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8-K - FORM 8-K - Premier, Inc.d130560d8k.htm
EX-99.3 - EX-99.3 - Premier, Inc.d130560dex993.htm
EX-99.2 - EX-99.2 - Premier, Inc.d130560dex992.htm

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE

PREMIER, INC. REPORTS FISCAL 2016 SECOND-QUARTER RESULTS

CHARLOTTE, NC, February 8, 2016 – Premier, Inc. (NASDAQ: PINC) today reported financial results for the fiscal 2016 second quarter ended December 31, 2015.

Second-Quarter Highlights:

 

  Net revenue increased 17% to $291.7 million from the same period last year; Supply Chain Services segment revenue rose 13% and Performance Services segment revenue increased 27%.

 

  Adjusted EBITDA* increased 17% to $116.1 million from the same period last year.

 

  Adjusted fully distributed net income* increased 18% to $61.7 million, or $0.42 on a fully diluted per-share basis, from the same period a year ago. GAAP net income totaled $61.0 million, compared with $65.8 million in the prior year.

 

* Descriptions of adjusted EBITDA, adjusted fully distributed net income and other non-GAAP financial measures are provided in “Use and Definition of Non-GAAP Measures,” and reconciliations are provided in the tables at the end of this release.

“Our second-quarter financial performance demonstrates the growing power of Premier’s integrated business model as our multiple growth drivers unite to provide comprehensive solutions to the many cost, quality, safety and population health challenges facing our healthcare providers,” said Susan DeVore, president and chief executive officer. “The businesses within Supply Chain Services and Performance Services delivered significant year-over-year growth in the quarter, driving a 17% increase in both consolidated net revenue and adjusted EBITDA. Based on this performance and our current outlook and assumptions for the remainder of the fiscal year, we are raising fiscal 2016 full-year revenue and earnings guidance.”

“Longer term, we remain well positioned to continue to lead the transformation of healthcare delivery in this country through co-innovation with our member health systems across the continuum of care,” DeVore said. “We believe our comprehensive, cloud-based, provider-centric technology platform, coupled with industry leading advisory services across the areas of cost, quality, safety and population health, provide solutions unmatched in the marketplace.”


Premier, Inc. FY’16 Q2 Results

Page 2 of 13

 

Results of Operations for the Second Quarter of Fiscal 2016

Consolidated Second-Quarter Financial Highlights

 

     Three Months Ended December 31,     Six Months Ended December 31,  

(in thousands, except per share data)

   2015     2014     % Change     2015     2014     % Change  

Net Revenue:

            

Supply Chain Services:

            

Net administrative fees

   $ 120,733      $ 112,675        7   $ 238,682      $ 219,198        9

Other services and support

     1,040        237        339     1,859        452        311
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Services

     121,773        112,912        8     240,541        219,650        10

Products

     81,316        66,696        22     159,097        130,260        22
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total Supply Chain Services

     203,089        179,608        13     399,638        349,910        14

Performance Services:

            

Services

     88,580        69,837        27     162,866        128,843        26
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 291,669      $ 249,445        17 %    $ 562,504      $ 478,753        17 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA (a):

            

Supply Chain Services

   $ 107,989      $ 97,342        11   $ 210,938      $ 188,610        12

Performance Services

     34,462        23,189        49     59,387        41,551        43
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total segment adjusted EBITDA

     142,451        120,531        18     270,325        230,161        17

Corporate

     (26,396     (21,723     22     (49,273     (40,835     21
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   $ 116,055      $ 98,808        17 %    $ 221,052      $ 189,326        17 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted fully distributed net income (a)

   $ 61,747      $ 52,130        18   $ 117,770      $ 99,895        18
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per share on adjusted fully distributed net income - diluted (a)

   $ 0.42      $ 0.36        17 %    $ 0.81      $ 0.69        17 % 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average fully distributed shares outstanding - diluted

     146,094        145,211          145,927        145,146     

 

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

For the fiscal second quarter ended December 31, 2015, Premier generated net revenue of $291.7 million, an increase of 17% from net revenue of $249.4 million for the same period a year ago.

Adjusted EBITDA of $116.1 million increased 17% from $98.8 million for the same period last year. The increase was driven by revenue growth in both of the company’s business segments, contributions from recent acquisitions in the current year and effective management of operating expenses.

Adjusted fully distributed net income for the fiscal second quarter rose 18% to $61.7 million, or $0.42 per fully diluted share, from $52.1 million, or $0.36 per fully diluted share, for the same period a year ago. Adjusted fully distributed earnings per share is a non-GAAP financial measure that represents net income, adjusted for non-recurring and non-cash items, attributable to all stockholders as if all Class B stockholders exchange their Class B common units and associated Class B common shares for Class A common shares, and reflects income taxes at an estimated effective rate of 40% on 100% of pretax income.

GAAP net income for the fiscal second quarter totaled $61.0 million, compared with $65.8 million for the same quarter a year ago. The decline is primarily attributable to higher income tax expense resulting from the recording of a valuation allowance against a portion of the company’s deferred tax assets. Fiscal 2016 and 2015 second-quarter net income attributable to stockholders required non-cash adjustments of $(65.6) million and $(42.3) million, respectively, to reflect the change in redemption value of the limited partners Class B common unit ownership at the end of each period. These non-cash adjustments result from changes in the company’s stock price


Premier, Inc. FY’16 Q2 Results

Page 3 of 13

 

between periods and do not reflect results of the company’s business operations. After these non-cash adjustments based on changes in stock price, the company reported a GAAP net loss attributable to stockholders of $1.31 per share, compared with a GAAP net loss attributable to stockholders of $0.93 per share a year ago. (See income statement in the tables section of this press release.)

Segment Results

Supply Chain Services

For the fiscal second quarter ended December 31, 2015, the Supply Chain Services segment generated net revenue of $203.1 million, an increase of 13% from $179.6 million a year ago. Revenue growth was driven by strong performance of both the company’s group purchasing organization (GPO) and products businesses. GPO net administrative fees revenue of $120.7 million increased 7% from a year ago, resulting from increased contract penetration of existing members, continued recruitment and conversion of members and positive utilization trends, although at a more normalized level. Product sales of $81.3 million increased 22% from a year ago due to the ongoing growth in member utilization of the company’s direct sourcing and specialty pharmacy businesses.

Supply Chain Services segment adjusted EBITDA of $108.0 million for the fiscal 2016 second quarter increased 11% from $97.3 million for the same period a year ago. The increase primarily reflects growth in net administrative fees revenue and the effective management of operating expenses.

Performance Services

For the fiscal second quarter ended December 31, 2015, the Performance Services segment generated net revenue of $88.6 million, an increase of 27% from $69.8 million for the same quarter last year. Revenue growth was driven by PremierConnect SaaS-based (software-as-a-service) subscriptions and renewals and the company’s advisory services as well as contributions from the recent acquisitions of CECity.Com, Inc., Healthcare Insights, LLC and InflowHealth LLC.

Performance Services segment adjusted EBITDA was $34.5 million for the fiscal 2016 second quarter, an increase of 49% from $23.2 million for the same quarter last year. The growth in adjusted EBITDA reflects increased revenue from PremierConnect SaaS-based subscriptions and licenses, advisory services, contributions from recent acquisitions and effective management of operating expenses.

Results of Operations for the Six Months Ended December 31, 2015

For the six months ended December 31, 2015, Premier generated net revenue of $562.5 million, an increase of 17%, from net revenue of $478.8 million for the same period a year ago. Adjusted EBITDA of $221.1 million increased 17% from $189.3 million for the same period last year. Adjusted fully distributed net income for the six months rose 18% to $117.8 million, or $0.81 per fully diluted share, from $99.9 million, or $0.69 per fully diluted share, for the same period a year ago.


Premier, Inc. FY’16 Q2 Results

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GAAP Net income for the six-month period totaled $113.2 million, compared with $130.7 million for the same period a year ago. Fiscal 2016 and 2015 six-month net income attributable to stockholders required non-cash adjustments of $401.2 million and $(424.9) million, respectively, to reflect changes in redemption value of the limited partners Class B common unit ownership at the end of each period. These non-cash adjustments result from changes in the company’s stock price between periods and do not reflect results of the company’s business operations. After these non-cash adjustments based on the changes in stock price, the company reported GAAP net income attributable to stockholders of $0.60 per fully diluted share, compared with a GAAP net loss attributable to stockholders of $11.96 per share a year ago. (See income statement in the tables section of this press release.)

Supply Chain Services segment net revenue for the first six months of fiscal 2016 increased 14% to $399.6 million from $349.9 million a year earlier. Supply Chain Services segment adjusted EBITDA increased 12%, to $210.9 million from $188.6 million for the prior year.

Performance Services segment net revenue for the first six months of fiscal 2016 increased 26% to $162.9 million from $128.8 million a year earlier, while segment adjusted EBITDA increased 43% to $59.4 million from $41.6 million.

Cash Flows and Liquidity

Cash provided by operating activities was $138.8 million for the six-month period ended December 31, 2015, compared with $153.7 million for the same period a year ago. At December 31, 2015, the company’s cash, cash equivalents and short- and long-term marketable securities totaled $251.6 million, compared with $469.5 million at December 31, 2014, and consisted of $157.4 million in cash and cash equivalents and $94.2 million in marketable securities with maturities ranging from three months to five years. The reduction in cash, cash equivalents and short- and long-term marketable securities, as compared to last year, was due to the company’s acquisitions of CECity.Com, Inc., Healthcare Insights, LLC and InflowHealth LLC during the first half of fiscal 2016. Through the first six months of fiscal 2016, the company had capital expenditures of $38.9 million.

Free cash flow for the quarter ended December 31, 2015 was $71.3 million, compared with $67.1 million for the same period last year. The company continues to expect that 40% to 50% of adjusted EBITDA will convert to free cash flow for the full fiscal year. The company does expect variability in free cash flow in certain quarters as a result of the timing of certain payments. The company defines free cash flow as cash provided by operating activities less distributions to limited partners, purchases of property and equipment, and payments to limited partners under tax receivable agreements (see free cash flow reconciliation to net cash provided by operating activities in the tables section of this press release).

At December 31, 2015, the company had an outstanding balance of $100.0 million on its five-year $750.0 million revolving credit facility. During the fiscal first quarter, the company borrowed $150.0 million to partially fund the acquisition of CECity.Com, Inc. which closed on August 20, 2015, and repaid $50.0 million in the fiscal second quarter.

Fiscal 2016 Outlook and Guidance

Based on fiscal second-quarter results and management’s current expectations and assumptions for the remainder of fiscal 2016, the company is raising full fiscal-year 2016 financial guidance as set forth below.


Premier, Inc. FY’16 Q2 Results

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Fiscal 2016 Financial Guidance

Premier, Inc. raises full-year fiscal 2016 financial guidance, as follows:

 

(in millions, except per share data)

   Updated
FY 2016
     % YoY Increase      Previous
FY 2016
 

Net Revenue:

        

Supply Chain Services segment

   $ 802 - $823         9% - 12%       $ 792 - $813   

Performance Services segment

   $ 352 - $362         31% - 35%       $ 352 - $362   
  

 

 

    

 

 

    

 

 

 

Total Net Revenue

   $ 1,154 - $1,185         15% - 18%       $ 1,144 - $1,175   

Non-GAAP adjusted EBITDA

   $ 430 - $449         9% - 14%       $ 425 - $444   

Non-GAAP adjusted fully distributed EPS

   $ 1.57 - $1.65         10% - 15%       $ 1.54 - $1.62   

 

(1) Updated February 8, 2016. The Company does not reconcile guidance for non-GAAP adjusted EBITDA and non-GAAP adjusted fully distributed earnings per-share to net income (loss) or GAAP earnings per share because the Company does not provide guidance for reconciling items between net income (loss) and non-GAAP adjusted EBITDA and non-GAAP adjusted fully distributed earnings per share. The Company is unable to provide guidance for these reconciling items since certain items that impact net income (loss) are outside of the Company’s control and cannot be reasonably predicted. Accordingly, a reconciliation to net income (loss) or GAAP earnings per share is not available without unreasonable effort.

The company’s updated fiscal full-year 2016 outlook is based on stronger-than-anticipated Supply Chain Services revenue and stronger-than-expected adjusted EBITDA performance in both Supply Chain Services and Performance Services segments in the first half of the fiscal year. Key assumptions include: expectations of continued stable growth in the Supply Chain Services segment through the continued (but more normalized) growth of the company’s direct sourcing and specialty pharmacy businesses; the addition and contract conversion ramp-up of new GPO members; deeper penetration of existing members’ supply spend; increased product and services sales in the Performance Services segment, including sales and use of SaaS-based products; increased member participation in performance improvement collaboratives and increased demand for advisory services; the contribution from the Centers for Medicare & Medicaid Services one-year contract award related to the Partnership for Patients initiative that began in October 2015; and the continuation of historically high retention and renewal rates of Premier’s GPO and SaaS informatics products.

Guidance assumptions also include the integration and realization of anticipated financial and operational contributions from the CECity, Healthcare Insights and InflowHealth acquisitions previously announced but do not contemplate the impact of any potential future acquisitions. Premier expects fiscal 2016 capital expenditures of approximately $83 million and a consolidated EBITDA margin approximating 38%, as a result of our intentional business mix shift related to our growth strategy and the impact of the recent acquisitions.

The statements in this “Outlook and Guidance” discussion are “forward-looking statements.” For additional information regarding the use and limitations of such statements, see “Forward-Looking Statements” below and the “Risk Factors” section of the company’s Form 10-K for the fiscal year ended June 30, 2015.

Conference Call

Premier management will host a conference call and live audio webcast on Monday, February 8, 2016, at 5:00 p.m. ET, to discuss the company’s financial results. The conference call can be accessed through a link provided on the investor relations page on Premier’s website at investors.premierinc.com. To expedite access, participants should preregister at this website, at which time the participant will be sent a confirmation email including dial-in numbers and a unique PIN for those who wish to participate by phone. A replay of the conference call will be available on the investor relations page of Premier’s website.


Premier, Inc. FY’16 Q2 Results

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About Premier, Inc.

Premier, Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of approximately 3,600 U.S. hospitals and 120,000 other providers to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and advisory and other services, Premier enables better care and outcomes at a lower cost. Premier, a Malcolm Baldrige National Quality Award recipient, plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites on www.premierinc.com; as well as Twitter, Facebook, LinkedIn, YouTube, Instagram, Foursquare and Premier’s blog for more information about the company.

Use and Definition of Non-GAAP Measures

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

In addition, adjusted fully distributed net income eliminates the variability of non-controlling interest as a result of member owner exchanges of Class B common stock and corresponding Class B units into shares of Class A common stock (which exchanges are a member owner’s cumulative right, but not obligation, which began on October 31, 2014, and occur each quarter thereafter, and are limited to one-seventh of the member owner’s initial allocation of Class B common units) and other potentially dilutive equity transactions which are outside of management’s control. Adjusted fully distributed net income is defined as net income attributable to PHSI (i) excluding income tax expense, (ii) excluding the effect of non-recurring and non-cash items, (iii) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination of non-controlling interest in Premier LP, and (iv) reflecting an adjustment for income tax expense on non-GAAP pro forma fully distributed net income before income taxes at the company’s estimated effective income tax rate.

EBITDA is defined as net income before interest and investment income, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets. Adjusted EBITDA is defined as EBITDA before merger and acquisition related expenses and non-recurring, non-cash or non-operating items, and including equity in net income of unconsolidated affiliates. Non-recurring items include certain strategic and financial restructuring expenses.


Premier, Inc. FY’16 Q2 Results

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Non-operating items include gain or loss on disposal of assets. Segment adjusted EBITDA is defined as the segment’s net revenue 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, and including equity in net income of unconsolidated affiliates. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of segment adjusted EBITDA. Adjusted EBITDA is a supplemental financial measure used by the company and by external users of the company’s financial statements.

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

Free cash flow is defined as cash provided by operating activities less distributions to limited partners and purchases of property and equipment and payments to limited partners under tax receivable agreements. Management believes free cash flow is an important measure because it represents the cash that the company generates after payment of tax distributions to limited partners and capital investment to maintain existing products and services as well as development of new and upgraded products and services to support future growth. Free cash flow is important because it allows the Company to enhance stockholder value through acquisitions, partnerships, investments in related or complimentary businesses and debt reduction.

Forward-Looking Statements

Statements made in this release that are not statements of historical or current facts, such as those under the heading “Fiscal 2016 Outlook and Guidance” are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Premier to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on any forward looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to Premier’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside Premier’s control. More information on potential factors that could affect Premier’s financial results is included from time to time in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Premier’s periodic and current filings with the SEC, including those discussed under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections of Premier’s Form 10-K for the fiscal year ended June 30, 2015 and also made available on Premier’s website at investors.premierinc.com. Forward-looking statements speak only as of the date they are made, and Premier undertakes no obligation to publicly update or revise any forward-looking statements, including as a result of new information or future events that occur after that date.


Premier, Inc. FY’16 Q2 Results

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Contacts  
Investor contact:   Media contact:
Jim Storey   Amanda Forster
Vice President, Investor Relations   Vice President, Public Relations
704.816.5958   202.897.8004
jim_storey@premierinc.com   amanda_forster@premierinc.com

(Tables Follow)


Premier, Inc. FY’16 Q2 Results

Page 9 of 13

 

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 
     2015     2014     2015     2014  

Net revenue:

        

Net administrative fees

   $ 120,733      $ 112,675      $ 238,682      $ 219,198   

Other services and support

     89,620        70,074        164,725        129,295   
  

 

 

   

 

 

   

 

 

   

 

 

 

Services

     210,353        182,749        403,407        348,493   

Products

     81,316        66,696        159,097        130,260   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net revenue

     291,669        249,445        562,504        478,753   

Cost of revenue:

        

Services

     40,492        35,276        78,616        68,040   

Products

     72,105        59,256        143,104        116,513   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of revenue

     112,597        94,532        221,720        184,553   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     179,072        154,913        340,784        294,200   

Operating expenses:

        

Selling, general and administrative

     99,284        85,391        186,222        156,557   

Research and development

     424        716        880        1,789   

Amortization of purchased intangible assets

     9,271        3,141        15,318        4,044   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating expenses

     108,979        89,248        202,420        162,390   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     70,093        65,665        138,364        131,810   
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in net income of unconsolidated affiliates

     4,785        4,749        9,375        9,615   

Interest and investment (expense) income, net

     (937     122        (696     313   

Other expense, net

     (272     (458     (2,081     (962
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income, net

     3,576        4,413        6,598        8,966   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     73,669        70,078        144,962        140,776   

Income tax expense

     12,674        4,270        31,714        10,081   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

     60,995        65,808        113,248        130,695   

Net income attributable to noncontrolling interest in S2S Global

     —          (786     —          (1,584

Net income attributable to noncontrolling interest in Premier LP

     (49,817     (55,751     (97,717     (110,567
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income attributable to noncontrolling interest

     (49,817     (56,537     (97,717     (112,151
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjustment of redeemable limited partners’ capital to redemption amount

     (65,561     (42,250     401,240        (424,907
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) attributable to stockholders

   $ (54,383   $ (32,979   $ 416,771      $ (406,363
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     41,575        35,589        39,655        33,965   

Diluted

     41,575        35,589        148,167        33,965   

Earnings (loss) per share attributable to stockholders (a)

        

Basic

   $ (1.31   $ (0.93   $ 10.51      $ (11.96

Diluted

   $ (1.31   $ (0.93   $ 0.60      $ (11.96

 

(a)  Earnings (loss) per share attributable to stockholders includes an adjustment to net income (loss) attributable to stockholders of redeemable limited partners’ capital to redemption amount of ($65.6) million and ($42.2) million for the three months ended December 31, 2015 and 2014, respectively, and $401.2 million and ($424.9 million) for the six months ended December 31, 2015 and 2014, respectively.


Premier, Inc. FY’16 Q2 Results

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Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

 

     December 31, 2015     June 30, 2015  
     (Unaudited)     (Audited)  

Assets

    

Cash and cash equivalents

   $ 157,410      $ 146,522   

Marketable securities

     42,205        240,667   

Accounts receivable

     125,052        99,120   

Inventory

     30,244        33,058   

Prepaid expenses and other current assets

     28,083        22,353   

Due from related parties

     3,764        3,444   
  

 

 

   

 

 

 

Total current assets

     386,758        545,164   

Marketable securities

     51,963        174,745   

Property and equipment, net

     163,044        147,625   

Intangible assets, net

     175,952        38,669   

Goodwill

     537,905        215,645   

Deferred income tax assets

     408,512        353,723   

Deferred compensation plan assets

     38,428        37,483   

Other assets

     25,418        17,137   
  

 

 

   

 

 

 

Total assets

   $ 1,787,980      $ 1,530,191   
  

 

 

   

 

 

 

Liabilities, redeemable limited partners’ capital and stockholders’ deficit

    

Accounts payable

   $ 25,829      $ 37,634   

Accrued expenses

     48,163        41,261   

Revenue share obligations

     60,798        59,259   

Limited partners’ distribution payable

     22,505        22,432   

Accrued compensation and benefits

     34,153        51,066   

Deferred revenue

     48,872        39,824   

Current portion of tax receivable agreements

     11,080        11,123   

Current portion of long-term debt

     4,046        2,256   

Other liabilities

     7,123        4,776   
  

 

 

   

 

 

 

Total current liabilities

     262,569        269,631   

Long-term debt, less current portion

     113,104        15,679   

Tax receivable agreements, less current portion

     275,621        224,754   

Deferred compensation plan obligations

     38,428        37,483   

Other liabilities

     21,081        20,914   
  

 

 

   

 

 

 

Total liabilities

     710,803        568,461   
  

 

 

   

 

 

 

Redeemable limited partners’ capital

     3,523,690        4,079,832   

Stockholders’ deficit:

    

Class A common stock, $0.01 par value, 500,000,000 shares authorized; 43,646,315 and 37,668,870 shares issued and outstanding at December 31, 2015 and June 30, 2015, respectively

     436        377   

Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 100,150,698 and 106,382,552 shares issued and outstanding at December 31, 2015 and June 30, 2015, respectively

     —          —     

Accumulated deficit

     (2,446,788     (3,118,474

Accumulated other comprehensive loss

     (161     (5
  

 

 

   

 

 

 

Total stockholders’ deficit

     (2,446,513     (3,118,102
  

 

 

   

 

 

 

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

   $ 1,787,980      $ 1,530,191   
  

 

 

   

 

 

 


Premier, Inc. FY’16 Q2 Results

Page 11 of 13

 

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

 

     Six Months Ended December 31,  
     2015     2014  

Operating activities

    

Net income

   $ 113,248      $ 130,695   

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

    

Depreciation and amortization

     39,382        25,614   

Equity in net income of unconsolidated affiliates

     (9,375     (9,615

Deferred income taxes

     21,331        917   

Stock-based compensation

     25,022        13,844   

Employee stock purchase plan expense

     232        —     

Adjustment to tax receivable agreement liability

     (4,818     1,073   

Changes in operating assets and liabilities:

    

Accounts receivable, prepaid expenses and other current assets

     (26,245     (11,276

Other assets

     (10,853     (3,754

Inventory

     2,814        (6,854

Accounts payable, accrued expenses, revenue share obligations and other current liabilities

     (12,376     11,246   

Long-term liabilities

     166        674   

Other operating activities

     308        1,151   
  

 

 

   

 

 

 

Net cash provided by operating activities

     138,836        153,715   
  

 

 

   

 

 

 

Investing activities

    

Purchase of marketable securities

     (19,211     (123,536

Proceeds from sale of marketable securities

     339,674        190,734   

Acquisition of CECity.com, Inc., net of cash acquired

     (398,261     —     

Acquisition of Healthcare Insights, LLC, net of cash acquired

     (64,634     —     

Acquisition of InFlow Health, LLC

     (10,197     —     

Acquisition of Aperek, Inc., net of cash acquired

     —          (47,446

Acquisition of TheraDoc, Inc., net of cash acquired

     —          (108,561

Investment in unconsolidated affiliate

     (1,000     —     

Distributions received on equity investment

     11,743        10,050   

Purchases of property and equipment

     (38,882     (32,411

Other investing activities

     (5     353   
  

 

 

   

 

 

 

Net cash used in investing activities

     (180,773     (110,817
  

 

 

   

 

 

 

Financing activities

    

Payments made on notes payable

     (1,336     (684

Proceeds from S2S Global revolving line of credit

     —          800   

Payments on S2S Global revolving line of credit

     —          (500

Proceeds from credit facility

     150,000        —     

Payments on senior secured line of credit

     (50,000     —     

Proceeds from exercise of stock options under equity incentive plan

     237        446   

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

     1,302        —     

Repurchase of restricted units

     (46     (31

Final remittance of net income attributable to S2S Global before February 1, 2015

     (1,890     —     

Distributions to limited partners of Premier LP

     (45,461     (45,099

Other financing activities

     19        —     
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     52,825        (45,068
  

 

 

   

 

 

 

Net decrease in cash and cash equivalents

     10,888        (2,170

Cash and cash equivalents at beginning of period

     146,522        131,786   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 157,410      $ 129,616   
  

 

 

   

 

 

 


Premier, Inc. FY’16 Q2 Results

Page 12 of 13

 

Supplemental Financial Information - Reporting of Adjusted EBITDA

and Non-GAAP Adjusted Fully Distributed Net Income

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

(Unaudited)

(In thousands)

 

     Three Months Ended
December 31,
    Six Months Ended
December 31,
 
     2015     2014     2015     2014  

Reconciliation of Net Income to Adjusted EBITDA and Reconciliation of Segment Adjusted EBITDA to Income Before Income Taxes:

   

Net income

   $ 60,995      $ 65,808      $ 113,248      $ 130,695   

Interest and investment income, net

     937        (122     696        (313

Income tax expense

     12,674        4,270        31,714        10,081   

Depreciation and amortization

     12,199        11,262        24,064        21,570   

Amortization of purchased intangible assets

     9,271        3,141        15,318        4,044   
  

 

 

   

 

 

   

 

 

   

 

 

 

EBITDA

     96,076        84,359        185,040        166,077   

Stock-based compensation

     11,554        7,405        25,254        13,844   

Acquisition related expenses

     5,644        2,267        9,116        3,545   

Strategic and financial restructuring expenses

     208        1,183        235        1,279   

ERP implementation expenses

     1,518        —          2,078        —     

Adjustment to tax receivable agreement liability

     —          —          (4,818     (1,073

Acquisition related adjustment - deferred revenue

     1,047        3,596        4,139        5,661   

Other income, net

     8        (2     8        (7
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 116,055      $ 98,808      $ 221,052      $ 189,326   
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Adjusted EBITDA:

        

Supply Chain Services

   $ 107,989      $ 97,342      $ 210,938      $ 188,610   

Performance Services

     34,462        23,189        59,387        41,551   

Corporate

     (26,396     (21,723     (49,273     (40,835
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 116,055      $ 98,808      $ 221,052      $ 189,326   

Depreciation and amortization

     (12,199     (11,262     (24,064     (21,570

Amortization of purchased intangible assets

     (9,271     (3,141     (15,318     (4,044

Stock-based compensation

     (11,554     (7,405     (25,254     (13,844

Acquisition related expenses

     (5,644     (2,267     (9,116     (3,545

Strategic and financial restructuring expenses

     (208     (1,183     (235     (1,279

ERP implementation expenses

     (1,518     —          (2,078     —     

Adjustment to tax receivable agreement liability

     —          —          4,818        1,073   

Acquisition related adjustment - deferred revenue

     (1,047     (3,596     (4,139     (5,661

Equity in net income of unconsolidated affiliates

     (4,785     (4,749     (9,375     (9,615

Deferred compensation plan expense

     264        460        2,073        969   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

   $ 70,093      $ 65,665      $ 138,364      $ 131,810   
  

 

 

   

 

 

   

 

 

   

 

 

 

Equity in net income of unconsolidated affiliates

     4,785        4,749        9,375        9,615   

Interest and investment income, net

     (937     122        (696     313   

Other expense, net

     (272     (458     (2,081     (962
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

   $ 73,669      $ 70,078      $ 144,962      $ 140,776   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of Net Income (Loss) Attributable to Stockholders to Non-GAAP Adjusted Fully Distributed Net Income:

  

Net income (loss) attributable to stockholders

   $ (54,383   $ (32,979   $ 416,771      $ (406,363

Adjustment of redeemable partners’ capital to redemption amount

     65,561        42,250        (401,240     424,907   

Income tax expense

     12,674        4,270        31,714        10,081   

Stock-based compensation

     11,554        7,405        25,254        13,844   

Acquisition related expenses

     5,644        2,267        9,116        3,545   

Strategic and financial restructuring expenses

     208        1,183        235        1,279   

ERP implementation expenses

     1,518        —          2,078        —     

Adjustment to tax receivable agreement liability

     —          —          (4,818     (1,073

Acquisition related adjustment - deferred revenue

     1,047        3,596        4,139        5,661   

Amortization of purchased intangible assets

     9,271        3,141        15,318        4,044   

Net income attributable to noncontrolling interest in Premier LP

     49,817        55,751        97,717        110,567   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP fully distributed income before income taxes

     102,911        86,884        196,284        166,492   

Income tax expense on fully distributed income before income taxes

     41,164        34,754        78,514        66,597   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Adjusted Fully Distributed Net Income

   $ 61,747      $ 52,130      $ 117,770      $ 99,895   
  

 

 

   

 

 

   

 

 

   

 

 

 


Premier, Inc. FY’16 Q2 Results

Page 13 of 13

 

Supplemental Financial Information - Reporting of Non-GAAP Free Cash Flow

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

(Unaudited)

(In thousands)

 

     Three Months Ended
December 31,
    Three Months Ended
September 30,
    Six Months Ended
December 31,
 
     2015     2014     2015     2014     2015     2014  

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

  

Net cash provided by operating activities

   $ 116,117      $ 107,842      $ 22,719      $ 45,873      $ 138,836      $ 153,715   

Purchases of property and equipment

     (21,741   $ (18,051     (17,141     (14,360     (38,882     (32,411

Distributions to limited partners

     (23,029   $ (22,691     (22,432     (22,408     (45,461     (45,099
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Free Cash Flow

   $ 71,347      $ 67,100      $ (16,854   $ 9,105      $ 54,493      $ 76,205   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Supplemental Financial Information - Reporting of Net Income and Earnings Per Share

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

(Unaudited)

(In thousands, except per share data)

 

     Three Months Ended
September 30,
    Six Months Ended
December 31,
 
     2015     2014     2015     2014  

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

  

Net income (loss) attributable to stockholders

   $ (54,383   $ (32,979   $ 416,771      $ (406,363

Adjustment of redeemable limited partners’ capital to redemption amount

     65,561        42,250        (401,240     424,907   

Income tax expense

     12,674        4,270        31,714        10,081   

Stock-based compensation

     11,554        7,405        25,254        13,844   

Acquisition related expenses

     5,644        2,267        9,116        3,545   

Strategic and financial restructuring expenses

     208        1,183        235        1,279   

ERP implementation expenses

     1,518        —          2,078        —     

Adjustment to tax receivable agreement liability

     —          —          (4,818     (1,073

Acquisition related adjustment - deferred revenue

     1,047        3,596        4,139        5,661   

Amortization of purchased intangible assets

     9,271        3,141        15,318        4,044   

Net income attributable to noncontrolling interest in Premier LP

     49,817        55,751        97,717        110,567   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP fully distributed income before income taxes

     102,911        86,884        196,284        166,492   

Income tax expense on fully distributed income before income taxes

     41,164        34,754        78,514        66,597   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted fully distributed net income

   $ 61,747      $ 52,130      $ 117,770      $ 99,895   
  

 

 

   

 

 

   

 

 

   

 

 

 

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

  

Weighted Average:

        

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

     41,575        35,589        39,655        33,965   

Potentially dilutive shares

     2,341        948        2,129        785   

Conversion of Class B common units

     102,178        108,674        104,143        110,396   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average fully distributed shares outstanding - diluted

     146,094        145,211        145,927        145,146   
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of GAAP EPS to Non-GAAP Adjusted Fully Distributed EPS

        

GAAP earnings (loss) per share

   $ (1.31   $ (0.93   $ 10.51      $ (11.96

Impact of adjustment of redeemable limited partners’ capital to redemption amount

   $ 1.58      $ 1.19      $ (10.12   $ 12.51   

Impact of additions:

        

Income tax expense

   $ 0.30      $ 0.12      $ 0.80      $ 0.30   

Stock-based compensation

   $ 0.28      $ 0.21      $ 0.64      $ 0.41   

Acquisition related expenses

   $ 0.14      $ 0.06      $ 0.23      $ 0.10   

Strategic and financial restructuring expenses

   $ —        $ 0.03      $ 0.01      $ 0.04   

ERP implementation expenses

   $ 0.04      $ —        $ 0.05      $ —     

Adjustment to tax receivable agreement liability

   $ —        $ —        $ (0.12   $ (0.03

Acquisition related adjustment - deferred revenue

   $ 0.02      $ 0.10      $ 0.10      $ 0.17   

Amortization of purchased intangible assets

   $ 0.22      $ 0.09      $ 0.39      $ 0.12   

Net income attributable to noncontrolling interest in Premier LP

   $ 1.20      $ 1.57      $ 2.46      $ 3.25   

Impact of corporation taxes

   $ (0.99   $ (0.98   $ (1.98   $ (1.96

Impact of increased share count

   $ (1.06   $ (1.10   $ (2.16   $ (2.26
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP earnings per share on adjusted fully distributed net income - diluted

   $ 0.42      $ 0.36      $ 0.81      $ 0.69   
  

 

 

   

 

 

   

 

 

   

 

 

 

# # #

Source: Premier, Inc.