Premier Inc.
08/19/2025 | Press release | Distributed by Public on 08/19/2025 05:49
Annual Report for Fiscal Year Ending June 30, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion should be read in conjunction with our consolidated financial statements and the notes thereto included elsewhere in this Annual Report. This discussion is designed to provide the reader with information that will assist in understanding our consolidated financial statements, the changes in certain key items in those financial statements from year to year, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our consolidated financial statements. In addition, the following discussion includes certain forward-looking statements. For a discussion of important factors, including the continuing development of our business and other factors which could cause actual results to differ materially from the results referred to in the forward-looking statements, see "Item 1A. Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" contained in this Annual Report.
Business Overview
Our Business
Premier, Inc. ("Premier," the "Company," "we" or "our") is a leading technology-driven healthcare improvement company, providing solutions to healthcare providers in the United States. Playing a critical role in the rapidly evolving healthcare industry, Premier unites providers, suppliers, and payers to make healthcare better with national scale, smarter with actionable intelligence and faster with novel technologies. Premier offers integrated data and analytics, collaboratives, supply chain solutions, consulting and other services in service of our mission to improve the health of communities. We partner with hospitals, health systems, physicians, employers, product suppliers, service providers, payers, and other healthcare providers and organizations with the common goal of improving and innovating in the clinical, financial, and operational areas of their businesses to meet the demands of a rapidly evolving healthcare industry. We deliver value through a comprehensive technology-enabled platform that offers critical supply chain services, clinical, financial, operational, and value-based care software-as-a-service ("SaaS") as well as clinical and enterprise analytics licenses, consulting services, performance improvement collaborative programs, and procure-to-pay functionalities which include digital supply chain market insights and digital invoicing and payment automation processes for healthcare suppliers and providers. We also continue to expand our capabilities to more fully address and coordinate care improvement and standardization in the payer and life sciences markets. We also provide some of the various products and services noted above to non-healthcare businesses.
| Year Ended June 30, | |||||||||||
|
in thousands
|
2025 | 2024 | |||||||||
| Net revenue | $ | 1,012,647 | $ | 1,136,009 | |||||||
|
Net income from continuing operations
|
72,734 | 104,219 | |||||||||
| Non-GAAP Adjusted EBITDA | 253,120 | 388,985 | |||||||||
Net revenue and net income from continuing operations are financial measures prepared in accordance with generally accepted accounting principles in the United States ("GAAP"). Adjusted EBITDA is not in conformity with GAAP and is considered a non-GAAP financial measure ("Non-GAAP"). See "Our Use of Non-GAAP Financial Measures" and "Results of Operations" below for a discussion of our use of Non-GAAP Adjusted EBITDA and a reconciliation of net income to Non-GAAP Adjusted EBITDA.
Strategic Review
In February 2024, we announced that our Board of Directors concluded its exploration of strategic alternatives. As part of the strategic review process, the Board of Directors authorized us to seek partners for some or all of our holdings in Contigo Health, LLC ("Contigo Health"), our subsidiary focused on providing comprehensive services that optimize employee health benefits, and SVS LLC d/b/a S2S Global ("S2S Global"), our direct sourcing subsidiary.
On October 1, 2024, our wholly owned subsidiary, Premier Supply Chain Improvement, LLC exchanged all of its holdings in S2S Global for 9,375,000 limited partnership units, or a 20% minority interest, in Prestige Ameritech, Ltd. ("Prestige") (the "S2S Divestiture"). This minority interest ownership is in addition to our existing indirect investment in Prestige, increasing our total ownership interest (direct and indirect) in Prestige to approximately 24% in the aggregate. Pursuant to the S2S Divestiture, PRAM Holdings, LLC ("PRAM") recognized a gain on its equity value directly tied to the S2S Divestiture of $12.8 million in continuing operations. With the $52.6 million loss in discontinued operations, the net impact associated with the divestiture was $39.8 million. We met the criteria for classifying certain assets and liabilities of the direct sourcing business as a discontinued operation as of September 30, 2024. Accordingly, unless otherwise indicated, information in this Annual Report has been retrospectively adjusted to reflect continuing operations for all periods presented. See Note 4 - Discontinued Operations and Exit Activities to the accompanying consolidated financial statements for further information.
On January 16, 2025, Contigo Health sold certain assets and liabilities associated with its wrap network business for a purchase price of $15.0 million, subject to working capital and other customary adjustments, to Direct Pay AG. During the year ended June 30, 2025, we recorded a gain on the sale of these certain assets and liabilities of $13.9 million. We continue to own and operate Contigo's remaining businesses, including its center of excellence and third party administrative services. However, we expect that these remaining businesses will be substantially, if not entirely, transitioned to partners or wound down by December 31, 2025.
In February 2024, our Board of Directors authorized the repurchase of up to $1.0 billion of our outstanding Class A common stock ("Common Stock") ("Share Repurchase Authorization"). Additionally, in February 2024, under the Share Repurchase Authorization, we entered into an accelerated share repurchase agreement (the "2024 ASR Agreement") with Bank of America, N.A. ("Bank of America") to repurchase an aggregate of $400.0 million of shares of our Common Stock, which was completed on July 11, 2024. On August 20, 2024, we announced that our Board of Directors approved execution of another $200.0 million of Common Stock repurchases under the Share Repurchase Authorization, which was completed on January 6, 2025. In February 2025, we announced that our Board of Directors approved two accelerated share repurchase agreements (the "2025 ASR Agreements") with JPMorgan Chase Bank, National Association ("JPMorgan"), under the Share Repurchase Authorization, to repurchase an aggregate of $200.0 million of shares of our Common Stock. Final settlement of the transactions under the 2025 ASR Agreements was completed on August 18, 2025. The Share Repurchase Authorization expired on June 30, 2025, and accordingly we will not make any repurchases under the authorization in addition to the $800 million of repurchases described above. Refer to "Share Repurchase Authorization" within "Contractual Obligations" section of Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations for more information.
Our Business Segments
Our business model and solutions are designed to provide our members and other customers access to scale efficiencies, spread the cost of their development, provide actionable intelligence derived from anonymized data in our enterprise data warehouse, mitigate the risk of innovation, and disseminate best practices that will help our members and other customers succeed in their transformation to higher quality and more cost-effective healthcare. We deliver our integrated platform of solutions that address the areas of clinical intelligence, margin improvement, and value-based care through two business segments: Supply Chain Services and Performance Services.
Segment net revenue was as follows (in thousands):
| Year Ended June 30, | % of Net Revenue | ||||||||||||||||||||||||||||||||||
| Net revenue: | 2025 | 2024 | Change | 2025 | 2024 | ||||||||||||||||||||||||||||||
| Supply Chain Services | $ | 631,039 | $ | 689,368 | $ | (58,329) | (8) | % | 62 | % | 61 | % | |||||||||||||||||||||||
| Performance Services | 381,608 | 446,641 | (65,033) | (15) | % | 38 | % | 39 | % | ||||||||||||||||||||||||||
| Segment net revenue | $ | 1,012,647 | $ | 1,136,009 | $ | (123,362) | (11) | % | 100 | % | 100 | % | |||||||||||||||||||||||
Our Supply Chain Services segment includes one of the largest national healthcare group purchasing organization ("GPO") programs in the United States, serving acute and continuum of care sites and providing supply chain co-management, and financial support services through our procure-to-pay functionalities which include digital supply chain market insights and digital invoicing and payables automation business. Beginning in fiscal year 2025, our digital invoicing and payables automation business is reported as a component of our Supply Chain Services segment to align with our strategy and operations. For comparability purposes, fiscal year 2024 financial measures are presented with our digital invoicing and payables automation business as a component of Supply Chain Services.
Our Performance Services segment consists of our technology and services platform with offerings that help optimize performance in three main areas - clinical intelligence, margin improvement, and value-based care - using advanced analytics to identify improvement opportunities, consulting and managed services for clinical and operational design, and workflow solutions to hardwire sustainable change in the provider, payer, and life sciences markets.
Acquisition of IllumiCare, Inc.
On June 13, 2025, we acquired through our wholly owned subsidiary Premier Healthcare Solutions, Inc. 100% of the issued and outstanding capital stock in IllumiCare, Inc ("IllumiCare") for a preliminary adjusted purchase price of $47.5 million, net of cash acquired, and subject to certain customary post-closing adjustments ("IllumiCare acquisition"). We paid $39.8 million with cash on hand, net of cash acquired, of which $4.5 million was placed in escrow to secure primarily certain indemnification obligations of the former IllumiCare owners. The acquisition agreement provides for potential additional contingent earn-out payments to the former IllumiCare owners of up to $15.0 million over a three-year period based upon achievement of certain
specified post-closing business performance goals. IllumiCare is reported as part of the Performance Services Segment. See Note 3 - Business Acquisitions to the accompanying consolidated financial statements for further information.
Market and Industry Trends and Outlook
We expect that certain trends and economic or industrywide factors will continue to affect our business, in both the short- and long-term. We have based our expectations described below on assumptions made by us and on information currently available to us. To the extent our underlying assumptions about, or interpretation of, available information prove to be incorrect, our actual results may vary materially from our expected results. See "Cautionary Note Regarding Forward-Looking Statements" and "Risk Factors."
Trends in the United States healthcare market as well as the broader United States and global economy affect our revenues and costs in the Supply Chain Services and Performance Services segments. The trends we see affecting our current business include the impact of inflation on the broader economy, the significant increase to input costs in healthcare, including the rising cost of labor, and the impact of the implementation of current or future healthcare legislation. Implementation of healthcare legislation could be disruptive for Premier and our customers, impacting revenue, reporting requirements, payment reforms, shift in care to the alternate site market, and increased data availability and transparency. To meet the demands of this environment, there will be increased focus on scale and cost containment, and healthcare providers will need to measure and report on and bear financial risk for outcomes. Over the long-term, we believe these trends will result in increased demand for our Supply Chain Services and Performance Services solutions in the areas of cost management, quality and safety, and value-based care; however, there are uncertainties and risks that may affect the actual impact of these anticipated trends, expected demand for our services, or related assumptions on our business. See "Cautionary Note Regarding Forward-Looking Statements" for more information.
Impact of Tariffs
The Trump administration has recently implemented, or threatened to implement, significant new and increased tariffs on certain industries and countries. While the specifics of these tariffs are still evolving, the implementation of new or increased tariffs on medical supplies, equipment, pharmaceuticals, and other products may adversely affect our suppliers' pricing structures or operational capabilities, leading to higher procurement costs for our members and other customers, potentially resulting in reduced purchasing power, changes in sourcing decisions, and margin pressure throughout their supply chains. We continue to monitor tariff developments and are working to continue to build resiliency within our portfolio and diversification of suppliers to mitigate the financial impact on our members and other customers. See "Item 1A. Risk Factors" in this Annual Report for further discussion on the risks related to tariffs.
Impact of Inflation
While the United States inflation rate has declined from its peak in calendar year 2022, the United States economy is still experiencing elevated rates of inflation. We believe that we have continued to limit the impact of inflation on our members and believe that we maintain lower inflation impacts across our diverse product portfolio than national levels. However, in certain areas of our business, there is still some level of risk and uncertainty for our members and other customers as labor costs, raw material costs and availability, higher interest rates, and inflation continue to pressure supplier pricing.
We continue to evaluate the contributing factors which have led to adjustments to selling prices. We are continuously working to manage price increases as market conditions change. The impact of inflation on our aggregated product portfolio is partially mitigated by contract term price protection for a large portion of our portfolio.
Furthermore, while the Federal Reserve may seek to reduce market interest rates, they may continue to be elevated, increasing the cost of borrowing under our Credit Facility (as defined in Note 10 - Debt and Notes Payable to the accompanying consolidated financial statements) as well as impacting our results of operations, financial condition, and cash flows.
See "Risk Factors - Risks Related to Our Business Operations" in this Annual Report.
Geopolitical Tensions
Geopolitical tensions continue to affect the global economy and financial markets, as well as exacerbate ongoing economic challenges, including issues such as rising inflation, energy costs, logistics costs, tariffs, and global supply-chain disruption.
We continue to monitor the impacts of geopolitical tensions on macroeconomic conditions and prepare for any implications they may have on member demand, our suppliers' ability to deliver products, cybersecurity risks, and our liquidity and access to capital. See "Risk Factors - Risks Related to Our Business Operations" in this Annual Report.
Critical Accounting Policies and Estimates
Below is a discussion of our critical accounting policies and estimates. These and other significant accounting policies are set forth under Note 2 - Significant Accounting Policies to the accompanying consolidated financial statements for more information.
Business Combinations
We account for acquisitions of a business using the acquisition method. All of the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration are generally recognized at their fair value on the acquisition date. Any excess of the purchase price over the estimated fair values of the net assets acquired is recorded as goodwill. Acquisition-related costs are recorded as expenses in the Consolidated Statements of Income and Comprehensive Income.
Several valuation methods may be used to determine the fair value of assets acquired and liabilities assumed. For intangible assets, we typically use the income method. This method starts with a forecast of all of the expected future net cash flows for each asset. These cash flows are then adjusted to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams. Third-party consultants are often engaged to assist management in determining the fair values of certain assets acquired and liabilities assumed. In the absence of a third-party report, we use internal valuation estimates based on pertinent data from comparable prior acquisitions. Some of the more significant estimates and assumptions inherent in the income method or other methods include the amount and timing of projected future cash flows, the discount rate selected to measure the risks inherent in the future cash flows and the assessment of the asset's life cycle, and the competitive trends impacting the asset, including consideration of any technical, legal, regulatory, or economic barriers to entry. Determining the useful life of an intangible asset also requires judgment as different types of intangible assets will have different useful lives and certain assets may even be considered to have indefinite useful lives.
Goodwill
Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. We perform our annual goodwill impairment testing on the first day of the last fiscal quarter of our fiscal year unless impairment indicators are present, which could require an interim impairment test.
Under accounting rules, we may elect to perform a qualitative assessment to determine if an impairment is more likely than not to have occurred. This qualitative assessment requires an evaluation of any excess of fair value over the carrying value for a reporting unit and significant judgment regarding potential changes in valuation inputs, including a review of our most recent long-range projections, analysis of operating results versus the prior year, changes in market values, changes in discount rates, and changes in terminal growth rate assumptions. If it is determined that an impairment is more likely than not to exist, then we are required to perform a quantitative assessment to determine whether or not goodwill is impaired and to measure the amount of goodwill impairment, if any.
A goodwill impairment charge is recognized for the amount by which the reporting unit's carrying amount exceeds its fair value. We determine the fair value of a reporting unit using a discounted cash flow analysis as well as market-based approaches. Determining fair value requires the exercise of significant judgment, including judgment about appropriate discount rates, perpetual growth rates, and the amount and timing of expected future cash flows. The cash flows employed in the discounted cash flow analyses are based on the most recent budget and long-term forecast. The discount rates used in the discounted cash flow analyses are intended to reflect the risks inherent in the future cash flows of the respective reporting units. The market comparable approach estimates fair value using market multiples of various financial measures compared to a set of comparable public companies and recent comparable transactions.
Based on our interim analysis as of December 31, 2024, we determined impairment indicators were present and the carrying value of our Informatics and Technology Services ("ITS") reporting unit would more likely than not exceed its fair value. We performed a quantitative assessment on our ITS reporting unit which resulted in $126.8 million in goodwill impairment losses recognized during the second quarter of fiscal year 2025. No triggering events were identified as of June 30, 2025 that would indicate the fair value of the ITS reporting unit was below its carrying value. The ITS reporting unit continues to have a heightened risk of future impairments if any assumptions, estimates, or market factors change unfavorably in the future. We continue to closely monitor any events, circumstances, or changes in this business that might imply a reduction in the estimated fair value and may lead to additional goodwill impairment. Refer to Note 9 - Goodwill and Intangible Assets to the accompanying consolidated financial statements for further information on the impairment loss recognized in fiscal 2025.
Revenue Recognition
We account for a contract with a customer when the parties are committed to perform their respective obligations, the rights of the parties, including payment terms, are identified, the contract has commercial substance, and consideration is probable of collection.
Revenue is recognized when, or as, control of a promised product or service transfers to a customer, in an amount that reflects the consideration to which we expect to be entitled in exchange for transferring those products or services. If the consideration promised in a contract includes a variable amount, we estimate the amount to which we expect to be entitled using either the expected value or most likely amount method. Our contracts may include terms that could cause variability in the transaction price, including, for example, revenue share, rebates, discounts, and variable fees based on performance.
We only include estimated amounts of consideration in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. These estimates require management to make complex, difficult, or subjective judgments, and to make estimates about the effect of matters that are inherently uncertain. As such, we may not be able to reliably estimate variable fees based on performance in certain long-term arrangements due to uncertainties that are not expected to be resolved for a long period of time or when our experience with similar types of contracts is limited. Estimates of variable consideration and the determination of whether to include estimated amounts of consideration in the transaction price are based on information (historical, current, and forecasted) that is reasonably available to us, taking into consideration the type of customer, the type of transaction, and the specific facts and circumstances of each arrangement. Additionally, management performs periodic analyses to verify the accuracy of estimates for variable consideration.
Although we believe that our approach in developing estimates and reliance on certain judgments and underlying inputs is reasonable, actual results could differ which may result in exposure of increases or decreases in revenue that could be material.
Performance Obligations
A performance obligation is a promise to transfer a distinct good or service to a customer. A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Contracts may have a single performance obligation as the promise to transfer individual goods or services is not separately identifiable from other promises, and therefore, not distinct, while other contracts may have multiple performance obligations, most commonly due to the contract covering multiple deliverable arrangements (licensing, subscription, consulting services, etc.).
Net Administrative Fees Revenue
Net administrative fees revenue is a single performance obligation earned through a series of distinct daily services and includes maintaining a network of members to participate in the group purchasing program and providing suppliers efficiency in contracting and access to our members. Revenue is generated through administrative fees received from suppliers and is included in net administrative fees revenue in the accompanying Consolidated Statements of Income and Comprehensive Income.
Through our GPO programs, we aggregate member purchasing power to negotiate pricing discounts and improve contract terms with suppliers. Contracted suppliers pay us administrative fees which generally represent 1% to 3% of the purchase price of goods and services sold to members under the contracts we have negotiated. Administrative fees are variable consideration and are recognized as earned based upon estimated purchases by our members utilizing analytics based on historical member spend and updates for current trends and expectations. Administrative fees are estimated due to the difference in timing of when a member purchases on a supplier contract and when we receive the purchasing information. Member and supplier contracts substantiate persuasive evidence of an arrangement. We do not take title to the underlying equipment or products purchased by members through our GPO supplier contracts. Administrative fee revenue receivable is included in contract assets in the accompanying Consolidated Balance Sheets.
Generally, we record a revenue share to members equal to a percentage of gross administrative fees, which is estimated according to the members' contractual agreements with us using a portfolio approach based on historical revenue fee share percentages and adjusted for current or anticipated trends. Revenue share is recognized as a reduction to gross administrative fees revenue to arrive at a net administrative fees revenue, and the corresponding revenue share liability is included in revenue share obligations in the accompanying Consolidated Balance Sheets.
Software Licenses, and Other Services and Support Revenue
We generate software licenses and other services and support revenue through Supply Chain Services and Performance Services.
Within Supply Chain Services, revenue is generated through the GPO, supply chain co-management, and procure-to-pay business.
GPO.GPO revenue generating activities include revenue from technology solutions and from additional services provided to suppliers.
Supply Chain Co-Management. Supply chain co-management activities generate revenue in the form of a service fee for services performed under the supply chain management contracts. Service fees are billed as stipulated in the contract, and revenue is recognized on a proportional performance method as services are performed.
Procure-to-Pay. Revenue for the procure-to-pay business primarily consists of fees from healthcare suppliers and providers as well as members and other customers. For fixed fee contracts, revenue is recognized in the period in which the services have been provided. For variable rate contracts, revenue is recognized as customers are invoiced after services have been provided.
Performance Services revenue consists of revenue generated through our technology and services platform. The main sources of revenue under technology and services platform are (i) subscription agreements to our SaaS-based clinical intelligence, margin improvement, and value-based care products, (ii) licensing revenue, (iii) professional fees for consulting services, and (iv) other miscellaneous revenue including data licenses, annual subscriptions to our performance improvement collaboratives, insurance services management fees, and commissions from endorsed commercial insurance programs.
SaaS-based Products Subscriptions: SaaS-based clinical analytics subscriptions include the right to access the Company's proprietary hosted technology on a SaaS basis, training and member support to deliver improvements in cost management, margin improvement, quality and safety, value-based care, and provider analytics. SaaS arrangements create a single performance obligation for each subscription within the contract in which the nature of the obligation is a stand-ready obligation, and each day of service meets the criteria for over time recognition. Pricing varies by application and size of healthcare system. Clinical analytics products subscriptions are generally three- to five-year agreements with automatic renewal clauses and annual price escalators that typically do not allow for early termination. These agreements do not allow for physical possession of the software. Subscription fees are typically billed on a monthly basis, and revenue is recognized as a single deliverable on a straight-line basis over the remaining contractual period following implementation. Implementation involves the completion of data preparation services that are unique to each member's data set in order to access and transfer member data into the Company's hosted SaaS-based clinical analytics products. Implementation is generally 60 to 240 days following contract execution before the SaaS-based clinical analytics products can be fully utilized by the member.
Software Licenses: Enterprise analytics licenses include term licenses that generally range from three to ten years and offer clinical analytics products, improvements in cost management, quality and safety, value-based care, and provider analytics. Pricing varies by application and size of healthcare system. Revenue on licensing is recognized upon delivery of the software code, and revenue from hosting and maintenance is recognized ratably over the life of the contract.
Consulting Services: Consulting services are provided under contracts whose terms vary according to the specific nature of each engagement. These services typically include general consulting, report-based consulting and margin improvement initiatives. Promised services under such consulting engagements are typically not considered distinct and are regularly combined and accounted for as one performance obligation. Fees are billed as stipulated in the contract, and revenue is recognized on a proportional performance method as services are performed or when deliverables are provided. In situations where the contracts have significant contract performance guarantees, the performance guarantees are estimated and accounted for as a form of variable consideration when determining the transaction price. In the event that guaranteed savings levels are not achieved, the Company may have to perform additional services at no additional charge in order to achieve the guaranteed savings or pay the difference between the savings that were guaranteed and the actual achieved savings. Occasionally, the Company's entitlement to consideration is predicated on the occurrence of an event such as the delivery of a report for which client acceptance is required. However, except for event-driven point-in-time transactions, the majority of services provided within this service line are delivered over time due to the continuous benefit provided to the Company's customers.
Consulting arrangements can require estimates for the transaction price and estimated number of hours within an engagement. These estimates are based on the expected value which is derived from outcomes from historical contracts that
are similar in nature and forecasted amounts based on anticipated savings for the new agreements. The transaction price is generally constrained until the target transaction price becomes more certain.
Other Miscellaneous Revenue:
•Revenue from data licenses which provide customers data from the Technology and Services Platform healthcare database is recognized upon delivery of the data.
•Revenue from performance improvement collaboratives that support the Company's offerings in cost management, quality and safety, and value-based care is recognized over the service period as the services are provided, which is generally one to three years. Performance improvement collaboratives revenue is considered one performance obligation and is generated by providing customers access to online communities whereby data is housed and available for analytics and benchmarking.
•Insurance services management fees are recognized in the period in which such services are provided. Commissions from insurance carriers for sponsored insurance programs are earned by acting as an intermediary in the placement of effective insurance policies. Under this arrangement, revenue is recognized at a point in time on the effective date of the associated policies when control of the policy transfers to the customer and is constrained for estimated early terminations.
Multiple Deliverable Arrangements
We enter into agreements where the individual deliverables discussed above, such as SaaS subscriptions, term licenses, and consulting services, are bundled into a single service arrangement. These agreements are generally provided over a time period ranging from approximately one to five years after the applicable contract execution date. On occasion, agreements may range up to 10 years. We use judgment in determining the stand-alone selling price ("SSP") for products and services. Revenue, including both fixed and variable consideration, is allocated to the individual performance obligations within the arrangement based on the SSP. We typically establish a SSP range for our products and services which is reassessed on a periodic basis or when facts and circumstances change. Term licenses are sold only as a bundled arrangement that includes the rights to a term license and support. In determining the SSP of license and support in a term license arrangement, we apply observable inputs using the value relationship between support and term license, and the average economic life of our products.
We also enter into agreements that bundle GPO services with technology and consulting services. These agreements typically provide for sharing of administrative fees received from suppliers and rebates paid to members, or net administrative fees, as well as fees from members for their access to or use of technology or consulting services.
The overall estimated transaction price, including net administrative fees and any fees for technology or consulting services, is allocated based on their respective SSP as part of an initial scoping to bifurcate the net administrative fees from the other components in the bundle. We use judgment in determining the SSP for net administrative fees, technology, and services and typically establish a range for each area, which is reassessed on a periodic basis or when facts and circumstances change. Following this scoping allocation, the amount allocated to each component is recognized as revenue as described above.
Software Development Costs
Costs associated with internally-developed computer software that are incurred prior to reaching technological feasibility are considered research and development and expensed as incurred. These costs consist of employee-related compensation and benefit expenses and third-party consulting fees of technology professionals. During the development stage and once the project has reached technological feasibility, direct consulting costs and payroll and payroll-related costs for employees that are directly associated with each project are capitalized. Capitalized software costs are included in property and equipment, net in the accompanying Consolidated Balance Sheets. Capitalized costs are amortized on a straight-line basis over the estimated useful lives of the related software applications of up to five years and amortization is included in cost of revenue or selling, general and administrative expenses in the accompanying Consolidated Statements of Income and Comprehensive Income, based on the software's end use. Replacements and major improvements are capitalized, while maintenance and repairs are expensed as incurred. Some of the more significant estimates and assumptions inherent in this process involve determining the stages of the software development project, the direct costs to capitalize and the estimated useful life of the capitalized software.
Income Taxes
We account for income taxes under the asset and liability approach. Deferred tax assets or liabilities are determined based on the differences between the financial statement and tax basis of assets and liabilities as measured by the enacted tax rates as well as net operating losses and credit carryforwards, which will be in effect when these differences reverse. We provide a valuation allowance against net deferred tax assets when, based upon the available evidence, it is more likely than not that the deferred tax assets will not be realized.
We prepare and file tax returns based on interpretations of tax laws and regulations. Our tax returns are subject to examination by various taxing authorities in the normal course of business. Such examinations may result in future tax, interest, and penalty assessments by these taxing authorities.
In determining our tax expense for financial reporting purposes, we establish a reserve when there are transactions, calculations, and tax filing positions for which the tax determination is uncertain and it is more likely than not that such positions would not be sustained upon examinations.
We adjust tax reserve estimates periodically based on the changes in facts and circumstances, such as ongoing examinations by, and settlements with, varying taxing authorities, as well as changes in tax laws, regulations, and interpretations. The consolidated tax expense of any given year includes adjustments to prior year income tax reserve and related estimated interest charges that are considered appropriate. Our policy is to recognize, when applicable, interest and penalties on uncertain income tax positions as part of income tax expense.
New Accounting Standards
New accounting standards that we have recently adopted as well as those that have been recently issued but not yet adopted by us, if any, are included in Note 2 - Significant Accounting Policies to the accompanying consolidated financial statements, which is incorporated herein by reference.
Key Components of Our Results of Operations
Net Revenue
Net revenue consists of net administrative fees revenue, software licenses, and other services and support revenue.
Supply Chain Services
Supply Chain Services revenue is comprised of:
•net administrative fees revenue which consists of gross administrative fees received from suppliers, reduced by the revenue share paid to members; and
•software licenses, and other services and support revenue which consist of supply chain co-management and fees from healthcare suppliers and providers associated with the procure-to-pay business.
The success of our Supply Chain Services revenue streams is influenced by our ability to negotiate favorable contracts with suppliers and members, the number of members that utilize our GPO supplier contracts and the volume of their purchases, the impact of changes in the defined allowable reimbursement amounts determined by Medicare, Medicaid, and other managed care plans, and the impact of competitive pricing. We believe that some of our GPO competitors may offer higher revenue share arrangements to some of their customers compared to our average arrangements. As we have renewed certain GPO member contracts during fiscal years 2024 and 2025, competitive pressure has resulted in increases to our average fee share paid to members, a trend that is expected to continue, particularly as we continue to renew GPO member contracts that were extended at the time of our August 2020 Restructuring. As of June 30, 2025, member agreements representing approximately 20% of the gross administrative fees associated with the member agreements extended in 2020 still need to be addressed. We expect to address the majority of these remaining member agreements in fiscal year 2026.
Performance Services
Performance Services revenue is comprised of the following software licenses and other services and support revenue:
•healthcare information technology license and SaaS-based clinical intelligence, margin improvement, and value-based care products subscriptions, license fees, professional fees for consulting services, data licenses, performance improvement collaborative and other service subscriptions, and insurance services management fees and commissions from endorsed commercial insurance programs under our technology and services platform.
Our Performance Services growth will depend upon the expansion of services to new and existing members and other customers and renewal of existing subscriptions to our SaaS and licensed software products.
Cost of Revenue
Cost of revenue consists of cost of services and software licenses revenue.
Cost of services and software licenses revenue includes expenses related to employees, consisting of compensation- and benefits-related costs, and outside consultants who directly provide services related to revenue-generating activities, including consulting services to members and other customers, and implementation services related to our SaaS and licensed software
products along with associated amortization of certain capitalized contract costs. Amortization of contract costs represent amounts that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract including costs related to implementing SaaS informatics tools. Cost of services and software licenses revenue also includes expenses related to hosting services, related data center capacity costs, third-party product license expenses, and amortization of the cost of internally-developed software applications.
Operating Expenses
Operating expenses includes selling, general, and administrative ("SG&A") expenses, research and development expenses, and amortization of purchased intangible assets.
SG&A expenses are directly associated with selling and administrative functions and support of revenue-generating activities including expenses to support and maintain our software-related products and services. SG&A expenses primarily consist of: compensation- and benefits-related costs; travel-related expenses; business development expenses, including costs for business acquisition opportunities; non-recurring strategic initiative and restructuring-related expenses; indirect costs such as insurance, professional fees, and other general overhead expenses; and amortization of certain contract costs. Amortization of contract costs represent amounts, including sales commissions, that have been capitalized and reflect the incremental costs of obtaining and fulfilling a contract. SG&A expenses can also include impairment of assets which includes goodwill impairment charges recognized when the reporting unit's carrying amount exceeds its fair value and impairment losses on intangibles and other long-lived assets when the carrying value of the asset subject to amortization may not be recoverable from the estimated cash flows expected to result from its use and eventual disposition (see Note 6 - Fair Value Measurements and Note 9 - Goodwill and Intangible Assets to the accompanying consolidated financial statements for further information).
Research and development expenses consist of employee-related compensation and benefit expenses and third-party consulting fees of technology professionals, incurred to develop our software-related products and services prior to reaching technological feasibility.
Amortization of purchased intangible assets includes the amortization of all identified intangible assets.
Other Income (Expense), Net
Other income (expense), net primarily includes interest income and expense and equity in net income of unconsolidated affiliates that is generated from our equity method investments. Other income (expense), net may also include, but is not limited to, realized and unrealized gains or losses on deferred compensation plan assets, gains or losses on the disposal of assets, dividend income, and other non-operating gains or losses.
•Interest income is primarily related to interest earned on investments in demand deposit accounts or money market funds while interest expense is primarily related to funds borrowed through our Credit Facility as well as imputed interest on non-interest bearing debt (see Note 10 - Debt and Notes Payable and Note 11 - Liability Related to the Sale of Future Revenues to the accompanying consolidated financial statements for further information).
•Our equity method investments primarily consist of our interests in Exela Holdings, Inc. ("Exela") and Prestige (see Note 5 - Investments to the accompanying consolidated financial statements for further information).
•Other non-operating gains and losses is largely comprised of the $57.0 million in cash received in July 2024 as the result of the settlement of a shareholder derivative complaint and the $13.9 million gain on the sale of certain assets and liabilities associated with Contigo Health's wrap network business.
Income Tax Expense
See Note 16 - Income Taxes to the accompanying consolidated financial statements for discussion of income tax expense.
Loss from Discontinued Operations, Net of Tax
Loss from discontinued operations, net of tax represents the net loss associated with the sale of certain assets and wind down and exit of the direct sourcing business. See Note 4 - Discontinued Operations and Exit Activities to the accompanying consolidated financial statements for further information.
Net Income/Loss Attributable to Non-Controlling Interest
We recognize net income/loss attributable to non-controlling interest for non-Premier ownership in our consolidated subsidiaries which hold interest in our equity method investments (see Note 5 - Investments to the accompanying consolidated financial statements for further information). At June 30, 2025, we recognized net income attributable to non-controlling interests held by member health systems or their affiliates in the consolidated subsidiaries holding our equity method
investments, including but not limited to the 74% and 85% interest held in PRAM Holdings, LLC ("PRAM") and ExPre Holdings, LLC ("ExPre"), respectively. In partnership with member health systems or their affiliates, these investments are part of our long-term supply chain resiliency program to promote domestic and geographically diverse manufacturing and to help ensure a robust and resilient supply chain for essential medical products.
As of June 30, 2025, we owned 93% of the equity interest in Contigo Health and recognized net loss attributable to non-controlling interest for the 7% of equity held by certain customers of Contigo Health.
Our Use of Non-GAAP Financial Measures
The other key business metrics we consider are EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, and Free Cash Flow, which are all Non-GAAP financial measures. Non-GAAP financial measures are not an alternative to GAAP and may be different from Non-GAAP financial measures used by other companies, but we believe they are useful for understanding our performance for the reasons described below.
We define EBITDA as net income before income or loss from discontinued operations, net of tax, interest and investment income or expense, net, income tax expense, depreciation and amortization, and amortization of purchased intangible assets. We define Adjusted EBITDA as EBITDA before merger and acquisition-related expenses and non-recurring, non-cash, or non-operating items. For all Non-GAAP financial measures, we consider non-recurring items to be income or expenses and other items that have not been earned or incurred within the prior two years and are not expected to recur within the next two years. Non-recurring items include certain strategic initiative and restructuring-related expenses. Non-cash items include share-based compensation expense and asset impairments. Non-operating items include gains or losses on the disposal of assets, interest and investment income or expense, equity in income of unconsolidated affiliates, and operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty fees retained.
We define Segment Adjusted EBITDA as the segment's net revenue less cost of revenue and operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition-related expenses, and non-recurring or non-cash items. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative, and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations and operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty fees retained.
We define Adjusted Net Income as net income attributable to Premier (i) excluding income or loss from discontinued operations, net, (ii) excluding income tax expense, (iii) excluding the effect of non-recurring or non-cash items, (iv) reflecting an adjustment for income tax expense on Non-GAAP adjusted net income before income taxes at our estimated annual effective income tax rate, adjusted for unusual or infrequent items, (v) excluding the equity in net income of unconsolidated affiliates, and (vi) excluding operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts, less royalty fees retained, imputed interest expense, and associated income tax expense. Non-recurring items include certain strategic initiative and restructuring-related expenses. Non-cash items include share-based compensation expense and asset impairments. We define Adjusted Earnings Per Share as Adjusted Net Income divided by diluted weighted average shares (see Note 13 - Earnings Per Share to the accompanying consolidated financial statements for further information).
We define Free Cash Flow as net cash provided by operating activities from continuing operations less (i) early termination payments to certain former limited partners that elected to execute a Unit Exchange and Tax Receivable Acceleration Agreement ("Unit Exchange Agreement") in connection with our August 2020 Restructuring, (ii) purchases of property and equipment, and (iii) cash payments to OMNIA for the sale of future revenues and tax payments on proceeds received from the sale of future revenues. Free Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments.
We have revised the definitions for Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow from the definitions reported in the 2024 Annual Report. Adjusted EBITDA, Segment Adjusted EBITDA, and Adjusted Net Income were revised to exclude the operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts. Adjusted Net Income was also revised to exclude the related imputed interest and tax expense in connection with the sale of non-healthcare GPO member contracts to OMNIA. Free Cash Flow was revised to exclude cash payments to OMNIA for the sale of future revenues and tax payments on proceeds received from the sale of future revenues. For comparability purposes, prior year Non-GAAP financial measures are presented based on the current definition.
Adjusted EBITDA and Free Cash Flow are supplemental financial measures used by us and by external users of our financial statements and are considered to be indicators of the operational strength and performance of our business. Adjusted EBITDA
and Free Cash Flow measures allow us to assess our performance without regard to financing methods and capital structure and without the impact of other matters that we do not consider indicative of the operating performance of our business. More specifically, Segment Adjusted EBITDA is the primary earnings measure we use to evaluate the performance of our business segments.
We use Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, and Adjusted Earnings Per Share to facilitate a comparison of our operating performance on a consistent basis from period to period and to provide measures that, when viewed in combination with our results prepared in accordance with GAAP, we believe allows for a more complete understanding of factors and trends affecting our business than GAAP measures alone. We believe Adjusted EBITDA and Segment Adjusted EBITDA assist our Board of Directors, management, and investors in comparing our operating performance on a consistent basis from period to period because they remove the impact of earnings elements attributable to our asset base (primarily depreciation and amortization), certain items outside the control of our management team, e.g. taxes, other non-cash items (such as impairment of intangible assets, purchase accounting adjustments and stock-based compensation), non-recurring items (such as strategic initiative and restructuring-related expenses), and income and expense that has been classified as discontinued operations from our operating results. We believe Adjusted Net Income and Adjusted Earnings Per Share assist our Board of Directors, management, and investors in comparing our net income and earnings per share on a consistent basis from period to period because these measures remove non-cash items (such as impairment of intangible assets, purchase accounting adjustments, and stock-based compensation) and non-recurring items (such as strategic initiative and restructuring-related expenses) and eliminate the variability of non-controlling interest and equity in net income of unconsolidated affiliates. We believe Free Cash Flow is an important measure because it represents the cash that we generate after payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring, capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth, and cash payments to OMNIA for the sale of future revenues and tax payments on proceeds received from the sale of future revenues. Free Cash Flow enables us to seek enhancement of stockholder value through acquisitions, partnerships, joint ventures, investments in related or complementary businesses, and/or debt reduction.
Despite the importance of these Non-GAAP financial measures in analyzing our business, determining compliance with certain financial covenants in our Credit Facility, measuring and determining incentive compensation and evaluating our operating performance relative to our competitors, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, and Free Cash Flow are not measurements of financial performance under GAAP, may have limitations as analytical tools and should not be considered in isolation from, or as an alternative to, net income, net cash provided by operating activities, or any other measure of our performance derived in accordance with GAAP.
Some of the limitations of the EBITDA, Adjusted EBITDA, and Segment Adjusted EBITDA measures include that they do not reflect: our capital expenditures or our future requirements for capital expenditures or contractual commitments; changes in, or cash requirements for, our working capital needs; the interest expense or the cash requirements to service interest or principal payments under our Credit Facility; income tax payments we are required to make; and any cash requirements for replacements of assets being depreciated or amortized. In addition, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, and Free Cash Flow are not measures of liquidity under GAAP, or otherwise, and are not alternatives to cash flows from operating activities.
Some of the limitations of the Adjusted Net Income and Adjusted Earnings Per Share measures are that they do not reflect income tax expense or income tax payments we are required to make. In addition, Adjusted Net Income and Adjusted Earnings Per Share are not measures of profitability under GAAP.
We also urge you to review the reconciliation of these Non-GAAP financial measures included elsewhere in this Annual Report. To properly and prudently evaluate our business, we encourage you to review the consolidated financial statements and related notes included elsewhere in this Annual Report and to not rely on any single financial measure to evaluate our business. In addition, because the EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, and Free Cash Flow measures are susceptible to varying calculations, such Non-GAAP financial measures may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.
Non-recurring and non-cash items excluded in our calculation of Adjusted EBITDA, Segment Adjusted EBITDA, and Adjusted Net Income consist of stock-based compensation, acquisition- and disposition-related expenses, strategic initiative and restructuring-related expenses, income and expense that has been classified as discontinued operations, and other reconciling items. More information about certain of the more significant items follows below.
Income tax expense on adjusted income
Adjusted Net Income, a Non-GAAP financial measure as defined above in "Our Use of Non-GAAP Financial Measures," is calculated net of taxes based on our estimated annual effective tax rate for federal and state income tax excluding goodwill
impairments and adjusted for unusual or infrequent items, as we are a consolidated group for tax purposes with all of our subsidiaries' activities included. The tax rate used to compute the Adjusted Net Income was 24% and 27% for the years ended June 30, 2025 and 2024, respectively. This decrease primarily relates to the decrease in pre-tax book income and dividends received deductions as a result of dividend from a non-controlling interest subsidiary in the current year.
Stock-based compensation
In addition to non-cash employee stock-based compensation expense, this item includes non-cash stock purchase plan expense of $0.5 million and $0.6 million for the years ended June 30, 2025 and 2024, respectively, (see Note 14 - Stock-Based Compensation to the accompanying consolidated financial statements for further information).
Acquisition- and disposition-related expenses
Acquisition-related expenses include legal, accounting, and other expenses related to acquisition activities, one-time integration expenses, and gains and losses on the change in fair value of earn-out liabilities. Disposition-related expenses include severance and retention benefits and financial advisor fees, legal fees, and other expenses related to disposition activities.
Strategic initiative and restructuring-related expenses
Strategic initiative and restructuring-related expenses include legal, accounting, severance and retention benefits, and other expenses related to strategic initiative and restructuring-related activities.
Operating income from revenues sold to OMNIA
Operating income from revenues sold to OMNIA represents the operating income from revenues sold to OMNIA in connection with the sale of non-healthcare GPO member contracts to OMNIA, less royalty fees retained.
Impairment of assets
Impairment of assets relates to impairment of long-lived assets.
Other reconciling items
Other reconciling items include, but are not limited to, dividend income, gains and losses on disposal of long-lived assets, imputed interest on non-interest bearing liabilities, certain legal expenses, and any impact from non-controlling interest on adjustments to net income (loss) attributable to stockholders.
Results of Operations for the Years Ended June 30, 2025 and 2024
The following table presents our results of operations for the fiscal years presented (in thousands, except per share data):
| Year Ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Amount | % of Net Revenue | Amount | % of Net Revenue | ||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||
| Net administrative fees | $ | 556,328 | 55 | % | $ | 624,168 | 55 | % | |||||||||||||||
| Software licenses, other services and support | 456,319 | 45 | % | 511,841 | 45 | % | |||||||||||||||||
| Net revenue | 1,012,647 | 100 | % | 1,136,009 | 100 | % | |||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Services and software licenses | 269,288 | 27 | % | 268,885 | 24 | % | |||||||||||||||||
| Cost of revenue | 269,288 | 27 | % | 268,885 | 24 | % | |||||||||||||||||
| Gross profit | 743,359 | 73 | % | 867,124 | 76 | % | |||||||||||||||||
| Operating expenses | 742,243 | 73 | % | 740,478 | 65 | % | |||||||||||||||||
| Operating income | 1,116 | - | % | 126,646 | 11 | % | |||||||||||||||||
| Other income, net | 96,933 | 10 | % | 19,875 | 2 | % | |||||||||||||||||
| Income before income taxes | 98,049 | 10 | % | 146,521 | 13 | % | |||||||||||||||||
| Income tax expense | 25,315 | 2 | % | 42,302 | 4 | % | |||||||||||||||||
| Net income from continuing operations | 72,734 | 7 | % | 104,219 | 9 | % | |||||||||||||||||
| Net (loss) income from discontinued operations, net of tax | (41,901) | (4) | % | 2,500 | - | % | |||||||||||||||||
| Net income | 30,833 | 3 | % | 106,719 | 9 | % | |||||||||||||||||
| Net (income) loss attributable to non-controlling interest | (10,564) | (1) | % | 12,825 | 1 | % | |||||||||||||||||
| Net income attributable to stockholders | $ | 20,269 | 2 | % | $ | 119,544 | 11 | % | |||||||||||||||
|
Earnings (loss) per share attributable to stockholders:
|
|||||||||||||||||||||||
|
Basic earnings (loss) per share
|
|||||||||||||||||||||||
| Continuing operations | $ | 0.68 | $ | 1.03 | |||||||||||||||||||
| Discontinued operations | (0.46) | 0.02 | |||||||||||||||||||||
| Basic | $ | 0.22 | $ | 1.05 | |||||||||||||||||||
|
Diluted earnings (loss) per share
|
|||||||||||||||||||||||
| Continuing operations | $ | 0.68 | $ | 1.02 | |||||||||||||||||||
| Discontinued operations | (0.46) | 0.02 | |||||||||||||||||||||
| Diluted | $ | 0.22 | $ | 1.04 | |||||||||||||||||||
For the following Non-GAAP financial measures and reconciliations of our performance derived in accordance with GAAP to the Non-GAAP financial measures, refer to "Our Use of Non-GAAP Financial Measures" for further information regarding items excluded in our calculation of Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Net Income, and Adjusted Earnings Per Share. The definitions for Adjusted EBITDA, Segment Adjusted EBITDA, and Adjusted Net Income were revised from those reported in the 2024 Annual Report. For comparability purposes, prior year Non-GAAP financial measures are presented based on the current definitions in the above section "Our Use of Non-GAAP Financial Measures."
The following table provides certain Non-GAAP financial measures for the fiscal years presented (in thousands, except per share data).
| Year Ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | ||||||||||||||||||||||
| Certain Non-GAAP Financial Data: | Amount | % of Net Revenue | Amount | % of Net Revenue | |||||||||||||||||||
| Adjusted EBITDA | $ | 253,120 | 25% | $ | 388,985 | 34% | |||||||||||||||||
|
Adjusted Net Income
|
133,752 | 13% | 237,846 | 21% | |||||||||||||||||||
|
Adjusted Earnings Per Share
|
1.46 | nm | 2.08 | nm | |||||||||||||||||||
nm = Not meaningful
The following tables provide the reconciliation of net income to Adjusted EBITDA and the reconciliation of income before income taxes to Segment Adjusted EBITDA (in thousands):
| Year Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net income from continuing operations | $ | 72,734 | $ | 104,219 | |||||||
| Interest expense, net | 17,223 | 662 | |||||||||
| Income tax expense | 25,315 | 42,302 | |||||||||
| Depreciation and amortization | 79,442 | 81,728 | |||||||||
| Amortization of purchased intangible assets | 38,189 | 47,026 | |||||||||
| EBITDA | 232,903 | 275,937 | |||||||||
| Stock-based compensation | 23,700 | 23,876 | |||||||||
| Acquisition- and disposition-related expenses | 6,943 | 12,612 | |||||||||
| Strategic initiative and restructuring-related expenses | 13,007 | 2,850 | |||||||||
| Operating income from revenues sold to OMNIA | (62,469) | (55,283) | |||||||||
| Equity in net (income) loss of unconsolidated affiliates | (11,972) | 295 | |||||||||
| Other non-operating gains | (79,826) | (11,046) | |||||||||
| Impairment of assets | 144,481 | 140,053 | |||||||||
|
Other reconciling items, net (a)
|
(13,647) | (309) | |||||||||
| Total Adjusted EBITDA | $ | 253,120 | $ | 388,985 | |||||||
| Income before income taxes | $ | 98,049 | $ | 146,521 | |||||||
| Equity in net (income) loss of unconsolidated affiliates | (11,972) | 295 | |||||||||
| Interest expense, net | 17,223 | 662 | |||||||||
|
Other income, net
|
(102,184) | (20,832) | |||||||||
| Operating income | 1,116 | 126,646 | |||||||||
| Depreciation and amortization | 79,442 | 81,728 | |||||||||
| Amortization of purchased intangible assets | 38,189 | 47,026 | |||||||||
| Stock-based compensation | 23,700 | 23,876 | |||||||||
| Acquisition- and disposition-related expenses | 6,943 | 12,612 | |||||||||
| Strategic initiative and restructuring-related expenses | 13,007 | 2,850 | |||||||||
| Operating income from revenues sold to OMNIA | (62,469) | (55,283) | |||||||||
|
Deferred compensation plan expense
|
4,603 | 8,769 | |||||||||
| Impairment of assets | 144,481 | 140,053 | |||||||||
|
Other reconciling items, net (b)
|
4,108 | 708 | |||||||||
| Total Adjusted EBITDA | $ | 253,120 | $ | 388,985 | |||||||
|
Adjusted EBITDA:
|
|||||||||||
| Supply Chain Services | $ | 326,902 | $ | 409,669 | |||||||
| Performance Services | 60,692 | 113,845 | |||||||||
|
Segment Adjusted EBITDA
|
387,594 | 523,514 | |||||||||
| Corporate | (134,474) | (134,529) | |||||||||
|
Total Adjusted EBITDA
|
$ | 253,120 | $ | 388,985 | |||||||
_________________________________
(a)Other reconciling items, net is primarily attributable to dividend income, certain legal expenses, and loss on disposal of long-lived assets.
(b)Other reconciling items, net is attributable to other miscellaneous expenses and certain legal expenses.
The following table provides the reconciliation of net income attributable to stockholders to Non-GAAP Adjusted Net Income and the reconciliation of the numerator and denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings Per Share for the years presented (in thousands):
| Year Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net income attributable to stockholders | $ | 20,269 | $ | 119,544 | |||||||
| Net loss (income) from discontinued operations, net of tax | 41,901 | (2,500) | |||||||||
| Income tax expense | 25,315 | 42,302 | |||||||||
| Amortization of purchased intangible assets | 38,189 | 47,026 | |||||||||
| Stock-based compensation | 23,700 | 23,876 | |||||||||
| Acquisition- and disposition-related expenses | 6,943 | 12,612 | |||||||||
| Strategic initiative and restructuring-related expenses | 13,007 | 2,850 | |||||||||
| Operating income from revenues sold to OMNIA | (62,469) | (55,283) | |||||||||
| Equity in net (income) loss of unconsolidated affiliates | (11,972) | 295 | |||||||||
| Other non-operating gains | (79,826) | (11,046) | |||||||||
| Impairment of assets | 144,481 | 140,053 | |||||||||
|
Other reconciling items, net (a)
|
16,451 | 6,087 | |||||||||
| Non-GAAP adjusted income before income taxes | 175,989 | 325,816 | |||||||||
|
Income tax expense on adjusted income before income taxes (b)
|
42,237 | 87,970 | |||||||||
| Non-GAAP Adjusted Net Income | $ | 133,752 | $ | 237,846 | |||||||
|
Reconciliation of denominator for earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings Per Share
|
|||||||||||
| Weighted average: | |||||||||||
| Basic weighted average shares outstanding | 91,228 | 113,791 | |||||||||
| Dilutive securities | 689 | 617 | |||||||||
| Weighted average shares outstanding - diluted | 91,917 | 114,408 | |||||||||
_________________________________
(a)Other reconciling items, net is primarily attributable to dividend income, loss on disposal of long-lived assets, imputed interest on non-interest bearing debt, certain legal expenses, and the impact from non-controlling interest on adjustments to net income attributable to stockholders.
(b)Reflects income tax expense at an estimated effective income tax rate of 24% and 27% of Non-GAAP adjusted net income before income taxes for the years ended June 30, 2025 and 2024, respectively.
The following table provides the reconciliation of basic earnings per share attributable to stockholders to Non-GAAP Adjusted Earnings Per Share for the periods presented:
| Year Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Basic earnings per share attributable to stockholders | $ | 0.22 | $ | 1.05 | |||||||
| Net loss (income) from discontinued operations, net of tax | 0.46 | (0.02) | |||||||||
| Income tax expense | 0.28 | 0.37 | |||||||||
| Amortization of purchased intangible assets | 0.42 | 0.41 | |||||||||
| Stock-based compensation | 0.26 | 0.21 | |||||||||
| Acquisition- and disposition-related expenses | 0.08 | 0.11 | |||||||||
| Strategic initiative and restructuring-related expenses | 0.14 | 0.03 | |||||||||
| Operating income from revenues sold to OMNIA | (0.68) | (0.49) | |||||||||
| Equity in net (income) loss of unconsolidated affiliates | (0.13) | - | |||||||||
| Other non-operating gains | (0.88) | (0.10) | |||||||||
| Impairment of assets | 1.58 | 1.23 | |||||||||
|
Other reconciling items, net (a)
|
0.18 | 0.05 | |||||||||
|
Impact of corporation taxes(b)
|
(0.46) | (0.77) | |||||||||
| Impact of dilutive shares | (0.01) | - | |||||||||
| Non-GAAP Adjusted Earnings Per Share | $ | 1.46 | $ | 2.08 | |||||||
(a)Other reconciling items, net is primarily attributable to dividend income, loss on disposal of long-lived assets, imputed interest on non-interest bearing debt, certain legal expenses, and the impact from non-controlling interest on adjustments to net income attributable to stockholders.
(b)Reflects income tax expense at an estimated effective income tax rate of 24% and 27% of Non-GAAP adjusted net income before income taxes for the years ended June 30, 2025 and 2024, respectively.
Consolidated Results - Comparison of the Years Ended June 30, 2025 to 2024
The variances in the material factors contributing to the changes in the consolidated results are discussed further in "Segment Results" below.
Net Revenue
Net revenue decreased by $123.4 million, or 11%, during the year ended June 30, 2025 compared to the year ended June 30, 2024 due to decreases of $65.0 million, or 15%, in Performance Services and $58.3 million, or 8%, in Supply Chain Services.
Cost of Revenue
Cost of revenue was flat for the year ended June 30, 2025 compared to the year ended June 30, 2024.
Operating Expenses
Operating expenses were flat for the year ended June 30, 2025 compared to the year ended June 30, 2024.
Other Income, Net
Other income, net increased by $77.1 million during the year ended June 30, 2025 compared to the year ended June 30, 2024, primarily due to a non-operating gain of $57.0 million from the settlement of a shareholder derivative complaint, an increase of $17.0 million in dividend income, and an increase in income of $12.3 million in equity in net income of unconsolidated affiliates. These increases were partially offset by an increase of interest expense, net.
Income Tax Expense
Income tax expense was $25.3 million and $42.3 million for the years ended June 30, 2025 and 2024, respectively. The income tax expense resulted in effective tax rates of 26% and 29% for the years ended June 30, 2025 and 2024, respectively. The change in the effective tax rate is primarily attributable to a decrease in pre-tax book income compared to prior year, and the release of valuation allowances during the current year (see Note 16 - Income Taxes to the accompanying consolidated financial statements for further information).
Net Loss/Income from Discontinued Operations, Net of Tax
Net loss/income from discontinued operations, net of tax was a net loss of $41.9 million during the year ended June 30, 2025 compared to net income of $2.5 million during the year ended June 30, 2024. This increase in net loss was due to the $53.0 million loss on the S2S Divestiture and the completion of the sale on October 1, 2024, which affected the comparability of operational quarters across fiscal years. See Note 4 - Discontinued Operations and Exit Activities to the accompanying consolidated financial statements for further information.
Net Income/Loss Attributable to Non-Controlling Interest
Net income attributable to non-controlling interest was $10.6 million for the year ended June 30, 2025 compared to net loss attributable to non-controlling interest of $12.8 million for the year ended June 30, 2024, primarily driven by the S2S Divestiture impact on net income in the current year period of our consolidated subsidiaries with non-controlling interests as well as the long-lived assets impairment related to Contigo Health during the prior period. See Note 5 - Investments to the accompanying consolidated financial statements for further information.
Adjusted EBITDA
Adjusted EBITDA, a Non-GAAP financial measure as defined in "Our Use of Non-GAAP Financial Measures," decreased by $135.9 million, or 35%, during the year ended June 30, 2025 compared to the year ended June 30, 2024, largely driven by decreases of $82.8 million and $53.2 million in Supply Chain Services and Performance Services, respectively.
Segment Results
Supply Chain Services
The following table presents our results of operations and Adjusted EBITDA, a Non-GAAP financial measure, in the Supply Chain Services segment for the fiscal years presented (in thousands):
| Year Ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||
| Net administrative fees | $ | 556,328 | $ | 624,168 | $ | (67,840) | (11) | % | |||||||||||||||
| Software licenses, other services and support | 74,711 | 65,200 | 9,511 | 15 | % | ||||||||||||||||||
| Services and software licenses | 631,039 | 689,368 | (58,329) | (8) | % | ||||||||||||||||||
| Net revenue | 631,039 | 689,368 | (58,329) | (8) | % | ||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Services and software licenses | 69,748 | 56,831 | 12,917 | 23 | % | ||||||||||||||||||
| Cost of revenue | 69,748 | 56,831 | 12,917 | 23 | % | ||||||||||||||||||
| Gross profit | 561,291 | 632,537 | (71,246) | (11) | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative | 211,784 | 203,623 | 8,161 | 4 | % | ||||||||||||||||||
| Research and development | 989 | 651 | 338 | 52 | % | ||||||||||||||||||
| Amortization of intangibles | 34,735 | 35,029 | (294) | (1) | % | ||||||||||||||||||
| Operating expenses | 247,508 | 239,303 | 8,205 | 3 | % | ||||||||||||||||||
| Operating income | 313,783 | 393,234 | (79,451) | (20) | % | ||||||||||||||||||
| Depreciation and amortization | 30,601 | 26,559 | |||||||||||||||||||||
| Amortization of purchased intangible assets | 34,735 | 35,030 | |||||||||||||||||||||
| Acquisition- and disposition-related expenses | (10,383) | 10,030 | |||||||||||||||||||||
| Operating income from revenues sold to OMNIA | (62,469) | (55,283) | |||||||||||||||||||||
| Impairment of assets | 16,564 | - | |||||||||||||||||||||
| Other reconciling items, net | 4,071 | 99 | |||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 326,902 | $ | 409,669 | $ | (82,767) | (20) | % | |||||||||||||||
Net Revenue
Supply Chain Services segment revenue decreased by $58.3 million, or 8%, during the year ended June 30, 2025 compared to the year ended June 30, 2024 driven by a decrease of $67.8 million in net administrative fees revenue, partially offset by an increase of $9.5 million in software licenses, other services and support revenue.
Net Administrative Fees Revenue
Net administrative fees revenue decreased $67.8 million, or 11%, during the year ended June 30, 2025 compared to the year ended June 30, 2024, primarily driven an increase in the aggregate blended fee share paid to members as a result of renewal of GPO contracts at a higher fee share than provided in historical agreements due to market dynamics. This decrease was partially offset by increased utilization and further penetration of our contracts by existing members.
Software Licenses, Other Services and Support Revenue
Software licenses, other services and support revenue increased by $9.5 million, or 15%, during the year ended June 30, 2025 compared to the year ended June 30, 2024, primarily due to an increase in supply chain co-management fees as a result of new engagements.
Cost of Revenue
Supply Chain Services segment cost of revenue increased by $12.9 million, or 23%, during the year ended June 30, 2025 compared to the year ended June 30, 2024, primarily attributable to increases in personnel costs associated with increased headcount in support of new engagements within our supply chain co-management business and depreciation expense.
Operating Expenses
Operating expenses increased by $8.2 million, or 3%, during the year ended June 30, 2025 compared to the year ended June 30, 2024, primarily due to an increase in SG&A expenses of $8.2 million. The increase in SG&A expenses was primarily due to the impairment of assets related to changes in utilization of our New York, New York office and increase in bad debt expense, partially offset by a decrease in acquisition- and disposition-related expenses driven by the net change in the year over year fair value of the Acurity and Nexera earn-out liability.
Segment Adjusted EBITDA
Segment Adjusted EBITDA in the Supply Chain Services segment decreased by $82.8 million, or 20%, during the year ended June 30, 2025 compared to the year ended June 30, 2024, primarily due to the aforementioned decrease in net revenue and increases in cost of revenue and bad debt expense.
Performance Services
The following table presents our results of operations and Adjusted EBITDA in the Performance Services segment for the fiscal years presented (in thousands):
| Year Ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| Net revenue: | |||||||||||||||||||||||
| Software licenses, other services and support | |||||||||||||||||||||||
| SaaS-based products subscriptions | $ | 155,458 | $ | 179,601 | $ | (24,143) | (13) | % | |||||||||||||||
| Consulting services | 68,237 | 92,560 | (24,323) | (26) | % | ||||||||||||||||||
| Software licenses | 86,731 | 82,073 | 4,658 | 6 | % | ||||||||||||||||||
| Other | 71,182 | 92,407 | (21,225) | (23) | % | ||||||||||||||||||
| Services | 381,608 | 446,641 | (65,033) | (15) | % | ||||||||||||||||||
| Net revenue | 381,608 | 446,641 | (65,033) | (15) | % | ||||||||||||||||||
| Cost of revenue: | |||||||||||||||||||||||
| Services and software licenses | 199,540 | 212,054 | (12,514) | (6) | % | ||||||||||||||||||
| Cost of revenue | 199,540 | 212,054 | (12,514) | (6) | % | ||||||||||||||||||
| Gross profit | 182,068 | 234,587 | (52,519) | (22) | % | ||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative | 307,106 | 308,334 | (1,228) | - | % | ||||||||||||||||||
| Research and development | 1,645 | 2,464 | (819) | (33) | % | ||||||||||||||||||
| Amortization of intangibles | 3,454 | 11,997 | (8,543) | (71) | % | ||||||||||||||||||
| Operating expenses | 312,205 | 322,795 | (10,590) | (3) | % | ||||||||||||||||||
|
Operating loss
|
(130,137) | (88,208) | (41,929) | 48% | |||||||||||||||||||
| Depreciation and amortization | 43,216 | 47,440 | |||||||||||||||||||||
| Amortization of purchased intangible assets | 3,454 | 11,996 | |||||||||||||||||||||
| Acquisition- and disposition-related expenses | 17,326 | 2,582 | |||||||||||||||||||||
| Impairment of assets | 126,818 | 140,053 | |||||||||||||||||||||
| Other reconciling items, net | 15 | (18) | |||||||||||||||||||||
| Segment Adjusted EBITDA | $ | 60,692 | $ | 113,845 | $ | (53,153) | (47) | % | |||||||||||||||
Net Revenue
Net revenue in our Performance Services segment decreased by $65.0 million, or 15%, during the year ended June 30, 2025 compared to the year ended June 30, 2024. The decrease was largely attributable to decreases of $21.2 million in other revenue primarily related to lower Contigo Health revenue driven by the January sale of assets associated with the wrap network business and expected customer attrition and the timing of data contracts in the current year period, $24.1 million in SaaS-based products subscriptions revenue primarily due to contract expirations and conversion of SaaS-based products to licensed-based products in recent periods, and $24.3 million in consulting services primarily due to fewer new engagements entered into in the
current year. These decreases in net revenue were partially offset by an increase of $4.7 million in enterprise analytics license revenue.
Cost of Revenue
Cost of services and software licenses revenue in our Performance Services segment decreased by $12.5 million, or 6%, during the year ended June 30, 2025 compared to the year ended June 30, 2024, primarily due to lower employee-related costs.
Operating Expenses
Performance Services segment operating expenses decreased by $10.6 million, or 3%, during the year ended June 30, 2025 compared to the year ended June 30, 2024, primarily due to the decrease of $8.5 million in amortization of purchased intangible assets due to Contigo Health intangible assets being fully impaired in the prior year.
Segment Adjusted EBITDA
Segment Adjusted EBITDA in the Performance Services segment decreased by $53.2 million, or 47%, during the year ended June 30, 2025 compared to the year ended June 30, 2024, primarily due to the aforementioned decreases in net revenue and cost of revenue.
Corporate
The following table summarizes corporate expenses and Adjusted EBITDA for the fiscal years presented (in thousands):
| Year Ended June 30, | |||||||||||||||||||||||
| 2025 | 2024 | Change | |||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative | $ | 182,530 | $ | 178,380 | $ | 4,150 | 2 | % | |||||||||||||||
| Operating expenses | 182,530 | 178,380 | 4,150 | 2 | % | ||||||||||||||||||
| Operating loss | (182,530) | (178,380) | (4,150) | 2 | % | ||||||||||||||||||
| Depreciation and amortization | 5,625 | 7,729 | |||||||||||||||||||||
| Stock-based compensation | 23,700 | 23,876 | |||||||||||||||||||||
| Strategic initiative and financial restructuring-related expenses | 13,007 | 2,850 | |||||||||||||||||||||
| Deferred compensation plan expense | 4,603 | 8,769 | |||||||||||||||||||||
|
Impairment of Assets
|
1,099 | - | |||||||||||||||||||||
| Other reconciling items, net | 22 | 627 | |||||||||||||||||||||
| Adjusted EBITDA | $ | (134,474) | $ | (134,529) | $ | 55 | - | % | |||||||||||||||
Operating Expenses
Corporate operating expenses increased by $4.2 million, or 2%, during the year ended June 30, 2025 compared to the year ended June 30, 2024 primarily due to an increase in strategic initiative and restructuring-related expenses due to severance expense, partially offset by a decrease in deferred compensation plan expense as a result of market changes.
Adjusted EBITDA
Corporate adjusted EBITDA was flat for the year ended June 30, 2025 compared to the year ended June 30, 2024.
Results of Operations for the Years Ended June 30, 2024 and 2023
A discussion of changes in our results of operations from fiscal year 2023 to fiscal year 2024 has been omitted from this Annual Report but may be found in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Form 10-K for the fiscal year ended June 30, 2024, filed with the SEC on August 21, 2024, which is available free of charge on the SEC's website at www.sec.gov and our website at http://investors.premierinc.com.
Off-Balance Sheet Arrangements
As of June 30, 2025, we did not have any off-balance sheet arrangements.
Liquidity and Capital Resources
Our principal source of cash has been primarily cash provided by operating activities. From time to time we have used, and expect to use in the future, borrowings under our Credit Facility (as defined in Note 10 - Debt and Notes Payable to the accompanying consolidated financial statements for more information) as a source of liquidity to fund acquisitions and related business investments as well as general corporate activities. Our primary cash requirements include operating expenses, working capital fluctuations, revenue share obligations, tax payments, capital expenditures, dividend payments on our Common Stock, if and when declared, repurchases of Common Stock pursuant to stock repurchase programs in place from time to time, acquisitions and related business investments, and general corporate activities. Our capital expenditures typically consist of internally-developed software costs, software purchases, and computer hardware purchases.
As of June 30, 2025 and 2024, we had cash and cash equivalents of $83.7 million and $125.1 million, respectively.
Credit Facility
As of June 30, 2025, we had $280.0 million outstanding borrowings under our Credit Facility. At June 30, 2024 we had no outstanding borrowings under our Credit Facility. During the year ended June 30, 2025, we borrowed $435.0 million, which was used for general corporate purposes and to fund stock repurchases under the $1.0 billion Share Repurchase Authorization, and repaid $155.0 million of borrowings under the Credit Facility. In July 2025, we repaid $90.0 million of outstanding borrowings under the Credit Facility.
We expect cash generated from operations and borrowings under our Credit Facility to provide us with adequate liquidity to fund our anticipated working capital requirements, revenue share obligations, tax payments, capital expenditures, notes payable, dividend payments on our Common Stock, if and when declared, repurchases of our Common Stock pursuant to stock repurchase programs in place from time to time, and to fund business acquisitions. Our capital requirements depend on numerous factors, including funding requirements for our product and service development and commercialization efforts, our information technology requirements, and the amount of cash generated by our operations. We believe that we have adequate capital resources at our disposal to fund currently anticipated capital expenditures, business growth and expansion, and current and projected debt service requirements. However, strategic growth initiatives will likely require the use of one or a combination of various forms of capital resources including available cash on hand, cash generated from operations, borrowings under our Credit Facility and other long-term debt, and, potentially, proceeds from the issuance of additional equity or debt securities.
At June 30, 2025, we had a net working capital deficit of $324.8 million compared to net working capital of $8.7 million at June 30, 2024. The decrease in net working capital is primarily due to the current year borrowings on the Credit Facility to fund the stock repurchases under the $1.0 billion Share Repurchase Authorization. While the Credit Facility is held within current liabilities on the Consolidated Balance Sheets, we have the ability to renew and extend the term of the borrowings.
Cash Dividends
In each of September 2024, December 2024, March 2025, and June 2025, we paid a cash dividend of $0.21 per share on outstanding shares of our Common Stock. On August 17, 2025, our Board of Directors declared a quarterly cash dividend of $0.21 per share, payable on September 15, 2025 to stockholders of record on September 1, 2025.
Sale of Non-Healthcare GPO Member Contracts
On July 25, 2023, we sold substantially all of our non-healthcare GPO member contracts pursuant to an equity purchase agreement with OMNIA for a purchase price of $723.8 million. See Note 11 - Liability Related to the Sale of Future Revenues to the accompanying consolidated financial statements for further information.
Discussion of Cash Flows for the Years Ended June 30, 2025 and 2024
A summary of net cash flows follows (in thousands):
| Year Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| Net cash provided by (used in): | |||||||||||
|
Operating activities from continuing operations
|
$ | 417,809 | $ | 278,143 | |||||||
| Investing activities | (102,095) | (68,466) | |||||||||
| Financing activities | (340,733) | (192,720) | |||||||||
|
Operating activities from discontinued operations
|
(16,380) | 18,417 | |||||||||
| Effect of exchange rate changes on cash flows | (22) | (21) | |||||||||
|
Net (decrease) increase in cash and cash equivalents
|
$ | (41,421) | $ | 35,353 | |||||||
Net cash provided by operating activities increased by $139.7 million for the year ended June 30, 2025 compared to the year ended June 30, 2024. The increase in net cash provided by operating activities from continuing operations was driven by lower cash income taxes paid in the current year period (cash income taxes of $162.3 million paid in fiscal year 2024 on proceeds received from the sale of future revenues to OMNIA), the $57.0 million received in the current year period as the result of the settlement of a shareholder derivative complaint, and a $17.6 million cash dividend from an unconsolidated affiliate. These increases to cash were partially offset by an increase of $60.9 million in cash paid for operating expenses primarily as a result of an increase in performance-related compensation related to the prior fiscal year performance, a decrease of $24.4 million in cash receipts driven by lower net revenue, and a decrease in interest income received of $15.7 million driven by the interest earned from the investment of cash received from the sale of non-healthcare contracts in money market funds in the prior year.
Net cash used in investing activities increased by $33.6 million for the year ended June 30, 2025 compared to the year ended June 30, 2024. The increase in net cash used in investing activities was primarily due to the cash outlay of $39.8 million for the IllumiCare acquisition in the current year as well as the prior year proceeds of $12.8 million from the sale of investment in unconsolidated affiliates and a $1.5 million increase in purchases of property and equipment. The increase was partially offset by net proceeds of $20.4 million from the sale of the assets associated with Contigo's wrap network business and the cash settlement of net working capital associated with the sale of S2S to Prestige in the current year.
Net cash used in financing activities increased by $148.0 million for the year ended June 30, 2025 compared to the year ended June 30, 2024. The increase in net cash used in financing activities was primarily driven by a decrease in net proceeds from the sale of future revenues of $660.7 million (see Note 11 - Liability Related to the Sale of Future Revenues to the accompanying consolidated financial statements for further information). The change was offset by the current year net borrowings of $280.0 million, as well as the prior year repayment of $215.0 million under our Credit Facility and a decrease in cash dividends paid of $17.8 million as a result of the Common Stock repurchases.
Net cash used in operating activities attributable to discontinued operations of $16.4 million for the year ended June 30, 2025 changed by $34.8 million from net cash provided by operating activities attributable to discontinued operations of $18.4 million for the year ended June 30, 2024. The change in net cash used in operating activities attributable to discontinued operations was due to a decrease in cash receipts from customers, partially offset by lower payments for expenses due to the S2S Divestiture, which closed on October 1, 2024.
Discussion of Non-GAAP Free Cash Flow for the Years Ended June 30, 2025 and 2024
We define Non-GAAP Free Cash Flow as net cash provided by operating activities from continuing operations less (i) early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring, (ii) purchases of property and equipment, and (iii) cash payments to OMNIA for the sale of future revenues and tax payments on proceeds received from the sale of future revenues. Non-GAAP Free Cash Flow does not
represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments under our Credit Facility.
A summary of Non-GAAP Free Cash Flow and reconciliation to net cash provided by operating activities for the periods presented follows (in thousands):
| Year Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
|
Net cash provided by operating activities from continuing operations
|
$ | 417,809 | $ | 278,143 | |||||||
|
Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement (a)
|
(101,524) | (99,665) | |||||||||
| Purchases of property and equipment | (82,649) | (81,189) | |||||||||
|
Cash payments to OMNIA for the sale of future revenues (b)
|
(53,107) | (31,535) | |||||||||
|
Cash tax payments on proceeds received from the sale of future revenues
|
- | 162,292 | |||||||||
| Non-GAAP Free Cash Flow | $ | 180,529 | $ | 228,046 | |||||||
_________________________________
(a) Early termination payments to certain former limited partners that elected to execute a Unit Exchange Agreement in connection with our August 2020 Restructuring are presented in our Consolidated Statements of Cash Flows under "Payments made on notes payable." During the year ended June 30, 2025, we paid $102.7 million to members including imputed interest of $1.2 million which is included in net cash provided by operating activities from continuing operations. During the year ended June 30, 2024, we paid $102.7 million to members including imputed interest of $3.0 million which is included in net cash provided by operating activities from continuing operations. See Note 10 - Debt and Notes Payable to the accompanying consolidated financial statements for further information.
(b)Cash payments to OMNIA for the sale of future revenues in connection with our sale of non-healthcare contracts to OMNIA are presented in our Consolidated Statements of Cash Flows under "Payments on liability related to the sale of future revenues." During the year ended June 30, 2025, we paid $70.1 million to OMNIA including imputed interest of $17.0 million which is included in net cash provided by operating activities from continuing operations. During the year ended June 30, 2024, we paid $44.4 million to OMNIA including imputed interest of $14.2 million which is included in net cash provided by operating activities from continuing operations. See Note 11 - Liability Related to the Sale of Future Revenues to the accompanying consolidated financial statements for further information.
Non-GAAP Free Cash Flow decreased by $47.5 million for the year ended June 30, 2025 compared to the year ended June 30, 2024. The decrease was primarily by the aforementioned increase in cash paid for operating expenses offset by lower cash received from customers and an increase of $21.6 million in the cash payments to OMNIA for the sale of future revenues due to the timing of the completion of the purchase agreement in the prior year.
See "Our Use of Non-GAAP Financial Measures" above for additional information regarding our use of Non-GAAP Free Cash Flow.
Contractual Obligations
The following table presents our contractual obligations as of June 30, 2025 (in thousands):
| Payments Due by Period | |||||||||||||||||||||||||||||
| Contractual Obligations | Total | Less Than 1 Year | 1-3 Years | 3-5 Years | Greater Than 5 Years | ||||||||||||||||||||||||
|
Operating lease obligations(a)
|
$ | 11,848 | $ | 9,526 | 1,798 | $ | 375 | $ | 149 | ||||||||||||||||||||
| Total contractual obligations | $ | 11,848 | $ | 9,526 | $ | 1,798 | $ | 375 | $ | 149 | |||||||||||||||||||
_________________________________
(a)Future contractual obligations for leases represent future minimum payments under noncancelable operating leases primarily for office space. See Note 17 - Commitments and Contingencies to the accompanying consolidated financial statements for more information.
During year ended June 30, 2025, we entered into a lease modification for our corporate headquarters, which commenced in July 2025 with an initial lease term of approximately eight years. As this lease had not yet commenced as of June 30, 2025, it is excluded from the table above.
Credit Facility
Outstanding borrowings under the Credit Facility (as defined in Note 10 - Debt and Notes Payable to the accompanying consolidated financial statements) bear interest on a variable rate structure with borrowings bearing interest at either the secured overnight financing rate ("SOFR") plus an adjustment of 0.100% plus an applicable margin ranging from 1.250% to 1.750% or the prime lending rate plus an applicable margin ranging from 0.250% to 0.750%. We pay a commitment fee ranging from 0.125% to 0.225% for unused capacity under the Credit Facility. At June 30, 2025, the commitment fee was 0.125%.
The Credit Facility contains customary representations and warranties as well as customary affirmative and negative covenants. We were in compliance with all such covenants at June 30, 2025. The Credit Facility also contains customary events of default, including a cross-default of any indebtedness or guarantees in excess of $75.0 million. If any event of default occurs and is continuing, the administrative agent under the Credit Facility may, with the consent, or shall, at the request of a majority of the lenders under the Credit Facility, terminate the commitments and declare all of the amounts owed under the Credit Facility to be immediately due and payable.
Proceeds from borrowings under the Credit Facility may generally be used to finance ongoing working capital requirements, including permitted acquisitions, repurchases of our Common Stock pursuant to stock repurchase programs, in place from time to time, dividend payments, if and when declared, and other general corporate activities. At June 30, 2025, we had $280.0 million outstanding borrowings under the Credit Facility with $715.0 million of available borrowing capacity after reductions for outstanding letters of credit.
The above summary does not purport to be complete, and is subject to, and qualified in its entirety by reference to, the complete text of the Credit Facility, which is filed as Exhibit 10.34 to this Annual Report. See also Note 10 - Debt and Notes Payable to the accompanying consolidated financial statements.
Notes Payable to Former Limited Partners
At June 30, 2025, we no longer owed any payments to former limited partners pursuant to Unit Exchange Agreements that were entered into in connection with the 2020 Restructuring. See Note 10 - Debt and Notes Payable to the accompanying consolidated financial statements for further information.
Other Notes Payable
At June 30, 2025, we had no commitments for other obligations under notes payable. See Note 10 - Debt and Notes Payable to the accompanying consolidated financial statements for further information.
Sale of Non-Healthcare GPO Member Contracts
At June 30, 2025, we had non-recourse commitments of $640.4 million for the sale of future revenues due to OMNIA in connection to the sale of non-healthcare GPO member contracts. The liability will be paid, with an effective annual interest rate of 2.5%, in monthly payments from net administrative fees received in connection with the sold contracts. These payments commenced during the first quarter of fiscal year 2024 for a period of at least 10 years. See Note 11 - Liability Related to the Sale of Future Revenues to the accompanying consolidated financial statements for further information.
Cash Dividends
On each or about September 15, 2024, December 15, 2024, March 15, 2025 and June 15, 2025, we paid a cash dividend of $0.21 per share on outstanding shares of our Common Stock. On August 17, 2025, our Board of Directors declared a cash dividend of $0.21 per share, payable on September 15, 2025 to stockholders of record on September 1, 2025.
We expect quarterly dividends to be paid in the third month of each fiscal quarter. The declaration of any future cash dividends, and the setting of record and payment dates as well as the per share amounts, will be at the discretion of our Board of Directors each quarter after consideration of various factors, including our results of operations, financial condition, and capital requirements, earnings, general business conditions, restrictions imposed by our current Credit Facility, and any future financing arrangements, legal restrictions on the payment of dividends, and other factors our Board of Directors deems relevant.
Share Repurchase Authorization
In February 2024, we announced our Board of Directors approved a share repurchase authorization for up to $1.0 billion of our Common Stock (the "Share Repurchase Authorization") and entered into an accelerated share repurchase agreement (the "2024 ASR Agreement") with Bank of America, N.A. ("Bank of America") pursuant to the Share Repurchase Authorization to repurchase an aggregate of $400.0 million of shares of our Common Stock, excluding fees and expenses. Under the terms of the 2024 ASR Agreement, we made a payment of $400.0 million to Bank of America and, in February 2024, received initial deliveries of an aggregate of approximately 15.0 million shares of our Common Stock. On July 11, 2024, as final settlement of the share repurchase transaction under the 2024 ASR Agreement, we received an additional approximately 4.8 million shares of our Common Stock. In total, we repurchased approximately 19.9 million shares of our Common Stock under the 2024 ASR Agreement at $20.12 per share, which represents the volume-weighted average share price of our Common Stock during the term of the 2024 ASR Agreement less a discount. The shares delivered were recorded in treasury stock and immediately retired and recorded to retained earnings in our Consolidated Balance Sheets.
In August 2024, we announced our Board of Directors approved the execution of $200.0 million of Common Stock repurchases under the Share Repurchase Authorization. We completed this repurchase program on January 6, 2025, repurchasing an aggregate of approximately 9.5 million shares of our Common Stock at an average price of $21.00 per share in open market transactions for a total purchase price of $200.0 million. The shares delivered were recorded in treasury stock and immediately retired and recorded to retained earnings in our Consolidated Balance Sheets.
On February 18, 2025, we announced our Board of Directors approved and that we had entered into two accelerated share repurchase agreements (the "2025 ASR Agreements") with JPMorgan Chase Bank, National Association ("JPMorgan") pursuant to the Share Repurchase Authorization for an aggregate repurchase of $200.0 million of our Common Stock, excluding fees and expenses. Under the terms of the 2025 ASR Agreements, on February 18, 2025, we made aggregate payments of $200.0 million to JPMorgan, and on February 18 and 19, 2025, received from JPMorgan initial deliveries of approximately 9.0 million shares, or $160.0 million, of our Common Stock at $17.77 per share. On August 18, 2025, as final settlement of the share repurchase transactions under the 2025 ASR Agreements, we received from JPMorgan approximately 0.5 million million shares of our Common Stock. In total, we repurchased approximately 9.5 million million shares of our Common Stock under the 2025 ASR Agreements at $21.07 per share, which represents the volume-weighted average share price of our Common Stock during the terms of the 2025 ASR Agreements, less a discount.
The initial deliveries of shares pursuant to the 2025 ASR Agreements resulted in an immediate reduction of the outstanding shares used to calculate the weighted-average common shares outstanding for basic and diluted earnings per share. At June 30, 2025, the 2025 ASR Agreements were accounted for as a treasury stock transaction and forward stock purchase contract. The shares delivered were recorded in treasury stock and the unsettled portions of the 2025 ASR Agreements were recorded in additional paid-in capital in our Consolidated Balance Sheets. The forward stock purchase contract was considered indexed to our own stock and was classified as an equity instrument. The final settlement of shares delivered were recorded in treasury stock and immediately the 2025 ASR Agreements' initial deliveries of shares and final settlement of shares were retired and recorded to retained earnings in our Consolidated Balance Sheets.
The Share Repurchase Authorization expired on June 30, 2025, and accordingly we will not repurchase any other shares pursuant to the Share Repurchase Authorization.
Fiscal Year 2025 Developments
Impact of Tariffs
The Trump administration has recently implemented, or threatened to implement, significant new and increased tariffs on certain industries and countries. While the specifics of these tariffs are still evolving, the implementation of new or increased tariffs on medical supplies, equipment, pharmaceuticals, and other products may adversely affect our suppliers' pricing structures or operational capabilities, leading to higher procurement costs for our members and other customers, potentially resulting in reduced purchasing power, changes in sourcing decisions, and margin pressure throughout their supply chains. We continue to monitor tariff developments and are working to continue to build resiliency within our portfolio and diversification of suppliers to mitigate the financial impact on our members and other customers. See "Item 1A. Risk Factors" in this Annual Report for further discussion on the risks related to tariffs.
Premier Inc. published this content on August 19, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on August 19, 2025 at 11:50 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]