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): November 6, 2017

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))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2). Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Item 2.02. Results of Operations and Financial Condition.

On November 6, 2017, Premier, Inc. (the “Company”) issued a press release reporting the financial results of the Company for the three months ended September 30, 2017. A copy of the press release is attached to this report as Exhibit 99.1 and is incorporated herein by this reference.

As discussed in the press release, the Company held a conference call and webcast on November 6, 2017. Supplemental slides referenced during the conference call and webcast were available on the Company’s website for viewing by call participants. A transcript of the call together with supplemental slides referenced during the conference call are attached as Exhibit 99.2 and Exhibit 99.3, respectively, to this Current Report on Form 8-K.

Item 7.01. Regulation FD Disclosure.

As noted above, the Company held a conference call and webcast on November 6, 2017, to discuss the Company’s operating results for the three months ended September 30, 2017. A copy of the press release, which contains additional information regarding how to access the conference call and webcast and how to listen to a recorded playback of the call, is attached as Exhibit 99.1 to this Current Report on From 8-K. A transcript of the call together with supplemental slides referenced during the conference call are attached as Exhibit 99.2 and Exhibit 99.3, respectively, to this Current Report on Form 8-K and are incorporated herein by reference.

* * * *

The information discussed under Item 2.02 and Item 7.01 above, including Exhibit 99.1, Exhibit 99.2 and Exhibit 99.3, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing by the Company under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1	Press release of Premier, Inc., dated November 6, 2017.
99.2	Transcript of conference call of Premier, Inc., dated November 6, 2017.
99.3	Supplemental slides referenced during the first quarter 2018 earnings call of Premier, Inc.

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:	President and Chief Executive Officer

Date: November 9, 2017

EX-99.1

Exhibit 99.1

Premier Inc. Reports Fiscal 2018 First-Quarter Results

CHARLOTTE, NC, Nov. 6, 2017 – Premier Inc. (NASDAQ: PINC) today reported financial results for the fiscal 2018 first quarter ended Sept. 30, 2017.

First-Quarter Highlights:

• Net revenue increased 25% to $390.6 million from the same period last year; Supply Chain Services segment revenue rose 31% and Performance Services segment revenue increased 7%.

• Net income rose 4% to $60.6 million from the same period a year ago. Diluted earnings per share totaled $0.36, compared with $0.26 in the prior year.

• Non-GAAP adjusted EBITDA* of $119.2 million increased 8% from the same period last year.

• Non-GAAP adjusted fully distributed net income* increased to $61.7 million, representing $0.44 per diluted share, an increase of 7% over $0.41 per diluted share from a year ago.

• Full-year fiscal 2018 financial guidance ranges remain unchanged.

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

“Premier delivered continued growth across our businesses in the fiscal first quarter, reflecting the vital role we play in helping healthcare providers navigate through this increasingly challenging healthcare environment,” said Susan DeVore, president and chief executive officer, Premier. “Consolidated revenue exceeded our expectations, delivering growth in non-GAAP adjusted EBITDA of 8%. Operationally, our overall sales performance was strong, we continued to successfully recruit academic health systems to our alliance, and we successfully renewed our five-year, group-purchasing agreements with member owners. As we announced in early October, approximately 93% of the company’s fiscal 2017 net administrative fees revenue associated with existing members is covered by group purchasing agreements that have been renewed, extended or initially had terms longer than five years. We expect the vast majority of our member owners to have renewed or extended their group purchasing agreements at the same or similar economics prior to the Oct. 1, 2018 renewal date.

“Amid these ongoing successes, first-quarter revenue growth in our group purchasing business was slower than expected, which pressured our profitability growth,” DeVore said. “Our group purchasing business was negatively impacted by slower hospital patient volumes, which we believe are transitory and tied to regulatory uncertainty, as well as the seasonal timing effect of consumer decision making around elective procedures. Timing of cash receipts and some slower growth in certain service lines also impacted net administrative fees revenue growth.

Premier, Inc. FY’18 Q1 Results

Page 2 of 13

“While we continue to monitor these trends, we are maintaining our full-year fiscal 2018 guidance range, which accounts for the potential impact of a softer patient utilization environment,” DeVore said. “Our other businesses are performing within management expectations and we will appropriately manage costs in this environment, while also leveraging the multiple drivers of our business model to generate long-term growth.

“Looking forward, we believe Premier remains uniquely well-positioned with a comprehensive total-value proposition that delivers data-driven actionable insights required by healthcare providers to succeed over the long term,” DeVore continued. “Our strong balance sheet and cash flow enable us to continue to focus on our long-term growth strategies while also returning value to our stockholders, as evidenced by our expected $200 million Class A common stock repurchase plan that we recently announced.”

Results of Operations for the First Quarter of Fiscal 2018

Consolidated First-Quarter Financial Highlights

	Three Months Ended September 30,
(in thousands, except per share data)	2017			2016			% Change
Net Revenue (a):
Supply Chain Services:
Net administrative fees	$	150,991		$	125,976			20	%
Other services and support		2,149			1,645			31	%
Services		153,140			127,621			20	%
Products		152,662			106,129			44	%
Total Supply Chain Services (a)		305,802			233,750			31	%
Performance Services (a)		84,762			79,522			7	%
Total (a)	$	390,564		$	313,272			25	%
Net income	$	60,616		$	58,095			4	%
Net income attributable to stockholders	$	336,430		$	70,302			379	%
Adjusted net income (b)	$	50,065		$	37,144			35	%
Weighted average shares outstanding:
Basic		52,909			47,214			12	%
Diluted		140,046			142,962			(2	)%
Earnings per share attributable to stockholders:
Basic	$	6.36		$	1.49			327	%
Diluted (b)	$	0.36		$	0.26			38	%
NON-GAAP FINANCIAL MEASURES:
Adjusted EBITDA (a) (c):
Supply Chain Services	$	125,620		$	117,304			7	%
Performance Services		21,221			22,311			(5	)%
Total segment adjusted EBITDA		146,841			139,615			5	%
Corporate		(27,670	)		(28,842	)		4	%
Total (a)	$	119,171		$	110,773			8	%
Adjusted fully distributed net income (c)	$	61,713		$	58,928			5	%
Earnings per share on adjusted fully distributed net income - diluted (a) (c)	$	0.44		$	0.41			7	%

(a) Bolded measures correspond to company guidance.

(b) Earnings per share attributable to stockholders excludes the adjustment of redeemable limited partners’ capital to redemption amount and the net income attributable to non-controlling interest in Premier LP if Class B common stock is determined to be dilutive. Likewise, earnings per share attributable to stockholders includes the adjustment of redeemable limited partners’ capital to redemption amount and the net income attributable to non-controlling interest in Premier LP if Class B common stock is determined to be antidilutive.

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

Premier, Inc. FY’18 Q1 Results

Page 3 of 13

For the fiscal first quarter ended Sept. 30, 2017, Premier generated net revenue of $390.6 million, an increase of 25%, from net revenue of $313.3 million for the same period a year ago.

Net income for the fiscal first quarter was $60.6 million, compared with $58.1 million for the same period a year ago. In accordance with GAAP, fiscal 2018 and 2017 first-quarter net income attributable to stockholders included non-cash adjustments of $320.4 million and $61.8 million, respectively, to reflect the change in the redemption value of limited partners’ Class B common unit ownership at the end of each period. These non-cash adjustments result primarily from changes in the number of Class B common shares outstanding and the company’s stock price between periods and do not reflect results of the company’s business operations. After these non-cash adjustments, the company reported net income attributable to stockholders of $336.4 million, compared with $70.3 million for the same period a year ago. First-quarter diluted earnings per share, which is based on net income adjusted for the tax expense related to Premier Inc. retaining the portion of net income attributable to income from non-controlling interest in Premier LP, rose to $0.36 from $0.26 for the same period a year ago. See “Calculation of GAAP Earnings per Share” in the income statement section of this press release.

Fiscal first-quarter non-GAAP adjusted EBITDA of $119.2 million increased 8% from $110.8 million for the same period the prior year.

Non-GAAP adjusted fully distributed net income for the fiscal first quarter increased 5% to $61.7 million from $58.9 million for the same period a year ago. Adjusted fully distributed earnings per share increased to $0.44 from $0.41 for the same period a year ago. Adjusted fully distributed earnings per share is a non-GAAP financial measure that represents net income, adjusted for non-recurring and non-cash items, attributable to all stockholders as if all Class B stockholders exchanged their Class B common units and associated Class B common shares for Class A common shares.

Segment Results

Supply Chain Services

For the fiscal first quarter ended Sept. 30, 2017, the Supply Chain Services segment generated net revenue of $305.8 million, an increase of 31% from $233.8 million a year ago. The increase was driven by growth in the company’s group purchasing organization (GPO) and products businesses. GPO net administrative fees revenue of $151.0 million increased $25.0 million, or 20%, from a year ago primarily driven by contributions of $22.6 million from the Innovatix and Essensa businesses, which were acquired in December 2016. Further contract penetration of existing members also contributed to the increase. Net administrative fee revenue growth in the first quarter was negatively impacted by softer patient utilization trends, timing of cash receipts, and slower growth in certain service lines when compared with the same period a year ago. Product revenues of $152.7 million increased 44% from $106.1 million a year ago, largely attributable to incremental contributions from the Acro Pharmaceuticals business acquired in late August 2016, as well as an increase in sales of certain limited distribution drugs dispensed to treat Idiopathic Pulmonary Fibrosis, Multiple Sclerosis and Oncology, partially offset by a slight decrease in the sales of Hepatitis-C pharmaceuticals. Products revenues also benefited from increased sales of direct sourcing products.

Supply Chain Services segment non-GAAP adjusted EBITDA of $125.6 million for the fiscal 2018 first quarter increased 7% from $117.3 million for the same period a year ago. The increase was largely the result of growth in net administrative fees revenue, primarily from contributions related to the Innovatix and Essensa acquisition along with an increase in product revenues. The contribution

Premier, Inc. FY’18 Q1 Results

Page 4 of 13

from Innovatix and Essensa is net of the reduction in equity in net income of unconsolidated affiliates as a result of the acquisition of the remaining 50% of Innovatix, given the company historically accounted for its 50% interest in Innovatix as income from an unconsolidated affiliate. These increases were partially offset by increased product costs, selling, general and administrative (SG&A) expenses associated with increased staffing as a result of prior-year acquisitions and to support growth.

Performance Services

For the fiscal first quarter ended Sept. 30, 2017, the Performance Services segment generated net revenue of $84.8 million, an increase of 7% from $79.5 million for the same quarter last year. The growth was primarily driven by cost-management advisory services related to performance-based engagements, as well as growth in SaaS-based informatics subscriptions, applied science services and government services related revenue.

While first-quarter Performance Services revenue increased, segment non-GAAP adjusted EBITDA of $21.2 million decreased 5% from $22.3 million for the same quarter last year, primarily as a result of an increase in cost of sales related to an increase in staffing and costs to support continued growth and performance-based engagements. Specifically, the company made investments in staff and infrastructure to support continuing new-business growth involving primarily larger and more complex engagements that include significant performance-based advisory services assignments.

Cash Flows and Liquidity

Cash provided by operating activities was $75.0 million for the fiscal first quarter ended Sept. 30, 2017, compared with $41.8 million for the same quarter last year. The increase in cash flow from operations was primarily driven by an increase in net administrative fees as well as decreased outflows related to working capital needs, partially offset by increased SG&A expenses in the current period. At Sept. 30, 2017, the company’s cash and cash equivalents totaled $132.1 million, compared with $156.7 million in cash, cash equivalents, and short- and long-term marketable securities at June 30, 2017. At Sept. 30, 2017, the company had an outstanding balance of $170.0 million on its five-year $750.0 million revolving credit facility. During the fiscal first quarter, the company repaid $50.0 million of borrowing under the credit facility.

Non-GAAP free cash flow for the fiscal first quarter ended Sept. 30, 2017 was $33.4 million, compared with free cash flow of $2.4 million for the same period a year ago. The increase in free cash flow results from the same factors driving the growth in cash flow from operations. Given the company’s fiscal year end in June and payment of certain expenses including annual incentives in the fiscal first quarter, free cash flow is generally lower in this period than in subsequent quarters of the fiscal year. The company defines free cash flow as cash provided by operating activities less quarterly tax distributions and annual tax receivable agreement payments to limited partners and purchases of property and equipment (see free cash flow reconciliation to net cash provided by operating activities in the tables section of this press release).

Fiscal 2018 Outlook and Guidance

Based on results for the three months ended Sept. 30, 2017 and management’s current expectations for the remainder of fiscal 2018, management is maintaining the fiscal-year 2018 financial guidance ranges that were established Aug. 21, 2017, subject to the realization of the assumptions underlying that guidance. To the extent the company implements all or part of the previously announced $200 million stock repurchase program and assuming no change to non-GAAP adjusted EBITDA guidance, Non-GAAP adjusted fully distributed EPS guidance would be positively impacted.

Premier, Inc. FY’18 Q1 Results

Page 5 of 13

Conference Call

Premier management will host a conference call and live audio webcast on Monday, Nov. 6, 2017, at 5:00 p.m. ET, to discuss the company’s financial results. The conference call can be accessed through a link provided on the investor relations page on Premier’s website at investors.premierinc.com. Those wanting to participate by phone may do so by dialing 844.296.7719 and providing the operator with conference ID number: 8697416. International callers should dial 574.990.1041 and provide the same passcode. The company encourages callers to dial in at least five minutes before the start of the call to register. The archived webcast will be accessible on Premier’s investor relations page.

About Premier Inc.

Premier Inc. (NASDAQ: PINC) is a leading healthcare improvement company, uniting an alliance of approximately 3,900 U.S. hospitals and health systems and approximately 150,000 other providers and organizations to transform healthcare. With integrated data and analytics, collaboratives, supply chain solutions, and advisory and other services, Premier enables better care and outcomes at a lower cost. Premier plays a critical role in the rapidly evolving healthcare industry, collaborating with members to co-develop long-term innovations that reinvent and improve the way care is delivered to patients nationwide. Headquartered in Charlotte, N.C., Premier is passionate about transforming American healthcare. Please visit Premier’s news and investor sites on www.premierinc.com; as well as Twitter, Facebook, LinkedIn, YouTube, Instagram, Foursquare and Premier’s blog for more information about the company.

Use and Definition of Non-GAAP Measures

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

In addition, adjusted fully distributed net income and adjusted fully distributed earnings per share eliminate the variability of non-controlling interest as a result of member owner exchanges of Class B common stock and corresponding Class B units into shares of Class A common stock (which exchanges are a member owner’s cumulative right, but not obligation, which began on October 31, 2014, and occur each quarter thereafter, and are limited to one-seventh of the member owner’s initial allocation of Class B common units per year) and other potentially dilutive equity transactions which are outside of management’s control. Adjusted fully distributed net income is defined as net income

Premier, Inc. FY’18 Q1 Results

Page 6 of 13

attributable to Premier (i) excluding income tax expense, (ii) excluding the impact of adjustment of redeemable limited partners’ capital to redemption amount, (iii) excluding the effect of non-recurring and non-cash items, (iv) assuming the exchange of all the Class B common units for shares of Class A common stock, which results in the elimination of non-controlling interest in Premier LP, and (v) reflecting an adjustment for income tax expense on non-GAAP fully distributed net income before income taxes at the company’s estimated effective income tax rate. We define adjusted fully distributed earnings per share as adjusted fully distributed net income divided by diluted weighted average shares. These measures 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 and non-recurring items, and eliminate the variability of non-controlling interest that results from member owner exchanges of Class B common units into shares of Class A common stock.

EBITDA is defined as net income before interest and investment income, net, income tax expense, depreciation and amortization and amortization of purchased intangible assets. Adjusted EBITDA is defined as EBITDA before merger and acquisition related expenses and non-recurring, non-cash or non-operating items, and including equity in net income of unconsolidated affiliates. Non-recurring items include certain strategic and financial restructuring expenses. Non-operating items include gain or loss on the disposal of assets. Segment adjusted EBITDA is defined 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, and including equity in net income of unconsolidated affiliates. Operating expenses directly attributable to the segment include expenses associated with sales and marketing, general and administrative and product development activities specific to the operation of each segment. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of segment adjusted EBITDA. Adjusted EBITDA is a supplemental financial measure used by the company and by external users of the company’s financial statements.

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

Free cash flow is defined as net cash provided by operating activities less distributions and tax receivable agreement payments to limited partners and purchases of property and equipment. Free cash flow does not represent discretionary cash available for spending as it excludes certain contractual obligations such as debt repayments. Management believes free cash flow is an important measure because it represents the cash that the company generates after payment of tax distributions to limited partners and capital investment to maintain existing products and services and ongoing business operations, as well as development of new and upgraded products and services to support future growth. Free cash flow is important because it allows the company to enhance stockholder value through acquisitions, partnerships, joint ventures, investments in related or complimentary businesses and/or debt reduction.

Premier, Inc. FY’18 Q1 Results

Page 7 of 13

Readers are urged to review the reconciliation of these non-GAAP financial measures included at the end of this release. To properly and prudently evaluate our business, readers are encouraged to review the financial tables included at the end of this release. Readers should not rely on any single financial measure to evaluate the company’s business. In addition, the non-GAAP financial measures used in this release are susceptible to varying calculations and may differ from, and may therefore not be comparable to, similarly titled measures used by other companies.

Forward-Looking Statements

Statements made in this release that are not statements of historical or current facts, such as those related to expected financial performance and growth trends in our Supply Chain and Performance Services business segments and their respective business units, the impact and length of the lower utilization and patient volume trends and regulatory uncertainty and our ability to manage through these issues, the success of our cost savings measures, anticipated GPO participation agreement renewals, expected financial contributions from our acquired businesses, the statements related to fiscal 2018 outlook and guidance and the assumptions underlying such guidance, Premier’s plans with respect to the Class A common stock repurchase program, including the possibility that the program is not adopted and the expected size of the program are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of Premier to be materially different from historical results or from any future results or projections expressed or implied by such forward-looking statements. Accordingly, readers should not place undue reliance on any forward looking statements. In addition to statements that explicitly describe such risks and uncertainties, readers are urged to consider statements in the conditional or future tenses or that include terms such as “believes,” “belief,” “expects,” “estimates,” “intends,” “anticipates” or “plans” to be uncertain and forward-looking. Forward-looking statements may include comments as to Premier’s beliefs and expectations as to future events and trends affecting its business and are necessarily subject to uncertainties, many of which are outside Premier’s control. More information on potential factors that could affect Premier’s financial results is included from time to time in the “Cautionary Note Regarding Forward-Looking Statements,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of Premier’s periodic and current filings with the SEC, including those discussed under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” section of Premier’s Form 10-K for the year ended June 30, 2017, as well as the Form 10-Q for the quarter ended Sept. 30, 2017, expected to be filed with the SEC shortly after the date of this release, and also made available on Premier’s website at investors.premierinc.com. Forward-looking statements speak only as of the date they are made, and Premier undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events that occur after that date, or otherwise.

Contacts
Investor Relations contact:	Media contact:
Jim Storey	Morgan Guthrie
Vice President, Investor Relations	Director, Public Relations
704.816.5958	704.816.4152
jim_storey@premierinc.com	morgan_guthrie@premierinc.com

(Tables Follow)

Premier, Inc. FY’18 Q1 Results

Page 8 of 13

Condensed Consolidated Statements of Income

(Unaudited)

(In thousands, except per share data)

	Three Months Ended September 30,
	2017			2016
Net revenue:
Net administrative fees	$	150,991		$	125,976
Other services and support		86,911			81,167
Services		237,902			207,143
Products		152,662			106,129
Net revenue		390,564			313,272
Cost of revenue:
Services		46,936			42,690
Products		144,440			95,813
Cost of revenue		191,376			138,503
Gross profit		199,188			174,769
Operating expenses:
Selling, general and administrative		114,321			92,238
Research and development		489			806
Amortization of purchased intangible assets		13,898			9,209
Operating expenses		128,708			102,253
Operating income		70,480			72,516
Equity in net income of unconsolidated affiliates		4,252			9,579
Interest and investment loss, net		(1,495	)		(152	)
Loss on disposal of long-lived assets		(1,320	)		(1,518	)
Other income		1,463			1,006
Other income, net		2,900			8,915
Income before income taxes		73,380			81,431
Income tax expense		12,764			23,336
Net income		60,616			58,095
Net income attributable to non-controlling interest in Premier LP		(44,610	)		(49,601	)
Adjustment of redeemable limited partners’ capital to redemption amount		320,424			61,808
Net income attributable to stockholders	$	336,430		$	70,302
Calculation of GAAP Earnings per Share
Numerator for basic earnings per share:
Net income attributable to stockholders	$	336,430		$	70,302
Numerator for diluted earnings per share:
Net income attributable to stockholders	$	336,430		$	70,302
Adjustment of redeemable limited partners’ capital to redemption amount		(320,424	)		(61,808	)
Net income attributable to non-controlling interest in Premier LP		44,610			49,601
Net income		60,616			58,095
Tax effect on Premier, Inc. net income		(10,551	)		(20,951	)
Adjusted net income	$	50,065		$	37,144
Denominator for basic earnings per share:
Weighted average shares		52,909			47,214
Denominator for diluted earnings per share:
Weighted average shares		52,909			47,214
Effect of dilutive stock based awards		655			939
Class B shares outstanding		86,482			94,809
Weighted average shares and assumed conversions		140,046			142,962
Basic earnings per share	$	6.36		$	1.49
Diluted earnings per share	$	0.36		$	0.26

Premier, Inc. FY’18 Q1 Results

Page 9 of 13

Condensed Consolidated Balance Sheets

(Unaudited)

(In thousands, except share data)

	September 30, 2017			June 30, 2017
Assets
Cash and cash equivalents	$	132,120		$	156,735
Accounts receivable (net of $2,007 and $1,812 allowance for doubtful accounts, respectively)		173,869			159,745
Inventory		57,604			50,426
Prepaid expenses and other current assets		29,787			35,164
Due from related parties		487			6,742
Total current assets		393,867			408,812
Property and equipment (net of $252,840 and $236,460 accumulated depreciation, respectively)		186,179			187,365
Intangible assets (net of $113,096 and $99,198 accumulated amortization, respectively)		364,064			377,962
Goodwill		906,545			906,545
Deferred income tax assets		506,166			482,484
Deferred compensation plan assets		40,906			41,518
Investments in unconsolidated affiliates		97,131			92,879
Other assets		9,484			10,271
Total assets	$	2,504,342		$	2,507,836
Liabilities, redeemable limited partners’ capital and stockholders’ deficit
Accounts payable	$	47,449		$	42,815
Accrued expenses		56,891			55,857
Revenue share obligations		69,535			72,078
Limited partners’ distribution payable		20,752			24,951
Accrued compensation and benefits		37,259			53,506
Deferred revenue		41,102			44,443
Current portion of tax receivable agreements		17,925			17,925
Current portion of long-term debt		173,023			227,993
Other liabilities		26,198			32,019
Total current liabilities		490,134			571,587
Long-term debt, less current portion		6,275			6,279
Tax receivable agreements, less current portion		362,093			321,796
Deferred compensation plan obligations		40,906			41,518
Deferred tax liabilities		51,363			48,227
Other liabilities		42,599			42,099
Total liabilities		993,370			1,031,506
Redeemable limited partners’ capital		2,799,533			3,138,583
Stockholders’ deficit:
Class A common stock, $0.01 par value, 500,000,000 shares authorized; 53,558,451 and 51,943,281 shares issued and outstanding at September 30, 2017 and June 30, 2017, respectively		536			519
Class B common stock, $0.000001 par value, 600,000,000 shares authorized; 86,067,478 and 87,298,888 shares issued and outstanding at September 30, 2017 and June 30, 2017, respectively		—			—
Additional paid-in-capital		—			—
Accumulated deficit		(1,289,097	)		(1,662,772	)
Accumulated other comprehensive loss		—			—
Total stockholders’ deficit		(1,288,561	)		(1,662,253	)
Total liabilities, redeemable limited partners’ capital and stockholders’ deficit	$	2,504,342		$	2,507,836

Premier, Inc. FY’18 Q1 Results

Page 10 of 13

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Three Months Ended September 30,
	2017			2016
Operating activities
Net income	$	60,616		$	58,095
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		30,405			23,227
Equity in net income of unconsolidated affiliates		(4,252	)		(9,579	)
Deferred income taxes		8,298			17,074
Stock-based compensation		8,815			5,800
Adjustment to tax receivable agreement liabilities		—			(5,722	)
Loss on disposal of long-lived assets		1,320			1,518
Changes in operating assets and liabilities:
Accounts receivable, prepaid expenses and other current assets		(8,748	)		(8,119	)
Other assets		1,379			(1,112	)
Inventories		(7,178	)		(827	)
Accounts payable, accrued expenses, and other current liabilities		(21,933	)		(38,463	)
Long-term liabilities		(111	)		322
Other operating activities		6,422			(387	)
Net cash provided by operating activities		75,033			41,827
Investing activities
Proceeds from sale of marketable securities		—			48,013
Acquisition of Acro Pharmaceuticals, net of cash acquired		—			(68,745	)
Investments in unconsolidated affiliates		—			(65,660	)
Distributions received on equity investments in unconsolidated affiliates		—			6,550
Purchases of property and equipment		(16,647	)		(16,966	)
Other investing activities		1			5
Net cash used in investing activities		(16,646	)		(96,803	)
Financing activities
Payments made on notes payable		(4,974	)		(218	)
Payments on credit facility		(50,000	)		—
Proceeds from exercise of stock options under equity incentive plan		2,652			2,317
Repurchase of vested restricted units for employee tax-withholding		(5,729	)		(17,435	)
Distributions to limited partners of Premier LP		(24,951	)		(22,493	)
Net cash used in financing activities		(83,002	)		(37,829	)
Net decrease in cash and cash equivalents		(24,615	)		(92,805	)
Cash and cash equivalents at beginning of year		156,735			248,817
Cash and cash equivalents at end of period	$	132,120		$	156,012

Premier, Inc. FY’18 Q1 Results

Page 11 of 13

Supplemental Financial Information

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

(Unaudited)

(In thousands)

	Three Months Ended September 30,
	2017			2016
Net cash provided by operating activities	$	75,033		$	41,827
Purchases of property and equipment		(16,647	)		(16,966	)
Distributions to limited partners of Premier LP		(24,951	)		(22,493	)
Non-GAAP Free Cash Flow	$	33,435		$	2,368

Premier, Inc. FY’18 Q1 Results

Page 12 of 13

Supplemental Financial Information

Reconciliation of Net Income to Adjusted EBITDA

Reconciliation of Operating Income to Segment Adjusted EBITDA

Reconciliation of Net Income Attributable to Stockholders to Non-GAAP Adjusted Fully Distributed Net Income

(Unaudited)

(In thousands)

	Three Months Ended September 30,
	2017			2016
Net income	$	60,616		$	58,095
Interest and investment loss, net		1,495			152
Income tax expense		12,764			23,336
Depreciation and amortization		16,507			14,018
Amortization of purchased intangible assets		13,898			9,209
EBITDA		105,280			104,810
Stock-based compensation		8,957			5,896
Acquisition related expenses		3,099			2,937
Adjustment to tax receivable agreement liabilities		—			(5,722	)
ERP implementation expenses		335			1,094
Acquisition related adjustment - revenue		105			151
Loss on disposal of long-lived assets		1,320			1,518
Loss on FFF put and call rights		20			—
Other expense		55			89
Adjusted EBITDA	$	119,171		$	110,773
Income before income taxes	$	73,380		$	81,431
Equity in net income of unconsolidated affiliates		(4,252	)		(9,579	)
Interest and investment loss, net		1,495			152
Loss on disposal of long-lived assets		1,320			1,518
Other income		(1,463	)		(1,006	)
Operating income		70,480			72,516
Depreciation and amortization		16,507			14,018
Amortization of purchased intangible assets		13,898			9,209
Stock-based compensation		8,957			5,896
Acquisition related expenses		3,099			2,937
Adjustment to tax receivable agreement liabilities		—			(5,722	)
ERP implementation expenses		335			1,094
Acquisition related adjustment - revenue		105			151
Equity in net income of unconsolidated affiliates		4,252			9,579
Deferred compensation plan income		1,539			1,095
Other expense		(1	)		—
Adjusted EBITDA	$	119,171		$	110,773
Segment Adjusted EBITDA:
Supply Chain Services	$	125,620		$	117,304
Performance Services		21,221			22,311
Corporate		(27,670	)		(28,842	)
Adjusted EBITDA	$	119,171		$	110,773
Net income attributable to stockholders	$	336,430		$	70,302
Adjustment of redeemable partners’ capital to redemption amount		(320,424	)		(61,808	)
Net income attributable to non-controlling interest in Premier LP		44,610			49,601
Income tax expense		12,764			23,336
Amortization of purchased intangible assets		13,898			9,209
Stock-based compensation		8,957			5,896
Acquisition related expenses		3,099			2,937
Adjustment to tax receivable agreement liabilities		—			(5,722	)
ERP implementation expenses		335			1,094
Acquisition related adjustment - revenue		105			151
Loss on disposal of long-lived assets		1,320			1,518
Loss on FFF put and call rights		20			—
Other expense		55			89
Non-GAAP adjusted fully distributed income before income taxes		101,169			96,603
Income tax expense on fully distributed income before income taxes		39,456			37,675
Non-GAAP Adjusted Fully Distributed Net Income	$	61,713		$	58,928

Premier, Inc. FY’18 Q1 Results

Page 13 of 13

Supplemental Financial Information

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

(Unaudited)

(In thousands, except per share data)

	Three Months Ended September 30,
	2017			2016
Net income attributable to stockholders	$	336,430		$	70,302
Adjustment of redeemable partners’ capital to redemption amount		(320,424	)		(61,808	)
Net income attributable to non-controlling interest in Premier LP		44,610			49,601
Income tax expense		12,764			23,336
Amortization of purchased intangible assets		13,898			9,209
Stock-based compensation		8,957			5,896
Acquisition related expenses		3,099			2,937
Adjustment to tax receivable agreement liabilities		—			(5,722	)
ERP implementation expenses		335			1,094
Acquisition related adjustment - revenue		105			151
Loss on disposal of long-lived assets		1,320			1,518
Loss on FFF put and call rights		20			—
Other expense		55			89
Non-GAAP adjusted fully distributed income before income taxes		101,169			96,603
Income tax expense on fully distributed income before income taxes		39,456			37,675
Non-GAAP Adjusted Fully Distributed Net Income	$	61,713		$	58,928
Weighted Average:
Common shares used for basic and diluted earnings per share		52,909			47,214
Potentially dilutive shares		655			939
Conversion of Class B common units		86,482			94,809
Weighted average fully distributed shares outstanding - diluted		140,046			142,962
GAAP earnings (loss) per share	$	6.36		$	1.49
Adjustment of redeemable limited partners’ capital to redemption amount		(6.05	)		(1.31	)
Net income attributable to non-controlling interest in Premier LP		0.84			1.05
Income tax expense		0.24			0.49
Amortization of purchased intangible assets		0.26			0.20
Stock-based compensation		0.17			0.13
Acquisition related expenses		0.06			0.06
Adjustment to tax receivable agreement liabilities		—			(0.12	)
ERP implementation expenses		0.01			0.02
Loss on disposal of long-lived assets		0.02			0.03
Impact of corporation taxes		(0.74	)		(0.80	)
Impact of dilutive shares		(0.73	)		(0.83	)
Non-GAAP EPS on Adjusted Fully Distributed Net Income	$	0.44		$	0.41

# # #

EX-99.2

Exhibit 99.2

FISCAL 2018 FIRST QUARTER CONFERENCE CALL TRANSCRIPT

November 6, 2017 / 05:00 PM EST

On November 6, 2017, Premier, Inc. hosted a conference call to discuss financial results for the fiscal 2018 first quarter, ended September 30, 2017. The following transcript is an interpretation of the statements made on the call. The actual conference call may have differed slightly.

CORPORATE PARTICIPANTS

James R. Storey Premier, Inc. – VP of IR

Susan D. DeVore Premier, Inc. – President, CEO & Director

Michael J. Alkire Premier, Inc. – COO

Craig S. McKasson Premier, Inc. – CFO and Senior VP

CONFERENCE CALL PARTICIPANTS

Donald Houghton Hooker KeyBanc Capital Markets Inc., Research Division – VP and Equity Research Analyst

Evan Arthur Stover Robert W. Baird & Co. Incorporated, Research Division – Senior Research Associate

James John Stockton Wells Fargo Securities, LLC, Research Division – Director & Senior Equity Research Analyst

Mohan A. Naidu Oppenheimer & Co. Inc., Research Division – MD and Senior Analyst

Nicholas Michael Jansen Raymond James & Associates, Inc., Research Division – Analyst

Richard Collamer Close Canaccord Genuity Limited, Research Division – MD and Senior Analyst

Ryan Scott Daniels William Blair & Company L.L.C., Research Division – Partner and Healthcare Analyst

Sean Wilfred Dodge Jeffries LLC, Research Division – Equity Analyst

Sean William Wieland Piper Jaffray Companies, Research Division – MD and Senior Research Analyst

PRESENTATION

Operator

Good day, ladies and gentlemen, and welcome to the Premier, Inc. Fiscal Year 2018 First Quarter Results Conference Call. (Operator Instructions)

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 2 of 18

As a reminder, today’s program may be recorded. I would now like to introduce your host for today’s program, Mr. Jim Storey, Investor Relations. Please go ahead.

James R. Storey – Premier, Inc. – VP of IR

Thank you, Jonathan, and welcome, everyone, to Premier’s fiscal 2018 first quarter conference call. Our speakers today are Susan DeVore, President and Chief Executive Officer; Mike Alkire, Chief Operating Officer; and Craig McKasson, Chief Financial Officer. Susan, Mike and Craig will review the quarter’s performance, provide an operations update and discuss our outlook for the remainder of the year.

Before we get started, I want to remind everyone that copies of our earnings release and the supplemental slides accompanying this conference call are available in the Investor Relations section of our website at investors.premierinc.com.

Management’s remarks today contain certain forward-looking statements, and actual results could differ materially from those discussed today. These forward-looking statements speak as of today, and we undertake no obligation to update them. Factors that might affect future results are discussed in our filings with the SEC, including our fiscal 2017 Form 10-K and fiscal 2018 quarterly report on Form 10-Q, which we expect to file soon. We encourage you to review these detailed safe harbor and risk factor disclosures.

Please also note that, where appropriate, we will refer to non-GAAP financial measures to evaluate our business. Reconciliations of non-GAAP financial measures to GAAP financial measures are included in our earnings release, in the appendix of the supplemental slides accompanying this presentation and in our earnings release Form 8-K, which we expect to furnish to the SEC soon.

Now let me turn the call over to Susan DeVore.

Susan D. DeVore – Premier, Inc. – President, CEO & Director

Thanks, Jim, and welcome, everyone, to our fiscal first quarter conference call. I’ll begin today with an overview of our first quarter performance and a look ahead to the rest of the year. Mike will provide an operational update, and Craig will walk through the quarter’s financials in more detail.

I’m pleased to report that Premier continued to deliver financial and strategic growth across our businesses in the fiscal first quarter. We grew revenue and earnings as we continued to guide our member healthcare providers toward their improvement imperatives in cost, quality, safety and value-based care against a backdrop of heightened regulatory and political uncertainty.

During the quarter, we achieved a highly successful outcome regarding the renewal of our group purchasing agreements. This success didn’t come as a surprise to us. As we previously shared, we were highly confident in the ongoing trust that our member owners place in Premier to help them navigate the present and future opportunities and challenges of our marketplace. We continue to grow, achieving our first quarter sales targets as we cultivated new partnerships and introduced innovative technologies and integrated solutions, some of which we’ll talk about on the call. And we ended the quarter with strong cash flow and a flexible balance sheet, which enable us to continue to execute our long-term strategic acquisition and growth strategy while also returning value to our stockholders in the form of our planned stock repurchase program announced last week. Looking forward, we continue to believe we remain extremely well positioned given that we expect pressures on healthcare providers and health systems to escalate in the months and years ahead.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 3 of 18

Before going into detail on the quarter, I want to take just a few minutes to commend our employees, our member healthcare providers and our suppliers for their actions during the string of hurricanes that recently impacted Texas, Florida and Puerto Rico. Our close collaboration ensured that members had the critical supplies and services needed to provide lifesaving care to the individuals impacted by these storms.

I’d like to share one specific example. When Hurricane Harvey brought historic rainfall and flooding to Texas, the University of Texas Medical Branch in Galveston reached out to Premier after their local blood bank became inaccessible due to flooding. Our disaster response team quickly found an alternate source in Indiana. Working with our partners at FFF, a specialty distributor that we are invested in, a chartered plane delivered the blood into the hands of the medical team in Texas, less than four hours after we were notified of the need. We were told that this effort specifically saved the lives of three patients and helped positively impact the care of many, many other patients at the Galveston campus.

We also worked with our members and suppliers to prepare for Hurricanes Irma in Florida and Maria in Puerto Rico, provisioning facilities with critical-care supplies while also working to help provide many hospitals with generators, flashlights, food and water.

In Puerto Rico, in the wake of Hurricane Maria, we’ve been working with device and pharmaceutical manufacturers on the island to identify and minimize potential supply chain disruption. The teamwork on display during these times of crisis exemplifies the long-term strategic partnerships inherent in the relationships that we’ve built with our healthcare providers and our suppliers. At the end of the day, we’re all working together to improve and to protect the health of our communities.

So now let’s look at the first quarter. In a rapidly evolving environment, we delivered a 25% increase in consolidated net revenue, which exceeded our expectations. Non-GAAP adjusted EBITDA increased 8%, and non-GAAP adjusted fully distributed earnings per share rose 7%. Within Supply Chain Services, we experienced a somewhat slower-than-expected start to the fiscal year from our group purchasing business where legacy year-over-year net administrative fees revenue grew 2%. This weighed on segment and consolidated profitability growth in the quarter. Some of this was related to timing of revenue recognition between quarters and lower administrative fees revenue in specific service lines due to slower growth levels. The remaining pressure on net administrative fees revenue correlated to recent softening in hospital patient utilization.

Based on our analysis of member volume trends impacting the first quarter, inpatient and outpatient utilization both registered year-over-year declines. We believe this is a transitory headwind, potentially driven by political and regulatory turmoil as well as the seasonal impact of consumer decision-making around elective procedures.

As we continue to monitor these trends, we are maintaining our full year fiscal 2018 guidance range, which accounts for the current impact of a softer hospital patient utilization environment. Our other businesses are operating within expectations, and we will appropriately manage costs through the fiscal year.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 4 of 18

Longer term, we expect pressure on providers and health systems to continue to intensify as costs increase, reimbursements decline and payments are increasingly tied to performance. In just the past few weeks, final rules have been released on moving forward with the MACRA-based MIPS program and the ACO program, and rules reducing 340B reimbursements and changing outpatient payment rates have also been finalized.

We have a proven history of identifying these emerging market trends and building the solutions that help our member health systems navigate the constant challenges that characterize healthcare delivery in America. Our strategic path forward is supported by our flexible balance sheet and our strong cash flow. And our solutions are designed to help our members manage through these periods of intense change in their continuing journey to higher-quality, more cost-effective healthcare.

Thanks so much. Now here’s Mike Alkire, our Chief Operating Officer.

Michael J. Alkire – Premier, Inc. – COO

Thank you, Susan, and thank you all for joining us on today’s call. I want to use my time today to briefly review some of the investments we continue to make in our business to drive long-term revenue and profitable growth by enhancing the value we provide to our members.

Regardless of the environment, our consistent goal is to deliver highly differentiated value through our diversified business model that spans supply chain services, pharmacy, SaaS informatics products, integrated analytics, advisory services and performance improvement collaboratives. These solutions are designed to help healthcare providers better manage costs, improve quality and safety and prepare for and implement value-based care programs.

I want to first focus on a few business initiatives that we believe demonstrate our trusted leadership role in the marketplace. First, we have worked hard over the years to bring ever-increasing value to our member owner providers who, on average, have been partnering with us for 18 years. We believe this partnership is clearly evidenced by our group purchasing agreement renewals.

As you know, the automatic renewal of our member owner group purchasing agreements occurred on October 1, extending contracts through September 30, 2023. As of October 1, approximately 93% of our historical net administrative fees revenue was currently covered by GPO agreements that have been automatically renewed, extended or initially had terms longer than five years. We believe this 93% is great and expected – an expected result, and we continue to discuss renewal of the agreements with the remainder of our member owners. We expect that the vast majority of all of our member owners will have renewed or extended their agreements at the same or similar economics by next October.

We believe this high renewal rate represents a significant confirmation of the confidence that our members have in Premier’s ability to continue to deliver value and strategic leadership for years to come.

I would also highlight the progress we are making with our new Academic Innovators Collaborative, which we launched during the quarter. This collaborative partners our new and existing academic members as they work with community health systems to address future healthcare trends. Their goals include advancing shared capabilities in precision medicine, addressing unique challenges and achieving economic sustainability and developing academic cohorts for the advancement of quality, safety and population health.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 5 of 18

Just today, we announced that OU Medical Center, Oklahoma’s largest and most comprehensive academic health system, signed a multi-year agreement with Premier to access Premier performance improvement technology solutions and services. OU has also joined our QUEST 2020 quality improvement collaborative and will use clinical data and analytics in the PremierConnect performance improvement platform.

And in late September, we announced that Vidant Health, a large academic health system in Eastern North Carolina, joined Premier as an academic partner. Vidant’s multi-year agreement includes a customized bundle of enterprise-wide performance improvement technology, supply chain and advisory services, including a large performance-based advisory services engagement. These latest additions follow the University of Virginia Health System, Wake Forest Baptist Medical Center and University Health System in San Antonio, all who have joined Premier with enterprise-wide relationships in recent months. And we continue to pursue an active pipeline in this area.

We also continue to invest in innovative solutions and services that combine our data analytics, technology and advisory services into what we believe are uniquely differentiated offerings. For instance, we recently launched an automated capital equipment analytics solution leveraging our historical acquisition of MEMdata to enable significant savings on high-cost capital equipment purchases. PremierConnect Capital Analytics is a cloud-based, on-demand application offered through our PremierConnect performance improvement platform on a multi-year subscription basis. We believe it is the only automated solution of its kind, driven by an analytics engine that empowers members to better control their capital spending.

In the area of real-time safety surveillance, our PremierConnect safety solution remains a market leader. We recently expanded our relationship with the Veterans Administration, securing a contract for all 7 of the VA medical centers serving North Carolina and Virginia. And we recently completed implementation of the same solution for VA medical centers serving Pennsylvania and Delaware. Our platform provides network standardization with real-time pharmacy and infection-control clinical surveillance.

Finally, our applied sciences business related to data licenses and outcomes research engagement is also expanding and has experienced strong year-over-year growth in the quarter. You may recall that over the past few years, we have been combining our clinical data integration and research capabilities to collaborate with pharmaceutical manufacturers and health systems on innovative, real-world research projects. We recently signed two large million-dollar-plus contracts with pharmaceutical manufacturers. One is a collaboration to develop a multiphase initiative focused on improving the quality of cancer patient care, and the other involves codeveloping a protocol to help prevent certain infections that can lead to hospital readmissions.

Let me conclude by saying that we will continue to invest in the future from a position of financial strength, partnering with our healthcare providers to develop and deliver the solutions that we believe provide unmatched value in the marketplace. We will do this by building and launching new technologies, by making investments in our solutions and by staying focused on the future.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 6 of 18

Thank you for your time today. Now let me turn the call over to Craig McKasson, our Chief Financial Officer.

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

Thanks, Mike. Now let’s work through the first quarter financial results in more detail.

From a GAAP standpoint, consolidated net revenue of $390.6 million increased 25% from a year ago. Supply Chain Services net revenue rose 31% to $305.8 million. Net administrative fees revenue increased 20% to $151 million from the same period a year ago, driven by contributions of $22.6 million from the Innovatix and Essensa businesses and, to a lesser extent, further contract penetration of our existing members. The 2% increase in legacy GPO net administrative fees revenue from the same period a year ago was below our expectations and, as Susan discussed, was negatively impacted by softer patient utilization trends, timing of cash receipts and some slower growth in certain service lines.

Our products business within Supply Chain Services grew first quarter revenue 44% from a year ago to $152.7 million, exceeding our expectations. This was largely due to incremental contributions from Acro, which we acquired in August 2016; and continued expansion in our multiple sclerosis, idiopathic pulmonary fibrosis and oncology-related disease states while year-over-year sales of hepatitis C-related drugs reflect a slight decrease. We also continued to experience double-digit growth in our direct sourcing business.

Turning to Performance Services, first quarter revenue increased 7% from the same period a year ago, reflecting strong year-over-year expansion of Advisory Services revenue as well as growth in informatics and technology services and applied sciences. As expected, Advisory Services benefited from revenue recognized in the first quarter that was largely generated by cost management advisory services related to performance-based engagements.

As a reminder, we experienced quarterly variability in revenue and profitability generated from our Advisory Services business due to the timing of revenue recognition associated with performance-based engagements, in which our revenue is based on a percentage of identified member savings, and recognition occurs upon approval and documentation of those savings.

Looking at profitability, GAAP net income increased to $60.6 million for the quarter from $58.1 million a year ago. After a GAAP-required noncash adjustment of $320.4 million to reflect the decrease in the redemption value of limited partners Class B common unit ownership, we reported GAAP earnings per share of $0.36.

Consolidated non-GAAP adjusted EBITDA of $119.2 million for the quarter represents an 8% increase from the same period a year ago. From a segment perspective, the 7% increase in Supply Chain Services non-GAAP adjusted EBITDA reflects growth in net administrative fees revenue, including contributions from Innovatix and Essensa, along with an increase in product revenue.

The contribution from Innovatix and Essensa is net of a reduction in equity and net income of unconsolidated affiliates, resulting from the acquisition of the remaining 50% of Innovatix given that we historically accounted for that 50% interest as income from an unconsolidated affiliate. These increases were partially offset by a rise in product costs and SG&A expenses as a result of the prior year acquisitions and to support future growth.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 7 of 18

In Performance Services, the 5% decrease in segment non-GAAP adjusted EBITDA is primarily due to an increase in cost of sales related to additional staffing and costs to support continued growth in performance-based engagements. Specifically, we invested in staff and infrastructure to support continuing new business growth primarily involving larger and more complex engagements that includes significant performance-based advisory services projects.

Corporate non-GAAP adjusted EBITDA reflects a 4% expense decrease in the first quarter, which is primarily timing related as we do expect corporate expense to increase on a full year basis in accordance with growth of the business. First quarter non-GAAP adjusted fully distributed net income increased 5% to $61.7 million from the same period a year ago, and non-GAAP adjusted fully distributed earnings per share totaled $0.44, an increase of 7% from a year ago.

From a liquidity and balance sheet perspective, cash flow from operations in the quarter was $75 million compared with $41.8 million last year. The increase in cash flow from operations was primarily driven by an increase in net administrative fees revenue as well as decreased outflows related to working capital needs, partially offset by increased SG&A expenses in the current period.

Non-GAAP free cash flow for the fiscal first quarter totaled $33.4 million compared with $2.4 million from the year-ago first quarter, primarily due to the same factors driving growth and cash flow from operations. We continue to expect that full year non-GAAP free cash flow will total 40% or more of non-GAAP adjusted EBITDA.

Our cash and cash equivalents totaled $132.1 million at September 30, 2017, compared with $156.7 million at June 30, 2017. During the quarter, we repaid $50 million on our five-year $750 million revolving credit facility, which resulted in an outstanding balance of $170 million at quarter end.

From a full year guidance perspective, we are maintaining the ranges that we introduced during our earnings call on August 21. In establishing that guidance, our assumptions included some softening of patient utilization trends and the ongoing lack of regulatory clarity, which we said at the time appeared to be slowing some decision-making, affecting certain areas of our business.

Looking at the full fiscal year, we continue to expect that our Supply Chain Services revenue will be split evenly between the first and second half. With respect to the impact from the hurricanes, we currently expect a potential impact of approximately $1 million to $2.5 million or about 20 to 40 basis points of full year net administrative fees, primarily as a result of the impact on supplier product availability due to Hurricane Maria. Any impact that we do experience will primarily occur across our second, third and fourth quarters given the timing of net administrative fee revenue recognition.

Performance Services revenue will continue to be more heavily weighted in the back half of the fiscal year, with approximately 55% of full year revenues expected in the last six months. As a result of this expected revenue cadence and the timing of expenses for the remainder of the year, we expect lower profitability growth in the second quarter to be followed by accelerating growth in the back half of the fiscal year.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 8 of 18

Finally, I would like to provide a brief update on our ongoing quarterly exchange process. Following our most recent exchange on October 31, our company is currently owned approximately 41% by the public and 59% by our member health systems. As a reminder, the company, at the discretion of the independent audit and compliance committee, has the ability to settle exchanging member owners’ Class B units on a one-for-one basis for Class A stock, cash or a combination thereof.

As we announced last week, we exchanged 100% of the exchanging Class B units on October 31 for 3.7 million shares of Class A common stock, and we announced plans to launch a $200 million share repurchase program for Class A common stock during the remainder of fiscal 2018. This program provides management with additional flexibility in terms of timing and the price paid for repurchase shares as repurchases will occur in the open market, whereas settlement of the Class B exchange for cash contractually requires the price to be established based on an average 20-day trading window that occurs preceding the exchange date. We expect to initiate the repurchase program when the company’s trading window opens on November 9. Our decision to repurchase Class A common stock is based in part on Premier’s continued strong balance sheet and cash flow, which allows us to continue our commitment to investing in long-term growth and maintenance of a strong balance sheet while, at the same time, launching a broad-based share repurchase program. Additionally, our Board of Directors and the management team believe that the recent trading levels of our stock represent an attractive investment opportunity and that our expected repurchase program demonstrates our continuing commitment to return value to all of our stockholders.

With that, let me turn the call back over to Susan.

Susan D. DeVore – Premier, Inc. – President, CEO & Director

Thanks, Mike and Craig. Before opening the call to questions, I’d like to just reiterate that I’m excited about the leadership role that Premier continues to play in the ongoing transformation of our nation’s healthcare delivery system. We’re operating from a position of financial strength, and we continue to enjoy long-standing relationships with our member healthcare providers.

We’ve operated as a successful company for decades, successfully navigating through the many economic, political and social changes that have occurred over the years. We’ve always been, and we will always be, a leader on the transformation journey. I believe that our position will continue to deliver long-term value to our stockholders.

So operator, could you please open the call for questions.

QUESTIONS AND ANSWERS

Operator

(Operator Instructions) Our first question comes from the line of Ryan Daniels from William Blair.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 9 of 18

Ryan Scott Daniels – William Blair & Company L.L.C., Research Division – Partner and Healthcare Analyst

Craig, just a quick follow-up for you on the Performance Services division. I’m curious how we should think about the margin delta between the first and second half, thinking not only about the sales being skewed 45-55. But I also assume some of the performance fees will fall later in the year and probably have a lot higher associated margins given that some, if not all, the costs are already being expensed. So number one, is that fair? And number two, just any more granularity and kind of profit cadence.

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

Sure, Ryan. It’s a great question. So first of all, I do think that your commentary is fair. I will continue to say that on a full year basis, we would expect the adjusted EBITDA margins for our Performance Services business to be in the mid-30s, which is what we’ve consistently talked about. But you saw the lower 25% margin that we reflected in the first quarter for the reasons that I articulated. I think you’ll see a sequential improvement but a lower level in Q2 and then a step-up occurring in the back half of the year to get to that overall 35%-ish range on a full year basis.

Ryan Scott Daniels – William Blair & Company L.L.C., Research Division – Partner and Healthcare Analyst

Okay. That’s very helpful. And then as my follow-up, I want to do a broad one for you, Susan. I believe during the renewal process, you were probably out visiting a lot of customers, maybe not even really focused on the renewals. But given that you had that opportunity, can you talk a little bit more about conversations you had with health system leaders? And then during those conversations, if there are any big lessons learned, big opportunities to push more cross-sells or just anything they’re particularly interested on, on a go-forward basis?

Susan D. DeVore – Premier, Inc. – President, CEO & Director

Yes. Thanks, Ryan. So Craig, Mike and I as well as some of our other management team members went out and met with or talked to virtually all of our member owners. And in those conversations, you’re right, we talked about strategy. We talked about their pain points, which are cost pressures, performance-based payment models and really how they build the infrastructure to manage their healthcare systems. It did gin up additional cross-selling opportunities, which the entire field team is following up on. Typically, those were bigger savings targets that they needed, either in supply chain or in total cost of care. Several discussions about clinical transformation at a systemwide level. Conversations about our pharmacy offerings, our analytics offerings. And so the renewal rates were very high. The conversations were at a senior level, and they were integration conversations. And they led to some cross-selling opportunities in a few areas. It also led to discussions of where we needed field support – stronger field support or anything going on in the account that they needed some help from us in making better. So good conversations. We feel really good about the process and continue to think the vast majority of all of our members will renew or extend before the October 2018 deadline.

Operator

Our next question comes from the line of Nicholas Jansen from Raymond James.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 10 of 18

Nicholas Michael Jansen – Raymond James & Associates, Inc., Research Division – Analyst

Following up on kind of Ryan’s first question. Just wanted to kind of get your visibility into the accelerated EBITDA contribution, not only from those advisory agreements but also on the supply chain side. How do we think about the margin trajectory from here certainly with a bigger step down? And I think most people were expecting for the September quarter. So maybe just your overall visibility, particularly to the low end of the guidance.

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

Sure, Nick. This is Craig. So on a revenue basis, as we talked about on our August 21 call, we established revenue visibility. We had talked about it being at that 89% to 94% level at the start of the year. I will indicate that, that has improved on a full year basis since that time even with some of the lower-than-expected performance that we saw in legacy GPO through the first quarter. So visibility on the top line continues to be improving and in that 90-plus percent range on a full year basis. From a profitability standpoint, overall, we did have a little bit of a step down in expected profitability in Q1. I would really characterize that into three major buckets: about 30% of the lower level of profitability than the street might have expected is really as a result of the lower utilization and a little bit of the slower growth that we experienced in a couple of the service lines; about 20% is for the ramp-up of staffing and infrastructure to support the growth of the business through the balance of the year; and then about half of that, actually related to timing. So we do have the implication across quarters of cash receipts and revenue recognition at times and a couple of one-time events or one-time impacts that aren’t material individually but collectively made up that adjustment. So those all weighed on the first quarter profitability. And as we continue to progress through the rest of the year, I think you’ll see a lower level of profitability in the second quarter in conjunction with the revenue flow and an improvement in the back half of the year.

Nicholas Michael Jansen – Raymond James & Associates, Inc., Research Division – Analyst

Maybe just your thoughts on your infrastructure as a whole from a cost perspective. Certainly, given the slower utilization environment, the regulatory environment, all of these things don’t seem like they’re going to reverse course overnight. So how do we think about your guys’ levers on G&A and others to think about offsetting some of the perhaps pressures that the industry-wide is seeing, which obviously flows to your P&L?

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

Yes. This is Craig. I’ll start, and then Susan or Mike can add any color. But as Susan had mentioned in her prepared remarks, we will actively manage costs for the balance of the fiscal year from a lever perspective, obviously managing the headcount across the organization and the addition of new headcount to support growth, ensuring that we’ve got appropriately and fully utilized staff driving the initiatives and the engagements that we have in place. And then we’ll continue to, in the short term, make sure that we’re managing what we are doing while ensuring that we’re continuing to capitalize and prepare long term strategically on the opportunities that present themselves as we move forward.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 11 of 18

Susan D. DeVore – Premier, Inc. – President, CEO & Director

And I would just agree with Craig. I mean, I think we have all of our initiatives in place to make sure we’re managing with what the volume does.

Operator

Our next question comes from line of Sean Dodge from Jefferies.

Sean Wilfred Dodge – Jefferies LLC, Research Division – Equity Analyst

So maybe going back to the contract renewals. Of the 93% that have now been finalized, what proportion of those chose just to simply auto renew? And for those that didn’t, I presume it’s because they want to make some changes to their contracts. Were there any commonalities or common themes in the changes those clients that didn’t auto renew were seeking during the process?

Susan D. DeVore – Premier, Inc. – President, CEO & Director

So all 93%, I would presume, are auto-renewed. So they auto-renewed their contracts and at same, similar economics. And typically, the conversation was about savings targets or staffing levels or additional services that they were interested in.

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

Yes. This is Craig. The only clarification I would make is we actually had a small handful that actually engaged in longer-term contracts beyond the five-year auto renewal. So it’s the same terms, but actually, for a longer time period than the five-year auto renewal. But that was a small subset of the total.

Sean Wilfred Dodge – Jefferies LLC, Research Division – Equity Analyst

Okay. That’s helpful. And then, Susan, you mentioned your belief that at least a portion of the slower hospital volumes you’re seeing are transitory. Is there anything specifically you’re seeing there that gives you confidence these will snap back at some point? Are some of your clients already seeing this? Are you seeing data showing this is just more of a pronounced form of seasonality because of things like high-deductible health plans and nothing really more structural than that? Any additional detail you can give there would be helpful.

Susan D. DeVore – Premier, Inc. – President, CEO & Director

Yes. So as you can imagine, we have spent a fair amount of time looking at all the data and indicators and we have been talking to our members. What I would say is that the summer months were tougher this year than they have been in prior years. We think part of that is the uncertainty kind of surrounding the regulatory environment and maybe some folks waiting from a seasonal perspective to meet their deductibles. It looks like it was elective procedures and outpatient surgeries. And we’ve talked on prior calls about inpatient volume being flat to slightly down and outpatient volume growing quite nicely. And so in recent couple of quarters, the outpatient has been more flattish. We have had conversations with our members. It does appear that in the fall, the September, October, November time frame, notwithstanding the hurricanes, that volume has picked back up to more historic levels. So that gives us the confidence that it was sort of a summer challenge and a seasonal challenge. And we have built some of that into our guidance when we put guidance out.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 12 of 18

Operator

Our next question comes from the line of Richard Close from Canaccord Genuity.

Richard Collamer Close – Canaccord Genuity Limited, Research Division – MD and Senior Analyst

Maybe extending on one of Brian’s questions on the client discussions. I was wondering if you could dig in deeper into the larger and more complex engagements you talked about. Given some of the uncertainty with the regulatory and the utilization, it seems a little counterintuitive. Maybe people would be going bigger and maybe looking for shorter type of wins here and there. So if you can go into the larger and more complex for us, that would be helpful.

Susan D. DeVore – Premier, Inc. – President, CEO & Director

Yes. So Richard, I think the two biggest areas that folks are requesting larger-scale help, one is systemwide cost improvement. I mean, when they are staring down the 340B changes, the outpatient payment changes, the summer kind of utilization challenges and the regulatory environment, they’re basically saying, “I need to take multimillion dollars of costs out of my system, and I need data across the continuum, and I need a partner who can bring me comparative data as well as wraparound advisory and consultative services.” So there’s a big play in cost management obviously. They’re also recognizing the significant variation they have in clinical performance, which is affecting cost. And so again, clinical data and large-scale wraparound consulting engagements to get clinical effectiveness at a systemwide level is an opportunity. We continue to have the same or/and some growth in our ACO collaborative and our bundled payment collaborative. These are voluntary programs, and folks continue to be interested. If they’ve got significant revenue pressure, how do they position themselves voluntarily to be able to assume more risk in value-based contracts? So while the growth is a little bit slower in that area than it has been historically, we continue to see our members really wanting to build that infrastructure to be able to accept the risk they think they’re going to own one way or another.

Richard Collamer Close – Canaccord Genuity Limited, Research Division – MD and Senior Analyst

Okay. And a follow-up, Craig. You talked a couple of times with respect to some slower growth in certain service lines. Can you elaborate which service lines that occurred in?

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

Sure. So we’ve seen a little bit slower growth in the CRM category. We’ve historically had some administrative fees tied to growth rates, and the growth has tempered in that CRM space recently. And then secondarily, the cellphone or telecom space as that market has matured, we’ve seen slower growth there, impacting the ongoing administrative fee growth trends.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 13 of 18

Our next question comes from the line of Evan Stover from Robert W. Baird.

Evan Arthur Stover – Robert W. Baird & Co. Incorporated, Research Division – Senior Research Associate

I wanted to go back and touch on the GPO. By my math, it looks like the net admin fee growth there, if I strip out Innovatix and Essensa, was about 2% this quarter. I didn’t hear anything about you cutting the comment that you’d made previously about growing the GPO mid-single digits organically this year. So I guess, my question is, if you’re not assuming utilization improvement, which it doesn’t seem like you are, how does Premier get to 5%? Is that some of the new client wins that have been discussed on prior calls? And I guess, the broader question is – Premier has done really well in a bad utilization environment for a couple of years now. It’s just a little bit surprising maybe that just now, for the first time, and really, in my opinion, it seems to really be hitting you guys.

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

Yes, Evan. So this is Craig. So your math is correct. And as we said in the prepared remarks, the legacy GPO growth was, in fact, 2%. That was partially due to softer utilization trends but also the impact of the slower growth in the couple of service lines I just responded to as well as we always do have an impact of cash timing of when cash comes in across quarters, which did impact us in Q1. On a full year basis, we do continue to maintain the overall administrative fee revenue growth guidance we talked about, which is 13% to 17% on a full year basis with mid-single-digit legacy administrative fee growth. And we believe, as Susan talked about, some of that utilization, if it were to continue to deteriorate, would take us to the lower end of that or keep us at the lower end. But if some of that does come back as the year progresses, we continue to feel confident in the broader guidance range that we’ve talked about, about mid-single-digit level organic business growth.

Evan Arthur Stover – Robert W. Baird & Co. Incorporated, Research Division – Senior Research Associate

Okay. Second question, unrelated. These 340B cuts, it looks like – I mean, it looks like they’re actually happening, lawsuits notwithstanding. Depending on who you believe, this is a material source of hospital margin. How would these cuts, if they play out, impact your specialty pharmacy business? And I guess, overall, I mean, A, how are you clients thinking about these cuts? And is it as material as some people have put it out there to be? And B, really, what are – what is Premier doing to kind of help clients cope with pretty draconian moves?

Susan D. DeVore – Premier, Inc. – President, CEO & Director

Yes. So this discussion in Washington will continue, and there will likely be lawsuits from our perspective. The 340B cuts, the 28.5% effective cut to payments for 340B drugs will significantly create pressure on our health systems. It will lead to, we think, the need for even more intense cost-reduction services, which utilize our data, our analytics and our advisory services. We do not think that it will affect our own specialty pharmacy business. But primarily, we think the effect is that it will just create more pressure on the cost side of the business for our health systems, which could be good for us.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 14 of 18

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

Yes. And I think just as a reminder, a clarification. This is Craig. But our specialty pharmacy business is in the outpatient setting. There’s 340B changes in Part B, which is the inpatient setting, which is why it won’t directly impact our specialty pharmacy business today.

Operator

Our next question comes from the line of Sean Wieland from Piper Jaffray.

Sean William Wieland – Piper Jaffray Companies, Research Division – MD and Senior Research Analyst

So the last 7% of the member owners by revenue that did not renew, can you just tell us the story behind that? How many members does that represent? And what’s the process that they’re going through in choosing whether or not to renew?

Susan D. DeVore – Premier, Inc. – President, CEO & Director

Yes. Thanks, Sean. It’s just a handful that are remaining. Some of them have policy or statutory requirements that they can’t auto-renew contracts and they have to go through some kind of evaluation process. So it was either that people needed more time or they had some sort of policy or statutory requirements to do so.

Sean William Wieland – Piper Jaffray Companies, Research Division – MD and Senior Research Analyst

And do any of them have an RFP out?

Susan D. DeVore – Premier, Inc. – President, CEO & Director

Not that I’m aware of.

Sean William Wieland – Piper Jaffray Companies, Research Division – MD and Senior Research Analyst

Okay. And then my second question. Your R&D was lower than my model was looking for. What was the software capitalization – the R&D capitalization rate? And why is that line being pressured?

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

It’s really just timing, Sean, in terms of the full year. And when things happen, we do tend to have a little bit lower in Q1 given the summer months, vacations, things of that nature. So it will continue to be on the path that it’s been in the past on a full year basis.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 15 of 18

Sean William Wieland – Piper Jaffray Companies, Research Division – MD and Senior Research Analyst

So it will kind of reaccelerate next quarter to something similar to what it’s been in the past?

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

It will start next quarter and then in the back half of the year. So yes, on a full year basis.

Sean William Wieland – Piper Jaffray Companies, Research Division – MD and Senior Research Analyst

So what do you think R&D will be for the full year?

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

We don’t provide specific guidance on R&D expense on a full year basis.

Operator

Our next question comes from the line of Donald Hooker from KeyBanc.

Donald Houghton Hooker – KeyBanc Capital Markets Inc., Research Division – VP and Equity Research Analyst

It’s somewhat impressive that the GPO organic growth was 2% despite what seems to be a weak volume backdrop. Can you maybe parse out kind of some of the gives and takes there? I guess, the contract compliance seems like it continues to grow and you’re certainly adding new members. How did that kind of break out if you had to break down on those different categories, the GPO growth, to sort of bridge the – get to the 2%?

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

Yes, this is Craig. Don, the majority is really, just as I mentioned in my prepared remarks, the continuing contract penetration of existing members. As we talked about, while we’ve been recently announcing some of these new academic wins that have come on board, they’re still in a ramp-up process and a conversion process. In some cases, running out their historical contractual agreements. So we don’t really expect to see any uptick from the recent announcements over the past few months until the tail end of ’18 and actually more likely into fiscal ’19. So it’s really been wholeheartedly the growth and expansion of driving penetration in our existing member accounts. We do continue to see improvements in existing penetration across our service lines, with the exception of the couple of areas that I mentioned seeing some slower growth.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 16 of 18

Donald Houghton Hooker – KeyBanc Capital Markets Inc., Research Division – VP and Equity Research Analyst

Okay. And then my follow-up. So a separate question. Guys, it’s kind of a basic question but always good to check in with you guys on this is, obviously, Premier has a nice balance sheet, free cash flow. And it seemed to me recently – I don’t know if this is fair or not, but you seem to be less inclined towards acquisitions because you felt like multiples were high in the market. Where are you now kind of thinking there as you look out to the marketplace with your big balance sheet? And I guess, I assume the Essensa and Innovatix integrations are done, and you’re looking forward. Is that all fair?

Susan D. DeVore – Premier, Inc. – President, CEO & Director

So we have been focused on, as you know, on the Innovatix-Essensa integration and the Acro Pharmaceuticals integration. So those are still ongoing. We do have an active pipeline. Our corporate development function continues to do what they have always done, which is we’ve identified in both supply chain and performance services, additional ambulatory care capabilities, supply chain analytics, purchase services, e-commerce. And then over on the Performance Services side, claims data and analytics, additional ambulatory data sets, other population health kinds of capabilities. So we continue to be active in looking at a pipeline of opportunities for acquisition. We’ve done a couple of partnerships this quarter, one with a company called Verge for incident reporting, which was a gap in our quality clinical analytics; and then a partnership with Milliman, which we’ve had actually for a while for ACO analytics, bundled payment analytics and claims analytics. So nothing’s really changed in terms of our interest in continuing to leverage our balance sheet to acquire and build the capabilities that we need long term.

Operator

Our next question comes from the line of Mohan Naidu from Oppenheimer.

Mohan A. Naidu – Oppenheimer & Co. Inc., Research Division – MD and Senior Analyst

Susan, I just want to ask you, based on a high level, there is a lot of discussion about potential threat from Amazon in the healthcare market. And how do you see a possible disruption from Amazon coming into the supply chain if there is anything relating to GPO market or supply chain in healthcare?

Susan D. DeVore – Premier, Inc. – President, CEO & Director

Yes. There is certainly a lot of discussion about it, and we obviously have discussions as well. Like many others, Mohan, distributors, wholesalers, manufacturers and technology partners, Amazon could be both a competitor in some areas and a collaborator in others. We actually think that our members want us to focus on using data and comparative data and our algorithms for prediction to help them figure out clinically what are the best products and at the best possible price. So our members want us to aggregate demand and then make choices among alternatives at the best price points. And so that’s a little counter to what is the normal Amazon approach. Having said that, I think our deep data, our data science, our clinical knowledge and our wraparound services could be interesting in collaboration with Amazon or others. So we continue to sort of just look at all of this as an opportunity and potentially some areas of competition.

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 17 of 18

Mohan A. Naidu – Oppenheimer & Co. Inc., Research Division – MD and Senior Analyst

Just a quick one, Craig, for you. The $200 million share repurchase program, is that included – anything included into the guidance from the benefit of that?

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

We have not updated our guidance for that share repurchase at this point. It’s obviously conditional upon to the timeline that it takes for that repurchase to be executed. And obviously, we will report and give updates prospectively on what shares have been repurchased under the program and the implications on earnings per share.

Operator

Our next question comes from the line of Jamie Stockton from Wells Fargo.

James John Stockton – Wells Fargo Securities, LLC, Research Division – Director & Senior Equity Research Analyst

Maybe I’ll add a follow-up to a couple of the other ones that have already been asked. On the share buyback, Craig or Susan, if you were to see valuations really start to come in for some of the stuff that is in kind of the M&A pipeline and they were less offensive, which, I think, has been one of the biggest hurdles historically to you guys doing a lot of deals, would you see yourselves kind of deploying capital on both fronts and really leveraging what has been a clean balance sheet and a great cash flow? Maybe I’ll start there.

Craig S. McKasson – Premier, Inc. – Senior VP & CFO

Yes. So this is Craig. I’ll start. So as we’ve traditionally talked about, our primary focus on capital allocation is, has been and will continue to be growth and strategic expansion of the business to deliver value. Secondarily, we do want to make sure we continue to maintain a strong balance sheet so that we can be opportunistic and ride through cycles. But thirdly, yes, we also understand the importance of returning value to stockholders and ideally view with the amount of capital access we have that we can be effective at deploying capital to do acquisitions where they are strategically, financially and culturally aligned, have our balance sheet continue to be strong and to return value to stockholders in the form of share repurchases.

James John Stockton – Wells Fargo Securities, LLC, Research Division – Director & Senior Equity Research Analyst

Great. I apologize if this is duplicative with the question earlier. But is there a – like a specific area of the business that you guys feel like over the next year or two is going to be really ripe for M&A? If we look back, obviously, you’ve committed a lot over the last year to specialty. My sense is that you’re not going to really invest there incrementally. You’ve also committed a lot to GPO. Will we see the focus turn more toward performance services?

PREMIER, INC.

Fiscal 2018 First Quarter Conference Call Transcript

Page 18 of 18

Susan D. DeVore – Premier, Inc. – President, CEO & Director

I do think it’s safe to say we’re not feeling like we need additional specialty pharmacy assets in a big way right now given the acquisitions that we’ve done to date. We do continue to think technologies, analytics, performance services, capabilities, as the world continues to bring together different data sets to solve the cost and quality and value-based care challenges that healthcare systems have. Risk-assuming, payer-like capabilities we think will be important. But also, on the supply chain side with the cost pressure that health systems are going to be facing additional analytics, additional capabilities to have end-to-end kind of supply chain operating capabilities, they all continue to be a focus for us.

Michael J. Alkire – Premier, Inc. – COO

Jamie, this is Mike Alkire. Just real quick. The only other thing I’d add is that we’re really thinking through how do we drive more speeds of value with the data and the analytics. So if you think of analytics capabilities that can really identify opportunities for improvement, either from a cost reduction or safety and clinical improvement standpoint, those are sort of those nuanced technologies that we’re going to continue to evaluate.

Operator

And this does conclude the question-and-answer session of today’s program. I’d like to hand the program back to Susan DeVore for any further remarks.

Susan D. DeVore – Premier, Inc. – President, CEO & Director

Okay. Thank you, everybody, for spending time with us today and for the thoughtful questions. We look forward to speaking with you again on or before our second quarter conference call in February.

So Jonathan, you may now close the call.

Operator

And thank you, ladies and gentlemen, for your participation in today’s conference. This does conclude the program. You may now disconnect.

Good day.

EX-99.3

November 6, 2017 First-Quarter 2018 Financial Results and Update Exhibit 99.3

Forward-looking statements and non-GAAP financial measures Forward-looking statements — Certain statements made during Premier’s webcast and included in this presentation, including, but not limited to, those related to our financial and business outlook, the impact of the evolving healthcare environment, strategy and growth drivers, member retention, renewal rates and revenue visibility, cross and upsell opportunities, acquisition contributions, activities and pipeline, revenue available under contract, 2018 financial guidance and related assumptions, implementation of and purchases under our share repurchase program, and target growth rate 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.  You should carefully read Premier’s current and future filings with the SEC for more information on potential risks and other factors that could affect Premier’s financial results. 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 federal securities laws. 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. You should carefully read Premier’s current and future filings with the SEC for definitions and further explanation and disclosure regarding our use of non-GAAP financial measures and such filings should be read in conjunction with this presentation.

President and Chief Executive Officer Premier Inc. Susan DeVore OVERVIEW AND BUSINESS UPDATE

During the fiscal first quarter, We achieved a highly successful outcome regarding the renewal of our group purchasing agreements. We continued to grow, achieving our first-quarter sales targets as we cultivated new partnerships and introduced innovative technologies and integrated solutions. We ended the quarter financially sound, with strong cash flow and a flexible balance sheet, which enables us to continue to execute our long-term, strategic acquisition and growth strategy, while also returning value to our stockholders.

Response to the impact of recent hurricanes Close collaboration with our providers and suppliers ensured life-saving services continued to be delivered to individuals impacted by natural disasters.

First-quarter fiscal 2018 financial highlights *See non-GAAP Adjusted EBITDA, non-GAAP Adjusted Fully Distributed Earnings Per Share and non-GAAP Free Cash Flow reconciliations to GAAP equivalents in Appendix. Performance Services segment revenue up 7% to $84.8 million Supply Chain Services segment revenue up 31% to $305.8 million Non-GAAP adjusted EBITDA* up 8% to $119.2 million Non-GAAP adjusted fully distributed earnings per share* up 7% to $0.44 Cash flow from operations of $75.0 million; non-GAAP free cash flow* of $33.4 million Consolidated net revenue up 25% to $390.6 million; GAAP net income of $60.6 million, GAAP EPS of $0.36 after required GAAP non-cash adjustment *See non-GAAP Adjusted EBITDA, non-GAAP Adjusted Fully Distributed Earnings Per Share and non-GAAP Free Cash Flow reconciliations to GAAP equivalents in Appendix.

Chief Operating Officer Premier Inc. Mike Alkire OPERATIONS REVIEW

New engagements with academic health systems

Select examples highlighting the expansion and value of our offerings Cloud-based, on-demand application driven by an analytics engine that can read and benchmark an equipment proposal automatically within seconds. It also includes repository, spend management, and team-collaboration capabilities designed to empower members to better control their capital expenditures. PremierConnect Capital Analytics Applied Sciences PremierConnect Safety Recently expanded relationship with the Veteran’s Administration, securing a contract for all seven of the V.A. medical centers serving North Carolina and Virginia. One is a collaboration to develop a multi-phase initiative focused on improving the quality of cancer patient care. The other involves co-developing a protocol to help prevent certain infections that can lead to hospital readmissions. CONTINUED EXPANSION WITH VA MEDICAL CENTERS NEW PRODUCT LAUNCH SIGNIFICANT NEW AGREEMENTS

Chief Financial Officer Premier Inc. Craig McKasson FINANCIAL REVIEW

Fiscal 2018 first-quarter consolidated and segment highlights Consolidated Net revenue (in millions) Supply Chain Services Net revenue (in millions) Performance Services Net revenue (in millions) Adjusted EBITDA (in millions) Adjusted EBITDA (in millions) Adjusted EBITDA (in millions) *See non-GAAP Adjusted EBITDA and non-GAAP Segment Adjusted EBITDA reconciliations to GAAP equivalents in Appendix. 25% 8% 31% 7% 7% -5% GAAP NON-GAAP*

Fiscal 2018 first-quarter Supply Chain Services revenue Supply Chain Services revenue increased 31% Net administrative fees revenue increased 20% Including contribution from Innovatix and Essensa Products revenue increased 44% Including contribution from Acro Double-digit growth in direct sourcing business Supply Chain Services Net revenue (in millions) 31% $233.8 $305.8

Fiscal 2018 first-quarter Performance Services revenue Performance Services revenue increased 7% Continued growth in both advisory services and informatics and technology services businesses Performance Services Net revenue (in millions) 7%

Fiscal 2018 first-quarter GAAP net income 4% $0.26 $0.36 Earnings per share attributable to stockholders* – diluted GAAP net income increased 4% *After required GAAP non-cash adjustments to reflect the change in redemption amount of limited partners’ Class B common unit ownership at the end of each period

Fiscal 2018 first-quarter non-GAAP adjusted EBITDA* Consolidated non-GAAP adjusted EBITDA up 8% * See non-GAAP Adjusted EBITDA and non-GAAP Segment Adjusted EBITDA reconciliations to GAAP equivalents in Appendix. $119.2 $110.8

Calculates income taxes at 39% on pre-tax income, assuming taxable C corporate structure Calculates adjusted fully distributed earnings per share, assuming all Class A and B common shares are held by the public Fiscal 2018 first-quarter non-GAAP adjusted fully distributed net income and earnings per share* 7% $58.9 million $61.7 million Non-GAAP adjusted fully distributed net income * See non-GAAP adjusted fully distributed net income and non-GAAP adjusted fully distributed earnings per share to GAAP equivalents in Appendix

Cash flow and capital flexibility at September 30, 2017 CONSIDERABLE CASH AND DEBT CAPACITY AVAILABLE AMPLE CAPITAL FLEXIBILITY FOR FUTURE ACQUISITIONS AND STOCKHOLDER RETURN Cash flow from operations of $75.0 million and non-GAAP free cash flow* of $33.4 million for first-quarter fiscal 2018 Cash and cash equivalents of $132.1 million Outstanding borrowings of $170.0 million on $750.0 million five-year unsecured revolving credit facility; repaid $50.0 million during first-quarter fiscal 2018 *See non-GAAP Adjusted EBITDA, non-GAAP Segment Adjusted EBITDA, and non-GAAP Free Cash Flow reconciliations to GAAP equivalents in Appendix.

Exchange update On October 31, 2017, approximately 3.7 million Class B units were exchanged for Class A common shares on 1-for-1 basis; equal number of Class B common shares retired. Expect to launch a $200.0 million share repurchase program on or about November 9, 2017 for Class A common shares during the remainder of fiscal 2018.

QUESTIONS

APPENDIX

Fiscal 2018 and fiscal 2017 non-GAAP reconciliations

Fiscal 2018 and fiscal 2017 non-GAAP reconciliations

Fiscal 2018 and fiscal 2017 non-GAAP reconciliations

Fiscal 2018 and fiscal 2017 non-GAAP reconciliations

Fiscal 2018 and fiscal 2017 non-GAAP reconciliations

Fiscal 2018 and fiscal 2017 non-GAAP reconciliations