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Premier, Inc. Reports Fiscal 2014 First-Quarter Results

Premier, Inc. Logo

CHARLOTTE, N.C., Nov. 11, 2013 (GLOBE NEWSWIRE) -- Premier, Inc. (Nasdaq:PINC) today reported financial results for the fiscal 2014 first quarter ended September 30, 2013.

First-quarter highlights:

  • Net revenue increased 21.2% to $240.6 million from the first quarter of fiscal 2013. On a pro forma basis, which reflects the impact of the company's reorganization and initial public offering (IPO),* net revenue increased 10.1% to $199.3 million.
  • Adjusted EBITDA* increased 31.3% to $124.3 million from the first quarter of fiscal 2013. On a pro forma basis, Adjusted EBITDA increased 7.6% to $83.1 million.
  • Pro forma adjusted fully distributed net income* increased 5.0% to $44.0 million, or $0.30 per share, from the first quarter of fiscal 2013.
  • Supply Chain Services business segment pro forma revenue increased 9.9% to $146.2 million and pro forma Adjusted EBITDA increased 4.2% to $84.2 million, compared with the first quarter of fiscal 2013.
  • Performance Services business segment pro forma revenue increased 10.4% to $53.1 million and pro forma Adjusted EBITDA rose 36.1% to $16.3 million, compared with the first quarter of fiscal 2013.
  • Completed acquisition of contract management and data services company SYMMEDRx.
  • On October 1, 2013, the company completed its IPO, issuing 32.4 million Class A shares of common stock at $27.00 per share. The IPO generated net proceeds of $821.7 million, of which $543.9 million was distributed to the company's member owners and $277.8 million was retained by the company for working capital and general corporate purposes, including potential future acquisitions and development activities.

* See "Use and Definition of Non-GAAP Measures" and related reconciliation to GAAP financial measures below for important information regarding non-GAAP financial measures. See "Reorganization and Initial Public Offering" for important information regarding pro forma results.

"Premier's mission is to improve the health of communities by transforming care delivery in America," said Susan DeVore, Premier, Inc. president and CEO. "This is a very real, long-term commitment. Our recent initial public offering provides us with additional capital to acquire, build and partner to develop the capabilities today that we believe will allow us to grow and deliver tomorrow's solutions.

"Our performance in the first quarter of fiscal 2014, which was in line with management expectations, and our outlook for the full fiscal year as a whole, demonstrate the multiple avenues of potential growth available to Premier as we expand both our capabilities and our member and customer base," DeVore said.

"Recent member additions include leading health systems that have indicated they will be working with Premier across our Supply Chain and Performance Services segments as they seek holistic solutions to the challenges they face," DeVore continued. "We believe our expanding suite of solutions and enhanced technology platform have increased the potential for Premier's future growth through the deepening and broadening relationships with our member healthcare providers, as we work together to address the formidable cost, efficiency, safety and population management issues facing this nation's healthcare system."

Results of operations for the first quarter of fiscal 2014

Consolidated First-Quarter Financial Highlights ACTUAL
PHSI (1)
PRO FORMA (2)
Premier, Inc.
(in thousands, except per share data) (3) Three Months Ended September 30, Three Months Ended September 30,
2013 2012 % Change 2013 2012 % Change
Net revenue:
Supply Chain Services Segment $ 187,458 $ 150,458 24.6% $ 146,195 $ 133,001 9.9%
Performance Services Segment 53,118 48,108 10.4% 53,118 48,108 10.4%
Total net revenue $ 240,576 $ 198,566 21.2% $ 199,313 $ 181,109 10.1%
Adjusted EBITDA:
Supply Chain Services Segment $ 125,480 $ 98,267 27.7% $ 84,217 $ 80,810 4.2%
Performance Services Segment 16,329 12,000 36.1% 16,329 12,000 36.1%
Segment-adjusted EBITDA $ 141,809 $ 110,267 28.6% $ 100,546 $ 92,810 8.3%
Corporate (17,475) (15,578) 12.2% (17,475) (15,578) 12.2%
Total adjusted EBITDA $ 124,334 $ 94,689 31.3% $ 83,071 $ 77,232 7.6%
Non-GAAP pro forma adjusted fully distributed net income $ 43,983 $ 41,882 5.0%
Non-GAAP earnings per share on pro forma adjusted fully distributed net income - diluted $ 0.30 $ 0.29 5.0%
Weighted average fully distributed shares outstanding - diluted 145,009 144,983
(1) Premier Healthcare Solutions, Inc. and subsidiaries
(2) Reflects the impact of the Company's reorganization and initial public offering
(3) See attached schedules for reconciliation of first-quarter 2014 and 2013 reported GAAP results to Non-GAAP pro forma results

On a pro forma basis, Premier generated net revenue of $199.3 million for the first quarter of fiscal 2014, an increase of $18.2 million, or 10.1%, from $181.1 million reported for the same period last year. The primary drivers of revenue growth were improved product revenue sales within the Supply Chain Services segment and increased SaaS (software as a service) informatics product subscriptions and advisory services within the Performance Services segment.

On a pro forma basis, the company generated non-GAAP adjusted fully distributed net income of $44.0 million, or $0.30 per diluted share, for the first quarter of fiscal 2014, compared with $41.9 million, or $0.29 per diluted share, for the first quarter of fiscal 2013. Pro forma Adjusted EBITDA was $83.1 million, an increase of 7.6% from first quarter a year earlier. Adjusted fully distributed net income and pro forma Adjusted EBITDA for the first quarter of fiscal 2014 add back strategic and financial restructuring expenses of $1.8 million and acquisition-related and stock-based compensation expenses of $0.5 million. Adjusted fully distributed net income and Adjusted EBITDA for the year-earlier results add back $0.6 million in expenses related to strategic and financial restructuring costs. Adjusted fully distributed net income and Adjusted EBITDA for the first quarter of fiscal 2014 were positively impacted by revenue growth in both of the company's business segments. This growth was partially offset by increases in selling, general and administrative services related both to the company's reorganization and to increased headcount and employee-related expenses to support the growth of the company.

Cash provided by operating activities was $64.0 million in the first quarter of fiscal 2014, compared to $57.3 million for the same quarter last year. Operating cash flows increased primarily due to the increase in net income, but were partially offset by an increase in receivables and other current assets, as well as a decrease in accounts payable and accrued expenses.

Capital expenditures were $12.3 million in the first quarter of fiscal 2014, unchanged from the prior year. Other investing activities in the quarter primarily consisted of the $28.7 million acquisition of SYMMEDRx, a business with a track record of analyzing and reducing costs for health systems through the innovative use of data.

At September 30, 2013, the company's cash, cash equivalents and marketable securities totaled $132.9 million, consisting of $75.4 million in cash and cash equivalents and $57.5 million in marketable securities with maturities ranging from three to 12 months. The company paid cash distributions to its limited partners in the first quarter of $208.3 million, attributable to earnings through June 30, 2013. In November 2013, the board approved an additional cash distribution of $78.0 million, of which $11.8 million has already been paid and the remainder will be paid later this month, to its limited partners attributable to earnings for the first quarter ended September, 30, 2013, calculated in a consistent manner with the company's historical semi-annual cash distributions provided to member owners prior to the Reorganization and IPO. Total borrowings at September 30, 2013, which include notes payable and borrowings under the company's line of credit, were $99.2 million. The company's outstanding balance on its revolving line of credit was $60.0 million at September 30, 2013, which it repaid in October.

On a GAAP basis, Premier generated net revenue of $240.6 million for the quarter ended September 30, 2013, an increase of 21.2% from $198.6 million for the same period last year. The company generated net income of $112.7 million, up 32.5% from $85.1 million for the 2013 first quarter.

Segment results

Premier operates two business segments:

  • Supply Chain Services includes one of the largest healthcare group purchasing organizations (GPO) in the United States, serving acute and alternate sites. The segment also includes the company's specialty pharmacy and direct sourcing activities.
  • Performance Services includes one of the nation's largest informatics and advisory services businesses in the United States focused on healthcare providers. The Performance Services segment includes the company's SaaS informatics products, technology-enabled performance improvement collaboratives, advisory services and insurance services.

Segment Results Three Months Ended September 30, Actual YoY Pro forma YoY
(in thousands) 2013 2012 2013 2012 % Change % Change
PHSI Pro forma - Premier, Inc.
Net Revenue:
Supply Chain Services:
Net administrative fees $ 143,576 $ 117,489 $ 102,313 $ 100,032 22.2% 2.3%
Other services and support 134 39 134 39 243.6% 243.6%
Services 143,710 117,528 102,447 100,071 22.3% 2.4%
Products 43,748 32,930 43,748 32,930 32.9% 32.9%
Total Supply Chain Services 187,458 150,458 146,195 133,001 24.6% 9.9%
Performance Services:
Services 53,118 48,108 53,118 48,108 10.4% 10.4%
Total $ 240,576 $ 198,566 $ 199,313 $ 181,109 21.2% 10.1%
Adjusted EBITDA:
Supply Chain Services $ 125,480 $ 98,267 $ 84,217 $ 80,810 27.7% 4.2%
Performance Services 16,329 12,000 16,329 12,000 36.1% 36.1%
Total segment Adjusted EBITDA 141,809 110,267 100,546 92,810 28.6% 8.3%
Corporate (17,475) (15,578) (17,475) (15,578) 12.2% 12.2%
Total $ 124,334 $ 94,689 $ 83,071 $ 77,232 31.3% 7.6%

Supply Chain Services

For the fiscal first quarter ended September 30, 2013, the Supply Chain Services segment generated GAAP net revenue of $187.5 million, an increase of $37.0 million, or 24.6% from $150.5 million in the prior year. On a pro forma basis, Supply Chain Services segment revenue was $146.2 million, an increase of $13.2 million, or 9.9%, from $133.0 million in the prior year. Revenue growth was driven by increased net administrative fees in the GPO and further penetration of the direct sourcing and specialty pharmacy businesses.

On a pro forma basis, Supply Chain Services Adjusted EBITDA of $84.2 million for the fiscal first quarter increased $3.4 million, or 4.2%, from $80.8 million for the same period a year ago.

Performance Services

For the fiscal first quarter ended September 30, 2013, the Performance Services segment generated GAAP net revenue of $53.1 million, an increase of $5.0 million, or 10.4%, from $48.1 million for the same quarter last year. The revenue growth is attributable primarily to new SaaS informatics products subscriptions and an increase in revenue from advisory services.

Performance Services Adjusted EBITDA was $16.3 million for the quarter, compared to $12.0 million last year, an increase of 36.1%.

Outlook and guidance

Premier believes it is well-positioned to help its members successfully address the cost, safety, efficiency and population health management issues facing the healthcare industry over the next several years. The company believes it enjoys a strong competitive position, a solid value proposition based on its large, integrated technology platform, and a long-standing collaborative relationship with major healthcare systems across the United States.

The guidance below is based on the following key assumptions: increasing use of Performance Services products and offerings, as well as stable growth in the Supply Chain segment through the addition of acute and alternate-site GPO members and deeper penetration of existing members' supply spend. Based on these assumptions, year-to-date results and the company's current outlook, Premier has established the following financial guidance for the full fiscal year ending June 30, 2014:

Fiscal 2014 Financial Guidance
Premier, Inc. introduces full-year fiscal 2014 financial guidance, as follows:
(in millions, except per share data) FY 2014
Pro Forma Net Revenue:
Supply Chain Services segment $614.0 - $631.0
Performance Services segment 231.0 - 238.0
Total Pro Forma Net Revenue 845.0 - 869.0
Non-GAAP pro forma adjusted EBITDA $335.0 - $355.0
Non-GAAP pro forma adjusted fully distributed EPS $1.20 - $1.29

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.

Conference call

Premier management will host a conference call and live audio webcast on Tuesday, November 12, 2013, at 8 a.m. ET, to discuss the company's financial results. The conference call can be accessed through a link provided on the investor relations page on Premier's website at investors.premierinc.com. Those wishing to participate in the call may do so by dialing 855.601.0048 (international callers should dial 702.495.1234) and providing the operator with conference ID number 93595004. Please call approximately 15 minutes before the start of the call to ensure you are connected. A replay of the conference call will be available beginning approximately two hours after the completion of the conference call through November 26, 2013, by dialing 800.585.8367 (702.495.1234 for international callers), and using the conference ID number above. The webcast will also be archived on the investor relations page on Premier's website.

About Premier, Inc., Malcolm Baldrige National Quality Award recipient

Premier, Inc. (Nasdaq:PINC) is a leading healthcare improvement company, uniting an alliance of more than 2,900 U.S. hospitals and nearly 100,000 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 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.

Reorganization and initial public offering

On October 1, 2013, Premier completed its IPO by issuing 32,374,751 shares of its Class A common stock, at a price of $27.00 per share, which included 4,222,793 shares sold pursuant to the option granted to the underwriters by Premier, which was exercised in full prior to the completion of the IPO, raising net proceeds of approximately $821.7 million, after underwriting discounts and commissions but before expenses. In connection with the IPO, Premier completed the reorganization of the company on October 1, 2013, issuing 112.6 million shares of Class B common stock representing 77.7% of the common stock outstanding, and corresponding Class B units in Premier Healthcare Alliance, L.P. to its 181 member owners.

The company's historical consolidated operating results do not reflect the reorganization, the IPO and contemplated use of net proceeds from the IPO. Therefore, in addition to presenting the historical actual results, the company presents and discusses pro forma results, which reflect the impact of the company's reorganization and IPO and the contemplated use of net proceeds from the IPO, to provide a more comparable indication of future expectations.

The key pro forma adjustments include:

  • The reorganization, which included the formation of a C-Corporation and the sale of 22.3% of the member's partnership interests to the public through the issuance of approximately 32.4 million shares of Premier Class A common stock, with the member owners retaining their ownership interest in the form of 112.6 million shares of Premier Class B common stock.
  • Payments to each member owner of revenue share from Premier equal to 30% of all gross administrative fees collected.
  • Payments due to member owners pursuant to the tax receivable agreement equal to 85% of the amount of cash savings, if any, in income and franchise taxes, that Premier realizes.
  • The further adjustments set forth in the notes to the pro forma financial statements provided below.

Further details of the reorganization and pro forma adjustments are in the company's IPO prospectus, dated September 25, 2013, as filed with the Securities and Exchange Commission (SEC), and in the company's Form 10-Q first-quarter report, to be filed with the SEC on or about November 12, 2013. The prospectus is accessible on the SEC's website at www.sec.gov and in the investor relations section of the company's website at investors.premierinc.com.

Use and definition of non-GAAP measures

Premier, Inc. uses Adjusted EBITDA, Segment Adjusted EBITDA and adjusted fully distributed net income to facilitate a comparison of the company's operating performance on a consistent basis from period to period that, when viewed in combination with its results prepared in accordance with GAAP, provides 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 because they remove 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 operations.

In addition, adjusted fully distributed net income eliminates the variability of noncontrolling 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, beginning on October 31, 2014, and each year thereafter, and are limited to one-seventh of the member owner's initial allocation of Class B common units). 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 into shares of Class A common stock, which results in the elimination of noncontrolling interest in Premier LP, and (iv) reflecting an adjustment for income tax expense on 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 are expenses that have not been incurred within the prior two years and are not expected to recur within the next two years. Such expenses include certain strategic and financial restructuring expenses. 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.

Forward-looking statements

Statements made in this release that are not statements of historical or current facts, such as those under the heading "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 "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, as well as those discussed under the "Risk Factors" and "Forward Looking Statements" section of Premier's IPO Prospectus, dated September 25, 2013, filed with the SEC and available on Premier's website at investors.premierinc.com. Forward looking statements speak only as of the date they are made. Premier undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that occur after that date.

(Tables follow)

Consolidated Statements of Income
(Unaudited)
(In thousands, except per share data)
Three Months Ended September 30,
2013 2012 2013 2012
PHSI Pro forma - Premier, Inc.
Net revenue:
Net administrative fees $ 143,576 $ 117,489 $ 102,313 $ 100,032 (a)
Other services and support 53,252 48,147 53,252 48,147
Services 196,828 165,636 155,565 148,179
Products 43,748 32,930 43,748 32,930
240,576 198,566 199,313 181,109
Cost of revenue:
Services 27,488 24,080 27,488 24,080
Products 40,038 30,152 40,038 30,152
67,526 54,232 67,526 54,232
Gross profit 173,050 144,334 131,787 126,877
Operating expenses:
Selling, general and administrative 62,318 55,732 62,643 55,732 (b)
Research and development 852 3,638 852 3,638
Amortization of purchased intangible assets 601 385 601 385
63,771 59,755 64,096 59,755
Operating income 109,279 84,579 67,691 67,122
Equity in net income of unconsolidated affiliates 4,114 2,781 4,114 2,781
Interest and investment income, net 220 224 220 224
Gain on disposal of assets 4 -- 4 --
Other income, net 4,338 3,005 4,338 3,005
Income before income taxes 113,617 87,584 72,029 70,127
Income tax expense 891 2,517 6,761 8,144 (b) (c)
Net income 112,726 85,067 65,268 61,983
Add: Net loss attributable to noncontrolling interest in S2S Global 210 305 210 305
Less: Net income attributable to noncontrolling interest in Premier LP (113,214) (83,116) (51,030) (48,398) (d)
Net income attributable to noncontrolling interest (113,004) (82,811) (50,820) (48,093)
Net (loss) income attributable to PHSI/Premier, Inc. shareholders $ (278) $ 2,256 $ 14,448 $ 13,890
Weighted average shares outstanding:
Basic 5,627 6,090 32,375 32,375
Diluted 5,627 6,090 32,401 32,375
(Loss) earnings per share attributable to PHSI/Premier, Inc.:
Basic $ (0.05) $ 0.37 $ 0.45 $ 0.43
Diluted $ (0.05) $ 0.37 $ 0.45 $ 0.43
(a) - Reflects the payment of revenue share to each member owner equal to 30% of all gross administrative fees collected, resulting in a decrease in net administrative fees revenue of $41.3 million and $17.5 million, respectively.
(b) - Reflects stock compensation expense of $325 with an associated income tax benefit of $127.
(c) - Reflects income taxes on additional allocable share of taxable income at an estimated effective income tax rate of 39%, resulting in additional income taxes of $6.0 million and $5.6 million, respectively.
(d) - Reflects a reduction in the noncontrolling interest attributable to the limited partners from 99% to approximately 78%, and the impact of adjustments (a) and (b), resulting in a decrease in noncontrolling interests of $62.2 million and $34.7 million, respectively.
Premier Healthcare Solutions, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
September 30, 2013 June 30, 2013
(Unaudited)
Assets
Cash and cash equivalents $ 75,351 $ 198,296
Marketable securities 57,500 57,323
Accounts receivable 61,968 62,162
Inventories 13,029 12,741
Prepaid expenses and other current assets 34,576 25,466
Due from related party 788 1,650
Deferred tax assets 7,691 8,403
Total current assets 250,903 366,041
Investments 10,773 6,676
Property and equipment 119,538 115,587
Restricted cash 5,000 5,000
Deferred tax assets 13,328 15,077
Goodwill 84,626 61,410
Intangible assets 9,262 4,292
Other assets 28,410 24,833
Total assets $ 521,840 $ 598,916
Liabilities, redeemable limited partners' capital and stockholders' equity
Accounts payable $ 16,899 $ 21,788
Accrued expenses 25,486 28,883
Revenue share obligations 5,085 10,532
Accrued compensation and benefits 22,374 51,359
Deferred revenue 17,492 18,880
Current portion of notes payable 7,438 4,441
Current portion of line of credit 60,000 7,708
Other current liabilities 2,402 1,557
Total current liabilities 157,176 145,148
Notes payable, less current portion 20,293 22,468
Lines of credit, less current portion 11,508 --
Deferred compensation plan obligations 27,653 24,081
Deferred rent 15,841 15,779
Other long-term liabilities 5,387 6,037
Total liabilities 237,858 213,513
Redeemable limited partners' capital 207,066 307,635
Stockholders' equity:
Series A Preferred stock, par value $0.01, 400,000 shares authorized; no shares issued and outstanding -- --
Common stock, par value $0.01, 12,250,000 shares authorized; 5,626,784 and 5,653,390 shares issued and outstanding at September 30, 2013 and June 30, 2013, respectively 56 57
Additional paid-in-capital 28,503 28,866
Common stock subscribed, 0 and 23,266 shares at September 30, 2013 and June 30, 2013, respectively -- 300
Subscriptions receivable -- (300)
Retained earnings 50,321 50,599
Noncontrolling interest (1,964) (1,754)
Total stockholders' equity 76,916 77,768
Total liabilities, redeemable limited partners' capital and stockholders' equity $ 521,840 $ 598,916
Premier, Inc.
Pro Forma Consolidated Balance Sheet
September 30, 2013
(In thousands, except share data)
Pro Forma Premier, Inc.
PHSI Actual Adjustments Pro Forma
Assets
Cash and cash equivalents $ 75,351 $ 277,814 $ 353,165 (a)
Marketable securities 57,500 -- 57,500
Accounts receivable 61,968 -- 61,968
Inventories 13,029 -- 13,029
Prepaid expenses and other current assets 34,576 (5,428) 29,148 (b) (g)
Due from related party 788 -- 788
Deferred tax assets 7,691 -- 7,691
Total current assets 250,903 272,386 523,289
Investments 10,773 -- 10,773
Property and equipment 119,538 -- 119,538
Restricted cash 5,000 -- 5,000
Deferred tax assets 13,328 294,823 308,151 (c)
Goodwill 84,626 -- 84,626
Intangible assets 9,262 -- 9,262
Other assets 28,410 -- 28,410
Total assets $ 521,840 $ 567,209 $ 1,089,049
Liabilities, redeemable limited partners' capital and stockholders' equity
Accounts payable $ 16,899 $ -- $ 16,899
Accrued expenses 25,486 -- 25,486
Revenue share obligations 5,085 -- 5,085
Accrued compensation and benefits 22,374 -- 22,374
Deferred revenue 17,492 -- 17,492
Current portion of notes payable 7,438 -- 7,438
Current portion of line of credit 60,000 -- 60,000
Payable pursuant to tax receivable agreement -- 10,142 10,142 (c)
Income tax payable -- 8,425 8,425 (d)
Other current liabilities 2,402 -- 2,402
Total current liabilities 157,176 18,567 175,743
Notes payable, less current portion 20,293 -- 20,293
Lines of credit, less current portion 11,508 -- 11,508
Deferred compensation plan obligations 27,653 -- 27,653
Deferred rent 15,841 -- 15,841
Payable pursuant to tax receivable agreement, less current portion -- 194,651 194,651 (c)
Other long-term liabilities 5,387 -- 5,387
Total liabilities 237,858 213,218 451,076
Redeemable limited partners' capital 207,066 212,595 419,661 (e)
Stockholders' equity:
Series A Preferred stock, par value $0.01, 400,000 shares authorized; no shares issued and outstanding -- -- --
Common stock, par value $0.01, 12,250,000 shares authorized; 5,626,784 and 5,653,390 shares issued and outstanding at September 30, 2013 and June 30, 2013, respectively 56 (56) -- (f)
Class A common stock, par value $0.01, 500,000,000 shares authorized; 32,374,751 shares issued and outstanding on a pro forma basis -- 324 324 (f)
Class B common stock, par value $0.000001, 600,000,000 shares authorized; 112,607,832 shares issued and outstanding on a pro forma basis -- -- -- (f)
Additional paid-in-capital 28,503 149,748 178,251 (h)
Retained earnings 50,321 (8,623) 41,698 (d) (g)
Noncontrolling interest (1,964) -- (1,964)
Accumulated other comprehensive income -- 3 3 (e)
Total stockholders' equity 76,916 141,396 218,312
Total liabilities, redeemable limited partners' capital and stockholders' equity $ 521,840 $ 567,209 $ 1,089,049
(a) - Reflects the effect of the receipt of net IPO proceeds of $821.7 million, less the purchase of units from the member owners of $543.9 million.
(b) - Reflects the reduction of prepaid expenses related to the IPO, with an offset to the IPO proceeds in additional paid-in capital.
(c) - Reflects the effect of the adjustments to the tax basis of the assets of Premier LP and the tax receivable agreement with the member owners.
(d) - Reflects $8.4 million of taxes payable as a result of the purchase of Class B common units of Premier LP from PHSI.
(e) - Reflects the increase in the noncontrolling interest held by the limited Partners in Premier LP as a result of the IPO, less the reduction in the noncontrolling interest attributable to the limited partners from 99% to approximately 78%.
(f) - Reflects the exchange of the existing PHSI shares of common stock, common stock subscribed and related subscriptions receivable for Class B common units of Premier LP, the issuance of Class B common stock in connection with the Reorganization and the issuance of Class A common stock in connection with the IPO.
(g) - Reflects adjustments related to stock-based compensation.
(h) - Reflects the adjustments to additional paid-in capital in (a), (b), (c), (e), (f) and (g) above.
Premier Healthcare Solutions, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Three Months Ended September 30,
2013 2012
Operating activities
Net income $ 112,726 $ 85,067
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 8,957 6,775
Equity in net income of unconsolidated affiliates (4,114) (2,781)
Deferred taxes 2,461 1,059
Amortization of discounts on investments, net 26 5
Gain on disposal of assets (4) --
Changes in operating assets and liabilities:
Accounts receivable, inventories, prepaid expenses and other current assets (11,277) (1,481)
Other assets (10) (3,480)
Accounts payable, accrued expenses and other current liabilities (44,205) (33,208)
Long-term liabilities (590) 5,380
Net cash provided by operating activities 63,970 57,336
Investing activities
Purchase of marketable securities (19,151) (6,522)
Proceeds from sale of marketable securities 18,974 46,977
Acquisition of SYMMEDRx, net of cash acquired (28,740) --
Distributions received on equity investment -- 3,235
Purchases of property and equipment (12,299) (12,255)
Net cash (used in) provided by investing activities (41,216) 31,435
Financing activities
Payments made on notes payable (1,475) (2,200)
Proceeds from lines of credit 63,800 2,070
Proceeds from issuance of common stock 300 --
Distributions to limited partners of Premier LP (208,324) (182,613)
Net cash used in financing activities (145,699) (182,743)
Net decrease in cash and cash equivalents (122,945) (93,972)
Cash and cash equivalents at beginning of year 198,296 140,822
Cash and cash equivalents at end of period $ 75,351 $ 46,850
Supplemental schedule of noncash investing and financing activities:
Issuance of limited partnership interest for notes receivable $ 7,860 $ 2,120
Payable to member owners incurred upon repurchase of ownership interest $ 1,652 $ 2,315
Reduction in redeemable limited partners' capital to reduce outstanding receivable $ 28,009 $ 101
Distributions utilized to reduce subscriptions, notes, interest and accounts receivable from member owners $ 6,186 $ 3,677
Supplemental Financial Information
(Unaudited)
(In thousands)
Reconciliation of Adjusted EBITDA to Net Income and Operating Income:
Three Months Ended September 30,
2013 2012 2013 2012
PHSI Pro forma - Premier, Inc.
Net income $ 112,726 $ 85,067 $ 65,268 $ 61,983
Interest and investment income, net (220) (224) (220) (224)
Income tax expense 891 2,517 6,761 8,144
Depreciation and amortization 8,356 6,390 8,356 6,390
Amortization of purchased intangible assets 601 385 601 385
EBITDA 122,354 94,135 80,766 76,678
Stock-based compensation -- -- 325 --
Acquisition related expenses 142 -- 142 --
Strategic and financial restructuring expenses 1,842 554 1,842 554
Gain on disposal of assets (4) -- (4) --
Adjusted EBITDA $ 124,334 $ 94,689 $ 83,071 $ 77,232
Adjusted EBITDA $ 124,334 $ 94,689 $ 83,071 $ 77,232
Depreciation and amortization (8,356) (6,390) (8,356) (6,390)
Amortization of purchased intangible assets (601) (385) (601) (385)
Stock-based compensation -- -- (325) --
Acquisition related expenses (142) -- (142) --
Strategic and financial restructuring expenses (1,842) (554) (1,842) (554)
Equity in net income of unconsolidated affiliates (4,114) (2,781) (4,114) (2,781)
109,279 84,579 67,691 67,122
Stock-based compensation in Premier, Inc. -- -- 325 --
Pro forma adjustment for revenue share post-IPO -- -- 41,263 17,457
Operating income $ 109,279 $ 84,579 $ 109,279 $ 84,579
Supplemental Financial Information
(Unaudited)
(In thousands)
Reconciliation of Non-GAAP Pro Forma Adjusted Fully Distributed Net Income:
Three Months Ended September 30,
2013 2012
Pro forma - Premier, Inc.
Pro Forma Adjusted Fully Distributed Net Income:
Net income attributable to Premier, Inc. shareholders $ 14,448 $ 13,890
Income tax expense 6,761 8,144
Stock-based compensation 325 --
Acquisition related expenses 142 --
Strategic and financial restructuring expenses 1,842 554
Net income attributable to noncontrolling interest in Premier LP 51,030 48,398
Pro forma adjusted fully distributed income before income taxes 74,548 70,986
Income tax expense on fully distributed income before income taxes 30,565 29,104
Pro forma adjusted fully distributed net income $ 43,983 $ 41,882
Weighted average fully distributed shares outstanding:
Basic 144,983 144,983
Diluted 145,009 144,983
Non-GAAP earnings per share on pro forma adjusted fully distributed net income:
Basic $ 0.30 $ 0.29
Diluted $ 0.30 $ 0.29

CONTACT: For information contact: Jim Storey Vice President, Investor Relations 704.816.5958 jim_storey@premierinc.com Alven Weil Director, PR and Communications 704.816.5797 alven_weil@premierinc.com

Source:Premier, Inc.