August 12, 2020 – Premier, Inc. (Charlotte, NC) has completed a corporate restructuring to eliminate its dual-class ownership structure, through an exchange under which Premier’s member-owners converted their Class B units in Premier Healthcare Alliance, LP and corresponding Class B shares of Premier, Inc. into shares of Premier Class A common stock, on a one-for-one basis.
The elimination of the dual-class structure follows the company’s transition to a majority independent board of directors. These actions complete Premier’s shift away from its prior “controlled-company” status and result in a simplified ownership structure and financial reporting. Premier expects the change to result in significant future cash tax savings.
Also, as a result of the exchange, 100% of operating income will now be attributable to the parent corporation, Premier, Inc. As such, the company will no longer make quarterly tax distribution payments to the former limited partners as it previously had under the dual-class ownership structure.
The company also terminated its Tax Receivable Agreement (TRA) with its member-owners by accelerating those payment obligations at a discounted value as provided in the TRA. The company noted that members representing more than 99% of its member-owner gross administrative fees agreed to the corporate restructuring and termination of TRAs.
The company announced that, separately, it has entered into amended Group Purchasing Organization (GPO) agreements with the vast majority of its member-owners. The amended GPO agreements are expected to support sustainable, long-term growth of net administrative fees revenue and enhance the company’s flexibility to invest in strategic initiatives to deliver additional value for members and stockholders.
“By undertaking these strategic actions to simplify Premier’s structure and strengthen our company, we expect to have greater flexibility to drive growth and support our technology-enabled, end-to-end supply chain as well as our enterprise analytics and performance improvement initiatives,” said Susan DeVore, Premier’s CEO. “In addition, we are pleased to have reached agreements that extend our longstanding relationships with an overwhelming majority of our member-owner organizations. These agreements demonstrate the value we deliver to our members and reflect their support of our strategy as we move forward. We believe that the changes we are making will enhance our ability to further differentiate Premier with additional innovative offerings that deliver superior service, performance and value for all our stakeholders.”