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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 __________________________________________________________________________________________
FORM 10-Q
 __________________________________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from          to         
Commission File Number 001-36092
 __________________________________________________________________________________________
Premier, Inc.
(Exact name of registrant as specified in its charter)
 ___________________________________________________________________________________________
Delaware 35-2477140
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
13034 Ballantyne Corporate Place
Charlotte,
North Carolina
 28277
(Address of principal executive offices) (Zip Code)
(704357-0022
(Registrant’s telephone number, including area code)
 __________________________________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.01 Par ValuePINCNASDAQ Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒     No   ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes  ☒ No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer Accelerated filerNon-accelerated filer
Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   No   ☒
As of April 29, 2021, there were 122,269,491 shares of the registrant’s Class A common stock, par value $0.01 per share outstanding.



TABLE OF CONTENTS
Page
Item 5.
Exhibits




CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements made in this Quarterly Report that are not statements of historical or current facts, such as those under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to our beliefs and expectations regarding future events and trends affecting our business and are necessarily subject to uncertainties, many of which are outside our control. Factors that could cause actual results to differ materially from those indicated in any forward-looking statement include, but are not limited to:
the impact of the continuing financial and operational uncertainty due to the coronavirus 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 other businesses or other joint ventures 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 in the event of a potential material price decline for the personal protective equipment products we may have purchased at elevated market prices;
our ability to attract, hire, integrate and retain key personnel;
3


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;
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 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 members or between us and our members;
the ability of our members to exercise significant influence over us;
the terms of agreements between us and our members;
the impact of payments required under the Unit Exchange and Tax Receivable Acceleration Agreements (the “Unit Exchange Agreements”) on our overall cash flow and our ability to fully realize the expected tax benefits to match such fixed payment obligations under 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 impact to us or the price of our Class A common stock if we cease paying dividends or reduce dividend payments from current levels;
the number of shares of Class A common stock repurchased by us pursuant to any Class A common stock repurchase program and the timing of any such repurchases;
the number of shares of Class A common stock eligible for sale after the issuance of Class A common stock in our August 2020 restructuring and the potential impact of such sales; and
the risk factors discussed under the heading “Risk Factors” under Item 1A of our Annual Report on Form 10-K for the fiscal year ended June 30, 2020 (the “2020 Annual Report”), filed with the Securities and Exchange Commission (“SEC”).
More information on potential factors that could affect our financial results is included from time to time in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” or similarly captioned sections of this Quarterly Report and our other periodic and current filings made from time to time with the SEC, which are available on our website at http://investors.premierinc.com/ (the contents of which are not part of this Quarterly Report). You should not place undue reliance on any of our forward-looking statements which speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or otherwise. Furthermore, we cannot guarantee future results, events, levels of activity, performance or achievements.
4


Certain Definitions
For periods prior to August 11, 2020, references in this Quarterly Report to “member owners” are to the participants in our GPO program that were also limited partners of Premier LP that held Class B common units of Premier LP and shares of our Class B common stock. For periods on or after August 11, 2020, references in this Quarterly Report to “members” are to healthcare provider participants that participate in our GPO program or utilize any of our programs or services, some of which were formerly referred to as member owners.

5


PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PREMIER, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands, except share data)
March 31, 2021June 30, 2020
Assets
Cash and cash equivalents$132,584 $99,304 
Accounts receivable (net of $2,137 and $731 allowance for doubtful accounts, respectively)
188,519 135,063 
Contract assets259,331 215,660 
Inventory225,231 70,997 
Prepaid expenses and other current assets83,527 97,338 
Total current assets889,192 618,362 
Property and equipment (net of $503,189 and $452,609 accumulated depreciation, respectively)
223,689 206,728 
Intangible assets (net of $279,023 and $245,160 accumulated amortization, respectively)
407,531 417,422 
Goodwill999,777 941,965 
Deferred income tax assets821,439 430,025 
Deferred compensation plan assets55,952 49,175 
Investments in unconsolidated affiliates153,747 133,335 
Operating lease right-of-use assets50,556 57,823 
Other assets80,082 93,680 
Total assets$3,681,965 $2,948,515 
Liabilities, redeemable limited partners' capital and stockholders' equity
Accounts payable$100,348 $54,841 
Accrued expenses64,255 53,500 
Revenue share obligations216,054 145,777 
Limited partners' distribution payable 8,012 
Accrued compensation and benefits80,234 73,262 
Deferred revenue35,933 35,446 
Current portion of tax receivable agreements 13,689 
Current portion of notes payable to members95,483  
Line of credit and current portion of long-term debt203,964 79,560 
Other liabilities56,574 31,987 
Total current liabilities852,845 496,074 
Long-term debt, less current portion5,333 4,640 
Tax receivable agreements, less current portion 279,981 
Notes payable to members, less current portion323,156  
Deferred compensation plan obligations55,952 49,175 
Deferred tax liabilities 17,508 
Deferred consideration, less current portion83,700 112,917 
Operating lease liabilities, less current portion45,654 52,990 
Other liabilities100,758 75,658 
Total liabilities1,467,398 1,088,943 
Commitments and contingencies (Note 16)
Redeemable limited partners' capital 1,720,309 
6


March 31, 2021June 30, 2020
Stockholders' equity:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 122,268,758 shares issued and outstanding at March 31, 2021 and 71,627,462 shares issued and outstanding at June 30, 2020
1,223 716 
Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 0 and 50,213,098 shares issued and outstanding at March 31, 2021 and June 30, 2020, respectively
  
Additional paid-in-capital2,046,836 138,547 
Retained earnings166,508  
Total stockholders' equity2,214,567 139,263 
Total liabilities, redeemable limited partners' capital and stockholders' equity$3,681,965 $2,948,515 
See accompanying notes to the unaudited condensed consolidated financial statements.
7


PREMIER, INC.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
(In thousands, except per share data)
Three Months EndedNine Months Ended
March 31,March 31,
2021202020212020
Net revenue:
Net administrative fees$146,553 $174,049 $424,537 $518,566 
Other services and support107,375 99,591 304,020 270,929 
Services253,928 273,640 728,557 789,495 
Products215,995 61,183 511,080 167,344 
Net revenue469,923 334,823 1,239,637 956,839 
Cost of revenue:
Services46,980 49,007 125,852 143,965 
Products211,136 54,121 496,286 150,415 
Cost of revenue258,116 103,128 622,138 294,380 
Gross profit211,807 231,695 617,499 662,459 
Operating expenses:
Selling, general and administrative134,502 115,289 388,453 315,311 
Research and development715 628 2,013 1,808 
Amortization of purchased intangible assets10,400 13,966 33,864 38,948 
Operating expenses145,617 129,883 424,330 356,067 
Operating income66,190 101,812 193,169 306,392 
Equity in net income of unconsolidated affiliates5,524 4,442 16,023 11,038 
Interest and investment loss, net(3,225)(9,966)(8,742)(9,849)
(Loss) gain on FFF put and call rights(5,195)(13,906)(21,621)8,477 
Other income (expense), net1,594 (5,005)10,167 (1,996)
Other (expense) income, net(1,302)(24,435)(4,173)7,670 
Income before income taxes64,888 77,377 188,996 314,062 
Income tax expense (benefit)13,444 4,165 (88,037)78,336 
Net income from continuing operations51,444 73,212 277,033 235,726 
Income from discontinued operations, net of tax 5  1,009 
Net income51,444 73,217 277,033 236,735 
Net income from continuing operations attributable to non-controlling interest(3,123)(35,055)(15,903)(132,189)
Net income from discontinued operations attributable to non-controlling interest (3) (480)
Net income attributable to non-controlling interest(3,123)(35,058)(15,903)(132,669)
Adjustment of redeemable limited partners' capital to redemption amount 302,569 (26,685)516,725 
Net income attributable to stockholders$48,321 $340,728 $234,445 $620,791 
Comprehensive income:
Net income51,444 73,217 277,033 236,735 
Less: comprehensive income attributable to non-controlling interest(3,123)(35,058)(15,903)(132,669)
Comprehensive income attributable to stockholders$48,321 $38,159 $261,130 $104,066 
Weighted average shares outstanding:
Basic122,254 69,451 114,596 65,582 
Diluted123,116 122,470 115,365 124,030 
8


Three Months EndedNine Months Ended
March 31,March 31,
2021202020212020
Earnings per share attributable to stockholders:
Basic earnings per share attributable to stockholders$0.40 $4.91 $2.05 $9.47 
Diluted earnings per share attributable to stockholders$0.39 $0.54 $2.03 $1.66 
See accompanying notes to the unaudited condensed consolidated financial statements.
9


PREMIER, INC.
Condensed Consolidated Statements of Stockholders' Equity (Deficit)
Nine Months Ended March 31, 2021 and 2020
(Unaudited)
(In thousands)
Class A
Common Stock
Class B
Common Stock
Treasury StockAdditional Paid-In CapitalRetained Earnings / (Accumulated Deficit)Total Stockholders' Equity
SharesAmountSharesAmountSharesAmount
Balance at June 30, 202071,627 $716 50,213 $  $ $138,547 $ $139,263 
Balance at July 1, 202071,627 716 50,213    138,547  139,263 
Impact of change in accounting principle— — — — — — — (1,228)(1,228)
Adjusted balance at July 1, 202071,627 716 50,213    138,547 (1,228)138,035 
Exchange of Class B common units for Class A common stock by member owners70 1 (70)— — — 2,436 — 2,437 
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation— — — — — — 37,319 — 37,319 
Increase in additional paid-in capital related to final exchange by member owners, including TRA termination— — — — — — 517,526 — 517,526 
Issuance of Class A common stock under equity incentive plan241 2 — — — — 642 — 644 
Stock-based compensation expense— — — — — — 7,229 — 7,229 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (3,023)— (3,023)
Net income— — — — — — — 180,685 180,685 
Net income attributable to non-controlling interest— — — — — — — (11,845)(11,845)
Adjustment of redeemable limited partners' capital to redemption amount— — — — — — — (26,685)(26,685)
Reclassification of redeemable limited partners' capital to permanent equity— — — — — — 1,750,840 3,767 1,754,607 
Final exchange of Class B common units for Class A common stock by member owners50,143 502 (50,143)— — — (502)—  
Early Termination Payments to members— — — — — — (438,967)— (438,967)
Dividends ($0.19 per share)
— — — — — — — (23,381)(23,381)
Balance at September 30, 2020122,081 1,221     2,012,047 121,313 2,134,581 
Issuance of Class A common stock under equity incentive plan102 1 — — — — 1,770 — 1,771 
Issuance of Class A common stock under employee stock purchase plan45  — — — — 1,597 — 1,597 
Stock-based compensation expense— — — — — — 7,316 — 7,316 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (28)— (28)
Net income— — — — — — — 44,904 44,904 
Net income attributable to non-controlling interest— — — — — — 935 (935) 
Dividends ($0.19 per share)
— — — — — — — (23,374)(23,374)
Adjustment in additional paid-in capital related to consolidated investment— — — — — — 318 (318) 
Capital Contributions— — — — — — 1,959 — 1,959 
Non-controlling interest in consolidated investments— — — — — — 3,690 — 3,690 
Balance at December 31, 2020122,228 1,222     2,029,604 141,590 2,172,416 
Issuance of Class A common stock under equity incentive plan40 1 — — — — 1,101 — 1,102 
Stock-based compensation expense— — — — — — 13,056 — 13,056 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (48)— (48)
Net income— — — — — — — 51,444 51,444 
Net income attributable to non-controlling interest— — — — — — 3,123 (3,123) 
Dividends ($0.19 per share)
— — — — — — — (23,403)(23,403)
Balance at March 31, 2021122,268 $1,223  $  $ $2,046,836 $166,508 $2,214,567 

10


Class A
Common Stock
Class B
Common Stock
Treasury StockAdditional Paid-In CapitalAccumulated DeficitTotal Stockholders’ Equity (Deficit)
SharesAmountSharesAmountSharesAmount
Balance at June 30, 201961,938 $644 64,548 $ 2,419 $(87,220)$ $(775,674)$(862,250)
Balance at July 1, 201961,938 644 64,548  2,419 (87,220) (775,674)(862,250)
Impact of change in accounting principle— — — — — — — (899)(899)
Adjusted balance at July 1, 201961,938 644 64,548  2,419 (87,220) (776,573)(863,149)
Exchange of Class B common units for Class A common stock by member owners1,311 — (1,311)— (1,311)47,258 3,534 — 50,792 
Redemption of limited partners— — (782)— — — — —  
Increase in additional paid-in capital related to quarterly exchange by member owners, including associated TRA revaluation— — — — — — 12,272 — 12,272 
Issuance of Class A common stock under equity incentive plan485 5 — — — — 1,749 — 1,754 
Treasury stock(1,055)— — — 1,055 (35,649)— — (35,649)
Stock-based compensation expense— — — — — — 3,704 — 3,704 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (8,311)— (8,311)
Net income— — — — — — — 71,329 71,329 
Net income attributable to non-controlling interest in Premier LP— — — — — — — (41,907)(41,907)
Adjustment of redeemable limited partners' capital to redemption amount— — — — — — (12,948)707,257 694,309 
Balance at September 30, 201962,679 649 62,455  2,163 (75,611) (39,894)(114,856)
Exchange of Class B units for Class A common stock by member owners6,873 19 (6,873)— (5,031)164,810 59,117 — 223,946 
Increase in additional paid-in capital related to departure and quarterly exchange by member owners, including associated TRA revaluation— — — — — — 1,103 — 1,103 
Issuance of Class A common stock under equity incentive plan146 1 — — — — 4,243 — 4,244 
Issuance of Class A common stock under employee stock purchase plan40  — — — — 1,540 — 1,540 
Treasury stock(3,549)— — — 3,549 (112,917)— — (112,917)
Stock-based compensation expense— — — — — — 7,775 — 7,775 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (47)— (47)
Net income— — — — — — — 92,189 92,189 
Net income attributable to non-controlling interest in Premier LP— — — — — — — (55,704)(55,704)
Adjustment of redeemable limited partner's capital to redemption amount— — — — — — (73,731)(406,422)(480,153)
Balance at December 31, 201966,189 669 55,582  681 (23,718) (409,831)(432,880)
Exchange of Class B units for Class A common stock by member owners4,866 41 (4,866)— (723)25,245 143,908 — 169,194 
Increase in additional paid-in capital related to departure and quarterly exchange by member owners, including associated TRA revaluation— — — — — — 58,193 — 58,193 
Issuance of Class A common stock under equity incentive plan58 1 — — — — 308 — 309 
Treasury stock(42)— — — 42 (1,527)— — (1,527)
Stock-based compensation expense— — — — — — 7,568 — 7,568 
Repurchase of vested restricted units for employee tax-withholding— — — — — — (123)— (123)
Net income— — — — — — — 73,217 73,217 
Net income attributable to non-controlling interest in Premier LP— — — — — — — (35,058)(35,058)
Adjustment of redeemable limited partner's capital to redemption amount— — — — — — (69,103)371,672 302,569 
Balance at March 31, 202071,071 $711 50,716 $  $ $140,751 $ $141,462 
See accompanying notes to the unaudited condensed consolidated financial statements.
11


PREMIER, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Nine Months Ended March 31,
20212020
Operating activities
Net income$277,033 $236,735 
Adjustments to reconcile net income to net cash provided by operating activities:
Income from discontinued operations, net of tax (1,009)
Depreciation and amortization89,768