to amend our bylaws upon the approval of 662/3% or more of the voting power of all of the outstanding shares of our capital stock entitled to vote.

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•	our Class A common stock;

•	the NASDAQ Composite stock index ("NASDAQ Composite Index");

•	a customized peer group of 14 companies selected by us that we believe is better aligned with our company (the "Peer Group"); and

•	a customized peer group of companies previously used by us (the "Prior Peer Group").

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(a)	Assumes $100 invested on June 30, 2015, including reinvestment of dividends. As noted above, we have not paid any cash dividends during the period covered by the graph.

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(1)

Amounts include the results of operations of Medpricer.com, Inc. ("Medpricer"), Acurity, LLC and Nexera, LLC and Contigo Health, LLC ("Contigo Health", f/k/a Health Design Plus, LLC, ("HDP")), from October 28, 2019, February 28, 2020 and May 4, 2020, respectively, the dates of acquisition of all of the outstanding common stock in Medpricer, substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc. and 97% of the equity of HDP, respectively. See Note 3 - Business Acquisitions to the accompanying audited consolidated financial statements for further information related to the acquisition completed during the year ended June 30, 2020.

(2)	Results have been retrospectively adjusted to reflect the specialty pharmacy business as a discontinued operation for all periods presented. See Note 4 - Discontinued Operations and Exit Activities to the accompanying audited consolidated financial statements for further information.

(3)	Amounts include the results of operations of Stanson Health, Inc. ("Stanson") from November 9, 2018, the date of acquisition of all the outstanding common stock of Stanson. See Note 3 - Business Acquisitions to the accompanying audited consolidated financial statements for further information related to the acquisition completed during the year ended June 30, 2019.

(4)

Amounts include the results of operations of (i) Acro Pharmaceutical Services LLC and Community Pharmacy Services, LLC (collectively, "Acro Pharmaceuticals") from August 23, 2016, the date of acquisition of all of the membership interests of Acro Pharmaceuticals, retrospectively adjusted to be reflected as a discontinued operation, and (ii) Innovatix, LLC ("Innovatix") and Essensa Ventures, LLC ("Essensa") from December 2, 2016, the date of acquisition of all the membership interests of Innovatix and Essensa. Prior to December 2, 2016, we held 50% of the membership interests in Innovatix, and reported equity in net income of Innovatix within other income (expense), net in the Consolidated Statements of Income and Comprehensive Income.

(5)	Amounts include the results of operations of InFlowHealth, LLC ("InFlow"), CECity.com, Inc. ("CECity") and Healthcare Insights, LLC ("HCI"), from October 1, 2015, August 20, 2015 and July 31, 2015, respectively, the dates of acquisition of all the membership interests of InFlow, all the outstanding shares of CECity, and all the membership interests of HCI, respectively.

(6)

Other operating income includes the adjustment to TRA liabilities. Changes in estimated TRA liabilities that are the result of a change in tax accounting method, including the impacts of the TCJA, are recorded as a component of other operating income in the Consolidated Statements of Income and Comprehensive Income. Changes in estimated TRA liabilities that are related to new basis changes as a result of the exchange of Class B common units for a like number of shares of Class A common stock or as a result of departed member owners are recorded as an increase or decrease to additional paid-in capital in the Consolidated Statements of Stockholders' Equity (Deficit).

(7)

Other income (expense), net, consists primarily of a one-time gain of $205.1 million related to the remeasurement of our historical 50% equity method investment in Innovatix to fair value upon acquisition of Innovatix and Essensa on December 2, 2016 which occurred during the year ended June 30, 2017. In addition, other income (expense), net includes equity in net income of unconsolidated affiliates that is generated from our equity method investments. Our equity method investments primarily consist of our 49% ownership in FFF Enterprises, Inc. ("FFF"), and prior to the acquisition of Innovatix and Essensa, included our 50% ownership interest in Innovatix. Other income (expense), net, also includes net changes in the fair values of the FFF put and call rights (see Note 6 - Fair Value Measurements to the accompanying audited consolidated financial

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(8)	Net income attributable to non-controlling interest includes net income attributable to non-controlling interest in Premier LP. Net income attributable to non-controlling interest in Premier LP represents the portion of net income attributable to the limited partners of Premier LP, which was 41% at June 30, 2020.

(9)	Working capital represents the excess (deficit) of total current assets less total current liabilities attributable to continuing operations. At June 30, 2018 and 2017, working capital deficit includes the $100.3 million and $228.0 million current portion of long-term debt, respectively, which is recorded within current liabilities.

(10)	Deferred revenue is primarily related to deferred subscription fees and deferred consulting fees in our Performance Services segment and consists of unrecognized revenue related to advanced member invoicing or member payments received prior to fulfillment of our revenue recognition criteria.

(11)

Redeemable limited partners' capital represents the member owners' ownership of Premier LP through their ownership of Class B common units. We are required to repurchase a limited partner's interest in Premier LP upon such limited partner's withdrawal from Premier LP, or such limited partner's failure to comply with the applicable purchase commitments under the historical limited partnership agreement of Premier LP. As of June 30, 2020, redeemable limited partners' capital was classified as temporary equity in the mezzanine section of the accompanying Consolidated Balance Sheets as the withdrawal was at the option of each limited partner and the conditions of the repurchase were not solely within our control. We record redeemable limited partners' capital at the greater of the book value or redemption amount per the LP Agreement at the reporting date, with the corresponding offset to additional paid-in-capital and accumulated deficit.

(12)

Pursuant to our previously announced fiscal years 2018, 2019 and 2020 stock repurchase programs, we purchased 6.4 million, 6.7 million and 4.6 million shares of Class A common stock, respectively, at an average price of $31.16, $37.38 and $32.28 per share, respectively, for a total purchase price of $200.0 million during fiscal year 2018, $250.0 million during fiscal year 2019 and $150.0 million during fiscal year 2020. We used 1.6 million, 9.0 million and 4.6 million treasury shares to settle the exchange of Class B common units during the years ended June 30, 2018, 2019 and 2020, respectively.

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Changes in the demand for our products and services. We have experienced and may continue to experience demand uncertainty from both significant increases and decreases in demand as a result of COVID-19. There has been a significant increase in demand for personal protective equipment ("PPE"), drugs and other supplies directly related to treating and preventing the spread of COVID-19. However, either voluntarily or due to government orders or advisories, patients, hospitals and other medical facilities have deferred elective procedures and routine medical visits during the crisis, which created a significant decline in the demand for supplies and services not related to COVID-19 in the fourth quarter of fiscal 2020 and such lower demand is expected to continue into fiscal 2021. In addition, as a result of our members' focus on managing COVID-19 and its impacts, we have experienced a decrease in demand for our consulting and other performance service engagements. Furthermore, during the COVID-19 pandemic, many of our members' non-acute or non-healthcare facilities, such as education and hospitality businesses, closed, operated on a limited or reduced basis and have delayed re-opening, and, as a result, we may see a material reduction in product sales to those facilities. The extent to which these impacts on demand will continue, and the effect that they will have on our business and operating results, will depend upon future developments that are highly uncertain and cannot be accurately predicted.

•

Limited access to our members' facilities that impacts our ability to fulfill our contractual requirements. Our member hospitals and non-acute care sites have experienced reduced or limited access for non-patients, including our field teams, consultants and other professionals, and travel restrictions have impacted our employees' ability to travel to our members' facilities. The long-term continuation, or any future recurrence of these circumstances may negatively impact the ability of our employees to more effectively deliver existing or sell new products and services to our members and could affect our performance of our existing contracts.

•

Materials and personnel shortages and disruptions in supply chain, including manufacturing and shipping. The global supply chain has been significantly disrupted due to stay at home orders, border closings and rapidly escalating shipping costs. Borders closings and restrictions in response to COVID-19, particularly regarding China and India, have impacted our access to products for our members. Staffing or personnel shortages due to shelter in place orders and quarantines have impacted and in the future may impact us and our members or suppliers. In addition, due to unprecedented demand during the COVID-19 pandemic, there are widespread shortages in certain product categories. In the food service line, COVID-19 related illnesses have impacted food processing suppliers and led to plant closures. If the supply chain for materials used in the products purchased by our members through our GPO or products contract manufactured through our direct sourcing business is adversely impacted by restrictions resulting from COVID-19, our supply chain may be disrupted. Failure of our suppliers, contract manufacturers, distributors, contractors and other business partners to meet their obligations to our members or to us, or significant disruptions in their ability to do so due to their own financial or operational difficulties, may adversely impact our operations.

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Requests for contract modifications, payment deferrals or exercises of force majeure clauses. We have and may continue to receive requests for contract modifications, payment waivers and deferrals, payment reductions or amended payment terms from our contract counterparties. We have and may continue to receive requests to delay service or payment on performance service contracts. In addition, we may receive requests from our suppliers for increases to their contracted prices, and such

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Overall economic and capital markets decline. The impact of the COVID-19 pandemic could result in a prolonged recession or depression in the United States or globally that could harm the banking system, limit demand for all products and services and cause other seen and unforeseen events and circumstances, all of which could negatively impact us. The continued spread of COVID-19 has led to and could continue to lead to severe disruption and volatility in the United States and global capital markets, which could increase our cost of capital and adversely affect our ability to access the capital markets in the future. In addition, trading prices on the public stock market, including our Class A common stock, have been highly volatile as a result of the COVID-19 pandemic.

•	Managing the evolving regulatory environment. In response to COVID-19, federal, state and local governments are issuing new rules, regulations, changing reimbursement eligibility rules, orders and advisories on a regular basis. These government actions can impact us and our members and suppliers.

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(a)	Reflects income tax expense at our estimated effective income tax rate of 26% of adjusted fully distributed net income before income taxes for the years ended June 30, 2020 and 2019, and 32% of adjusted fully distributed income before income taxes for the year ended June 30, 2018.

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(a)	Reflects income tax expense at our estimated effective income tax rate of 26% of adjusted fully distributed net income before income taxes for the years ended June 30, 2020 and 2019, and 32% of adjusted fully distributed income before income taxes for the year ended June 30, 2018.

(b)	Reflects impact of dilutive shares, primarily attributable to the assumed conversion of all Class B common units for Class A common stock.

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•	We have experienced and may continue to experience demand uncertainty from both significant increases in demand for PPE, drugs and other products related to the treatment of COVID-19 and decreases in demand for non-COVID-19 related products.

•	Our GPO member hospitals and non-acute care sites have experienced reduced or limited access for non-patients, including our field teams, consultants and other professionals, and travel restrictions have impacted our employees' ability to travel to our members' facilities.

•	The global supply chain has been significantly disrupted due to stay at home orders, border closings and rapidly escalating shipping costs.

•	We have and may continue to receive requests for contract modifications, payment waivers and deferrals, payment reductions or amended payment terms from our contract counterparties. In addition, several pharmacy suppliers have exercised force majeure clauses related to failure to supply clauses in their contracts with us.

•	The impact of the COVID-19 pandemic could result in a prolonged recession or depression in the United States or globally that could harm the banking system, limit demand for all products and services and cause other seen and unforeseen events and circumstances, all of which could negatively impact us.

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•	In response to COVID-19, federal, state and local governments are issuing new rules, regulations, changing reimbursement eligibility rules, orders and advisories on a regular basis. These government actions can impact us and our members and suppliers.

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(a)

Net cash provided by operating activities from continuing operations excludes the impact of the prepaid administrative fee share for one-time rebates paid by Acurity, Inc. to certain of its then members, as agreed to by Acurity, Inc. prior to entering into the Purchase Agreement and the net change in the aforementioned prepaid administrative fee share capitalized on the Consolidated Balance Sheets as of June 30, 2020.

(a)	Estimated payments due to limited partners under the TRA are based on 85% of the estimated amount of tax savings we expect to receive, generally over a 15-year period.

(b)

On August 10, 2020, Premier exercised its right to terminate the TRA providing all former limited partners a notice of the termination and the amount of the expected payment to be made to each former limited partner pursuant to the early termination provisions of the TRA (each such amount an "Early Termination Payment") with a determination date of August 10, 2020. The aggregate amount of the Early Termination Payments is approximately $473.5 million. Of that amount, approximately $10.6 million is payable within three business days after the date the Early Termination Payment becomes final, which is expected to be on or about September 15, 2020, to former limited partners that did not elect to execute Unit Exchange Agreements. Pursuant to the Unit Exchange Agreements, the remaining amount payable, approximately $462.9 million in the aggregate, will be paid, without interest, to former limited partners that elected to execute Unit Exchange Agreements in 18 equal quarterly installments commencing during the quarter ended March 31, 2021 and ending in the quarter ending June 30, 2025.

(c)	Future contractual obligations for leases represent future minimum payments under noncancelable operating leases primarily for office space.

(d)	Notes payable are non-interest bearing and represent an aggregate principal amount of $9.2 million owed to departed member owners, generally payable over five years from the respective departure dates.

(e)	Additional consideration to be paid pursuant to the Purchase Agreement for the Acurity and Nexera asset acquisition.

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(1) ORGANIZATION AND BASIS OF PRESENTATION

Organization

Premier, Inc. ("Premier" or the "Company") is a publicly held, for-profit Delaware corporation owned by hospitals, health systems and other healthcare organizations (such owners of Premier are referred to herein as "member owners") located in the United States and by public stockholders. The Company is a holding company with no material business operations of its own. The Company's primary asset is its equity interest in its wholly owned subsidiary Premier Services, LLC, a Delaware limited liability company ("Premier GP"). Premier GP is the sole general partner of Premier Healthcare Alliance, L.P. ("Premier LP"), a California limited partnership. The Company conducts substantially all of its business operations through Premier LP and its other consolidated subsidiaries. The Company, together with its subsidiaries and affiliates, is a leading healthcare performance improvement company that unites hospitals, health systems, physicians and other healthcare providers to improve and innovate in the clinical, financial and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry.

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

The Company, together with its subsidiaries and affiliates, delivers its integrated platform of solutions through two business segments: Supply Chain Services and Performance Services. See Note 19 - Segments for further information related to the Company's reportable business segments. The Supply Chain Services segment includes one of the largest healthcare group purchasing organization ("GPO") programs in the United States, supply chain co-management and direct sourcing activities. The Performance Services segment, through its development, integration and delivery of technology with wrap-around service offerings, includes one of the largest clinical analytics and consulting services businesses in the United States focused on healthcare providers. The Company's software as a service ("SaaS") and licensed-based clinical analytics products utilize the Company's comprehensive data set to provide actionable intelligence to its members, enabling them to benchmark, analyze and identify areas of improvement across the three main categories of cost management, quality and safety, and value-based care. While leveraging these tools, the Company also combines its consulting services and technology-enabled performance improvement collaboratives to provide a more comprehensive and holistic customer value proposition and overall experience. The Performance Services segment also includes the Company's direct to employer initiative and insurance management services.

Acquisitions and Divestitures

Acquisition of Health Design Plus, LLC

On May 4, 2020, the Company, through its consolidated subsidiary Premier Healthcare Solutions, Inc. ("PHSI"), acquired 97% of the equity of Health Design Plus, LLC ("HDP") for an adjusted purchase price of $24.0 million, giving effect to certain purchase price adjustments provided for in the purchase agreement, and funded with borrowings under the Credit Facility (the "HDP acquisition"). Shortly after closing, Contigo Health, LLC ("Contigo Health"), a wholly-owned subsidiary of PHSI, was merged with HDP. HDP was the surviving entity and renamed Contigo Health. The seller, University Hospitals Holdings, Inc., retained 3% of the equity in Contigo Health. HDP is a third-party administrator and arranges care for employees through its Centers of Excellence program.

The Company has accounted for the HDP acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values. Total fair value assigned to intangible assets acquired was $13.9 million, primarily comprised of customer relationships and a provider network. The initial purchase price allocation for the HDP acquisition is preliminary and subject to changes in fair value of working capital and valuation of the assets acquired and the liabilities assumed. Contigo Health (f/k/a HDP) is reported as part of the Performance Services segment. See Note 3 - Business Acquisitions for further information.

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Acquisition of Acurity and Nexera Assets

On February 28, 2020, the Company, through two newly formed consolidated subsidiaries, Prince A Purchaser, LLC ("PAP") and Prince N Purchaser, LLC ("PNP"), acquired substantially all of the assets and certain liabilities of Acurity, Inc. and Nexera, Inc., both indirect wholly-owned subsidiaries of Greater New York Hospital Association ("GNYHA"), for an aggregate amount of $291.5 million, of which $166.1 million was paid at closing with borrowings under the Company's Credit Facility (as defined in Note 9 - Debt). Pursuant to the terms of the asset purchase agreement (as amended, the "Purchase Agreement"), an additional $120.0 million will be paid to the sellers in four equal annual installments of $30.0 million on or about June 30, 2021, 2022, 2023 and 2024. An additional $5.4 million is expected to be paid during the Company's first fiscal quarter of 2021. In addition to the aggregate amount of $291.5 million, the Purchase Agreement provides a graduated earn-out opportunity to Acurity, Inc. of up to $30.0 million based upon the Company's achievement of a range of member renewals on terms to be agreed to by the Company and GNYHA based on prevailing market conditions in December 2023.

After the closing of the transaction, the Company changed the names of PAP and PNP to Acurity, LLC ("Acurity") and Nexera, LLC ("Nexera"), respectively. Acurity is a regional group purchasing organization and has been a customer and strategic partner of the Company for more than 24 years. Nexera is a hospital financial improvement consulting firm which partners with healthcare organizations to improve hospital and health system performance, with a significant focus on supply chain enhancement and transformation. The Company reports the operations of Acurity and Nexera as part of its Supply Chain Services segment. See Note 3 - Business Acquisitions for further information.

Acquisition of Medpricer

On October 28, 2019, the Company, through its consolidated subsidiary, Premier Supply Chain Improvement, Inc. ("PSCI"), acquired all of the outstanding capital stock in Medpricer.com, Inc. ("Medpricer") for an adjusted purchase price of $38.5 million, giving effect to certain purchase price adjustments provided for in the purchase agreement. The transaction was funded with borrowings under the Credit Facility. Medpricer is a SaaS-based provider of technology solutions that enable hospitals and other organizations to analyze, benchmark and source purchased services contracts independent of any existing GPO affiliation. Recently, Medpricer changed its name to Conductiv, Inc. ("Conductiv") and is reported as part of the Supply Chain Services segment. See Note 3 - Business Acquisitions for further information.

Acquisition of Stanson

On November 9, 2018, the Company, through its consolidated subsidiary PHSI, acquired 100% of the outstanding capital stock in Stanson Health, Inc. ("Stanson") through a reverse subsidiary merger transaction for $51.5 million in cash. As a result of certain purchase price adjustments provided for in the purchase agreement, the adjusted purchase price was $55.4 million. Stanson is a SaaS-based provider of clinical decision support tools that are integrated directly into the electronic health record workflow to help provide real-time, patient-specific best practices at the point of care. Stanson is reported as part of the Performance Services segment. See Note 3 - Business Acquisitions for further information.

Divestiture of Specialty Pharmacy Business - Discontinued Operations

On June 7, 2019, the Company and its consolidated subsidiaries, NS3 Health, LLC, Commcare Pharmacy - FTL, LLC, and Acro Pharmaceutical Services LLC completed the sale of prescription files and records and certain other assets used in the Company's specialty pharmacy business to ProCare Pharmacy, L.L.C., an affiliate of CVS Health Corporation, for $22.3 million. The Company also received $7.6 million related to the sale of a portion of its pharmaceutical inventory on June 10, 2019, and an additional $3.6 million on July 24, 2019 primarily in connection with the sale of its remaining pharmaceutical inventory. In addition, during the year ended June 30, 2020, the Company substantially completed its wind down and exit from the specialty pharmacy business. See Note 4 - Discontinued Operations and Exit Activities for further information.

The Company recognized non-cash impairment charges of $80.4 million during the year ended June 30, 2019 related to goodwill, purchased intangibles and other assets of the specialty pharmacy business that were not sold or did not have an alternative use.

The Company met the criteria for classifying certain assets and liabilities of the specialty pharmacy business as a discontinued operation as of June 30, 2019. Accordingly, unless otherwise indicated, information in the notes to the condensed consolidated financial statements has been retrospectively adjusted to reflect continuing operations for all periods presented.

Company Structure

The Company, through Premier GP, held a 59% and 49% sole general partner interest in Premier LP at June 30, 2020 and 2019, respectively. In addition to their equity ownership interest in the Company, our member owners held a 41% and 51% limited partner interest in Premier LP at June 30, 2020 and 2019, respectively. On July 31, 2019, as a result of the Class B common unit exchange process, the Company no longer qualified for the "controlled company" exemption under NASDAQ rules, and the Company was

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required to comply with the general NASDAQ rules regarding board and committee composition within one year. On July 31, 2020, the Company met the NASDAQ corporate governance guidelines, including having a majority of independent directors on the Board of Directors. On August 11, 2020, we executed a corporate restructuring as described in Note 21 - Subsequent Events.

Below is a summary of the principal documents that define and regulate the governance and control relationships among Premier, Premier LP and the member owners during fiscal 2020.

LP Agreement

Pursuant to the Amended and Restated Limited Partnership Agreement, as amended ("LP Agreement"), Premier GP is the general partner of Premier LP and controls the day-to-day business affairs and decision-making of Premier LP without the approval of any other partner, subject to certain limited partner approval rights. As the sole member of Premier GP, Premier is responsible for all operational and administrative decisions of Premier LP. In accordance with the LP Agreement, subject to applicable law or regulation and the terms of Premier LP's financing agreements, Premier GP causes Premier LP to make quarterly distributions out of its estimated taxable net income to Premier GP and to the holders of Class B common units as a class in an aggregate amount equal to Premier LP's total taxable income other than net profit attributable to dispositions not in the ordinary course of business for each such quarter multiplied by the effective combined federal, state and local income tax rate then payable by Premier to facilitate payment by each Premier LP partner of taxes, if required, on its share of taxable income of Premier LP. In addition, in accordance with the LP Agreement, Premier GP may cause Premier LP to make additional distributions to Premier GP and to all limited partners holding Class B common units as a class in proportion to their respective number of units, subject to any applicable restrictions under Premier LP's financing agreements or applicable law. Premier GP will distribute any amounts it receives from Premier LP to Premier, which Premier will use to (i) pay applicable taxes, (ii) meet its obligations under the tax receivable agreement ("TRA") and (iii) meet its obligations to the member owners under the Exchange Agreement (as defined below) if they elect to convert their Class B common units for shares of its Class A common stock and Premier elects to pay some or all of the consideration to such member owners in cash.

In the event that a limited partner of Premier LP holding Class B common units not yet eligible to be exchanged for shares of Premier's Class A common stock pursuant to the terms of the Exchange Agreement (i) ceases to participate in Premier's GPO programs, (ii) ceases to be a limited partner of Premier LP (except as a result of a permitted transfer of its Class B common units), (iii) ceases to be a party to a GPO participation agreement (subject to certain limited exceptions) or (iv) becomes a related entity of, or affiliated with, a competing business of Premier LP, in each case, Premier LP will have the option to redeem all of such limited partner's Class B common units not yet eligible to be exchanged at a purchase price set forth in the LP Agreement. In addition, the limited partner will be required to exchange all Class B common units eligible to be exchanged on the next exchange date following the date of the applicable termination event described above.

Voting Trust Agreement

Pursuant to a voting trust agreement (the "Voting Trust Agreement"), the member owners contributed their Class B common stock into Premier Trust, under which Wells Fargo Delaware Trust Company, N.A., as trustee, acts on behalf of the member owners for purposes of voting their shares of Class B common stock. As a result of the Voting Trust Agreement, the member owners retain beneficial ownership of the Class B common stock, while the trustee is the legal owner of such equity. Pursuant to the Voting Trust Agreement, the trustee must vote all of the member owners' Class B common stock as a block in the manner determined by the plurality of the votes received by the trustee from the member owners for the election of directors to serve on our Board of Directors and by a majority of the votes received by the trustee from the member owners for all other matters.

Exchange Agreement

Pursuant to the terms of an exchange agreement ("the Exchange Agreement"), subject to certain restrictions, commencing on October 31, 2014 and during each year thereafter, each member owner has the cumulative right to exchange up to one-seventh of its initial allocation of Class B common units, as well as any additional Class B common units purchased by such member owner pursuant to certain rights of first refusal (discussed below), for shares of Class A common stock (on a one-for-one basis subject to customary adjustments for subdivisions or combinations by split, reverse split, distribution, reclassification, recapitalization or otherwise), cash or a combination of both, the form of consideration to be at the discretion of Premier's Audit and Compliance Committee. This exchange right can be exercised on a quarterly basis and is subject to rights of first refusal in favor of the other holders of Class B common units and Premier LP. For each Class B common unit that is exchanged pursuant to the Exchange Agreement, the member owner will also surrender one corresponding share of our Class B common stock, which will automatically be retired.

Registration Rights Agreement

Pursuant to the terms of a registration rights agreement (the "Registration Rights Agreement") Premier filed with the Securities and Exchange Commission (the "SEC") a resale shelf registration statement for resales from time to time of its Class A common

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stock issued to the member owners in exchange for their Class B common units pursuant to the Exchange Agreement, subject to various restrictions. The registration statement was declared effective by the SEC in November 2014. Subject to certain exceptions, Premier will use reasonable efforts to keep the resale shelf registration statement effective for seven years. Pursuant to the Registration Rights Agreement, Premier may, but is not required to, conduct a company-directed underwritten public offering to allow the member owners to resell Class A common stock received by them in exchange for their Class B common units. Premier, as well as the member owners, will be subject to customary prohibitions on sale prior to and for 60 days following any company-directed underwritten public offering. The Registration Rights Agreement also grants the member owners certain "piggyback" registration rights with respect to other registrations of Class A common stock.

TRA

Pursuant to the terms of the TRA, for as long as the member owner remains a limited partner, Premier has agreed to pay to the member owners, generally over a 15-year period (under current law), 85% of the amount of cash savings, if any, in U.S. federal, foreign, state and local income and franchise tax that Premier actually realizes (or is deemed to realize, in the case of payments required to be made upon certain occurrences under the TRA) as a result of the increases in tax basis resulting from the initial sale of Class B common units by the member owners in conjunction with the IPO, as well as subsequent exchanges by such member owners pursuant to the Exchange Agreement, and of certain other tax benefits related to Premier entering into the TRA, including tax benefits attributable to payments under the TRA.

GPO Participation Agreement

Pursuant to the terms of a GPO participation agreement, each member owner will generally receive cash sharebacks, or revenue share, from Premier LP based upon purchasing by such member owner's acute and alternate site providers and other eligible non-healthcare organizations that are owned, leased or managed by, or affiliated with, each such member owner, or owned, leased, managed and affiliated facilities, through Premier's GPO supplier contracts. In general, our GPO participation agreements automatically extend for successive five-year or seven-year periods (corresponding to the length of their initial terms) unless the member owner notifies Premier LP, prior to the fourth anniversary (in the case of five-year agreements), or sixth anniversary (in the case of seven-year agreements), of the then-current term, that such member owner desires to terminate the GPO participation agreement effective upon the expiration of the then-current term.

The terms and conditions of certain GPO participation agreements vary as a result of provisions in Premier's existing arrangements with member owners that conflict with provisions of the GPO participation agreement and which by the express terms of the GPO participation agreement are incorporated by reference and deemed controlling and will continue to remain in effect. In certain other instances, Premier LP and member owners have entered into GPO participation agreements with certain terms and conditions that vary from the standard form, which were approved by the member agreement review committee of Premier's Board of Directors, based upon regulatory constraints, pending merger and acquisition activity or other circumstances affecting those member owners.

Basis of Presentation and Consolidation

Basis of Presentation

The member owners' interest in Premier LP is reflected as redeemable limited partners' capital in the Company's accompanying Consolidated Balance Sheets, and the limited partners' proportionate share of income in Premier LP is reflected within net income attributable to non-controlling interest in Premier LP and within comprehensive income attributable to non-controlling interest in Premier LP in the Company's accompanying Consolidated Statements of Income and Comprehensive Income.

At June 30, 2020 and 2019, the member owners owned 41% and 51%, respectively, of the Company's combined Class A and Class B common stock through their ownership of Class B common stock. During the year ended June 30, 2020, the member owners exchanged 13.6 million Class B common units and associated Class B common shares for an equal number of Class A common shares pursuant to the Exchange Agreement. The Exchange Agreement provides each member owner the cumulative right to exchange up to one-seventh of its initial allocation of Class B common units, as well as any additional Class B common units purchased by such member owner pursuant to certain rights of first refusal, for shares of Class A common stock (on a one-for-one basis subject to customary adjustments for subdivisions or combinations by split, reverse split, distribution, reclassification, recapitalization or otherwise), cash or a combination of both, the form of consideration to be at the discretion of the Company's independent Audit and Compliance Committee of the Board of Directors (the "Audit and Compliance Committee"). During the year ended June 30, 2020, 13.6 million Class B common units were contributed to Premier LP, converted to Class A common units and remain outstanding. Correspondingly, 13.6 million Class B common shares were retired during the same period. For further information, see Note 13 - Earnings (Loss) Per Share.

At June 30, 2020 and 2019, the public investors, which may include member owners that have received shares of Class A common stock in connection with previous exchanges of their Class B common units and associated Class B common shares for an equal

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number of Class A common shares, owned approximately 59% and 49%, respectively, of the Company's outstanding common stock through their ownership of Class A common stock.

Principles of Consolidation

The accompanying consolidated financial statements have been prepared pursuant to the rules and regulations of the SEC and in accordance with U.S. generally accepted accounting principles ("GAAP") and include the assets, liabilities, revenues and expenses of all majority-owned subsidiaries over which the Company exercised control and when applicable, entities for which the Company had a controlling financial interest or was the primary beneficiary. All intercompany transactions have been eliminated upon consolidation. Accordingly, the consolidated financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of results of operations and financial condition for the periods shown, including normal recurring adjustments.

Variable Interest Entities

Premier LP is a variable interest entity ("VIE") as the limited partners do not have the ability to exercise a substantive removal right with respect to the general partner. The Company, through Premier GP, has the exclusive power and authority to manage the business and affairs of Premier LP, to make all decisions with respect to driving the economic performance of Premier LP, and has both an obligation to absorb losses and a right to receive benefits. As such, the Company is the primary beneficiary of the VIE and consolidates the operations of Premier LP under the Variable Interest Model.

The assets and liabilities of Premier LP at June 30, 2020 and 2019, including assets and liabilities of discontinued operations, consisted of the following (in thousands):

	June 30, 2020			June 30, 2019
Assets
Current	$	610,990		$	603,390
Noncurrent	1,900,137			1,536,685
Total assets of Premier LP	$	2,511,127		$	2,140,075
Liabilities
Current	$	580,430		$	517,616
Noncurrent	296,801			118,032
Total liabilities of Premier LP	$	877,231		$	635,648

Net income attributable to Premier LP, including income and expense that has been classified as discontinued operations, during the years ended June 30, 2020, 2019 and 2018 was as follows (in thousands):

	Year Ended June 30,
	2020			2019			2018
Premier LP net income	$	359,978		$	322,865		$	371,131

Premier LP's cash flows, including cash flows attributable to discontinued operations, for the years ended June 30, 2020, 2019 and 2018 consisted of the following (in thousands):

	Year Ended June 30,
	2020			2019			2018
Net cash provided by (used in):
Operating activities	$	339,894		$	533,024		$	534,643
Investing activities	(222,322		)	(129,469		)	(92,680		)
Financing activities	(159,948		)	(390,086		)	(457,673		)
Net (decrease) increase in cash and cash equivalents	(42,376		)	13,469			(15,710		)
Cash and cash equivalents at beginning of year	131,210			117,741			133,451
Cash and cash equivalents at end of year	$	88,834		$	131,210		$	117,741

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Use of Estimates in the Preparation of Financial Statements

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

(2) SIGNIFICANT ACCOUNTING POLICIES

Business Combinations

The Company accounts for acquisitions of a business using the acquisition method. All of the assets acquired, liabilities assumed, contractual contingencies and contingent consideration are generally recognized at their fair value on the acquisition date. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Acquisition-related costs are recorded as expenses in the Consolidated Statements of Income and Comprehensive Income.

Several valuation methods may be used to determine the fair value of assets acquired and liabilities assumed. For intangible assets, the Company typically uses the income method. This method starts with a forecast of all of the expected future net cash flows for each asset. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams. Some of the more significant estimates and assumptions inherent in the income method or other methods include the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows and the assessment of the asset's life cycle and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory or economic barriers to entry. Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives.

Cash and Cash Equivalents

Cash and cash equivalents include cash and highly liquid investments with remaining maturities of three months or less at the time of acquisition.

Fair Value of Financial Instruments

The fair value of an asset or liability is based on the assumptions that market participants would use in pricing the asset or liability. Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value. The Company follows a three-tiered fair value hierarchy when determining the inputs to valuation techniques. The fair value hierarchy prioritizes the inputs to valuation techniques into three broad levels in order to maximize the use of observable inputs and minimize the use of unobservable inputs. The levels of the fair value hierarchy are as follows:

Level 1: consists of financial instruments whose values are based on quoted market prices for identical financial instruments in an active market;

Level 2: consists of financial instruments whose values are determined using models or other valuation methodologies that utilize inputs that are observable either directly or indirectly, including (i) quoted prices for similar assets or liabilities in active markets, (ii) quoted prices for identical or similar assets or liabilities in markets that are not active, (iii) pricing models whose inputs are observable for substantially the full term of the financial instrument and (iv) pricing models whose inputs are derived principally from or corroborated by observable market data through correlation or other means for substantially the full term of the financial instrument;

Level 3: consists of financial instruments whose values are determined using pricing models that utilize significant inputs that are primarily unobservable, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

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Accounts Receivable

Financial instruments, other than marketable securities, that subject the Company to potential concentrations of credit risk consist primarily of the Company's receivables. Receivables consist primarily of amounts due from hospital and healthcare system members for services and products. The Company maintains an allowance for doubtful accounts. This allowance is an estimate and is regularly evaluated by the Company for adequacy by taking into consideration factors such as past experience, credit quality of the member base, age of the receivable balances, both individually and in the aggregate, and current economic conditions that may affect a member's ability to pay. Provisions for the allowance for doubtful accounts attributable to bad debt are recorded in selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income. Accounts deemed uncollectible are written off, net of actual recoveries. If circumstances related to specific customers change, the Company's estimate of the recoverability of receivables could be further adjusted.

Contract Assets

Supply Chain Services contract assets primarily represent estimated customer purchases on supplier contracts for which administrative fees have been earned, but not collected. Performance Services contract assets represent revenue earned for services provided but which the Company is not contractually able to bill as of the end of the respective reporting period.

Inventory

Inventory consisting of finished goods, primarily medical products, are stated at the lower of cost or net realizable values on an average cost basis. The Company performs periodic assessments to determine the existence of obsolete, slow-moving and unusable inventory and records necessary provisions to reduce such inventory to net realizable value.

Property and Equipment, Net

Property and equipment is recorded at cost, net of accumulated depreciation. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance and repairs are charged to expense as incurred. When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the Consolidated Statements of Income and Comprehensive Income for the respective period. Depreciation is calculated over the estimated useful lives of the related assets using the straight-line method. Capitalized modifications to leased properties are amortized using the straight-line method over the shorter of the lease term or the assets' estimated useful lives. See Note 8 - Supplemental Balance Sheet Information.

Costs associated with internally developed computer software that are incurred in the preliminary project stage are expensed as incurred. During the development stage, direct consulting costs and payroll and payroll-related costs for employees that are directly associated with each project are capitalized. Internal use capitalized software costs are included in property and equipment, net in the accompanying Consolidated Balance Sheets. Capitalized costs are amortized on a straight-line basis over the estimated useful lives of the related software applications of up to five years and amortization is included in cost of revenue or selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income, based on the software's end use. Replacements and major improvements are capitalized, while maintenance and repairs are expensed as incurred. Some of the more significant estimates and assumptions inherent in this process involve determining the stages of the software development project, the direct costs to capitalize and the estimated useful life of the capitalized software. The Company capitalized costs related to internally developed software of $88.3 million and $77.3 million during the years ended June 30, 2020 and 2019, respectively.

The Company reviews the carrying value of property and equipment for impairment whenever events and circumstances indicate that the carrying value of an asset or asset group may not be recoverable from the estimated cash flows expected to result from its use and eventual disposition. In cases where the undiscounted cash flows are less than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the asset or asset group. The factors considered by the Company in performing this assessment include current and projected operating results, trends and prospects, the manner in which the asset or asset group is used, and the effects of obsolescence, demand, competition and other economic factors.

Intangible Assets

Definite-lived intangible assets consist primarily of member relationships, technology, customer relationships, trade names and non-compete agreements, and are amortized on a straight-line basis over their estimated useful lives. See Note 9 - Goodwill and Intangible Assets.

The Company reviews the carrying value of definite-lived intangible assets subject to amortization for impairment whenever events and circumstances indicate that the carrying value of the intangible asset subject to amortization may not be recoverable from the estimated cash flows expected to result from its use and eventual disposition. In cases where the undiscounted cash flows are less

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than the carrying value, an impairment loss is recognized equal to an amount by which the carrying value exceeds the fair value of the intangible asset subject to amortization on the measurement date. The factors considered by the Company in performing this assessment include current and projected operating results, trends and prospects, the manner in which the definite-lived intangible asset is used, and the effects of obsolescence, demand and competition, as well as other economic factors.

Goodwill

Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Goodwill is not amortized. The Company performs its annual goodwill impairment testing on the first day of the last fiscal quarter of its fiscal year unless impairment indicators are present which could require an interim impairment test.

Under accounting rules, the Company may elect to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. This qualitative assessment requires an evaluation of any excess of fair value over the carrying value for a reporting unit and significant judgment regarding potential changes in valuation inputs, including a review of the Company's most recent long-range projections, analysis of operating results versus the prior year, changes in market values, changes in discount rates and changes in terminal growth rate assumptions. If it is determined that an impairment is more likely than not to exist, then the Company is required to perform a quantitative assessment to determine whether or not goodwill is impaired and to measure the amount of goodwill impairment, if any.

A goodwill impairment charge is recognized for the amount by which the reporting unit's carrying amount exceeds its fair value. The Company determines the fair value of a reporting unit using a discounted cash flow analysis as well as market-based approaches. Determining fair value requires the exercise of significant judgment, including judgment about appropriate discount rates, perpetual growth rates and the amount and timing of expected future cash flows. The cash flows employed in the discounted cash flow analyses are based on the most recent budget and long-term forecast. The discount rates used in the discounted cash flow analyses are intended to reflect the risks inherent in the future cash flows of the respective reporting units. The market comparable approach estimates fair value using market multiples of various financial measures compared to a set of comparable public companies and recent comparable transactions.

The Company's most recent annual impairment testing as of April 1, 2020 consisted of a quantitative assessment and did not result in any goodwill impairment charges. During the fourth quarter of fiscal year 2019, the Company performed an interim assessment of goodwill and other long-lived assets of its specialty pharmacy business for impairment following the announcement of the Company's commitment to sell certain assets of the specialty pharmacy business and to wind down and exit the specialty pharmacy business. See Note 4 - Discontinued Operations and Exit Activities for further information.

Contract Costs

Contract costs represent amounts the Company has capitalized and reflect the incremental costs of obtaining and fulfilling a contract, which include sales commissions and costs related to implementing SaaS informatics tools. For commissions on new contracts, these costs are amortized over the life of the expected relationship with the customer for the respective performance obligation. For renewals, commissions are amortized over the contract life with the customer. Implementation costs are amortized on a straight-line basis, once the tool is implemented, over the life of the expected relationship with the customer for the respective performance obligation, which is consistent with the transfer of services to the customer to which the implementation relates. The Company's contract costs are included in other assets in the Consolidated Balance Sheets, while the associated amortization related to sales commissions is included in selling, general and administrative expenses and the associated amortization related to implementation costs is included in cost of revenue in the Consolidated Statements of Income and Comprehensive Income.

Deferred Revenue

Deferred revenue consists of unrecognized revenue related to advanced customer invoicing or member payments received prior to fulfillment of the Company's revenue recognition criteria. Substantially all deferred revenue consists of deferred subscription fees and deferred consulting fees. Subscription fees for Company-hosted SaaS applications are deferred until the customer's unique data records have been incorporated into the underlying software database, or until customer site-specific software has been implemented and the customer has access to the software. Deferred consulting fees arise upon invoicing to customers prior to services being performed.

Deferred Compensation Plan Assets and Related Liabilities

The Company maintains a non-qualified deferred compensation plan for the benefit of eligible employees. This plan is designed to permit employee deferrals in excess of certain tax limits and provides for discretionary employer contributions in excess of the tax limits applicable to the Company's 401(k) plan. The amounts deferred are invested in assets at the direction of the employee. Company assets designated to pay benefits under the plan are held by a rabbi trust and are subject to the general creditors of the Company.

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The assets, classified as trading securities, and liabilities of the rabbi trust are recorded at fair value and are accounted for as assets and liabilities of the Company. The assets of the rabbi trust are designated to fund the deferred compensation liabilities owed to current and former employees. The deferred compensation plan contains both current and non-current assets. The current portion of the deferred compensation plan assets is comprised of estimated amounts to be paid within one year to departed participants following separation from the Company. The current portion, totaling $3.4 million and $4.8 million at June 30, 2020 and 2019, respectively, is included in prepaid expenses and other current assets in the accompanying Consolidated Balance Sheets. The corresponding current portion of deferred compensation plan liabilities is included in other current liabilities in the accompanying Consolidated Balance Sheets at June 30, 2020 and 2019. The non-current portion of the deferred compensation plan assets, totaling $49.2 million and $45.5 million at June 30, 2020 and 2019, respectively, is included in long-term assets in the accompanying Consolidated Balance Sheets. The corresponding non-current portion of deferred compensation plan liabilities is included in long-term liabilities in the accompanying Consolidated Balance Sheets at June 30, 2020 and 2019. Realized and unrealized gains of $3.9 million, $2.5 million and $4.0 million on plan assets as of the years ended June 30, 2020, 2019 and 2018, respectively, are included in other income (expense), in the accompanying Consolidated Statements of Income and Comprehensive Income. Deferred compensation expense from the change in the corresponding liability of $3.9 million, $2.5 million and $4.0 million, respectively, are included in selling, general and administrative expense in the accompanying Consolidated Statements of Income and Comprehensive Income for the years ended June 30, 2020, 2019 and 2018, respectively.

Leases

The Company enters into lease contracts in which the Company is the lessee, substantially all of which are related to office space leased in various buildings used for general corporate purposes. The terms of these non-cancelable operating leases typically require the Company to pay rent and a share of operating expenses and real estate taxes, generally with an inflation-based rent increase included. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Operating lease right-of-use assets and operating lease liabilities are recognized based on the present value of future minimum lease payments over the lease term beginning at the commencement date. Operating lease right-of-use assets are adjusted for lease incentives, deferred rent and initial direct costs, if incurred. The Company's leases generally do not include an implicit rate; therefore, the Company determined the present value of future minimum lease payments using an incremental borrowing rate based on information available as of July 1, 2019, the transition date. The related lease expense is recognized on a straight-line basis over the lease term.

TRA

The Company records TRA liabilities based on 85% of the estimated amount of tax savings the Company expects to receive, generally over a 15-year period, in connection with the additional tax benefits created in conjunction with the IPO. Absent a TRA Termination Event, tax payments under the TRA will be made to the member owners as the Company realizes tax benefits attributable to the initial purchase of Class B common units from the member owners made concurrently with the IPO and any subsequent exchanges of Class B common units into Class A common stock or cash between the Company and the member owners. Determining the estimated amount of tax savings the Company expects to receive requires judgment as deductibility of goodwill amortization expense is not assured and the estimate of tax savings is dependent upon the actual realization of the tax benefit and the tax rates in effect at that time.

Changes in estimated TRA liabilities that are the result of a change in tax accounting method are recorded in remeasurement of tax receivable agreement liabilities in the Consolidated Statements of Income and Comprehensive Income. Changes in estimated TRA liabilities that are related to new basis changes as a result of the exchange of Class B common units for a like number of shares of Class A common stock or as a result of departed member owners are recorded as an increase or decrease to additional paid-in capital in the Consolidated Statements of Stockholders' Equity (Deficit).

Redeemable Limited Partners' Capital

The LP Agreement includes a provision that provides for redemption of a limited partner's interest upon termination as follows: for Class B common units not yet eligible for exchange, those will be redeemed at a purchase price which is the lower of the limited partner's capital account balance in Premier LP immediately prior to the IPO after considering any IPO proceeds received and the fair market value of the Class A common stock of the Company on the date of the termination with either (a) a five-year, unsecured, non-interest bearing term promissory note, (b) a cashier's check or wire transfer of immediately available funds in an amount equal to the present value of the Class B unit redemption amount, or (c) payment on such other terms mutually agreed upon with Premier GP. For Class B common units that are eligible for exchange, the limited partner is also required to exchange all eligible Class B common units on the next exchange date following the date of the termination.

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A limited partner cannot redeem all or any part of its interest in Premier LP without the approval of Premier GP, which is controlled by the Board of Directors. Given that limited partners hold the majority of the votes of the Board of Directors, limited partners' capital has a redemption feature that is not solely within the control of the Company. As a result, the Company reflects redeemable limited partners' capital as temporary equity in the mezzanine section of the Consolidated Balance Sheets. In addition, the limited partners have the ability to exchange their Class B common units for cash or Class A common shares on a one-for-one basis. Accordingly, the Company records redeemable limited partners' capital at the redemption amount, which represents the greater of the book value or redemption amount per the LP Agreement at the reporting date.

Distributions to Limited Partners under the LP Agreement

Premier LP makes distributions to Premier, Inc. as the general partner and to the limited partners in the form of a legal partnership income distribution governed by the terms of the LP Agreement. The general partner distribution is based on the general partner's ownership in Premier LP. The limited partner distributions are based on the limited partners' ownership in Premier LP and relative participation across Premier service offerings. While the limited partner distributions are partially based on relative participation across Premier service offerings, the actual distribution is not solely based on revenue generated from an individual partner's participation as distributions are based on the net income or loss of the partnership which encompass the operating expenses of the partnership as well as income or loss generated by non-owner members' participation in Premier's service offerings. To the extent Premier LP incurred a net loss, the partners would not receive a quarterly distribution.

Revenue Recognition

The Company accounts for a contract with a customer when the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection.

Revenue is recognized when, or as, control of a promised product or service transfers to a customer, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products or services. If the consideration promised in a contract includes a variable amount, the Company estimates the amount to which it expects to be entitled using either the expected value or most likely amount method. The Company's contracts may include terms that could cause variability in the transaction price, including, for example, revenue share, rebates, discounts, and variable fees based on performance.

The Company only includes estimated amounts of consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. These estimates require management to make complex, difficult or subjective judgments, and to make estimates about the effect of matters inherently uncertain. As such, the Company may not be able to reliably estimate variable fees based on performance in certain long-term arrangements due to uncertainties that are not expected to be resolved for a long period of time or when the Company's experience with similar types of contracts is limited. Estimates of variable consideration and the determination of whether to include estimated amounts of consideration in the transaction price are based on information (historical, current and forecasted) that is reasonably available to the Company, taking into consideration the type of customer, the type of transaction and the specific facts and circumstances of each arrangement. Additionally, management performs periodic analyses to verify the accuracy of estimates for variable consideration.

Although the Company believes that its approach in developing estimates and reliance on certain judgments and underlying inputs is reasonable, actual results could differ which may result in exposure of increases or decreases in revenue that could be material.

Performance Obligations

A performance obligation is a promise to transfer a distinct good or service to a customer. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contracts may have a single performance obligation as the promise to transfer individual goods or services is not separately identifiable from other promises, and therefore, not distinct, while other contracts may have multiple performance obligations, most commonly due to the contract covering multiple deliverable arrangements (licensing fees, subscription fees, professional fees for consulting services, etc.).

Net Administrative Fees Revenue

Net administrative fees revenue is a single performance obligation earned through a series of distinct daily services and includes maintaining a network of members to participate in the group purchasing program and providing suppliers efficiency in contracting and access to the Company's members. Revenue is generated through administrative fees received from suppliers and is included in service revenue in the accompanying Consolidated Statements of Income and Comprehensive Income.

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The Company, through its GPO programs, aggregates member purchasing power to negotiate pricing discounts and improve contract terms with suppliers. Contracted suppliers pay the Company administrative fees which generally represent 1% to 3% of the purchase price of goods and services sold to members under the contracts the Company has negotiated. Administrative fees are variable consideration and are recognized as earned based upon estimated purchases by the Company's members utilizing analytics based on historical member spend and updates for current trends and expectations. Administrative fees are estimated due to the difference in timing of when a member purchases on a supplier contract and when the Company receives the purchasing information. Member and supplier contracts substantiate persuasive evidence of an arrangement. The Company does not take title to the underlying equipment or products purchased by members through its GPO supplier contracts. Administrative fee revenue receivable is included in contract assets in the accompanying Consolidated Balance Sheets.

The Company pays a revenue share equal to a percentage of gross administrative fees, which is estimated according to the members' contractual agreements with the Company using a portfolio approach based on historical revenue fee share percentages and adjusted for current or anticipated trends. Revenue share is recognized as a reduction to gross administrative fees revenue to arrive at a net administrative fees revenue, and the corresponding revenue share liability is included in revenue share obligations in the accompanying Consolidated Balance Sheets.

Product Revenue

Direct sourcing generates revenue through products sold to distributors, hospitals and other customers. Revenue is recognized once control of products has been transferred to the customer and is recorded net of discounts and rebates offered to customers. Discounts and rebates are estimated based on contractual terms and historical trends.

Other Services and Support Revenue

Within Performance Services, which provides technology with wrap-around service offerings, revenue consists of SaaS clinical analytics products subscriptions, perpetual and term licenses, performance improvement collaboratives and other service subscriptions, professional fees for consulting services, third party administrator fees for the direct to employer initiative and insurance services management fees and commissions from group-sponsored insurance programs.

SaaS clinical analytics subscriptions include the right to use the Company's proprietary hosted technology on a SaaS basis, training and member support to deliver improvements in cost management, quality and safety, value-based care and provider analytics. SaaS arrangements create a single performance obligation for each subscription within the contract in which the nature of the obligation is a stand-ready obligation, and each day of service meets the criteria for over time recognition. Pricing varies by application and size of healthcare system. Clinical analytics subscriptions are generally three to five year agreements with automatic renewal clauses and annual price escalators that typically do not allow for early termination. These agreements do not allow for physical possession of the software. Subscription fees are typically billed on a monthly basis and revenue is recognized as a single deliverable on a straight-line basis over the remaining contractual period following implementation. Implementation involves the completion of data preparation services that are unique to each member's data set and, in certain cases, the installation of member site-specific software, in order to access and transfer member data into the Company's hosted SaaS clinical analytics products. Implementation is generally 60 to 240 days following contract execution before the SaaS clinical analytics products can be fully utilized by the member.

The Company sells perpetual and term licenses that include post-contract customer support in the form of maintenance and support services. Pricing varies by application and size of healthcare system. Fees for the initial period include the license fees, implementation fees and the initial bundled maintenance and support services fees. The maintenance fees for the initial period are recognized on a straight-line basis over the remaining initial period following implementation. Subsequent renewal maintenance and support services fees are recognized on a straight-line basis over the contractually stated renewal periods. Implementation services are provided to the customer prior to the use of the software and do not involve significant customization or modification. Implementation is generally 250 to 300 days following contract execution before the licensed software products can be fully utilized by the member.

Revenue from performance improvement collaboratives and other service subscriptions that support the Company's offerings in cost management, quality and safety, and value-based care is recognized over the service period as the services are provided, which is generally one year. Performance improvement collaboratives and other services subscriptions revenue is considered one performance obligation and is generated by providing customers access to online communities whereby data is housed and available for analytics and benchmarking.

Professional fees for consulting services are sold under contracts, the terms of which vary based on the nature of the engagement. These services typically include general consulting, report-based consulting and cost savings initiatives. Promised services under such consulting engagements are typically not considered distinct and are regularly combined and accounted for as one performance obligation. Fees are billed as stipulated in the contract, and revenue is recognized on a proportional performance method as services

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are performed or when deliverables are provided. In situations where the contracts have significant contract performance guarantees, the performance guarantees are estimated and accounted for as a form of variable consideration when determining the transaction price. In the event that guaranteed savings levels are not achieved, the Company may have to perform additional services at no additional charge in order to achieve the guaranteed savings or pay the difference between the savings that were guaranteed and the actual achieved savings. Occasionally, the Company's entitlement to consideration is predicated on the occurrence of an event such as the delivery of a report for which client acceptance is required. However, except for event-driven point-in-time transactions, the majority of services provided within this service line are delivered over time due to the continuous benefit provided to the Company's customers.

Consulting arrangements can require significant estimates for the transaction price and estimated number of hours within an engagement. These estimates are based on the expected value which is derived from outcomes from historical contracts that are similar in nature and forecasted amounts based on anticipated savings for the new agreements. The transaction price is generally constrained until the target transaction price becomes more certain.

Third party administrator fees for our direct to employer initiative consist of integrated fees for the processing of self-insured health care plan claims. Third party administrator fees are invoiced to customers on a monthly basis and typically collected in that period. Revenue is recognized in the period in which the services have been provided.

Insurance services management fees are recognized in the period in which such services are provided. Commissions from group sponsored insurance programs are earned by acting as an intermediary in the placement of effective insurance policies. Under this arrangement, revenue is recognized at a point in time on the effective date of the associated policies when control of the policy transfers to the customer and is constrained for estimated early terminations.

Multiple Deliverable Arrangements

The Company enters into agreements where the individual deliverables discussed above, such as SaaS subscriptions and consulting services, are bundled into a single service arrangement. These agreements are generally provided over a time period ranging from approximately three months to five years after the applicable contract execution date. Revenue, including both fixed and variable consideration, is allocated to the individual performance obligations within the arrangement based on the stand-alone selling price when it is sold separately in a stand-alone arrangement.

Cost of Revenue and Operating Expenses

Cost of Revenue

Cost of service revenue includes expenses related to employees (including compensation and benefits) and outside consultants who directly provide services related to revenue-generating activities, including consulting services to members and capitalized implementation services related to SaaS informatics products. Cost of service revenue also includes expenses related to hosting services, related data center capacity costs, third-party product license expenses and amortization of the cost of internal use software.

Cost of product revenue consists of purchase and shipment costs for direct sourced medical products.

Operating Expenses

Selling, general and administrative expenses consist of expenses directly associated with selling and administrative employees and indirect expenses associated with employees that primarily support revenue generating activities (including compensation and benefits) and travel-related expenses, as well as occupancy and other indirect expenses, insurance expenses, professional fees, and other general overhead expenses.

Research and development expenses consist of employee-related compensation and benefits expenses, and third-party consulting fees of technology professionals, incurred to develop, support and maintain the Company's software-related products and services.

Amortization of purchased intangible assets includes the amortization of all identified definite-lived intangible assets resulting from acquisitions.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs are reflected in selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income and were $5.0 million, $4.8 million and $4.0 million for the years ended June 30, 2020, 2019 and 2018, respectively.

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Income Taxes

The Company accounts for income taxes under the asset and liability approach. Deferred tax assets or liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates as well as net operating losses and credit carryforwards, which will be in effect when these differences reverse. The Company provides a valuation allowance against net deferred tax assets when, based upon the available evidence, it is more likely than not that the deferred tax assets will not be realized.

The Company prepares and files tax returns based on interpretations of tax laws and regulations. The Company's tax returns are subject to examination by various taxing authorities in the normal course of business. Such examinations may result in future tax, interest and penalty assessments by these taxing authorities.

In determining the Company's tax expense for financial reporting purposes, the Company establishes a reserve for uncertain income tax positions unless it is determined to be "more likely than not" that such tax positions would be sustained upon examination, based on their technical merits. That is, for financial reporting purposes, the Company only recognizes tax benefits taken on the tax return if it believes it is "more likely than not" that such tax positions would be sustained. There is considerable judgment involved in determining whether it is "more likely than not" that positions taken on the tax returns would be sustained.

The Company adjusts its tax reserve estimates periodically because of ongoing examinations by, and settlements with, varying taxing authorities, as well as changes in tax laws, regulations and interpretations. The consolidated tax expense of any given year includes adjustments to prior year income tax reserve and related estimated interest charges that are considered appropriate. The Company's policy is to recognize, when applicable, interest and penalties on uncertain income tax positions as part of income tax expense.

Comprehensive Income

Comprehensive income includes all changes in stockholders' deficit during a period from non-owner sources. Net income and other comprehensive income are reported, net of their related tax effect, to arrive at comprehensive income.

Basic and Diluted Earnings (Loss) per Share ("EPS")

Basic EPS is calculated by dividing net income by the number of weighted average common shares outstanding during the period. Diluted EPS assumes the conversion, exercise or issuance of all potential common stock equivalents, unless the effect of such inclusion would result in the reduction of a loss or the increase in income per share. Diluted EPS is computed by dividing net income by the number of weighted average common shares increased by the dilutive effects of potential common shares outstanding during the period. The number of potential common shares outstanding is determined in accordance with the treasury stock method.

Recently Adopted Accounting Standards

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), ("ASU 2016-12"), which increases transparency and comparability by requiring the recognition of lease assets and lease liabilities on the balance sheet, as well as requiring the disclosure of key information about leasing arrangements. The Company adopted ASU 2016-02 on July 1, 2019 on a modified retrospective basis under the optional transition method; therefore, comparative periods are presented in accordance with Accounting Standards Codification ("ASC") Topic 840. Additionally, the Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry forward (1) historical lease classification and assessments for expired and existing leases, and (2) historical accounting for initial direct costs for existing leases. The Company elected not to recognize any operating lease right-of-use assets or operating lease liabilities for any lease whose term is 12 months or less and does not include a purchase option that the Company is reasonably certain to exercise. The Company also elected to account for the non-lease components within its leases as part of the single lease component to which they are related. Refer to "Adoption of ASC Topic 842" for additional information on the impact of the adoption of ASC Topic 842.

Recently Issued Accounting Standards Not Yet Adopted

In August 2018, the FASB issued ASU 2018-15, Intangibles- Goodwill and Other- Internal Use Software (Topic 350): Customer Account for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract, which requires customers in a cloud computing arrangement (i.e., hosting arrangement) that is a service contract to follow the internal use software guidance in ASC 350-40 to determine which implementation costs to capitalize as assets or expense as incurred. More specifically, capitalized implementation costs related to a hosting arrangement that is a service contract will be amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The new standard will be effective for the Company for the fiscal year beginning July 1, 2020. Early adoption is permitted including adoption in any interim periods. Entities have the option to apply the guidance prospectively to all implementation costs incurred after the date of

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adoption or retrospectively. The Company is currently evaluating the impact of the adoption of the new standard on its consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework- Changes to Disclosure Requirements for Fair Value Measurement, which improves the effectiveness of fair value measurement disclosures by eliminating, adding and modifying certain disclosure requirements for fair value measurements as part of its disclosure framework project. More specifically, entities will no longer be required to disclose the amount of and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy, but public companies will be required to disclose the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The standard is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The new standard will be effective for the Company for the fiscal year beginning July 1, 2020. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of the new standard on its financial statement disclosures.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, ("ASU 2016-13"), which modifies the measurement of expected credit losses on certain financial instruments and the timing of when such losses are recorded. ASU 2016-13, will be effective for the Company for the fiscal year beginning July 1, 2020. The Company has performed an initial analysis on the impact of the adoption of the new standard, and does not expect the adoption to have a material impact on its consolidated financial statements and disclosures.

Adoption of ASC Topic 606

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), which requires revenue to be recognized when promised goods or services are transferred to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted Topic 606 effective July 1, 2018 using the modified retrospective approach. The modified retrospective approach resulted in recognizing the cumulative effect of initially applying Topic 606 as an adjustment to the opening balance of equity at July 1, 2018 for contracts that were not complete at that date. Therefore, comparative information prior to July 1, 2018 has not been adjusted and is reported under the previous revenue standard, Topic 605.

Adoption of ASC Topic 842

The following tables summarize the impacts of adopting ASC Topic 842 on the Consolidated Balance Sheets (in thousands). See Note 18 - Commitments and Contingencies for further information.

	June 30, 2019 As presented			Impact of ASC Topic 842			July 1, 2019 Adjusted
Intangible assets, net (a)	$	270,722		$	(8,474	)	$	262,248
Deferred income tax assets	422,014			302			422,316
Operating lease right-of-use assets	—			62,642			62,642
Total assets	$	2,569,567		$	54,470		$	2,624,037
Other current liabilities	$	7,113		$	7,661		$	14,774
Current liabilities of discontinued operations	11,797			1,200			12,997
Operating lease liabilities	—			58,596			58,596
Other long-term liabilities	67,683			(12,088		)	55,595
Total liabilities	$	908,547		$	55,369		$	963,916
Accumulated deficit (b)	$	(775,674	)	$	(899	)	$	(776,573	)
Total liabilities and equity	$	2,569,567		$	54,470		$	2,624,037

(a)	The Company reclassified a favorable lease commitment, which was recorded within intangible assets, net in the Consolidated Balance Sheets as of June 30, 2019, to operating lease right-of-use assets as part of the adoption of ASC Topic 842.

(b)	The Company recognized a non-cash impairment charge of $1.2 million ($0.9 million net of deferred tax impact), which was recorded as an adjustment to the opening balance of equity at July 1, 2019. The impairment charge was related to operating lease right-of-use assets of the specialty pharmacy business, which is classified as a discontinued operation.

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(3) BUSINESS ACQUISITIONS

Acquisition of Health Design Plus, LLC

On May 4, 2020, the Company, through its consolidated subsidiary PHSI, acquired 97% of the equity of Health Design Plus, LLC ("HDP") for an adjusted purchase price of $24.0 million, giving effect to certain purchase price adjustments provided for in the purchase agreement. The transaction was funded with borrowings under the Credit Facility. HDP is a third-party administrator and arranges care for employees through its Centers of Excellence program.

The Company has accounted for the HDP acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values. Total fair value assigned to intangible assets acquired was $13.9 million, primarily comprised of customer relationships and a provider network. The initial purchase price allocation for the Company's acquisition of HDP is preliminary and subject to changes in fair value of working capital and valuation of the assets acquired and the liabilities assumed.

The HDP acquisition resulted in the recognition of $10.5 million of goodwill attributable to the anticipated profitability of HDP. The HDP acquisition was considered an asset purchase for tax purposes and accordingly, the goodwill is expected to be deductible for tax purposes.

Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to the Company's historic consolidated financial statements. Shortly after closing, HDP was renamed Contigo Health, and is reported as part of the Performance Services segment.

Acquisition of Acurity and Nexera Assets

On February 28, 2020, the Company completed the Acurity and Nexera asset acquisition (the "Acurity and Nexera asset acquisition"). Pursuant to the terms of the Purchase Agreement, the Company agreed to pay an aggregate amount of $291.5 million, of which $166.1 million was paid at closing with borrowings under the Credit Facility. An additional $120.0 million will be paid in four equal annual installments of $30.0 million on or about June 30, 2021, 2022, 2023 and 2024. An additional $5.4 million is expected to be paid to an affiliate of GNYHA during the Company's first fiscal quarter of 2021.

The Purchase Agreement provides an earn-out opportunity for Acurity, Inc. of up to $30.0 million based upon the Company's achievement of a range of member renewals on terms to be agreed to by the Company and GNYHA based on prevailing market conditions in December 2023. As of June 30, 2020, the fair value of the earn-out liability was $22.7 million (see Note 6 - Fair Value Measurements).

Prior to entering into the Purchase Agreement, Acurity, Inc. agreed to provide one-time rebates to certain of its then members based on their pre-closing purchasing volume. The Company has concluded that these one-time rebates of $93.8 million will be excluded from the purchase price and capitalized as prepaid contract administrative fee share at closing. The prepaid contract administrative fee share will be treated as a reduction in the determination of net administrative fee revenue over the remaining life of the acquired contracts on the Company's consolidated financial statements. As a result, the total fair value of consideration paid as part of the acquisition totaled $202.6 million. The current and noncurrent components of the prepaid contract administrative fee share were recorded to the "Prepaid expenses and other current assets" and "Other assets" line items, respectively, on the Consolidated Balance Sheets.

At the closing of the transaction, GNYHA Purchasing Alliance, LLC unilaterally terminated its participation in the TRA, and will cease to be a limited partner of Premier LP on November 2, 2020.

The Company has accounted for the Acurity and Nexera asset acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on fair values. Total fair value assigned to the intangible assets was $187.7 million, consisting primarily of acquired member relationships of $166.0 million. The fair values of the assets acquired and liabilities assumed were preliminarily determined using the income, cost and market approaches. The fair value measurements were primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement as defined in ASC 820, "Fair Value Measurement". The income approach was primarily used to value the intangible assets, consisting primarily of member relationships, customer relationships and trade names. The income approach estimates fair value for an asset based on the present value of cash flow projected to be generated by the asset. Projected cash flow is discounted at a required rate of return that reflects the relative risk of achieving the cash flow and the time value of money.

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The acquisition resulted in the recognition of $24.5 million of goodwill (see Note 9 - Goodwill and Intangible Assets) attributable to the anticipated profitability of the acquired assets of Acurity, Inc. and Nexera, Inc. The acquisition was considered an asset acquisition for tax purposes, and accordingly, the Company expects the goodwill to be deductible for tax purposes. The initial purchase price allocation for the Acurity and Nexera asset acquisition is preliminary and subject to changes in fair value valuation of the assets acquired and the liabilities assumed.

Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to the Company's historic consolidated financial statements. After closing of the transaction, the Company changed the names of PAP and PNP to Acurity and Nexera, respectively. The Company reports their operations as part of the Supply Chain Services segment.

Acquisition of Medpricer

On October 28, 2019, the Company, through its consolidated subsidiary PSCI, acquired all of the outstanding capital stock in Medpricer for an adjusted purchase price of $38.5 million, giving effect to certain purchase price adjustments provided for in the purchase agreement. The transaction was funded with borrowings under the Credit Facility.

The acquisition provides the sellers an earn-out opportunity of up to $5.0 million based on Medpricer's achievement of a revenue target for the calendar year ended December 31, 2020. As of June 30, 2020, the fair value of the earn-out liability was $1.4 million (see Note 6 - Fair Value Measurements).

The Company has accounted for the Medpricer acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values. Total fair value assigned to intangible assets acquired was $12.1 million, primarily comprised of developed software technology.

The Medpricer acquisition resulted in the recognition of $26.2 million of goodwill attributable to the anticipated profitability of Medpricer. The Medpricer acquisition was considered a stock purchase for tax purposes and accordingly, the goodwill is not deductible for tax purposes.

Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to the Company's historic consolidated financial statements. Recently, Medpricer changed its name to Conductiv and is reported as part of the Supply Chain Services segment.

Acquisition of Stanson

On November 9, 2018, the Company, through its consolidated subsidiary PHSI, acquired 100% of the outstanding capital stock in Stanson through a reverse subsidiary merger transaction for $51.5 million in cash. As a result of certain purchase price adjustments provided for in the purchase agreement, the adjusted purchase price was $55.4 million. The transaction was funded with available cash on hand.

The acquisition provides the sellers and certain employees an earn-out opportunity of up to $15.0 million based on Stanson's successful commercial delivery of a SaaS tool on or prior to December 31, 2019 and achievement of certain revenue milestones for the calendar year ended December 31, 2020. As of June 30, 2020, the fair value of the earn-out liability was $9.1 million (see Note 6 - Fair Value Measurements).

The Company has accounted for the Stanson acquisition as a business combination whereby the purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on their fair values. Total fair value assigned to the intangible assets acquired was $23.6 million, primarily comprised of developed software technology.

The Stanson acquisition resulted in the recognition of $37.5 million of goodwill (see Note 9 - Goodwill and Intangible Assets) attributable to the anticipated profitability of Stanson. The Stanson acquisition was considered a stock purchase for tax purposes and accordingly, the goodwill is not deductible for tax purposes.

Pro forma results of operations for the acquisition have not been presented because the effects on revenue and net income were not material to the Company's historic consolidated financial statements. The Company reports Stanson as part of its Performance Services segment.

(4) DISCONTINUED OPERATIONS AND EXIT ACTIVITIES

In connection with the sale of certain assets and wind down and exit from the specialty pharmacy business (see Note 1 - Organization and Basis of Presentation), the Company met the criteria for classifying certain assets and liabilities of its specialty pharmacy business as a discontinued operation as of June 30, 2019. Prior to its classification as a discontinued operation, the specialty pharmacy business was included as part of the Supply Chain Services segment.

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During the fourth quarter of fiscal year 2019, due to our commitment to sell certain assets of, and wind down and exit, the specialty pharmacy business, the Company performed an interim impairment assessment of goodwill and other long-lived assets of its specialty pharmacy business. As a result, the Company recognized a non-cash impairment charge of $80.4 million during the year ended June 30, 2019, including $63.4 million related to goodwill impairment, which is recorded within discontinued operations. In addition, the Company recognized a $6.3 million loss on disposal of other Corporate long-lived assets that supported the specialty pharmacy business during the year ended June 30, 2019. This charge is included in other expense, net in the Consolidated Statements of Income and Comprehensive Income.

The Company incurred $0.9 million and $3.3 million of severance and retention expenses directly associated with the specialty pharmacy business within discontinued operations during the years ended June 30, 2020 and 2019, respectively.

The following table summarizes the major classes of assets and liabilities classified as discontinued operations at June 30, 2019 (in thousands):

	June 30, 2019
Assets
Accounts receivable	$	21,183
Inventory	3,385
Assets of discontinued operations	24,568
Liabilities
Accounts payable	2,255
Accrued expenses	6,630
Accrued compensation and benefits	2,373
Other current liabilities	539
Liabilities of discontinued operations	$	11,797

As of June 30, 2020, there were no assets or liabilities classified as discontinued operations.

The following table summarizes the major components of net loss from discontinued operations for the years ended June 30, 2020, 2019 and 2018 (in thousands):

	Year Ended June 30,
	2020			2019			2018
Net revenue	$	—		$	428,493		$	476,599
Cost of revenue	—			417,524			456,294
Gross profit	—			10,969			20,305
Selling, general and administrative expense	—			23,588			18,388
Amortization of purchased intangible assets	—			2,425			2,646
Operating expenses	—			26,013			21,034
Operating loss from discontinued operations	—			(15,044		)	(729		)
Net (gain) loss on disposal and impairment of assets	(1,697		)	61,219			—
Income (loss) from discontinued operations before income taxes	1,697			(76,263		)	(729		)
Income tax expense (benefit)	643			(25,665		)	(292		)
Income (loss) from discontinued operations, net of tax	1,054			(50,598		)	(437		)
Net income (loss) from discontinued operations attributable to non-controlling interest in Premier LP	(498		)	25,948			279
Net income (loss) from discontinued operations attributable to stockholders	$	556		$	(24,650	)	$	(158	)

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(5) INVESTMENTS

Investments in Unconsolidated Affiliates

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

	Carrying Value							Equity in Net Income (Loss)
	June 30,							Year Ended June 30,
	2020			2019				2020			2019			2018
FFF	$	109,204		$	96,905			$	12,299		$	5,102		$	6,283
Prestige	11,194			—				—			—			—
Other investments	12,937			2,731				238			556			(5,109		)
Total investments	$	133,335		$	99,636			$	12,537		$	5,658		$	1,174

The Company, through its consolidated subsidiary, PSCI, held a 49% interest in FFF Enterprises, Inc. ("FFF") through its ownership of stock of FFF at June 30, 2020 and 2019. The Company records the fair value of the FFF put and call rights in the accompanying Consolidated Balance Sheets (see Note 6 - Fair Value Measurements for additional information). The Company accounts for its investment in FFF using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.

On May 26, 2020, PSCI along with 16 limited partners of Premier LP acquired a minority interest in Prestige Ameritech, Ltd. ("Prestige"). The Company, through its consolidated subsidiary, PRAM Holdings, LLC, held a 19.9% interest in Prestige through its ownership of limited partnership units at June 30, 2020. The Company accounts for its investment in Prestige using the equity method of accounting and includes the investment as part of the Supply Chain Services segment.

Unconsolidated Significant Subsidiaries

In accordance with Rules 3-09 and 4-08(g) of Regulation S-X, the Company must determine which of its unconsolidated investments, if any, are considered "significant subsidiaries." In evaluating these investments, there are three tests utilized to determine if any unconsolidated subsidiaries are considered significant subsidiaries: the investment test, the asset test and the income test. Rule 3-09 of Regulation S-X requires the Company to include separate audited financial statements of any unconsolidated majority-owned subsidiary (unconsolidated subsidiaries in which the Company owns greater than 50% of the voting securities) in an annual report if any of the three tests exceed 20%. Rule 4-08(g) of Regulation S-X requires summarized financial information of unconsolidated subsidiaries in an annual report if any of the three tests exceeds 10%, and summarized financial information in a quarterly report if any of the three tests exceeds 20% pursuant to Rule 10-01(b)(1) of Regulation S-X.

As of June 30, 2020, the Company had one unconsolidated subsidiary whose assets represented greater than 10% of its total assets.

As of June 30, 2020, 2019 and 2018, the Company had no control investments that exceeded 10% in any of the three tests.

The following tables show summarized unaudited financial information for FFF, which met the 10% asset test for the year ended June 30, 2020 (in thousands):

	June 30,
	2020			2019
Total current assets	$	762,608		$	353,612
Total non-current assets	95,444			63,508
Total current liabilities	486,210			216,471
Total non-current liabilities	273,599			124,972
Non-controlling equity	48,139			37,082

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	Year Ended June 30,
	2020			2019			2018
Revenue	$	1,990,282		$	1,840,462		$	1,715,046
Gross profit	108,733			85,232			84,431
Income from operations	35,624			21,680			26,649
Net income	22,565			11,872			13,345
Net income attributable to non-controlling interest	11,057			5,817			6,539

(6) FAIR VALUE MEASUREMENTS

Recurring Fair Value Measurements

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

	Fair Value of Financial Assets and Liabilities			Quoted Prices in Active Markets for Identical Assets (Level 1)			Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)
June 30, 2020
Cash equivalents	$	13,272		$	13,272		$	—		$	—
Deferred compensation plan assets	52,538			52,538			—			—
Total assets	65,810			65,810			—			—
Earn-out liabilities	33,151			—			—			33,151
FFF put right	36,758			—			—			36,758
Total liabilities	$	69,909		$	—		$	—		$	69,909
June 30, 2019
Cash equivalents	$	57,607		$	57,607		$	—		$	—
FFF call right	204			—			—			204
Deferred compensation plan assets	50,229			50,229			—			—
Total assets	108,040			107,836			—			204
Earn-out liabilities	6,816			—			—			6,816
FFF put right	41,652			—			—			41,652
Total liabilities	$	48,468		$	—		$	—		$	48,468

Deferred compensation plan assets consisted of highly liquid mutual fund investments, which were classified as Level 1. The current portion of deferred compensation plan assets was included in prepaid expenses and other current assets ($3.4 million and $4.8 million at June 30, 2020 and 2019, respectively) in the accompanying Consolidated Balance Sheets.

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

FFF put and call rights

In connection with the Company's equity investment in FFF, the Company entered into a shareholders' agreement on July 26, 2016, which was amended and restated on November 22, 2017. On July 29, 2019, the parties entered into a second amended and restated shareholders' agreement that provides, among other things, that the majority shareholder of FFF holds a put right that requires the Company to purchase the majority shareholder's interest in FFF, on an all or nothing basis, on or after April 15, 2023. Any required purchase by the Company upon exercise of the put right by FFF's majority shareholder must be made at a per share price equal to FFF's earnings before interest, taxes, depreciation and amortization ("FFF EBITDA") over the twelve calendar months prior to the purchase date multiplied by a market adjusted multiple, adjusted for any outstanding debt and cash and cash equivalents ("Equity Value per Share"). In addition, under the second amended and restated shareholders' agreement, the Company has a call right that requires the majority shareholder to sell its remaining interest in FFF to the Company, and is exercisable at any time within the later of 180 calendar days after the date of a Key Man Event (generally defined in the amended and restated shareholders' agreement as the resignation, termination for cause, death or disability of the majority shareholder) or after January 30, 2021. As of June 30,

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2020, the call right had zero value. In the event that either of these rights are exercised, the purchase price for the additional interest in FFF will be at a per share price equal to the Equity Value per Share.

The fair values of the FFF put and call rights were determined based on the Equity Value per Share calculation using unobservable inputs, which included the estimated FFF put and call rights' expiration dates, the forecast of FFF EBITDA and enterprise value over the option period, forecasted movements in the overall market and the likelihood of a Key Man Event. Significant changes to the Equity Value per Share resulting from changes in the unobservable inputs could have a significant impact on the fair values of the FFF put and call rights.

The Company recorded the FFF put and call rights within long-term other liabilities and long-term other assets, respectively, within the accompanying Consolidated Balance Sheets. Net changes in the fair values of the FFF put and call rights were recorded within other income (expense) in the accompanying Consolidated Statements of Income and Comprehensive Income.

Earn-out liabilities

Earn-out liabilities were established in connection with the Acurity and Nexera asset acquisition as well as the Medpricer and Stanson acquisitions. The earn-out liabilities were classified as Level 3 of the fair value hierarchy. The earn-out liability value for the Acurity and Nexera asset acquisition is based upon the Company's estimated achievement of a range of member renewals on terms to be agreed to by the Company and GNYHA based on prevailing market conditions in December 2023. The earn-out liability values for the Medpricer and Stanson acquisitions were determined based on estimated future earnings and the probability of achieving them. Changes in the fair values of the earn-out liabilities were recorded within selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income.

A reconciliation of the Company's FFF put and call rights and earn-out liabilities is as follows (in thousands):

	Beginning Balance			Purchases (Settlements)			Gain (Loss)			Ending Balance
Year ended June 30, 2020
FFF call right	$	204		$	—		$	(204	)	$	—
Total Level 3 assets	204			—			(204		)	—
Earn-out liabilities	6,816			26,481			146			33,151
FFF put right	41,652			—			4,894			36,758
Total Level 3 liabilities	$	48,468		$	26,481		$	5,040		$	69,909
Year ended June 30, 2019
FFF call right	$	610		$	—		$	(406	)	$	204
Total Level 3 assets	610			—			(406		)	204
Earn-out liabilities	—			4,548			(2,268		)	6,816
FFF put right	42,041			—			389			41,652
Total Level 3 liabilities	$	42,041		$	4,548		$	(1,879	)	$	48,468

Non-Recurring Fair Value Measurements

During the year ended June 30, 2020, no non-recurring fair value measurements were required relating to the measurement of goodwill and intangible assets for impairment. However, purchase price allocations required significant non-recurring Level 3 inputs. The preliminary fair values of the acquired intangible assets resulting from the acquisitions of HDP and Medpricer as well as the Acurity and Nexera asset acquisition were determined using the income approach (see Note 3 - Business Acquisitions).

Financial Instruments For Which Fair Value Only is Disclosed

The fair values of non-interest bearing notes payable, classified as Level 2, were less than their carrying value by approximately $0.2 million and $0.5 million at June 30, 2020 and 2019, respectively, based on assumed market interest rates of 1.6% and 3.4%, respectively.

Other Financial Instruments

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(7) CONTRACT BALANCES

Contract Assets, Deferred Revenue and Revenue Share Obligations

The timing of revenue recognition, billings and cash collections results in accounts receivables, contract assets (unbilled receivables) and deferred revenue on the Consolidated Balance Sheets. Contract assets increased by $10.2 million during the year ended June 30, 2020 compared to the year ended June 30, 2019 primarily due to the acceleration of revenue recognition from licensing contracts in Performance Services which represent performance obligations that have been satisfied prior to customer invoicing offset by the timing of invoicing related to certain cost management consulting services and performance-based engagements where revenue is recognized as work is performed. Revenue share obligations increased by $8.4 million during the year ended June 30, 2020 compared to the year ended June 30, 2019 primarily due to the underlying revenue share arrangements associated with the Company's GPO participation agreements.

Revenue recognized during the year ended June 30, 2020 that was included in the opening balance of deferred revenue at June 30, 2019 was $29.8 million, which is a result of satisfying performance obligations within the Performance Services segment.

Performance Obligations

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

Net revenue recognized during the year ended June 30, 2020 from performance obligations that were satisfied or partially satisfied on or before June 30, 2019 was reduced by $2.3 million. The reduction in net revenue recognized was driven by $8.2 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business partially offset by $5.9 million of net administrative fees revenue related to under-forecasted cash receipts received in the current period.

Net revenue recognized during the year ended June 30, 2019 from performance obligations that were satisfied or partially satisfied on or before June 30, 2018 was $10.2 million. The net revenue recognized was driven by $6.7 million of net administrative fees revenue related to under-forecasted cash receipts received in the current period and $3.5 million associated with revised forecasts from underlying contracts that include variable consideration components as well as additional fluctuations due to input method contracts which occur in the normal course of business.

Remaining performance obligations represent the portion of the transaction price that has not yet been satisfied or achieved. As of June 30, 2020, the aggregate amount of the transaction price allocated to remaining performance obligations was $585.8 million. The Company expects to recognize 42% of the remaining performance obligations over the next 12 months and an additional 28% over the following 12 months, with the remainder recognized thereafter.

Contract Costs

The Company capitalizes the incremental costs of obtaining and fulfilling a contract, which include costs associated with implementing SaaS informatics tools and sales commissions. At June 30, 2020, the Company had $18.6 million in capitalized contract costs, including $9.9 million related to implementation costs and $8.7 million related to sales commissions. The Company recognized $7.4 million of related amortization expense for the year ended June 30, 2020.

At June 30, 2019, the Company had $16.8 million in capitalized contract costs, including $8.8 million related to implementation costs and $8.0 million related to sales commissions. The Company recognized $6.4 million of related amortization expense for the year ended June 30, 2019.

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(8) SUPPLEMENTAL BALANCE SHEET INFORMATION

Accounts Receivable, Net

Trade accounts receivable consisted primarily of amounts due from hospital and healthcare system members for services and products. Managed services receivable consisted of amounts receivable related to fees for services provided to members to support contract negotiation and administration, claims data, rebate processing and evaluation of pharmacy formulary and utilization. Accounts receivable, net consisted of the following (in thousands):

	June 30,
	2020			2019
Trade accounts receivable	$	116,222		$	113,599
Managed services receivable	19,057			54,541
Other	515			714
Total accounts receivable	135,794			168,854
Allowance for doubtful accounts	(731		)	(739		)
Accounts receivable, net	$	135,063		$	168,115

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

		June 30,
	Useful life	2020			2019
Capitalized software	2-5 years	$	569,298		$	478,356
Computer hardware	3-5 years	63,244			59,301
Furniture and other equipment	5 years	7,913			7,810
Leasehold improvements	Lesser of estimated useful life or term of lease	18,882			18,876
Total property and equipment		659,337			564,343
Accumulated depreciation and amortization		(452,609		)	(359,235		)
Property and equipment, net		$	206,728		$	205,108

Depreciation and amortization expense related to property and equipment was $97.3 million, $86.9 million and $70.3 million for the years ended June 30, 2020, 2019 and 2018, respectively. Unamortized capitalized software costs was $159.6 million at both June 30, 2020 and 2019.

During the year ended June 30, 2019, the Company incurred a $6.3 million loss on disposal of long-lived assets associated with assets of the Corporate segment that supported the specialty pharmacy business, which were disposed in connection with the sale of certain assets and wind down and exit from the specialty pharmacy business (see Note 4 - Discontinued Operations and Exit Activities for further information). The Company did not incur a material loss on disposal of long-lived assets during the years ended June 30, 2020 and 2018.

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Other Long-Term Assets

Other long-term assets consisted of the following (in thousands):

	June 30,
	2020			2019
Capitalized contract costs	$	18,601		$	16,757
Convertible notes receivable	—			9,045
Deferred loan costs, net	2,141			2,783
Prepaid contract administrative fee share, less current portion	67,897			—
Other	5,041			3,283
Total other long-term assets	$	93,680		$	31,868

Contract costs include capitalized sales commissions and implementation costs. See Note 7 - Contract Balances for further information.

The Company recorded $0.6 million, $0.6 million and $0.5 million in amortization expense on deferred loan costs during the years ended June 30, 2020, 2019 and 2018, respectively. Amortization expense on deferred loan costs was recognized based on the straight-line method, which approximates the effective interest method, and was included in interest and investment income, net in the Consolidated Statements of Income and Comprehensive Income.

The Company capitalized the one-time rebates pursuant to the Purchase Agreement with Acurity, Inc. as prepaid contract administrative fee share. See Note 3 - Business Acquisitions for further information.

Other Long-Term Liabilities

Other long-term liabilities consisted of the following (in thousands):

	June 30,
	2020			2019
FFF put right	$	36,758		$	41,652
Deferred rent	—			12,156
Reserve for uncertain tax positions	16,163			7,419
Earn-out liability, less current portion	22,700			5,634
Other	37			822
Total other long-term liabilities	$	75,658		$	67,683

Pursuant to an amended and restated shareholders' agreement entered into in connection with the Company's equity investment in FFF (see Note 5 - Investments), the majority shareholder of FFF obtained a put right that provides such shareholder the right to sell all or any portion of its interest in FFF to the Company (see Note 6 - Fair Value Measurements).

(9) GOODWILL AND INTANGIBLE ASSETS

Goodwill

Goodwill consisted of the following (in thousands):

	Supply Chain Services			Performance Services			Total
June 30, 2019	$	336,973		$	543,736		$	880,709
Acquisition of businesses and assets	50,749			10,507			61,256
June 30, 2020	$	387,722		$	554,243		$	941,965

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The initial purchase price allocations for the Company's acquisition of HDP, the Acurity and Nexera asset acquisition and the acquisition of Medpricer are preliminary and subject to changes in fair value of working capital and valuation of the assets acquired and the liabilities assumed. See Note 3 - Business Acquisitions for more information.

Intangible Assets, Net

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

		June 30,
	Useful Life	2020			2019
Member relationships	14.7 years	$	386,100		$	220,100
Technology	5.6 years	164,117			164,217
Customer relationships	9.6 years	70,830			48,010
Trade names	7.5 years	24,160			16,060
Favorable lease commitments	n/a	—			11,393
Non-compete agreements	5.3 years	11,315			8,800
Other (a)	12.1 years	6,060			—
Total intangible assets		662,582			468,580
Accumulated amortization		(245,160		)	(197,858		)
Total intangible assets, net		$	417,422		$	270,722

(a)	Includes a $1.0 million indefinite-lived asset that was acquired through the HDP acquisition.

Intangible asset amortization totaled $55.5 million, $53.3 million and $52.8 million for the years ended June 30, 2020, 2019 and 2018, respectively.

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

2021	$	43,755
2022	39,917
2023	38,602
2024	37,883
2025	34,257
Thereafter	222,008
Total amortization expense	$	416,422

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

	June 30,
	2020			2019
Supply Chain Services	$	364,647		$	196,241
Performance Services (a)	52,775			74,481
Total intangible assets, net	$	417,422		$	270,722

(a)	Includes a $1.0 million indefinite-lived asset that was acquired through the HDP acquisition.

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(10) DEBT

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

	June 30,
	2020			2019
Credit Facility	$	75,000		$	25,000
Notes payable	9,200			8,611
Total debt	84,200			33,611
Less: current portion	(79,560		)	(27,608		)
Total long-term debt	$	4,640		$	6,003

Credit Facility

Premier LP, along with its consolidated subsidiaries, PSCI and PHSI, as Co-Borrowers, Premier GP and certain domestic subsidiaries of Premier GP, as guarantors, entered into an unsecured Credit Facility, dated as of November 9, 2018. The Credit Facility has a maturity date of November 9, 2023, subject to up to two one-year extensions at the request of the Co-Borrowers and approval of a majority of the lenders under the Credit Facility. The Credit Facility provides for borrowings of up to $1.0 billion with (i) a $50.0 million sub-facility for standby letters of credit and (ii) a $100.0 million sub-facility for swingline loans. The Credit Facility also provides that Co-Borrowers may from time to time (i) incur incremental term loans and (ii) request an increase in the revolving commitments under the Credit Facility, together up to an aggregate $350.0 million, subject to the approval of the lenders providing such term loans or revolving commitment increases. The Credit Facility includes an unconditional and irrevocable guaranty of all obligations under the Credit Facility by Premier GP, certain domestic subsidiaries of Premier GP and future guarantors, if any. Premier, Inc. is not a guarantor under the Credit Facility.

At the Company's option, committed loans may be in the form of Eurodollar rate loans ("Eurodollar Loans") or base rate loans ("Base Rate Loans"). Eurodollar Loans bear interest at the Eurodollar rate (defined as the London Interbank Offered Rate, or LIBOR, plus the Applicable Rate (defined as a margin based on the Consolidated Total Net Leverage Ratio (as defined in the Credit Facility))). Base Rate Loans bear interest at the Base Rate (defined as the highest of the prime rate announced by the administrative agent, the federal funds effective rate plus 0.50%, the one-month LIBOR plus 1.0% and 0.0%) plus the Applicable Rate. The Applicable Rate ranges from 1.000% to 1.500% for Eurodollar Loans and 0.000% to 0.500% for Base Rate Loans. In the event that the LIBOR is no longer available, the Credit Facility states that interest will be calculated based upon rates offered to leading banks for comparable loans by leading banks in the London interbank market. At June 30, 2020, the interest rate on outstanding borrowings under the Credit Facility was 1.180%. The Co-Borrowers are required to pay a commitment fee ranging from 0.100% to 0.200% per annum on the actual daily unused amount of commitments under the Credit Facility. At June 30, 2020, the commitment fee was 0.100%.

The Credit Facility contains customary representations and warranties as well as customary affirmative and negative covenants, including, among others, limitations on liens, indebtedness, fundamental changes, dispositions, restricted payments and investments. Under the terms of the Credit Facility, Premier GP is not permitted to allow its consolidated total net leverage ratio (as defined in the Credit Facility) to exceed 3.75 to 1.00 for any period of four consecutive quarters, provided that, in connection with any acquisition for which the aggregate consideration exceeds $250.0 million, the maximum consolidated total net leverage ratio may be increased to 4.25 to 1.00 for the four consecutive fiscal quarters beginning with the quarter in which such acquisition is completed. In addition, Premier GP must maintain a minimum consolidated interest coverage ratio (as defined in the Credit Facility) of 2.50 to 1.00 at the end of every fiscal quarter. Premier GP was in compliance with all such covenants at June 30, 2020.

The Credit Facility also contains customary events of default including, among others, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults of any indebtedness or guarantees in excess of $75.0 million, bankruptcy and other insolvency events, ERISA-related liabilities and judgment defaults in excess of $50.0 million, and the occurrence of a change of control (as defined in the Credit Facility). If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request of a majority of the lenders under the Credit Facility, terminate the commitments and declare all of the amounts owed under the Credit Facility to be immediately due and payable. The Company may prepay amounts outstanding under the Credit Facility without premium or penalty provided that Co-Borrowers compensate the lenders for losses and expenses incurred as a result of the prepayment of any Eurodollar Loan, as defined in the Credit Facility.

Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, discretionary cash settlements of Class B unit exchanges under the Exchange Agreement, repurchases of Class A common stock pursuant to stock repurchase programs and other general corporate activities. During the year ended June 30, 2020, the Company borrowed $400.0 million and repaid $350.0 million of borrowings under the Credit Facility.

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The Company had $75.0 million in outstanding borrowings under the Credit Facility at June 30, 2020 with $925.0 million of available borrowing capacity after reductions for outstanding borrowings and outstanding letters of credit. On July 31, 2020, the Company repaid $25.0 million of outstanding borrowings under the Credit Facility.

During the year ended June 30, 2020, interest expense was $2.8 million and cash paid for interest was $2.8 million.

Notes Payable

At June 30, 2020 and 2019, the Company had $9.2 million and $8.6 million in notes payable, respectively, of which $4.6 million and $2.6 million, respectively, were included in current portion of long-term debt in the accompanying Consolidated Balance Sheets. Notes payable do not bear interest and generally have stated maturities of five years from their date of issuance.

Future minimum principal payments on the notes as of June 30, 2020 are as follows (in thousands):

2021	$	4,560
2022	1,416
2023	944
2024	1,546
2025	734
Total principal payments	$	9,200

TRA Termination Payments

In connection with the termination of the TRA, the Company entered into certain Unit Exchange and Tax Receivable Acceleration Agreements (the "Unit Exchange Agreements") pursuant to which the Company is obligated to pay approximately $462.9 million in 18 equal quarterly installments commencing during the quarter ended March 31, 2021 and ending in the quarter ending June 30, 2025. See Note 21 - Subsequent Events for further information.

(11) REDEEMABLE LIMITED PARTNERS' CAPITAL

Redeemable limited partners' capital represents the member owners' 41% ownership of Premier LP through their ownership of Class B common units at June 30, 2020. As of June 30, 2020 and 2019, the member owners held the majority of the votes of the Board of Directors and any redemption or transfer or choice of consideration cannot be assumed to be within the control of the Company. Therefore, redeemable limited partners' capital is recorded at the greater of the book value or redemption amount per the LP Agreement (see Note 1 - Organization and Basis of Presentation for more information), and is calculated as the fair value of all Class B common units as if immediately exchangeable into Class A common shares. For the years ended June 30, 2020, 2019 and 2018, the Company recorded adjustments to the fair value of redeemable limited partners' capital as an adjustment of redeemable limited partners' capital to redemption amount in the accompanying Consolidated Statements of Income and Comprehensive Income in the amounts of $468.3 million, $(118.1) million and $157.6 million, respectively.

Redeemable limited partners' capital is classified as temporary equity in the mezzanine section of the accompanying Consolidated Balance Sheets as, pursuant to the LP Agreement, withdrawal is at the option of each member owner and the conditions of the repurchase are not solely within the Company's control. As of July 31, 2020, the limited partner's redemption feature was under the control of the Company and as a result, the fair value of redeemable limited partners' capital at July 31, 2020 will be reclassified from temporary equity in the mezzanine section of the Consolidated Balance Sheets to additional paid in capital as a component of permanent equity. See Note 1 - Organization and Basis of Presentation under "Company Structure" and Note 21 - Subsequent Events for further information.

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The table below provides a summary of the changes in the redeemable limited partners' capital from June 30, 2017 to June 30, 2020 (in thousands):

	Receivables From Limited Partners			Redeemable Limited Partners' Capital			Total Redeemable Limited Partners' Capital
June 30, 2017	$	(4,177	)	$	3,142,760		$	3,138,583
Distributions applied to receivables from limited partners	1,972			—			1,972
Redemption of limited partners	—			(942		)	(942		)
Net income attributable to non-controlling interest in Premier LP	—			224,269			224,269
Distributions to limited partners	—			(69,770		)	(69,770		)
Exchange of Class B common units for Class A common stock by member owners	—			(216,121		)	(216,121		)
Adjustment of redeemable limited partners' capital to redemption amount	—			(157,581		)	(157,581		)
June 30, 2018	(2,205		)	2,922,615			2,920,410
Distributions applied to receivables from limited partners	1,001			—			1,001
Redemption of limited partners	—			(1,819		)	(1,819		)
Net income attributable to non-controlling interest in Premier LP	—			174,959			174,959
Distributions to limited partners	—			(55,562		)	(55,562		)
Exchange of Class B common units for Class A common stock by member owners	—			(633,783		)	(633,783		)
Adjustment of redeemable limited partners' capital to redemption amount	—			118,064			118,064
June 30, 2019	(1,204		)	2,524,474			2,523,270
Distributions applied to receivables from limited partners	209			—			209
Redemption of limited partners	—			(1,372		)	(1,372		)
Net income attributable to non-controlling interest in Premier LP	—			161,816			161,816
Non-controlling interest due to acquisition	—			9,004			9,004
Distributions to limited partners	—			(43,714		)	(43,714		)
Exchange of Class B common units for Class A common stock by member owners	—			(460,593		)	(460,593		)
Adjustment of redeemable limited partners' capital to redemption amount	—			(468,311		)	(468,311		)
June 30, 2020	$	(995	)	$	1,721,304		$	1,720,309

Receivables from limited partners represent amounts due from limited partners for their required capital in Premier LP. These receivables are interest bearing notes that were issued to new limited partners. These receivables are reflected as a reduction to redeemable limited partners' capital so that amounts due from limited partners for capital are not reflected as redeemable limited partnership capital until paid. No interest bearing notes receivable were executed by limited partners of Premier LP during the years ended June 30, 2020, 2019 and 2018.

During the year ended June 30, 2020, three limited partners withdrew from Premier LP. The limited partnership agreement provides for the redemption of former limited partner's Class B common units that are not eligible for exchange in the form of a five-year, unsecured, non-interest bearing term promissory note, a cash payment equal to the present value of the redemption amount, or other mutually agreed upon terms. Partnership interest obligations to former limited partners are reflected in notes payable in the accompanying Consolidated Balance Sheets. Under the Exchange Agreement, Class B common units that are eligible for exchange by withdrawing limited partners must be exchanged in the subsequent quarter's exchange process.

Premier LP's distribution policy requires cash distributions as long as taxable income is generated and cash is available to distribute on a quarterly basis prior to the 60^th day after the end of each calendar quarter. The Company makes quarterly distributions to its limited partners in the form of a legal partnership income distribution governed by the terms of the LP Agreement. These partner distributions are based on the limited partner's ownership in Premier LP and relative participation across Premier service offerings. While these distributions are based on relative participation across Premier service offerings, they are not based directly on revenue generated from an individual partner's participation as the distributions are based on the net income (loss) of the partnership which encompasses the operating expenses of the partnership as well as participation by non-owner members in Premier's service offerings. To the extent Premier LP incurred a net loss, the limited partners would not receive a quarterly distribution. As provided

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in the LP Agreement, the amount of actual cash distributed may be reduced by the amount of such distributions used by limited partners to offset loans or other amounts payable to the Company.

Quarterly distributions made to limited partners during the current fiscal year are as follows (in thousands):

Date	Distribution (a)
August 22, 2019	$	13,202
November 21, 2019	13,699
February 21, 2020	12,689
May 21, 2020	9,314

(a)

Distributions are equal to Premier LP's total taxable income from the preceding fiscal quarter-to-date period for each respective distribution date multiplied by the Company's standalone effective combined federal, state and local income tax rate for each respective distribution date. Premier LP expects to make a $8.0 million quarterly distribution on August 28, 2020. The distribution is reflected in limited partners' distribution payable in the accompanying Consolidated Balance Sheets at June 30, 2020.

Pursuant to the Exchange Agreement (see Note 1 - Organization and Basis of Presentation for more information), each limited partner has the cumulative right to exchange up to one-seventh of its initial allocation of Class B common units for shares of Class A common stock, cash or a combination of both, the form of consideration to be at the discretion of the Company's independent Audit and Compliance Committee of the Board of Directors. During the year ended June 30, 2020, the Company recorded total reductions of $460.6 million to redeemable limited partners' capital to reflect the exchange of approximately 13.6 million Class B common units and surrender of associated shares of Class B common stock by member owners for a like number of shares of the Company's Class A common stock (see Note 13 - Earnings (Loss) Per Share for more information). Quarterly exchanges during the current fiscal year were as follows (in thousands, except Class B common units):

Date of Quarterly Exchange	Number of Class B Common Units Exchanged		Reduction in Redeemable Limited Partners' Capital
July 31, 2019	1,310,771		$	50,792
October 31, 2019	6,873,699		223,946
January 31, 2020	4,866,082		169,194
April 30, 2020	502,466		16,661
Total	13,553,018		$	460,593

(12) STOCKHOLDERS' EQUITY (DEFICIT)

As of June 30, 2020, there were 71,627,462 shares of the Company's Class A common stock, par value $0.01 per share, and 50,213,098 shares of the Company's Class B common stock, par value $0.000001 per share, outstanding.

On May 7, 2019, the Company announced that its Board of Directors authorized the repurchase of up to $300.0 million of the Company's Class A common stock during fiscal year 2020. The Company completed this stock repurchase program during the fiscal year ended June 30, 2020, through which 4.6 million shares of Class A common stock were purchased at an average price of $32.28 per share for a total purchase price of $150.0 million.

Holders of Class A common stock are entitled to (i) one vote for each share held of record on all matters submitted to a vote of stockholders, (ii) receive dividends, when and if declared by the Board of Directors out of funds legally available, subject to any statutory or contractual restrictions on the payment of dividends and subject to any restrictions on the payment of dividends imposed by the terms of any outstanding preferred stock or any class of series of stock having a preference over or the right to participate with the Class A common stock with respect to the payment of dividends or other distributions and (iii) receive pro rata, based on the number of shares of Class A common stock held, the remaining assets available for distribution upon the dissolution or liquidation of Premier, after payment in full of all amounts required to be paid to creditors and to the holders of preferred stock having liquidation preferences, if any.

Holders of Class B common stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders, but are not entitled to receive dividends, other than dividends payable in shares of Premier's common stock, or to receive a distribution upon the dissolution or a liquidation of Premier. Pursuant to the Voting Trust Agreement, the trustee will vote all of the Class B common stock as a block in the manner determined by the plurality of the votes received by the trustee from the member owners for the election of directors to serve on the Board of Directors, and by a majority of the votes received

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by the trustee from the member owners for all other matters. Class B common stock will not be listed on any stock exchange and, except in connection with any permitted sale or transfer of Class B common units, cannot be sold or transferred.

(13) EARNINGS (LOSS) PER SHARE

Basic earnings per share is computed by dividing net income attributable to stockholders by the weighted average number of shares of common stock outstanding for the period. Net income attributable to stockholders includes the adjustment recorded in the period to reflect redeemable limited partners' capital at the redemption amount, which is due to the exchange benefit obtained by limited partners through the ownership of Class B common units. Except when the effect would be anti-dilutive, the diluted earnings (loss) per share calculation, which is calculated using the treasury stock method, includes the impact of shares that could be issued under the outstanding stock options, non-vested restricted stock units and awards, shares of non-vested performance share awards and the effect of the assumed redemption of Class B common units through the issuance of Class A common shares.

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

	Year Ended June 30,
	2020			2019			2018
							Previous revenue standard (a)
Numerator for basic earnings (loss) per share:
Net income from continuing operations attributable to stockholders (b)	$	598,119		$	15,706		$	191,040
Net income (loss) from discontinued operations attributable to stockholders	556			(24,650		)	(158		)
Net income (loss) attributable to stockholders	$	598,675		$	(8,944	)	$	190,882
Numerator for diluted earnings (loss) per share:
Net income from continuing operations attributable to stockholders (b)	$	598,119		$	15,706		$	191,040
Adjustment of redeemable limited partners' capital to redemption amount	(468,311		)	—			(157,581		)
Net income from continuing operations attributable to non-controlling interest	161,318			—			224,548
Net income from continuing operations	291,126			15,706			258,007
Tax effect on Premier, Inc. net income (c)	(40,154		)	—			(70,257		)
Adjusted net income from continuing operations	$	250,972		$	15,706		$	187,750
Net income (loss) from discontinued operations attributable to stockholders	$	556		$	(24,650	)	$	(158	)
Net income (loss) from discontinued operations attributable to non-controlling interest in Premier LP	498			—			(279		)
Adjusted net income (loss) from discontinued operations	$	1,054		$	(24,650	)	$	(437	)
Adjusted net income (loss)	$	252,026		$	(8,944	)	$	187,313

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	Year Ended June 30,
	2020			2019			2018
							Previous revenue standard (a)
Denominator for basic earnings (loss) per share:
Weighted average shares (d)	67,035			59,188			53,518
Denominator for diluted earnings (loss) per share:
Weighted average shares (d)	67,035			59,188			53,518
Effect of dilutive securities: (e)
Stock options	329			577			275
Restricted stock	248			297			295
Performance share awards	67			207			252
Class B shares outstanding	55,935			—			83,000
Weighted average shares and assumed conversions	123,614			60,269			137,340
Basic earnings (loss) per share:
Basic earnings per share from continuing operations	$	8.92		$	0.27		$	3.57
Basic earnings (loss) per share from discontinued operations	0.01			(0.42		)	0.00
Basic earnings (loss) per share attributable to stockholders	$	8.93		$	(0.15	)	$	3.57
Diluted earnings (loss) per share:
Diluted earnings per share from continuing operations	$	2.03		$	0.27		$	1.37
Diluted earnings (loss) per share from discontinued operations	0.01			(0.42		)	(0.01		)
Diluted earnings (loss) per share attributable to stockholders	$	2.04		$	(0.15	)	$	1.36

(a)	The Company adopted Topic 606 effective July 1, 2018. Comparative results are presented under Topic 605. Refer to Note 2 - Significant Accounting Policies for more information.

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

	Year Ended June 30,
	2020			2019			2018
							Previous revenue standard (a)
Net income from continuing operations	$	291,126		$	334,677		$	258,007
Net income from continuing operations attributable to non-controlling interest	(161,318		)	(200,907		)	(224,548		)
Adjustment of redeemable limited partners' capital to redemption amount	468,311			(118,064		)	157,581
Net income from continuing operations attributable to stockholders	$	598,119		$	15,706		$	191,040

(c)	Represents income tax expense related to Premier, Inc. retaining the portion of net income attributable to income from non-controlling interest in Premier, LP for the purpose of diluted earnings (loss) per share.

(d)	Weighted average number of common shares used for basic earnings per share excludes weighted average shares of non-vested stock options, non-vested restricted stock, non-vested performance share awards and Class B shares outstanding for the years ended June 30, 2020, 2019 and 2018.

(e)

For the year ended June 30, 2020, the effect of 0.8 million stock options were excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect. For the year ended June 30, 2019, the effect of 70.8 million Class B common units exchangeable for Class A common shares and 0.4 million stock options were excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect. For the year ended June 30, 2018, the effect of 1.6 million stock options were excluded from diluted weighted average shares outstanding as they had an anti-dilutive effect.

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Pursuant to the terms of the Exchange Agreement, on a quarterly basis, the Company has the option, as determined by the independent Audit and Compliance Committee, to settle the exchange of Class B common units of Premier LP by member owners for cash, an equal number of Class A common shares of Premier, Inc. or a combination of cash and shares of Class A common stock. In connection with the exchange of Class B common units by member owners, regardless of the consideration used to settle the exchange, an equal number of shares of Premier's Class B common stock are surrendered by member owners and retired (see Note 11 - Redeemable Limited Partners' Capital). The following table presents certain information regarding the exchange of Class B common units and associated Class B common stock for Premier's Class A common stock and/or cash in connection with the quarterly exchanges pursuant to the terms of the Exchange Agreement, including activity related to the Class A and Class B common units and Class A and Class B common stock through the date of the applicable quarterly exchange:

Quarterly Exchange by Member Owners	Class B Common Shares Retired Upon Exchange (a)		Class B Common Shares Outstanding After Exchange (a)		Class A Common Shares Outstanding After Exchange (b)		Percentage of Combined Voting Power Class B/Class A Common Stock
July 31, 2019	1,310,771		62,767,860		63,274,182		49.8%/50.2%
October 31, 2019	6,873,699		55,581,646		66,552,023		46%/54%
January 31, 2020	4,866,082		50,715,564		71,066,141		42%/58%
April 30, 2020	502,466		50,213,098		71,574,119		41%/59%
July 31, 2020 (c)	69,684		50,143,414		71,724,149		41%/59%

(a)	The number of Class B common shares retired or outstanding are equivalent to the number of Class B common units retired upon exchange or outstanding after the exchange, as applicable.

(b)	The number of Class A common shares outstanding after exchange also includes activity related to the Company's share repurchase program (see Note 12 - Stockholders' Equity (Deficit)) and equity incentive plan (see Note 14 - Stock-Based Compensation).

(c)	As the quarterly exchange occurred on July 31, 2020, the impact of the exchange is not reflected in the consolidated financial statements for the year ended June 30, 2020.

(14) STOCK-BASED COMPENSATION

Stock-based compensation expense is recognized over the requisite service period, which generally equals the stated vesting period. The associated deferred tax benefit was calculated at a rate of 25% for the year ended June 30, 2020, 26% for the year ended June 30, 2019 and 25% for the year ended June 30, 2018, which represents the expected effective income tax rate at the time of the compensation expense deduction primarily at PHSI, and differs from the Company's current effective income tax rate which includes the impact of partnership income not subject to federal and state income taxes. See Note 16 - Income Taxes for further information.

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

	Year Ended June 30,
	2020			2019			2018
Pre-tax stock-based compensation expense (a)	$	20,706		$	29,001		$	28,844
Deferred tax benefit (b)	3,014			6,296			7,124
Total stock-based compensation expense, net of tax	$	17,692		$	22,705		$	21,720

(a)	Pre-tax stock-based compensation expense attributable to discontinued operations is not included in the above table and was $0.5 million and $0.6 million for the years ended June 30, 2019 and June 30, 2018, respectively. For the year ended June 30, 2020, there was no pre-tax stock-based compensation expense attributable to discontinued operations.

(b)	For the year ended June 30, 2020, the deferred tax benefit was reduced by $2.2 million attributable to stock-based compensation expense that is nondeductible for tax purposes pursuant to Section 162(m) as amended by the Tax Cuts and Jobs Act ("TCJA") of 2017.

Premier 2013 Equity Incentive Plan

The Premier 2013 Equity Incentive Plan, as amended and restated (and including any further amendments thereto, the "2013 Equity Incentive Plan") provides for grants of up to 14.8 million shares of Class A common stock, all of which are eligible to be issued as non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units or performance share awards. As of June 30, 2020, there were approximately 6.0 million shares available for grant under the 2013 Equity Incentive Plan.

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The following table includes information related to restricted stock, performance share awards and stock options for the year ended June 30, 2020:

	Restricted Stock						Performance Share Awards						Stock Options
	Number of Awards		Weighted Average Fair Value at Grant Date				Number of Awards		Weighted Average Fair Value at Grant Date				Number of Options		Weighted Average Exercise Price
Outstanding at June 30, 2019	589,550		$	37.06			1,439,815		$	36.38			2,798,673		$	30.22
Granted	352,465		$	36.71			742,235		$	36.39			—		$	—
Vested/exercised	(222,592	)	$	33.63			(493,759	)	$	31.58			(232,141	)	$	30.58
Forfeited	(37,885	)	$	38.57			(81,982	)	$	38.71			(22,395	)	$	33.16
Outstanding at June 30, 2020	681,538		$	37.91			1,606,309		$	37.58			2,544,137		$	30.17
Stock options outstanding and exercisable at June 30, 2020													2,415,033		$	30.02

Restricted stock units issued and outstanding generally vest over a three-year period for employees and a one-year period for directors. Performance share awards issued and outstanding generally vest over a three year period if performance targets are met. Stock options have a term of ten years from the date of grant. Vested stock options will expire either after twelve months of an employee's termination with Premier or immediately upon an employee's termination with Premier, depending on the termination circumstances. Stock options generally vest in equal annual installments over three years.

Unrecognized stock-based compensation expense at June 30, 2020 was as follows (in thousands):

	Unrecognized Stock-Based Compensation Expense			Weighted Average Amortization Period
Restricted stock	$	12,113		1.74 years
Performance share awards	24,633			1.69 years
Stock options	245			0.23 years
Total unrecognized stock-based compensation expense	$	36,991		1.7 years

The aggregate intrinsic value of stock options at June 30, 2020 was as follows (in thousands):

	Intrinsic Value of Stock Options
Outstanding and exercisable	$	10,859
Expected to vest	191
Total outstanding	$	11,050
Exercised during the year ended June 30, 2020	$	1,567

The Company estimated the fair value of each stock option on the date of grant using a Black-Scholes option-pricing model, applying the following assumptions, and amortized expense over each option's vesting period using the straight-line attribution approach:

	June 30, 2018
Expected life (a)	6 years
Expected dividend (b)	—
Expected volatility (c)	29.4% - 32.3%
Risk-free interest rate (d)	1.9% - 2.9%
Weighted average option grant date fair value	$9.48 - $11.42

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(a)	The six-year expected life (estimated period of time outstanding) of stock options granted was estimated using the "Simplified Method" which utilizes the midpoint between the vesting date and the end of the contractual term. This method was utilized for the stock options due to the lack of historical exercise behavior of Premier's employees.

(b)	At grant date, no dividends were expected to be paid over the contractual term of the stock options granted, resulting in the use of a zero expected dividend rate.

(c)	The expected volatility rate was based on the observed historical volatilities of comparable companies.

(d)	The risk-free interest rate was interpolated from the five-year and seven-year Constant Maturity Treasury rate published by the United States Treasury as of the date of the grant.

(15) POST-RETIREMENT BENEFITS

The Company maintains a defined contribution 401(k) retirement savings plan which covers employees who meet certain age and service requirements. This plan allows for employee contributions of up to 30% and matching employer contributions of up to 4% of the participant's compensation, not to exceed certain limits. The Company's 401(k) expense related to such matching of employee contributions was $10.1 million, $9.4 million and $9.4 million for the years ended June 30, 2020, 2019 and 2018, respectively.

The Company also maintains a non-qualified deferred compensation plan for the benefit of eligible employees. This plan is designed to permit employee deferrals in excess of certain tax limits and provides for discretionary employer contributions in excess of certain tax limits.

(16) INCOME TAXES

The Company's income tax expense is attributable to the activities of the Company, PHSI, PSCI, and Premier Marketplace, LLC ("PMLLC"), all of which are subchapter C corporations and are subject to U.S. federal and state income taxes. In contrast, under the provisions of federal and state statutes, Premier LP is not subject to federal and state income taxes as the income realized by Premier LP is taxable to its partners.

On November 8, 2019, the State of North Carolina made significant changes to its income tax law, effective for tax years beginning on or after January 1, 2020. As a result, the Company remeasured its deferred tax assets and liabilities as of the enactment date and recorded income tax expense of $38.6 million as a discrete item in the Company's income tax provision during the quarter ended December 31, 2019.

Significant components of the consolidated expense for income taxes are as follows (in thousands):

	Year Ended June 30,
	2020			2019			2018
Current:
Federal	$	11,394		$	16,832		$	22,103
State	12,545			4,752			4,141
Total current expense	23,939			21,584			26,244
Deferred:
Federal	35,768			10,493			232,920
State	32,854			1,385			362
Total deferred expense	68,622			11,878			233,282
Provision for income taxes	$	92,561		$	33,462		$	259,526

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The reconciliation between the Company's effective tax rate on income and the statutory tax rates of 21.0%, 21.0% and 28.1% for fiscal years ended 2020, 2019 and 2018, respectively, is as follows (in thousands):

	Year Ended June 30,
	2020			2019			2018
Computed tax expense	$	80,814		$	77,309		$	145,220
Partnership income not subject to tax	(40,154		)	(50,333		)	(70,257		)
State taxes (net of federal benefit)	7,072			9,884			12,919
Remeasurement adjustments and other permanent items	(1,570		)	3,300			(53,151		)
Benefit on subsidiaries treated separately for income tax purposes	(3,889		)	(1,564		)	(848		)
Change in valuation allowance	12,472			(3,030		)	(33,106		)
Deferred tax remeasurement	34,447			(1,814		)	256,787
Uncertain tax position	7,472			(1,417		)	5,047
Other	(4,103		)	1,127			(3,085		)
Provision for income taxes	$	92,561		$	33,462		$	259,526
Effective income tax rate	24.1		%	9.1		%	50.1		%

The fiscal year 2020 effective tax rate of 24.1% differs from the statutory income tax rate of 21.0% primarily due to the remeasurement of deferred tax assets and liabilities as a result of changes to the State of North Carolina income tax law, partially offset by Premier LP income which is not subject to federal, state and local income taxes.

The fiscal year 2019 effective tax rate of 9.1% differs from the statutory income tax rate of 21.0% due to Premier LP income which is not subject to federal, state and local income taxes.

The fiscal year 2018 effective tax rate of 50.1% differs from the statutory income tax rate of 28.1% largely driven by the remeasurement of deferred tax balances due to the reduction in the statutory rate from 35% to 21% pursuant to the TCJA.

Deferred Income Taxes

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of June 30, 2020 and 2019 are presented below (in thousands):

	June 30,
	2020			2019
Deferred tax asset
Partnership basis differences in Premier LP	$	425,365		$	417,157
Stock compensation	14,026			18,321
Accrued expenses	22,878			26,682
Net operating losses and credits	89,660			61,437
Other	15,597			12,662
Total deferred tax assets	567,526			536,259
Valuation allowance for deferred tax assets	(61,241		)	(48,769		)
Net deferred tax assets	506,285			487,490
Deferred tax liability
Purchased intangible assets and depreciation	(64,211		)	(52,585		)
Accrued expenses	(9,905		)	—
Other liabilities	(19,651		)	(17,657		)
Net deferred tax asset	$	412,518		$	417,248

At June 30, 2020, the Company had federal and state net operating loss carryforwards of $314.6 million and $293.5 million, respectively, primarily attributable to PHSI and PSCI. The resulting federal and state deferred tax assets are $65.9 million and $13.4 million, respectively. The federal and state net operating loss carryforwards generated prior to fiscal year 2019 expire between the years ending June 30, 2020 through June 30, 2038 while the net operating losses generated in fiscal year 2019 and beyond can

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be carried forward indefinitely, until utilized. A valuation allowance was established for federal and state losses as the Company believes it is more likely than not that a portion of these losses will not be realized in the near future.

At June 30, 2020, the Company had federal research and development credit carryforwards of $12.4 million. The federal credit carryforwards expire at various times between the years ended June 30, 2020 through June 30, 2039, until utilized. A valuation allowance was established as the Company believes it is more likely than not that all or a portion of the federal and state credit carryforwards will not be realized in the near future.

Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and income tax purposes. The Company assessed the future realization of the tax benefit of its existing deferred tax assets and concluded that it is more likely than not that a portion of the deferred tax assets will not be realized in the future. As a result, the Company recorded a valuation allowance of $61.2 million against its deferred tax assets at June 30, 2020. The valuation allowance increased by $12.4 million from the $48.8 million valuation allowance recorded as of June 30, 2019.

Unrecognized Tax Benefits

The Company recognizes income tax benefits for those income tax positions determined more likely than not to be sustained upon examination, based on the technical merits of the positions. The reserve for uncertain income tax positions is included in other liabilities in the Consolidated Balance Sheets. A reconciliation of the beginning and ending gross amounts of the Company's uncertain tax position reserves for the years ended June 30, 2020, 2019 and 2018 are as follows (in thousands):

	Year Ended June 30,
	2020			2019			2018
Beginning of year balance	$	8,266		$	18,479		$	5,043
Increases in prior period tax positions	7,734			66			12,965
Decreases in prior period tax positions	(48		)	(11,867		)	(179		)
Reductions on settlements and lapse in statute of limitations	(2,276		)	(27		)	(611		)
Increases in current period tax positions	1,920			1,615			1,261
End of year balance	$	15,596		$	8,266		$	18,479

If the Company were to recognize the benefits of these uncertain tax positions, the income tax provision and effective tax rate would be impacted by $12.8 million, $6.2 million and $7.4 million, including interest and penalties and net of the federal and state benefit for income taxes, for the years ended June 30, 2020, 2019 and 2018, respectively. The Company recognizes interest and penalties accrued on uncertain income tax positions as part of the income tax provision. The amount of accrued interest and penalties was $2.5 million, $1.0 million, and $0.9 million at 2020, 2019 and 2018, respectively.

We are no longer subject to U.S. federal examination for periods ending on and before June 30, 2016. The Company made cash tax payments of $19.8 million and $26.1 million during the years ended June 30, 2020 and 2019, respectively.

(17) RELATED PARTY TRANSACTIONS

The Company's 49% ownership share of net income of FFF, which was acquired on July 26, 2016, included in equity in net income of unconsolidated affiliates in the accompanying Consolidated Statements of Income and Comprehensive Income was $12.3 million, $5.1 million and $6.3 million for the years ended June 30, 2020, 2019 and 2018, respectively. The Company maintains group purchasing agreements with FFF and receives administrative fees for purchases made by the Company's members pursuant to those agreements. Net administrative fees revenue recorded from purchases under those agreements was $7.4 million, $8.0 million and $7.6 million during the years ended June 30, 2020, 2019 and 2018, respectively.

(18) COMMITMENTS AND CONTINGENCIES

Operating Leases

Operating lease expense was $12.3 million, $11.5 million and $11.0 million for the years ended June 30, 2020, 2019 and 2018, respectively. As of June 30, 2020, the weighted average remaining lease term was 5.7 years and the weighted average discount rate was 4%.

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

2021	$	12,171
2022	11,738
2023	12,012
2024	12,145
2025	12,177
Thereafter	10,171
Total future minimum lease payments	70,414
Less: imputed interest	7,567
Total operating lease liabilities (a)	$	62,847

(a)	As of June 30, 2020, total operating lease liabilities included $9.9 million within other liabilities, current in the Consolidated Balance Sheets.

The following table presents the future minimum lease payments under noncancelable operating leases with initial lease terms in excess of one year prior to adoption of ASC 842 as report in the 2019 Annual Report were as follows (in thousands):

2020	$	12,130
2021	11,539
2022	11,468
2023	11,533
2024	11,510
Thereafter	20,645
Total future minimum lease payments	$	78,825

Other Matters

The Company is not currently involved in any litigation it believes to be significant. The Company is periodically involved in litigation, arising in the ordinary course of business or otherwise, which from time to time may include claims relating to commercial, product liability, tort and personal injury, employment, antitrust, intellectual property, or other regulatory matters. If current or future government regulations, specifically, those with respect to antitrust or healthcare laws, are interpreted or enforced in a manner adverse to the Company or its business, the Company may be subject to enforcement actions, penalties and other material limitations which could have a material adverse effect on the Company's business, financial condition and results of operations.

(19) SEGMENTS

The Company delivers its solutions and manages its business through two reportable business segments, the Supply Chain Services segment and the Performance Services segment. The Supply Chain Services segment includes the Company's GPO, supply chain co-management and direct sourcing activities. The Performance Services segment includes the Company's clinical analytics, collaborative, consulting services, direct to employer initiative and insurance management services businesses.

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

	Year Ended June 30,
	2020			2019			2018
							Previous revenue standard (a)
Net revenue:
Supply Chain Services
Net administrative fees	$	670,593		$	662,462		$	643,839
Other services and support	12,225			8,561			7,812
Services	682,818			671,023			651,651
Products	269,945			184,157			172,327
Total Supply Chain Services (b)	952,763			855,180			823,978
Performance Services (b)	346,829			362,458			360,679
Net revenue	$	1,299,592		$	1,217,638		$	1,184,657

(a)	The Company adopted Topic 606 effective July 1, 2018. Comparative results are presented under Topic 605. Refer to Note 2 - Significant Accounting Policies for more information.

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

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

	Year Ended June 30,
Depreciation and amortization expense (b):	2020			2019			2018 (a)
Supply Chain Services	$	25,968		$	18,618		$	18,040
Performance Services	118,556			110,581			95,808
Corporate	8,303			10,965			9,217
Total depreciation and amortization expense	$	152,827		$	140,164		$	123,065
Capital expenditures:
Supply Chain Services	$	7,143		$	10,154		$	1,436
Performance Services	78,231			70,757			80,900
Corporate	9,023			12,474			10,089
Total capital expenditures	$	94,397		$	93,385		$	92,425

	Year Ended June 30,
Total assets (c):	2020			2019
Supply Chain Services	$	1,483,751		$	1,111,934
Performance Services	930,968			941,183
Corporate	538,248			516,450
Total assets	$	2,952,967		$	2,569,567
Eliminations (d)	(4,452		)	—
Total assets, net	$	2,948,515		$	2,569,567

(a)	The Company adopted Topic 606 effective July 1, 2018. Comparative results are presented under Topic 605. Refer to Note 2 - Significant Accounting Policies for more information.

(b)	Includes amortization of purchased intangible assets.

(c)	Total assets in Supply Chain Services includes $24.6 million as of June 30, 2019 for discontinued operations related to the specialty pharmacy business. There are no assets of discontinued operations related to the specialty pharmacy business as of June 30, 2020.

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

The Company uses Segment Non-GAAP Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles ("Non-GAAP")) as its primary measure of profit or loss to assess segment performance and to

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determine the allocation of resources. The Company also uses Segment Non-GAAP Adjusted EBITDA to facilitate the comparison of the segment operating performance on a consistent basis from period to period. The Company defines Segment Non-GAAP Adjusted EBITDA as the segment's net revenue and equity in net income of unconsolidated affiliates less operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expenses and non-recurring or non-cash items. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative and product development activities specific to the operation of each segment. Non-recurring items are income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Non-GAAP Adjusted EBITDA. Segment Non-GAAP Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.

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

A reconciliation of income before income taxes to the Unaudited Segment Non-GAAP Adjusted EBITDA is as follows (in thousands):

	Year Ended June 30,
	2020			2019			2018
							Previous revenue standard (a)
Income before income taxes	$	383,687		$	368,139		$	517,533
Equity in net income of unconsolidated affiliates (a)	(12,537		)	(5,658		)	(1,174		)
Interest and investment loss, net (b)	11,313			2,471			5,300
Gain (loss) on FFF put and call rights (c)	(4,690		)	17			22,036
Other (income) expense	(4,153		)	3,545			(3,336		)
Operating income	373,620			368,514			540,359
Depreciation and amortization	97,297			86,879			70,264
Amortization of purchased intangible assets	55,530			53,285			52,801
Stock-based compensation (d)	21,132			29,396			29,235
Acquisition and disposition related expenses	19,319			13,154			8,335
Remeasurement of tax receivable agreement liabilities (e)	(24,584		)	—			(177,174		)
Equity in net income of unconsolidated affiliates (a)	12,537			5,658			1,174
Deferred compensation plan income (f)	3,904			2,546			3,960
Other income, net	5,285			1,610			10,566
Non-GAAP Adjusted EBITDA	$	564,040		$	561,042		$	539,520
Segment Non-GAAP Adjusted EBITDA:
Supply Chain Services (g)	$	570,298		$	548,029		$	531,851
Performance Services (g)	111,282			129,147			123,429
Corporate	(117,540		)	(116,134		)	(115,760		)
Non-GAAP Adjusted EBITDA	$	564,040		$	561,042		$	539,520

(a)	Refer to Note 5 - Investments for further information.

(b)	Represents interest expense, net and investment income.

(c)	Refer to Note 6 - Fair Value Measurements for more information.

(d)	Represents non-cash employee stock-based compensation expense and stock purchase plan expense of $0.4 million during each of the years ended June 30, 2020, 2019 and 2018.

(e)	The adjustments to TRA liabilities for the years ended June 30, 2020 and 2018 are primarily attributable to decreases in the Premier, Inc. effective tax rate related to state tax liabilities and the TCJA, respectively.

(f)	Represents realized and unrealized gains and dividend income on deferred compensation plan assets.

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

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(20) QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present unaudited summarized financial data by quarter for the years ended June 30, 2020 and 2019 (in thousands, except per share data):

	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter
Fiscal Year 2020
Net revenue	$	302,410		$	319,606		$	334,823		$	342,753
Gross profit	211,399			219,365			231,695			204,342
Net income from continuing operations	70,939			91,575			73,212			55,400
Income from discontinued operations, net of tax	390			614			5			45
Net income	71,329			92,189			73,217			55,445
Net income attributable to non-controlling interest in Premier LP	(41,907		)	(55,704		)	(35,058		)	(29,147		)
Adjustment of redeemable limited partners' capital to redemption amount	694,309			(480,153		)	302,569			(48,414		)
Net income (loss) attributable to stockholders	723,731			(443,668		)	340,728			(22,116		)
Weighted average shares outstanding:
Basic	62,785			64,552			69,451			71,425
Diluted	126,632			64,552			122,470			71,425
Earnings (loss) per share from continuing operations attributable to stockholders:
Basic	$	11.53		$	(6.88	)	$	4.91		$	(0.31	)
Diluted	$	0.49		$	(6.88	)	$	0.54		$	(0.31	)
Fiscal Year 2019
Net revenue	$	292,602		$	307,589		$	301,213		$	316,234
Gross profit	209,463			219,638			215,172			217,735
Net income from continuing operations	83,372			105,811			75,265			70,229
Loss from discontinued operations, net of tax	(1,399		)	(1,000		)	(1,463		)	(46,736		)
Net income	81,973			104,811			73,802			23,493
Net income attributable to non-controlling interest in Premier LP	(55,113		)	(62,631		)	(43,388		)	(13,827		)
Adjustment of redeemable limited partners' capital to redemption amount	(708,193		)	651,709			235,394			(296,974		)
Net (loss) income attributable to stockholders	(681,333		)	693,889			265,808			(287,308		)
Weighted average shares outstanding:
Basic	53,221			59,876			62,020			61,725
Diluted	53,221			133,672			129,072			61,725
(Loss) earnings per share from continuing operations attributable to stockholders:
Basic	$	(12.79	)	$	11.60		$	4.30		$	(4.28	)
Diluted	$	(12.79	)	$	0.70		$	0.49		$	(4.28	)

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(21) SUBSEQUENT EVENTS

On July 31, 2020, after the resignation of three directors affiliated with the Company's GPO members, the Board of Directors consist of fifteen (15) directors, comprised of eight (8) independent directors, six (6) member-directors and the Company's Chief Executive Officer. Accordingly, the Company is in compliance with the NASDAQ rules regarding board and committee composition, including having a majority of independent directors on the Board of Directors. As a result, as of July 31, 2020, the limited partner's redemption feature was under the control of the Company (not the holders of Class B common units), which under the Exchange Agreement can redeem the Class B common units for cash or Class A Common Stock at their discretion. As a result, approximately $1.8 billion representing the fair value of redeemable limited partners' capital at July 31, 2020 will be reclassified from temporary equity in the mezzanine section of the consolidated balance sheet to additional paid in capital as a component of permanent equity. The Exchange Agreement was terminated in connection with the matters discussed below.

On August 11, 2020, the Company announced that it entered into an Agreement and Plan of Merger (the "Merger Agreement") dated as of August 11, 2020, by and among the Company, Premier LP and BridgeCo, LLC ("BridgeCo"), a wholly-owned subsidiary of Premier Services, LLC formed for the sole purpose of merging with and into Premier LP. Pursuant to the Merger Agreement, effective August 11, 2020, BridgeCo merged with and into Premier LP, with Premier LP as the surviving entity (the "Merger"). The Merger was approved by Premier GP, the general partner of Premier LP and a majority in interest of the Class B Common Units of Premier LP ("Class B Units"). Pursuant to the Merger Agreement, each of the issued and outstanding Class B Units was canceled and converted automatically into a right to receive one share of the Company's Class A common stock ("Class A Stock"). In conjunction with the Merger, all of the issued and outstanding shares of Class B Common Stock of the Company ("Class B Stock") beneficially held by limited partners of Premier LP (individually a "LP" and collectively, the "LPs") were canceled in accordance with the Company's Certificate of Incorporation. Each LP that did not consent to the Merger is entitled to statutory dissenters' rights under California law, to the extent such rights have been properly perfected.

On August 10, 2020, the Company exercised its right to terminate the TRA entered into as of September 25, 2013 and effective as of October 1, 2013 by and among the Company and the former limited partners by providing all former LPs a notice of the termination and the amount of the expected payment to be made to each LP pursuant to the early termination provisions of the TRA (each such amount an "Early Termination Payment") with a determination date of August 10, 2020. The valuation of the Early Termination Payment is based on average of the closing prices of a Class A Share on such exchange over the 20 trading days ending three day prior to August 10, 2020, or the determination date. The aggregate amount of the Early Termination Payments is approximately $473.5 million. Of that amount, approximately $10.6 million is payable within three business days after the date the Early Termination Payment becomes final, which is expected to be on or about September 15, 2020, to LPs that did not elect to execute a Unit Exchange Agreement. Pursuant to the Unit Exchange Agreements, the remaining amount payable, approximately $462.9 million in the aggregate, will be paid, without interest, to LPs that elected to execute a Unit Exchange Agreement in 18 equal quarterly installments commencing during the quarter ended March 31, 2021 and ending in the quarter ending June 30, 2025.

As a result of the Merger, management will record a deferred tax benefit in the amount of $300.0 million to $350.0 million resulting from the increase in amortizable tax basis goodwill resulting from the step-up from the initial sale of the Class B Stock by the member owners in conjunction with the IPO, to the fair value of the Class A Stock at the final exchange date of August 11, 2020. Management is expected to realize the cash tax savings over a 15-year period.

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(1)	Assumes restricted stock unit (RSU), performance share (PSA) and stock option awards are paid at target. Actual shares awarded may be higher or lower based upon actual performance over the measurement period. For more detailed information, see Note 14 - Stock-Based Compensation to our Consolidated Financial Statements.

(2)	This calculation only reflects outstanding stock option awards.

(3)	Reflects, as of June 30, 2020, shares reserved for future grants of stock options, RSUs, RSAs, PSAs and/or other equity awards. Any shares withheld to satisfy tax withholding obligations or tendered to pay the exercise price of an option shall again be available for grant under the terms of the plan.

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Schedule II Valuation and Qualifying Accounts

Years Ended June 30, 2020, 2019 and 2018
(in thousands)
	Beginning Balance			Additions/(Reductions) to Expense or Other Accounts		Deductions		Ending Balance
Year ended June 30, 2020
Allowance for doubtful accounts	$	739		669		677		$	731
Deferred tax assets valuation allowance	48,769			12,472		—		61,241
Year ended June 30, 2019
Allowance for doubtful accounts	$	1,841		2,277		3,379		$	739
Deferred tax assets valuation allowance	58,681			(3,030	)	6,882		48,769
Year ended June 30, 2018
Allowance for doubtful accounts	$	1,812		1,148		1,119		$	1,841
Deferred tax assets valuation allowance	91,787			(33,106	)	—		58,681

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