Premier is eliminating its dual-class ownership structure, a move that the group purchasing and consulting organization said will simplify financial reporting.
Premier's member-owners converted their Class B shares into shares of Premier Class A common stock, the company announced Tuesday. The exchange resulted in tax amortizable goodwill of $1.2 billion to $1.4 billion, which is expected to result in $300 million to $350 million in future cash tax savings.
Premier also terminated its Tax Receivable Agreement with its member-owners and accelerated its obligated payouts.
"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," Premier CEO Susan DeVore said in prepared remarks. "In addition, we are pleased to have reached agreements that extend our longstanding relationships with an overwhelming majority of our member-owner organizations.
The company, which reported $1.22 billion in net revenue in 2019, also amended its group purchasing agreements with the vast majority of its member-owners, which executives expect to reduce net administrative fees revenue between $100 million and $110 million in the 2021 fiscal year.
Shares were trading at around $35 on Tuesday, down about 10.5% from around $39 this time last year. The S&P 500 index rose about 14% in that time.