Q4 2025 Premier Inc Earnings Call

Conference Operator: Good morning and welcome to Premier Inc.'s fiscal 2025 fourth quarter and full-year conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star, then zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Ben Krasinski, Senior Director, Investor Relations. Please go ahead.

Speaker #2: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on a touchtone phone.

Speaker #2: To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Ben Krasinski.

Speaker #2: Senior Director, Investor Relations. Please go ahead.

Speaker #3: 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 Glenn Coleman, our Chief Administrative and Financial Officer.

Ben Krasinski: Thank you and welcome to Premier Inc.'s fiscal 2025 fourth quarter and full-year conference call. Our speakers this morning are Michael Alkire, Premier Inc.'s President and CEO, and Glenn Coleman, our 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 Investors 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. 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 2025 Form 10-K, which we expect to file soon.

Speaker #3: 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 dot premiere inc dot com.

Speaker #3: 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. Actual results could differ materially from those discussed today.

Speaker #3: 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.

Speaker #3: We encourage you to review the detailed forward-looking statements and risk factor disclosures in these reports. Also, during this presentation, we will refer to adjusted and other non-GAAP financial measures, including free cash flow, to evaluate our business.

Ben Krasinski: 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-GAAP financial measures, including free cash flow, to evaluate our business. Information on why we use these measures, in addition to GAAP financial measures, and reconciliations of these measures to our GAAP financial measures, are included in our earnings release and in the appendix of the supplemental presentation accompanying this call. Information on our non-GAAP financial measures will also be included in our fiscal 2025 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 Michael Alkire.

Speaker #3: 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 #3: 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 #3: I will now turn the call over to Mike Alkire.

Speaker #4: Thanks, Ben. Good morning, everyone, and thank you for joining us for Premier's fiscal year 2024 fourth quarter and full year earnings call. Glenn will share a more detailed review of our results later in the call.

Michael Alkire: Thanks, Ben. Good morning, everyone, and thank you for joining us for Premier Inc.'s fiscal year 2025 fourth quarter and full-year earnings call. Glenn Coleman will share a more detailed review of our results later in the call. Overall, I am pleased with our strong finish to the year. Our overall revenue and profitability exceeded expectations, largely due to better-than-anticipated performance in the Supply Chain Services segment, where we continue to see better contract penetration and ramp-up of new member spend. In addition, we also continue to return meaningful capital to stockholders through our quarterly dividends and the completion of our $200 million accelerated share repurchase program. From a macro perspective, we continue to see mounting financial pressures for many of our member hospitals and health systems, both in the current environment and looking ahead.

Speaker #4: But overall, I'm pleased with our strong finish to the year. Our overall revenue and profitability exceeded expectations, largely due to better-than-anticipated performance in the supply chain services segment.

Speaker #4: We continue to see better contract penetration and ramp-up of new member spend. In addition, we also continue to return meaningful capital to stockholders through our quarterly cash dividend and the completion of our $200 million accelerated share repurchase program.

Speaker #4: From a macro perspective, we continue to see mounting financial pressures for many of our member hospitals and health systems, both in the current environment and looking ahead.

Speaker #4: These broader market dynamics are accelerating demand for the kind of value-based strategic support that we uniquely provide. Significant headwinds, such as reimbursement cuts, are forcing health systems to rethink their cost structures and long-term sustainability.

Michael Alkire: These broader market dynamics are accelerating demand for the kind of value-based strategic support that we uniquely provide. Significant headwinds, such as reimbursement cuts, are forcing health systems to rethink their cost structures and long-term sustainability. Many of our members are proactively moving beyond short-term cost containment towards structural changes that strengthen operational resilience and unlock long-term value. We are well-positioned to help them on that journey. The breadth of our GPO portfolio, the depth of our advisory expertise, and the promise of our technology are differentiating us in the market, enabling us to deliver measurable impact that scale and deepen our strategic partnerships across the health system landscape. This is evident in the fact that we recently signed four very large advisory deals and have a robust pipeline heading into fiscal 2026.

Speaker #4: Many of our members are proactively moving beyond short-term cost containment towards structural changes that strengthen operational resilience and unlock long-term value. We are well positioned to help them on that journey.

Speaker #4: The breadth of our GPO portfolio, the depth of our advisory expertise, and the promise of our technology are differentiating us in the market, enabling us to deliver measurable impact that scales and deepens our strategic partnerships across the health system landscape.

Speaker #4: This is evident in the fact that we recently signed four very large advisory deals and have a robust pipeline heading into fiscal 2026. As a result of our efforts to reinvigorate our performance services segment and the new talent that we have brought into the company, we are seeing meaningful momentum in our advisory business.

Michael Alkire: As a result of our efforts to reinvigorate our Performance Services segment and the new talent that we have brought into the company, we are seeing meaningful momentum in our advisory business, a strong validation of the differentiated expertise and capabilities we bring to our members. These health systems are turning to Premier Inc. for enterprise-wide transformation. In June, we were excited to announce the acquisition of Alumacare, a strategic move that significantly strengthens our ability to deliver real-time insights at the point of care, leveraging our AI capabilities. This solution not only complements our existing clinical decision support offering, but also expands our addressable market, especially as providers face mounting pressure to improve clinical and financial performance simultaneously. Importantly, our pipeline continues to build, and we are encouraged by the level of strategic engagement we are seeing. These are not one-off projects.

Speaker #4: A strong validation of the differentiated expertise and capabilities we bring to our members. These health systems are turning to Premier for enterprise-wide transformation. In June, we were excited to announce the acquisition of AlumaCare, a strategic move that significantly strengthens our ability to deliver real-time insights at the point of care, leveraging our AI capabilities.

Speaker #4: This solution not only complements our existing clinical decision support offering but also expands our addressable market, especially as providers face mounting pressure to improve clinical and financial performance simultaneously.

Speaker #4: Importantly, our pipeline continues to build, and we're encouraged by the level of strategic engagement we're seeing. These are not one-off projects; our members are increasingly recognizing the need for fundamental change.

Michael Alkire: Our members are increasingly recognizing the need for fundamental change. In our Supply Chain Services segment, our core GPO visits remain strong. We are seeing increased demand for members looking for margin improvement solutions amid ongoing cost pressures, reimbursement uncertainty, and potential tariff impacts. We continue to focus on delivering stability and long-term value creation. Our pharmacy and food portfolios continue to serve as key differentiators within our GPO. Both are delivering steady, meaningful growth, not only among our current members, but also by attracting non-Premier Inc. organizations seeking distinctive, high-impact savings with built-in supply assurance. These categories are proving to be powerful entry points, and based on historical performance, we believe they are strong leading indicators of broader engagement across our portfolio. This momentum reinforces the critical value we deliver in helping members and future partners navigate today's operational and financial challenges.

Speaker #4: In our supply chain services segment, our core GPO business remains strong. We're seeing increased demand for members looking for margin improvement solutions amid ongoing cost pressures.

Speaker #4: Reimbursement uncertainty and potential tariff impacts: We continue to focus on delivering stability and long-term value creation. Our pharmacy and food portfolio continues to serve as key differentiators within our GPO.

Speaker #4: Both are delivering steady, meaningful growth, not only among our current members but also by attracting non-Premier organizations seeking distinctive, high-impact savings with built-in supply assurance.

Speaker #4: These categories are proving to be powerful entry points, and based on historical performance, we believe they are strong leading indicators of broader engagement across our portfolio.

Speaker #4: This momentum reinforces the critical value we deliver in helping members and future partners navigate today's operational and financial challenges. Sticking together, the strength of our business, the commitment of our team, and the growing strategic needs of our members give us confidence in our ability to drive growth moving forward.

Michael Alkire: Taken together, the strength of our business, the commitment of our team, and the growing strategic needs of our members give us confidence in our ability to drive growth moving forward. With that, I will now turn the call over to Glenn Coleman for a deeper dive into our financial results and outlook for the year ahead.

Speaker #4: With that, I'll now turn the call over to Glenn for a deeper dive into our financial results and outlook for the year ahead.

Speaker #5: Thanks, Mike. As a reminder, all results discussed during this call reflect continuing operations and do not reflect S2S Global, which was divested in October 2024.

Glenn Coleman: Thanks, Mike. As a reminder, all results discussed during this call reflect continuing operations and do not reflect S2S Global, which was divested in October 2024. In addition, we continue to transition and wind down the remaining Contigo Health assets by the end of this calendar year. As such, actual results for the quarter include contributions from the Contigo Health business. However, we are continuing to exclude the results of Contigo Health in our guidance and our discussion of revenue and adjusted profitability for the fourth quarter and full year on today's call. Now turning to our financial results. Total full-year revenue, adjusted EBITDA, and adjusted EPS exceeded our expectations.

Speaker #5: In addition, we continue to transition and wind down the remaining Contigual Health assets by the end of this calendar year. As such, after our results for the quarter, we include contributions from the Contigual Health business; however, we're continuing to exclude the results of Contigual Health in our guidance and our discussion of revenue and adjusted profitability for the fourth quarter and full year on today's call.

Speaker #5: Now, turning to our financial results. Total full-year revenue, adjusted EBITDA, and adjusted EPS exceeded our expectations. We closed out fiscal year 2025 on a positive note, with net revenue of $986 million being $11 million above the midpoint of the guidance range, while adjusted EPS of $1.54 was $0.11 above the high end of our guidance range.

Glenn Coleman: We closed out fiscal year 2025 on a positive note, with net revenue of $986 million, being $11 million above the midpoint of the guidance range, while adjusted EPS of $1.54 was $0.11 above the high end of our guidance range. Moving to our fourth quarter results, net revenue of $258 million increased 1% on a sequential basis, but declined from the prior year period, largely driven by higher fee share from contract renewals, which are now mostly completed. GAAP net income and EPS from continuing operations of $18 million are $0.22 per share, decreased from the prior year period, mainly due to lower revenue in the current year quarter. Adjusted EBITDA of $71 million was flat on a sequential basis and translated to a margin of 27.6%. This was better than expected, as the revenue outperformance in Supply Chain Services had high margin flow-through to profitability.

Speaker #5: Moving to our fourth quarter results, net revenue of $258 million increased 1% on a sequential basis but declined from the prior year period, largely driven by higher fee share from contract renewals, which are now mostly completed.

Speaker #5: GAAP net income and EPS from continuing operations of $18 million are $0.22 per share, decreased from the prior year period, mainly due to lower revenue in the current year quarter.

Speaker #5: Adjusted EBITDA of $71 million was flat on a sequential basis and translated to a margin of 27.6%. This was better than expected, as the revenue outperformance in supply chain services had high margin flow-through to profitability.

Speaker #5: Adjusted EPS of $0.46 was well ahead of our expectations due to better-than-expected revenue in our supply chain services segment and a lower share count.

Glenn Coleman: Adjusted EPS of $0.46 was well ahead of our expectations due to better than expected revenue in our Supply Chain Services segment and a lower share count. In mid-August, we completed our $200 million accelerated share repurchase program, bringing the total amount of common stock repurchase to $800 million under our $1 billion authorization, which expired on June 30th. Turning to segment results, Supply Chain Services continued to perform above expectations despite the increase in the aggregate blended fee share in the quarter. This increase was partially offset by continued growth in gross administrative fees, which grew over 3% in fiscal year 2025, driven by higher contract penetration with existing members and onboarding of new members.

Speaker #5: Amid August, we completed our $200 million accelerated share repurchase program, bringing the total amount of common stock we purchased to $800 million under our $1 billion authorization, which expired on June 30.

Speaker #5: Turning to segment results, supply chain services continued to perform above expectations, despite the increase in the aggregate blended fee share in the quarter. This increase was partially offset by continued growth in gross administrative fees, which grew over 3% in fiscal year 2025, driven by higher contract penetration with existing members and the onboarding of new members.

Speaker #5: In addition, we continue to see broad growth across key categories such as med-surg, pharmacy, food, and purchase services. We've also made meaningful progress in contract negotiations with GPO members that were part of the August 2020 restructure.

Glenn Coleman: In addition, we continue to see broad growth across key categories such as med surge, pharmacy, food, and purchase services. We have also made meaningful progress in contract negotiations with GPO members that were part of the August 2020 restructure. As of June 30th, contracts representing less than 20% of this group's fees remain, with the majority expected to be addressed in fiscal year 2026. As such, we anticipate fee share will increase to the mid-60% range in fiscal year 2026 and will stabilize in the high 60s on an annualized basis once we have addressed all renewals. Lastly, given we are on the back end of renewals, this will be our final report on the process. Also in this segment, other Supply Chain Services revenue was driven by 17% growth in our Supply Chain Co-Management business, resulting from new engagements with members.

Speaker #5: As of June 30, contracts representing less than 20% of this group's fees remain, with the majority expected to be addressed in fiscal year 2026.

Speaker #5: As such, we anticipate fee share will increase to the mid-60% range in fiscal year 2026 and will stabilize in the high 60s on an annualized basis once we've addressed all renewals.

Speaker #5: Lastly, given we are on the back end of renewals, this will be our final report on the process. Also in this segment, other supply chain services revenue was driven by 17% growth in our supply chain co-management business, resulting from new engagements with members.

Speaker #5: In addition, our digital supply chain business grew 15% due to further expansion of our solutions to providers and suppliers. Both of these areas represent growth opportunities for us in fiscal year 2026 and beyond.

Glenn Coleman: In addition, our digital supply chain business grew 15% due to further expansion of our solutions to providers and suppliers. Both of these areas represent growth opportunities for us in fiscal year 2026 and beyond. Moving to the Performance Services segment, we delivered another quarter of sequential improvement in our advisory business. However, it was lower compared to the prior year period, as we are still working to rebuild our sales funnel, but are very encouraged by the large engagements that we have recently won. We also have a robust pipeline of additional opportunities that we are working to close and expect our advisory business to return to double-digit growth in fiscal year 2026. In the fourth quarter, we also had lower enterprise license revenue due to a tough comp to the prior year quarter.

Speaker #5: Moving to the performance services segment, we delivered another quarter of sequential improvement in our advisory business. However, it was lower compared to the prior year period, as we're still working to rebuild our sales funnel. But we are very encouraged by the large engagements that we've recently won.

Speaker #5: We also have a robust pipeline of additional opportunities that we're working to close and expect our advisory business to return to double-digit growth in fiscal year 2026.

Speaker #5: In the fourth quarter, we also had lower enterprise license revenue due to a tough comp to the prior year quarter. Shifting to the balance sheet, in fiscal year 2025, free cash flow was above our expectations, amounting to $181 million, which translated to a free cash flow conversion of 69%.

Glenn Coleman: Shifting to the balance sheet, in fiscal year 2025, free cash flow was above our expectations, amounting to $181 million, which translated to a free cash flow conversion of 69%. Year-over-year, free cash flow decreased $48 million, mainly due to higher performance-related compensation payments and the timing of payments to Omnia. These are partially offset by cash received from the derivative lawsuit settlement and a dividend distribution from one of our minority investments in the current year. In fiscal year 2026, we expect free cash flow conversion in the range of 70% to 80%, and we continue to anticipate that our cash tax rate will be less than 5% over the next five years. Cash and cash equivalents totaled $84 million as of June 30th, and we ended the quarter with an outstanding balance of $280 million on our credit facility.

Speaker #5: Year over year, free cash flow decreased by $48 million, mainly due to higher performance-related compensation payments and the timing of payments to Omnia. These were partially offset by cash received from the derivative lawsuit settlement and a dividend distribution from one of our minority investments in the current year.

Speaker #5: In fiscal year 2026, we expect free cash flow conversion in the range of 70% to 80%. Additionally, we continue to anticipate that our cash tax rate will be less than 5% over the next five years.

Speaker #5: Cash and cash equivalents totaled $84 million as of June 30, and we ended the quarter with an outstanding balance of $280 million on our credit facility.

Speaker #5: With respect to capital deployment, we continue to remain disciplined and focused on taking a balanced approach. As I mentioned earlier, we recently completed the $200 million accelerated share repurchase program.

Glenn Coleman: With respect to capital deployment, we continue to remain disciplined and focused on taking a balanced approach. As I mentioned earlier, we recently completed the $200 million accelerated share repurchase program. In fiscal year 2025, our quarterly dividends totaled $77 million and represented a nearly 4% dividend yield. Going forward, our priority on capital deployment will be driving revenue growth through organic investments, as well as potential tuck-in acquisitions to further enhance our core offerings in the marketplace. As Mike mentioned earlier, we recently acquired Alumacare to further expand our clinical decision support capabilities. Lastly, we made the final payment associated with the termination of a tax receivable agreement in connection with our August 2020 restructure. These payments have been approximately $100 million per year, and beginning July 1st, 2025, they no longer negatively impact our free cash flow, providing us more capacity to support our long-term growth plans.

Speaker #5: In fiscal year 2025, our quarterly dividends totaled $77 million and represented a nearly 4% dividend yield. Going forward, our priority on capital deployment will be driving revenue growth through organic investments, as well as potential tuck-in acquisitions to further enhance our core offerings in the marketplace.

Speaker #5: As Mike mentioned earlier, we recently acquired AlumaCare to further expand our clinical decision support capabilities. Lastly, we made the final payment associated with the termination of the tax receivable agreement in connection with our August 2020 restructure.

Speaker #5: These payments have been approximately $100 million per year, and beginning July 1, 2025, they will no longer negatively impact our free cash flow, providing us with more capacity to support our long-term growth plans.

Speaker #5: Let me now turn to our outlook. At a high level, I would generally characterize fiscal year 2026 as a year of expected stabilization and transition as we finalize the GPO contract renewal process.

Glenn Coleman: Let me now turn to our outlook. At a high level, I would generally characterize fiscal year 2026 as a year of expected stabilization and transition as we finalize the GPO contract renewal process. As such, we expect to return to positive growth for total net revenue, adjusted EBITDA, and adjusted EPS in fiscal year 2027. With that said, our fiscal year 2026 guidance ranges are as follows: total net revenue of $940 million to $1 billion. Our segment guidance assumed in this range is Supply Chain Services revenue of $590 million to $620 million and Performance Services revenue of $350 million to $380 million. We also expect adjusted EBITDA to be in the range of $230 million to $245 million and adjusted EPS of $1.33 to $1.43.

Speaker #5: As such, we expect to return to positive growth for total net revenue, adjusted EBITDA, and adjusted EPS in fiscal year 2027. With that said, our fiscal year 2026 guidance ranges are as follows.

Speaker #5: Total net revenue of $940 million to $1 billion. Our segment guidance assumed in this range is supply chain services revenue of $590 million to $620 million and performance services revenue of $350 million to $380 million.

Speaker #5: We also expect adjusted EBITDA to be in the range of $230 million to $245 million and adjusted EPS of $1.33 to $1.43. In terms of operating expense, we took meaningful steps to reduce our expenses by $40 million on an annual run-rate basis in the fourth quarter, which is expected to result in a slight year-over-year reduction in fiscal year 2026 operating expenses.

Glenn Coleman: In terms of operating expense, we took meaningful steps to reduce our expenses by $40 million on an annual run-rate basis in the fourth quarter, which is expected to result in a slight year-over-year reduction in fiscal year 2026 operating expenses, despite reinvesting some of these savings back into faster-growing areas of our business. In terms of our quarterly cadence, we expect lower revenue and profitability in the first half of the year, mainly due to the ramp-up of headcount to support the recent success of our advisory business. Importantly, we anticipate this impact will be transitory and that margins will improve as we begin to recognize the associated revenue later in the year.

Speaker #5: Despite reinvesting some of these savings back into faster-growing areas of our business, we expect lower revenue and profitability in the first half of the year. This is mainly due to the ramp-up of headcount to support the recent success of our advisory business.

Speaker #5: Importantly, we anticipate this impact will be transitory and that margins will improve as we begin to recognize the associated revenue later in the year.

Speaker #5: Although we don't typically provide quarterly guidance given this dynamic, we're providing the following guidance for Q1: total net revenue of between $230 million and $245 million, adjusted EBITDA of $45 million to $50 million, and adjusted EPS of $0.27 to $0.32.

Glenn Coleman: Although we do not typically provide quarterly guidance, given this dynamic, we are providing the following guidance for Q1: total net revenue of between $230 million and $245 million, adjusted EBITDA of $45 million to $50 million, and adjusted EPS of $0.27 to $0.32. In summary, we finished the year on a positive note as overall revenue and profitability exceeded our expectations for the year. This provides us momentum heading into fiscal year 2026. Second, Supply Chain Services continue to perform better than expected, and we are on the back end of the contract renewals for GPO members. We also continue to execute our plan to reinvigorate Performance Services with significant contract wins in advisory services and are building a robust pipeline of future opportunities. Third, we expect an inflection back to growth in key consolidated financial metrics in fiscal year 2027.

Speaker #5: In summary, we finished the year on a positive note, as overall revenue and profitability exceeded our expectations for the year. This provides us momentum heading into fiscal year 2026.

Speaker #5: Second, supply chain services continue to perform better than expected, and we're on the back end of the contract renewals for GPO members. We also continue to execute our plan to reinvigorate performance services with significant contract wins in advisory services, and we are building a robust pipeline of future opportunities.

Speaker #5: Third, we expect an inflection back to growth in key consolidated financial metrics in fiscal year 2027. We have a flexible balance sheet and meaningful cash flow that provide us with the ability to continue to grow our business and return value to stockholders.

Glenn Coleman: In closing, we have a flexible balance sheet and meaningful cash flow that provide us with the ability to continue to grow our business and return value to stockholders. We appreciate your time today and will now open the call for questions.

Speaker #5: We appreciate your time today and will now open the call for questions.

Speaker #2: We will now begin the question-and-answer session. To ask a question, you may press star then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

Conference Specialist: We will now begin the question and answer session. To ask a question, you may press star, then one on your touch-tone phone. If you are using a speakerphone, 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. At this time, we will pause momentarily to assemble our roster. The first question today comes from Michael Cherny with Lee Ring Partners. Please go ahead.

Speaker #2: If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. At this time, we will pause momentarily to assemble our roster.

Speaker #2: The first question today comes from Michael Turney with Lee Ring Partners. Please go ahead.

Speaker #6: Great. Thanks. Good morning. This is Dan Clark on for Mike. First question, just wanted to ask about customer buying behavior you saw in the supply chain services segment in the quarter.

Analyst (multiple, see below): Great, thanks. Good morning. This is Dan Clark on for Mike. First question, just wanted to ask about customer buying behavior you saw in the Supply Chain Services segment in the quarter. Were there any changes or any pull forward ahead of potential tariffs that you observed? What are you kind of seeing here generally?

Speaker #6: Was there any changes or any pull forward ahead of potential tariffs that you observed? And what do you kind of see here generally?

Speaker #4: Hey, this is Mike Alkire. We did not see a significant pull forward of any buying behavior in certain areas. You might have seen some increases, but that was primarily due to some regional issues and things like that. However, there was nothing significant due to the tariffs.

Michael Alkire: Hey, this is Michael Alkire. We did not see a significant pull forward of any buying behavior. In certain areas, you might have seen some increases, but that was primarily due to some regional issues and things like that, nothing significant due to the tariffs.

Speaker #6: Great. And then just a second question. On the momentum in the advisory business, can you just talk about a little more about what's driving that?

Analyst (multiple, see below): Great. Then just a second question on the momentum in the advisory business. Can you just talk a little more about what is driving that? How much of it is execution on your end, the collection of the services that you offer, and how much of it is just market-driven? Thanks.

Speaker #6: Is it how much of it is execution on your end, the collection of kind of the services that you offer, and how much of it is just sort of market-driven?

Speaker #6: Thanks.

Speaker #4: Yeah, so I'm going to introduce Dave Zito here in just a second. So, Dave's on the call. Dave is obviously the leader of Performance Services.

Michael Alkire: I am going to introduce Dave Zito here in just a second. Dave is on the call. Dave is obviously the leader of Performance Services. Let me just start by saying, I think the number one thing that is driving it is obviously we have hired Dave, and Dave has got a long history of a lot of success in advisory. With all that success and with what is happening with the market, the dynamics happening with the cost pressures, the labor issues, some of these issues associated with potential cuts in Medicaid, and those kinds of things, it is a market that needs some very, very strong solutions to help these health systems transform. The market is there. We have got a strong team led by Dave, and these guys have recently signed four very large deals.

Speaker #4: But let me just start by saying I think the number one thing that's driving it is obviously we've hired Dave, and Dave's got a long history of a lot of success in advisory.

Speaker #4: And with all that success, and with what's happening with the market, the dynamics occurring with cost pressures, the labor issues, some of these issues associated with potential cuts in Medicaid, and those kinds of things, it's a market that needs some very, very strong solutions to help these health systems transform.

Speaker #4: So the market's there. We've got a strong team led by Dave, and these guys have recently signed four very large deals. With that, Dave, I'll turn it over to you for some caller.

Michael Alkire: With that, Dave, I will turn it over to you for some color.

Speaker #7: Oh, thank you. I would just echo Mike's comments. I think it's one market for sure. I think people are concerned about the impacts of the one big, beautiful bill from a Medicaid perspective.

Dave Zito: Oh, thank you. I would just echo Mike's comments. I think it is one is market for sure. I think people are concerned about the impacts of the one big beautiful bill from a Medicaid perspective on both top and bottom lines. So they are trying to prepare for that. Secondly, I think it is we have the right capabilities, breadth and depth of resources, the technology enablement that Premier Inc.'s investment over time is a differentiator. Probably most importantly is that Premier Inc. is a trusted brand in the market in terms of delivering results for customers. So they look to us. They trust that we will help them address their concerns. So I think it is a combination of all those things that is allowing us to be successful.

Speaker #7: Although top and bottom line, they are trying to prepare for that. Secondly, I think we have the right capabilities, breadth and depth of resources. The technology enablement that Premier has invested in over time is a differentiator.

Speaker #7: And probably most importantly, Premier is a trusted brand in the market in terms of delivering results for customers. So, they look to us.

Speaker #7: They trust that we'll help them address their concerns. So I think it's a combination of all those things. It's allowing us to be successful.

Speaker #4: Thank you.

Michael Alkire: Thank you.

Speaker #2: The next question comes from Eric Purcher with Nephron Research. Please go ahead.

Conference Specialist: The next question comes from Eric Percher with Nephron Research. Please go ahead.

Speaker #8: Thank you. It's good to hear the progress on the admin fee renewal, now being below 20% for that August 20 group. Given that you said it's a final report you'd like to give here, can you provide us with a bit of color on the cadence over the year as you get to the stabilization level in the high 60s?

Analyst (multiple, see below): Thank you. It is good to hear the progress on the admin fee renewal now being below 20% for that August 2020 group. Given that you said it is a final report you would like to give here, can you provide us with a bit of color on the cadence over the year as you get to the stabilization level in the high 60s? Is it fair to expect that we may see more of that in the first half of the year versus the second half? Also, can you tell us what the underlying admin fee share growth assumption is for fiscal year 2026?

Speaker #8: Is it fair to expect that we may see more of that in the first half of the year versus the second half? And then also, can you tell us what the underlying admin fee share growth assumption is for fiscal year '26?

Speaker #4: Yeah, Eric, this

Glenn Coleman: Eric, this is Glenn Coleman. Thanks for the questions. Before I get into that, I just first want to highlight the outstanding quarter we had in Supply Chain Services. We actually beat our guidance midpoint by about $21 million on the top line, and it drove a significant beat on both our EBITDA and EPS. We were very pleased overall with how we ended up the year with Supply Chain Services, which was pretty consistent throughout the year. If I look at the components of our fee share, our gross administrative fees grew about 3% on a full-year basis. We saw growth year over year in all four quarters, with the largest being in the fourth quarter. We also saw growth in both acute and non-acute. The growth we are seeing across our portfolio, food, pharmacy, med surge, acute, non-acute, is very broad-based growth.

Speaker #9: Glenn. Thanks for the questions. Before I get into that, I just first want to highlight the outstanding quarter we had in supply chain services.

Speaker #9: We actually beat our guidance midpoint by about $21 million on the top line, and that drove a significant beat on both our EBITDA and EPS.

Speaker #9: So, we were very pleased overall with how we ended up the year with supply chain services, which was pretty consistent throughout the year. If I look at the components of our fee share, our gross administrative fees grew about 3% on a full-year basis.

Speaker #9: We saw growth year-over-year in all four quarters, with the largest being in the fourth quarter. We also saw growth in both acute and non-acute.

Speaker #9: So the growth we're seeing across our portfolio—food, pharmacy, med-surg, acute, non-acute—is very broad-based growth. And we're expecting that to continue heading into fiscal year 2026.

Glenn Coleman: We are expecting that to continue heading into fiscal year 2026. I would say on the GAAP side, with the increase we are seeing in contract penetration, more uptake on our surpassed contracts, we are expecting that 3% number to go up in 2026. Think of that as a 4% type number. On the fee share, we ended the year in 2025 in the low 60% range. That was consistent with our guidance. Based upon our 2026 guidance numbers, we are anticipating the fee share amount to go in the mid-60s range, and that will ramp up throughout 2026. Expect to see a slight increase throughout the year. By the end of 2026, we should be essentially complete with all of the 2020 restructured contracts.

Speaker #9: So, I would say on the GAAP side, with the increase we're seeing in contract penetration and more uptake on our surpassed contracts, we're expecting that 3% number to go up in 2026.

Speaker #9: So, think of that as a 4% type number. On the fee share, we ended the year in 2025 in the low 60% range. That was consistent with our guidance.

Speaker #9: Based upon our 2026 guidance numbers, we're anticipating the fee share amount to go in the mid-60s range, and that will ramp up throughout 2026.

Speaker #9: So, expect to see a slight increase throughout the year. By the end of 2026, we should be essentially complete with all of the 2020 restructured contracts.

Speaker #9: There may be a couple still out there, but you know we're now on the back end of this. We're going to be done with the majority of these contracts by the end of 2026, and that's why we're no longer going to give specific numbers on our fee share percentages moving forward.

Glenn Coleman: There may be a couple still out there, but we are now on the back end of this. We are going to be done for the majority of these contracts by the end of 2026, and that is why we are no longer going to give specific numbers on our fee share percentages moving forward. If anything changes in a significant way, obviously we would call that out. Hopefully that gives you enough power to give you a sense about where we are at.

Speaker #9: If anything changes in a significant way, obviously we would call that out. But hopefully, that gives you enough color to give you a sense of where we're at.

Speaker #7: Yeah, that's helpful. I think where I'm trying to get is the segment EBITDA levels based on what you stated. Did it appear that PS will be down?

Dave Zito: That's helpful. I think where I'm trying to get is the segment EBITDA levels. Based on what you stated, it appears that Performance Services will be down. I think you just gave us why. We should assume the pull-through on the admin fee in Supply Chain Services looks similar to what we saw this quarter as we're modeling next year. Is that fair?

Speaker #7: I think you just gave us why. But we should assume the pull-through on the admin fee in the supply chain looks similar to what we saw this quarter as we're modeling for next year.

Speaker #7: Is that fair?

Speaker #9: Well, again, we're not going to give specific segment guidance for EBITDA. I would just directionally tell you that I'm expecting to see a nice EBITDA margin expansion in our performance services business.

Glenn Coleman: Again, we are not going to give specific segment guidance for EBITDA. I would just directionally tell you I am expecting to see a nice EBITDA margin expansion in our Performance Services business. That is largely driven by the fact that advisory services are expected to ramp. We talked about the meaningful contracts that we have won recently. There are four of them. We have got a robust pipeline of additional opportunities. Even with some of our software business declining in 2026, we are expecting EBITDA margin expansion because of better productivity largely coming from our advisory business. I am really excited about that turnaround. On the Supply Chain Services side, we would expect to see a decline in our EBITDA margins because we are not through the fee share reset yet.

Speaker #9: That's largely driven by the fact that advisory services is expected to ramp. You know we talked about the meaningful contracts that we've won recently.

Speaker #9: There's four of them. We've got a robust pipeline of additional opportunities. So, even with some of our software business declining in 2026, we're expecting EBITDA margin expansion because of better productivity, largely coming from our advisory business.

Speaker #9: So, I'm not really excited about that turnaround. On the supply chain services side, we would expect to see a decline in our EBITDA margins because we're not through the fee share reset yet.

Speaker #9: So even with the GAAP growth I talked about, overall I'm expecting our EBITDA margins to go down in Supply Chain Services. And then obviously, as we get to 2027, we would expect the overall business to show an improvement.

Glenn Coleman: Even with the GAAP growth I talked about, overall, I am expecting our EBITDA margins to go down in Supply Chain Services. Then obviously, as we get to 2027, we would expect the overall business to show an improvement. I think for the first time now, we have got a good line of sight to say we feel good we are going to be growing across all of our key financial metrics in 2027.

Speaker #9: And I think for the first time now we've got a good line of sight to say we feel good we're going to be growing across all of our key financial metrics in 2027.

Speaker #7: Thanks for that.

Dave Zito: Thanks for that.

Speaker #9: Thank you, Eric.

Michael Alkire: Thank you, Eric.

Speaker #2: The next question comes from Eric Caldwell with Baird. Please go ahead.

Conference Specialist: The next question comes from Eric Coldwell with Baird. Please go ahead.

Speaker #8: Thanks very much, and good morning. I was hoping you could help us with sizing on AlumaCare in terms of both revenue and EBITDA profile. Secondarily, I know you're guiding fiscal '26 without Contigo, but could you let us know what you're thinking the results might look like?

Analyst (multiple, see below): Thanks very much and good morning. I was hoping you could help us with sizing on Alumacare in terms of both revenue and EBITDA profile. Secondarily, I know you are guiding fiscal 2026 without Contigo Health, but could you let us know what your thinking results might look like if we continue to model that from what is left on revenue and EBITDA?

Speaker #8: If we continue to model that from what's left on revenue and EBITDA.

Speaker #9: Sure, but let me start real quick on AlumaCare because I want to make sure everybody understands the asset that we've acquired. First of all, AlumaCare solves a very, very critical member pain point.

Michael Alkire: Sure, let me start real quick on Alumacare because I want to make sure everybody understands the asset that we've acquired. First of all, Alumacare solves a very, very critical member pain point. It addresses the concerns that we've been speaking about, which is margin compression. All these things that both Dave Zito and I have talked about with labor shortages, reimbursement cuts, rising costs, and those kinds of things, Alumacare is going to be a proven lever to actually drive value there. It drives demonstrable difference in terms of delivering about $100 savings per inpatient discharge. I think it has a huge opportunity to have significant penetration in our health systems and, importantly, can really help our healthcare systems perform in a very, very difficult time. It also has some wonderful real-time clinical decision support capability that actually works across all EMRs or the significant chunk of EMRs.

Speaker #9: It addresses the concerns that we've been speaking about, which is margin compression. And so all these things that both Dave Zito and I have talked about with labor shortages, reimbursement cuts, rising costs, and those kinds of things, AlumaCare is going to be a proven lever to actually drive value there.

Speaker #9: It drives a demonstrable difference in terms of delivering about $100 savings per inpatient discharge, so I think it has a huge opportunity to have significant penetration in our health systems. Importantly, it can really help our healthcare systems perform in a very, very difficult time.

Speaker #9: It also has some wonderful real-time clinical decision support capability that actually works across all EMRs or a significant chunk of EMRs. So we're very excited about that.

Michael Alkire: We're very excited about that. Obviously, we think it's going to be a really nice addition to our Stanson Health capability, and it's going to be a very robust solution using AI, machine learning, and clinical decision support. With that, Glenn, I'll flip it over to you to get into the details on the numbers.

Speaker #9: And then, obviously, we think it's going to be a really nice addition to our stance in health capability, and it's going to be a very robust solution using AI, machine learning, and clinical decision support.

Speaker #9: But with that, Glenn, I'll flip it over to you to get into the details on the numbers. Yeah, I would just add to your comments on the $100 per discharge savings.

Glenn Coleman: I would just add to your comments on the $100 per discharge savings. It is a 10 to 1 return on investment for our customers, which is a meaningful return that they get almost immediate. We are really excited about that acquisition. In terms of the size of the numbers, Alumacare, you can think of as an $8 million to $10 million revenue business for us in fiscal year 2026 and break even on the bottom line. So no impact to our adjusted EPS or adjusted EBITDA. Obviously, we are expecting this to be one of the growth engines for us going forward as it integrates with our Stanson Health business. Between the clinical decision support and financial decision support now, we have a really nice synergistic business that we are expecting to generate double-digit growth moving forward.

Speaker #9: It's a 10 to 1 return on investment for our customers, which is a meaningful return that they get almost immediately. So we're really excited about that acquisition.

Speaker #9: In terms of the size of the numbers, AlumaCare, you can think of as an $8 to $10 million revenue business for us in fiscal year '26 and break even on the bottom line.

Speaker #9: So, no impact to our adjusted EPS or adjusted EBITDA. And obviously, we're expecting this to be one of the growth engines for us going forward as it integrates with our stance in business.

Speaker #9: So, between the clinical decision support and financial decision support now, we have a really nice synergistic business that we're expecting to generate double-digit growth moving forward.

Speaker #9: As it relates to Contigual Health, I would just say we're winding that business down. Right now, we've modeled about $9 million of revenue in 2026 and a $6 million EBITDA loss.

Glenn Coleman: As it relates to Contigo Health, I would just say we are winding that business down. Right now, we have modeled about $9 million of revenue in 2026 and a $6 million EBITDA loss.

Speaker #7: Thank you very much. That's great.

Analyst (multiple, see below): Thank you very much. That's great.

Speaker #9: Thank you. Appreciate it.

Michael Alkire: Thank you. Appreciate it.

Speaker #2: The next question comes from Jessica Tessian with Piper Sandler. Please go ahead.

Conference Specialist: The next question comes from Jessica Tassan with Piper Sandler. Please go ahead.

Speaker #10: Hi, guys. Thank you so much for the question, and congrats on the really strong fourth quarter and fiscal '25. You all have an interesting year.

Jessica Tassan: Hi guys, thank you so much for the question and congrats on the really strong fourth quarter and fiscal 2025.

Michael Alkire: Thank you.

Jessica Tassan: You all have an interesting, yeah, so you guys have an interesting perspective because I think the Group Purchasing Organization portfolio includes food and perishable items. I guess, are you observing any divergence in kind of typical food purchasing patterns versus med surge purchasing patterns that would indicate increased intensity per unit of care delivered in FY25, either because of kind of deliberate hospital actions or because patients are preparing to lose coverage in 2026? Just any color on trends in intensity per unit of care that you might be able to glean based on just med surge versus food purchasing?

Speaker #10: So you guys have an interesting perspective because I think the group, and you mentioned this in your prepared remarks, the group purchasing portfolio includes food and perishable items.

Speaker #10: I guess, are you observing any divergence in kind of typical food purchasing patterns versus med-surg purchasing patterns that would indicate increased intensity per unit of care delivered in FY '25? Either because of kind of deliberate hospital actions or because patients are preparing to lose coverage in '26?

Speaker #10: Just any color on trends in intensity per unit of care that you might be able to glean based on just med-surg versus food purchasing?

Speaker #4: That's a great question. It's very tough to glean it out of those two portfolios. We look at—we have all the data on other measures from a clinical standpoint.

Michael Alkire: That's a great question. It's very tough to glean it out of those two portfolios. We look at, we have all the data on other measures, from a clinical standpoint, lab values, and those kinds of things that we can understand and glean that a little bit more effectively. I would tell you, there's nothing that we see that's significantly changing from a dynamic that you're speaking about. From a food standpoint, as just a quick reminder, our food program has truly differentiated in the industry. We use it as sort of a pointy end of the spear in terms of getting access into accounts that might not be Premier Inc. accounts. You heard me talk a little bit about that in those opening remarks.

Speaker #4: And lab values and those kinds of things that we can understand and glean that a little bit more effectively. I would tell you there's nothing that we see that's significantly changing from a dynamic that you're speaking about.

Speaker #4: From a food standpoint, it's just a quick reminder. Our food program has truly differentiated in the industry. We use it as sort of a pointy end of the spear.

Speaker #4: In terms of getting access into accounts that might not be Premier accounts, you heard me talk a little bit about that in those opening remarks.

Speaker #4: We want to continue to do that. Just because that program continues to grow and evolve and drive a significant amount of value to these health systems, especially when there are a lot of fiscal pressures they’re facing.

Michael Alkire: We want to continue to do that just because that program continues to grow and evolve and drive a significant amount of value to these health systems, especially when there's a lot of fiscal pressures they're facing.

Speaker #10: Got it. That's helpful. And then just my second question is, how big is the advisory business within, apologies if I missed this. How big is advisory within performance services?

Jessica Tassan: Got it. That's helpful. My second question is, how big is the advisory business within Performance Services? And I think you mentioned that business is expected to grow double digits in FY26. Do those four big contracts get you there, or just how much visibility do you have into that double-digit growth? Thanks again.

Speaker #10: And then I think you mentioned that business is expected to grow double digits in FY '26. Do the four big contracts get you there, or just how much visibility do you have into that double-digit growth?

Speaker #10: Thanks again.

Speaker #9: Yeah, thanks for the question. We don't break out advisory in performance services, but I'll just give you a rough sizing. It's about $50 million to $100 million.

Glenn Coleman: Yeah, thanks for the question. We don't break out advisory in Performance Services, but I'll just give you a rough sizing. It's about $50 to $100 million. I talked about double-digit growth. I would say we're expecting the growth to be above 25% in fiscal year 2026. A lot of these contracts, keep in mind, are multi-year contracts. So we will recognize that revenue over, in many cases, 18 to 24 months. But I'm expecting at least 25% growth coming from advisory, largely coming from these four deals. If we get more deals closed, there could even be greater upside to our numbers. But right now, we feel very confident given what we've closed. And obviously, we've got to execute on these deals to get that revenue. But a really nice turnaround in our advisory business. It's not going to be a one-time blip.

Speaker #9: And you know I talked about double-digit growth. I would say we're expecting the growth to be above 25% in fiscal year '26. A lot of these contracts, keep in mind, are multi-year contracts, so we will recognize that revenue over, in many cases, 18 to 24 months.

Speaker #9: But I'm expecting at least 25% growth coming from advisory, largely coming from these four deals. If we get more deals closed, it could even be greater upside to our numbers.

Speaker #9: But right now we feel very confident given what we've closed, and obviously we've got to execute on these deals to get that revenue. But there's really nice turnaround in our advisory business, and it's not going to be a one-time blip.

Speaker #9: We're really creating a sustainable long-term business that we expect to grow meaningfully over the next five years.

Glenn Coleman: We're really creating a sustainable long-term business that we expect to grow meaningfully over the next five years.

Speaker #4: Thank you, Jess.

Michael Alkire: Thank you, Jess.

Speaker #2: The next question comes from Kevin Caliendo with UBS. Please go ahead.

Conference Specialist: The next question comes from Kevin Caliendo with UBS. Please go ahead.

Speaker #7: Thanks. Thanks for taking my question. Glenn, on the free cash flow guidance, I appreciate the color on that; it's always helpful. I'm just wondering how the TRA plays into that.

Analyst (multiple, see below): Thanks. Thanks for taking my question. Glenn, on the free cash flow guidance, I appreciate the color on that. It's always helpful. I am just wondering how the TRA plays into that. Is that included in the free cash flow conversion, or should we think about the TRA as incremental for fiscal 2026 free cash flow?

Speaker #7: Is that included in the free cash flow conversion, or should we think about the TRA as incremental for fiscal '26 free cash flow?

Speaker #9: Yeah, no, it's included in our free cash flow guidance. Overall, our free cash flows, if you look at the numbers year to year, are pretty flat.

Glenn Coleman: Yeah, no, it is included in our free cash flow guidance. Overall, our free cash flows, if you look at the numbers year to year, are pretty flat. There are a couple of dynamics in place here. Number one, we have got the positive $100 million TRA benefit, but there were a couple of items in fiscal year 2025 that helped us as well. That is one-time in nature. The derivative lawsuit that I mentioned, along with this minority investment dividend that we received, pretty much offset that year over year. That is why you do not see the big pop in free cash flow. Going forward, we expect not to have this $100 million headwind, which is a big positive for us.

Speaker #9: So there's a couple of dynamics in place here. Number one, we've got the positive $100 million TRA benefit, but there were a couple of items in fiscal year '25 that helped us as well.

Speaker #9: That's a one-time occurrence. So the derivative lawsuit that I mentioned, along with this minority investment dividend, essentially offset that year over year.

Speaker #9: So that's why you don't see the big pop in free cash flow. But going forward, we expect to no longer have this $100 million headwind, which is a big positive for us.

Speaker #7: Got it. And I know you guys said there wasn't any forward buying around tariffs and the like, but was there any activity, services activity, or other activity that you found because of the fear of tariffs and the changes that were taking place that were a benefit, or continuing to be a benefit?

Analyst (multiple, see below): Got it. I know you guys said there wasn't any forward buying around tariffs and the like, but was there any activity, services activity, other activity that you found because of the fear of tariffs and the changes that were taking place that were a benefit or are continuing to be a benefit? How should we think about it, because it obviously occupied a ton of our mental well-being, but I'm just wondering how customers behaved and if that's continued or carried momentum or if it was a benefit in fiscal 2025 that wouldn't be a benefit in fiscal 2026?

Speaker #7: Like how should we think about—because obviously it occupied a ton of our mental well-being—but I'm just wondering how customers behaved and if that's continued or carried momentum, or if it was a benefit in fiscal '25 that wouldn't be a benefit in fiscal '26?

Speaker #4: Yeah, it's a little bit, I would characterize it as more, you know, a focus on the psyche of what's happening. So, obviously, tariffs are incredibly dynamic.

Michael Alkire: Yeah, it is a little bit, I would characterize it as more, you know, a focus on like the psyche of what is happening. Obviously, tariffs are incredibly dynamic, as you are well aware and everybody on the call is well aware. As we have said in the past, our contracts are firm for the term. That means that, you know, for the most part, there is not necessarily going to be significant impacts from tariffs. We have this member-led contracting process, as we have spoken about in the past. This, you know, when we talk about this, that does not mean that suppliers are not coming and saying, "Hey, we have got issues with tariffs. You know, we might want, you know, some price increase," those kinds of things.

Speaker #4: As you are well aware, and everybody on the call is well aware, as we've said in the past, our tariffs are firm for the term.

Speaker #4: I'm sorry, our contracts are firm for the term. So that means that, for the most part, there's not necessarily going to be significant impacts from tariffs.

Speaker #4: We have this member-led contracting process, as we have spoken about in the past. So, you know, when we talk about this, that doesn't mean that suppliers aren't coming and saying, "Hey, we've got issues with tariffs."

Speaker #4: You know we might want some price increases, those kinds of things. But the member-led contracting process is really what dictates whether or not we decide to have a tariff or not.

Michael Alkire: But the member-led contracting process is really what dictates whether or not we decide to, you know, have a tariff or not. I think that comes down to, obviously, if we have a healthy market, if there are multiple suppliers in a market and, you know, many of them are not asking for tariff relief or any of that stuff, obviously, you know, then you are not, the tariffs are going to have a de minimis impact on the business. I will just say that so far, you know, things are pretty stable as it relates to tariffs. That does not mean there is not a lot of work that is actually happening in concert with our suppliers and concert with our members to minimize the impacts of these tariffs.

Speaker #4: And I think that comes down to, obviously, what if we have a healthy market. If there are multiple suppliers in a market and you know many of them are not asking for tariff relief or any of that stuff, obviously, you know then the tariffs are going to have a de minimis impact on the business.

Speaker #4: So I will just say that, so far, you know things are pretty stable as it relates to tariffs. That does not mean there's not a lot of work that's actually happening in concert with our suppliers and in concert with our members to minimize the impacts of these tariffs.

Speaker #4: So, there is a lot of work happening under the, you know, sort of under the water level, if you will. But, you know, so far, the teams are working through these without having a significant impact on the healthcare systems.

Michael Alkire: So there is a lot of work happening under the, you know, sort of under the water level, if you will. But, you know, so far, the teams are working through these without having a significant impact on the healthcare systems.

Speaker #7: Fantastic. Thanks so much, guys.

Analyst (multiple, see below): Fantastic. Thanks so much, guys.

Speaker #9: Thank you.

Michael Alkire: Thank you.

Speaker #2: The next question comes from Alan Lutz with Bank of America. Please go ahead.

Conference Specialist: The next question comes from Alan Lux with Bank of America. Please go ahead.

Speaker #8: Good morning, and thanks for taking the questions. Glenn, you mentioned that you expect a return to revenue and EBITDA growth in fiscal '27. Then you talked about the increasing contract penetration.

Analyst (multiple, see below): Good morning and thanks for taking the questions. Glenn Coleman, you mentioned that you expect a return to revenue on EBITDA growth in fiscal 2027. You talked about increasing contract penetration and maybe a stabilization of revenue share backs. What is embedded or what needs to happen in fiscal 2027 for revenue and EBITDA to increase? Can you just provide some high-level framing of what utilization has to do, revenue share backs? Any high-level thoughts would be helpful. Thanks.

Speaker #8: And maybe a stabilization of revenue share backs. What is embedded, or what needs to happen in fiscal '27 for revenue and EBITDA to increase?

Speaker #8: Can you just provide some high-level framing of what utilization has to do with revenue share backs? Just any high-level thoughts would be helpful. Thanks.

Speaker #9: Yeah, sure. I'll give you a couple of points and why we're confident in the recovery to growth in '27. So, I think first and foremost, when we look at our enterprise license agreements and our software deals, we have a bit of a trough here in '26.

Glenn Coleman: Yeah, sure. I will give you a couple of points on why we are confident in the recovery to growth in 2027. I think first and foremost, when we look at our enterprise license agreements and our software deals, we have a bit of a trough here in 2026. We have fewer renewals coming due just based upon timing. That is going to pick up in 2027. We are expecting an increase in our software business starting in 2027. Advisory, as we talked about, is going to continue to ramp into fiscal year 2027. I think we are expecting to see some good double-digit growth coming from the synergies of our clinical decision support business and Alumacare. Those are areas, I would say, of growth that will continue to help us moving forward.

Speaker #9: We have fewer renewals coming due just based upon timing. That's going to pick up in 2027, and so we're expecting an increase in our software business starting in 2027.

Speaker #9: Advisory, as we talked about, is going to continue to ramp into fiscal year '27. I think we're expecting to see some good double-digit growth coming from the synergies of our clinical decision support business and AlumaCare.

Speaker #9: So those are areas I would say of growth that will continue to help us moving forward. On the supply chain services side, this GAAP growth should continue; we're seeing great momentum in our food and pharmacy portfolios.

Glenn Coleman: On the Supply Chain Services side, this GAAP growth should continue. We are seeing great momentum in our food and pharmacy portfolios. So, 3% this year, we are expecting faster growth in 2026. That should continue into 2027. There is good momentum on our gross administrative fees. Both our digital supply chain and co-management business are growing double digits. That should continue as we go into 2027. Most importantly, we are going to have lower fee share headwinds. We will be through the 2026 negotiations, and those headwinds, and it will still probably be a slight headwind in 2027, will be much less than what we have seen in 2025 and 2026. Those are the key items. As we look at our plans for 2027 now, we are saying, we expect to see a rebound back to growth across all of our key financial metrics. Thanks for the question.

Speaker #9: So you know, 3% this year; we're expecting faster growth in 2026. That should continue into 2027. So there's good momentum on our gross administrative fees.

Speaker #9: Both our digital supply chain and co-management business are growing double digits. That should continue. As we go into 2027, and then most importantly, we're going to have lower fee share headwinds, right?

Speaker #9: We'll be through the 2026 negotiations, and those headwinds will still probably be a slight headwind in '27. We'll be much less than what we've seen in 2025 and 2026.

Speaker #9: So those are the key items. And as we look at our plans for 2027 now, we're saying we expect to see a rebound back to growth across all of our key financial metrics.

Speaker #9: Thanks for the question.

Speaker #8: That's helpful. Thank you for that. And then you mentioned last quarter you were expecting a client termination payment in Q4. Did that take place, and is there any way to size that?

Analyst (multiple, see below): That's helpful. Thank you for that. You mentioned last quarter you were expecting a client termination payment in Q4. Did that take place, and is there any way to size that? Thank you.

Speaker #8: Thank you.

Speaker #9: Yeah, so it did take place. We received the cash as well. And the sizing was previously given several quarters ago as part of our guidance increase for supply chain services back at that point in time.

Glenn Coleman: Yeah, so it did take place. We received the cash as well, and the sizing was previously given several quarters ago as part of our guidance increase for Supply Chain Services. Back at that point in time, I believe we raised our guidance by $15 million, and it was one of the components of the $15 million raise. That just gives you a general idea about what that could be, but there were other areas as well. It was consistent with our expectations, and that was all booked and cash received in Q4.

Speaker #9: I believe you raised our guidance by $15 million, and it was one of the components of the $15 million raise. So that just gives you a general idea about what that could be.

Speaker #9: But there are other areas as well, and that is consistent with our expectations. All of that is booked and cash received in Q4.

Speaker #8: Great. Thanks, Glenn.

Analyst (multiple, see below): Great. Thanks, Glenn.

Speaker #9: Thank you.

Speaker #4: Thank you, Alan.

Glenn Coleman: Thank you.

Michael Alkire: Thank you, Alan.

Speaker #2: The next question comes from Richard Close with Canaccord Genuity. Please go ahead.

Conference Specialist: The next question comes from Richard Close with Canaccord Genuity. Please go ahead.

Speaker #8: Yeah, thanks for the questions. A lot of the questions I had on advisory were asked. But I'm curious, just the magnitude of the headcount additions, can you give any color there?

Glenn Coleman: Yeah, thanks for the questions. A lot of the questions I had on advisory were asked, but I am curious just the magnitude of the headcount additions. Can you give any color there? I am curious how long those people take to ramp up to be productive. I will start here, and Dave Zito, I think you are still on, if you can maybe add some color. I think first and foremost, the reason why we are winning is the deep subject matter expertise we are building in our advisory business, along with our tech enablement. We have ramped resources. We have pretty much added roughly 10 senior leaders across our business. We have got more people we are going to be adding here based upon the support needed for these advisory wins and what we are seeing in the funnel.

Speaker #8: And just curious how long those people take to ramp up to be productive.

Speaker #9: Yeah, I'll start here. And Dave Zito, I think you're still on. If you can maybe add some color. I think, first and foremost, you know the reason why we're winning is the deep subject matter expertise we're building in our advisory business.

Speaker #9: Along with our tech enablement, we've ramped resources. We've added roughly 10 senior leaders across our business. We have more people we will be adding here based on the support needed for these advisory wins and what we're seeing in the funnel.

Speaker #9: But I would expect you know probably another 20 people or so will be added in the not too distant future. And these engagements, I would say, range everywhere from cost reduction and margin improvement to revenue opportunities.

Glenn Coleman: I would expect probably another 20 people or so will be added in the not-too-distant future. These engagements, I would say, range everywhere from cost reduction, margin improvement, to revenue opportunities. It is everything from revenue optimization to clinical delivery, workforce optimization, supply chain optimization, and those are areas that we are going after. Dave, did you want to add any more color?

Speaker #9: So it's everything from revenue optimization to clinical delivery, workforce optimization, supply chain optimization, and those are areas that we're going after. But Dave, did you want to add any more color?

Speaker #7: Yeah, I would just like to mention a couple of things. We've been making the investment since the beginning of the calendar year, and the addition of those 10 people that we referenced really helped drive, again, partnering with the Premier team that was here to build that pipeline and close those deals.

Dave Zito: Yeah, just a couple of things. We have been making the investments since the beginning of the calendar year, and the additions of those 10 people that were referenced really helped drive, again, partnering with the Premier team that was here to build that pipeline and close those deals. The people we are hiring now are really going to be deployed immediately to work. We are really staffing as people come on board. We are deploying them right to project work. Ramp-up will not be an issue as we move forward. Right now, we are really trying to fill gaps in our capacity to deliver the work that we have sold. Ramp-up will be very, very positive and quick.

Speaker #7: So the people who are hiring now are really going to be deployed immediately to work. We're really staffing as people come on board; we are deploying them right to project work.

Speaker #7: So ramp-up will not be an issue as we move forward. Right now, we're really trying to fill gaps in our capacity to deliver the work that we have sold.

Speaker #7: So, ramp-up will be very, very positive and quick.

Speaker #8: Okay. As a follow-up, maybe on the tech side of the performance services, I'm just curious how you're viewing demand, I guess, post July 4th and the signing of the big, beautiful bill.

Glenn Coleman: Okay, as a follow-up, maybe on the tech side of the Performance Services, I am just curious how you are viewing demand, I guess, post July 4th and the signing of the big, beautiful bill. I am just curious with respect to maybe the SaaS offerings and then enterprise. I know you said there is not going to be many renewals here in fiscal 2026 on the enterprise license, but just any changes in demand since July 4th or anything you can provide would be helpful.

Speaker #8: I'm just curious with respect to maybe the SaaS offerings and then enterprise. I know you said there are not going to be many renewals here in fiscal '26.

Speaker #8: On the enterprise license, but just any changes in demand since July 4th or anything you can provide would be helpful.

Speaker #9: Yeah, a couple of thoughts on that. And then again, Dave Zito, if you'd like to add in, please do. So in general, I will tell you there's still a lot of interest in our clinical decision support capability.

Michael Alkire: Yeah, a couple of thoughts on that. Dave Zito, if you would like to add in, please do. I will tell you there is still a lot of interest in our clinical decision support capability. So think of things around prior authorization, clinical coding and documentation, and those kinds of things. Because of the investments we have made with Stanson Health and the additional capital outlay, those technologies are still having phenomenal interest in the market. Just as a quick reminder, AI-enabled machine learning, natural language processing, it is a very efficient way to help these health systems with prior authorization and coding and documentation. I think Dave and team are looking to continue to expand those capabilities, given the success they have had so far.

Speaker #9: So think of things around prior authorization clinical coding and documentation and those kinds of things. So you know because of the investments we've made you know with Stanton and the additional capital outlay, those technologies are still doing are still having a phenomenal or getting phenomenal interest in the market.

Speaker #9: And so, just as a quick reminder, AI-enabled machine learning and natural language processing are very efficient ways to help these health systems with prior authorization, coding, and documentation.

Speaker #9: I think Dave and the team are looking to continue to expand those capabilities, given the success they've had so far. But I sense that there's significant interest and a lot of that activity, you know, just because of the dynamics of the market, with some of the slow-paced stuff coming from payers and those kinds of things.

Michael Alkire: I sense that there is significant interest in a lot of that activity, just because of the dynamics of the market with some of the slow-paced stuff coming from payers and those kinds of things. Our capabilities really help offset that. Secondarily, I will say that what is unique about Premier Inc. is that not only can we work with our health systems and benchmark their performance and have them understand how they are performing, but we have got this fantastic ability with advisory to drive significant change for those health systems. Then we can use this technology really to sort of codify or leave as an artifact within the record, within the workflow, all the change that we have driven. It is very, very unique, some of the things that we can do to help drive performance improvement for these health systems.

Speaker #9: And our capabilities really help offset that. Secondarily, you know, I will say that what's unique about Premier is that not only can we work with our health systems and benchmark their performance to help them understand how they're performing, but we've got this fantastic ability with advisory to drive significant change for those health systems.

Speaker #9: And then we can use this technology really to sort of codify or leave as an artifact, you know, within the record, within the workflow, all the change that we've driven.

Speaker #9: So it's very, very unique. Some of the things that we can do to help drive performance improvement for these health systems. Dave, not sure if you have any other thoughts.

Michael Alkire: Dave, not sure if you have any other builds.

Speaker #7: I would just echo the last thing you said. I mean, basically, if you look at the way we've developed and deployed technology, it's to drive performance improvement.

Dave Zito: I would just echo the last thing you said. Basically, if you look at the way we've developed and deployed technology to drive performance improvement, we view the tools, and I think as customers need to improve performance, they're looking for, and we're deploying technology that will enable change as well as change. So it's actually a driver of demand, not a, you know, the current environment is a driver of demand, not a deterrent. As long as we can demonstrate how our tech drives and supports and enables change, I think that our demand will increase.

Speaker #7: So, we view the tools and what I think as customers need to improve performance. They are looking for, and we're deploying technology that will enable change as well as change.

Speaker #7: So it's actually a driver of demand; the current environment is a driver of demand, not a deterrent. In my view, as long as we can demonstrate how our technology drives, supports, and enables change.

Speaker #7: I think that our demand will increase.

Speaker #4: Thank you, Dave. Thank you, Richard.

Michael Alkire: Thank you, Dave.

Dave Zito: Thank you, Richard.

Speaker #2: The next question comes from Eric Caldwell with Baird. Please go ahead.

Conference Specialist: The next question comes from Eric Coldwell with Baird. Please go ahead.

Speaker #8: Hey, thanks so much. Your good answers to my first questions enticed me to get back on and ask some more. So, on the advisory deals, would we be thinking about something in the ballpark of $5 million a year on average as a typical sizing for what you would consider a large deal?

Analyst (multiple, see below): Hey, thanks so much. Your good answers to my first questions enticed me to get back on and ask some more. On the advisory deals, would we be thinking about something in the ballpark of $5 million a year on average as a typical sizing for what you would consider a large deal?

Speaker #8: And then.

Speaker #9: Higher than that. Higher than that.

Michael Alkire: Higher than that. Higher than that.

Speaker #8: Higher than that. Okay. So the 25% growth in advisory off of $50 million to $100 million— the reason you're, you know, that that makes sense.

Analyst (multiple, see below): Higher than that. Okay. So the 25% growth in advisory off of $50 to $100 million, the reason that makes sense. Other areas of the business may be a bit weaker. These are bigger deals that help offset challenges elsewhere, it sounds.

Speaker #8: So other areas of the business may be a bit weaker. These are bigger deals that help offset challenges elsewhere, it sounds.

Speaker #9: Correct. And just to be and just to be clear to the point, so we are expecting our enterprise license deals to be down in 2026 because of fewer renewals.

Glenn Coleman: Correct. Just to be clear to the point, we are expecting our enterprise license deals to be down in 2026 because of fewer renewals. Advisory is helping to offset that. Based upon the midpoint of our guidance for Performance Services as a total segment, we are expecting to grow in fiscal year 2026, but it is driven by the advisory deals. Yes.

Speaker #9: Advisory is helping to offset that. Based on the midpoint of our guidance for performance services as a total segment, we are expecting to grow.

Speaker #9: In fiscal year 2026, but it's driven by the advisory deals. Yes.

Speaker #8: Okay, that's helpful. And then are there revenue recognition or profit triggers in these deals that we should be aware of, such as performance or milestone-based items, or true-ups at the end of a fiscal year or a calendar year?

Analyst (multiple, see below): Okay, that is helpful. Are there revenue, recognition, or profit triggers in these deals that we should be aware of, such as performance or milestone-based items or true-ups at the end of a fiscal year or a calendar year? Is there anything of that nature, or is the billing and performance, profit performance fairly ratable throughout the engagement?

Speaker #8: Is there anything of that nature, or is the billing and performance profit fairly ratable throughout the engagement?

Speaker #9: No, there are milestones in these deals, and it's one of the reasons why the revenue recognition, at least for fiscal year '26, will be more backend-loaded because we have to ramp the resources.

Glenn Coleman: No, there are milestones in these deals. It is one of the reasons why the revenue recognition, at least for fiscal year 2026, will be more back-end loaded because we have to ramp the resources. As we hit the milestones, which will be later this year, we will start to recognize the revenue. That is one of the dynamics about why Q1 is going to be a lower quarter than the second half of the year.

Speaker #9: And as we hit the milestones, which will be later this year, we'll start to recognize the revenue. So, that's one of the dynamics about why Q1 is going to be a lower quarter than, you know, the second half of the year.

Speaker #8: If I might, just one or two quick ones. So I’d really like to hear what you’re doing. Could you give us some anecdotes of a unique advisory contract?

Analyst (multiple, see below): If I might, just one or two quick ones. I would really like to hear what you are doing. Could you give us some anecdotes of a unique advisory contract? Quite frankly, I have always struggled a bit with the difference between advisory and Consulting Services. Maybe you could help parse out the nuance there between what, maybe to a less informed person like myself, what is the difference between a consulting engagement and an advisory engagement?

Speaker #8: And quite frankly, I've always struggled a bit with, you know, the difference between advisory and consulting. So maybe you could help parse out the nuance there between what you know, maybe to a less informed person like myself. What is the difference between a consulting engagement and an advisory engagement?

Speaker #9: So, Dave, I'm going to ask you to join in here just a second. I think people use those terms interchangeably. When we talk about advisory, though, in the broader scope, Glenn hit this.

Michael Alkire: Dave, I am going to ask you to join in here just a second. I think people use those terms interchangeably. When we talk about advisory, though, in the broader scope, Glenn hit this. It is about revenue optimization, clinical delivery, it is workflow, workforce, and productivity, and those kinds of things. Then obviously all things supply chain. Dave Zito, any builds?

Speaker #9: It's about revenue optimization, clinical delivery, workflow, workforce, and productivity, and those kinds of things. And then obviously, all things supply chain. But Dave Zito, any bills?

Speaker #7: No, I would answer in the second part first. I would say consulting and advisory are the same; they're interchangeable in my mind. These are traditional consulting and their performance improvement.

Dave Zito: No, I would, answering the second part first, I would say Consulting Services and advisory are the same. They're interchangeable in my mind. These are traditional consulting, and they're performance improvement. Clients have large, they estimate what they need to, how they need to improve their performance.

Speaker #7: Clients have large they they estimate what they needed to how they need to improve their their performance. They break it into categories whether it's workforce or supplies or clinical or revenue cycle or strategic growth.

Conference Operator: it into categories, whether it is workforce or supplies or clinical or revenue cycle or strategic growth. Then we develop strategies to achieve those, help them achieve their expectations and goals. We deploy resources to partner with them to drive that change. They are very comprehensive in nature as they try to transform their business and modify their cost structure to perform in a new revenue world. It is really a strategic and operational transformation of their business.

Speaker #7: And then we develop strategies to help them achieve their expectations and goals. We deploy resources to partner with them to drive that change.

Speaker #7: So they're very comprehensive in nature as they try to, you know, transform their business and modify their cost structure to perform in a new revenue world.

Speaker #7: So it's really a strategic and operational transformation of their business.

Speaker #8: Thanks, Dave. That's helpful. Last one. We didn't seem to get any updates on the life sciences or pharma support businesses this quarter. Just curious what you're seeing on that front.

Conference Specialist: Thanks, Dave. That's helpful. Last one, we didn't seem to get any updates on the life sciences or pharma support businesses this quarter. Just curious what you're seeing on that front.

Rachel Smith: Yeah, I think overall that business is performing as we had expected. It was not a key driver of our results in the quarter, so that's why we haven't called it out. But there are lots of exciting growth opportunities in terms of how we leverage our data and sell into life sciences companies. That's a plan for us moving forward. We do expect that business to be one of the areas of growth for us in 2026 and beyond.

Conference Specialist: Thanks again. Appreciate it.

Rachel Smith: All right. Thanks.

Conference Operator: Thank you.

Ben Krasinski: This concludes our question and answer session and Premier Inc.'s fiscal 2025 fourth quarter and full year conference call. Thank you for attending today's presentation. You may now disconnect.