Q3 2024 Premier Inc Earnings Call
Speaker Change: Good morning, and welcome to Premier's fiscal 2024 third quarter conference call.
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I tried to conservative Banker's landscape Senior director Investor Relations. Please go ahead.
Thank you and welcome to Premier's fiscal 'twenty 'twenty four third quarter conference call. Our speakers. This morning are Mike Al Khair, Premier's, President and CEO, and Craig Mackay, our chief administrative and financial Officer.
Before we get started I want to remind everyone that our earnings release in the supplemental presentation accompanying this call are available in the investors section of our website at investors Dot Premier Inc. Dot com.
Please be advised that managements remarks today contain certain forward looking statements such as statements regarding our strategy plans prospect expectations and future performance and actual results could differ materially from those discussed today.
These forward looking statements speak 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 most recent Form 10-K and Form 10-Q for the quarter, which we expect to file soon.
We encourage you to review the detailed forward looking statements and risk factor disclosures in these reports.
Also during this presentation, we will refer to adjusted and other non-GAAP financial measures, including free cash flow to evaluate our business.
Information on why we use these measures in addition to GAAP financial measures and reconciliations of these measures to our GAAP financial measures are included in our earnings release and in the appendix of the supplemental presentation accompanying this call.
Information on our non-GAAP financial measures will also be included in our Form 10-Q for the quarter.
And our earnings form 8-K, both of which we expect to furnish to the S. E C suite.
I will now turn the call over to Mike <unk>.
Good morning, everyone and thank you for joining US today, we will share our fiscal 2024 third quarter operating results.
We will also provide some highlights on the progress we continue to make advancing our strategy to drive health care performance improvement through further technology enablement of our capabilities.
Lastly, we'll provide an update on our outlook for fiscal 'twenty 'twenty four as well as provide some initial perspectives on fiscal 2025.
First let me say that I am proud of how our team executed this quarter to deliver operating performance that exceeded our expectations for profitability.
And has us on track to meet our guidance, which we are reaffirming for the full year.
For the third quarter total net revenue increased from the prior year period, driven by growth in both our supply chain services and.
And performance services segments. We also continued to return additional capital to stockholders as we implemented our 400 million dollar accelerated share repurchase transaction during the quarter.
We continue to execute with discipline as we advance our two core strategies technology, enabling and streamlining all aspects of supply chain and leveraging our unique data technology and AI capabilities to support provider performance improvement and growth in certain adjacent.
Markets.
Regarding our technology enabled supply chain strategy, we made progress driving adoption of our digital supply chain capabilities as we continue to rollout automated invoicing and payable capabilities to large integrated delivery networks and other providers. We believe these solutions are differentiated in the market and can be.
A key enabler for providers to better manage labor costs and increased working capital, allowing for better cash flow management and helping to support organizational growth initiatives.
We've also renewed expanded inside new partnership agreements with providers and key suppliers and.
And we continue to deliver significant value in the market.
For example, Kaleida health a five hospital system in Western New York leverage premier's capabilities to realize over $75 million in savings during the last five years, all while maintaining high quality care at outcomes for their patients.
So why did it utilizes our robust data and analytics as well as our supply chain co management capabilities and together, we aligned clinical and supply chain teams with industry, leading data and insights to enable smarter purchasing decisions.
With respect to our AI driven provider performance improvement strategy.
Excited to announce the recent release of about a 100 top hospitals and partnership with Fortune magazine.
This transparent ratings program provides vital insights for providers seeking market differentiation and performance enhancement and importantly, the success of this program and our roadmap for its enhancements have helped us open doors and expand partnerships, including a signed deal with one of the nation's largest health systems.
We also continue to expand relationships and establish new partnerships with hospitals and health systems to drive margin improvement.
These engagements underscore the central role our technology enabled solutions play in supporting and enhancing health care delivery.
For example, a large regional system recently expanded our multi decade partnership.
As part of this agreement they will deploy our advanced analytics and AI enabled technology across their entire system.
This included clinical decision support capabilities, specifically, our AI enabled clinical documentation solution that Craig will speak further about later in the call.
Before I conclude I wanted to commend our team for their dedication and commitment as they continue to innovate to enable better smarter health care for our member health system providers and the communities they serve.
I will now turn the call over to Craig for a more comprehensive discussion on our financial results and outlook.
Thanks, Mike.
Let me share our fiscal year 2024 third quarter results.
Total net revenue increased from the prior year period in both of our segments.
In our supply chain services segment higher net administrative fees were driven primarily by continued growth in member purchasing in both the acute and continuum of care programs as well as onetime payments from certain members due to early termination of their agreements.
Firstly offset by an expected increase in the aggregate blended member fee share to the mid 50% level.
And our direct sourcing business products revenue was relatively flat as further expansion and growth of the business was offset by lower pricing for certain products compared to the prior year period.
We also experienced growth in software license other services and support revenue in the supply chain services segment, driven by growth in our supply chain co management business, where members continue to engage premier's expertise to help manage their end to end supply chain operations. We recently.
Ounce Beebe healthcare selection of Premier as it supply chain operations partner, which comes on the heels of our announcement last quarter with tough medicine.
In our performance services segment. The revenue increase was driven by an increase in contributions from enterprise license agreements compared to the prior year period, partially offset by a decrease in our applied Sciences business.
We continue to make progress in our adjacent markets businesses, which have delivered over 20% revenue growth. During the first nine months of fiscal 'twenty 'twenty. Four for example, we continue to see interest in our AI enabled clinical documentation capabilities and recently highlighted how community health network in Indiana leveraged our <unk>.
Solution to improve the accuracy of clinical documentation, while also increasing provider satisfaction by enhancing decision, making and reducing alert fatigue.
Turning to profitability GAAP net loss was $49 2 million for the quarter and was primarily the result of a $140 million impairment charge to goodwill and long lived assets related to our continued go health business the.
The expansion of our network capabilities into their self insured health care provider market was a key driver of our future financial expectations for this business and adoption has been meaningfully slower than originally contemplated.
As we announced last quarter, we believe an outside partner will allow for continued advancement of this business through a broader capability set and increase scale.
We will provide more information on this process as well as our search for a partner for <unk> global our direct sourcing business. Once we have something definitive to report.
Total adjusted EBITDA was impacted by the following factors performance services adjusted EBITDA increased mainly due to revenue growth, partially offset by an increase in expenses primarily related to higher performance related compensation in the current year period as well as investments to support.
<unk> continued growth in our adjacent markets businesses.
Supply chain services adjusted EBITDA declined primarily due to an increase in expenses primarily related to the ongoing enablement of generative AI capabilities in our purchase services G. P O program.
And for expansion of our supply chain co management business.
And a lower profit margin than our direct sourcing business due to higher logistics costs compared to the prior year period, partially offset by revenue growth.
Adjusted net income decreased primarily as a result of the same factors that impacted adjusted EBITDA, but was partially offset by a decrease in interest expense.
Adjusted earnings per share increased primarily due to the reduction in weighted average share count as a result of the retirement of approximately 15 million class a common shares in conjunction with our 400 million dollar accelerated share repurchase implemented in early February.
The final number of shares to be repurchased and retired through the accelerated share repurchase transaction will be determined upon completion, which is expected in the first quarter of fiscal 2025.
From a cash perspective, excluding the impact of the $148 6 million in tax payments related to the sale of our non health care GPO operations earlier. This fiscal year, we continue to expect fiscal 'twenty 'twenty four free cash flow to approximate 45 to <unk>.
55% of adjusted EBITDA for the full year.
For the first nine months of fiscal 2024 cash flow from operations of $193 million decreased from $331 2 million in the prior year period.
The change was primarily due to the tax payments associated with the sale of our non health care G. P O operations.
Free cash flow of $48 1 million also declined from the prior year period as it too was impacted by the tax payments as well as an increase in capitalized software development related to the advancement of our supply chain technology automation.
Cash and cash equivalents totaled $61 9 million as of March 31, 2024.
Paired with $89 8 million as of June 32023.
The decrease was driven by the use of cash for the accelerated share repurchase as well as the repayment of the outstanding balance on our five year $1 billion revolving credit facility, which continued to have no balance as of the end of the quarter.
These decreases were partially offset by the proceeds received from the sale of our non health care GPO operations net of the previously mentioned tax payments.
With respect to the sale of non health care GPO operations. We have received a total of $629 8 million in total proceeds as of March 31, 2024, and expect the final purchase price to be up to $738 million as we continue to finalize member consents and the true up period.
That has been extended into the fourth quarter.
With respect to capital deployment, we remain disciplined and focused on taking a balanced approach long term with returned to stockholders a current priority as we mentioned last quarter to accelerate returns to stockholders. Our board approved a $1 billion share repurchase authorization through June.
32025, and as part of that we executed a $400 million accelerated share repurchase transaction.
This augmented our quarterly cash dividend, which totaled $73 1 million during the first nine months of fiscal 2024.
In addition, our board recently declared a dividend of 21 cents per share payable on June 15, 2024 to stockholders of record as of June 1st.
We also continue to evaluate opportunities for investment to support organic growth as well as potential acquisitions to strengthen enhance or complement our existing capabilities and further differentiate our offerings in the marketplace.
Turning to our full year fiscal 2024 guidance based on our performance for the nine months year to date and outlook for the remainder of this year. We are reaffirming the guidance that we introduced on our fiscal 2024 second quarter earnings call in February.
Looking ahead, while we are not planning to provide our formal fiscal 2025 guidance until our fourth quarter and full year earnings report in August we did want to share a few high level perspective in anticipation of next fiscal year.
Consistent with recent commentary, we expect fiscal 2025 revenue will decline in supply chain services, excluding <unk> global primarily due to a further increase in aggregate blended member fee share from the current mid 50% level to the low 60%.
Range as we continue to renew and extend GPO agreements with our members.
While we expect continued growth in member purchasing and gross administrative fees revenue in both our acute and continuum of care G. P. O programs. We anticipate this will be more than offset by the increase in member fee share.
Given the high margin nature of the GPO business. This will have a meaningful impact on profitability.
In our performance services segment, excluding contango health, we expect revenue to grow in the mid single digit range comprised of double digit growth in our adjacent markets businesses and low single digit growth in the health care provider business.
In closing I would also like to thank our employees for their continued dedication to our mission and for their hard work advancing our strategies and enabling our members and other customers to deliver higher quality lower cost health care to the communities they serve they.
They are our greatest asset and a key component of our foundation, which we believe is also differentiated by our unique combination of capabilities, including our AI enabled technology solutions powered by our vast datasets and deeply embedded member relationships.
Where we are helping to drive health care improvement from the inside.
We also continue to maintain a flexible balance sheet generates substantial cash flow and remain committed to returning value to stockholders. We appreciate your time today and we'll now open the call for questions.
Yes. Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys. If anytime Youre question is I've been addressing you would like to withdraw it. Please press star then two.
At this time, we will pause momentarily to assemble the roster.
And the first question comes from Eric Percher with Nephron research.
Thank you.
A question for both Mike and Craig trying to understand the underlying supply chain performance could you help us with the.
The extent of the early termination benefit in the quarter and was that an item that was expected in guidance.
Yeah.
Sure. Eric This is Craig I'll be happy to address that so the early termination payment.
In the range of $5 million in the quarter.
We did it we didn't know about this terminated member and had factored that into our expectations when we established guidance.
Okay and as we look at that in the guidance for next year low 60% range.
This point how much of the book will have re priced at that level and the fact that it's offsetting revenue does that suggest that.
We've seen more.
Book Reprice at that level or that the full book is for pricing at that level, yes. Its a good question, Eric So what I would say is that where we sit here today about a third of our book has already been renewed and extended.
The future with revised.
The revised pricing and the fee share levels that we anticipate we obviously, we will plan to continue to renew through fiscal 2025.
With remaining members that would be coming up in that time period and would anticipate that by the end of fiscal 2025, we would have about three fourths of the book.
Renewed and extended at that point in time.
And the rest of the book longer term contracts with the rest of the book already there.
So about a third is already renewed longer term contracts ranging three up to in some cases 10 years.
As we go through 'twenty five we'll renew.
An additional amount to get to about 70% about three fourths of the book and then there will be about a quarter of the restructure related members that will continue to be renewed post June 30 of 2025.
Speaker Change: Gotcha. Thank you.
Thank you and the next question comes from Michael Cherny with Leerink partners.
Hi, good morning, Thanks for taking the question.
Maybe if I can stay on that topic relative to the renewal process and especially into next year is there any way to think about what the ceiling is long term for admin fee share and where this could go.
<unk> the color that youre, giving relative to the change you've seen in this book of business is this one of those things that as you get through the renewals there'll be another cut due we think low <unk> is kind of the ceiling for where this would go curious how do you see the evolution of this on a longer term basis beyond this round of negotiations yes, Michael This is Craig.
For the question obviously, it's an important question that the Investor community wants to understand it is difficult until we actually get into and through all the renewals to be able to accurately predict I mean, there are dynamic market conditions as we've talked about our current perspective is when the contracts that have been renewed the contracts.
Speaker Change: We anticipate renewing as we go through next fiscal year. That's what is the reason that we're providing the perspective on the low sixty's. Our current perspective is that we likely will remain in the 60% range.
Albeit it could definitely it could definitely.
Ratchet up from the low <unk> longer term, but we believe ultimately will reside in the sixties.
Got it and then maybe thinking about.
Call it expansion ancillary services on the GPO side, obviously these negotiate renegotiations could give you a chance to go back to your customers to talk more about what you can do can you talk maybe just specifically within the supply chain component.
Second performance services are there other.
Service lines that you were able to work through is there a trade off in terms of greater contract compliance go beyond the sudden surpassed but anything else you can talk about relative to the strategic nature of these renegotiations and what it means for a multiyear revenue growth perspective would be great. Thank you. Yes. This is Mike So a couple of things so first of all.
Mike: Let me just stick with the contracting side first.
It gives us an opportunity to really work with them for them to leverage our services and purchase services as well as the non acute area. Obviously, we have been making a lot of investment in the technology to support those areas. So obviously, we want to see higher levels of contract penetration.
Mike: For both the non acute as well as purchase services. It also gives us the opportunity to drive.
Levels of utilization of our committed portfolio, which drove significantly more value back to the health care system. So think of our surpass and ascend programs with Sun drive programs.
We want to see that continue to ratchet up because you know it.
Not only drives more obviously revenue to the business, but it also drives significant savings to our health care system and then the final.
Area that it allows us to really focus on is as you think about.
What's happening from a invoicing standpoint, with the health care systems, a lot of that effort today is manual.
It allows for us really to get much more embedded from a technology standpoint to <unk>.
Manage their invoicing and payables process, which we believe.
Again will deliver significantly more value.
Mike: As it brings a degree of transparency as to what's happening in the buying transaction as well as <unk>.
Mike: Drive higher levels of penetration, Yeah, and Michael This is Craig to two additional builds to mikes points one not in all cases, but in limited circumstances. It also provides an opportunity for us to bring our supply chain co management capabilities I talked in the prepared remarks about BB this quarter and we talked about tufts last quarter.
Those were new relationships, where we have a supply chain partner, where now we are actually taking over some of their supply chain operations.
To actually run the supply chain for them. The reason that's important where that does occur is that actually puts us more in the driver's seat with power of the pen to actually help drive the higher contract penetration that Mike's talking about and then I will I do just need to add why you said you didn't you didn't ask about this we also are taking advantage of this renewal process to have.
Much more of a one premier approach to the member and the customer to actually pull through additional technology and wraparound service capabilities through performance services.
Speaker Change: Great. Thank you.
Thank you.
Speaker Change: Thank you and the next question comes from Anne Samuel with Jpmorgan.
Hey, guys congrats on the quarter and thanks for the question.
Anne Elizabeth Samuel: I've seen some improving margins.
The hospitals seem to be in kind of stabilizing a little bit there I was hoping maybe you could just speak to what the appetite looks like maybe for some of your performance services solutions, and maybe where are things starting to loosen up on the edges and where are some things still considered discretionary where hospitals are holding off on spending yes. So this is Mike so a few things.
Mike: I think our health care systems or not I think our healthcare systems are very much still struggling with the cost of labor.
Mike: So that's that's not something that's going away, so they're having to figure out ways to reengineer the way, they're providing care. So obviously.
Mike: Leveraging technology and.
And driving high quality of care, So I think.
As we continue to explore capabilities to support the health systems.
Mike: Got to continue to make the investments in technology to be labor extenders for those health care systems. So that's number one number two.
I will tell you this whole idea of proliferation of technology, we're hearing so much about AI.
Within the health care ecosystem.
And bringing meaningfulness to that where are the areas that we should really apply.
The different kinds of AI to the health care systems and again, our focus for the most part.
Is on that is on that.
Predictive.
Mike: Area of AI, So where can we actually work within the electronic medical record to identify patients for <unk>.
Drug trials to actually look at ways to help our health care systems document procedures appropriately for reimbursement.
As well as think of things like you know prior authorization, which by the way requires a great deal of labor.
But also.
In some cases, a significant amount of time, so we want to continue to build out technologies and capabilities to streamline all of those areas and I think that's where we're going to continue to see investments on behalf of the health care systems.
That's really helpful. Thanks, and maybe just a follow up on that I was hoping maybe you could just talk about the receptivity within your customer base for some of those AI enabled.
Speaker Change: Ability he just asking things like documentation and things like that how comfortable are they with using that kind of technology and then you talked about having access to 45% of discharged annually within think AI can you just talk about the data set that you're using to inform this model.
I'll ask Lee to jump in a little bit here on on maybe the data set with a couple of sentences but.
I will tell you it's like any other sort of business maturity curve I would suggest that tend to 10% to 20% of our health systems are actually the innovators and leading the utilization of of machine learning and AI and obviously those are organizations that have implemented standards.
It's around one EMR because it makes it a lot easier as they think about adding.
Speaker Change: Advanced capabilities, if you have that one electronic medical record. So I think you have those innovators and then you have the next.
Probably 60% to 70% of the market that are the followers and they want to see the tried and true implementation capabilities of what's actually working.
And then they'll join US I think we're kind of beginning to enter into that area. Given we've got some incredible proof cases on what we've been able to do with HCC scores and some of the other areas. There is a lot of interest on behalf of our health system health systems to participate to participate in trials where.
They have not obviously been able to in the past.
And then you always have some of the followers and for a variety of reasons there'll be slower to the uptake, but that'll be it the opportunity there as Craig said earlier that as we come in and we're looking for opportunities for improvement does it make more sense for us to come in and help.
Basically co manage some of those opportunities to bring that technology to really support their journey towards leveraging that advanced technology.
Speaker Change: Do you want to just touch really quickly on the data assets I think if we start with 100 top that's probably the best view into that data set its augmented with a large set of clinical and margin intelligence information that are derived from either the EHR. The ERP. So we can sort of really high level.
Speaker Change: And we can keep that data extraordinarily timely it's an advisory offering.
<unk> is one of our solution sets either clinical transformation human capital management or as Mike was talking about managed services to that solution set and then we augment that data with.
Effectively assets into the ERP your assets into the EHR to get down to the patient level and we can look at cohort information at the physician level do risk adjustment and help our hospitals be able to blend that supply chain data and that clinical data together. So that we can help them with whatever strategic imperative, whether it be labor, whether it be clinical quality.
Transformational information and then we alert through the clinical decision support solution. Thanks Julien.
Julien: Very helpful. Thank you. Thank you.
Julien: Thank you and the next question comes from Stephanie Davis with Barclays.
Hey, guys. Thank you so much for taking my question I was curious helping pull on that one premier for that but you guys had talked about a little bit earlier.
Stephanie July Davis: As you go through some of these client renewals are there any solutions within performance services is that resonating most with your client base.
Stephanie July Davis: Or is there anything that you're seeing you get prioritized a little bit higher than before just doesn't come back and its dynamics.
Speaker Change: Yeah I would tell you there is there is.
Speaker Change: I would probably break it down into two areas. So we have rough.
Speaker Change: Roughly half of our health systems, primarily really lean on us for supply chain. So those organizations that lean on us for supply chain are.
Speaker Change:
Speaker Change: Really looking at the pull through of co management Theyre looking at pulling through all of our advanced technology, where we're obviously technology, enabling the supply chain. The E. Invoicing the payables all of the work we're doing there. So that's sort of one pocket and you're pulling through all of those capabilities. The other part.
Speaker Change: It uses us for both supply chain and obviously performance services in other areas.
Speaker Change: And I would characterize those as looking it as Lee and Craig both have said total margin improvement so theyre looking at not only ways to drive.
Speaker Change: Enhanced.
Speaker Change: Our enhanced reductions supply chain, but theyre also looking at ways to standardize the way that they are providing clinical capabilities to the health care systems as well so.
Speaker Change: And then that's bringing it all obviously all those technology that Lee just talked about with all the alerting capability.
Speaker Change: I'd say its characterized in two different ways in terms of how we're going out and having those discussions.
Speaker Change: Stephanie This is Craig the only build I would have is you know obviously it depends on the on the health care institution Youre working with but specific to performance services, we have definitely seen interest in our enterprise analytics, and so bringing and we talk about the enterprise license component of that but that would be the area that we've seen in increased <unk>.
Speaker Change: <unk> and wanting to leverage those technologies to help them with margin improvement as Mike articulated. Thank you Craig.
Speaker Change: So with that in mind and given the term fees this quarter and then the client.
Speaker Change: By your large competitor.
Speaker Change: Are there any.
Stephanie July Davis: Beyond pricing like client there may be less interested in these investments that you're starting to see in some of the client attrition or is it purely a pricing kind of model.
Stephanie July Davis: It's sort of it's it's really Craig and I have been talking about this you know basically for quarters, but you have some health systems that really do.
Stephanie July Davis: Want to look at total value, that's being created and.
Stephanie July Davis: They want to bring all of the assets that premier brings because they've got huge imperatives huge labor some of them in huge labor issues or labor cost issues. Some are trying to transform to new.
Stephanie July Davis: Payment models and those kinds of things. So I will tell you you do have organizations that are willing to.
Stephanie July Davis: Look at total value as opposed to one aspect of value that we create.
Stephanie July Davis: And so obviously our job is to as much as possible demonstrate what the total value proposition looks like.
Stephanie July Davis: To relieve some of the pressure on just the admin fee share back.
Speaker Change: Thank you Stephanie.
Stephanie July Davis: Thank you. Our next question comes from Kevin Mccalley Endo with UBS.
Speaker Change: Hi, guys. Good morning, Thanks for taking my question good morning.
Speaker Change:
Speaker Change: On the performance services I talked a lot about the business, but just thinking about this sort of mid single digit growth.
Speaker Change: Outlook, how much of that is sort of in your control based on customer wins and just the overall and how much of it like what are the assumptions around the macro that get you. There what are the puts and takes just to thinking about how you think about how that business is going to grow both from a micro perspective and a macro.
Speaker Change: Yeah, I can take the highest level.
Speaker Change: Look I think that as we continue to build out services and capabilities again to support the health care system says, they're struggling with increased labor cost in some cases struggling with inflation.
Speaker Change: And those kinds of things and obviously reimbursement is not necessarily <unk>.
Speaker Change: Paying up with those extra.
Speaker Change: Cos, they're asking us to come in and really focus in on.
Speaker Change: How can we help them.
Speaker Change: Do more with less and basically be incredibly.
Speaker Change: Diligent around cost structures, but at the same time, ensuring they're delivering the highest quality care that they can put to potentially deliver so at the highest level that that's really what's driving quite a bit of the market.
Speaker Change: Yeah, the only thing I would add to that Kevin is I think as we think about and again, we will more formalized our twenty-five guidance in August with the underlying assumptions, but at a broad level. The early perspective that we're trying to provide we typically go into a fiscal year and our performance services business with sort of 70% 75%.
Speaker Change: Visibility to the revenue.
Speaker Change: Given that the majority of that business is still a SaaS based on the technology side. So we have good visibility.
Speaker Change: To a large amount of that business. We've talked previously about enterprise license agreements and so we have that that will have to we have a pipeline of them to process, but have to work through which leaves some of the judgmental nature of that but the combination of those gets us too.
Speaker Change: With the wraparound services component from our advisory services are part of our business gets us to the low single digits.
Speaker Change: Anticipated growth in the provider market and then as we look at the adjacent markets business, we anticipate double digit growth and a 15% to 20% type of range that we.
Speaker Change: Haven't seen that as its growing ex contango.
Speaker Change: Becoming and that is going to continue to be in the applied sciences business, which we have very sound ongoing relationships with the largest pharma companies in the country and continue to facilitate naval work with them. Our clinical decision support business is really driven off growth in the coding and documentation capabilities that were asked.
Speaker Change: Earlier.
Speaker Change: And then our <unk> business and the electronic invoicing processing those don't have as high a visibility typically given the nascent nature of those businesses.
Speaker Change: But continue to feel very comfortable given the the pipelines the appreciation for those capabilities to drive the type of double digit growth that we anticipate from that side of the performance services segment, which in combination gets us to the mid single digit growth overall.
Speaker Change: That's super helpful. In a lot more detail than I was even hoping for so thank you.
Speaker Change: [laughter] one quick follow up just on PPE PPE stuff I didn't think we'd be still asking about this but.
Speaker Change: We have heard that sort of P. P. B demand and Destocking is is somewhat normalized I'm wondering if that had any.
Speaker Change:
Speaker Change: Context in your outlook at all or is that better than expected or is it trending as expected is that what got you to the sort of the higher end of fiscal 'twenty four.
Speaker Change: It's really trending as expected I mean, we've talked about this again the past couple of quarters as well that we really thought we had hit sort of the bottom in terms of seeing ordering patterns return I think the thing that we've still been managing through his price reductions I mean, we continue to see and <unk>.
Speaker Change: Particular glove pricing, which is the largest component of our PPE portfolio to continue to have very low pricing. Although we are we believe that stabilizing now as well. So you know from a perspective of where we anticipate performance, we talked last quarter and reaffirmed today that we expect sort of direct sourcing to come in where we thought.
Speaker Change: We expect sort of flat to nominal growth quarter to quarter, but.
Speaker Change: So I would anticipate that that will step up moving forward.
Speaker Change: Thanks, So much guys. Thank you.
Speaker Change: Thank you and the next question comes from Jessica Task with Piper Sandler.
Jessica Elizabeth Tassan: Hi, guys. Thank you for taking my question I was hoping that maybe I can tell you go and ask to ask Lowball you could describe maybe the type of outside partner you are looking to engage and then kind of how you envision the structure of any future partnership.
Jessica Elizabeth Tassan: Sure. Jessica this is Craig happy to take it Mike can add any color with respect to contango I think as we talked about when we announced looking for partners too.
Speaker Change: Help to augment the vision and the value of that business that we do still believe in long term. It is looking for organizations that have an interest in that.
Speaker Change: A coa type of business may have existing infrastructure, there that could be strategic partners that could also be <unk>.
Speaker Change: Strategics that are powered or enabled by <unk>.
Speaker Change: Financial backers and so we think that it is really a platform play where the idea of taking the capabilities that we have in that business for Tpa Coa and the network business as well and actually put it onto what theyre trying to develop and build would allow it to be a more comprehensive scalable solution in the future with additional resource.
Speaker Change: Capability than we've been able to bring to bear.
Speaker Change: That's what I would say on the <unk> side on the <unk> side I think that.
Speaker Change: From a similar standpoint, we believe there is an opportunity with an organization that has more product breadth and capacity and ability to deliver more scale, while maintaining a strategic focus and view on supply chain resiliency, which we think is really critical and important moving forward for you.
Speaker Change: Health care would be the ideal partner and so we are looking at organizations that would have that type of shared vision as we continue to move.
Speaker Change: Forward and think about the ongoing kind of benefit that the SCS business can have on a go forward basis for our members and other customers around the country and thanks, Craig and then a couple of bills that I'd like to share on top of Craigs.
Speaker Change: As you think about the whole <unk> market space.
Speaker Change: Our systems are continually struggling with.
Speaker Change: Slow reimbursement in some cases from payers and.
Speaker Change: Prior authorization issues and those kinds of things and I will say that the pay via their market space is going to be something that a number of healthcare systems are going to continue to look at long term.
Speaker Change: And so that's why it's so important that we believe we find the right partner that can obviously add some additional capability to help really beef that capability up to support those health systems.
Speaker Change: Thank you for the question.
Speaker Change: Got it that makes sense can I just follow up with you kind of clarifying questions I wanted to confirm on the FY 'twenty five consolidated fee share.
Speaker Change: It's the consolidated rate expected to be low, 60% or the renewals are going to be in the low 60% and then just hoping you guys could comment on the the piece of that remaining buybacks. Thanks. So much.
Speaker Change: To answer the first question Jessica our overall blended fee share for the entire business in fiscal 2025, we anticipate to be in the low 60%. So that's a combination of renewed agreements ongoing agreements in the acute business and our continuum of care GPO. So overall blended rate.
Speaker Change: Relative to the share repurchase we continue to progress through it.
Speaker Change: Accelerated share repurchase transaction.
Speaker Change: Current expectations have not changed in terms of when that will complete somewhere between mid July.
Speaker Change: And mid August so when we have our next earnings call. We believe we will be complete at that point in time, and we would anticipate that we will.
Speaker Change: Be evaluating with our board of directors at its board meeting in August.
Speaker Change: The plans and the expectations for the remaining $600 million on the $1 billion share repurchase authorization that was approved in February.
Speaker Change: Awesome. Thank you. Thank you.
Speaker Change: Thank you and this concludes our question and answer session in Premier's fiscal 2024 third quarter Conference call. Thank you for attending today's presentation. You may now disconnect.
Speaker Change:
Speaker Change: [music].