Q4 2024 Premier Inc Earnings Call

August 20, 2024

Speaker Change: Good day and welcome to Premier's fiscal 2024 fourth quarter and full year conference call.

Operator: This is your fourth quarter and full year conference call.

Operator: This is your 4th quarter and full year conference call. All participants will be in listen-only mode.

4th quarter and full year conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. To withdraw your question, please press star, then two. Please note this event is being recorded.

Operator: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Craig McKasson: Because it does feel like a little bit of a departure from some of your peers.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by 0.

Craig McKasson: Yeah, this is Craig.

Speaker Change: All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions.

Operator: To ask a question, you may press star then 1 on your telephone keypad.

Speaker Change: After today's presentation, there will be an opportunity to ask questions.

Operator: To ask a question, you may press star then 1 on your telephone keypad.

Operator: To withdraw your question, please press star then.

Speaker Change: To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded. I would now like to turn the call over to Ben Krasinski, Senior Director, Investor Relations. Please go ahead.

Operator: To withdraw your question, please press star then 2.

Operator: Please note this event is being recorded.

Operator: I would now like to turn the call over to Ben Krasinski, Senior Director, Investor Relations.

Craig McKasson: I'll start and then Mike can add color.

Ben Krasinski: I would now like to turn the call over to Ben Krasinski, Senior Director and Investor Relations. Please go ahead.

Operator: I would now like to turn the call over to Ben Krasinski, Senior Director, Investor Relations.

Mike Alkire: A couple of things, Stephanie.

Ben Krasinski: Please go ahead.

Operator: Please go ahead.

Craig McKasson: First and foremost, I, wouldn't say there are distinctions between the composition of the members that have been renewed now and what will continue to be renewed in the future.

Ben Krasinski: Thank you and welcome to Premier's fiscal 2024 4th quarter and full year conference call. Our speakers this morning are Mike Alkire, Premier's president and CEO, and Craig McKasson, chief administrative and financial officer.

Ben Krasinski: Thank you and welcome to Premier's Fiscal 2024 fourth quarter and full year conference call.

Mike Alkire: This is Mike.

Craig McKaig: Thank you, and welcome to Premier's Fiscal 2024 Fourth Quarter and Full Year Conference Call. Our speakers this morning are Mike Alkire, Premier's President and CEO , and Craig McKasson, our Chief Administrative and Financial Officer.

Ben Krasinski: Our speakers this morning are Mike Alkire, Premier's President and CEO, and Craig McKasson, our Chief Administrative and Financial Officer.

Mike Alkire: At a macro level, utilization of the health system, you know, we still think is flat to maybe up single digits.

Ben Krasinski: Before we get started, I want to remind everyone that our earnings release and the supplemental presentation accompanying this call are available in the investor's section of our website at investors.premierinc.com.

Ben Krasinski: Before we get started, I want to remind everyone that our earnings release and the supplemental presentation accompanying this call are available in the investors section of our website at investors.premierinc.com.

Speaker Change: Before we get started, I want to remind everyone that our earnings release and the supplemental presentation accompanying this call are available in the Investors section of our website at investors.premierinc.com.

Ben Krasinski: Please be advised that management's remarks today contain certain forward-looking statements, such as statements regarding our strategies, plans, prospects, 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 fiscal 2024 Form 10-K, which we expect to file soon. We encourage you to review the detailed forward-looking statement and risk factor disclosures in these reports.

Ben Krasinski: Please be advised that management's remarks today contain certain forward-looking statements such as statements regarding our strategies, plans, prospects, expectations, and future performance, and actual results could differ materially from those discussed today.

Speaker Change: Please be advised that management's remarks today contain certain forward-looking statements, such as statements regarding our strategies, plans, prospects, expectations, and future performance, and actual results could differ materially from those discussed today.

Ben Krasinski: These forward-looking statements speak as of today, and we undertake no obligation to update them.

Speaker Change: These forward-looking statements speak as of today, and we undertake no obligation to update them.

Ben Krasinski: Factors that might affect future results are discussed in our filings with the SEC, including our fiscal 2024 Form 10-K, which we expect to file soon.

Speaker Change: Factors that might affect future results are discussed in our filings with the SEC, including our fiscal 2024 Form 10-K , which we expect to file soon. We encourage you to review the detailed forward-looking statement and risk factor disclosures in these reports.

Ben Krasinski: We encourage you to review the detailed forward-looking statement and risk factor disclosures in these reports.

Ben Krasinski: 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 gap financial measures and reconciliation of these measures to our gap 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 fiscal 2024 Form 10-K and our earnings Form 8-K, both of which we expect to file soon.

Ben Krasinski: Also, during this presentation, we will refer to adjusted and other non-GAAP financial measures, including free cash flow, to evaluate our business.

Speaker Change: Also, during this presentation, we will refer to adjusted and other non-GAAP financial measures, including free cash flow, to evaluate our business.

Ben Krasinski: 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.

Speaker Change: 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.

Ben Krasinski: Information on our non-GAAP financial measures will also be included in our fiscal 2024 Form 10-K and our earnings Form 8-K, both of which we expect to file soon.

mike alkhaa: Information on our non-GAAP financial measures will also be included in our Fiscal 2024 Form 10-K and our Earnings Form 8-K, both of which we expect to file soon. I will now turn the call over to Mike Alkire.

Ben Krasinski: Thank you, and welcome to Premier's fiscal 2024 4th quarter and full year conference call.

Craig McKasson: We have been thoughtful around how we've approached the timing and the expectations of renewals based on the relationship and changes that may be taking place within those member organizations that drive when those conversations and discussions should occur.

Mike Alkire: I will now turn the call over to Mike Alkair. Good morning, everyone. Thank you for joining us. This morning, I'm pleased to share our fourth quarter and full year fiscal 2024 results, which exceeded our expectations.

Mike Alkire: I will now turn the call over to Mike Alkire.

Mike Alkire: So we do believe there's still the tail one that's occurring.

Mike Alkire: Good morning, everyone.

Mike Alkire: Obviously, there's a lot of regionality that exists there.

Ben Krasinski: Our speakers this morning are Mike Alkire, Premier's President and CEO, and Craig McKasson, our Chief Administrative and Financial Officer.

Craig McKasson: I will say we, through this process, yes, we have had a couple of terminations, but I'm going to come back to, we had 97% retention in our GPO this past year. We continue to have very strong retention rates.

Ben Krasinski: Before we get started, I want to remind everyone that our earnings release and the supplemental presentation accompanying this call are available in the Investors section of our website at investors.premierinc.com.

Craig McKasson: We believe we will be successful as we continue to move through the remainder of the renewals and feel good about the organizational plan that our teams have in place to navigate that over the coming months.

Mike Alkire: Thank you for joining us.

Mike Alkire: Secondarily, if you look at the portfolio of products that we have in the supply chain, including the GPO, we still have a very long run rate in terms of contract penetration.

Richard Close: Okay.

mike alkhaa: Good morning everyone. Thank you for joining us.

mike alkhaa: This morning I'm pleased to share our fourth quarter and full year fiscal 2024 results, which exceeded our expectations.

Mike Alkire: So the tools and the technologies that we've been developing we believe will continue to provide growth for us.

Mike Alkire: I will also paint a vision for the year ahead, which includes, first, advancing our strategy to technology and able better healthcare performance and a smarter supply chain. Second, continuing to return value to stockholders as a board-approved execution of another share repurchase of $200 million of Class A common shares under our $1 billion share repurchase authorization. And third, our plan to address non-core assets, SDS Global and Contigo Health for which the processes launched in May remain ongoing, and we're hopeful to have something to announce soon.

mike alkhaa: I will also paint a vision for the year ahead, which includes

Mike Alkhalaf: First, advancing our strategy to technology-enabled better healthcare performance and a smarter supply chain.

Mike Alkhalaf: Second, continuing to return value to stockholders as a board-approved execution of another share repurchase of $200 million of Class A common shares under our $1 billion share repurchase authorization.

Mike Alkhalaf: And third, our plan to divest non-core assets, SDS Global and Contigo Health, for which the processes launched in May remain ongoing and we are hopeful to have something to announce soon.

Richard Close: Thank you.

Mike Alkire: Before we begin, I want to acknowledge this morning's announcement. Craig McKasson, our Chief Administrative and Financial Officer, has decided to retire on December 31, 2024, after more than 27 years with Premier. Craig will remain in his current role until his successor joins the company on November 11, 2024, and then will become an executive advisor through his retirement date. Following retirement, Craig will continue to serve in a consulting capacity for 24 months to support the company. We are incredibly grateful for Craig's contribution to our company's success and culture. During his tenure at Premier, Craig led the company through the initial integration following the 1996 mergers of the originally formed Premier.

Mike Alkire: This morning, I'm pleased to share our fourth quarter and full year fiscal 2024 results, which exceeded our expectations.

Mike Alkire: In terms of driving higher levels of contract penetration, you've heard us say this multiple times in this call.

Mike Alkire: I will also paint a vision for the year ahead, which includes, First, advancing our strategy to technology enable better health care performance and a smarter supply chain.

Mike Alkire: Those organizations that are more highly penetrated from a contract standpoint are those that obviously are performing better.

Speaker Change: Before we begin, I want to acknowledge this morning's announcement.

Speaker Change: Craig McKasson, our Chief Administrative and Financial Officer, has decided to retire on December 31st, 2024, after more than 27 years with Premier.

Richard Close: Congratulations again, Craig.

Mike Alkire: So we're going to continue to get that message out to the market.

Speaker Change: Craig will remain in his current role until his successor joins the company on November the 11th, 2024, and then will become an executive advisor through his retirement date.

Richard Close: Thanks.

Speaker Change: Following retirement, Craig will continue to serve in a consulting capacity for 24 months to support the company.

Richard Close: Thank you.

Speaker Change: We are incredibly grateful for Craig's contributions to our company's success and culture.

Speaker Change: During his tenure at Premier, Craig led the company through

Speaker Change: The initial integration following the 1996 mergers of the originally formed Premier,

Mike Alkire: Revenue growth from approximately $130 million to over $1.3 billion. The successful 2013 initial public offering, the 2020 and 2022 restructuring to simplify our corporate structure and strategic expansion to the leading integrated healthcare performance improvement company, Premier, is today.

Speaker Change: Revenue growth from approximately $130 million to over $1.3 billion.

Speaker Change: The successful 2013 Initial Public Offering.

Speaker Change: The 2020 and 2022 restructurings to simplify our corporate structure.

Operator: I appreciate it.

Speaker Change: And strategic expansion to the leading integrated healthcare performance improvement company, Premier, is today.

Mike Alkire: While Craig's departure is bittersweet, we are pleased to announce Glenn Coleman as Craig's successor. Glenn is currently the Executive Vice President and Chief Financial Officer of Dense Supply Sorona, a publicly traded healthcare manufacturing company in the Charlotte market. Prior to joining Dense Supply Sorona, Glenn served as the Executive Vice President and Chief Operating Officer of Integra Life Sciences Holding Corporation, along with 25 additional years in financial management positions with leading global businesses. We are thrilled to welcome Glenn to Premier and are excited about the experiences and opportunities he will bring to help us further grow into the future.

Glin Coleman: While Craig's departure is bittersweet, we are pleased to announce Glenn Coleman as Craig's successor.

Glin Coleman: Mine is currently the Executive Vice President and Chief Financial Officer of Dense Supply Sirona, a publicly traded healthcare manufacturing company in the Charlotte market.

Speaker Change: Prior to joining Dent Supply Sirona, Glenn served as the Executive Vice President and Chief Operating Officer of Integra Life Sciences Holdings Corporation.

Speaker Change: along with 25 additional years in financial management positions with leading global businesses.

Speaker Change: We are thrilled to welcome Glenn to Premier and are excited about the experiences and opportunities he will bring to help us further grow into the future.

Ben Krasinski: These forward-looking statements speak as of today, and we undertake no obligation to update them.

Operator: This concludes our question and answer session and premier's fiscal 2024 fourth quarter and, full year conference call.

Mike Alkire: Turning to performance, I am pleased to report that, thanks to our team's dedication and the trust of our members and other customers, our fourth quarter and full-year results for revenue and profitability in both segments surpassed our expectations. Our performance this fiscal year was fueled in part by our expanding role as a vital strategic partner for providers, manufacturers, and payers. From a provider standpoint, I am incredibly proud of the team for achieving outstanding member retention with a 97% GPO retention rate and a 95% SAS institutional renewal rate for our core informatics and technology products. Additionally, our team collectively identified significant targeted supply chain savings for our members.

Mike Alkire: Second, continuing to return value to stockholders as a board-approved execution of another share repurchase of $200 million of Class A common shares under our $1 billion share repurchase authorization.

Mike Alkire: We're seeing strong demand for our co-sourcing, co-management capabilities, really, really excited about that.

Speaker Change: Turning to performance, I am pleased to report that thanks to our team's dedication and the trust of our members and other customers, our fourth quarter and full year results for revenue and profitability in both segments surpassed our expectations.

Ben Krasinski: Factors that might affect future results are discussed in our filings with the SEC, including our fiscal 2024 Form 10-K, which we expect to file soon.

Mike Alkire: And third, our plan to divest non-core assets, Estes Global and Contigo Health, for which the processes launched in May remain ongoing, and we're hopeful to have something to announce soon.

Mike Alkire: When we're in actually providing those services, Stephanie, as you know, it allows us to drive higher levels of penetration and also bring to the fore the opportunity to leverage our tools and technologies in a very unique way.

Ben Krasinski: We encourage you to review the detailed forward-looking statement and risk factor disclosures in these reports.

Ben Krasinski: Also, during this presentation, we will refer to adjusted and other non-GAAP financial measures, including free cash flow, to evaluate our business.

Ben Krasinski: 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.

Ben Krasinski: Information on our non-GAAP financial measures will also be included in our fiscal 2024 Form 10-K and our earnings Form 8-K, both of which we expect to file soon.

Speaker Change: Our performance this fiscal year was fueled, in part, by our expanding role as a vital strategic partner for providers, manufacturers, and payers.

Ben Krasinski: I will now turn the call over to Mike Alkire.

Mike Alkire: So, you know, we see that as more opportunities.

Mike Alkire: And then finally, I will tell you, as consolidation picks up, you know, we do believe, you know, our capabilities around integrated services, and standardization and those kinds of things are going to be necessary.

Speaker Change: From a provider standpoint.

Speaker Change: I'm incredibly proud of the team for achieving outstanding member retention with a 97% GPO retention rate and a 95% SAS institutional renewal rate for our core informatics and technology products.

Speaker Change: Additionally, our team collectively identified significant targeted supply chain savings for our members.

Mike Alkire: Beyond retention, Premier is increasingly the partner of choice for those looking to drive growth beyond traditional boundaries. Our market edge is opening doors to innovative partnership proposals from technology enablement to full supply chain outsourcing. In fiscal 2024, we secured five new supply chain co-management agreements with Elfzos. Systems. I'm pleased to announce that all Spire Health Partners, competitively selected, premieres its National GPO to support its more than $3.5 billion in annual purchase volume, one of the largest single volume deals in Premier history. We have several reasons to believe that there is a great deal of momentum in the market for some providers to contemplate a shift to more strategic partners that have the data, the technology, and the people to implement transformative, sustainable change, change that alters the financial and operational trajectory of health systems and positions them for market differentiation.

Speaker Change: Beyond Retention, Premier is increasingly the partner of choice for those looking to drive growth beyond traditional boundaries.

Mike Alkire: So, again, we're seeing, you know, those as opportunities for us and we want to continue to, you know, provide the services into those areas.

Stephanie Davis: All right, very helpful.

Speaker Change: Our market edge is opening doors to innovative partnership proposals from technology enablement to full supply chain outsourcing.

Speaker Change: In fiscal 2024, we secured five new supply chain co-management agreements with health systems.

Mike Alkire: Good morning, everyone.

Operator: Thank you for attending today's presentation.

Stephanie Davis: I'm going to hop back into Q, but I'll hope someone else asks the questions on Allspire.

Speaker Change: I'm pleased to announce that Allspire Health Partners competitively selected Premier as its national GPO to support its more than $3.5 billion in annual purchase volume, one of the largest single volume deals in Premier history.

Stephanie Davis: Thank you, guys.

Speaker Change: We have several reasons to believe that there is a great deal of momentum in the market.

Mike Alkire: Thank you.

Speaker Change: for some providers to contemplate a shift to more strategic partners that have the data, the technology, and the people to implement transformative, sustainable change.

Mike Alkire: Great.

Dan Clark: Thank you.

Speaker Change: change that alters the financial and operational trajectory of health systems and positions them for market differentiation.

Mike Alkire: We also onboarded 32 new health systems into our health care specific enterprise resource planning solution, and continued to attract new logos with our market leading AI-enabled clinical decision support solution. In the fourth quarter of fiscal 2024, we secured a major integrated delivery network and their health plan in the Southwest US, which will now use our AI solution to automate prior authorization. From the perspective of health care product manufacturers, including life sciences companies, as well as payers, our long-term vision and strategy continues to materialize as we further expand into these adjacent markets. We are executing with precision on our plan to use our robust data and AI-enabled technology to deliver unparalleled insights and efficiencies for these customers.

Speaker Change: We also onboarded 32 new health systems into our healthcare-specific enterprise resource planning solution.

Speaker Change: and continue to attract new logos with our market-leading AI-enabled clinical decision support solution.

Speaker Change: In the fourth quarter of fiscal 2024, we secured a major integrated delivery network and their health plan in the Southwest U.S., which will now use our AI solution to automate prior authorization.

Speaker Change: From the perspective of healthcare product manufacturers, including life sciences companies, as well as payers, our long-term vision and strategy continues to materialize as we further expand into these adjacent markets.

Speaker Change: We are executing with precision on our plan to use our robust data and AI enabled technology to deliver unparalleled insights and efficiencies for these customers.

Mike Alkire: Most recently, we leveraged our digital supply chain capabilities to ensure timely payment and accurate reporting for the manufacturers who take part in our high compliance programs. This model is proving to reduce the administrative burden on manufacturers and health care providers, while adding transparency and efficiency to the entire exchange. We believe technology enablement of our network of health care provider members and other customers will become a critical driver in accelerating innovation in health care. We believe this integration will pave the way for a united approach to delivering higher quality and more affordable health care.

Speaker Change: Most recently, we leveraged our digital supply chain capabilities to ensure timely payment and accurate reporting for the manufacturers who take part in our high-compliance programs.

Speaker Change: This model is proving to reduce the administrative burden on manufacturers and healthcare providers, while adding transparency and efficiency to the entire exchange.

Speaker Change: We believe technology enablement of our network of health care provider members and other customers will become a critical driver in accelerating innovation in health care.

Speaker Change: We believe this integration will pave the way for a united approach to delivering higher quality and more affordable health care.

Mike Alkire: I want to once again thank our team for their steadfast commitment to our strategic vision and mission of improving the health of communities. In Cisco 2024, we again outperform global benchmarks in our employee engagement survey. highlighting that Premier's greatest asset is indeed its people.

Dan Clark: This is Dan Clark on for Mike.

Mike Alkire: Thank you for joining us.

You may now disconnect.

Speaker Change: I want to once again thank our team for their steadfast commitment to our strategic vision and mission of improving the health of communities.

Speaker Change: In Fiscal 2024, we again outperformed global benchmarks in our Employee Engagement Survey, highlighting that Premier's greatest asset is indeed its people.

Craig McKasson: I will now turn the call over to Craig for a closer look at our results and update on our share repurchase program and to provide our initial guidance for fiscal year 2025. Thanks, Mike.

Dan Clark: Just wanted to start, you know, based on sort of where you are in your ongoing renewals with your members.

Speaker Change: I will now turn the call over to Craig for a closer look at our results.

Craig McKaig: An update on our share repurchase program and to provide our initial guidance for fiscal year 2025.

Mike Alkire: We are incredibly grateful for Craig's contributions to our company's success and culture.

Dan Clark: Should we think EBITDA is going to grow in fiscal year 26 as you continue to reset your net admin fee share?

Craig McKasson: First, I would like to say that I'm incredibly grateful for my career at Premier. It's truly been an honor to work with such an amazing team, be part of our strong culture, and to contribute to Premier's mission to improve the health of communities.

Mike Alkire: During his tenure at Premier, Craig led the company through, The initial integration following the 1996 mergers of the originally formed Premier. Revenue growth from approximately $130 million to over $1.3 billion.

Mike Alkire: If I could, Craig, at the highest level, just before we jump into the answer to that, I do want, you know, to actually frame this in a little bit broader way in that, you know, having these conversations around admin fee reset allows for us to have more broader discussions with these health systems around other tools and services that we can provide.

Mike Alkire: The successful 2013 Initial Public Offering.

Mike Alkire: So, as we continue to go through this reset, I do look at it as an opportunity for us to continue to sell our broader community.

Craig McKaig: Thanks, Mike.

Craig McKaig: First, I would like to say that I'm incredibly grateful for my career at Premier. It's truly been an honor to work with such an amazing team, be part of our strong culture, and to contribute to Premier's mission to improve the health of communities.

Mike Alkire: This morning, I'm pleased to share our fourth quarter and full-year fiscal 2024 results, which exceeded our expectations.

Unnamed: Police.

Mike Alkire: I will also paint a vision for the year ahead, which includes, first, advancing our strategy to technology-enabled better healthcare performance and a smarter supply chain.

Craig McKasson: Now turning to our fiscal 2024 fourth quarter results. Total net revenue of 350.3 million increased 3% from the prior year period, from increases in both of our segments. In our supply chain services segment, higher net administrative fees were driven by continued growth in member purchasing in both the acute and continuum of care markets, as well as one-time payments of approximately $25 million from two members due to early termination of their agreements. This was partially offset by an expected increase in the aggregate blended member fee share for the high 50% level as we continue to progress through our contract renewal process.

Craig McKasson: Craig?

Craig McKasson: Yeah.

Speaker Change: Now turning to our fiscal 2024 fourth quarter results.

Speaker Change: Total net revenue of $350.3 million increased 3% from the prior year period from increases in both of our segments.

Craig McKasson: Thanks, Mike.

Craig McKasson: Relative to the question, I think as you might expect, I would say today we're establishing our fiscal 2025 guidance.

Speaker Change: and our Supply Chain Services segment.

Speaker Change: Higher net administrative fees were driven by continued growth in member purchasing in both the acute and continuum of care markets, as well as one-time payments of approximately $25 million from two members due to early termination of their agreements.

Speaker Change: This was partially offset by an expected increase in the aggregate blended member fee share to the high 50% level as we continue to progress through our contract renewal process.

Craig McKasson: To provide an update, the group of GPO members that were part of the August 2020 restructure represents approximately 70% of our total gross administrative fees. As of June 30, 2024, we have now renewed and extended GPO members representing approximately 50% of this group's associated gross administrative fees. We currently plan to address and finalize additional member renewals during fiscal 2025 that would result in over three-fourths of this group's gross administrative fees being through the renewal process by the end of fiscal 2025, with the remainder occurring in fiscal 2026 and 2027.

Mike Alkire: The 2020 and 2022 restructurings to simplify our corporate structure.

Mike Alkire: And strategic expansion to the leading integrated healthcare performance improvement company, Premier, is today.

Mike Alkire: While Craig's departure is bittersweet, we are pleased to announce Glenn Coleman as Craig's successor.

Mike Alkire: Lana is currently the Executive Vice President and Chief Financial Officer of Dense Supply Serona, a publicly traded healthcare manufacturing company in the Charlotte market.

Mike Alkire: Prior to joining Dent Supply Sirona, Glenn served as the Executive Vice President and Chief Operating Officer of Integra Life Sciences Holding Corporation, along with 25 additional years in financial management positions with leading global business.

Speaker Change: To provide an update, the group of GPO members that were part of the August 2020 restructure represent approximately 70% of our total gross administrative fees.

Mike Alkire: We are thrilled to welcome Glenn to Premier and are excited about the experiences and opportunities he will bring to help us further grow into the future.

Speaker Change: As of June 30, 2024, we have now renewed and extended GPO members representing approximately 50% of this group's associated gross administrative fees.

Speaker Change: We currently plan to address and finalize additional member renewals during Fiscal 2025 that would result in over three-fourths of this group's gross administrative fees being through the renewal process by the end of Fiscal 2025.

Speaker Change: with the remainder occurring in fiscal 2026 and 2027.

Craig McKasson: In our direct sourcing business, revenue declined primarily due to lower pricing and demand for certain products. In software license, other services, and support revenue, we experienced a growth in our supply chain co-management business, as well as in surpass our highly committed GPO program. In our performance services segment, revenue growth was driven by an increase in contributions from consulting services and enterprise license agreements compared to the prior year period. We also continued to experience growth in our adjacent markets businesses, which include our applied sciences, clinical decision support, Antigo, health, and Remitra businesses, which collectively grew double digits during the quarter, resulting in more than 18% growth for the full year.

Speaker Change: In our direct sourcing business, revenue declined primarily due to lower pricing and demand for certain products.

Speaker Change: In software license, other services, and support revenue, we experienced a growth in our supply chain co-management business, as well as in surpass our highly committed GPO program.

Speaker Change: In our performance services segment, revenue growth was driven by an increase in contributions from consulting services and enterprise license agreements compared to the prior year period.

Speaker Change: We also continue to experience growth in our adjacent markets businesses, which include our Applied Sciences, Clinical Decision Support, Contigo Health, and Remitra businesses.

Speaker Change: which collectively grew double digits during the quarter, resulting in more than 18% growth for the full year.

Craig McKasson: Turning to profitability, Gap net income was 60.6 million for the quarter. Total adjusted EBIDA of 118.7 million was impacted by the following factors. First, supply chain services adjusted EBIDA declines mainly due to an increase in expenses in support of growth in our supply chain co-management business and higher performance-related compensation expense. The aforementioned increase in aggregate blended member fee share in the GPO and a lower profit margin in our direct sourcing business due to lower-than-normal logistics costs in the prior year period. And second, performance services adjusted EBIDA decreased mainly due to incremental headcount to support growth in our applied sciences and clinical decision support businesses.

Mike Alkire: Our performance this fiscal year was fueled, in part, by our expanding role as a vital strategic partner for providers, manufacturers, and payers.

Speaker Change: Turning to profitability, gap net income was $60.6 million for the quarter.

Mike Alkire: From a provider standpoint, I'm incredibly proud of the team for achieving outstanding member retention with a 97% GPO retention rate and a 95% SAS institutional renewal rate for our core informatics and technology products. Additionally, our team collectively identified significant targeted supply chain savings for our members.

Mike Alkire: Beyond retention, Premier is increasingly the partner of choice for those looking to drive growth beyond traditional boundaries.

Mike Alkire: Our market edge is opening doors to innovative partnership proposals from technology enablement to full supply chain outsourcing.

Speaker Change: Total adjusted EBITDA of $118.7 million was impacted by the following factors.

Speaker Change: First, supply chain services adjusted EBITDA declines mainly due to an increase in expenses in support of growth in our supply chain co-management business and higher performance-related compensation expense. For more information, visit www.fema.gov

Mike Alkire: In fiscal 2024, we secured five new supply chain co-management agreements with health systems.

Mike Alkire: I'm pleased to announce that Allspire Health Partners competitively selected Premier as its national GPO to support its more than $3.5 billion in annual purchase volume, one of the largest single volume deals in Premier history.

Mike Alkire: We have several reasons to believe that there is a great deal of momentum in the market, for some providers to contemplate a shift to more strategic partners that have the data, the technology, and the people to implement transformative, sustainable change, change that alters the financial and operational trajectory of health systems and positions them for market differentiation.

Mike Alkire: We also onboarded 32 new health systems into our healthcare-specific enterprise resource planning solution, and continue to attract new logos with our market-leading AI-enabled clinical decision support solution.

Mike Alkire: In the fourth quarter of fiscal 2024, we secured a major integrated delivery network and their health plan in the southwest US, which will now use our AI solution to automate prior authorization.

Mike Alkire: From the perspective of healthcare product manufacturers, including life sciences companies, as well as payers, our long-term vision and strategy continues to materialize as we further expand into these adjacent markets.

Mike Alkire: We are executing with precision on our plan to use our robust data and AI-enabled technology to deliver unparalleled insights and efficiencies for these customers.

Mike Alkire: We believe technology enablement of our network of healthcare provider members and other customers will become a critical driver in accelerating innovation in healthcare.

Mike Alkire: We believe this integration will pave the way for a united approach to delivering higher quality and more affordable healthcare.

Mike Alkire: I want to once again thank our team for their steadfast commitment, through our strategic vision and mission of improving the health of communities.

Mike Alkire: In fiscal 2024, we again outperformed global benchmarks in our employee engagement survey.

Mike Alkire: Highlighting the Premier's greatest assets, is indeed a.

Speaker Change: The aforementioned increase in aggregate blended member fee share in the GPO and a lower profit margin in our direct sourcing business due to lower than normal logistics costs in the prior year period.

Speaker Change: and second performance services adjusted EBITDA decreased mainly due to incremental headcount to support growth in our applied sciences and clinical decision support businesses partially offset by increased revenue

Craig McKasson: Partially offset by increased revenue. Adjusted net income decrease primarily as a result of the same factors that impacted adjusted EBIDA and adjusted earnings per share increased, primarily due to a reduction in weighted average share count resulting from our accelerated share repurchase transaction.

Speaker Change: Adjusted net income decreased primarily as a result of the same factors that impacted adjusted EBITDA and adjusted earnings per share increased primarily due to a reduction in weighted average share count resulting from our accelerated share repurchase transaction.

Craig McKasson: From a liquidity and balance sheet perspective, cash flow from operations for fiscal 2024 of 296.6 million decreased from 444.5 million in the prior year. The change was primarily due to 162.3 million in tax payments in the current year from the sale of our non-health care GPO operations. With respect to the sale of the non-health care GPO operations, we received a total of 681.4 million in proceeds as of June 30, 2024. The transaction was finalized in July 2024, and we received the final cash proceeds of 42.4 million in the first quarter of fiscal 2025, resulting in a final total purchase price of 723.8 million.

Speaker Change: From a liquidity and balance sheet perspective.

Speaker Change: Cash flow from operations for fiscal 2024 of $296.6 million decreased from $444.5 million in the prior year.

Speaker Change: The change was primarily due to $162.3 million in tax payments in the current year from the sale of our non-healthcare GPO operations.

Speaker Change: With respect to the sale of the non-healthcare GPO operations, we received a total of $681.4 million in proceeds as of June 30, 2024.

Speaker Change: The transaction was finalized in July 2024, and we received the final cash proceeds of $42.4 million.

Speaker Change: in the first quarter of fiscal 2025, resulting in a final total purchase price of $723.8 million.

Craig McKasson: Free cash flow for fiscal 2024 of 115.7 million decreased from 264.4 million in the prior year primarily due to the same factors that impacted cash flow from operations, including the aforementioned tax payments. Excluding the impact of the 162.3 million in tax payments, fiscal 2024 free cash was 62% of adjusted EBIDA for the full year.

Speaker Change: Pre-cash flow for fiscal 2024 of $115.7 million decreased from $264.4 million in the prior year, primarily due to the same factors that impacted cash flow from operations, including the aforementioned tax payments.

Speaker Change: Excluding the impact of the $162.3 million in tax payments, fiscal 2024 free cash flow was 62% of adjusted EBITDA for the full year.

Craig McKasson: Cash and cash equivalents totaled 125.1 million as of June 30, 2024, compared with 89.8 million as of June 30, 2023. The increase was primarily driven by the sale of our non-health care GPO operations, net of the previously mentioned tax payments, partially offset by the use of cash for the $400 million accelerated chair repurchase, as well as the repayment of the outstanding balance on our five-year $1 billion revolving credit facility in the first quarter of fiscal 2024. We continue to have no amount drawn on the credit facility. We also paid 102.7 million to former limited partners in fiscal 2024 associated with the termination of the tax receivable agreement in connection with our August 2020 restructure and have a remaining liability of 102.7 million that will be paid in fiscal 2025 to complete that obligation, and those payments will no longer impact our free cash flow in fiscal 2026 and beyond.

Speaker Change: Cash and cash equivalents totaled $125.1 million as of June 30, 2024, compared with $89.8 million as of June 30, 2023.

Speaker Change: The increase was primarily driven by the sale of our non-healthcare GPO operations, net of the previously mentioned tax payments.

Speaker Change: Partially offset by the use of cash for the $400 million accelerated Cherry purchase, as well as the repayment of the outstanding balance on our five-year $1 billion revolving credit facility in the first quarter of fiscal 2024.

Speaker Change: We continue to have no amount drawn on the credit facility.

Speaker Change: We also paid $102.7 million to former limited partners in fiscal 2024 associated with the termination of the tax receivable agreement in connection with our August 2020 restructure.

Speaker Change: and have a remaining liability of $102.7 million that will be paid in fiscal 2025 to complete that obligation and those payments will no longer impact our free cash flow in fiscal 2026 and beyond.

Craig McKasson: With respect to capital deployment, we continue to be disciplined and focused on taking a balanced approach long term that are currently focused on return of capital, Sutherland. We completed the $400 million accelerated share repurchase transaction in July 2024 and retired $4.8 million Class A common shares in addition to the initial retirement of more than 15 million Class A common shares in February 2024. As part of our approved $1 billion share repurchase authorization, our board recently approved the execution of another share repurchase of $200 million of Class A common shares that we currently expect to occur in the open market.

Speaker Change: With respect to capital deployment, we continue to be disciplined and focused on taking a balanced approach long term, but are currently focused on return of capital to stockholders.

Speaker Change: We completed the $400 million accelerated share repurchase transaction in July 2024.

Speaker Change: and retired 4.8 million Class A common shares in addition to the initial retirement of more than 15 million Class A common shares in February 2024.

Speaker Change: As part of our approved $1 billion share repurchase authorization, our board recently approved the execution of another share repurchase of $200 million of Class A common shares that we currently expect to occur in the open market.

Speaker Change: We will continue to assess the remaining $400 million under the share repurchase authorization as we progress through fiscal 2025.

Speaker Change: The share repurchase augments our quarterly cash dividend, which totaled $95.2 million in fiscal 2024.

Craig McKasson: In addition, our board recently declared a dividend of 21 cents per share, payable on September 15, 2024, to stockholders of record as of September 1. We will also continue to evaluate opportunities to further invest in organic growth and assess potential acquisitions to strengthen, enhance, or complement our existing capabilities in order to differentiate our offerings in the marketplace.

Speaker Change: In addition, our board recently declared a dividend of 21 cents per share payable on September 15, 2024 to stockholders of record as of September 1.

Speaker Change: We will also continue to evaluate opportunities to further invest in organic growth and assess potential acquisitions to strengthen, enhance, or complement our existing capabilities in order to differentiate our offerings in the marketplace.

Craig McKasson: Turning to our outlook for fiscal 2025, our guidance incorporates certain key assumptions related to the market and our business, and it does not incorporate the impact of the potential additional $200 million share repurchase or any future share repurchases, or any significant acquisitions. In addition, I would also like to provide some clarity on the following changes impacting our guidance. As a result of our previously announced plan to divest majority interests in our Contigo Help and S2S Global businesses, we are presenting guidance excluding any financial contributions from these businesses for fiscal 2025. In conjunction with the evolution of our digital supply chain strategy to more tightly align Remitra's strategic and operational capabilities with our GPO, we have determined it is more appropriate to report the Remitra business as part of the supply chain services segment beginning in fiscal 2025.

Mike Alkire: I will now turn the call over to Craig for a closer look at our results, an update on our share repurchase program and to provide our initial guidance for fiscal year 2025.

Speaker Change: Turning to our outlook for fiscal 2025.

Speaker Change: Our guidance incorporates certain key assumptions related to the market and our business.

Speaker Change: And it does not incorporate the impact of the potential additional $200 million share repurchase or any future share repurchases or any significant acquisitions.

Craig McKasson: Thanks, Mike.

Craig McKasson: First, I would like to say that I'm incredibly grateful for my career at Premier.

Craig McKasson: It's truly been an honor to work with such an amazing team, be part of our strong culture and to contribute to Premier's mission to improve the health of community.

Speaker Change: In addition, I would also like to provide some clarity on the following changes impacting our guidance.

Mike Alkire: And third, our plan to divest non-core assets, SDS Global and Contigo Health, for which the processes launched in May remain ongoing and we are hopeful to have something to announce soon.

Craig McKasson: Now turning to our fiscal 2024 fourth quarter results. Total net revenue of $350.3 million, increased 3% from the prior year period from increases in both of our segments, and our Supply Chain Services section. Higher net administrative fees were driven by continued growth in member purchasing in both the acute and continuum of care markets, as well as one-time payments of approximately $25 million from two members due to early termination of their agreement.

Craig McKasson: This was partially offset by an expected increase in the aggregate blended member fee share to the high 50% level as we continue to progress through our contract renewal process.

Mike Alkire: We are incredibly grateful for Craig's contributions to our company's success and culture, and strategic expansion to the leading integrated healthcare performance improvement company, Premier, is today.

Mike Alkire: While Craig's departure is bittersweet, we are pleased to announce Glenn Coleman as Craig's successor. Glenn is currently the Executive Vice President and Chief Financial Officer of Dent Supply Serona, a publicly traded healthcare manufacturing company in the Charlotte market. Prior to joining Dent Supply Serona, Glenn served as the Executive Vice President and Chief Operating Officer of Integra Life Sciences Holding Corporation, along with 25 additional years in financial management positions with leading global businesses. We are thrilled to welcome Glenn to Premier and are excited about the experiences and opportunities he will bring to help us further grow into the future.

Speaker Change: As a result of our previously announced plan to divest majority interest in our Contigo Health and S2S global businesses.

Craig McKasson: To provide an update, the group of GPO members that were part of the August 2020 restructure represent approximately 70% of our total gross administrative, As of June 30, 2024, we have now renewed and extended GPO members representing approximately 50% of this group's associated gross administrative fees. We currently plan to address and finalize additional member renewals during fiscal 2025 that would result in over three-fourths of this group's gross administrative fees being through the renewal process by the end of fiscal 2025, with the remainder occurring in fiscal 2026 and 2027.

Craig McKasson: In our direct sourcing business, revenue declined primarily due to lower pricing and demand for certain products.

Speaker Change: We are presenting guidance excluding any financial contributions from these businesses for fiscal 2025.

Mike Alkire: Our performance this fiscal year was fueled, in part, by our expanding role as a vital strategic partner for providers, manufacturers, and payers.

Mike Alkire: Beyond retention, Premier is increasingly the partner of choice for those looking to drive growth beyond traditional boundaries.

Mike Alkire: Our market edge is opening doors to innovative partnership proposals from technology enablement to full supply chain outsourcing. In fiscal 2024, we secured five new supply chain co-management agreements with Health Systems.

Mike Alkire: I'm pleased to announce that Allspire Health Partners competitively selected Premier as, its national GPO to support its more than $3.5 billion in annual purchase volume, one of the largest single volume deals in Premier history.

Speaker Change: In conjunction with the evolution of our digital supply chain strategy to more tightly align Remitra's strategic and operational capabilities with our GPO,

Speaker Change: We have determined it is more appropriate to report the Remitra business as part of the Supply Chain Services segment beginning in fiscal 2025.

Craig McKasson: Lastly, based upon shareholder and analyst feedback, we decided it is appropriate, following the close of the sale of our non-healthcare GPO operations, to exclude the impact of the Omnia transaction, including associated revenues sold, imputed interest expense, and cash taxes paid on proceeds received from our non-GAAP profitability measures moving forward. We will present our adjusted EBITDA, adjusted net income, adjusted earnings per share, and free cash flow on a comparable basis excluding these impacts from the Omnia transaction effective in fiscal 2025.

Speaker Change: Lastly, based upon shareholder and analyst feedback, we decided it is appropriate, following the close of the sale of our non-healthcare GPO operations,

Speaker Change: to exclude the impact of the Omnia transaction, including associated revenues sold, imputed interest expense, and cash taxes paid on proceeds received from our non-GAAP profitability measures moving forward.

Speaker Change: We will present our Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, and Free Cash Flow on a comparable basis, excluding these impacts from the Omnia transaction effective in fiscal 2025.

Craig McKasson: With these key assumptions and changes in mind, our specific fiscal 2025 Folier guidance ranges are as follows. Supply chain services segment revenue, excluding direct sourcing products revenue of 560 to 610 million, is comprised of net administrative fees revenue of 495 to 525 million. And software license, other services, and support revenue of 65 to 85 million, which now includes Remitra. Our net administrative fees revenue will continue to include revenue from Omnina, and our guidance includes 60 to 75 million in revenue related to this non-health care member purchasing. Performance services segment revenue of 370 to 410 million, which excludes contributions from the Contigo Health and Remitra businesses.

Speaker Change: With these key assumptions and changes in mind, our specific fiscal 2025 full-year guidance ranges are as follows.

Speaker Change: supply chain services segment revenue excluding direct sourcing products revenue

Speaker Change: of $560 to $610 million, is comprised of net administrative fees revenue of $495 to $525 million.

Craig McKasson: In software license, other services and support revenue, we experienced a growth in our supply chain co-management business as well as in surpass our highly committed GPO program.

Speaker Change: and software license, other services and support revenue of $65 to $85 million, which now includes Remitra.

Speaker Change: Our Net Administrative Fees Revenue will continue to include revenue from Omnena, and our guidance includes $60 to $75 million in revenue related to this non-healthcare member purchasing.

Craig McKasson: In our performance services segment, revenue growth was driven by an increase in contributions from consulting services and enterprise licensing, compared to the prior year period.

Speaker Change: Performance Services Segment Revenue of $370 to $410 million, which excludes contributions from the Contigo Health and Remitra businesses.

Craig McKasson: We also continue to experience growth in our adjacent markets businesses, which include our Applied Sciences, Clinical Decision Support, Contigo Health, and Remitra businesses, which collectively grew double digits during the quarter, resulting in more than 18% growth for the full year.

Craig McKasson: Together, these produce total net revenue of 930 million to 1.02 billion dollars.

Craig McKasson: Turning to profitability, gap net income was $60.6 million for the quarter. Total adjusted EBITDA of $118.7 million was impacted by the following factors. First, supply chain services adjusted EBITDA declined mainly due to an increase in expenses in support of growth in our supply chain co-management business and higher performance-related compensation expense.

Speaker Change: Together, these produce total net revenue of $930 million to $1.02 billion.

Craig McKasson: We expect adjusted EBITDA to be in the range of 235 to 255 million, and adjusted earnings per share to be in the range of $1.16 to $1.28. Our guidance is also based on the following assumptions and expectations. In our GPO business, we expect current number utilization levels to continue with growth and growth administrative fees driven by further penetration of existing members' spend and the addition of new GPO members. We continue to anticipate aggregate blended member fee share will increase to the low 60 percent range for fiscal 2025 on a full-year basis. While we benefited from certain member termination payments during fiscal 2024, we do not have any of these types of payments factored into our fiscal 2025 guidance.

Speaker Change: We expect adjusted EBITDA to be in the range of $235 to $255 million and adjusted earnings per share to be in the range of $1.16 to $1.28.

Craig McKasson: The aforementioned increase in aggregate blended member fee share in the GPO and a lower profit margin in our direct sourcing business due to lower than normal logistics costs in the prior year period.

Speaker Change: Our guidance is also based on the following assumptions and expectations.

Speaker Change: In our GPO business, we expect current member utilization levels to continue, with growth and gross administrative fees driven by further penetration of existing member spend and the addition of new GPO members.

Craig McKasson: We're not actually giving 26 guidance at this point in time, but to provide some color around your question consistent with remarks that I've previously publicly made, we do anticipate that our administrative fee share for fiscal 2025 will be in the low 60% range.

Speaker Change: We continue to anticipate aggregate blended member fee share will increase to the low 60% range for fiscal 2025 on a full year basis.

Speaker Change: While we benefited from certain member termination payments during Fiscal 2024, we do not have any of these types of payments factored into our Fiscal 2025 guidance.

Craig McKasson: Also in our supply chain services segment, we expect software license, other services, and support revenue growth to be primarily driven by the continued adoption and expansion of our supply chain co-management business. From a cadence perspective, we expect our supply chain services segment revenue to be slightly more back half-weighted. In our performance services business, we finished fiscal 2024 better than expected. As a result of the timing of revenue recognition due to enterprise license agreements and consulting engagements, we expect our healthcare provider business to be impacted by the timing of new bookings and the associated conversion to revenue recognition.

Speaker Change: Also in our supply chain services segment, we expect software license, other services, and support revenue growth to be primarily driven by the continued adoption and expansion of our supply chain co-management business.

Speaker Change: From a cadence perspective, we expect our supply chain services segment revenue to be slightly more back half-weighted.

Craig McKasson: And second, performance services adjusted EBITDA decreased mainly due to incremental head count to support growth in our applied sciences and clinical decision support businesses, partially offset by increased revenue.

Craig McKasson: Adjusted net income decreased primarily as a result of the same factors that impacted adjusted EBITDA and adjusted earnings per share increased primarily due to a reduction in weighted average share count resulting from our accelerated share repurchase transaction.

Speaker Change: In our performance services business, we finished fiscal 2024 better than expected.

Craig McKasson: From a liquidity and balance sheet perspective.

Craig McKasson: Cash flow from operations for fiscal 2024 of $296.6 million decreased from $444.5 million in the prior year. The change was primarily due to $162.3 million in tax payments in the current year from the sale of our non-healthcare GPO operation.

Speaker Change: As a result of the timing of revenue recognition due to enterprise license agreements and consulting engagements, we expect our healthcare provider business to be impacted by the timing of new bookings and the associated conversion to revenue recognition.

Craig McKasson: We continue to expect double-digit growth in our applied sciences and clinical decision support businesses. As previously mentioned, year-over-year growth in the performance services segment will also be impacted as a result of the decision to report our Remitra business in the supply chain services segment, beginning in fiscal 2025. From a cadence perspective, we expect segment revenue to be slightly more back half-weighted, with the first quarter being the lowest point for the year. Related to profitability, given the nature of the GPO business, and the fact that there are not many variable costs associated with administrative fee share changes in the business, we expect the decrease in net administrative fees revenue in fiscal 2025 to have a comparable impact on our profitability measures.

Speaker Change: We continue to expect double-digit growth in our applied sciences and clinical decision support businesses.

Speaker Change: As previously mentioned, year-over-year growth in the performance services segment will also be impacted as a result of the decision to report our remitra business in the supply chain services segment beginning in fiscal 2025.

Speaker Change: From a cadence perspective, we expect segment revenue to be slightly more back half-weighted, with the first quarter being the lowest point for the year.

Craig McKasson: With respect to the sale of the non-healthcare GPO operations, we received a total of $681.4 million in proceeds as of June 30, 2024. The transaction was finalized in July 2024, and we received the final cash proceeds of $42.4 million in the first quarter of fiscal 2025, resulting in a final total purchase price of $723.8 million.

Craig McKasson: Pre-cash flow for fiscal 2024 of $115.7 million decreased from $264.4 million in the prior year, primarily due to the same factors that impacted cash flow from operations, including the aforementioned tax payments. Excluding the impact of the $162.3 million in tax payments, fiscal 2024 free cash flow was 62% of adjusted EBITDA for the full year.

Speaker Change: Related to profitability.

Speaker Change: Given the nature of the GPO business and fact that there are not many variable costs associated with administrative fee share changes in the business, we expect the decrease in net administrative fees revenue in fiscal 2025 to have a comparable impact on our profitability measures.

Craig McKasson: However, we take our fiduciary responsibility very seriously, and as a matter of normal practice, we are always carefully managing our cost structure. In addition, and as I mentioned earlier, we will now exclude the impact of the Omnia transaction from our non-GAAP profitability measures. Lastly, from a cadence perspective, we expect to achieve approximately 45% of our adjusted EVA guidance in the first half of the fiscal year, with the first quarter being our low water mark, given the margin profile associated with our anticipated revenue in the first quarter of the year. In the second half of the year, we expect margin to be favorable compared to the first half, primarily given the expected timing of enterprise license agreements.

Speaker Change: However, we take our fiduciary responsibility very seriously and as a matter of normal practice, we are always carefully managing our cost structure.

Speaker Change: In addition, and as I mentioned earlier, we will now exclude the impact of the Omnia transaction from our non-GAAP profitability measures.

Craig McKasson: Cash and cash equivalents totaled $125.1 million as of June 30, 2024, compared with $89.8 million as of June 30, 2023. The increase was primarily driven by the sale of our non-healthcare GPO operations, net, of the previously mentioned tax, partially offset by the use of cash for the $400 million Accelerated Cherry Purchase, as well as the repayment of the outstanding balance on our five-year, $1 billion revolving credit facility in the first quarter of fiscal 2024.

Speaker Change: Lastly, from a cadence perspective, we expect to achieve approximately 45% of our adjusted EBITDA guidance in the first half of the fiscal year, with the first quarter being our low watermark given the margin profile associated with our anticipated revenue in the first quarter of the year.

Speaker Change: In the second half of the year, we expect margin to be favorable compared to the first half, primarily given the expected timing of enterprise license agreements.

Craig McKasson: Related to cash, we expect free cash flow to approximate 45% to 55% of adjusted EVA for the full year.

Craig McKasson: We continue to have no amount drawn on the credit facility. We also paid $102.7 million to former limited partners in fiscal 2024 associated with the termination of the tax receivable agreement in connection with our August 2020 restructuring, and have a remaining liability of $102.7 million that will be paid in fiscal 2025 to complete that obligation and those payments will no longer impact our free cash flow in fiscal 2026 and beyond, with respect to capital deployment.

Speaker Change: Related to cash, we expect free cash flow to approximate 45-55% of adjusted EBITDA for the full year.

Craig McKasson: From a cash tax perspective, we continue to benefit from our 2020 restructuring and 2022 subsidiary reorganization. As a result, we anticipate our fiscal 2025 cash tax rate will be less than 5% and expect a similar range over the next three to five years.

Craig McKasson: We continue to be disciplined and focused on taking a balanced approach long-term, but are currently focused on return of capital to stockholders. We completed the $400 million accelerated share repurchase transaction in July 2024 and retired 4.8 million Class A common shares in addition to the initial retirement of more than 15 million Class A common shares in February 2024. As part of our approved $1 billion share repurchase authorization, our board recently approved the execution of another share repurchase of $200 million of Class A common shares that we currently expect to occur in the open market.

Speaker Change: From a cash tax perspective, we continue to benefit from our 2020 restructuring and 2022 subsidiary reorganization.

Speaker Change: As a result, we anticipate our fiscal 2025 cash tax rate will be less than 5% and expect a similar range over the next 3 to 5 years.

Craig McKasson: Thanks again for joining us today. I look forward to connecting with many of you over the coming months and remain committed to ensuring a smooth transition for my successor following our fiscal 2025 first quarter earnings call in early November.

Mike Alkire: We have several reasons to believe that there is a great deal of momentum in the market.

Mike Alkire: For some providers to contemplate a shift to more strategic partners that have the data, the technology, and the people to implement transformative, sustainable change, change that alters the financial and operational trajectory of health systems and positions them for market differentiation.

Mike Alkire: We also onboarded 32 new health systems into our healthcare specific enterprise resource, planning solution and continue to attract new logos with our market-leading AI-enabled clinical decision support solution.

Mike Alkire: I want to once again thank our team for their steadfast commitment to our strategic vision, and mission of improving the health of communities.

Operator: 4th quarter and full year conference call. All participants will be in listen only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded.

Mike Alkire: In the fourth quarter of fiscal 2024, we secured a major integrated delivery network and their, health plan in the southwest U.S., which will now use our AI solution to automate prior authorization.

Mike Alkire: In fiscal 2024, we again outperformed global benchmarks in our employee engagement survey, demonstrating that Premier's greatest asset is indeed its people.

Speaker Change: Thanks again for joining us today. I look forward to connecting with many of you over the coming months and remain committed to ensuring a smooth transition for my successor following our fiscal 2025 first quarter earnings call in early November .

Mike Alkire: We are executing with precision on our plan to use our robust data and AI-enabled technology, to deliver unparalleled insights and efficiencies for these customers.

Mike Alkire: Most recently, we leveraged our digital supply chain capabilities to ensure timely payment, and accurate reporting for the manufacturers who take part in our high-compliance programs. This model is proving to reduce the administrative burden on manufacturers and healthcare providers, while adding transparency and efficiency to the entire exchange.

Mike Alkire: We believe technology enablement of our network of healthcare provider members and other customers, will become a critical driver in accelerating innovation in healthcare.

Mike Alkire: I will now turn the call over to Craig for a closer look at our results, an update on, our share repurchase program, and to provide our initial guidance for fiscal year 2025.

Mike Alkire: We believe this integration will pave the way for a united approach to delivering higher, quality and more affordable healthcare.

Operator: After today's presentation, there will be an opportunity to ask questions.

Unnamed: We appreciate your time and will now open the call for questions.

Craig McKasson: Thanks, Mike.

Operator: To ask a question, you may press star then one on your telephone keypad.

Speaker Change: We appreciate your time and will now open the call for questions.

Unnamed: We will now begin the question and answer session. To ask a question, you may press star, then one on your telephone keypad. If you were using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two.

Craig McKasson: We will continue to assess the remaining $400 million under the share repurchase authorization as we progress through fiscal 2025.

Craig McKasson: First, I would like to say that I'm incredibly grateful for my career at Premier.

Craig McKasson: The share repurchase augments our quarterly cash, which totaled $95.2 million in fiscal 2024. In addition, our board recently declared a dividend of 21 cents per share payable on September 15, 2024 to stockholders of record as of September 1.

Craig McKasson: It has truly been an honor to work with such an amazing team, be part of our strong culture, and to contribute to Premier's mission to improve the health of communities.

Craig McKasson: We will also continue to evaluate opportunities to further invest in organic growth and assess potential acquisitions to strengthen, enhance, or complement our existing capabilities in order to differentiate our offerings in the marketplace.

Craig McKasson: Now, turning to our fiscal 2024 fourth quarter results, total net revenue of $350.3 million, increased 3% from the prior year period from increases in both of our segments. In our supply chain services segment, higher net administrative fees were driven by continued, growth in member purchasing in both the acute and continuum of care markets, as well as one-time payments of approximately $25 million from two members due to early termination of their agreements.

Craig McKasson: Turning to our outlook for fiscal 2025. Our guidance incorporates certain key assumptions related to the market and our business, and it does not incorporate the impact of the potential additional $200 million share repurchase or any future share repurchases or any significant acquisitions.

Operator: To withdraw your question, please press star then two.

Craig McKasson: This was partially offset by an expected increase in the aggregate blended member fee share, to the high 50% level as we continue to progress through our contract renewal process. To provide an update, the group of GPO members that were part of the August 2020 restructure, represent approximately 70% of our total gross administrative fees. As of June 30, 2024, we have now renewed and extended GPO members representing approximately, 50% of this group's associated gross administrative fees.

Craig McKasson: In addition, I would also like to provide some clarity on the following changes impacting our guidance. As a result of our previously announced plan to divest majority interest in our Contigo Health and S2S global business. We are presenting guidance excluding any financial contributions from these businesses for fiscal 2025.

Craig McKasson: We currently plan to address and finalize additional member renewals during fiscal 2025, that would result in over three-fourths of this group's gross administrative fees being through the renewal process by the end of fiscal 2025, with the remainder occurring in fiscal 2026 and 2027.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Craig McKasson: In conjunction with the evolution of our digital supply chain strategy to more tightly align Remitra's strategic and operational capabilities with our GPO, we have determined it is more appropriate to report the Remitra business as part of the supply chain services segment beginning in fiscal 2025.

Craig McKasson: In our direct sourcing business, revenue declined primarily due to lower pricing and demand, for certain products.

Craig McKasson: Lastly, based upon shareholder and analyst feedback, we decided it is appropriate, following the close of the sale of our non-healthcare GPO operation, to exclude the impact of the Omnia transaction, including associated revenues sold, imputed interest expense, and cash taxes paid on proceeds received, from our non-GAAP profitability measures moving forward.

Craig McKasson: In software license, other services, and support revenue, we experienced a growth in our supply, chain co-management business, as well as in surpass our highly committed GPO program.

Operator: Please note this event is being recorded.

Craig McKasson: We will present our Adjusted EBITDA, Adjusted Net Income, Adjusted Earnings Per Share, and Free Cash Flow on a comparable basis, excluding these impacts from the Omnia transaction effective in fiscal 2025. With these key assumptions and changes in mind, our specific fiscal 2025 full-year guidance ranges are as follows.

Craig McKasson: In our performance services segment, revenue growth was driven by an increase in contributions, from consulting services and enterprise license agreements compared to the prior year period.

Craig McKasson: From a cadence perspective, we expect segment revenue to be slightly more back half-weighted with the first quarter being the lowest point for the year.

Craig McKasson: Supply Chain Services Segment Revenue Excluding Direct Sourcing Products Revenue, of $560 to $610 million is comprised of net administrative fees revenue of $495 to $525 million, and software license, other services, and support revenue of $65 to $85 million, which now includes remittances.

Craig McKasson: We also continued to experience growth in our adjacent markets businesses, which include, our Applied Sciences, Clinical Decision Support, Contigo Health, and Remitra businesses, which collectively grew double digits during the quarter, resulting in more than 18% growth for the full year.

Craig McKasson: Our net administrative fees revenue will continue to include revenue from Omnia and our guidance includes $60 to $75 million in revenue related to this non-health care member purchase, performance services segment revenue of $370 million to $410 million, which excludes contributions from the Contigo Health and Remitra businesses. Together, these produce total net revenue of $930 million to $1.02 billion.

Craig McKasson: Turning to profitability, gap net income was $60.6 million for the quarter. Total adjusted EBITDA of $118.7 million was impacted by the following factors. First, supply chain services adjusted EBITDA declined mainly due to an increase in expenses, in support of growth in our supply chain co-management business and higher performance-related compensation expense.

Ben Krasinski: I would now like to turn the call over to Ben Krasinski, senior director and investor relations.

Craig McKasson: We expect adjusted EBITDA to be in the range of $235 to $255 million and adjusted earnings per share to be in the range of $1.16 to $1.28. Our guidance is also based on the following assumptions and expectations, in our GPO. We expect current member utilization levels to continue with growth and gross administrative fees driven by further penetration of existing member spend and the addition of new GPO members.

Craig McKasson: The aforementioned increase in aggregate blended member fee share in the GPO and a lower profit, margin in our direct sourcing business due to lower than normal logistics costs in the prior year period.

Craig McKasson: We continue to anticipate aggregate blended member fee share will increase to the low 60% range for fiscal 2025 on a full year basis.

Craig McKasson: While we benefited from certain member termination payments during fiscal 2024, we do not have any of these types of payments factored into our fiscal 2025 guidance.

Craig McKasson: From a cadence perspective, we expect our supply chain services segment revenue to be slightly more back halfway, in our performance services business.

Craig McKasson: We finished fiscal 2024 better than expected.

Craig McKasson: As a result of the timing of revenue recognition due to enterprise license agreements and consulting engagements, we expect our health care provider, to be impacted by the timing of new bookings and the associated conversion to revenue recognition.

Operator: Please go ahead.

Ben Krasinski: I would now like to turn the call over to Ben Krasinski, senior director and investor relations. Please go ahead. Thank you and welcome to Premier's fiscal 2024 4th quarter and full year conference call.

Craig McKasson: We continue to expect double-digit growth in our Applied Sciences and Clinical Decision Support business.

Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2.

Eric Percher: The first question comes from Eric Parcher with Neffron Research. Please go ahead.

Craig McKasson: Related to profitability, given the nature of the GPO business and the fact that there are not many variable costs associated with administrative fee share changes in the business, we expect a decrease in net administrative fees revenue in fiscal 2025 to have a comparable impact on our profitability.

Craig McKasson: However, we take our fiduciary responsibility very seriously, and as a matter of normal practice, we are always carefully managing our cost structure.

Mike Alkire: Thank you and welcome to Premier's fiscal 2024 4th quarter and full year conference call.

Ben Krasinski: Our speakers this morning are Mike Alkire, Premier's president and CEO and Craig McKasson are chief administrative and financial officer. Before we get started, I want to remind everyone that our earnings release and the supplemental presentation accompanying this call are available in the investor's section of our website at investors.premierinc.com. Please be advised that management's remarks today contain certain forward-looking statements such as statements regarding our strategies, plans, prospects, expectations and future performance and actual results could differ materially from those discussed today.

Craig McKasson: In addition, and as I mentioned earlier, we will now exclude the impact of the Omnia transaction from our non-GAAP profitability.

Eric Percher: The first question comes from Eric Percher with Nefron Research. Please go ahead.

Eric Percher: Thank you, and first I'll say, Craig, congrats on your retirement here. There are questions with respect to expectations for next year, and what I'd like to ask is for some assistance in the EBITDA margin expectation across the segments. I'll ask you to speak to the underlying margin expectations versus any impact from the reclassification.

Craig McKasson: And second, performance services adjusted EBITDA decreased mainly due to incremental, headcount to support growth in our Applied Sciences and Clinical Decision Support businesses, partially offset by increased revenue.

Eric Percher: Thank you. And first I'll say, Craig, congrats on your retirement here.

Eric Percher: question with respect to

Speaker Change: expectations for next year and what I'd like to ask is for some assistance in the

Ben Krasinski: 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 fiscal 2024 form 10K, which we expect to file soon. We encourage you to review the detailed forward-looking statement and risk factor disclosures in these reports. Also, during this presentation, we will refer to adjusted and other non-gap financial measures, including free cash flow, to evaluate our business.

Eric Percher: I'll ask you to speak to the underlying margin expectations versus any impact from the reclassification.

Craig McKasson: Adjusted net income decreased primarily as a result of the same factors that impacted adjusted EBITDA, and adjusted earnings per share increased primarily due to a reduction in weighted average share count resulting from our accelerated share repurchase transaction.

Craig McKasson: From a liquidity and balance sheet perspective, cash flow from operations for fiscal 2024 of $296.6 million decreased from $444.5 million in the prior year. The change was primarily due to $162.3 million in tax payments in the current year from the sale of our non-healthcare GPO operations. With respect to the sale of the non-healthcare GPO operations, we received a total of $681.4 million in proceeds as of June 30, 2024. The transaction was finalized in July 2024, and we received the final cash proceeds of $42.4 million in the first quarter of fiscal 2025, resulting in a final total purchase price of $723.8 million.

Craig McKasson: Sure. Eric described, thanks for the question. As we think about the EBITDA margin profiles for our business in fiscal 2025, we would anticipate the supply chain services segment to be in the low to mid 40s in terms of the EBITDA margin percentage, and that'll be we would anticipate fairly consistent across the fiscal year.

Craig McKasson: Lastly, from a cadence perspective, we expect to achieve approximately 45% of our adjusted EBITDA guidance in the first half of the fiscal year, with the first quarter being our low watermark, given the margin profile associated with our anticipated revenue in the first quarter of the year. In the second half of the year, we expect margin to be favorable compared to the first half, primarily given the expected timing of Enterprise License Agreement. Related to cash, we expect free cash flow to approximate 45 to 55 percent of adjusted EBITDA for the full year.

Craig McKasson: Free cash flow for fiscal 2024 of $115.7 million decreased from $264.4 million in the prior year, primarily due to the same factors that impacted cash flow from operations, including the aforementioned tax payments. Excluding the impact of the $162.3 million in tax payments, fiscal 2024 free cash flow was 62% of adjusted EBITDA for the full year.

Craig McKasson: Cash and cash equivalents totaled $125.1 million as of June 30, 2024, compared with $89.8 million as of June 30, 2023. The increase was primarily driven by the sale of our non-healthcare GPO operations, net of the previously mentioned tax payments, partially offset by the use of cash for the $400 million accelerated share repurchase, as well as the repayment of the outstanding balance on our five-year, $1 billion revolving credit facility in the first quarter of fiscal 2024.

Craig McKasson: Thanks again for joining us today.

Craig McKasson: We continue to have no amount drawn on the credit facility. We also paid $102.7 million to former limited partners in fiscal 2024, associated with the termination of the tax receivable agreement in connection with our August 2020 restructure, and have a remaining liability of $102.7 million that will be paid in fiscal 2025 to complete that obligation.

Craig McKasson: I look forward to connecting with many of you over the coming months and remain committed to ensuring a smooth transition for my successor following our fiscal 2025 first quarter earnings call in early November.

Craig McKasson: In addition, I would also like to provide some clarity on the following changes impacting our guidance. As a result of our previously announced plan to divest majority interest in our Contigo Health and S2S global businesses, we are presenting guidance excluding any financial contributions from these businesses for fiscal 2025.

Craig McKasson: And those payments will no longer impact our free cash flow in fiscal 2026 and beyond.

Operator: We appreciate your time and will now open the call for questions.

Craig McKasson: With respect to capital deployment, we continue to be disciplined and focused on taking a balanced approach long-term, but are currently focused on return of capital to stockholders. We completed the $400 million accelerated share repurchase transaction in July 2024 and retired 4.8 million Class A common shares in addition to the initial retirement of more than 15 million Class A common shares in February 2024. As part of our approved $1 billion share repurchase authorization, our board recently approved the execution of another share repurchase of $200 million of Class A common shares that we currently expect to occur in the open market.

Eric Scrog: Sure. Eric, this is Craig. Thanks for the question. As we think about the EBITDA margin profiles for our business in fiscal 2025, we would anticipate the supply chain services segment to be in the low to mid 40s in terms of the EBITDA.

Operator: We will now begin the question and answer session.

Eric Percher: The first question comes from Eric Percher with Nephron Research.

Operator: To ask a question, you may press star, then 1, on your telephone keypad.

Operator: If you are using a speakerphone, please pick up your handset before pressing the, If at any time your question has been addressed and you would like to withdraw your question, Please press star then.

Eric Percher: Please go ahead.

Eric Percher: Thank you.

Craig McKasson: Lastly, based upon shareholder and analyst feedback, we decided it is appropriate, following the close of the sale of our non-healthcare GPO operations, to exclude the impact of the Omnia transaction, including associated revenues sold, imputed interest expense, and cash taxes paid on proceeds received from our non-GAAP profitability measures moving forward. We will present our adjusted EBITDA, adjusted net income, adjusted earnings per share, and free cash flow on a comparable basis, excluding these impacts from the Omnia transaction effective in fiscal 2025.

Craig McKasson: With these key assumptions and changes in mind, our specific fiscal 2025 full year guidance ranges are as follows. Supply chain services segment revenue, excluding direct sourcing products revenue of $560 to $610 million, is comprised of net administrative fees revenue of $495 to $525 million and software license other services and support revenue of $65 to $85 million, which now includes Remitra. Our net administrative fees revenue will continue to include revenue from Omnena, and our guidance includes $60 to $75 million in revenue related to this non-healthcare member purchasing.

Eric Scrog: Margin Percentage, and that will be, we would anticipate, fairly consistent across the fiscal year.

Craig McKasson: Performance services segment revenue of $370 to $410 million, which excludes contributions from the Contigo Health and Remitra businesses. Together, these produce total net revenue of $930 million to $1.02 billion.

Eric Scrog: In our performance services segment, we would anticipate mid-20s for an EBITDA margin.

Craig McKasson: In our GPO business, we expect current member utilization levels to continue, with growth in gross administrative fees driven by further penetration of existing member spend and the addition of new GPO members.

Eric Scrog: The low water mark consistent with the last two years, we think, will be in the first quarter, and it will be below that level, and then it will average out over the year to the mid-20s. What that results from an overall business perspective is an adjusted EBITDA margin in the mid-20s.

Craig McKasson: We continue to anticipate aggregate blended member fee share will increase to the low 60% range for fiscal 2025 on a full-year basis.

Ben Krasinski: Information on why we use these measures in addition to gap financial measures and reconciliation of these measures to our gap financial measures are included in our earnings release and in the appendix of the supplemental presentation accompanying this call. Information on our non-gap financial measures will also be included in our fiscal 2024 form 10K and our earnings form 8K, both of which we expect to file soon.

Craig McKasson: The changes that we discussed relative to guidance, obviously the removal of the direct sourcing revenues on the supply chain side changes the margin profile that is counteracted by the incremental fee share expense that we're seeing in the GPO. On the performance services side, the removal of the Contigo Health revenues obviously has an impact on the margins in that business. and the transfer of Remitra is not a material change in the margins given the size and scale of that business.

Eric Scrog: The changes that we discussed relative to guidance, obviously, the removal of the direct sourcing revenues on the supply chain side.

Eric Scrog: changes the margin profile that is counteracted by the incremental fee share expense that we're seeing in the GPO. On the performance services side, the removal of the Contigo Health revenues obviously has an impact on the margins in that business.

Mike Alkire: Our speakers this morning are Mike Alkire, Premier's president and CEO and Craig McKasson are chief administrative and financial officer.

Mike Alkire: I will now turn the call over to Mike Alkair.

Mike Alkire: Good morning, everyone. Thank you for joining us. This morning, I'm pleased to share our fourth quarter and full year fiscal 2024 results, which exceeded our expectations. I will also paint a vision for the year ahead, which includes, first, advancing our strategy to technology and able better healthcare performance and a smarter supply chain. Second, continuing to return value to stockholders as a board approved execution of another share repurchase of $200 million of class A common shares under our $1 billion share repurchase authorization. And third, our plan to address non-core assets, SDS global and contigo health for which the processes launched in May remain ongoing and we're hopeful to have something to announce soon.

Ben Krasinski: Please be advised that management's remarks today contain certain forward-looking statements such as statements regarding our strategies, plans, prospects, expectations and future performance and actual results could differ materially from those discussed today.

Eric Scrog: And the transfer of Remitra is not a material change in the margins given the size and scale of that business.

Ben Krasinski: These forward-looking statements speak as of today and we undertake no obligation to update them.

Unnamed: That's helpful.

Craig McKasson: And your visibility into the margin relative to the prior two years, how do you feel coming into the year? I think as we come into the year, we feel very good about the supply chain services. We do think that we have factored in, as we publicly and continue to disclose the impact of the renewals that we'll be doing in the GPO as part of our supply chain services segment. So I think we feel good about that on the performance services side. I think we feel good about the margin expectations. As I always say, there is periodic variability throughout a year and through quarters based on the timing of when enterprise licenses and or certain consulting engagements occur.

Speaker Change: That's helpful. And your visibility into the margin relative to the prior two years, how do you feel coming into the year?

Speaker Change: I think as we come into the year, we feel very good about the supply chain services. We do think that we have factored in as we've publicly and continue to disclose the impact of the renewals that we'll be doing in the GPO as part of our supply chain services segment. So I think we feel good about that. On the performance services side, I think we feel good about the margin expectations.

Craig McKasson: We are going to continue to do renewals and have been that will impact 25 and into 26.

Speaker Change: As I always say, there is periodic variability throughout a year and through quarters based on the timing of when enterprise licenses and or certain consulting engagements.

Ben Krasinski: Factors that might affect future results are discussed in our filings with the SEC, including our fiscal 2024 form 10K, which we expect to file soon.

Craig McKasson: But on a broad basis, we're heading into fiscal 2025 with similar visibility to the guidance that we've put out for the performance services segment.

Speaker Change: But on a broad basis, we're heading into fiscal 2025 with

Speaker Change: similar visibility to the guidance that we've put out for the performance services segment.

Unnamed: Thank you.

Stephanie Davis: The next question comes from Stephanie Davis with Barclays.

Speaker Change: Thank you.

Stephanie Davis: Please go ahead. Hey guys, thank you for taking my question, and Craig.

Stephanie Davis: The next question comes from Stephanie Davis with Barclays. Please go ahead.

Eric Percher: And first I'll say, Craig, congrats on your retirement.

Stephanie Davis: Congrats on the retirement; that you are going to be very sore and be missed. I appreciate that, Stephanie. Thank you.

Stephanie Davis: Hey guys, thank you for taking my question. And Craig, congrats on the retirement, but you are going to be very sorely missed.

Stephanie Davis: I wanted to follow up on the guidance as well, just because there's a lot of moving pieces. There was a lot of upside in this quarter, and I know there can be some lumpiness in performance services, and then you hold out some expectations from bookings for that in the guidance.

Eric Percher: Is there a question with respect to.., expectations for next year.

Craig McKaig: I appreciate that, Stephanie. Thank you.

Mike Alkire: We are incredibly grateful for Craig's contribution to our company's success and culture. During his tenure at Premier, Craig led the company through the initial integration following the 1996 mergers of the originally formed Premier. Revenue growth from approximately $130 million to over $1.3 billion. The successful 2013 initial public offering, the 2020 and 2022 restructuring to simplify our corporate structure and strategic expansion to the leading integrated healthcare performance improvement company, Premier, is today.

Speaker Change: I wanted to follow up on the guidance as well, just because there's a lot of moving pieces.

Speaker Change: There was a lot of upside in this quarter, and I know there can be some lumpiness in performance services, and then you pulled out some expectations from bookings for that in the guidance.

Craig McKasson: How much of the before QB and soft FY25 is just from from kind of timing expectations or pull forward versus many some underlying changes in the environment. Yeah, it's a great question, Stephanie. First of all, I wouldn't say it was per se a pull forward, but what I would say is that the team was very successful in terms of actually getting engagements through the finish line that we're in the pipeline. To put a perspective on that, kind of in the ballpark of $15 million of performance actually came through in the fourth quarter that we otherwise thought it might have come into 2025.

Speaker Change: How much of the 4Q beat and soft FY25 is just from kind of timing expectations or a pull forward versus maybe some underlying changes in the environment?

Eric Percher: And what I'd like to ask is for some assistance in the EBITDA margin expectation across the segments.

Speaker Change: Yeah, it's a great question, Stephanie. First of all, I wouldn't say it was per se a pull forward, but what I would say is that the team was very successful in terms of actually getting engagements through the finish line that were in the pipeline.

Mike Alkire: While Craig's departure is bittersweet, we are pleased to announce Glenn Coleman as Craig successor. Glenn is currently the Executive Vice President and Chief Financial Officer of Dense Supply Sorona, a publicly-traded healthcare manufacturing company in the Charlotte Market. Prior to joining Dense Supply Sorona, Glenn served as the Executive Vice President and Chief Operating Officer of Integra Life Sciences Holding Corporation, along with 25 additional years in financial management positions with leading global businesses.

Speaker Change: to put a perspective on that.

Speaker Change: kind of in the ballpark of $15 million of performance actually came through in the fourth quarter that we otherwise thought it might have come into 2025. And so that is impacting, A, the growth rates that we're anticipating on a year-over-year basis, and secondarily, given some of those

Craig McKasson: And so that is impacting a the growth rates that we're anticipating on a year-over-year basis, and secondarily, given some of those we would have anticipated might have slipped into Q1. That is why we do think the first quarter is going to be, has you know obviously the teams are going to do everything they can to overcome it but has the potential to be a bit lighter.

Speaker Change: We would have anticipated it might have slipped into Q1. That is why we do think the first quarter is going to be... Obviously, the teams are going to do everything they can to overcome it, but it has the potential to be a bit lighter. And that is consistent, again, with the past two years in terms of what we've seen in the first quarter from performance services.

Stephanie Davis: And that is consistent again with the past two years in terms of what we've seen in the first quarter from performance services. Now, I guess kind of following up on that one, we have seen a lot of hospital-facing names see a better demand environment. And then on more of the, guess like the broader GPO business, we've heard some headwinds on the medical distribution side, right?

Mike Alkire: We are thrilled to welcome Glenn to Premier and are excited about the experiences and opportunities he will bring to help us further grow into the future. Turning to performance, I am pleased to report that thanks to our team's dedication and the trust of our members and other customers, our fourth quarter and full-year results for revenue and profitability in both segments surpassed our expectations. Our performance this fiscal year was fueled in part by our expanding role as a vital strategic partner for providers, manufacturers, and payers.

Speaker Change: Now, I guess...

Speaker Change: kind of following up on that one we have seen a lot of hoful facing names see a better demand environment

Ben Krasinski: We encourage you to review the detailed forward-looking statement and risk factor disclosures in these reports.

Speaker Change: And then on more of the, I guess, like the broader GPO business, we've heard some headwinds on the medical distribution side, right, post-COVID demand normalization, primary care channel softness.

Mike Alkire: Post COVID-19 normalization, primary care channels often is, is there any background you can give us on what you're thinking about the demand environment to frame this guidance because it does feel like a little bit of a departure from some of your peers.

Ben Krasinski: Also, during this presentation, we will refer to adjusted and other non-gap financial measures, including free cash flow, to evaluate our business.

Speaker Change: Is there any background you can give us on what you're thinking about the demand environment to frame this guidance because it does feel like a little bit of a departure from some of your peers?

Mike Alkire: Yeah, a couple of things, Stephanie. This is Mike. At a macro level, utilization of the health system, you know, still thinks is flat to maybe up single digits. So we do believe there's still the tail one that's occurring. Obviously, there's a lot of regionality that exists there. In terms of contract penetration. So, you know, the tools and the technologies that we've been developing, we believe will continue to provide growth for us, you know, in terms of driving higher levels of contract penetration. You've heard us say this multiple times in this call. Those organizations that are more highly, you know, penetrated from a contract standpoint of those that, you know, obviously are performing better.

Eric Percher: And I'll ask you to speak to the underlying margin expectations versus any impact from the reclassification.

Speaker Change: Yeah, a couple of things, Stephanie, this is Mike. At a macro level...

Mike Alkire: From a provider standpoint, I am incredibly proud of the team for achieving outstanding member retention with a 97% GPO retention rate and a 95% SAS institutional renewal rate for our core informatics and technology products. Additionally, our team collectively identified significant targeted supply chain savings for our members. Beyond retention, Premier is increasingly the partner of choice for those looking to drive growth beyond traditional boundaries. Our market edge is opening doors to innovative partnership proposals from technology enablement to full supply chain outsourcing.

Mike: Utilization of the health system, you know, we still think is flat to maybe up single digits, so we do believe there's still the tail one that's occurring. Obviously, there's a lot of regionality that exists there.

Mike: Secondarily, if you look at the portfolio products that we have in the supply chain, including the GPO, we still have a very long run rate in terms of contract penetration.

Mike: So, you know, the tools and the technologies that we've been developing, we believe will continue to provide growth for us.

Mike: You know, in terms of driving higher levels of contract penetration, you've heard us say this multiple times in this call.

Mike Alkire: In fiscal 2024, we secured five new supply chain co-management agreements with Elfzos. Systems. I'm pleased to announce that all Spire Health Partners, competitively selected premieres its National GPO, to support its more than $3.5 billion in annual purchase volume, one of the largest single volume deals in premier history. We have several reasons to believe that there is a great deal of momentum in the market, for some providers to contemplate a shift to more strategic partners that have the data, the technology, and the people to implement transformative, sustainable change, change that alters the financial and operational trajectory of health systems and positions them for market differentiation.

Mike: Those organizations that are more highly, you know, penetrated from a contract standpoint are those that, you know, obviously are performing better. So we're going to continue to get that out, that message out to the market. We're seeing strong demand for our co-sourcing, co-management capabilities.

Mike Alkire: So we're going to continue to get that message out to the market. We're seeing a strong demand for our co-sourcing co-management capabilities to really, really, really excited about that. When we're in actually providing those services, Stephanie, as you know, it allows us to drive higher levels of penetration and also bring to the four of the opportunity to leverage our tools and technologies in a very unique way. So, you know, we see that as more opportunities.

Stephanie Davis: We're really, really excited about that. When we're in actually providing those services, Stephanie, as you know.

Stephanie Davis: It allows us to drive higher levels of penetration and also bring to the fore the opportunity to leverage our tools and technologies in a very unique way. So thank you.

Mike Alkire: And then finally, I will tell you, as consolidation picks up, you know, we do believe, you know, our capabilities are on integrated services and standardization, and those kinds of things are going to be necessary. So, again, we're seeing, you know, those as opportunities for us. And we want to continue to, you know, provide the services into those areas.

Stephanie Davis: We see that as more opportunities. And then finally, I will tell you, as consolidation picks up, we do believe...

Stephanie Davis: You know, our capabilities around integrated services and standardization and those kinds of things are going to be necessary. So again, we're seeing, you know, those as opportunities for us, and we want to continue to, you know, provide the services into those areas.

Mike Alkire: We also onboarded 32 new health systems into our health care specific enterprise resource planning solution, and continued to attract new logos with our market leading AI-enabled clinical decision support solution. In the fourth quarter of fiscal 2024, we secured a major integrated delivery network and their health plan in the southwest US, which will now use our AI solution to automate prior authorization. From the perspective of health care product manufacturers, including life sciences companies, as well as payers, our long-term vision and strategy continues to materialize as we further expand into these adjacent markets.

Unnamed: All right, very helpful.

Unnamed: I'm going to hop back in the cue, but I hope someone else asks the questions that I'll fire. Thank you, guys. Thank you.

Speaker Change: All right, very helpful. I'm gonna hop back in the queue, but I'll hope someone else asks the questions and I'll fire. Thank you guys. Thank you.

Michael Cherny: The next question comes from Michael Cherny with Learning Partners. Please go ahead.

michael chourney: The next question comes from Michael Cherny with Leigh Rank Partners. Please go ahead.

Michael Cherny: Great. Thank you.

Dan Clark: This is Dan Clark on for Mike. Just wanted to start, you know, based on sort of where you are in your ongoing renewals with your members, you know, should we think EBITDA is going to grow in fiscal year 26 as you continue to reset? You're not admin fee share. Thank you.

michael chourney: Great, thank you. This is Dan Clark on for Mike.

Craig McKasson: Sure.

Dan Clark: Just wanted to start, you know, based on sort of where you are in your ongoing renewals with your members, you know, should we think EBITDA is going to grow in fiscal year 26 as you continue to reset your net admin fee share? Thank you.

Mike Alkire: We are executing with precision on our plan to use our robust data and AI-enabled technology to deliver unparalleled insights and efficiencies for these customers. Most recently, we leveraged our digital supply chain capabilities to ensure timely payment and accurate reporting for the manufacturers who take part in our high compliance programs. This model is proving to reduce the administrative burden on manufacturers and health care providers, while adding transparency and efficiency to the entire exchange.

Craig McKasson: If I could crack at the highest level just before we jump into the answer that I do want, you know, to actually frame this in a little bit broader way in that, you know, having these conversations around Admin fee reset allows for us to have more broader discussions with these health systems around other tools and services that we can provide. So, as we're continuing to go through this reset, I do look at it. It's an opportunity for us to continue to sell our broader capabilities. Great. Yeah, thanks, Mike.

Speaker Change: if i could crg at the highest level just before we jump into the answer that i do want

Speaker Change: to actually frame this in a little bit broader way in that having these conversations around ad but the adm fee

Speaker Change: allows for us to have more broader discussions with these health systems around other tools and services that we can provide. So as we continue to go through this reset, I do look at it as an opportunity for us to continue to sell our broader capabilities.

Craig McKasson: Eric, this is Craig.

Mike Alkire: We believe technology enablement of our network of health care provider members and other customers will become a critical driver in accelerating innovation in health care. We believe this integration will pave the way for a united approach to delivering higher quality and more affordable health care.

Craig McKasson: Thanks for the question.

Craig McKasson: While we benefited from certain member termination payments during fiscal 2024, we do not have any of these types of payments factored into our fiscal 2025 guidance.

Craig McKasson: Relative to the question that I think, as you might expect, I would say today we're establishing our fiscal 2025 guidance. We're not actually giving 26 guidance at this point in time, but to provide some color around your question consistent with remarks that I previously publicly made. We do anticipate that our administrative fee share for fiscal 2025 will be in the low 60% range. We are going to continue to do renewals and have been that will impact 25 and into 26. We would anticipate that at the end of the day, our fee share will rise within the 60% range, and that's consistent with prior commentary.

Craig McKasson: As we think about the EBITDA margin profiles for our business in fiscal 2025, we would anticipate the supply chain services segment to be in the low to mid-40s in terms of the EBITDA margin percentage, and that'll be – we would anticipate fairly consistent across the fiscal year.

Craig McKasson: In our performance chain services segment, we would anticipate mid-20s for an EBITDA margin.

Crick: Craig? Yeah. Thanks, Mike. Relative to the question, I think as you might expect, I would say today we're establishing our fiscal 2025 guidance. We're not actually giving 26 guidance at this point in time, but to provide some color around your question consistent with remarks that I've previously publicly made.

Craig McKasson: Also in our supply chain services segment, we expect software license, other services, and support revenue growth, to be primarily driven by the continued adoption and expansion of our supply chain co-management business. From a cadence perspective, we expect our supply chain services segment revenue to be slightly more back half-weighted.

Craig McKasson: In our performance services business, we finished fiscal 2024 better than expected.

Craig McKasson: The low water mark consistent with the last two years we think will be in the first quarter, and it'll be below that level, and then it will average out over the year to the mid-20s. What that results from an overall business perspective is an adjusted EBITDA margin in the mid-20s.

Craig McKasson: As a result of the timing of revenue recognition due to enterprise license agreements and consulting engagements, we expect our healthcare provider business to be impacted by the timing of new bookings and the associated conversion to revenue recognition.

Craig McKasson: We continue to expect double-digit growth in our applied sciences and clinical decision support businesses.

Mike Alkire: I want to once again thank our team for their steadfast commitment to our strategic vision and mission of improving the health of communities. In Cisco 2024, we again outperform global benchmarks in our employee engagement survey, highlighting that premier's greatest asset is indeed its people.

Craig McKasson: As previously mentioned, year-over-year growth in the performance services segment will also be impacted, as a result of the decision to report our remitra business in the supply chain services segment beginning in fiscal 2025.

Crick: We do anticipate that our administrative fee share for fiscal 2025 will be in the low 60% range.

Craig McKasson: From a cadence perspective, we expect segment revenue to be slightly more back half-weighted, with the first quarter being the lowest point for the year.

Crick: we are going to continue to do renewals and have been that will impact twenty-five and into twenty six

Craig McKasson: Related to profitability, given the nature of the GPO business, and the fact that there, are not many variable costs associated with administrative fee share changes in the business, we expect the decrease in net administrative fees revenue in fiscal 2025 to have a comparable impact on our profitability measures.

Craig McKasson: We would anticipate that at the end of the day, our fee share will rise within the 60% range, and that's consistent with prior commentary.

Craig McKasson: However, we take our fiduciary responsibility very seriously, and as a matter of normal, practice, we are always carefully managing our cost structure.

Craig McKasson: In addition, and as I mentioned earlier, we will now exclude the impact of the Omnia transaction, from our non-GAAP profitability measures.

Crick: We would anticipate that at the end of the day, our fee share will rise within the 60% range, and that's consistent with prior commentary, so that clearly has an implication on EBITDA growth in fiscal 2026.

Craig McKasson: Lastly, from a cadence perspective, we expect to achieve approximately 45% of our adjusted, EBITDA guidance in the first half of the fiscal year, with the first quarter being our low watermark, given the margin profile associated with our anticipated revenue in the first quarter of the year. In the second half of the year, we expect margin to be favorable compared to the first, half, primarily given the expected timing of enterprise license agreements. Related to cash, we expect free cash flow to approximate 45% to 55% of adjusted EBITDA, for the full year.

Craig McKasson: From a cash tax perspective, we continue to benefit from our 2020 restructuring and 2022, subsidiary reorganization. As a result, we anticipate our fiscal 2025 cash tax rate will be less than 5% and expect, a similar range over the next three to five years.

Craig McKasson: Thanks again for joining us today.

Craig McKasson: So that clearly has an implication on EBITDA growth in fiscal 2026, but at that point, we do believe that the business will have gone through its reset and will be well-positioned and poised to regain profitability growth on a prospective.

Craig McKasson: So this clearly has an implication on EBITDA growth in fiscal 2026. But at that point, we do believe that the business will have gone through its reset and will be well positioned and poised to regain kind of profitability growth on a prospect. on the basis moving forward. Got it.

Craig McKasson: On the performance services side, the removal of the Contigo Health revenues obviously has an impact on the margins in that business.

Craig McKasson: Got it.

Crick: But at that point, we do believe that the business will have gone through its reset and will be well-positioned employees to regain profitability growth on a prospective basis moving forward.

Craig McKasson: First, I would like to say that I'm incredibly grateful for my career at premier. It's truly been an honor to work with such an amazing team, be part of our strong culture, and to contribute to premier's mission to improve the health of communities. Police. Now turning to our fiscal 2024 fourth quarter results. Total net revenue of 350.3 million increased 3% from the prior year period, from increases in both of our segments.

Unnamed: Thank you. And then, as you sort of are talking with your customers, as you go with this renewal process, can you sort of talk about the performance services, you know, a catch rate opportunities that you have, like how are those conversations going with folks as you bring them in for annals? Thank you.

Speaker Change: Got it. Thank you. And then as you sort of are talking with your customers as you go through this renewal process, can you sort of talk about...

Speaker Change: The performance services, you know, attach rate opportunities that you have, like how are those conversations going with folks as you bring them in for renewals? Thank you. Yeah, first of all, thank you for the question. We are hyper-focused on this cross-selling.

Craig McKasson: And the transfer of Remitra is not a material change in the margins given the size and scale of that.

Craig McKasson: Thank you.

Mike Alkire: Yeah, first of all, thank you for the question. We are hyper focused on this cross-selling plan. We actually put it as part of our annual objectives this year. So the opportunities obviously are to help them sort of advance the way they provide care in their communities. Our AI and machine learning capabilities, helping the health systems with the way they look at prior authorization, the way they do their ATC documentation. We look at, you know, those are the opportunities to bring real value to those health systems that, in some cases, are not taking advantage of today.

Speaker Change: plan. We actually put it as part of our annual objectives this year. So the opportunities obviously are to help them sort of advance the way they provide care in their communities.

Dan Clark: And then as you sort of are talking with your customers as you go through this renewal process, can you sort of talk about the performance services, you know, attach rate opportunities that you have?

Craig McKasson: In our supply chain services segment, higher net administrative fees were driven by continued growth in member purchasing in both the acute and continuum of care markets, as well as one-time payments of approximately $25 million from two members due to early termination of their agreements. This was partially offset by an expected increase in the aggregate blended member fee share for the high 50% level as we continue to progress through our contract renewal process.

Dan Clark: Like how are those conversations going with folks as you bring them in for renewals?

Speaker Change: Our AI and machine learning capabilities, helping the health systems with the way they look at prior authorization.

Mike Alkire: Thank you.

Speaker Change: the way they do their HCC documentation.

Mike Alkire: Yeah.

Mike Alkire: First of all, thank you for the question.

Mike Alkire: We are hyper-focused on this cross-selling plan.

Mike Alkire: We actually put it as part of our annual objectives this year.

Speaker Change: We look at, you know, those as opportunities to bring real value to those health systems that, in some cases, they're not taking advantage of today.

Mike Alkire: So the opportunities obviously are to help them sort of advance the way they provide care in their communities.

Mike Alkire: Our AI and machine learning capabilities, helping the health systems with the way they look at prior authorization, the way they do their HCC documentation.

Mike Alkire: Obviously, we will be serving up other capabilities for those that are probably mid-size and smaller: the ability to help them with co-managing those supply chain capabilities. We will be continuing to demonstrate the value that we can bring to the table to help them be more efficient in the way they do supply chain. But those are just a few of the areas that will continue to focus on as we, you know, have these discussions.

Speaker Change: Obviously, we will be serving up other capabilities for those that are probably mid-size and small or the ability.

Craig McKasson: To provide an update, the group of GPO members that were part of the August 2020 restructure represent approximately 70% of our total gross administrative fees. As of June 30, 2024, we have now renewed and extended GPO members representing approximately 50% of this group's associated gross administrative fees. We currently plan to address and finalize additional member renewals during fiscal 2025 that would result in over three-fourths of this group's gross administrative fees being through the renewal process by the end of fiscal 2025, with the remainder occurring in fiscal 2026 and 2027.

Mike Alkire: We look at those as opportunities to bring real value to those health systems that in some cases they're not taking advantage of today.

Speaker Change: To help them with co-managing those supply chain capabilities, we will be...

Speaker Change: continue to demonstrate the value that we can bring to the table to help them be more efficient in the way they do supply chain. But those are just a few of the areas that we'll continue to focus on as we, you know, have these discussions.

Mike Alkire: Obviously, we will be serving up other capabilities for those that are probably midsize and small or the ability to help them with co-managing those supply chain capabilities.

Craig McKasson: I look forward to connecting with many of you over the coming months and remain committed, to ensuring a smooth transition for my successor following our fiscal 2025 first quarter earnings call in early November.

Craig McKasson: That's helpful.

Mike Alkire: We will, continue to demonstrate the value that we can bring to the table to help them be more efficient in the way they do supply chain.

Craig McKasson: And this is Craig. The only thing I would add is that we really do have sort of a one-premure mindset as we're going through this renewal process. And so it is all about an integrated deal team getting together, thinking about the opportunity set across, clearly the GPO renewal, but all the margin improvement services and capabilities that we can deliver through performance services. We're obviously not going to be successful on 100%, but they are teed up in that way, and there's a big opportunity for future growth through that approach.

Craig McKasson: And your visibility into the margin relative to the prior two years, how do you feel coming into the year?

Mike Alkire: But those are just a few of the areas that we'll continue to focus on as we, you know, have to...

Cragular: And this is Craig. The only thing I would add is that we really do have sort of a one premier mindset as we're going through this renewal process. And so it is all about an integrated deal team getting together, thinking about the opportunities set across.

Craig McKasson: I think as we come into the year, we feel very good about the supply chain services.

Craig McKasson: And this is Craig, the only thing I would add is that we really do have sort of a one premier mindset as we're going through this renewal process, and so it is all about an integrated deal team getting together, thinking about the opportunities set across, clearly the GPO renewal, but all the margin improvement services and capabilities that we can deliver through performance services.

Craig McKasson: We do think that we have factored in as we publicly and continue to disclose the impact of the renewals that we'll be doing in the supply, in the GPO as part of our supply chain services segment.

Speaker Change: Clearly the GPO renewal, but all the margin improvement services and capabilities that we can deliver through performance services. We're obviously not going to be successful in 100%, but they are teed up in that way, and there's a big opportunity for future growth through that approach.

Craig McKasson: We're obviously not going to be successful in 100%, but they are teed up in that way, and there's a big opportunity for.., future growth through that approach.

Craig McKasson: In our direct sourcing business, revenue declined primarily due to lower pricing and demand for certain products. In software license, other services, and support revenue, we experienced a growth in our supply chain co-management business, as well as in surpass our highly committed GPO program. In our performance services segment, revenue growth was driven by an increase in contributions from consulting services and enterprise license agreements compared to the prior year period. We also continued to experience growth in our adjacent markets businesses, which include our applied sciences, clinical decision support, antigo, health, and remitra businesses, which collectively grew double digits during the quarter, resulting in more than 18% growth for the full year.

Operator: We appreciate your time and will now open the call for questions.

Unnamed: Great, thank you.

Dan Clark: Great, thank you.

Operator: We will now begin the question and answer session.

Jessica: The next question comes from Jessica with Piper Sandler.

Craig McKasson: So I think we feel good about that.

Jessica Tassan: The next question comes from Jessica Tassan with Piper Sandler.

Speaker Change: Great, thank you.

Craig McKasson: On the performance services side, I think we feel good about the margin expectations.

Jessica Tassan: Please go ahead.

Jessica: Please go ahead. Hi guys, thanks for taking the question, and congratulations on your retirement, Craig. I guess I'll maybe kick off where Steph left off. So congratulations on the huge win with Allspire. I guess can you help us to understand maybe what were the circumstances surrounding that win? Is that contract in line with the 50% of August 2020 restructuring in terms of fee share? And then maybe just, are there any nuances to co-sourcing and co-management versus a typical GPO engagement? Thanks.

Jessica Tufan: the next question comes from jessica to fan with piper sandler please go ahead

Jessica Tassan: Hi guys, thanks for taking the question and congratulations on your retirement, Craig.

Operator: To ask a question, you may press star then one on your telephone keypad.

Craig McKasson: As I always say, there is periodic variability throughout a year and through quarters based on the timing of when enterprise licenses and or certain consulting engagements occur.

Jessica Tassan: I guess I'll maybe kick off where Steph left off.

Jessica Tufan: Hi guys, thanks for taking the question and congratulations on your retirement, Craig.

Craig McKasson: But on a broad basis, we're heading into fiscal 2025 with similar visibility to the guidance that we've put out for the performance services segment.

Jessica Tassan: So congratulations on the huge win with Allspire.

Jessica Tufan: I guess I'll maybe kick off where Steph left off, so congratulations on the huge win with Allspire. I guess, can you help us just understand maybe what were the circumstances surrounding that win? Is that contract in line with the 50% of August 2020 restructurings in terms of fee share? And then maybe just...

Craig McKasson: Thank you.

Jessica Tassan: I guess, can you help us just understand maybe what were the circumstances surrounding that win?

Jessica Tassan: Is that contract in line with the 50% of August 2020 restructurings in terms of fee share?

Jessica Tassan: And then maybe just, are there any nuances to co-sourcing and co-management versus a typical GPO engagement?

Speaker Change: Are there any nuances to co-sourcing and co-management versus a typical GPO engagement? Thanks. Yeah, so just Allspire, it was a, you know, RFI, RFP process, obviously.

Jessica Tassan: Thanks.

Mike Alkire: Yeah, so just Allspire. It was a RFI RP process, obviously. I was able to get a little bit of feedback from the team in terms of what was our key differentiation. I think overall it was about the value that we could provide to the health systems that are part of Allspire. That's number one. Number two, I think they were very, very interested in our technology and the capabilities that we can bring to help them identify where there's opportunities for savings, where there's opportunities for contract penetration, and then most importantly, for Allspire to be able to have a broad view across all those health systems in terms of what's happening from a pricing standpoint for products, pricing of products.

Mike Alkire: Yeah, so just Allspire, it was a RFI, RFP process, obviously.

Craig McKasson: Turning to profitability, gap net income was 60.6 million for the quarter. Total adjusted EBIDA of 118.7 million was impacted by the following factors. First, supply chain services adjusted EBIDA declines mainly due to an increase in expenses in support of growth in our supply chain co-management business and higher performance related compensation expense. The aforementioned increase in aggregate blended member fee share in the GPO and a lower profit margin in our direct sourcing business due to lower than normal logistics costs in the prior year period.

Speaker Change: You know, I was able to get a little bit of feedback from the team in terms of, you know, what was our key differentiation. I think overall, it was about the value that we could provide to the health systems that.

Mike Alkire: I was able to get a little bit of feedback from the team in terms of what was our key differentiation. I think overall, it was about the value that we could provide to the health systems that are part of Allspire.

Mike Alkire: That's number one.

Speaker Change: are part of Allspire. That's number one. Number two, I think they were very, very interested in our technology and the capabilities that we can bring to help them identify where there's opportunities for savings.

Mike Alkire: And then most importantly, for Allspire to be able to have a broad view across all those health systems, in terms of what's happening from a pricing standpoint for products, pricing of products.

Speaker Change: where there's opportunities for contract penetration. And then most importantly, for Allspire to be able to have a broad view across all those health systems.

Mike Alkire: And so I think those were some of the key notes that I heard that were the reasons that they select. Premier.

Mike Alkire: And so I think those were, you know, some of the keynotes that I heard that were the reasons that they selected.

Speaker Change: in terms of what's happening from a pricing standpoint for products, pricing of products. And so I think those were, you know, some of the keynotes that I heard that were the reasons that they selected Premier.

Craig McKasson: And second, performance services adjusted EBIDA decreased mainly due to incremental headcount to support growth in our applied sciences and clinical decision support businesses. Partially offset by increased revenue. Ajusted net income decrease primarily as a result of the same factors that impacted adjusted EBIDA and adjusted earnings per share increased, primarily due to a reduction in weighted average share count resulting from our accelerated share repurchase transaction. From a liquidity and balance sheet perspective, cash flow from operations for fiscal 2024 of 296.6 million decreased from 444.5 million in the prior year.

Craig McKasson: And this is Craig.

Craig McKasson: Yeah, and this is Craig. The only thing I would add because it piggybacks right onto the response I had on my last question is that was very much a one premier go-to-market approach where we have won the GPO but all the technology is pulling through in addition for all the reasons that might just articulate. Okay, awesome.

craing: And this is Craig. The only thing I would add, because it piggybacks right onto the response I had on my last question, is that was very much a one premier go-to-market approach, where we have won the GPO, but all the technology is pulling through in addition for all the reasons that Mike just articulated.

Craig McKasson: The only thing I would add, because it piggybacks right on to the response I had on my last question, is that was very much a one premier go-to-market approach, where we have won the GPO, but all the technology is pulling through in addition, for all the reasons that Mike just started talking about.

Jessica: That's really helpful, and then just my second question is I wanted to be clear on the fourth quarter results and so the 25 million hit or one-time kind of early term fees that hit in the fourth quarter, and I'm curious just were those contemplated in your FY 24 guidance. I know there's no such there are no such fees in the 25 guidance but was that 25 in your 24 guidance. Thanks. The 25 was not in our fiscal 2024 guidance when we established the guidance for the supply chain. We obviously didn't know about those. We did talk on the third quarter about one termination that impacted our third quarter results.

Speaker Change: Okay, awesome. That's really helpful. And then just my second question is, I wanted to be clear on the fourth quarter results. So the $25 million hit, or of one-time kind of early term fees that hit in the fourth quarter. And I'm curious, just were those contemplated in your FY 24 guidance? I know there's no such, there are no such fees in the 25 guidance, but was that $25 in your 24 guidance? Thanks.

Jessica Tassan: Okay, awesome.

Craig McKasson: The change was primarily due to 162.3 million in tax payments in the current year from the sale of our non-health care GPO operations. With respect to the sale of the non-health care GPO operations, we received a total of 681.4 million in proceeds as of June 30, 2024. The transaction was finalized in July 2024 and we received the final cash proceeds of 42.4 million in the first quarter of fiscal 2025 resulting in a final total purchase price of 723.8 million.

Speaker Change: The 25 was not in our fiscal 2024 guidance when we established the guidance for the supply chain. We obviously didn't know about those. We did talk on the third quarter about one termination that impacted our third quarter results.

Craig McKasson: These two occurred in the fourth quarter. And so impacted, you know, I'll say in the quarter the performance, but no, they were not contemplated in the guidance expectations for the year. Got it.

Speaker Change: These two occurred in the fourth quarter and so impacted, you know, I'll say in the quarter the performance, but no, they were not contemplated in the guidance expectations for the year.

Jessica Tassan: That's really helpful.

Unnamed: Thank you again.

Unnamed: Thank you.

Operator: If you are using a speakerphone, please pick up your handset before pressing the keys.

Richard Close: The next question comes from Richard Close with Can a core genuity.

Stephanie Davis: The next question comes from Stephanie Davis with Barclays, please go ahead.

Jessica Tassan: And then just my second question is, I wanted to be clear on the fourth quarter results.

Speaker Change: Got it. Thank you again.

Speaker Change: so

Jessica Tassan: And so the $25 million hit, or of one time kind of early term fees that hit in the fourth quarter.

Richard Close: Please go ahead. Yeah, thanks for the questions.

richard clothes: The next question comes from Richard Close with Canaccord Genuity. Please go ahead.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then two.

Stephanie Davis: Alright guys, thank you for taking my question, and Craig, congrats on the retirement, but you are going to be very sorely missed.

Jessica Tassan: And I'm curious, just were those contemplated in your FY 24 guidance?

Jessica Tassan: I know there's no such, there are no such fees in the 25 guidance, but was that 25 in your 24 guide?

Richard Close: Congratulations, Craig, as well. Enjoy. A lot of my questions have been asked already, but like maybe go into the co-management, you know, talk a little bit more about the pipeline of opportunities, and I was wondering if you could just give some examples of like the uplift you get, you know, from entering into a co-management. That would be helpful and better understanding.

Operator: The first question comes from Eric Percher with Nefron Research.

Richard Cloes: A lot of my questions have been asked already, but, Mike, maybe go into the co-management.

richard clothes: You know, talk a little bit more about the pipeline of opportunities. And I was wondering if you could just give some examples of like the uplift you get, you know, from entering into a co-management.

Stephanie Davis: I appreciate that stuff.

Jessica Tassan: Thanks.

Eric Percher: Please go ahead.

Mike Alkire: Thank you, Richard. And I appreciate the question. So first of all, as you know, our health systems are continuing to experience issues with, you know, high cost labor and then obviously, you know, with some inflation issues. So Richard, I'll take it back up one, one level and say that we go in with an approach of, you know, doing total transformation around how we're driving savings. So we're bringing it together. The team of folks to talk to our health care systems based upon the data that we see around where there are opportunities for improvement. And so there could be high level advisory capability that are necessary.

Craig McKasson: The 25 was not in our fiscal 2024 guidance.

richard clothes: That would be helpful in better understanding. Thank you, Richard. I appreciate the question. So, first of all, as you know, our health systems are continuing to experience issues with

Stephanie Davis: I wanted to follow up on the guidance as well, just because there's a lot of moving pieces.

richard clothes: you know, high-cost labor, and then obviously, you know, with some inflation issues.

Eric Percher: Thank you.

Stephanie Davis: There was a lot of upside in this quarter, and I know there can be some lumpiness in performance services, and then you called out some expectations from bookings for that in the guidance.

Craig McKasson: When we established the guidance for the supply chain, we obviously didn't know about those.

Craig McKasson: We did talk on the third quarter about one termination that impacted our third quarter results.

Craig McKasson: The increase was primarily driven by the sale of our non-health care GPO operations, net of the previously mentioned tax payments, partially offset by the use of cash for the $400 million accelerated chair repurchase, as well as the repayment of the outstanding balance on our five-year $1 billion revolving credit facility in the first quarter of fiscal 2024. We continue to have no amount drawn on the credit facility. We also paid 102.7 million to former limited partners in fiscal 2024 associated with the termination of the tax receivable agreement in connection with our August 2020 restructure and have a remaining liability of 102.7 million that will be paid in fiscal 2025 to complete that obligation and those payments will no longer impact our free cash flow in fiscal 2026 and beyond.

Speaker Change: orriginal i'll take it back up one one level and stay that we go in with an approach of doing total transformation around how we're driving savings so we're bring a team of folks to talk to our health care system based upon the data that we see

Craig McKasson: These two occurred in the fourth quarter.

Craig McKasson: And so impacted, you know, All say in the quarter, the performance, but no, they were not contemplated in the guidance expectation.

Jessica Tassan: Got it.

Jessica Tassan: Thank you again.

Richard Close: The next question comes from Richard Close with Canaccord Genuity.

Richard Close: Please go ahead.

Richard Close: Yeah, thanks for the questions.

Richard Close: Congratulations, Craig, as well.

Richard Close: Enjoy.

Speaker Change: around where there are opportunities for improvement. And so there could be high-level advisory.

Mike Alkire: There could be technology needs that are necessary. But at the end of the day, it's really how do we help the health systems bring out, take out cost and improve the quality of care that they are providing. So, as part of that, as we go through that analysis and get into some of that, you know, advisory work, it may be identified that there might be opportunities for us to do co-management, and what that means is it could mean anything. Like Matt, look, they've got some areas that, you know, they'd like to shore up from a distribution standpoint, from a procurement standpoint, all phases of supply chain.

Speaker Change: Capabilities that are necessary, there could be technology needs that are necessary, but at the end of the day, it's really how do we help the health systems.

Speaker Change: take out costs and improve the quality of care that they are providing.

Richard Close: A lot of my questions have been asked already, but, Mike, maybe go into the co-management, you know, talk a little bit more about the pipeline of opportunities, and I was wondering if you could just give some examples of, like, the uplift you get, you know, from entering into a co-management.

Richard Close: That would be helpful and better understanding.

Speaker Change: So as part of that, as we go through that analysis and get into some of that, you know, advisory work.

Speaker Change: It may be identified that there might be opportunities for us to do co-management, and what that means is it could mean anything, that, look, they've got some areas that, you know, they'd like to shore up from a distribution standpoint, from a

Mike Alkire: And so, you know, as we're going through those engagements, we'll identify where those opportunities are and what's the most beneficial structure for those organizations. And then to get your question, you know, what is the upside? Obviously, there's revenue associated with providing that service. That's number one. Number two, there's obviously opportunities to potentially bring in our technology and capabilities around automation that can actually help them become more efficient in the long term. And then number three, obviously, there's that opportunity to drive higher levels of contract penetration. And so not only penetration from contracts from our national GPO, but also contracts that are more regional things around purchase services and those kinds of areas.

Speaker Change: procurement standpoint, all phases of supply chain. And so, you know, as we're going through those engagements, we'll identify where those opportunities are and what's the most beneficial structure for those organizations.

Craig McKasson: With respect to capital deployment, we continue to be disciplined and focused on taking a balanced approach long term that are currently focused on return of capital Sutherland. We completed the $400 million accelerated share repurchase transaction in July 2024 and retired $4.8 million class A common shares in addition to the initial retirement of more than 15 million class A common shares in February 2024. As part of our approved $1 billion share repurchase authorization, our board recently approved the execution of another share repurchase of $200 million of class A common shares that we currently expect to occur in the open market.

Speaker Change: And then, to get to your question, you know, what is the upside, obviously there's revenue associated with providing that service, that's number one. Number two, there's obviously opportunities to potentially bring in our technology and capabilities around.

Speaker Change: automation that can actually help them become more efficient in the long term. And then number three, obviously, there's that opportunity to drive higher levels of contract penetration. And so not only penetration from contracts from our national GPO, but also contracts that are more regional things around purchase services and those

Mike Alkire: So those are probably be the three or four areas that will continue to, you know, bring additional value as we think about, you know, doing more co-management work with those help.

Speaker Change: those kinds of areas. So, those would probably be the three or four areas that will continue to, you know, bring additional value as we think about, you know, doing more co-management work with those health systems.

Craig McKasson: We will continue to assess the remaining $400 million under the share repurchase authorization as we progress through fiscal 2025. The share repurchase augments are quarterly catch-driven, which totalled 95.2 million in fiscal 2024. In addition, our board recently declared a dividend of 21 cents per share, payable on September 15, 2024, to stockholders of record as of September 1. We will also continue to evaluate opportunities to further invest in organic growth and assess potential acquisitions to strengthen, enhance or complement our existing capabilities in order to differentiate our offerings in the marketplace.

Richard Close: Law systems. Okay, and then a follow up.

Craig McKasson: You appreciate the details on the terminations. As you look at the book that part of the book that has yet to renew, is there any, you know, any additional details you can provide in terms of how you're thinking about that are the renewals. You know, those individual customers, any different than people that have, you've already gone through the process with or, you know, are you expecting similar, you know, renewal rates in this part of the, I guess, book.

Speaker Change: Okay, and then a follow-up. I appreciate the details on the terminations. As you look at the book, that part of the book that has yet to renew, is there any...

Speaker Change: You know any additional details you can provide in terms of how you're thinking about that is are the renewals

Speaker Change: Those individual customers any different than people that you've already gone through the process with?

Speaker Change: Yeah, are you expecting similar, you know, renewal rates in this part of the, I guess, book?

Craig McKasson: Yeah, this is Craig. I'll start in the Mike and Ed color. First and foremost, I wouldn't say there are distinctions between the composition of the members that have been renewed now and will continue to be renewed in the future. We have been thoughtful around how we've approached the timing and the expectations of renewals based on the relationship and changes that may be taking place within those member organizations that drive when those conversations and discussions should occur. I will say we through this process. Yes, we have had a couple of terminations, but I'm going to come back to we had 90% 97% retention in our GPO this past year.

Speaker Change: Yeah, this is Craig Allstar and then Mike Knagg-Keller. First and foremost, I wouldn't say there are distinctions between the composition of the members that have been renewed now and what will continue to be renewed in the future. We have been thoughtful around how we've approached the timing and the expectations of renewals based on the relationship and changes that may be taking place within those member organizations that drive when those conversations and discussions should occur.

Speaker Change: You know, I will say we...

Speaker Change: Through this process, yes, we have had a couple of terminations, but I'm going to come back to we had 97% retention in our GPO this past year. We continue to have very strong retention rates.

Craig McKasson: We continue to have very strong retention rates. We believe we will be successful as we continue to move through the remainder of the renewals and feel good about kind of the organizational plan that our teams have in place to navigate that over the coming months.

Speaker Change: We believe we will be successful as we continue to move through the remainder of the renewals and feel good about kind of the organizational plan that our teams have in place to navigate that over the coming months.

Craig McKasson: In conjunction with the evolution of our digital supply chain strategy to more tightly align remitra's strategic and operational capabilities with our GPO, we have determined it is more appropriate to report the remitra business as part of the supply chain services segment beginning in fiscal 2025. Lastly, based upon shareholder and analyst feedback, we decided it is appropriate following the close of the sale of our non-healthcare GPO operations to exclude the impact of the omnia transaction, including associated revenues sold, imputed interest expense, and cash taxes paid on proceeds received from our non-gap profitability measures moving forward. We will present our adjusted EBITDA, adjusted net income, adjusted earnings per share, and free cash flow on a comparable basis excluding these impacts from the omnia transaction effective in fiscal 2025.

Richard Close: Okay, thank you.

Eric Percher: And first, I'll say, Craig, congrats on your retirement here.

Mike Alkire: Thank you, Richard, and I appreciate the question.

Unnamed: Congratulations again, Craig. Thanks. Thank you. I appreciate it.

Eric Percher: A question with respect to expectations for next year and what I'd like to ask is for, some assistance in the EBITDA margin expectation across the segments and I'll ask you to speak to the underlying margin expectations versus any impact from the reclassification.

Mike Alkire: So first of all, as you know, our health systems are continuing to experience issues with, you know, high-cost labor, and then obviously, you know, with some inflation issues.

Craig McKasson: Sure.

Mike Alkire: So Richard, I'll take it back up one level and say that we go in with an approach of, you know, doing total transformation around how we're driving savings.

Craig McKasson: Thanks for the question.

Craig McKasson: Eric, this is Craig.

Mike Alkire: So we'll bring in a team of folks to talk to our health care systems based upon the data that we see around where there are opportunities for improvement.

Craig McKasson: As we think about the EBITDA margin profiles for our business in fiscal 2025, we would, anticipate the supply chain services segment to be in the low to mid 40s in terms of the EBITDA margin percentage and that will be, we would anticipate fairly consistent across, the fiscal year.

Mike Alkire: And so there could be high-level advisory capabilities that are necessary, there could be technology needs that are necessary, but at the end of the day, it's really how do we help the health systems bring out, take out cost and improve the quality of care that they are providing.

Craig McKasson: In our performance services segment, we would anticipate mid 20s for an EBITDA margin.

Speaker Change: can i thank you congratulations are again correct thanks thank you every year

Mike Alkire: So as part of that, as we go through that analysis and get into some of that, you know, advisory work, it may be identified that there might be opportunities for us to do co-management.

Craig McKasson: The low watermark consistent with the last two years we think will be in the first quarter, and it will be below that level and then it will average out over the year to the mid, 20s. What that results from an overall business perspective is an adjusted EBITDA margin in, the mid 20s.

Unnamed: Disconclusion question and answer session and premieres fiscal 2024 fourth quarter and full year conference call. Thank you for attending today's presentation.

Stephanie Davis: How much of the 4Q beat and soft FY25 is just from kind of timing expectations or a pull forward versus maybe some underlying changes in the environment?

Mike Alkire: And what that means is it could mean anything that, look, they've got some areas that, you know, they'd like to shore up from a distribution standpoint, from a, you know, procurement standpoint, all phases of supply chain.

Operator: This concludes our question and answer session, and Premier's Fiscal 2024 4th Quarter and Full Year Conference Call.

Craig McKasson: The changes that we discussed relative to guidance, obviously the removal of the direct, sourcing revenues on the supply chain side changes the margin profile that is counteracted by the incremental fee share expense that we're seeing in the GPO.

Mike Alkire: And so, you know, as we're going through those engagements, we'll identify where those opportunities are and what's the most beneficial structure for those organizations.

Craig McKasson: On the performance services side, the removal of the contigo health revenues obviously has, an impact on the margins in that business.

Mike Alkire: And then to get to your question, you know, what is the upside, obviously there's revenue associated with providing that service, that's number one.

Craig McKasson: And the transfer of Remitra is not a material change in the margins given the size and scale of that business.

Craig McKasson: That's helpful.

Mike Alkire: And number three, obviously, there's that opportunity to drive higher levels of contract penetration.

Craig McKasson: And your visibility into the margin relative to the prior two years, how do you feel coming into the year?

Speaker Change: this concludes our question-and-answer session and premier's fiscal two thousand and twenty four fourth quarter and full year conference call thank you for attending today's presentation you may now disconnect

Mike Alkire: And so not only penetration from contracts from our national GPO, but also contracts that are more regional, things around purchase services and those kinds of areas.

Craig McKasson: I think as we come into the year, we feel very good about the supply chain services.

Mike Alkire: So those would probably be the three or four areas that will continue to, you know, bring additional value as we think about, you know, doing more co-management work with those health, Okay, and then a follow up, your appreciate the the details on the terminations.

Richard Close: And then a follow-up, I appreciate the details on the terminations.

Craig McKasson: We do think that we have factored in as we publicly and continue to disclose the impact of the renewals that we'll be doing in the supply in the GPO as part of our supply chain services segment.

Richard Close: As you look at the book that part of the book that has yet to renew.

Richard Close: As you look at the part, of the book that has yet to renew, is there any additional details you can provide in terms of how you're thinking about that?

Craig McKasson: So I think we feel good about that on the performance services side.

Stephanie Davis: Yeah, it's a great question, Stephanie.

Operator: Thank you for attending today's presentation.

Richard Close: Is there any you know, any additional details you can provide in terms of how you're thinking about that is are the renewals you know, those individual customers any different than people that have you've already gone through the process with or, you know, are you expecting similar, you know, renewal rates in this part of the, I guess, book?

Richard Close: Are the renewals, those individual customers, any different than people that you've already gone through the process with?

Craig McKasson: I think we feel good about the margin expectations.

Craig McKasson: First of all, I wouldn't say it was per se a pull forward.

Operator: You may now disconnect.

Craig McKasson: Yeah, this is Craig Allstar, and then Mike Knagg-Keller.

Richard Close: Are you expecting similar renewal rates in this part of the book?

Craig McKasson: As I always say, there is periodic variability throughout a year and through quarters based on the timing of when enterprise licenses and or certain consulting engagements occur.

Craig McKasson: But what I would say is that the team was very successful in terms of actually getting engagements through the finish line that were in the pipeline. To put a perspective on that, kind of in the ballpark of $15 million of performance actually came through in the fourth quarter that we otherwise thought it might have come into 2025.

Craig McKasson: First and foremost, I wouldn't say there are distinctions between the composition of the members that have been renewed now and what will continue to be renewed in the future.

Craig McKasson: But on a broad basis, we're heading into fiscal 2025 with similar visibility to the guidance that we've put out for the performance services segment.

Craig McKasson: And so that is impacting, A, the growth rates that we're anticipating on a year-over-year basis.

Unnamed: You may now disconnect.

Craig McKasson: Thank you.

Craig McKasson: And secondarily, given some of those we would have anticipated might have slipped into Q1, that is why we do think the first quarter is going to be, has, and obviously the teams are going to do everything they can to overcome it, but has the potential to be a bit lighter.

Craig McKasson: You know, I will say we, through this process, yes, we have had a couple of terminations, but I'm going to come back to, we had 97% retention in our GPO this past year. We continue to have very strong retention rates.

Stephanie Davis: The next question comes from Stephanie Davis with Barclays.

Craig McKasson: And that is consistent, again, with the past two years in terms of what we've seen in the first quarter.

Ben Krasinski: Information on our non-gap financial measures will also be included in our fiscal 2024 form 10K and our earnings form 8K, both of which we expect to file soon.

Craig McKasson: We believe we will be successful as we continue to move through the remainder of the renewals and feel good about kind of the organizational plan that our teams have in place to navigate that over the next year.

Stephanie Davis: Please go ahead.

Craig McKasson: Now, I guess.

Richard Close: Thank you.

Stephanie Davis: Hey, guys, thank you for taking my question.

Craig McKasson: Kind of following up on that one, we have seen a lot of hospital-facing names see a better demand environment.

Richard Close: Congratulations again, Craig.

Stephanie Davis: And Craig, congrats on the retirement, but you are going to be very sorely missed.

Craig McKasson: And then on more of the, I guess, like the broader GPO business, we've heard some headwinds on the medical distribution side, right, post-COVID demand normalization, primary care channel softness.

Stephanie Davis: I appreciate that, Stephanie.

Craig McKasson: Is there any background you can give us on what you're thinking about the demand environment to frame this guidance?

Stephanie Davis: Thank you.

Stephanie Davis: I wanted to follow up on the guidance as well, just because there's a lot of moving pieces.

Stephanie Davis: How much of the 4QB and soft FY25 is just from kind of timing expectations or a pull forward versus maybe some underlying changes in the environment?

Stephanie Davis: Yeah, it's a great question, Stephanie.

Stephanie Davis: First of all, I wouldn't say it was per se a pull forward, but what I would say is that the team was very successful in terms of actually getting engagements through the finish line that were in the pipeline. To put a perspective on that, kind of in the ballpark of $15 million of performance actually came through in the fourth quarter that we otherwise thought it might have come into 2025.

Stephanie Davis: And so that is impacting, A, the growth rates that we're anticipating on a year-over-year basis, and secondarily, given some of those we would have anticipated might have slipped into Q1, that is why we do think the first quarter is going to be – and obviously the teams are going to do everything they can to overcome it, but has the potential to be a bit lighter.

Stephanie Davis: And that is consistent, again, with the past two years in terms of what we've seen in the first quarter from performance services.

Stephanie Davis: Now, I guess kind of following up on that one, we have seen a lot of hospital-facing names see a better demand environment.

Stephanie Davis: And then on more of the – I guess like the broader GPO business, we've heard some headwinds on the medical distribution side, right?

Stephanie Davis: Post-COVID demand normalization, primary care channel softness.

Stephanie Davis: Is there any background you can give us on what you're thinking about the demand environment to frame this guidance?

Stephanie Davis: Because it does feel like a little bit of a departure from some of your peers.

Stephanie Davis: Yeah, a couple of things, Stephanie.

Mike Alkire: This is Mike.

Mike Alkire: At a macro level, utilization of the health system, you know, we still think is flat to maybe up single digits, so we do believe there's still the tail one that's occurring.

Mike Alkire: Obviously, there's a lot of regionality that exists there.

Mike Alkire: All right.

Stephanie Davis: Very helpful.

Stephanie Davis: I'm going to hop back into Q, but I'll hope someone else asks the questions and I'll fire.

Stephanie Davis: Thank you, guys.

Stephanie Davis: Thank you.

Michael Czerny: The next question comes from Michael Czerny with Lear, Inc. Partners.

Michael Czerny: Please go ahead.

Michael Czerny: Great.

Mike Alkire: I will now turn the call over to Mike Alkair.

Michael Czerny: Thank you.

Michael Czerny: This is Dan Clark on for Mike.

Michael Czerny: Just wanted to start, you know, based on sort of where you are in your ongoing renewals with your members, you know, should we think EBITDA is going to grow in fiscal year 26 as you continue to reset your net admin fee share?

Michael Czerny: Thank you.

Mike Alkire: So as we continue to go through this reset, I do look at it as an opportunity for us to continue to sell our broader capabilities.

Craig McKasson: Craig?

Craig McKasson: Yeah.

Craig McKasson: Thanks, Mike.

Craig McKasson: Relative to the question, I think as you might expect, I would say today we're establishing our fiscal 2025 guidance.

Craig McKasson: We're not actually giving 26 guidance at this point in time, but to provide some color around your question consistent with remarks that I've previously publicly made.

Craig McKasson: We do anticipate that our administrative fee share for fiscal 2025 will be in the low 60% range.

Craig McKasson: We are going to continue to do renewals and have been that will impact 25 and into 26.

Craig McKasson: We would anticipate that at the end of the day, our fee share will rise within the 60% range. And that's consistent with prior commentary.

Craig McKasson: So that clearly has an implication on EBITDA growth in fiscal 2026.

Craig McKasson: But at that point, we do believe that the business will have gone through its reset and will be well positioned employees to regain kind of profitability growth on a prospective basis.

Michael Czerny: Got it.

Mike Alkire: Good morning, everyone.

Craig McKasson: With these key assumptions and changes in mind, our specific fiscal 2025 Folier Guidance Ranges are as follows. Supply chain services segment revenue, excluding direct sourcing products revenue of 560 to 610 million is comprised of net administrative fees revenue of 495 to 525 million. And software license, other services and support revenue of 65 to 85 million, which now includes remitra. Our net administrative fees revenue will continue to include revenue from Omnina, and our guidance includes 60 to 75 million in revenue related to this non-health care member purchasing.

Michael Czerny: Thank you.

Michael Czerny: And then as you sort of are talking with your customers as you go through this renewal process, can you sort of talk about the performance services, you know, attach rate opportunities that you have?

Michael Czerny: Like how are those conversations going with folks as you bring them in for renewals?

Michael Czerny: Thank you.

Mike Alkire: Yeah.

Mike Alkire: First of all, thank you for the question.

Mike Alkire: We are hyper-focused on this cross-selling plan.

Mike Alkire: We actually put it as part of our annual objectives this year.

Craig McKasson: So the opportunities obviously are to help them sort of advance the way they provide care in their communities.

Craig McKasson: And this is Craig.

Craig McKasson: The only thing I would add is that we really do have sort of a one premier mindset as we're going through this renewal process.

Mike Alkire: Thank you for joining us.

Craig McKasson: And so it is all about an integrated deal team getting together, thinking about the opportunities set across clearly the GPO renewal, but all the margin improvement services and capabilities that we can deliver through performance services.

Craig McKasson: We're obviously not going to be successful in 100%, but they are teed up in that way.

Craig McKasson: And there's a big opportunity for future growth through that approach.

Michael Czerny: Great.

Michael Czerny: Thank you.

Jessica: The next question comes from Jessica with Piper Sandler.

Jessica: Please go ahead.

Jessica: Hi, guys.

Jessica: Thanks for taking the question.

Jessica: And congratulations on your retirement, Craig.

Jessica: I guess I'll maybe kick off where Steph left off.

Jessica: So congratulations on the huge win with Allspire.

Jessica: I guess can you help us just understand maybe what were the circumstances surrounding that win?

Jessica: Was that contract in line with the 50% of August 2020 restructurings in terms of fee share?

Jessica: And then maybe just are there any nuances to co-sourcing and co-management versus a typical GPO engagement?

Jessica: Thanks.

Craig McKasson: This is Craig.

Craig McKasson: The only thing I would add, because it piggybacks right onto the response I had on my last question, is that was very much a one Premier go-to-market approach, where we have won the GPO, but all the technology is pulling through in addition for all the reasons that Mike just articulated.

Craig McKasson: Okay.

Jessica: Awesome.

Jessica: That's really helpful.

Jessica: And then just my second question is, I wanted to be clear on the fourth quarter results.

Jessica: So, the $25 million hit or of one-time kind of early-term fees that hit in the fourth quarter, and I'm curious just were those contemplated in your FY24 guidance?

Jessica: I know there are no such fees in the 25 guidance, but was that 25 in your 24 guidance?

Jessica: Thanks.

Craig McKasson: The 25 was not in our fiscal 2024 guidance when we established the guidance for the supply chain.

Craig McKasson: We obviously didn't know about those.

Craig McKasson: We did talk on the third quarter about one termination that impacted our third quarter results.

Craig McKasson: These two occurred in the fourth quarter, and so impacted, you know, I'll say in the quarter, the performance, but no, they were not contemplated in the guidance expectations for the year.

Jessica: Got it.

Jessica: Thank you again.

Jessica: Thank you.

Richard Close: The next question comes from Richard Close with Canaccord Genuity.

Richard Close: Please go ahead.

Richard Close: Yeah, thanks for the questions.

Richard Close: Congratulations, Craig, as well.

Richard Close: Enjoy.

Richard Close: That would be helpful in better understanding.

Richard Close: Thank you, Richard.

Mike Alkire: I appreciate the question.

Mike Alkire: So, first of all, as you know, our health systems are continuing to experience issues with, you know, high cost labor, and then obviously, you know, with some inflation issues.

Mike Alkire: So, Richard, I'll take it back up one level and say that we go in with an approach of, you know, doing total transformation around how we're driving savings, so we'll bring in a team of folks to talk to our health care systems based upon the data that we see around where there are opportunities for improvement.

Mike Alkire: And so, there could be high-level advisory capabilities that are necessary.

Craig McKasson: Performance services segment revenue of 370 to 410 million, which excludes contributions from the contigo health and remitra businesses. Together, these produce total net revenue of 930 million to 1.02 billion dollars. We expect adjusted EBITDA to be in the range of 235 to 255 million and adjusted earnings per share to be in the range of $1.16 to $1.28. Our guidance is also based on the following assumptions and expectations. In our GPO business, we expect current number utilization levels to continue with growth and growth administrative fees driven by further penetration of existing members spend and the addition of new GPO members.

Mike Alkire: There could be technology needs that are necessary, but at the end of the day, it's really how do we help the health systems bring out, take out cost and improve the quality of care that they are providing.

Mike Alkire: So, as part of that, as we go through that analysis and get into some of that, you know, advisory work, it may be identified that there might be opportunities for us to do co-management, and what that means is it could mean anything.

Mike Alkire: That, look, they've got some areas that, you know, they'd like to shore up from a distribution standpoint, from a, you know, procurement standpoint, all phases of supply chain.

Mike Alkire: And so, you know, as we're going through those engagements, we'll identify where those opportunities are and what's the most beneficial structure for those organizations.

Mike Alkire: And then, to get to your question, you know, what is the upside?

Mike Alkire: Obviously, there's revenue associated with providing that service.

Mike Alkire: That's number one.

Mike Alkire: And then, number three, obviously, there's that opportunity to drive higher levels of contract penetration.

Mike Alkire: And so, not only penetration from contracts from our national GPO, but also contracts that are more regional, things around purchase services and those kinds of areas.

Mike Alkire: So, those would probably be the three or four areas that will continue to, you know, bring additional value as we think about, you know, doing more co-management work with those health systems.

Craig McKasson: We continue to anticipate aggregate blended member fee share will increase to the low 60 percent range for fiscal 2025 on a full year basis. While we benefited from certain member termination payments during fiscal 2024, we do not have any of these types of payments factored into our fiscal 2025 guidance. Also in our supply chain services segment, we expect software license, other services and support revenue growth to be primarily driven by the continued adoption and expansion of our supply chain co-management business.

Craig McKasson: From a cadence perspective, we expect our supply chain services segment revenue to be slightly more back half-weighted. In our performance services business, we finished fiscal 2024 better than expected. As a result of the timing of revenue recognition due to enterprise license agreements and consulting engagements, we expect our healthcare provider business to be impacted by the timing of new bookings and the associated conversion to revenue recognition. We continue to expect double-digit growth in our applied sciences and clinical decision support businesses.

Mike Alkire: This morning, I'm pleased to share our fourth quarter and full year fiscal 2024 results, which exceeded our expectations.

Mike Alkire: I will also paint a vision for the year ahead, which includes, first, advancing our strategy to technology and able better healthcare performance and a smarter supply chain.

Mike Alkire: Second, continuing to return value to stockholders as a board approved execution of another share repurchase of $200 million of class A common shares under our $1 billion share repurchase authorization.

Mike Alkire: And third, our plan to address non-core assets, SDS global and contigo health for which the processes launched in May remain ongoing and we're hopeful to have something to announce soon.

Craig McKasson: As previously mentioned, year-over-year growth in the performance services segment will also be impacted as a result of the decision to report our remitra business in the supply chain services segment, beginning in fiscal 2025. From a cadence perspective, we expect segment revenue to be slightly more back half-weighted with the first quarter being the lowest point for the year. Related to profitability, given the nature of the GPO business, and fact that there are not many variable costs associated with administrative fee share changes in the business, we expect the decrease in net administrative fees revenue in fiscal 2025, have a comparable impact on our profitability measures.

Craig McKasson: However, we take our fiduciary responsibility very seriously, and as a matter of normal practice, we are always carefully managing our cost structure. In addition, and as I mentioned earlier, we will now exclude the impact of the omnia transaction from our non-gap profitability measures. Lastly, from a cadence perspective, we expect to achieve approximately 45% of our adjusted EVA guidance in the first half of the fiscal year, with the first quarter being our low water mark, given the margin profile associated with our anticipated revenue in the first quarter of the year.

Craig McKasson: In the second half of the year, we expect margin to be favorable compared to the first half, primarily given the expected timing of enterprise license agreements. Related to cash, we expect free cash flow to approximate 45% to 55% of adjusted EVA for the full year. From a cash tax perspective, we continue to benefit from our 2020 restructuring and 2022 subsidiary reorganization. As a result, we anticipate our fiscal 2025 cash tax rate will be less than 5% and expect a similar range over the next three to five years.

Operator: Thanks again for joining us today. I look forward to connecting with many of you over the coming months and remain committed to ensuring a smooth transition for my successor following our fiscal 2025 first quarter earnings call in early November. We appreciate your time and will now open the call for question. We will now begin the question and answer session to ask a question you may press star then one on your telephone keypad.

Operator: If you were using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two.

Eric Percher: The first question comes from Eric Parcher with Neffron Research. Please go ahead.

Craig McKasson: Thank you and first I'll say Craig congrats on your retirement here. There are questions with respect to expectations for next year and what I'd like to ask is for some assistance in the EBITDA margin expectation across the segments and I'll ask you to speak to the underlying margin expectations versus any impact from the reclassification. Sure. Eric described thanks for the question. As we think about the EBITDA margin profiles for our business in fiscal 2025, we would anticipate the supply chain services segment to be in the low to mid 40s in terms of the EBITDA margin percentage and that'll be we would anticipate fairly consistent across the fiscal year.

Craig McKasson: In our performance services segment, we would anticipate mid 20s for an EBITDA margin, the low watermark consistent with the last two years. We think we'll be in the first quarter and it'll be below that level and then it will average out over the year to the mid 20s. What that results from an overall business perspective is an adjusted EBITDA margin in the mid 20s. The changes that we discussed relative to guidance, obviously the removal of the direct sourcing revenues on the supply chain side changes the margin profile that is counteracted by the incremental fee share expense that we're seeing in the GPO.

Craig McKasson: On the performance services side, the removal of the contigo health revenues obviously has an impact on the margins in that business, and the transfer of remitra is not a material change in the margins given the size and scale of that business.

Craig McKasson: That's helpful. And your visibility into the margin relative to the prior two years, how do you feel coming into the year? I think as we come into the year, we feel very good about the supply chain services. We do think that we have factored in as we publicly and continue to disclose the impact of the renewals that we'll be doing in the GPO as part of our supply chain services segment. So I think we feel good about that on the performance services side.

Craig McKasson: I think we feel good about the margin expectations. As I always say, there is periodic variability throughout a year and through quarters based on the timing of when enterprise licenses and or certain consulting engagements occur. But on a broad basis, we're heading into fiscal 2025 with similar visibility to the guidance that we've put out for the performance services segment.

Eric Percher: Thank you.

Stephanie Davis: The next question comes from Stephanie Davis with Barclays. Please go ahead. Hey guys, thank you for taking my question and Craig. Congrats on the retirement that you are going to be very sore and be missed. I appreciate that Stephanie. Thank you.

Mike Alkire: The successful 2013 initial public offering, the 2020 and 2022 restructuring to simplify our corporate structure and strategic expansion to the leading integrated healthcare performance improvement company, Premier, is today.

Mike Alkire: Turning to performance, I am pleased to report that thanks to our team's dedication and the trust of our members and other customers, our fourth quarter and full-year results for revenue and profitability in both segments surpassed our expectations.

Mike Alkire: Our performance this fiscal year was fueled in part by our expanding role as a vital strategic partner for providers, manufacturers, and payers.

Stephanie Davis: I wanted to follow up on the guidance as well, just because there's a lot of moving pieces. There was a lot of upside in this quarter and I know there can be some lumpiness and performance services and then you hold out some expectations from bookings for that in the guidance. How much of the before QB and soft FY25 is just from from kind of timing expectations or pull forward versus many some underlying changes in the environment.

Mike Alkire: Beyond retention, Premier is increasingly the partner of choice for those looking to drive growth beyond traditional boundaries.

Stephanie Davis: Yeah, it's a great question, Stephanie. First of all, I wouldn't say it was per se a pull forward, but what I would say is that the team was very successful in terms of actually getting engagements through the finish line that we're in the pipeline. To put a perspective on that, kind of in the ballpark of $15 million of performance actually came through in the fourth quarter that we otherwise thought it might have come into 2025.

Stephanie Davis: And so that is impacting a the growth rates that we're anticipating on a year over your basis and secondarily given some of those we would have anticipated might have slipped into Q1. That is why we do think the first quarter is going to be has you know obviously the teams are going to do everything they can to overcome it but has the potential to be a bit lighter. And that is consistent again with the past two years in terms of what we've seen in the first quarter from performance services.

Stephanie Davis: Now, I guess kind of following up on that one, we have seen a lot of hospital-facing names, see a better demand environment. And then on more of the, guess like the broader GPO business, we've heard some headwinds on the medical distribution side, right? Post COVID-19 normalization primary care channels often is, is there any background you can give us on what you're thinking about the demand environment to frame this guidance because it does feel like a little bit of a departure from some of your peers.

Mike Alkire: Yeah, a couple of things, Stephanie, this is Mike. At a macro level utilization of the health system, you know, we still think is flat to maybe up single digits. So we do believe there's still the tail one that's occurring. Obviously there's a lot of regionality that exists there. In terms of contract penetration. So, you know, the tools and the technologies that we've been developing, we believe will continue to provide growth for us, you know, in terms of driving higher levels of contract penetration.

Mike Alkire: You've heard us say this multiple times in this call. Those organizations that are more highly, you know, penetrated from a contract standpoint of those that, you know, obviously are performing better. So we're going to continue to get that out that message out to the market. We're seeing a strong demand for our co sourcing co management capabilities to really, really, really excited about that. When we're in actually providing those services, Stephanie, as you know, it allows us to drive higher levels of penetration and also bring to the four of the opportunity to leverage our tools and technologies in a very unique way.

Mike Alkire: Systems.

Mike Alkire: I'm pleased to announce that all Spire Health Partners, competitively selected premieres its National GPO, to support its more than $3.5 billion in annual purchase volume, one of the largest single volume deals in premier history.

Mike Alkire: So, you know, we see that as more opportunities. And then finally, I will tell you, as consolidation picks up, you know, we do believe, you know, our capabilities are on integrated services and standardization and those kinds of things are going to be necessary. So, again, we're seeing, you know, those as opportunities for us. And we want to continue to, you know, provide the services into those into those areas.

Stephanie Davis: All right, very helpful. I'm going to hop back in the cue, but I hope someone else asks the questions that I'll fire. Thank you guys. Thank you.

Michael Cherny: The next question comes from Michael, Cherny with Learing Partners. Please go ahead. Great. Thank you. This is Dan Clark on for Mike. Just wanted to start, you know, based on sort of where you are in your ongoing renewals with your members, you know, should we think EBITDA is going to grow in fiscal year 26 as you continue to reset? You're not admin fee share. Thank you.

Craig McKasson: If I could crack at the highest level just before we jump into the answer that I do want, you know, to actually frame this in a little bit broader way in that, you know, having these conversations around Admin fee reset allows for us to have more broader discussions with these health systems around other tools and services that we can provide. So as we're continuing to go through this reset, I do look at it.

Craig McKasson: It's an opportunity for us to continue to sell our broader capabilities. Great. Yeah, thanks Mike. Relative to the question that I think as you might expect, I would say today we're establishing our fiscal 2025 guidance. We're not actually giving 26 guidance at this point in time, but, but to provide some color around your question consistent with remarks that I previously publicly made. We do anticipate that our administrative fee share for fiscal 2025 will be in the low 60% range.

Craig McKasson: We are going to continue to do renewals and have been that will impact 25 and into 26. We would anticipate that at the end of the day, our fee share will rise within the 60% range and that's consistent with prior commentary. So that clearly has an implication on EBITDA growth in fiscal 2026. But at that point, we do believe that the business will have gone through its reset and will be well positioned and poised to regain kind of profitability growth on a prospect, on the basis moving forward. Got it. Thank you.

Mike Alkire: And then as you sort of are talking with your customers, as you go with this renewal process, can you sort of talk about the performance services, you know, a catch rate opportunities that you have, like how are those conversations going with folks as you bring them in for annals? Thank you. Yeah, first of all, thank you for the question. We are hyper focused on this cross-selling plan. We actually put it as part of our annual objectives this year.

Mike Alkire: So the opportunities obviously are to help them sort of advance the way they provide care in their communities. Our AI and machine learning capabilities, helping the health systems with the way they look at prior authorization, the way they do their ATC documentation. We look at, you know, those are the opportunities to bring real value to those health systems that in some cases are not taking advantage of today. Obviously we will be serving up other capabilities for those that are probably mid-size and smaller, the ability to help them with co-managing those supply chain capabilities.

Mike Alkire: From the perspective of health care product manufacturers, including life sciences companies, as well as payers, our long-term vision and strategy continues to materialize as we further expand into these adjacent markets.

Mike Alkire: We are executing with precision on our plan to use our robust data and AI-enabled technology to deliver unparalleled insights and efficiencies for these customers.

Mike Alkire: We will be continuing to demonstrate the value that we can bring to the table to help them be more efficient in the way they do supply chain. But those are just a few of the areas that will continue to focus on as we, you know, have these discussions.

Mike Alkire: We believe technology enablement of our network of health care provider members and other customers will become a critical driver in accelerating innovation in health care.

Mike Alkire: We believe this integration will pave the way for a united approach to delivering higher quality and more affordable health care.

Craig McKasson: And this is Craig, the only thing I would add is that we really do have sort of a one-premure mindset as we're going through this renewal process. And so it is all about an integrated deal team getting together, thinking about the opportunity set across, clearly the GPO renewal, but all the margin improvement services and capabilities that we can deliver through performance services. We're obviously not going to be successful on 100%, but they are teed up in that way, and there's a big opportunity for future growth through that approach. Great, thank you.

Mike Alkire: I want to once again thank our team for their steadfast commitment to our strategic vision and mission of improving the health of communities.

Mike Alkire: In Cisco 2024, we again outperform global benchmarks in our employee engagement survey, highlighting that premier's greatest asset is indeed its people.

Craig McKasson: I will now turn the call over to Craig for a closer look at our results and update on our share repurchase program and to provide our initial guidance for fiscal year 2025.

Craig McKasson: Thanks, Mike.

Jessica: The next question comes from Jessica with Piper Sandler. Please go ahead. Hi guys, thanks for taking the question and congratulations on your retirement, Craig. I guess I'll maybe kick off where Steph left off. So congratulations on the huge win with Allspire. I guess can you help us to understand maybe what were the circumstances surrounding that win? Is that contract in line with the 50% of August 2020 restructuring in terms of fee share?

Craig McKasson: First, I would like to say that I'm incredibly grateful for my career at premier.

Craig McKasson: It's truly been an honor to work with such an amazing team, be part of our strong culture, and to contribute to premier's mission to improve the health of communities.

Craig McKasson: Police.

Jessica: And then maybe just, are there any nuances to co-sourcing and co-management versus a typical GPO engagement? Thanks. Yeah, so just Allspire. It was a RFI RP process, obviously. I was able to get a little bit of feedback from the team in terms of what was our key differentiation. I think overall it was about the value that we could provide to the health systems that are part of Allspire. That's number one. Number two, I think they were very, very interested in our technology and the capabilities that we can bring to help them identify where there's opportunities for savings, where there's opportunities for contract penetration, and then most importantly, for Allspire to be able to have a broad view across all those health systems in terms of what's happening from a pricing standpoint for products, pricing of products.

Jessica: And so I think those were some of the key notes that I heard that were the reasons that they select. Premier. Yeah, and this is Craig. The only thing I would add because it piggybacks right onto the response I had on my last question is that was very much a one premier go-to-market approach where we we have won the GPO but all the technology is pulling through in addition for all the reasons that might just articulate.

Jessica: Okay, awesome. That's really helpful and then just my second question is I wanted to be clear on the fourth quarter results and so the 25 million hit or of one time kind of early term fees that hit in the fourth quarter and I'm curious just were those contemplated in your FY 24 guidance. I know there's no such there are no such fees in the 25 guidance but was that 25 in your 24 guidance.

Craig McKasson: This was partially offset by an expected increase in the aggregate blended member fee share for the high 50% level as we continue to progress through our contract renewal process. To provide an update, the group of GPO members that were part of the August 2020 restructure represent approximately 70% of our total gross administrative fees. As of June 30, 2024, we have now renewed and extended GPO members representing approximately 50% of this group's associated gross administrative fees.

Jessica: Thanks. The 25 was not in our fiscal 2024 guidance when we established the guidance for the supply chain. We obviously didn't know about those. We did talk on the third quarter about one termination that impacted our third quarter results. These two occurred in the fourth quarter. And so impacted, you know, I'll say in the quarter the performance but no they were not contemplated in the guidance expectations for the year. Got it. Thank you again. Thank you.

Craig McKasson: We currently plan to address and finalize additional member renewals during fiscal 2025 that would result in over three-fourths of this group's gross administrative fees being through the renewal process by the end of fiscal 2025, with the remainder occurring in fiscal 2026 and 2027.

Richard Close: The next question comes from Richard close with can a core genuity. Please go ahead. Yeah, thanks for the questions.

Mike Alkire: Congratulations, Craig as well. Enjoy. A lot of my questions have been asked already but like maybe go into the co management, you know, talk a little bit more about the pipeline of opportunities and I was wondering if you could just give some examples of like the uplift you get, you know, from entering into a co management. That would be helpful and better understanding. Thank you, Richard. And I appreciate the question. So first of all, as you know, our health systems are continuing to experience issues with, you know, high cost labor and then obviously, you know, with some inflation issues.

Craig McKasson: In our direct sourcing business, revenue declined primarily due to lower pricing and demand for certain products.

Craig McKasson: In software license, other services, and support revenue, we experienced a growth in our supply chain co-management business, as well as in surpass our highly committed GPO program.

Mike Alkire: So Richard, I'll take it back up one, one level and say that we go in with an approach of, you know, doing total transformation around how we're driving savings. So we're bringing it together. The team of folks to talk to our health care systems based upon the data that we see around where there are opportunities for improvement. And so there could be high level advisory capability that are necessary. There could be technology needs that are necessary.

Mike Alkire: But at the end of the day, it's really how do we help the health systems bring out take, take out cost and improve the quality of care that they are providing. So as part of that, as we go through that analysis and get into some of that, you know, advisory work, it may be identified that there might be opportunities for us to do co management and what that means is it could mean anything.

Mike Alkire: Like Matt, look, they've got some areas that, you know, they'd like to shore up from a distribution standpoint, from a procurement standpoint, all phases of supply chain. And so, you know, as we're going through those engagements, we'll identify where those opportunities are and what's the most beneficial structure for those organizations. And then to get your question, you know, what is the upside? Obviously, there's revenue associated with providing that service. That's number one.

Craig McKasson: In our performance services segment, revenue growth was driven by an increase in contributions from consulting services and enterprise license agreements compared to the prior year period.

Craig McKasson: We also continued to experience growth in our adjacent markets businesses, which include our applied sciences, clinical decision support, antigo, health, and remitra businesses, which collectively grew double digits during the quarter, resulting in more than 18% growth for the full year.

Mike Alkire: Number two, there's obviously opportunities to potentially bring in our technology and capabilities around automation that can actually help them become more efficient in the long term. And then number three, obviously, there's that opportunity to drive higher levels of contract penetration. And so not only penetration from contracts from our national GPO, but also contracts that are more regional things around purchase services and those kinds of areas. So those are probably be the three or four areas that will continue to, you know, bring additional value as we think about, you know, doing more co management work with those help.

Craig McKasson: Law Systems. Okay, and then a follow up. You appreciate the details on the terminations. As you look at the book that part of the book that has yet to renew, is there any, you know, any additional details you can provide in terms of how you're thinking about that are the renewals. You know, those individual customers, any different than people that have, you've already gone through the process with or, you know, are you expecting similar, you know, renewal rates in this part of the, I guess, book.

Craig McKasson: I will say we through this process. Yes, we have had a couple of terminations, but I'm going to come back to we had 90% 97% retention in our GPO this past year. We continue to have very strong retention rates. We believe we will be successful as we continue to move through the remainder of the renewals and feel good about kind of the organizational plan that our teams have in place to navigate that over the coming months.

Richard Close: Okay, thank you. Congratulations again, Craig. Thanks. Thank you. I appreciate it.

Craig McKasson: Ajusted net income decrease primarily as a result of the same factors that impacted adjusted EBIDA and adjusted earnings per share increased, primarily due to a reduction in weighted average share count resulting from our accelerated share repurchase transaction.

Operator: Disconclusion question and answer session and premieres fiscal 2024 fourth quarter and full year conference call. Thank you for attending today's presentation.

Craig McKasson: From a liquidity and balance sheet perspective, cash flow from operations for fiscal 2024 of 296.6 million decreased from 444.5 million in the prior year. The change was primarily due to 162.3 million in tax payments in the current year from the sale of our non-health care GPO operations. With respect to the sale of the non-health care GPO operations, we received a total of 681.4 million in proceeds as of June 30, 2024. The transaction was finalized in July 2024 and we received the final cash proceeds of 42.4 million in the first quarter of fiscal 2025 resulting in a final total purchase price of 723.8 million.

Operator: You may now disconnect.

Craig McKasson: Excluding the impact of the 162.3 million in tax payments, fiscal 2024 free cash was 62% of adjusted EBIDA for the full year. Cash and cash equivalents totaled 125.1 million as of June 30, 2024, compared with 89.8 million as of June 30, 2023. The increase was primarily driven by the sale of our non-health care GPO operations, net of the previously mentioned tax payments, partially offset by the use of cash for the $400 million accelerated chair repurchase, as well as the repayment of the outstanding balance on our five-year $1 billion revolving credit facility in the first quarter of fiscal 2024.

Craig McKasson: We continue to have no amount drawn on the credit facility. We also paid 102.7 million to former limited partners in fiscal 2024 associated with the termination of the tax receivable agreement in connection with our August 2020 restructure and have a remaining liability of 102.7 million that will be paid in fiscal 2025 to complete that obligation and those payments will no longer impact our free cash flow in fiscal 2026 and beyond.

Craig McKasson: With respect to capital deployment, we continue to be disciplined and focused on taking a balanced approach long term that are currently focused on return of capital Sutherland.

Craig McKasson: We completed the $400 million accelerated share repurchase transaction in July 2024 and retired $4.8 million class A common shares in addition to the initial retirement of more than 15 million class A common shares in February 2024. As part of our approved $1 billion share repurchase authorization, our board recently approved the execution of another share repurchase of $200 million of class A common shares that we currently expect to occur in the open market.

Craig McKasson: We will continue to assess the remaining $400 million under the share repurchase authorization as we progress through fiscal 2025.

Craig McKasson: The share repurchase augments are quarterly catch-driven, which totalled 95.2 million in fiscal 2024. In addition, our board recently declared a dividend of 21 cents per share, payable on September 15, 2024, to stockholders of record as of September 1.

Craig McKasson: We will also continue to evaluate opportunities to further invest in organic growth and assess potential acquisitions to strengthen, enhance or complement our existing capabilities in order to differentiate our offerings in the marketplace.

Craig McKasson: In addition, I would also like to provide some clarity on the following changes impacting our guidance. As a result of our previously announced plan to divest majority interests in our contigo help and S2S global businesses, we are presenting guidance excluding any financial contributions from these businesses for fiscal 2025.

Craig McKasson: Lastly, based upon shareholder and analyst feedback, we decided it is appropriate following the close of the sale of our non-healthcare GPO operations to exclude the impact of the omnia transaction, including associated revenues sold, imputed interest expense, and cash taxes paid on proceeds received from our non-gap profitability measures moving forward.

Craig McKasson: We will present our adjusted EBITDA, adjusted net income, adjusted earnings per share, and free cash flow on a comparable basis excluding these impacts from the omnia transaction effective in fiscal 2025. With these key assumptions and changes in mind, our specific fiscal 2025 Folier Guidance Ranges are as follows.

Craig McKasson: Supply chain services segment revenue, excluding direct sourcing products revenue of 560 to 610 million is comprised of net administrative fees revenue of 495 to 525 million. And software license, other services and support revenue of 65 to 85 million, which now includes remitra.

Craig McKasson: Our net administrative fees revenue will continue to include revenue from Omnina, and our guidance includes 60 to 75 million in revenue related to this non-health care member purchasing.

Craig McKasson: We expect adjusted EBITDA to be in the range of 235 to 255 million and adjusted earnings per share to be in the range of $1.16 to $1.28. Our guidance is also based on the following assumptions and expectations. In our GPO business, we expect current number utilization levels to continue with growth and growth administrative fees driven by further penetration of existing members spend and the addition of new GPO members.

Craig McKasson: We continue to anticipate aggregate blended member fee share will increase to the low 60 percent range for fiscal 2025 on a full year basis.

Craig McKasson: While we benefited from certain member termination payments during fiscal 2024, we do not have any of these types of payments factored into our fiscal 2025 guidance.

Craig McKasson: Also in our supply chain services segment, we expect software license, other services and support revenue growth to be primarily driven by the continued adoption and expansion of our supply chain co-management business.

Craig McKasson: From a cadence perspective, we expect our supply chain services segment revenue to be slightly more back half-weighted.

Craig McKasson: In our performance services business, we finished fiscal 2024 better than expected.

Craig McKasson: We continue to expect double-digit growth in our applied sciences and clinical decision support businesses.

Craig McKasson: From a cadence perspective, we expect segment revenue to be slightly more back half-weighted with the first quarter being the lowest point for the year.

Craig McKasson: Related to profitability, given the nature of the GPO business, and fact that there are not many variable costs associated with administrative fee share changes in the business, we expect the decrease in net administrative fees revenue in fiscal 2025, have a comparable impact on our profitability measures.

Craig McKasson: However, we take our fiduciary responsibility very seriously, and as a matter of normal practice, we are always carefully managing our cost structure.

Craig McKasson: In addition, and as I mentioned earlier, we will now exclude the impact of the omnia transaction from our non-gap profitability measures.

Craig McKasson: Lastly, from a cadence perspective, we expect to achieve approximately 45% of our adjusted EVA guidance in the first half of the fiscal year, with the first quarter being our low water mark, given the margin profile associated with our anticipated revenue in the first quarter of the year. In the second half of the year, we expect margin to be favorable compared to the first half, primarily given the expected timing of enterprise license agreements.

Craig McKasson: Related to cash, we expect free cash flow to approximate 45% to 55% of adjusted EVA for the full year.

Craig McKasson: Thanks again for joining us today.

Operator: We appreciate your time and will now open the call for question.

Operator: We will now begin the question and answer session to ask a question you may press star then one on your telephone keypad.

Operator: If you were using a speaker phone, please pick up your handset before pressing the keys.

Operator: If at any time your question has been addressed and you would like to withdraw your question, please press star then two.

Eric Percher: The first question comes from Eric Parcher with Neffron Research.

Eric Percher: Please go ahead.

Eric Percher: Thank you and first I'll say Craig congrats on your retirement here.

Craig McKasson: There are questions with respect to expectations for next year and what I'd like to ask is for some assistance in the EBITDA margin expectation across the segments and I'll ask you to speak to the underlying margin expectations versus any impact from the reclassification.

Craig McKasson: Sure.

Craig McKasson: Eric described thanks for the question.

Craig McKasson: As we think about the EBITDA margin profiles for our business in fiscal 2025, we would anticipate the supply chain services segment to be in the low to mid 40s in terms of the EBITDA margin percentage and that'll be we would anticipate fairly consistent across the fiscal year.

Eric Percher: That's helpful.

Eric Percher: And your visibility into the margin relative to the prior two years, how do you feel coming into the year?

Craig McKasson: I think as we come into the year, we feel very good about the supply chain services.

Craig McKasson: We do think that we have factored in as we publicly and continue to disclose the impact of the renewals that we'll be doing in the GPO as part of our supply chain services segment.

Craig McKasson: So I think we feel good about that on the performance services side.

Craig McKasson: I think we feel good about the margin expectations.

Craig McKasson: As I always say, there is periodic variability throughout a year and through quarters based on the timing of when enterprise licenses and or certain consulting engagements occur.

Craig McKasson: But on a broad basis, we're heading into fiscal 2025 with similar visibility to the guidance that we've put out for the performance services segment.

Eric Percher: Thank you.

Stephanie Davis: The next question comes from Stephanie Davis with Barclays.

Stephanie Davis: Please go ahead.

Stephanie Davis: Hey guys, thank you for taking my question and Craig.

Stephanie Davis: Congrats on the retirement that you are going to be very sore and be missed.

Stephanie Davis: I appreciate that Stephanie.

Stephanie Davis: Thank you.

Stephanie Davis: I wanted to follow up on the guidance as well, just because there's a lot of moving pieces.

Stephanie Davis: There was a lot of upside in this quarter and I know there can be some lumpiness and performance services and then you hold out some expectations from bookings for that in the guidance.

Stephanie Davis: How much of the before QB and soft FY25 is just from from kind of timing expectations or pull forward versus many some underlying changes in the environment.

Stephanie Davis: Yeah, it's a great question, Stephanie.

Craig McKasson: First of all, I wouldn't say it was per se a pull forward, but what I would say is that the team was very successful in terms of actually getting engagements through the finish line that we're in the pipeline. To put a perspective on that, kind of in the ballpark of $15 million of performance actually came through in the fourth quarter that we otherwise thought it might have come into 2025.

Craig McKasson: And so that is impacting a the growth rates that we're anticipating on a year over your basis and secondarily given some of those we would have anticipated might have slipped into Q1.

Craig McKasson: That is why we do think the first quarter is going to be has you know obviously the teams are going to do everything they can to overcome it but has the potential to be a bit lighter.

Craig McKasson: And that is consistent again with the past two years in terms of what we've seen in the first quarter from performance services.

Stephanie Davis: Now, I guess kind of following up on that one, we have seen a lot of hospital-facing names, see a better demand environment.

Stephanie Davis: And then on more of the, guess like the broader GPO business, we've heard some headwinds on the medical distribution side, right?

Stephanie Davis: Post COVID-19 normalization primary care channels often is, is there any background you can give us on what you're thinking about the demand environment to frame this guidance because it does feel like a little bit of a departure from some of your peers.

Mike Alkire: Yeah, a couple of things, Stephanie, this is Mike.

Mike Alkire: At a macro level utilization of the health system, you know, we still think is flat to maybe up single digits.

Mike Alkire: So we do believe there's still the tail one that's occurring.

Mike Alkire: Obviously there's a lot of regionality that exists there.

Mike Alkire: In terms of contract penetration. So, you know, the tools and the technologies that we've been developing, we believe will continue to provide growth for us, you know, in terms of driving higher levels of contract penetration.

Mike Alkire: You've heard us say this multiple times in this call.

Mike Alkire: Those organizations that are more highly, you know, penetrated from a contract standpoint of those that, you know, obviously are performing better.

Mike Alkire: So we're going to continue to get that out that message out to the market.

Mike Alkire: We're seeing a strong demand for our co sourcing co management capabilities to really, really, really excited about that.

Mike Alkire: When we're in actually providing those services, Stephanie, as you know, it allows us to drive higher levels of penetration and also bring to the four of the opportunity to leverage our tools and technologies in a very unique way.

Mike Alkire: So, you know, we see that as more opportunities.

Mike Alkire: So, again, we're seeing, you know, those as opportunities for us.

Mike Alkire: And we want to continue to, you know, provide the services into those into those areas.

Stephanie Davis: All right, very helpful.

Stephanie Davis: I'm going to hop back in the cue, but I hope someone else asks the questions that I'll fire.

Stephanie Davis: Thank you guys.

Stephanie Davis: Thank you.

Michael Cherny: The next question comes from Michael, Cherny with Learing Partners.

Michael Cherny: Please go ahead.

Michael Cherny: Great.

Michael Cherny: Thank you.

Michael Cherny: This is Dan Clark on for Mike.

Michael Cherny: Just wanted to start, you know, based on sort of where you are in your ongoing renewals with your members, you know, should we think EBITDA is going to grow in fiscal year 26 as you continue to reset?

Craig McKasson: You're not admin fee share.

Craig McKasson: Thank you.

Craig McKasson: So as we're continuing to go through this reset, I do look at it.

Craig McKasson: It's an opportunity for us to continue to sell our broader capabilities.

Craig McKasson: Great.

Craig McKasson: Yeah, thanks Mike.

Craig McKasson: Relative to the question that I think as you might expect, I would say today we're establishing our fiscal 2025 guidance. We're not actually giving 26 guidance at this point in time, but, but to provide some color around your question consistent with remarks that I previously publicly made. We do anticipate that our administrative fee share for fiscal 2025 will be in the low 60% range.

Craig McKasson: We are going to continue to do renewals and have been that will impact 25 and into 26.

Craig McKasson: We would anticipate that at the end of the day, our fee share will rise within the 60% range and that's consistent with prior commentary.

Craig McKasson: So that clearly has an implication on EBITDA growth in fiscal 2026.

Craig McKasson: But at that point, we do believe that the business will have gone through its reset and will be well positioned and poised to regain kind of profitability growth on a prospect, on the basis moving forward.

Craig McKasson: Got it.

Craig McKasson: Thank you.

Craig McKasson: And then as you sort of are talking with your customers, as you go with this renewal process, can you sort of talk about the performance services, you know, a catch rate opportunities that you have, like how are those conversations going with folks as you bring them in for annals?

Craig McKasson: Thank you.

Craig McKasson: Yeah, first of all, thank you for the question.

Craig McKasson: We are hyper focused on this cross-selling plan. We actually put it as part of our annual objectives this year.

Craig McKasson: So the opportunities obviously are to help them sort of advance the way they provide care in their communities.

Craig McKasson: Our AI and machine learning capabilities, helping the health systems with the way they look at prior authorization, the way they do their ATC documentation.

Craig McKasson: We look at, you know, those are the opportunities to bring real value to those health systems that in some cases are not taking advantage of today.

Craig McKasson: Obviously we will be serving up other capabilities for those that are probably mid-size and smaller, the ability to help them with co-managing those supply chain capabilities.

Craig McKasson: We will be continuing to demonstrate the value that we can bring to the table to help them be more efficient in the way they do supply chain.

Craig McKasson: But those are just a few of the areas that will continue to focus on as we, you know, have these discussions.

Craig McKasson: And this is Craig, the only thing I would add is that we really do have sort of a one-premure mindset as we're going through this renewal process.

Craig McKasson: And so it is all about an integrated deal team getting together, thinking about the opportunity set across, clearly the GPO renewal, but all the margin improvement services and capabilities that we can deliver through performance services.

Craig McKasson: We're obviously not going to be successful on 100%, but they are teed up in that way, and there's a big opportunity for future growth through that approach.

Craig McKasson: Great, thank you.

Jessica Tassan: The next question comes from Jessica with Piper Sandler.

Jessica Tassan: Please go ahead.

Jessica Tassan: Hi guys, thanks for taking the question and congratulations on your retirement, Craig.

Jessica Tassan: I guess I'll maybe kick off where Steph left off.

Jessica Tassan: So congratulations on the huge win with Allspire.

Jessica Tassan: I guess can you help us to understand maybe what were the circumstances surrounding that win?

Jessica Tassan: Is that contract in line with the 50% of August 2020 restructuring in terms of fee share?

Jessica Tassan: And then maybe just, are there any nuances to co-sourcing and co-management versus a typical GPO engagement?

Jessica Tassan: Thanks.

Mike Alkire: Yeah, so just Allspire.

Mike Alkire: It was a RFI RP process, obviously.

Mike Alkire: I was able to get a little bit of feedback from the team in terms of what was our key differentiation. I think overall it was about the value that we could provide to the health systems that are part of Allspire.

Mike Alkire: That's number one.

Mike Alkire: Number two, I think they were very, very interested in our technology and the capabilities that we can bring to help them identify where there's opportunities for savings, where there's opportunities for contract penetration, and then most importantly, for Allspire to be able to have a broad view across all those health systems in terms of what's happening from a pricing standpoint for products, pricing of products.

Mike Alkire: And so I think those were some of the key notes that I heard that were the reasons that they select.

Mike Alkire: Premier.

Craig McKasson: Yeah, and this is Craig.

Craig McKasson: The only thing I would add because it piggybacks right onto the response I had on my last question is that was very much a one premier go-to-market approach where we we have won the GPO but all the technology is pulling through in addition for all the reasons that might just articulate.

Jessica Tassan: Okay, awesome.

Craig McKasson: That's really helpful and then just my second question is I wanted to be clear on the fourth quarter results and so the 25 million hit or of one time kind of early term fees that hit in the fourth quarter and I'm curious just were those contemplated in your FY 24 guidance.

Craig McKasson: I know there's no such there are no such fees in the 25 guidance but was that 25 in your 24 guidance.

Craig McKasson: Thanks.

Craig McKasson: The 25 was not in our fiscal 2024 guidance when we established the guidance for the supply chain.

Craig McKasson: We obviously didn't know about those.

Craig McKasson: We did talk on the third quarter about one termination that impacted our third quarter results.

Craig McKasson: These two occurred in the fourth quarter.

Craig McKasson: And so impacted, you know, I'll say in the quarter the performance but no they were not contemplated in the guidance expectations for the year.

Craig McKasson: Got it.

Craig McKasson: Thank you again.

Craig McKasson: Thank you.

Richard Close: The next question comes from Richard close with can a core genuity.

Richard Close: Please go ahead.

Richard Close: Yeah, thanks for the questions.

Richard Close: Congratulations, Craig as well.

Richard Close: Enjoy.

Richard Close: A lot of my questions have been asked already but like maybe go into the co management, you know, talk a little bit more about the pipeline of opportunities and I was wondering if you could just give some examples of like the uplift you get, you know, from entering into a co management.

Richard Close: That would be helpful and better understanding.

Richard Close: Thank you, Richard.

Mike Alkire: And I appreciate the question.

Mike Alkire: So first of all, as you know, our health systems are continuing to experience issues with, you know, high cost labor and then obviously, you know, with some inflation issues.

Mike Alkire: So Richard, I'll take it back up one, one level and say that we go in with an approach of, you know, doing total transformation around how we're driving savings.

Mike Alkire: So we're bringing it together.

Mike Alkire: The team of folks to talk to our health care systems based upon the data that we see around where there are opportunities for improvement.

Mike Alkire: And so there could be high level advisory capability that are necessary.

Mike Alkire: There could be technology needs that are necessary.

Mike Alkire: But at the end of the day, it's really how do we help the health systems bring out take, take out cost and improve the quality of care that they are providing.

Mike Alkire: Like Matt, look, they've got some areas that, you know, they'd like to shore up from a distribution standpoint, from a procurement standpoint, all phases of supply chain.

Mike Alkire: And so, you know, as we're going through those engagements, we'll identify where those opportunities are and what's the most beneficial structure for those organizations.

Mike Alkire: And then to get your question, you know, what is the upside?

Mike Alkire: Obviously, there's revenue associated with providing that service.

Mike Alkire: That's number one. Number two, there's obviously opportunities to potentially bring in our technology and capabilities around automation that can actually help them become more efficient in the long term.

Mike Alkire: And then number three, obviously, there's that opportunity to drive higher levels of contract penetration.

Mike Alkire: And so not only penetration from contracts from our national GPO, but also contracts that are more regional things around purchase services and those kinds of areas.

Mike Alkire: So those are probably be the three or four areas that will continue to, you know, bring additional value as we think about, you know, doing more co management work with those help.

Mike Alkire: Law Systems.

Richard Close: Okay, and then a follow up.

Richard Close: You appreciate the details on the terminations.

Craig McKasson: As you look at the book that part of the book that has yet to renew, is there any, you know, any additional details you can provide in terms of how you're thinking about that are the renewals.

Craig McKasson: You know, those individual customers, any different than people that have, you've already gone through the process with or, you know, are you expecting similar, you know, renewal rates in this part of the, I guess, book.

Craig McKasson: Yeah, this is Craig.

Craig McKasson: I'll start in the Mike and Ed color.

Craig McKasson: First and foremost, I wouldn't say there are distinctions between the composition of the members that have been renewed now and will continue to be renewed in the future.

Craig McKasson: I will say we through this process.

Craig McKasson: Yes, we have had a couple of terminations, but I'm going to come back to we had 90% 97% retention in our GPO this past year. We continue to have very strong retention rates.

Richard Close: Okay, thank you.

Richard Close: Congratulations again, Craig.

Richard Close: Thanks.

Operator: Thank you.

Operator: I appreciate it.

Operator: Disconclusion question and answer session and premieres fiscal 2024 fourth quarter and full year conference call.

Operator: Thank you for attending today's presentation.

Operator: You may now disconnect.

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