8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): May 13, 2015

Premier, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	001-36092	35-2477140
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

13034 Ballantyne Corporate Place

Charlotte, NC 28277

(Address of Principal Executive Offices) (Zip Code)

(704) 357-0022

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01. Regulation FD Disclosure.

Premier, Inc. (the “Company”) is scheduled to present at the Bank of America Merrill Lynch 2015 Health Care Conference in Las Vegas, Nevada on Wednesday, May 13, 2015 at 3:40 p.m. pacific time. The presentation will be audio webcast live through the investor relations page on the Company’s website at investors.premierinc.com, where presentation slides also will be made available. A webcast replay will be archived on the Company’s website for approximately 90 days.

Pursuant to Regulation FD, the Company hereby furnishes the presentation materials attached as Exhibit 99.1 to this Current Report on Form 8-K, which information is incorporated into this Item 7.01 by this reference. A related press release announcing the Company’s participation in the conference was previously issued.

The information in this Current Report on Form 8-K under this Item 7.01, as well as Exhibit 99.1, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act except as shall be expressly set forth by specific reference in such a filing. The furnishing of this report is not intended to constitute a determination by the registrant that the information is material or that the dissemination of the information is required by Regulation FD.

Use and Definition of Non-GAAP Financial Measures

The financial data contained in the presentation materials attached hereto as Exhibit 99.1 includes non-GAAP financial measures, including EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA and Adjusted Fully Distributed Net Income and Free Cash Flow, each as defined below. For all non-GAAP financial measures, the Company considers non-recurring items to be expenses and other items that have not been incurred within the prior two years and are not expected to recur within the next two years. Such expenses include certain strategic and financial restructuring expenses. Non-operating items include gain or loss on disposal of assets.

The Company defines EBITDA as net income before interest and investment income, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets. The Company defines Adjusted EBITDA as EBITDA before merger and acquisition related expenses and non-recurring, non-cash or non-operating items, and including equity in net income of unconsolidated affiliates.

The Company defines Segment Adjusted EBITDA as the segment’s net revenue less operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expenses and non-recurring or non-cash items, and including equity in net income of unconsolidated affiliates. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA.

The Company defines Adjusted Fully Distributed Net Income as net income attributable to Premier (i) excluding income tax expense, (ii) excluding the effect of non-recurring and non-cash items, (iii) assuming the exchange of all the Class B common units into shares of Class A common stock, which results in the elimination of noncontrolling interest in Premier Healthcare Alliance, L.P. (“Premier LP”) and (iv) reflecting an adjustment for income tax expense on non-GAAP pro forma fully distributed net income before income taxes at the Company’s estimated effective income tax rate. Adjusted Fully Distributed Net Income is a non-GAAP financial measure because it represents net income attributable to Premier before merger and acquisition related expenses and non-recurring or non-cash items and the effects of noncontrolling interests in Premier LP.

The Company defines Free Cash Flow as net cash provided by operating activities less distributions to limited partners and purchases of property and equipment. Free Cash Flow is a non-GAAP financial measure because it does not represent net cash provided by operating activities alone but takes into consideration the ongoing distributions to limited partners and purchases of property and equipment that are necessary for ongoing business operations and long-term value creation. The Company believes Free Cash Flow is an important measure because it represents the cash that the Company generates after payment of tax distributions to limited partners and capital investment to maintain existing products and services as well as development of new and upgraded products and services to support future growth. Free Cash Flow is important because it allows the Company to enhance shareholder value through acquisitions, partnerships, joint ventures, investments in related business and/or debt reduction. Also, Free Cash Flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayment.

Adjusted EBITDA and Free Cash Flow are supplemental financial measures used by the Company and by external users of its financial statements. The Company considers Adjusted EBITDA and Free Cash Flow to be indicators of the operational strength and performance of its business. Adjusted EBITDA and Free Cash Flow measures allow the Company to assess its performance without regard to financing methods and capital structure and without the impact of other matters that the Company does not consider indicative of the operating performance of its business. Segment Adjusted EBITDA is the primary earnings measure the Company uses to evaluate the performance of its business segments.

The Company uses EBITDA to determine compliance with certain financial covenants in its revolving credit facility. The Company uses Adjusted EBITDA, Segment Adjusted EBITDA and Adjusted Fully Distributed Net Income to facilitate a comparison of its operating performance on a consistent basis from period to period that, when viewed in combination with its results prepared in accordance with GAAP, provides a more complete understanding of factors and trends affecting its business than GAAP measures alone. The Company believes Adjusted EBITDA and Segment Adjusted EBITDA assist its board of directors, management and investors in comparing the Company’s operating performance on a consistent basis from period to period because they remove the impact of the Company’s asset base (primarily depreciation and amortization) and items outside the control of its management team (taxes), as well as other non-cash (impairment of intangible assets, purchase accounting adjustments and stock-based compensation) and non-recurring items (strategic and financial restructuring expenses), from its operations. The Company believes Adjusted Fully Distributed Net Income assists its board of directors, management and investors in comparing its net income on a consistent basis from period to period because it removes non-cash (impairment of intangible assets, purchase accounting adjustments and stock-based compensation) and non-recurring items (strategic and financial restructuring expenses), and eliminates the variability of noncontrolling interest as a result of member owner exchanges of Class B common units into shares of Class A common stock (which exchanges are a member owner’s cumulative right, but not obligation, beginning on October 31, 2014, and each year thereafter, and are limited to one-seventh of the member owner’s initial allocation of Class B common units).

Despite the importance of these non-GAAP financial measures in analyzing the Company’s business, determining compliance with certain financial covenants in the Company’s revolving credit facility, measuring and determining incentive compensation and evaluating the Company’s operating performance relative to its competitors, EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income 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 alternatives to, net income, net cash provided by operating activities, or any other measure of the Company’s performance derived in accordance with GAAP. Some of the limitations of EBITDA, Adjusted EBITDA, and Segment Adjusted EBITDA include that they do not reflect: the Company’s capital expenditures or its future requirements for capital expenditures or contractual commitments; changes in, or cash requirements for, the Company’s working capital needs; the interest expense or the cash requirements to service interest or principal payments under the Company’s revolving credit facility; income tax payments the Company is 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 continuing operating activities. Some of the limitations of Adjusted Fully Distributed Net Income are that it does not reflect income tax expense or income tax payments the Company is required to make. In addition, Adjusted Fully Distributed Net Income is not a measure of profitability under GAAP.

The Company urges investors to review the reconciliation of these non-GAAP measures included in the Appendix to Exhibit 99.1 of this Form 8-K and in the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 (“Form 10-Q”), filed with the United States Securities and Exchange Commission (the “SEC”). To properly and prudently evaluate the Company’s business, investors should review (i) the unaudited consolidated financial statements and related notes included in the Form 10-Q, (ii) the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended June 30, 2014 (“Form 10-K”), filed with the SEC and (iii) the future periodic and current reports the Company files with the SEC, and investors should not rely on any single financial measure to evaluate the Company’s business. In addition, because EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income and Free Cash Flow are susceptible to varying calculations, the EBITDA, Adjusted EBITDA, Segment Adjusted EBITDA, Adjusted Fully Distributed Net Income, and Free Cash Flow measures, as presented in the presentation materials, may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.

The Company also uses a non-GAAP pro forma presentation in Exhibit 99.1 for consolidated operating results prior to October 1, 2013, the effective date of the Company’s Reorganization and initial public offering (“IPO”). The Company believes this presentation is useful because its consolidated operating results prior to the Reorganization and IPO are not indicative of its results for periods after the Reorganization and IPO. This non-GAAP pro forma presentation is for informational purposes only and does not purport to reflect the Company’s historical results of operations or financial position. This non-GAAP pro forma presentation should not be relied upon as being indicative of the Company’s financial condition or results of operations had the Reorganization and IPO occurred on the dates assumed. Further, this presentation does not project the Company’s results of operations or financial position for any future period or date. Investors should carefully review historical actual results.

Forward-Looking Statements

Statements made in the presentation materials attached hereto as Exhibit 99.1 that are not statements of historical or current facts, such as those related to Premier’s financial and business outlook, strategy and growth drivers, member retention and renewal rates and revenue visibility, cross and upsell opportunities, acquisition activities and pipeline, revenue available under contract, and 2015 financial guidance and related assumptions, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on any forward looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to the Company’s beliefs and expectations as to future financial performance, events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside the Company’s control. More information on potential factors that could affect the Company’s financial results is included from time to time in the “Forward Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of the Company’s periodic and current filings with the SEC, including the Form 10-Q and Form 10-K, filed with the SEC and available on the Company’s website at http://investors.premierinc.com. Forward looking statements speak only as of the date they are made. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise that occur after that date.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1 Premier, Inc. Presentation Materials, dated May 13, 2015

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Premier, Inc.
By:	/s/ Susan D. DeVore
	Name:	Susan D. DeVore
	Title:	Chief Executive Officer and President

Date: May 13, 2015

EX-99.1

Bank of America Merrill Lynch

2015 Health Care Conference

May 13, 2015

Transforming Healthcare

from the Inside

Exhibit 99.1

2

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2015 PREMIER, INC.

Forward-looking

statements—Certain

statements

included

in

this

presentation,

including,

but

not

limited

to,

those

related

to

our

financial

and

business

outlook,

strategy

and

growth

drivers,

member

retention rates and revenue visibility, cross and upsell opportunities, acquisition activities and pipeline,

revenue available under contract, and 2015 financial guidance and related assumptions, are “forward-

looking statements”

within the meaning of the federal securities laws. Forward-looking statements may

involve

known

and

unknown

risks,

uncertainties

and

other

factors

that

may

cause

the

actual

results

of

Premier to be materially different from historical results or from any future results or projections

expressed or implied by such forward-looking statements. Accordingly, readers should not place

undue reliance on any forward looking statements. Readers are urged to consider statements in the

conditional

or

future

tenses

or

that

include

terms

such

as

“believes,”

“belief,”

“expects,”

“estimates,”

“intends,”

“anticipates”

or “plans”

to be uncertain and forward-looking.

Forward-looking statements

may include comments as to Premier’s beliefs and expectations as to future events and trends

affecting its business and are necessarily subject to uncertainties, many of which are outside

Premier’s

control.

More

information

on

potential

risks

and

other

factors

that

could

affect

Premier’s

financial results is included, and updated, from time to time, in Premier’s periodic and current filings

with

the

SEC,

including

Premier’s

most

recent

Form

10-K

for

the

year

ended

June

30,

2014.

Forward-

looking statements speak only as of the date they are made. Premier undertakes no obligation to

publicly update or revise any forward-looking statements.

Non-GAAP

financial

measures—This

presentation

includes

certain

“non-GAAP

financial

measures”

as

defined in Regulation G under the Securities Exchange Act of 1934. Schedules are attached that

reconcile the non-GAAP financial measures included in this presentation to the most directly

comparable financial measures calculated and presented in accordance with Generally Accepted

Accounting Principles in the United States. Our Form 10-Q for the quarter ended March 31, 2015, filed 

on or about May 12, 2015, provides further explanation and disclosure regarding our use of non-GAAP

financial measures and should be read in conjunction with this presentation.

Forward-looking statements and Non-GAAP financial

measures

3

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2015 PREMIER, INC.

Our business at a glance

Alliance of approximately 3,400

hospitals –

68% of U.S. community

hospitals –

and 110,000 alternate

sites of care

Approximately

74%

owned

by

health systems ¹

~$41

billion

in

group

purchasing

volume

Insights

into

~1

out

of

every

3

U.S.

health system discharges

Integrated clinical, financial and

operational data

Over 500 sales/field and advisory

services

employees

that

work

with

and inside our member hospitals

Data as of September 30, 2014.

(1)

As

of

April

30,

2015.

Premier’s unique customer alignment and data-driven intelligence

platform allow us to help our health systems manage current

challenges and build for the future…

all at the same time

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2015 PREMIER, INC.

Partnership model drives innovation and growth

SCALE

»

Represent ~68% of U.S. community hospitals

»

Clinical, financial, operational data integrated on

PremierConnect

®

platform

»

Insights into ~1 out of every 3 U.S. health system

discharges

»

Approximately $41 billion in supply chain spend

»

Manage ~1,900 contracts from ~1,100 suppliers

ALIGNMENT

»

Members own ~74% of equity

(1)

»

10 health system board members

»

Premier field force embedded in member hospitals

COMMITMENT

»

Member owner average tenure ~15 years (76% at 10+ years)

»

Members view Premier as strategic partner or organizational

extension

CO-INNOVATION

»

Co-develop solutions with members

»

Committees composed of ~165 member hospitals

»

~1,100 hospitals in performance improvement

collaboratives

»

Data Alliance Collaborative

Note: Data as of September 30, 2014. 

(1)

As of April 30, 2015.

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2015 PREMIER, INC.

Unique business model generates multiple revenue drivers 

Performance Services    

27% of FY’14 consolidated revenue

INTEGRATED SALES/FIELD FORCE &                         

Become the data analytics “backbone”

with wrap-around services for cost and

quality improvement over the short term

and population health management

solutions over the long term

Change the game in supply chain,

uncover unmatched savings and value,

and lead the disruption of the industry

Note: Consolidated revenue is presented on a non-GAAP pro forma basis for Supply Chain Services. See reconciliation pages in the appendix. 

Supply Chain Services

»

Group purchasing

»

Direct sourcing

»

Specialty pharmacy

»

Capital planning

73% of FY’14 consolidated revenue

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2015 PREMIER, INC.

5

»

SaaS-based informatics products

»

PremierConnect

®

Enterprise

»

Advisory services

»

Performance improvement

collaboratives

6

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2015 PREMIER, INC.

A platform for continuous performance improvement

Manage

Populations

Improve

Quality and Safety

Reduce

Costs

PREMIERCONNECT

SUPPLY CHAIN

BILLING

PURCHASING

CLAIMS

CLINICAL

FINANCIAL

Combines People, Process, and Technology

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2015 PREMIER, INC.

the

Third-quarter

consolidated

and

segment

highlights

1

Consolidated

Net revenue (millions)

Supply Chain Services

Net revenue (millions)

Performance Services

Net revenue (millions)

Adjusted EBITDA

(millions)

Adjusted EBITDA (millions)

Adjusted EBITDA (millions)

(1) See

non-GAAP

Adjusted

EBITDA

and

non-GAAP

Segment

Adjusted

EBITDA

reconciliations

to

GAAP

equivalents

in

Appendix.

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2015 PREMIER, INC.

Third-quarter

non-GAAP

adjusted

fully

distributed

net

income

1

$0.34

$0.38

Non-GAAP earnings per share on adjusted fully

distributed net income –

diluted

(1) See non-GAAP adjusted fully distributed net income and non-GAAP earnings per share on

fully

distributed

net

income

reconciliations

to

GAAP

equivalents

in

Appendix

»

Calculates income taxes at

40% on pre-tax income,

assuming taxable C corporate

structure

»

Calculates adjusted fully

distributed earnings per

share, assuming total Class A

and B common shares held

by public

(in millions, except per share data)

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2015 PREMIER, INC.

Fiscal 2015 annual guidance

1

1

Guidance is based on comparisons with prior-year non-GAAP pro forma results, which have been adjusted to reflect the impact of the company’s reorganization and IPO. The

Company does not reconcile guidance for adjusted EBITDA and non-GAAP adjusted fully distributed net income per-share to net income (loss) or GAAP earnings per share

because the Company does not provide guidance for reconciling items between net income (loss) and adjusted EBITDA and non-GAAP adjusted fully distributed earnings per

share. The Company is unable to provide guidance for these reconciling items since certain items that impact net income (loss) are outside of the Company’s control and cannot be

reasonably predicted. Accordingly, a reconciliation to net income (loss) or GAAP earnings per share is not available without unreasonable effort.

Financial guidance for year ending June 30, 2015 (updated May 11, 2015):

Supply Chain Services growth driven by:

»

6%-7% net administrative fee revenue growth

»

27%-32% product revenue growth

»

Continued high GPO retention rates

Guidance Assumptions:

Performance Services growth driven by:

»

Continued demand for integrated offerings of SaaS-based

subscription and licensed products, advisory services and

collaboratives

»

Continuation of high SaaS institutional renewal rates

Updated

Pro Forma

Previous

(in millions, except per share data)

FY 2015

% YoY Change

FY 2015

Net Revenue:

Supply Chain Services segment

$720.0 -

$733.0

13% -

15%

$706.0 -

$725.0

Performance Services segment

$268.0 -

$275.0

15% -

18%

$268.0 -

$275.0

Total Net Revenue

$988.0 -

$1008.0

14% -

16%

$974.0 -

$1000.0

Non-GAAP adjusted EBITDA

$384.0 -

$392.0

9% -

12%

$382.0 -

$390.0

Non-GAAP adjusted fully distributed EPS

$1.40 -

$1.44

8% -

11%

$1.40 -

$1.44

Premier, Inc. updates full-year fiscal 2015 financial guidance, as follows:

Fiscal 2015 Financial Guidance

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2015 PREMIER, INC.

Cash flow and capital flexibility at March 31, 2015

»

Year-to-date cash flow from operations of

$255.6 million

»

Third-quarter

free

cash

flow

of

$59.5

million

1

»

Cash, cash equivalents and marketable

securities of $503.3 million

»

No outstanding borrowings on $750 million

five-year unsecured revolving credit facility

CONSIDERABLE CASH AND

DEBT CAPACITY 

AVAILABLE

AMPLE CAPITAL

FLEXIBILITY FOR FUTURE

ACQUISITIONS AND

BUSINESS GROWTH

(1)

Three

months

ended

March

31,

2015.

Company

defines

free

cash

flow

as

cash

provided

by

operating

activities

less

distributions

to

limited

partners

and

purchases

of

property

and

equipment.

See

non-GAAP

free

cash

flow

reconciliation

to

GAAP

equivalent

in

Appendix.

11

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2015 PREMIER, INC.

Strategic acquisitions address member needs 

(Closed July 2013)

(Closed October 2013)

(Closed April 2014)

(Closed August 2014)

(Closed September 2014)

Company

Clinical & physician

preference cost reduction

Data acquisition from

multiple technologies

Health system capital

expenditure cost reduction

Supply chain technology

enablement

Quality & safety

improvement

Strategic Need

Direct sourcing

(Closed

February

2015

1

)

(1) Purchased initial 60% ownership in 2011.  Remaining 40% minority interest purchased on February 2, 2015. 

12

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2015 PREMIER, INC.

Attractive opportunities for further capital deployment

Supply Chain Services

Performance Services

Diverse and growing end markets to drive Premier’s growth

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Key investment differentiators

Unique

customer

alignment

Data-driven,

technology

enabled

Diversified

growth

engine

Compelling

financial

profile

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2015 PREMIER, INC.

13

Thank you

For more information contact:

Jim Storey

Vice President, Investor Relations

Premier, Inc.

704-816-5958

jim_storey@premierinc.com

15

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2015 PREMIER, INC.

Appendix

“Data, data, everywhere...

…

and

not

a

drop

to

drink!”

Premier is a uniquely-aligned healthcare performance

improvement company that provides integrated data-analytics

and business intelligence to comprehensively reduce costs,

improve quality, and drive better patient outcomes.

16

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2015 PREMIER, INC.

Our leadership team

Susan DeVore, President and CEO

11 years Premier; 26 years healthcare

Cap Gemini Ernst & Young

Mike Alkire, COO

10 years Premier; 11 years healthcare

Cap Gemini Ernst & Young

Craig McKasson, CFO

17 years Premier; 21 years healthcare

Ernst & Young

Jeff Lemkin, General Counsel

4 years Premier; 41 years healthcare

McDermott Will & Emery

Terry Linn, SVP, Strategy

4 years Premier; 31 years healthcare

Ernst & Young, American Medical International,              

Charter Medical

Kelli Price, SVP, People

14 years Premier; 16 years healthcare

Malcolm Baldrige National Quality Award expert

Blair Childs, SVP, Public Affairs

7 years Premier; 26 years healthcare

AdvaMed

Durral Gilbert, President, Supply Chain Services

8 years Premier; 8 years healthcare

BDS Management, Wachovia Securities

Wes Champion, SVP, Performance Partners

7 years Premier; 23 years healthcare

Cap Gemini Ernst & Young, Accenture

Gary Long, SVP, Chief Sales Officer

2 years Premier; 21 years healthcare

McKesson

Andy Brailo, SVP, Member Field Services

13 years Premier; 21 years healthcare

Medibuy, Bard

Keith Figlioli, SVP, Informatics

5 years Premier; 11 years HIT

Eclipsys (acquired by Allscripts)

Jeff Petry, SVP, Marketing

17 years Premier; 23 years healthcare

Mezzia, The Advisory Board Company

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2015 PREMIER, INC.

Our multiple business and growth drivers

1

GPO

Specialty

pharmacy

Direct

sourcing

SaaS-based

informatics

products

Performance

improvement

collaboratives

Advisory

services

Data

management/

warehousing

Business

Revenue Drivers

FY’14 Results

1

Net Revenue

14%

Segment Adjusted

EBITDA

9%

Net Revenue

13%

Segment Adjusted

EBITDA

31%

Net Revenue

14%

Adjusted EBITDA

12%

Adjusted fully

distributed EPS

9% 

Consolidated

•

Administrative fees paid

by suppliers

•

Drug reimbursement

•

Fee for service

•

Product sales of contract

manufactured items

•

SaaS-based subscriptions

•

Fee-for-service

•

Fee-for-service

•

SaaS-based subscriptions

•

SaaS-based subscriptions

•

Significant stickiness

•

Strong visibility across

diverse revenue streams

(1)

Results are presented on a non-GAAP pro forma basis. See Adjusted EBITDA, Segment Adjusted EBITDA and fully distributed net income  reconciliation to

GAAP equivalent in the Appendix.

Net Revenue

11% -

14%

Adjusted EBITDA

8% -

11%

Adjusted fully

distributed EPS

7% -

11%

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2015 PREMIER, INC.

MULTIPLE GROWTH

DRIVERS

•

Consolidated double-digit net revenue and adjusted

EBITDA

(1)

growth

•

Diversified revenue opportunities in Supply Chain Services

and Performance Services

•

Multiple emerging growth drivers

HIGH VISIBILITY

•

High retention rates in both business segments

•

5-7 year contracts in Supply Chain Services and 3-5 year

SaaS-based subscription contracts in Performance Services

•

Fiscal 2015 revenue visibility over 90%

ATTRACTIVE

ECONOMIC MODEL

•

Significant cross and upsell opportunities in existing

member base

•

High margins and low marginal cost to support new GPO

members and further penetration of existing GPO members

•

SaaS-based products generate high returns on new wins

EVOLVING

BUSINESS MIX

•

Investments in emerging growth initiatives will impact

adjusted EBITDA

(1)

margins, but enhance adjusted

EBITDA

(1)

growth

•

Capital investments increase D&A, impacting near-term net

income margins

DISCIPLINED CAPITAL

DEPLOYMENT TRACK

RECORD

•

Strong returns on acquired assets

•

Strategic, financial and execution framework in place for

capital deployment

Demonstrated financial model and performance

(1) See Adjusted EBITDA reconciliation to GAAP equivalent in Appendix.

19

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2015 PREMIER, INC.

the

Fiscal

year-to-date

nine-month

financial

highlights

1

Consolidated

Net revenue (millions)

Supply Chain Services

Net revenue (millions)

Performance Services

Net revenue (millions)

Adjusted EBITDA

(millions)

Adjusted EBITDA (millions)

Adjusted EBITDA (millions)

(1) Comparisons are with year-ago non-GAAP pro forma information that reflects the impact of the company’s reorganization and initial public offering. 

See Adjusted EBITDA, Segment Adjusted EBITDA and Adjusted Fully Distributed Net Income reconciliations to GAAP equivalents in Appendix.

20

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2015 PREMIER, INC.

Significant Fiscal 2015 revenue visibility: 90+% 

PERFORMANCE METRICS

1

FY 2015

FY 2014

3 Year

Average

Revenue available under contract

$898M

---

---

GPO

retention

rate

2

---

99%

97%

SaaS

institutional

renewal

rate

3

---

94%

94%

(1)

As of fiscal year-end June 30, 2014

(2)

The retention rate is calculated based upon the aggregate purchasing volume among all members participating in our GPO for such fiscal year less the annualized GPO purchasing

volume

for

departed

members

for

such

fiscal

year,

divided

by

the

aggregate

purchasing

volume

among

all

members

participating

in

our

GPO

for

such

fiscal

year.

(3)

The renewal rate is calculated based upon the total number of members that have SaaS revenue in a given period that also have revenue in the corresponding prior year period

divided

by

the

total

number

of

members

that

have

SaaS

revenue

in

the

same

period

of

the

prior

year.

OVER 90%

FY 2015 REVENUE

GUIDANCE RANGE

ALREADY AVAILABLE

UNDER CONTRACT

HIGH GPO

RETENTION

AND SAAS

INSTITUTIONAL

RENEWAL RATES

21

©

2015 PREMIER, INC.

Expanding

supply chain

solutions

Steady acute

GPO growth

“Other”

Upside

Performance Services

Supply Chain Services

Non-acute and 

complementary

services

expansion

Top Priority Strategic Initiatives

Expanded cost reduction

Non acute and pharmacy growth

Supply chain technology

Member

penetration

performance

services

New product

development

M&A and

growth

opportunities

Attributes

Strong

distribution

channel

Desired

expertise/

capabilities

Top Priority Strategic Initiatives

Clinical integration/ shared

services

Ambulatory data expansion

Population health capabilities

Multiple opportunities to drive long-term sustainable growth

22

©

2015 PREMIER, INC.

Structural implications of Premier, Inc.

Structure

Structured as “Up-C”

with Premier, Inc. (parent C-Corp above operating partnership and

subsidiaries)

Premier, Inc. formed with two classes of stock 

•

Class A shares held by public investors

•

Class B shares allocated to member owners

22% of Limited Partner interests sold to public, 78% retained by

member owners as

Class B units

Class B units eligible to exchange 1/7th per year, over seven-year period

Exchange of Class B units for A-shares (on a 1-for-1 basis) as B-units become eligible

for exchange subject to ROFR by members owners and Premier, Inc.

First exchange on October 31, 2014, and subsequent company directed offering injected

3.9 million shares of liquidity into the public market, resulting in public ownership of 26%

and member owner interest of 74%

Given Up-C structure and differences between taxes paid by our Class A unit holder

(Premier GP) vs. distributions to our Class B unit holders (members owners), we

calculate Adjusted Fully Distributed Net Income¹

for comparability purposes

Reflects taxes and net income as if the Company was a C-Corp for all periods

presented

Class A and Class B shares will be used to calculate fully diluted EPS to eliminate

variability due to member exchanges over time

Impact of IPO and

Exchange Process

Adjusted fully

distributed net

income

Share count

(1)

See Adjusted EBITDA and Adjusted Fully Distributed Net Income reconciliations to GAAP equivalents in Appendix

23

©

2015 PREMIER, INC.

Member owners allocated

income in operating

partnership based on

percentage ownership

Income tax expense equals

40% of income attributable

to Premier, Inc.

Member owners receive tax

distribution to cover any tax

liability on allocated income

Amount of retained

profitability in business

equal regardless of

ownership structure

Reflects 41% tax rate on

100% of pretax income

(assumes full C-Corp tax

treatment)

Amount paid for taxes equal

regardless of ownership

structure

Illustrative impact of ownership structure

Ownership

(1)

22% Class A /

78% Class B

Ownership

100% Class A

1

For illustrative purposes only. Ownership percentage is based on

structure at the time of the October 2013

initial public offering and will change over time.

Income Statement

Net Revenue

500,000

500,000

Cost of Revenue

200,000

200,000

Gross Profit

300,000

300,000

Operating Expenses

140,000

140,000

Operating Income

160,000

160,000

Net Income Attributable to NCI in Premier LP

(124,800)

-

Pre-Tax Income Attributable to Premier Inc.

35,200

160,000

Income Tax Expense

14,080

64,000

Net Income Attributable to Premier, Inc.

21,120

96,000

Income Retained in Business

Net Income Attributable to Premier, Inc.

21,120

96,000

Net Income Attributable to NCI in Premier LP

124,800

-

Tax Distribution to Premier LP Limited Partners

(49,920)

-

Net Income Retained in Business

96,000

96,000

Adjusted Fully Distributed Net Income

Net Income Attributable to Premier, Inc.

21,120

96,000

Add:  Income Tax Expense

14,080

64,000

Add:  Net Income Attributable to NCI in Premier

124,800

-

Fully Distributed Income Before Income Taxes

160,000

160,000

Adjusted for income tax expense on fully

distributed net income before income taxes

64,000

64,000

Adjusted Fully Distributed Net Income

96,000

96,000

Income Taxes/Tax Distributions

Income Tax Expense

14,080

64,000

Tax Distribution to Class B Limited Partners

49,920

-

Total Tax, including tax distribution to limited

partners

64,000

64,000

24

©

2015 PREMIER, INC.

Fiscal 2014 and fiscal 2013 non-GAAP reconciliations

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

(Unaudited, in thousands)

Adjustments

Adjustments

Amount

% of Net

Revenue

Amount

Amount

% of Net

Revenue

Amount

% of Net

Revenue

Amount

Amount

% of Net

Revenue

Net revenue:

Net administrative fees

464,837

$       

51%

(41,263)

$      

423,574

$      

49%

519,219

$

60%

(105,012)

$    

414,207

$  

54%

Other services and support

233,186

26%

-

233,186

27%

205,685

24%

-

205,685

27%

Services

698,023

77%

(41,263)

656,760

76%

724,904

84%

(105,012)

619,892

81%

Products

212,526

23%

-

212,526

24%

144,386

16%

-

144,386

19%

Net revenue

910,549

100%

(41,263)

869,286

100%

869,290

100%

(105,012)

764,278

100%

Cost of revenue:

Services

115,740

13%

-

115,740

13%

103,795

12%

-

103,795

14%

Products

191,885

21%

-

191,885

22%

133,618

15%

-

133,618

17%

Cost of revenue

307,625

34%

-

307,625

35%

237,413

27%

-

237,413

31%

Gross profit

602,924

66%

(41,263)

561,661

65%

631,877

73%

(105,012)

526,865

69%

Operating expenses:

Selling, general and administrative

294,421

33%

-

294,421

35%

248,301

29%

-

248,301

33%

Research and development

3,389

— %

-

3,389

— %

9,370

1%

-

9,370

1%

Amortization of purchased intangible assets

3,062

— %

-

3,062

— %

1,539

— %

-

1,539

— %

Total operating expenses

300,872

33%

-

300,872

35%

259,210

30%

-

259,210

34%

Operating income

302,052

33%

(41,263)

260,789

30%

372,667

43%

(105,012)

267,655

35%

Other income, net

58,274

6%

-

58,274

7%

12,145

1%

-

12,145

2%

Income before income taxes

360,326

40%

(41,263)

319,063

37%

384,812

44%

(105,012)

279,800

37%

Income tax expense

27,709

3%

(3,239)

24,470

3%

9,726

1%

22,813

32,539

4%

Net income

332,617

37%

(38,024)

294,593

34%

375,086

43%

(127,825)

247,261

33%

Net (income) loss attributable to noncontrolling interest

in S2S Global

(949)

— %

-

(949)

— %

1,479

— %

-

1,479

— %

Net income attributable to noncontrolling interest in

Premier LP

(303,336)

(33)%

57,690

(245,646)

(28)%

(369,189)

(42)%

150,726

(218,463)

(29)%

Net income attributable to noncontrolling interest

(304,285)

(33)%

57,690

(246,595)

(28)%

(367,710)

(42)%

150,726

(216,984)

(29)%

Net income attributable to shareholders

28,332

$         

4%

19,666

$        

47,998

$         

6%

7,376

$     

1%

22,901

$        

30,277

$     

4%

Adjustment of redeemable limited partners' capital to

redemption amount

(2,741,588)

$  

nm

-

$               

(2,741,588)

$ 

nm

-

$         

nm

-

$               

-

$           

nm

Net income (loss) attributable to shareholders after

adjustment of redeemable partners' capital to

redemption amount

(2,713,256)

$  

nm

19,666

$        

(2,693,590)

$ 

nm

7,376

$     

nm

22,901

$        

30,277

$     

nm

Adjusted EBITDA

392,288

$       

43%

(41,263)

$      

351,025

$      

40%

419,025

$

48%

(105,012)

$    

314,013

$  

41%

Adjusted Fully Distributed Net Income

na

na

na

188,561

$      

22%

na

na

na

172,793

$  

23%

nm - Not meaningful

na - Not applicable

Actual

Actual

Non-GAAP Pro Forma

Year Ended June 30,

2014

2013

Non-GAAP Pro Forma

25

©

2015 PREMIER, INC.

Fiscal 2014 and fiscal 2013 non-GAAP reconciliations

(Unaudited, in thousands)

Actual

Adjustments

Non-GAAP

Pro Forma

Actual

Adjustments

Non-GAAP

Pro Forma

Reconciliation of Non-GAAP Pro Forma Net Revenue to Net Revenue:

Supply Chain Services

678,141

$     

(41,263)

$      

636,878

$     

664,076

$     

(105,012)

$    

559,064

$     

Performance Services

232,408

-

232,408

205,214

-

205,214

Net Revenue

910,549

(41,263)

869,286

869,290

(105,012)

764,278

Reconciliation of Net Income to Adjusted EBITDA and Reconciliation of

Segment Adjusted EBITDA to Income Before Income Taxes:

Net income

332,617

$     

(38,024)

$      

294,593

$     

375,086

$     

(127,825)

$    

247,261

$     

Interest and investment income, net

(1,019)

-

(1,019)

(965)

-

(965)

Income tax expense

27,709

(3,239)

24,470

9,726

22,813

32,539

Depreciation and amortization

36,761

-

36,761

27,681

-

27,681

Amortization of purchased intangible assets

3,062

-

3,062

1,539

-

1,539

EBITDA

399,130

(41,263)

357,867

413,067

(105,012)

308,055

Stock-based compensation expense

19,476

-

19,476

-

-

-

Acquisition related expenses

2,014

-

2,014

-

-

-

Strategic and financial restructuring expenses

3,760

-

3,760

5,170

-

5,170

Gain on sale of investment

(38,372)

-

(38,372)

-

-

-

Adjustment to tax receivable agreement liability

6,215

-

6,215

-

-

-

Other (income) expense, net

65

-

65

788

-

788

Adjusted EBITDA

392,288

$     

(41,263)

$      

351,025

$     

419,025

$     

(105,012)

$    

314,013

$     

Segment Adjusted EBITDA:

Supply Chain Services

396,470

$     

(41,263)

$      

355,207

$     

431,628

$     

(105,012)

$    

326,616

$     

Performance Services

73,898

-

73,898

56,456

-

56,456

Corporate

(78,080)

-

(78,080)

(69,059)

-

(69,059)

Adjusted EBITDA

392,288

(41,263)

351,025

419,025

(105,012)

314,013

Depreciation and amortization

(36,761)

-

(36,761)

(27,681)

-

(27,681)

Amortization of purchased intangible assets

(3,062)

-

(3,062)

(1,539)

-

(1,539)

Stock-based compensation expense

(19,476)

-

(19,476)

-

-

-

Acquisition related expenses

(2,014)

-

(2,014)

-

-

-

Strategic and financial restructuring expenses

(3,760)

-

(3,760)

(5,170)

-

(5,170)

Adjustment to tax receivable agreement liability

(6,215)

-

(6,215)

-

-

-

Equity in net income of unconsolidated affiliates

(16,976)

-

(16,976)

(11,968)

-

(11,968)

Deferred compensation plan expense

(1,972)

-

(1,972)

-

-

-

Operating income

302,052

(41,263)

260,789

372,667

(105,012)

267,655

Equity in net income of unconsolidated affiliates

16,976

-

16,976

11,968

-

11,968

Interest and investment income, net

1,019

-

1,019

965

-

965

Gain on sale of investment

38,372

-

38,372

-

-

-

Other income (expense), net

1,907

-

1,907

(788)

-

(788)

Income before income taxes

360,326

$     

(41,263)

$      

319,063

$     

384,812

$     

(105,012)

$    

279,800

$     

Year Ended June 30,

2014

2013

26

©

2015 PREMIER, INC.

Fiscal 2014 and fiscal 2013 non-GAAP reconciliations

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

(Unaudited, in thousands)

2014

2013

28,332

$          

7,376

$                       

(41,263)

(105,012)

27,709

9,726

19,476

—

2,014

—

3,760

5,170

(38,372)

—

6,215

—

3,062

1,539

303,336

369,189

314,269

287,988

125,708

115,195

188,561

$        

172,793

$                  

Non-GAAP Pro forma fully distributed income before income taxes

Income tax expense on fully distributed income before income taxes

Non-GAAP Pro Forma Adjusted Fully Distributed Net Income

Acquisition related expenses

Strategic and financial restructuring expenses

Gain on sale of investment

Adjustment to tax receivable agreement liability

Amortization of purchased intangible assets

Net income attributable to noncontrolling interest in Premier LP

Stock-based compensation expense

Year Ended June 30,

Net income attributable to shareholders

Pro forma adjustment for revenue share post-IPO

Income tax expense

27

©

2015 PREMIER, INC.

Fiscal 2014 and fiscal 2013 non-GAAP reconciliations

2014

2013

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

Net income (loss) attributable to shareholders after  adjustment

of redeemable limited partners' capital to

redemption amount

(2,713,256)

$ 

7,376

$          

Adjustment of redeemable limited partners' capital to redemption

amount

2,741,588

-

Net income (loss) attributable to shareholders

28,332

7,376

Pro forma adjustment for revenue share post-IPO

(41,263)

(105,012)

Income tax expense

27,709

9,726

Stock-based compensation

19,476

—

Gain on sale of investment

(38,372)

—

Acquisition related expenses

2,014

—

Strategic and financial restructuring expenses

3,760

5,170

Adjustment to tax receivable agreement liability

6,215

—

Amortization of purchased intangible assets

3,062

1,539

Net income attributable to noncontrolling interest in Premier LP

303,336

369,189

Non-GAAP pro forma adjusted fully distributed income before income taxes

314,269

287,988

Income tax expense on fully distributed income before income taxes

125,708

115,195

Non-GAAP pro forma adjusted fully distributed net income

188,561

$   

172,793

$   

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

Weighted Average:

Common shares used for basic and diluted earnings per share

25,633

5,858

Potentially dilutive shares

124

-

Class A common shares outstanding

6,742

26,517

Conversion of Class B common units

112,584

112,608

Weighted average fully distributed shares outstanding -

diluted

145,083

144,983

Reconciliation of GAAP EPS to Adjusted Fully Distributed EPS

GAAP income (loss) per share

$        (105.85)

$              1.26

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

$        

106.96

$                  -

Impact of additions:

Pro forma adjustment for revenue share post-IPO

$            (1.61)

$          (17.93)

Income tax expense

$

1.08

$              1.66

Stock-based compensation

$       

0.76

$                  -

Gain on sale of investment

$            (1.50)

$                  -

Acquisition related expenses

$     

0.08

$                  -

Strategic and financial restructuring expenses

$     

0.15

$              0.88

Adjustment to tax receivable agreement liability

$      

0.24

$                  -

Amortization of purchased intangible assets

$        

0.12

$              0.26

Net income attributable to noncontrolling interest in Premier LP

$      

11.83

$           63.02

Impact of corporation taxes

$            (4.90)

$         (19.66)

Impact of increased share count

$            (6.06)

$          (28.31)

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

-

diluted

$      

1.30

$      

1.19

Supplemental Financial Information -

Reporting of Net Income and Earnings Per Share

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

(Unaudited)

(In thousands)

Year Ended

June 30,

28

©

2015 PREMIER, INC.

Fiscal 2015 and fiscal 2014 non-GAAP reconciliations

2015*

2014*

2015*

2014

Reconciliation of Pro Forma Net Revenue to Net Revenue:

Pro Forma Net Revenue

261,723

$        

225,598

$       

740,476

$      

633,820

$     

Pro forma adjustment for revenue share post-IPO

—

—

—

41,263

Net Revenue

261,723

$        

225,598

$       

740,476

$      

675,083

$     

Net income

72,029

$          

101,980

$       

202,724

$      

265,985

$     

Pro forma adjustment for revenue share post-IPO

—

—

—

(41,263)

Interest and investment income, net

(204)

(400)

(517)

(641)

Income tax expense

2,026

9,413

12,107

24,461

Depreciation and amortization

11,538

9,396

33,107

26,952

Amortization of purchased intangible assets

2,554

802

6,598

2,158

EBITDA

87,943

121,191

254,019

277,652

Stock-based compensation

7,285

6,299

21,129

13,118

Acquisition related expenses

2,863

984

6,408

1,303

Strategic and financial restructuring expenses

2

733

1,281

3,614

Loss (gain) on investment

1,000

(37,850)

1,000

(37,850)

Adjustment to tax receivable agreement liability

1,073

—

—

—

Acquisition related adjustment -

deferred revenue

3,563

—

9,224

—

Other expense (income), net

16

(52)

10

(56)

Adjusted EBITDA

103,745

$        

91,305

$         

293,071

$      

257,781

$     

Segment Adjusted EBITDA:

Supply Chain Services

101,600

$        

91,477

$         

290,210

$      

302,076

$     

Pro forma adjustment for revenue share post-IPO

—

—

—

(41,263)

Supply Chain Services

(including pro forma adjustment)

101,600

$        

91,477

$         

290,210

$      

260,813

$     

Performance Services

26,166

20,307

67,717

54,367

Corporate

(24,021)

(20,479)

(64,856)

(57,399)

Adjusted EBITDA

103,745

$        

91,305

$         

293,071

$      

257,781

$     

Depreciation and amortization

(11,538)

(9,396)

(33,107)

(26,952)

Amortization of purchased intangible assets

(2,554)

(802)

(6,598)

(2,158)

Stock-based compensation

(7,285)

(6,299)

(21,129)

(13,118)

Acquisition related expenses

(2,863)

(984)

(6,408)

(1,303)

Strategic and financial restructuring expenses

(2)

(733)

(1,281)

(3,614)

Adjustment to tax receivable agreement liability

(1,073)

—

—

—

Acquisition related adjustment -

deferred revenue

(3,563)

—

(9,224)

—

Equity in net income of unconsolidated affiliates

(5,197)

(3,566)

(14,812)

(12,171)

Deferred compensation plan (income) expense

(759)

—

209

—

68,911

69,525

200,721

198,465

Pro forma adjustment for revenue share post-IPO

—

—

—

41,263

Operating income

68,911

$        

69,525

$       

200,721

$    

239,728

$   

Equity in net income of unconsolidated affiliates

5,197

3,566

14,812

12,171

Interest and investment income, net

204

400

517

641

(Loss) gain on investment

(1,000)

37,850

(1,000)

37,850

Other income (expense), net

743

52

(219)

56

Income before income taxes

74,055

$        

111,393

$     

214,831

$    

290,446

$   

* Note that no pro forma adjustments were made for the three and

nine months ended March 31, 2015 and the three months ended March 31,

2014; as such, actual results are presented for each of these periods.

Three Months Ended

March 31,

Nine Months Ended

March 31,

Supplemental Financial Information -

Reporting of Pro Forma Adjusted EBITDA

(Unaudited)

(In thousands)

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

and Non-GAAP Adjusted Fully Distributed Net Income

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

29

©

2015 PREMIER, INC.

Fiscal 2015 and fiscal 2014 non-GAAP reconciliations

2015*

2014*

2015*

2014

Reconciliation of Non-GAAP Pro Forma Adjusted Fully Distributed Net Income:

Net income attributable to shareholders

12,209

$          

13,525

$         

30,753

$        

19,453

$       

Pro forma adjustment for revenue share post-IPO

—

—

—

(41,263)

Income tax expense

2,026

9,413

12,107

24,461

Stock-based compensation

7,285

6,299

21,129

13,118

Acquisition related expenses

2,863

984

6,408

1,303

Strategic and financial restructuring expenses

2

733

1,281

3,614

Loss (gain) on investment

1,000

(37,850)

1,000

(37,850)

Adjustment to tax receivable agreement liability

1,073

—

—

—

Acquisition related adjustment -

deferred revenue

3,563

—

9,224

—

Amortization of purchased intangible assets

2,554

802

6,598

2,158

Net income attributable to noncontrolling interest in Premier LP

59,568

87,925

170,135

246,055

Non-GAAP pro forma adjusted fully distributed income before income taxes

92,143

81,831

258,635

231,049

Income tax expense on fully distributed income before income taxes

36,857

32,732

103,454

92,420

Non-GAAP Pro Forma Adjusted Fully Distributed Net Income

55,286

$        

49,099

$       

155,181

$    

138,629

$   

*

Note

that

no

pro

forma

adjustments

were

made

for

the

three

and

nine

months

ended

March

31,

2015

and

the

three

months

ended

March

31,

2014; as such, actual results are presented for each of these periods.

Three Months Ended

March 31,

Nine Months Ended

March 31,

Supplemental Financial Information -

Reporting of Pro Forma Adjusted EBITDA

(Unaudited)

(In thousands)

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

and Non-GAAP Adjusted Fully Distributed Net Income

30

©

2015 PREMIER, INC.

Fiscal 2015 and fiscal 2014 non-GAAP reconciliations

2015

2014

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

Net cash provided by operating activities

101,860

$      

90,173

$        

Purchases of property and equipment

(18,653)

(13,823)

Distributions to limited partners

(23,701)

(17,419)

Non-GAAP free cash flow

59,506

$        

58,931

$        

Non-GAAP Adjusted EBITDA

103,745

$      

91,305

$        

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

Reconciliation of Selected Non-GAAP Measures to GAAP Measures

(Unaudited)

(In thousands)

Three Months Ended

March 31,

31

©

2015 PREMIER, INC.

Fiscal 2015 and fiscal 2014 non-GAAP reconciliations

2015*

2014*

2015*

2014

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

Net income (loss) attributable to shareholders after adjustment of redeemable

limited partners' capital to redemption amount

(374,853)

$      

509,239

$      

(781,216)

$     

(3,204,645)

$  

Adjustment of redeemable limited partners' capital to redemption amount

387,062

(495,714)

811,969

3,224,098

Net income attributable to shareholders

12,209

           13,525

30,753

            19,453

Pro forma adjustment for revenue share post-IPO

—

—

—

(41,263)

Income tax expense

2,026

9,413

12,107

24,461

Stock-based compensation

7,285

6,299

21,129

13,118

Acquisition related expenses

2,863

984

6,408

1,303

Strategic and financial restructuring expenses

2

733

1,281

3,614

Loss (gain) on investment

1,000

(37,850)

1,000

(37,850)

Adjustment to tax receivable agreement liability

1,073

—

—

—

Acquisition related adjustment - deferred revenue

3,563

—

9,224

—

Amortization of purchased intangible assets

2,554

802

6,598

2,158

Net income attributable to noncontrolling interest in Premier LP

59,568

87,925

170,135

246,055

Non-GAAP pro forma adjusted fully distributed income before income taxes

92,143

81,831

258,635

231,049

Income tax expense on fully distributed income before income taxes

36,857

32,732

103,454

92,420

Non-GAAP pro forma adjusted fully distributed net income

55,286

$        

49,099

$      

155,181

$    

138,629

$    

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

Weighted Average:

Common shares used for basic and diluted earnings per share

             37,316

           32,375

            35,066

            23,394

Potentially dilutive shares

                1,148

                 181

                  845

                  100

Class A common shares outstanding

                      -  

                    -  

                     -  

               8,981

Conversion of Class B common units

           106,706

         112,608

          109,184

          112,608

Weighted average fully distributed shares outstanding - diluted

         145,170

       145,164

        145,095

        145,083

Reconciliation of GAAP EPS to Adjusted Fully Distributed EPS

GAAP earnings (loss) per share

$           (10.05)

$          15.73

$          (22.28)

$        (136.99)

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

$            10.37

$         (15.31)

$           23.16

$         137.82

Impact of additions:

Pro forma adjustment for revenue share post-IPO

$                  -  

$                -  

$                 -  

$            (1.76)

Income tax expense

$              0.05

$            0.29

$             0.35

$             1.05

Stock-based compensation

$              0.20

$            0.19

$             0.60

$             0.56

Acquisition related expenses

$              0.08

$            0.03

$             0.18

$             0.06

Strategic and financial restructuring expenses

$              0.00

$            0.02

$             0.04

$             0.15

Loss (gain) on investment

$              0.03

$           (1.17)

$             0.03

$            (1.62)

Adjustment to tax receivable agreement liability

$              0.03

$                -  

$                 -  

$                 -  

Acquisition related adjustment - deferred revenue

$              0.10

$                -  

$             0.26

$                 -  

Amortization of purchased intangible assets

$              0.07

$            0.02

$             0.19

$             0.09

Net income attributable to noncontrolling interest in Premier LP

$              1.60

$            2.72

$             4.85

$           10.52

Impact of corporation taxes

$             (0.99)

$           (1.01)

$            (2.95)

$            (3.95)

Impact of increased share count

$             (1.11)

$           (1.17)

$            (3.36)

$            (4.97)

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

$             0.38

$           0.34

$            1.07

$            0.96

* Note that no pro forma adjustments were made for the three and nine months ended March 31, 2015 and the three months ended March 31, 2014;

as such, actual results are presented for each of these periods.

Three Months Ended

March 31,

Nine Months Ended

March 31,

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

(Unaudited)

(In thousands, except per share data)

Reconciliation of Selected Non-GAAP Measures to GAAP Measures