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SEGMENTS (Tables) | 9 Months Ended
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Mar. 31, 2017
Segment Reporting [Abstract] |
Schedule of Segment Information | Segment information was as follows (in thousands):
| Three Months Ended March 31, | Nine Months Ended March 31,
| 2017 | 2016 | 2017 | 2016
Net revenue: |  |  |  |
Supply Chain Services |  |  |  |
Net administrative fees | $ | 143,915 |  | $ | 131,270 |  | $ | 398,962 |  | $ | 369,952 |
Other services and support | 3,116 |  | 1,104 |  | 5,962 |  | 2,963 |
Services | 147,031 |  | 132,374 |  | 404,924 |  | 372,915 |
Products | 138,132 |  | 80,010 |  | 386,639 |  | 239,107 |
Total Supply Chain Services | 285,163 |  | 212,384 |  | 791,563 |  | 612,022 |
Performance Services | 94,640 |  | 86,285 |  | 260,012 |  | 249,151 |
Net revenue | $ | 379,803 |  | $ | 298,669 |  | $ | 1,051,575 |  | $ | 861,173 |
Depreciation and amortization expense (a): |  |  |  |
Supply Chain Services | $ | 5,717 |  | $ | 262 |  | $ | 8,637 |  | $ | 1,138 |
Performance Services | 21,491 |  | 20,016 |  | 63,350 |  | 55,616 |
Corporate | 1,974 |  | 1,572 |  | 5,771 |  | 4,478 |
Total depreciation and amortization expense | $ | 29,182 |  | $ | 21,850 |  | $ | 77,758 |  | $ | 61,232 |
Capital expenditures: |  |  |  |
Supply Chain Services | $ | 198 |  | $ | 63 |  | $ | 2,347 |  | $ | 1,031 |
Performance Services | 16,308 |  | 14,368 |  | 47,079 |  | 44,836 |
Corporate | 1,061 |  | 1,371 |  | 2,466 |  | 8,817 |
Total capital expenditures | $ | 17,567 |  | $ | 15,802 |  | $ | 51,892 |  | $ | 54,684 |
|  |  | March 31, 2017 | June 30, 2016
Total assets: |  |  | (Restated) |
Supply Chain Services |  |  | $ | 1,118,587 |  | $ | 345,219 |
Performance Services |  |  | 901,360 |  | 934,588 |
Corporate |  |  | 578,737 |  | 575,576 |
Total assets |  |  | $ | 2,598,684 |  | $ | 1,855,383 |
(a) | Includes amortization of purchased intangible assets.
Reconciliation of Income Before Income Taxes to Segment Adjusted EBITDA | A reconciliation of income before income taxes to Segment Adjusted EBITDA is as follows (in thousands):
| Three Months Ended March 31, | Nine Months Ended March 31,
| 2017 | 2016 | 2017 | 2016
Income before income taxes | $ | 78,653 |  | $ | 81,100 |  | $ | 443,697 |  | $ | 226,062 |
Remeasurement gain attributable to acquisition of Innovatix, LLC | — |  | — |  | (204,833 | ) | — |
Equity in net income of unconsolidated affiliates (a) | (83 | ) | (6,627 | ) | (14,789 | ) | (16,002 | )
Interest and investment loss, net (b) | 2,017 |  | 285 |  | 3,026 |  | 981 |
Loss on disposal of long-lived assets | 725 |  | — |  | 2,243 |  | — |
Other expense (income), net | (2,260 | ) | — |  | (3,135 | ) | 2,081 |
Operating income | 79,052 |  | 74,758 |  | 226,209 |  | 213,122 |
Depreciation and amortization | 15,102 |  | 13,110 |  | 43,318 |  | 37,174 |
Amortization of purchased intangible assets | 14,080 |  | 8,740 |  | 34,440 |  | 24,058 |
Stock-based compensation (c) | 7,157 |  | 11,839 |  | 19,476 |  | 37,093 |
Acquisition related expenses | 4,330 |  | 2,583 |  | 11,483 |  | 11,699 |
Strategic and financial restructuring expenses | — |  | 33 |  | — |  | 268 |
Adjustment to tax receivable agreement liability (d) | 2,768 |  | — |  | (2,954 | ) | (4,818 | )
ERP implementation expenses (e) | 215 |  | 1,162 |  | 1,741 |  | 3,240 |
Acquisition related adjustment - revenue (f) | 11,765 |  | 1,077 |  | 17,729 |  | 5,216 |
Equity in net income of unconsolidated affiliates (a) | 83 |  | 6,627 |  | 14,789 |  | 16,002 |
Deferred compensation plan income (expense) (g) | 1,675 |  | — |  | 2,778 |  | (2,073 | )
Other income | 497 |  | — |  | 497 |  | — |
Adjusted EBITDA | $ | 136,724 |  | $ | 119,929 |  | $ | 369,506 |  | $ | 340,981 |
Segment Adjusted EBITDA: |  |  |  |
Supply Chain Services | $ | 127,898 |  | $ | 118,704 |  | $ | 364,224 |  | $ | 329,642 |
Performance Services | 36,535 |  | 30,771 |  | 87,449 |  | 90,158 |
Corporate (h) | (27,709 | ) | (29,546 | ) | (82,167 | ) | (78,819 | )
Adjusted EBITDA | $ | 136,724 |  | $ | 119,929 |  | $ | 369,506 |  | $ | 340,981 |
(a) | Represents equity in net income of unconsolidated affiliates primarily generated by the Company's 49% ownership interest in FFF and 50% ownership interest in Innovatix prior to the acquisition of the remaining 50% interest on December 2, 2016.
(b) | Represents interest expense, net and realized gains and losses on our marketable securities.
(c) | In addition to non-cash employee stock-based compensation expense, includes stock purchase plan expense of $0.1 million for both the three months ended March 31, 2017 and 2016 and $0.4 million and $0.3 million for the nine months ended March 31, 2017 and 2016, respectively.
(d) | Represents adjustment to tax receivable agreement liability for an increase in income apportioned to California during the three months ended March 31, 2017 and a 1% decrease in the North Carolina state income tax rate that occurred during each of the nine months ended March 31, 2017 and 2016.
(e) | Represents implementation and other costs associated with the implementation of an enterprise resource planning ("ERP") system.
(f) | During the three and nine months ended March 31, 2017, we recorded $11.6 million and $17.2 million purchase accounting adjustments to Adjusted EBITDA, respectively, related to our acquisition of Innovatix and Essensa in December 2016. These adjustments reflect the fair value of administrative fees related to member purchases that occurred prior to December 2, 2016, but were reported to us subsequent to that date through March 31, 2017. Under our revenue recognition accounting policy, which is in accordance with GAAP, these administrative fees would be ordinarily recorded as revenue when reported to us; however, the acquisition method of accounting requires us to estimate the amount of purchases prior to the acquisition date and to record the fair value of the administrative fees to be received from those purchases as an account receivable (as opposed to recognizing revenue when these transactions are reported to us) and record any corresponding revenue share obligation as a liability. The purchase accounting adjustment amounted to an estimated $22.1 million of accounts receivable relating to these administrative fees and an estimated $4.0 million for the related revenue share obligation through March 31, 2017.
This item also includes non-cash adjustments to deferred revenue of acquired entities of $0.1 million and $1.1 million for the three months ended March 31, 2017 and 2016, respectively, and $0.5 million and $5.2 million for the nine months ended March 31, 2017 and 2016, respectively. Business combination accounting rules require the Company to record a deferred revenue liability at its fair value only if the acquired deferred revenue represents a legal performance obligation assumed by the acquirer. The fair value is based on direct and indirect incremental costs of providing the services plus a normal profit margin. Generally, this results in a reduction to the purchased deferred revenue balance, which was based on upfront fees associated with software license updates and product support contracts assumed in connection with acquisitions. Because these support contracts are typically one year in duration, our GAAP revenues for the one year period subsequent to the acquisition of a business do not reflect the full amount of support revenues on these assumed support contracts that would have otherwise been recorded by the acquired entity. The Non-GAAP adjustment to software license updates and product support revenues is intended to include, and thus reflect, the full amount of such revenues.
(g) | Represents realized and unrealized gains and losses and dividend income on deferred compensation plan assets.
(h) | Corporate consists of general and administrative corporate expenses that are not specific to either of our reporting segments.

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