Q2 2021 Premier Inc Earnings Call
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Ladies and gentlemen, this is the operator today's conference is scheduled to begin momentarily until that time your lines will again be placed on music hold thank you for your patience.
John.
Okay.
John.
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Yes.
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Ladies and gentlemen, thank you for standing by and welcome to the Premier Inc. Fiscal 'twenty 'twenty, one second quarter results conference call. At this time, all participants are in a listen only mode.
After the speaker's presentation, there will be a question and answer session to ask a question. During this session you will need to press star one on your telephone.
If you require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Angie Mccabe Vice President of Investor Relations. Thank you. Please go ahead Madam.
Thank you Cindy welcome to Premier Inc. 's fiscal 2021 second quarter Conference call. Our speakers. This morning are Susan Devor Premier Chief Executive Officer, Mike Al-qaeda, President and incoming CEO and Craig Mckesson, our chief administrative and financial officer 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 <unk> Premier Inc. Dot com management's remarks today contain certain forward looking statements and actual results could differ.
Really from those discussed today these forward looking statements.
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 form 10-Q for the fiscal second quarter, which we expect to file soon we encourage you to review these detailed safe harbor and risk factor disclosures.
Please also note the financial results.
Under today reflect continuing operations following the completion of our sale and exit the specialty pharmacy business on June seven 2019.
Also where appropriate we will work to where appropriate we will refer to adjusted or other non-GAAP financial measures such as free cash flow to reconciliations of non-GAAP financial measures to GAAP financial measures are included in our earnings release, the appendix of the supplemental slides accompanying this presentation.
And in our earnings form 8-K, which we expect to furnish to the SEC.
I will now turn I'll turn the call over to Susan Devor.
Yeah.
Susan.
Sorry, I'm on mute.
What happens thanks, Angie and good morning, everyone and thank you for joining US today as you may have seen earlier. This morning, we announced my planned retirement and Mike <unk> appointment as President as premieres next Chief Executive Officer.
We also announced our fiscal 2021 second quarter results and are establishing our full year fiscal 'twenty 'twenty one financial guidance.
After a nearly 18 year career at premier, including more than 12 years as CEO I'm retiring effective June 32021, and transitioning the CEO role to Mike on May 1st.
Following my retirement from the company I'll continue as an advisor to premier for two years.
Together with our employees, we have built a successful mission driven health care company that is focused on delivering innovative solutions to our members and other customers.
That helped them deliver better care improved outcomes and lower costs.
Premier has a strong foundation in the company is well positioned to further advance its strategic objectives.
So after much reflection and careful consideration I believe that now is the right time for me to retire and the company to transition to its next generation of leadership.
Succession planning is a key responsibility of the Premier Board of directors, it's something they take seriously and have been working on for quite some time.
The board and I believe Mike is the ideal leader to oversee premier ongoing strategic evolution.
He is a seasoned executive with three decades of operational technology and business development experience.
Over his nearly 17 years with Premier Mike has been instrumental.
And developing building and executing our strategy and he has played a key role in driving the company's growth and success.
It's been an honor and privilege to be a member of the Premier family I am So proud of all that we've accomplished and I think premier as employees for their dedication passion and focus on serving our member organizations and other customers to improve the health of our communities while positioning premier for continued.
Success.
Also want to thank our board of directors for their confidence in me over the years for their commitment to cultivating outstanding talent at Premier.
And for their focus on ensuring a seamless leadership transition.
Finally, my Thanks go out to everyone in the investment community for your support and your thoughtful perspective.
With that I'll now turn to a discussion of our second quarter results and our fiscal 'twenty 'twenty one guidance.
We're pleased with our second quarter results, which reflect solid execution and the differentiated value that we deliver to our members. We produced strong results. Despite the ongoing challenges caused by the COVID-19 pandemic.
Compared with the second quarter of fiscal 2020, we achieved 32% growth in consolidated net revenue.
41% growth in our supply chain services segment, net revenue and 8% growth in our performance services segment net revenue.
As we expected adjusted EBITDA and adjusted earnings per share declined year over year, primarily due to the amended and extended GPO agreements that were executed in August 2020.
In addition, the ongoing COVID-19 pandemic continues to affect our year over year profitability, Craig will discuss our financial results in more detail in his remarks.
This morning, we also announced that we are establishing our fiscal 'twenty 'twenty one guidance, while we are still in the midst of the pandemic. We are at a point, where we believe we have more visibility on the remainder of this fiscal year and are now in a position to provide guidance ranges for our key metrics.
Craig will provide additional detail during his remarks, but we currently expect consolidated net revenue to be in the range of $1 six O eight to $1 $65 $3 billion.
Adjusted EBITDA to be in the range of $445 million to $465 million.
And adjusted EPS to be in the range of $2 26 to $2 39.
With regard to the pandemic impact on our business. We will of course continue to monitor health care utilization resurgence and spread of the virus and its variance by geography vaccine distribution consumer behavior and the status of reopening or as the case may be ongoing or renewed.
<unk> are businesses and other organizations across the country.
We continue to support our members as they navigate this challenging environment and are advancing our efforts to create a more resilient health care supply chain.
I'd also like to take just a few minutes to provide our views of the changes in Washington D. C from a macro perspective, we're encouraged by some of the recent commentary from the new biting administration and generally have the following expectations.
First the administration's number one priority is moving ahead with the largest mass vaccination program in U S history.
And improving our rapid testing capabilities and therapeutic treatments for COVID-19 in order to build herd immunity and allow us to safely reopen and rebuild the economy.
We believe this backdrop will permeate all decisions this year.
Second given the Democrats extremely narrow margins of control of government and the need to unite the nation by avoiding extreme polarization. We believe that many of the sweeping changes proposed during the campaign may not be achievable. This includes proposals like Medicare for all a public option and direct drug pricing.
Negotiations among others.
In this regard key health care themes and trends will more likely stay the same rather than change.
Moreover, we believe this more stabilized policy environment will create an opportunity for continued innovation and investment in health care overall.
Third we do believe there will be important incremental changes for one we believe the COVID-19 pandemic has highlighted areas, where the policy directions underway over the last decade will be accelerated.
For example, telemedicine is working well during the pandemic when leveraged by all providers. So it's likely that it will not only remain but we will expand and be a competitive differentiator for health systems.
Providers in value based care arrangements have clearly outperformed during the pandemic and this will further the movement to new payment models and risk.
Third given the prevailing discussion about reforming the health care supply chain, which we see as overly reliant still on foreign nations. We believe there will be a greater focus on domestic manufacturing and gaining upstream and downstream visibility into the supply chain.
Lastly, we'll also likely see investments made in health information technology infrastructure in part so as to better harnessed that technology.
Overcome future Pandemics. This includes a focus on accelerating interoperability, providing access to all data and creating applications that utilize EMR and claims data.
We believe premier is extremely well positioned to succeed under these major policy trends that we see emerging and being the focus in Washington.
I'll now turn the call over to our president and incoming CEO, Mike our car.
Thank you Susan and good morning, everyone.
I am truly humbled and excited to take on the CEO role at Premier.
I sincerely, thank Susan for her leadership guidance and contributions to premier.
In the coming months, Susan and I will work closely to ensure a smooth transition.
Over the years, we affords strong relationships with our members.
And I will work diligently to continue strengthening them and to build new relationships as we grow.
To help drive member alignment with our long term strategy.
Move into the CEO role.
I will be leaving the company in its execution of our strategic priorities to drive long term sustainable growth and deliver value to our stakeholders.
As we have communicated previously beginning in fiscal 2022 and adjusted for the impact of the COVID-19 pandemic on our business, we expect to target multi year compound annual growth rates.
Mid to high single digits for consolidated net revenue adjusted EBITDA and adjusted earnings per share.
We are focused on successfully executing our strategy while at the same time, helping our members as they navigate the challenges of the COVID-19 pandemic.
The sourcing critically needed supplies, we are working closely with their members and suppliers to help ensure our members have the access to the supplies staffing and insights they need to carry out the mass vaccination campaign currently underway we.
We are uniquely positioned as a trusted partner in connecting the health care community and we believe our role. We are playing is critical to helping our country has returned to normal and repairing the economy.
I will now discuss our business performance in the second quarter.
Over the past several years, we have built a strong foundation that uniquely positions us to advance our business.
In our performance services business, we are focused on further penetrating the provider market with our technology and consulting services and leveraging our unique capabilities to expand into adjacent markets.
Included in the payer and life Sciences and employer markets.
We believe theres, a real need and opportunity for artificially intelligent technology data.
Data and insights with wraparound implementation services to improve quality and reduce total cost we.
We are expanding our capabilities to more fully address and coordinate care improvement and standardization in these markets.
One example of this is our expansion into the life Sciences market.
Differentiated offering we connect our network of health care providers with life Sciences companies.
With our innovative clinical decision support technology that uses machine learning and artificial intelligence, we help automate the complex process of identifying the appropriate participants to include in clinical studies.
We have a strong pipeline with an anticipated full year fiscal 2021 bookings growth rate in the mid teens for this business.
In fact, we recently engaged with FSD pharma to use our technology to demonstrate drug efficacy and limiting COVID-19 disease progression.
In addition, we are further expanding <unk>, our direct to employer platform through expansion of the centers of excellence programs to include additional providers.
Prior authorization capabilities and high value network growth and wrap around network.
Work expansion.
We continue to see strong interest from our health care provider members and large national employers with which demonstrates the differentiated value of this offering.
In fact.
During the first half of fiscal 2021, we closed a number of new engagements, representing a 25% increase and manage lives.
We also continue to develop our technology enabled prior authorization solution with the potential to connect to our <unk> offering as a further differentiator and value enhancer.
And our supply chain services segment, our long term goal is to continue expanding the amount of member spend we capture there.
Thereby solidifying our position as.
As a leading provider of health care supply chain technology and services that will enable us to manage alongside our member health systems total supply chain outcomes.
We made progress advancing our efforts in the second quarter through the following actions.
<unk>.
In an effort to capture more of our members spend particularly in the largely untapped area of purchase services, we recently announced that through conducting our comprehensive purchase services offering we are partnering with our long term memory Yankee Alliance.
Build a customized GPO portfolio to further address its members combined purchase services spend of around $800 million.
This partnership will leverage national regional and local contract using conductus analytics capabilities to drive incremental savings for Yankees members.
We are excited about the work we are doing with the Yankee Alliance and look forward to exploring additional opportunities to partner with our members to address their purchase services spend.
Second we are advancing our strategy to create more resiliency in the health care supply chain.
Recently, we announced that we along with 34 of our member health systems are partnering with the Royal industries are.
Yeah.
Okay.
Okay.
Okay.
I'm not sure what happened to microphone sounds like Theres difficulty anti can you here Mike.
I cannot I've reached out to the operator.
Okay, why don't I, just continue on with Mike's piece and then if he comes back and.
He can pick up.
We're partnering partnering with the oil industry, the global medical supplies manufacturer through our new joint venture dedicated to the domestic production of isolation gowns.
Similar to the Royal and previously announced prestige ameritech partnerships through.
Through minimal capital investment, we have actively oh, sorry, there pick it back up.
I am so sorry, this I guess with the Covid era anyway Im.
I'm going to start right word second we are advancing our strategy is to create a more resilient healthcare supply chain recently, we announced that we along with 34 of our member health systems are partnering with the Royal industries, a global medical supplier manufacturer through our new joint venture dedicated to the domestic production of isolation gowns similar.
Similar to the Royal and previously announced prestige ameritech partnerships with minimal capital investment we are actively pursuing other targeted opportunities and critical supply chain categories to diversify the supply chain. We believe this exemplifies and strengthen the deep and long term relationships, we have with our member health care providers.
We continue to focus on our strategy to technology enabled all aspects of the health care supply chain through our E. Commerce front end platform stock and our planned technology expansion and to invoicing and payables to provide an automated seamless and paperless procurement invoice and payment experience.
Our employees are our most valuable assets and we recognize that employee engagement. It's one of the most important factors that drive our success.
During this unprecedented and challenging period brought on by the pandemic and employee engagement has never been more critical.
And our most recent employee engagement survey results show that engagement remained strong in fact, there were meaningful increases across all major drivers of engagement over the past year. In addition, our leadership team received high marks outperforming global benchmarks for our response to the pandemic and the support of our teams and trans.
Turning to fully remote work.
We are also we also outperformed global benchmarks as it relates to diversity inclusion and belonging in the workplace reinforcing premier his commitment to diversity and inclusion we recently hired a chief diversity and inclusion officer, Joe Metro Cody, who is a member of the executive team. Joe is working closely with our leadership team to evolve our program.
<unk> and practices and enhance our employee experience.
I have committed to enhancing our world class workforce. So that we can continue to carry out our mission to improve the health of our communities.
And further position premier for success.
Looking ahead, there is tremendous opportunity for premier as the incoming CEO.
Absolutely thrilled to lead our incredibly talented employees and advancing our strategies to achieve our long term goals.
Alongside our Premier team I look forward to continuing to work closely with our members and our customers to deliver meaningful solutions that result in more and more.
More cost effective quality health care.
And as I look forward to continuing to engage with you the financial community to hear your perspective and look forward to continue sharing the progress, we're making on achieving our goals.
I'll now turn the call over to Craig Mckesson, our chief administrative and financial Officer.
Thanks, Mike I'd like to take a brief moment to congratulate Susan on her retirement and Mike on his appointment as the next CEO of Premier.
Susan has been an incredible leader and an exceptional mentor and I've thoroughly enjoyed working with her.
I look forward to continuing to work closely with Mike who I have partnered with for over 17 years as he takes the helm at Premier and as we remain focused on executing our strategy and delivering long term shareholder value.
I'll now turn to a brief discussion of our fiscal 2021 second quarter results and close my remarks by providing details around our financial guidance and outlook for the remainder of fiscal 2021.
For the second quarter of 2021 consolidated net revenue of $422 8 million increased 32% from a year ago. So.
Supply chain services segment revenue of $329 1 million increased 41% compared with the prior year quarter and performance services segment revenue of $93 7 million increased 8% compared with the prior year quarter.
In supply chain services net administrative fees revenue decreased compared with prior year, primarily due to three factors first as we expected our amended and extended GPO agreements, which were effective July one 2020 reduced net administrative fees revenue by approximately 20.
$5 million in the second quarter compared with the prior year quarter.
Second a $5 million impact, resulting from the GAAP required noncash amortization of prepaid contract administrative fees as a result of our prior year asset acquisition of security and Nextera in February 2020.
And third an estimated decline of approximately $3 million related to a decrease in member purchasing volume in certain categories. As a result of the COVID-19, pandemic, which continues to negatively impact overall health care utilization, including elective procedures as well as the <unk>.
Ongoing decline of spending and non health care related areas.
These impacts were partially offset by the ramp up from the addition of new members and further penetration of existing members.
Products revenue increased 210% from the prior year second quarter, driven by $120 million in incremental revenue related to our ongoing efforts to secure PPE and other critically needed high demand supplies for our members as a result of the COVID-19 pandemic.
For the first half of fiscal 2021, the impact of the pandemic on our GPO net administrative fees revenue due to lower contracted spend wasn't approximately negative $19 million, while our direct sourcing products revenue was positively impacted by approximately one.
$180 million.
In the performance services segment revenue growth was primarily driven by new technology, and consulting agreements, including enterprise license agreements and approximately $5 million in incremental revenue from our acquisition of health design plus in May 2020.
Similar to the fiscal first quarter, while there was some impact of the pandemic on our performance services business. It was generally not material to overall results during the recent quarter.
Okay.
With respect to profitability net income was $44 $9 million for the quarter.
<unk> adjusted EBITDA of $124 8 million in the second quarter decreased 16% as expected from the prior year quarter. As a result of supply chain services, adjusted EBITDA of $118 9 million, which decreased 20% quarter over quarter.
Primarily as a result of the same factors that affected net administrative fees revenue.
And this was partially offset by performance services segment, adjusted EBITDA of $36 6 million, which increased 22% from the prior year quarter, mainly due to revenue growth as well as the decline in SG&A expenses, primarily related to decreased travel and meeting expenses.
As a result of the COVID-19 pandemic.
As well as efficiencies and third party cost of sales.
Adjusted net income of $79 4 million decreased 13% from a year ago and adjusted earnings per share decreased 12% to 65.
From a liquidity and balance sheet perspective cash flow from operations for the six months ended December 31, 2020 was $116 2 million compared with $217 million for the prior year.
The decrease was primarily driven by expected lower net administrative fees revenue as a result of the amended GPO agreements the impact of the COVID-19 pandemic on health care and non health care purchasing and the timing of cash collections related to approximately $169 million in <unk>.
Purchases during the period associated with the demand for PPE to address increased needs as a result of the pandemic.
Okay.
Free cash flow for the six months period was $37 1 million compared with $127 9 million for the same period a year ago.
The decrease was primarily due to the same factors that impacted net cash provided by operating activities as well as an increase in tax receivable agreement payments made as a result of the acceleration of payments to former limited partners a premier LP as part of the company's restructure.
Yeah.
Okay.
On January 21, 2021, Premier's Board of directors declared a quarterly cash dividend.
Of <unk> 19 per share payable on March 15th 2021 to stockholders of record as of May 1st March 1st excuse me.
Cash and cash equivalents totaled $109 million at December 31, 2020, compared with $99 3 million at June 30.
Our five year $1 billion revolving credit facility had an outstanding balance of $100 million as of December 31.
Now, let's turn to our financial guidance for fiscal 2021.
As Susan highlighted earlier with our increased visibility on the remainder of this fiscal year. We are introducing fiscal 2021 full year guidance, which is based on our year to date performance through December 31, 2020, and our current expectations for the remainder of this fiscal year.
Our guidance incorporates certain key assumptions related to our business and consistent with prior years. It does not incorporate the effect of any future significant acquisitions that we may undertake.
In terms of specific metrics. We currently expect the following.
Supply chain services segment revenue of one to four two to one to seven $2 billion, primarily comprised of GPO net administrative fees revenue of $560 million to $580 million.
And direct sourcing products revenue of $650 million to $690 million performance.
Performance services segment revenue of $366 million to $381 million.
Together these produce an expected consolidated net revenue of $1 68 to $1 $65 3 billion.
We expect adjusted EBITDA to be in the range of $445 million to $465 million and adjusted earnings per share in the range of $2 26.
To $2 39.
Our fiscal 2021 guidance is also based on the following assumptions.
We continue to expect that our GPO net administrative fees revenue will continue to be pressured by lower overall health care utilization.
The potential deferral of certain elective procedures and the ongoing reduction in purchasing and non health care related areas. As a result of the ongoing COVID-19 pandemic.
We currently expect direct sourcing products revenue to increase sequentially by an incremental $20 million to $30 million in the third quarter from the second quarter of fiscal 2021, with an anticipated step down below second quarter performance and fiscal fourth quarter 2021.
As we've communicated previously due to the timing of enterprise analytics license agreements and our performance services segment. There may be periodic variability in the revenue recognition of the revenue and profitability associated with these engagements during any given fiscal year.
Capital expenditures, which consists primarily of capitalized internally developed software and other purchase capital is expected to be approximately $105 million to $110 million for the year.
And we expect adjusted net income will reflect an effective tax rate of 24%.
As Mike indicated our longer term growth objective remains unchanged beginning in fiscal 2022 and.
And adjusted for the impact of the COVID-19 pandemic on our business.
We expect to target multi year compound annual growth rates in the mid to high single digits for consolidated net revenue adjusted EBITDA and adjusted earnings per share.
Thank you for your time today I'll now turn the call back over to Susan.
Thanks, Craig we'll now open the call up for questions. We appreciate everyone's participation in our call today and because we are all in different locations. Please address your questions to either Mike or Craig or me and we'll answer them. Accordingly, operator, you may open the call for questions.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press, the pound or hash key and please standby, while we compile the Q&A roster.
Your first question comes from Lisa Gill with Jpmorgan Securities.
Thanks, very much and good morning, Susan first off let me congratulate you on Gary.
Retirement, it's been great working with you.
Uh huh.
I wish you well and Mike Congratulations on your new role.
Do you all always have such great insights as to what's happening with any administration, we clearly have a new administration and just looking at your slide five that you put out around the current macro political environment. One of the things we talk about is telemedicine and obviously the pandemic has really changed telemedicine, but I'm just.
I'd love to hear more about how you think premier will play a role in telemedicine do you think that there is something you need to acquire how do we think about platforms for telemedicine.
Any of your incremental thoughts.
Susan or Mike that you can give us around the future of telemedicine would be great. Yes.
Yes, so I'll start and then turn to you Mike I think from a telemedicine perspective, we don't have telemedicine offerings as you know, but I think to the extent that our health system have built systems of care that include inpatient EHR ambulatory telemedicine, all kinds of methods to keep consumers can.
<unk> to the health system.
We see it as good for the overall, our overall utilization if you will of health care systems are health care systems. Their inpatient utilization is back to almost pre COVID-19 levels still having challenges in E R and in the non healthcare utilization.
We don't really see ourselves getting into telemedicine directly but just as it affects the overall health care environment, Mike I don't know, what you might add to that.
Yes, so Lisa it's a great question and if you think about our clinical decision support offering.
Where we are.
Leveraging all of our data and analytics and embedding those into the workflow all of those insights into the workflow.
The concept, we think that.
<unk>.
We will offer an opportunity is for us to embed those insights as the clinicians are providing those telemedicine visits to ensure a standardized way of providing care. So we're really excited about continuing the evolution of our clinical position.
Clinical decision support as it.
Relates to telemedicine.
And Mike and I also correct in thinking that we're going to need that clinical aspect as we think about reimbursement I mean, I think today a lot of the rules have been relaxed because of COVID-19, but if we think about it you know a doctor, saying that they spent 30 minutes with the patient being able to go back and have that actual clinical profile to show. They spent 30 minutes instead of seven or eight.
That's what that patient to get paid is that another way to think about this.
That's an interesting way to think about it is it's it's a little too early for us to tell how that whole reimbursement.
<unk> will sort of play out, but if you think about even as we're building out prior authorization and authorizing additional services.
Do think as it relates to payments Lisa I do think the more that we can embed at the point of care in terms of what's being authorized from a from a disease standpoint, I think the better. So again I think that's another opportunity for a clinical decision support tool.
Okay, great. Thanks, so much.
Your next question comes from Richard close with Canaccord Genuity.
Yes can you hear me okay.
Yeah, Hi, Richard.
Great Susan and Mike Congratulations on the news and enjoy your retirement, Susan and good luck Mike.
Hey, Craig.
Wanted to drill down on performance services, a little bit it came in a little below our estimate.
The 8% growth lower than I guess, what was achieved in the first quarter was there anything really to call out in a year over year growth numbers from <unk> and <unk>.
Like maybe life sale or something.
Yes, Thanks, Richard for the question. So we were very pleased with the second quarter performance, which as you know was consistent with Q1 of 2021 performance overall in terms of revenue. We did have in both quarters enterprise analytics license agreements. We also continued to have really strong growth in <unk>.
Our clinical decision support SaaS capabilities, and we saw growth in our <unk>.
Life Sciences, and our advisory services business.
Part of the change in the growth rate was the year over year comps because in fiscal 'twenty, our first quarter performance was fairly.
Fairly significantly lower than the second quarter of last year. So so overall consistent performance. Yes. We did have really the same drivers of growth that we saw in the first quarter of this fiscal year and feel really good about the continued trajectory of the business overall.
Okay. That's helpful.
Then.
Just a follow up question for Mike So on the life Sciences and 10 Tego.
With respect to the metrics you provided bookings I believe in the mid teens for.
For life Sciences in the 25% managed lives or growth in managed slides for <unk>, how does that compare to prior periods are you seeing an acceleration of growth.
And maybe discuss the pipeline each and each of those areas.
Sure. Thanks, Richard So on contango I think the key point, there really is that we're making progress ramping up the business as we're continuing to expand our centers of excellence programs.
With employers and we're building out our high valued network of health care providers.
Which we think will create a differentiated value.
Two our unique offering to.
To help connect the large employers obviously to the members that helps.
Drive higher quality low cost care. So it's all around that centers of excellence and building out that high valued network.
As it relates to the life Sciences I think what we're so excited about is again as we.
Evolving our capabilities.
This we went from <unk>.
Providing data too.
Really focusing on doing real world evidence work for these pharmaceutical and medical device organizations.
To now where we're not only doing a real world evidence stuff, but we're also focused now on patient identification and because of our data and our technology, we're able to identify.
Patients based on lab values and screens and that kind of thing. So we're really really excited about the prospects of our lifestyle business going forward.
And the pipe Ryan.
Hi, folks released yes pipeline looks strong for both we.
Obviously had a really really nice quarter in terms of driving sales and life Sciences, and we're looking forward to that to continue through Q3 and Q4.
Okay. Thank you congratulations again.
Thank you Richard.
Your next question comes from Steve Valiquette with Barclays.
Hi, Thanks, it's actually Jonathan young on for Steve Congrats Susan on the retirement and Michael on the CEO role I think this is for Craig.
In relation to the net admin fee guidance.
<unk> came in better than we expect that it was a nice clip up from <unk>.
<unk> seem to imply that there is a little bit of a step down in the third and fourth quarter. I'm. Just curious was there something unique that happened into Q4 that that brought up the admin fees up in that.
Leading to a bit more step down in the remainder of the Pittsburgh Blair.
Yes from our perspective, we don't expect a step down overall in and GPO fees I think what we're continuing to be mindful of is the impact and the continued impact of the pandemic, particularly for us in the non healthcare space at this point.
I think we've talked about this on previous calls, but we do provide services to colleges and universities and K through 12 school systems, and hospitality chains and things of that nature that that continued to be virtual or closed.
And not in a position to.
Procures.
Products and services through our GPO contract portfolio. So that's going to continue to weigh on the second half of the fiscal year as we don't see things opening back up there and then we're continuing to monitor obviously the impact on overall health care utilization and potential deferral of elective procedures in certain pockets of the business, but as we look broad.
Lay up the GTO, we wouldn't expect a step down in the second half of the year.
Okay, Great and then turning to performance services.
The margin profile for the business came in.
Ahead of what we were expecting and kind of ahead of the mid 30% range that you've talked about.
How should we kind of think about this for the back half of the year is there do you still expect that for.
For the trajectory of the business to move back towards that mid 35% down or do you expect it to remain elevated and I kind of.
How do you think about the drivers of that flexing up or down.
Sure, Yes, so for performance services as we've talked about historically, we do continue to think that that is a mid <unk> EBITDA margin business. Obviously, the importance of the wraparound implementation services that we provide to drive the use of the technology to make actionable improvement.
It was higher in the first two quarters of this fiscal year as we pointed out primarily due to the timing of enterprise analytics engagements that we've sold and as I did mentioned in my prepared remarks, the timing of those can impact things overall, so on a full year basis, we would expect based on current visibility that will likely wind up in the.
Mid thirties, and not necessarily up to 39% level that we achieved in the first two quarters.
Great. Thanks.
The next question comes from Jillian dressing with credit Suisse.
Okay.
Hi, Good morning can you hear me clearly.
Yes, we can hear you.
Okay. This is actually remains on filling in for virtual interests. So first off Susan and Mike Congrats on the retirement.
Upcoming CEO position I wish you, all Susan and Mike Good luck.
Thank you.
This question is for I guess, you or Susan or Mike.
This is on the Yankee Alliance partnership.
So what drove that decision to pursue that particular route as it relates to capturing membership spend are you seeing elevated demand or.
Was this a unique situations or do you see similar partnership opportunities with other hospital members.
Yeah, Mike why don't you take that.
Sure. So Yankee has a very unique relationship so they are.
What we call a group of affiliates. So they affiliate a number of healthcare systems and hospitals are technology is perfectly designed for entities like that so if you think about as they're trying to expand their spend.
The conduct of offering allows them to built out sort of customized portfolios to meet their member needs.
And when I say portfolio a portfolio of both local regional or I should say local regional and then leveraging our national agreements. So it actually helps Yankee help their members get after more of the spend in terms of is this a potential offering.
Or other entities like Yankee that have.
Large affiliate networks.
The answer to that is yes. It is an opportunity for them to help those organizations that have those affiliates create differentiated portfolios and create value for those.
Health care systems, and hospitals that are attached to those affiliates.
Our group of affiliates.
Yeah.
Got it and then quickly on shaping programs to invest in domestic manufacturing.
Over the long term, how should we think about the balance between.
Ensuring domestic or near shore supply and optimizing cost.
Yeah. So we kind of look at it I look at it we look at it sort of like a third a third a third so it's obviously very very dependent on the category.
And it's obviously very dependent on how much automation can occur at the point of manufacturing.
But what we'd like to see is a lot more resiliency in the supply chain.
And so one of the things we learned from the pandemic because we didn't have obviously enough to domestic capability for the critical PPE.
So our focus really is to sort of think about how do we build out more domestic.
PPE, especially where.
It lends itself well to highly automated manufacturing.
We're obviously in conversations now also building out capabilities that are near shore.
And then finally, we are looking at creating more resilient strategies.
In Southeast Asia, where we are reducing our dependence on just one one country for production. So looking to produce in multiple countries of South East Asia, but that's sort of the way we look at it as having we've got to build out that domestic capability, we've got to evolve with near shore capability and then we've got to have much more resiliency.
Suffocation of the manufacturing base in Southeast Asia.
Yeah.
Perfect. Thank you congrats again. Thank you. Thank you very much.
Okay.
Your next question comes from Donald Hooker with Keybanc.
Great.
Good morning.
So I guess the broad.
Grasp to Susan Devor from the investment community.
Appreciated you I'm sure you remember too as well.
I wanted to follow up on the last question on the Yankee Alliance I'm interested in that purchase services GPO concept is that 800 million I'm, just trying to think about extrapolating that broadly.
Is that 800 million specific Leigh.
Potential new GPO spend that youre going to capture or is that going to be.
Services revenue I'm trying to think how that manifest on the P&L, whether its through our high margin GPO revenue line or it's sort of maybe.
Our services line.
Uh huh.
Walking and then thinking about how to work that out through the through the broader membership.
Sure.
Go ahead, Craig do you want to address that or would you like me to okay. So so Dan. This is Craig I'll start and then Mike can add any color.
So the $800 million, we've talked about with Yankee as the aggregate purchase services spend across their entire membership of.
Organizations. The majority of the revenue would be through the GPO as we continue to expand that and develop that portfolio.
And so it would be GPO fees, there, they're using the services and the technology to help get after that so there are service fees associated with the relationship but longer term it would be <unk>.
<unk> would be the incremental revenue that we would see from that that is the entire book of their spend so similar to how we've talked about.
Publicly our entire membership having sort of a 81.
Billion dollar capture a bowl spend of purchase services.
That's the Yankee component of that so I think thats a longer term objective to grow that over time as we expand the portfolio.
Through the customized approaches that Mike described.
Okay. That's that's helpful perspective, and then on the products revenue Craig I guess for you.
You gave some guidance there.
Revenue lines screen all over the place of course.
With the with the PPE demands from your members.
Jim.
You were asked this last quarter, but I guess I'll ask it again because every quarter. This is changing what is kind of like how does this settle out as we go out what is kind of the right level you said by the June quarter, It will be below the December quarter levels.
But that's still a little bit vague I, just don't want to get over my skis here.
Protecting out revenues like what is the right baseline when things settle out post COVID-19.
Yes, it's a really good question, Don and where we're still trying to work through some of that as well I think if you think about the business prior to the pandemic starting in the fourth quarter of last year. The business was running at sort of a $60 million a quarter level and we would have expected that that would have continued to grow at.
A high single to low double digit growth had we not had the pandemic. We've now been facing through the pandemic a elevated use of supplies, which has created part of the increase in revenues that you've seen and then be incremental purchases above and beyond that as people have been.
Increasing their stockpiles and their on hand inventory, so that they're not caught short of these critical.
PPE.
And so that's been happening all this year at this point, we believe many of our health care providers are getting their stockpiles, where they need it to be and so that will continue to build through the third quarter to a lesser extent, which is why we continue to see the incremental upside I've talked about in the third quarter and then our current visibility.
<unk> would tell us that as the vaccination starts to take hold et cetera, we'll see that start to come back down.
There's going to be a little bit of a tail until it gets back down to.
Kind of pre COVID-19 levels, but ultimately I would expect and of course, we'll look for innovative ways to continue to grow the business overall, but in a kind of normalized.
Unaffected COVID-19 environment. It would have been at the at the levels I talked about we saw prior to the pandemic with regular ongoing growth.
Got him in it real quick the drop through margin on that wouldn't be any I think I asked this last quarter, but as youre getting more perspective, the drop through margin on that product rather in line is it received a more normal level.
We're not seeing any change there.
But kind of mid singles and get that margin, Okay Thats correct.
Thank you.
Your next question comes from Kevin Caliendo with UBS.
Great. Thanks for the question this is Adam noble in for Kevin.
Definitely like to Echo what everyone else said about working with you Susan.
And we will definitely yet.
Yes.
That engagement and that is looking forward to continuing to work with you Mike.
In the future.
Yeah, I wanted to ask a little bit about your comments around some of the non healthcare.
The GPO admin fee revenue being lower this year and as we think about that.
By the administration's focus on reopening schools allocating money potential stimulus along those lines.
Do you think that there is some possibility you could see some some of those.
Institutions opening maybe a little bit faster than your expectations and how should we think about assuming that most schools and other.
Non health care entities are able to open as we've kind of cycling through the summer and fall.
How should we think about the comp.
For net admin fees.
That segment for FY 'twenty two.
Yes sure. This is Craig so I'll start and Susan or Mike could add any color.
Relative to our guidance expectations, we have not factored in a faster recovery in that non health care business through the balance of our fiscal year ended June 30th.
There are some slow.
Reopening and some schools and University and some things are on site, but the level and the volume of activity at those is not returning even with students on campus in some cases.
To the levels that it was pre pandemic. So we think that'll be sort of a slower adoption, we're optimistic that as we get to the fall.
The.
Herd immunity will be getting I mean, you you see everything in the press in terms of the <unk>.
Plan at least for the rollout of vaccinations and what we'll get in terms of sort of comps and as we think about moving forward.
Talked about this on prior calls that this non health care business represents about 5% of our GPO. So that has been pretty significantly impacted this fiscal year.
Recovering a bit but down over 50%.
So ultimately we will see that hopefully come back in fiscal 'twenty, two and clearly we'll talk more about that as we.
Plan to provide 22 guidance.
In the summer months.
That stuff is Super helpful. One question. Another question I just wanted to go back to the life Sciences business and there's been a lot of other companies that have been making moves in this space either organically or via M&A and just curious if you could kind of give an updated thought on whats.
What's the Tam for you guys for that business and have you seen any shift in the <unk>.
Competitive dynamics.
Who you're kind of competing against for.
For that business.
Craig Let me take the broader question and then you can follow up on the sort of ex fuel.
Future numbers, but as you think about sort of our differentiation in that market.
And this obviously is what gives us confidence one we have.
An incredible amount of data that these.
Both pharma and med device organizations are interested in leveraging and so I think one it's just that.
Jim.
That data that I think differentiates us number one number two is.
As <unk> been going through their real world evidence.
Oftentimes these studies require us to pull together health care systems.
Hospitals that they want to.
Do some some research around.
And those areas and so.
We just we have that ability to connect those dots and pull those health care providers together.
The specific areas or specific markets, where they have an interest in doing some of the real world evidence sort of trials.
And then further as we continue to evolve.
Our clinical decision support capability again at the point of care.
Care, we do believe we will have.
Pretty significant differentiation as you think about our ability to read the.
Unstructured data natural language technology kind of stuff reading those those those patients those those physician nodes.
And identify through that and again lab values and lab scores and those kinds of things patients that will be.
We think.
The data would suggest would be good for trials. So we think that that sort of the differentiated capability and Craig I'll, let you answer the question about growth.
Yeah, I mean the.
The Tam in the life Sciences sector is enormous.
We don't look to.
To be a massive.
Participants on that but there's a huge opportunity for us to continue to grow the business in that space with the unique capabilities that we provide that Mike described and I think as you heard Mike articulated in his prepared remarks.
We're seeing good bookings growth in the mid teens for this fiscal year.
And I think our expectation moving forward is that the life Sciences space will continue to be one of the higher growth.
Parts of our performance services business getting us to the longer term.
Mid to high single digit growth for the overall segment that we've described.
Yeah.
Great. Thanks for the questions.
Thank you.
Your next question comes from Ryan Daniels with William Blair.
Yeah. Good morning. This is Sheridan for Ryan and I'll Echo the congratulations to Susan.
Susan and Mike both on the update here.
Susan maybe this is for you and.
A lot of the questions have been asked and answered here. So I'll just stick to one but I'm kind of curious I think in your prepared remarks, Susan you mentioned.
Seeing more of a sort of status quo in health care in terms of the political or policy environment. So I'm curious.
The extent is that stability is beneficial for health systems and some of your key end markets.
Is that something that you feel could potentially drive upside to the longer term growth targets over say the next three to five years or so.
We are optimistic about where the binding administration will go as it relates to value based care the new payment models, and we do think that there'll be able to do.
A fair amount of incremental staff through the regulatory environment it'll be just the legislative environment that is tougher and so from our perspective, the focus on making the supply chain more resilient and I think they recognize the.
The role we played in the pandemic and they have future plans that I think will be helpful to premier.
I also think the whole you know the whole area of technology infrastructure. The pandemic has actually highlighted a fair amount of weakness in real time information and the ability to integrate and share information, we think that's an opportunity.
For Premier So we actually see opportunities on both the supply chain side of the business and the performance services side of the business. We think the innovation center will get reactivated and there will be more experimentation with with value based care models.
And so you know we're already interacting with the administration, putting our recommendations forward relative.
Relative to optimizing the vaccine.
Process and the advancement of alternative payment model. So we do see it as good for Premier.
Got it yeah, thanks for that color and I'll leave it there and congrats again thanks.
Thanks, so much.
Your next question comes from John Ransom with Raymond James.
Hey, good morning, Congrats everybody.
My question is if I look at your longer term outlook that there is no.
Arent difference between EBIT growth and EPS growth and normally what we would see for example, the company micro EBIT say, 6%, but EPS 10, 10% to 12% as a leverage down the income statement either share buybacks or tuck in acquisitions or something so just to be clear is the guy that's contemplated no deployment of <unk>.
Capital at all and no no ever leverage between the EBIT line of EPS and if so why is that.
Sure. This is Craig John Thanks for the question. So the longer term targets that we've talked about are primarily for our organic business do not include significant.
Capital deployment and so to your point there is the opportunity for incremental benefit to the EPS line. If we were to put either share repurchases or have incremental M&A that would drive growth above that we're really focused on returning our organic business to the historical mid to high single digits.
Level of performance that we have the first.
Five six years after going public and so.
We just don't want to be speculative about what that potential capital deployment might be in the future, but we have a lot of flexibility and opportunity to do just that and so our hope would obviously be to over perform those expert to expectations in the long term.
Okay.
And just secondly, I mean, I think it's fair to say that.
Partly it was the surprise election, but some of the prior capital deployment, probably doesn't give you. The returns that you were looking for particularly in performance services, so with that in mind.
Let's say that hypothetically, you've got a chance to.
Pay up for an exciting business that has a lot of growth, but you pay it in some multiple of revenue versus buying your own stock back at 12 times earnings. So how did you kind of filter capital allocation through that sort of level.
Sure I'll start and then Susan or Mike could add any additional perspective.
We've been we have been consistent and we will continue to be in terms of our approach to capital allocation with our primary focus being.
Growth in both organic and inorganic opportunities to deploy capital to.
Add additional capabilities to drive.
Value to members and long term shareholder value.
Yes, there are things we've deployed in the past that through policy changes et cetera have had some implications but longer term, we still feel very good about the strategic assets that we've acquired over time.
And then we will balance that with.
Shareholder return, we obviously have the dividend in place at this point and with intent as you would expect to have that be permanent and continued and then we will have the flexibility to do share repurchase over time, if we ultimately determine if thats the best use of capital at that point in time.
And just lastly, and maybe this is the last one I'll ever ask Susan kind of makes me sad.
Yes, I'm fascinated in theory by FICO.
And certainly there is a cartel of four big Ppos and Theres the consultant Cartel and then a picture you're trying to go into self insured employers and breakthrough all of that and try to talk them into doing something completely different with a performance network and by passing all of that.
Is this a five year kind of sales cycle is this something we should have very modest expectations of or do you think there is the frustration of a 6% forever trend in health care costs do you think that that could be a step function at some point and what would it take for that to happen.
Yeah, I think our perspective here and Mike certainly can add in his perspective for both <unk> and life Sciences.
We're looking for those sweet spots, where providers and employers and life Sciences company have have challenges that they share.
So this concept of cost of health care and delivery of health care account for and self insured employers. We've got a big provider network, we've got a ton of data where.
We're growing that business significantly.
But it's early innings, and so I think it's going to take time to.
To actually penetrate that market as much as we want to penetrate that market. So we are early innings and I think we're early innings in life Sciences, two but the whole.
The concept of automating prior authorization, which is a pain point for employers and payers and providers finding a sweet spot that Mike talked about with clinical trials, where through our technology you can actually identify patients for clinical trials through this huge provider network we have.
So that's how we think about it theyre small businesses today, they are growing double digit or in some cases triple digit and it'll take us a few years to get to what we think is the scalable size that we're trying to get to I don't know, Mike If you want to add anything to that yes, it's Susan.
I agree with everything you said so the way I describe continue go really as we have been building out the chassis.
We're building out these centers of excellence in this high value network. We are as Susan said very early on but I will tell you as you build those capabilities out and as you have that chassis.
When you are able to create programs and services off of that I mean, and so the whole focus is we want to really build out. This this really strong high value network.
Fantastic providers based upon their ability to deliver high quality care and then on top of that we will layer on programs that we will offer to the employer market. So we're really excited and obviously, we think once you have the chassis you have a pretty significant upside.
Once you have that fabric in place.
Okay.
Thank you.
Thank you.
Your next question comes from Iris long with Baron Burke capital markets.
Hi, Good morning first of all Susan Congrats on your timing and Mike Congrats on that.
Jim just my first question.
On the GPO business I think you mentioned that you see the possibility to capture like 80 billion from the purchase credit, but I was just wondering if you can talk about conducting a little bit what technology analytics KBR.
That's not happening right now and what needs to happen for you to capture that $80 billion in terms of an investment do you need to make more investment securities purchases from customers and then increase the purchase volume.
Susan I'll take a first pass at that so conductor really has obviously helped us.
Building out analytics capabilities to get out there initially purchased services and then right behind that we want to build out.
We are building out our group purchasing function.
Purchased services contracts in those kinds of things I think our strategy as it relates to E. Invoicing any payables, if you think about invoicing.
Our focus really is to build out technology that looks at all the invoices and part of that.
We will be purchased services.
That.
He will be invoicing and so we believe that.
The Ah.
Combination of both conductive and that Ian invoicing capability, we're going to have access and visibility to all of that spend and once we have that access.
We can help our healthcare systems drive down costs there.
Providing the benchmarks in terms of how to really value those services that they are buying as well as creating contracts both out of our local and regional level.
Again to help them manage that spend.
Right.
Yes, Mike This is Craig the only thing I would add to that Iris is that in the purchase services arena.
You heard Mike our type articulate that it's a customized GPO that we're building out to get after and that it's through a combination of leveraging national agreements regional agreements and in some cases local agreements because in the case of purchase services. There are many things that are not necessarily done nationally and so there will be effort.
It's to work in geographic regions like we're doing in the northeast with Yankee.
And that engagement to build out the portfolio as we do get access to that spend are able to aggregate. It and then identify those opportunities to put contracts in place. So the $80 billion is the total addressable market across our membership for purchase services spend and Thats, a long term objective to capture as much of it.
That as we can.
Okay, great that is helpful.
Then I have one follow up if.
If we can kind of talk about your high compliance program I'm wondering if you can give us an update on that.
How many customers or what percentage of your customers are enrolled in the high compliance programs and how has that changed over time, just trying to understand how many customers do you typically add each quarter each year.
Yes, let me just give you sort of the general framework. So we have the two programs obviously the.
Send program.
And the surpass program and.
The surpass program has north of eight 8 billion.
BSN program has somewhere around $20 billion of spend and those obviously have been growing up to the pandemic and then the pandemic happened in our buying had to shift a little bit given that it wasn't just about bringing in all of that the big building out more and more of that committed program.
Even though it has been growing through the.
Through the pandemic.
Instead, we've been shifting it getting access to products through.
Drilling group buys and those kinds of things, which in effect basically is creating more committed programs right you're coalescing membership spend to buy additional PPE to help them build out their inventory levels and their stockpiles and those kinds of things. So we've just switched a little bit while they're they've been growing we've just been.
Switched a little bit because of the pandemic to different kinds of committed programs, which is really all about.
These forward by getting access to the P P and helping our health care systems drive higher levels of inventory and stockpile.
Got it that's helpful. Thank you guys.
Thank you.
Your next question comes from Sean Weiland with Piper Sandler.
Hi, Thank you for taking the question is Jeff on for Sean and I would echo everyone's congratulations to Susan.
Retirement and to Mike on the new role.
I think that our question for Jeff.
Surrounding some of the more nascent service lines like clinical trial recruitment or Contigo health.
Just talk a little bit about some of the early maybe clinical operational our cost improvement that you guys have been able to deliver our plan to deliver in some of the early deployment.
Yes, my kind of thing.
Yeah. Thanks, Susan Yeah, just in general I'll, just go back and I'll keep it at sort of a higher level here.
Thank you the engagement really as I said earlier, it's moving.
We're still really focused on real world evidence.
We're having conversations with.
You know pharma about the utilization of our products post drug approval on those kinds of things and really really important because they want to make sure that as they're launching their therapies and those kinds of things that you know.
They're getting as much clinical benefit as possible and for us and our health care systems, we want to make sure that those those new therapies are actually.
Working with the right patient populations to ensure appropriate utilization so.
I think that youre going to see us continue to.
If all of that capability as I said earlier into patient identification, we think theres, a huge opportunity to leverage machine learning.
And again that natural language technology looking at the unstructured boats to identify.
Patients for these for these.
For those trials so that that we're really interested in and then Susan made some comments about contango and how we want to continue to evolve again some of this modernized technology like machine learning and AI as we're building on a prior authorization. So if you think about contango and you've got employers that are looking.
To attach more directly with providers there is going to be that opportunity for us to build out capabilities as it relates to the authorization and prior authorization at the point of care.
Again, we think our technology platform, our ml and AI are going to be able to differentiate contango at the point of care working.
With those large employers to say these are the care progression. These lip care protocols that.
Are driving the most amount of Av.
Quality outcome benefit and so we're really looking forward to embedding some of that technology into that can tivo offering.
Susan I don't know if theres anything else.
No you've got it.
If I could just ask one follow up.
To the extent that you can share.
The revenue model for some of them again more Nathan service lines, and then maybe the expected ramp or duration of the contract.
Yeah, Craig I mean, so continue go I'll give you a start Craig please jump in here, but configured.
There is.
Services fees that that we have in terms of helping members than in others.
Become part of our network technology.
That will be needed as they're thinking through again, how they can participate in those networks that do you think about what we've been doing with contango, we bought to help design plus capability, which obviously is that third party administration. So you have to from the Tpa fees that are part of the revenue as well in that model.
Craig I don't know if you have additional thoughts.
Yeah no. Thanks, Mike. So so those are the models in terms of the ramp we have talked about <unk> being a longer term.
Growth driver.
It's getting traction as Mike described in his prepared remarks, but employee benefits tend to be more annual in terms of ramp up overtime, but yes. It's a combination of kind of a PM TM model around Tpa services and then services.
And the ability to use.
Technology like our clinical decision support with members to drive standardization and that part of the business and then relative to life sciences. It tends to be a combination of I'll say advisory service type engagements and then longer term sort of.
Annuity type.
Data engagements over time, and I think we've talked earlier about the anticipation of that part of the business being one of the faster growing aspects of our performance services business over time.
Thanks again.
Yeah.
Your next question comes from Stephanie Davis with CFPB Leigh.
Rink.
Hey, Susan Congrats and as long as they have retirement.
Retirement act like everyone else on Mike Congratulations I mean big shoes to fill.
Thank you Keith.
And then Mike you mentioned, some pretty big bags, whereas on the prior questions about clinical trial enablement tools. So I thought it might make sense to touch on the question of talent.
How should we think about the available talent pool from folks voluntary somebody's MLP skills and how much do you need to automate their workforce as you expand into this arena.
Kind of need a more interesting.
Folks in your workforce.
It's a great. It's a great question. So a couple of thoughts first of all.
As you know related to the <unk> acquisition.
We were able to acquire.
So some really nice great talent.
And the machine learning.
AI natural language technology arena, so obviously that that sort of became the hurdle by which we are growing in them.
Lee Anderson is.
Has been continuing to build out channels to get access to that kind of capability.
Won't go into a lot of detail but.
We think we've got.
The Wright vision and the right Mitch.
Mission.
As an organization to attract talent that.
Has that kind of capability to transform health care. So if you think about what we're doing in terms of.
Real world evidence and identifying patient trials and really helping.
Ah patient population from we think that we've got the Wright mission that will attract that kind of talent and obviously, we're out recruiting that kind of talent.
And the various schools as we speak.
Who does that talent pool mind is there anything you feel you need to augment.
Beyond that in order to further though that your solution or is it not just a question of blocking and tackling.
Could you just restate the last part because you're sort of trailed off of that.
And I didn't hear the rest about common.
Gary Nowhere is this is the theme of 'twenty, 'twenty and 'twenty 'twenty, one connectivity issues.
Yeah, No I was just going to say I. Given you you feel like you have the council of relatively well set up what then.
Need to still be done there to build out some of your clinical trials or is it blocking and tackling or is there.
Anything else that kind of keeps you up at night.
First I will.
I would I don't think I've ever characterized what you're saying we have enough of that channel and I think we're going to constantly look to continue to grow that talent base. That's number one number two.
Sort of.
As we think about it.
It is about execution right. So it's taking the talent and building out the use cases that make the most sense in that drive the most amount of value depending on you know on what the use case looks like so.
We're kind of thinking about when they're thinking about how do you organize that capability a little bit differently within premier to allow us to focus on a couple three or four additional use cases to give those folks an opportunity to work in different areas as opposed as opposed to just constantly working in one. So again. It is an area that we're going to continue to.
<unk>.
Focus on and again, we think that we've got the right mission and values to attract that kind of talent and we're really excited about our prospects.
Let's keep a helpful and congrats again thanks. Thank you. Thank you.
Your next question comes from Sandy Draper with truest.
Thanks very much.
Im pretty sure I cannot think of another interesting <unk>.
Question, So I'm, just going to but I did want to stay on and just say congrats Susan it's been great working with you.
And also congratulations Mike it'll be fun working with you. So that's it for me. Thanks, guys. Thank you. Thank you Susan.
Right.
I'm showing no further questions at this time I would like to turn the conference back to Susan before.
Thank you operator, I'd just like to thank you all again for joining our call. This morning.
No that Mike is just as passionate.
As I am about Premier success, and the Premier Board and I believe that the company is an extremely capable hands.
And when I reflect on my time here I'm, just grateful for having had the opportunity to get to know all of you and I wish all of you the very best of health and success.
Thanks, so much for your support for many years.
With that we'll end the call and plan to talk to you again in another quarter. Thanks, So much bye bye.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
Okay.
Yes.
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