SEGMENTS

3 Months Ended

Sep. 30, 2019

(17) SEGMENTS

The Company delivers its solutions and manages its business through two reportable business segments, the Supply Chain Services segment and the Performance Services segment. The Supply Chain Services segment includes the Company's GPO, and direct sourcing activities. The Performance Services segment includes the Company's informatics, collaborative, consulting services and insurance services businesses.

The following table presents disaggregated revenue by business segment and underlying source (in thousands):



	Three Months Ended September 30,
Net revenue:	2019		2018
Supply Chain Services
Net administrative fees	$	172,403	$	162,000
Other services and support	2,560		1,211
Services	174,963		163,211
Products	48,121		43,659
Total Supply Chain Services	223,084		206,870
Performance Services	79,326		85,732
Net revenue	$	302,410	$	292,602

Additional segment information related to depreciation and amortization expense, capital expenditures and total assets was as follows (in thousands):



	Three Months Ended September 30,
	2019		2018
Depreciation and amortization expense ^(a):
Supply Chain Services	$	4,825	$	4,704
Performance Services	30,620		25,913
Corporate	2,134		2,613
Total depreciation and amortization expense	$	37,579	$	33,230

Capital expenditures:
Supply Chain Services	$	1,477	$	495
Performance Services	18,504		19,374
Corporate	2,002		5,193
Total capital expenditures	$	21,983	$	25,062



Total assets^(b):	September 30, 2019		June 30, 2019
Supply Chain Services	$	1,129,999	$	1,111,934
Performance Services	933,856		941,183
Corporate	530,729		516,450
Total assets	$	2,594,584	$	2,569,567


(a)	Includes amortization of purchased intangible assets.


(b)	As of June 30, 2019, Supply Chain Services total assets included $24.6 million in assets of discontinued operations related to the specialty pharmacy business.

The Company uses Segment Adjusted EBITDA (a financial measure not determined in accordance with generally accepted accounting principles ("Non-GAAP")) as its primary measure of profit or loss to assess segment performance and to determine the allocation of resources. The Company also uses Segment Adjusted EBITDA to facilitate the comparison of the segment operating performance on a consistent basis from period to period. The Company defines Segment Adjusted EBITDA as the segment's net revenue and equity in net income of unconsolidated affiliates less operating expenses directly attributable to the segment excluding depreciation and amortization, amortization of purchased intangible assets, merger and acquisition related expenses and non-recurring or non-cash items. 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. Non-recurring items are income or expenses and 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. General and administrative corporate expenses that are not specific to a particular segment are not included in the calculation of Segment Adjusted EBITDA. Segment Adjusted EBITDA also excludes any income and expense that has been classified as discontinued operations.

For more information on Segment Adjusted EBITDA and the use of Non-GAAP financial measures, see "Our Use of Non-GAAP Financial Measures" within Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.

A reconciliation of income before income taxes to Segment Adjusted EBITDA is as follows (in thousands):



	Three Months Ended September 30,
	2019			2018
Income before income taxes	$	80,553		$	94,690
Equity in net income of unconsolidated affiliates ^(a)	(3,607		)	(2,690		)
Interest and investment (income) loss, net ^(b)	(476		)	688
Other expense	7,577			1,941
Operating income	84,047			94,629
Depreciation and amortization	24,535			20,253
Amortization of purchased intangible assets	13,044			12,977
Stock-based compensation ^(c)	3,852			6,233
Acquisition and disposition related expenses	6,141			1,037
Remeasurement of tax receivable agreement liabilities ^(d)	4,674			—
ERP implementation expenses ^(e)	23			326
Equity in net income of unconsolidated affiliates ^(a)	3,607			2,690
Deferred compensation plan income ^(f)	241			1,336
Other expense, net	92			45
Non-GAAP Adjusted EBITDA	$	140,256		$	139,526

Segment Non-GAAP Adjusted EBITDA:
Supply Chain Services	$	149,911		$	136,310
Performance Services	20,376			30,575
Corporate	(30,031		)	(27,359		)
Non-GAAP Adjusted EBITDA	$	140,256		$	139,526


(a)	Refer to Note 5 - Investments for more information.


(b)	Represents interest expense, net and investment income.


(c)	Represents non-cash employee stock-based compensation expense and stock purchase plan expense of $0.1 million during both of the three months ended September 30, 2019 and 2018.


(d)	The adjustment to TRA liabilities for the three months ended September 30, 2019 is primarily attributable to an increase in the Premier, Inc. effective tax rate related to a state tax liability.


(e)	Represents implementation and other costs associated with the implementation of an enterprise resource planning ("ERP") system.

(f)

Represents realized and unrealized gains and losses and dividend income on deferred compensation plan assets.