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PINC Premier

Participants
James Storey VP, IR
Susan DeVore CEO
Michael Alkire President & COO
Craig McKasson CFO, CAO, Senior VP & Treasurer
Michael Cherny Bank of America
Ryan Daniels William Blair
Stephanie Demko Citi
Sean Dodge Jefferies
Kevin Caliendo UBS
Charles Rhyee Cowen
Sean Wieland Piper Jaffray
Jonathan Yong Barclays
David Larsen Leerink
Eric Percher Nephron Research
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Premier Inc. Fiscal 2019 Third Quarter Results and Conference Call. At this time, all participants are in a listen-only mode. Later, there will be a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. to host like Mr. today's now would introduce for your conference, I Storey Investor Jim Relations. of Mr. begin. may you Storey,

James Storey

Thank you, welcome, Conference Josh, and Call. Third Fiscal Quarter XXXX everyone, to Premier's

President; Chief Our for Officer. Financial the our year. an and the the Officer; Susan operations today review Mike McKasson, DeVore, remainder will performance, speakers Mike Administrative of are Susan, Alkire, outlook quarter's and Craig and update Craig Chief discuss Executive provide and

and supplemental which business. earnings release X-K, SEC the our slides Form the we are in that to our certain Before in of that started, accompanying copies Reconciliations in included that, refer presentation those this earnings filings investors.premierinc.com. financial accompanying update contain appendix fiscal We measures XX-K soon. could materially which to appropriate, evaluate expect expect from to fiscal disclosures. XX-Q, we release I report we the today. GAAP the this might financial risk at detailed also measures Form results furnish will no today statements differ in financial harbor on file remarks factor Management's section discussed of Please note soon. of them. SEC, results measures the non-GAAP available quarterly obligation XXXX review we release and our the you everyone remind to and our affect safe conference earnings get to to to in we want Relations encourage non-GAAP our are XXXX slides these forward-looking where Form our to are to and and website discussed statements future Factors These our and forward-looking today actual supplemental of including undertake call with speak of Investor as

the turn Susan DeVore. me to call over let Now

Susan DeVore

questions. update. brief Craig will with Thanks, then I'll operational Jim, through the financials Mike, provide observations will over we'll to who us open everyone, some for this call thanks, begin call an and and then the to and joining morning. walk turn the

that through continue to ongoing Let continuing and beginning full we the believe financial slower are environment, year. by of this guidance navigate at and expect are characterized year in established by fiscal We political growth we uncertainty. progress me to the saying making to regulatory XXXX results start the steady challenging deliver that we a ranges environment, we within

we of our in stated half we to As experiencing quarter, due large revenue in more last the year-over-year the adoption difficult are part standard. new comparisons recognition second

Let me clear. be

our with performance. satisfied financial not current are We

steps enterprise to our focus performance growth future supply capabilities. We necessary core are chain, improvement around taking analytics and

evaluating businesses. financially strategic health and First, they This business. systems in enterprise decision consistent the our we positioned step A capabilities that sharpen complement crucial are core ensure helps in and and core deliver strategy our member this action pharmacy and specialty ongoing This best-in-class solutions our with portfolio to improvement our future the value and regularly for sustained our our creation is to to analytics businesses was exit remain generate each stockholders. our of growth. for to focus chain company performance supply endeavor on strategically our

XX% not margin the to million, annual the past years. to impact EBITDA $XXX to low adjusted we level revenue mid-XXs flow will approximately non-GAAP with net material, EBITDA consolidated and this the adjusted over compared Premier's cash consolidated While by expect is increase impact the few and

shortly. some to And manage focusing and our capabilities, to these thoughtfully enhance evolution we we continue on preserve strengthen and growth. flow. drive and our initiatives and Mike review of our stockholders. profitability, expenses and to growth cash best core for core of value company we Second, members, the third, our our By that are will promote capabilities diligently continue positioned in invest businesses to

Care are to continuing consistently approval expect of And our and prior programs we Board current XX% rhetoric strong We for environment capital recent by to million believe flow, uncertainty. hand as $XXX a non-GAAP the volatility now have of cash continued to the to flexible and hand authorization. market market current All Act the efforts on are repurchase return and demonstrated which industry sheet year. well. one the peers a across recent other The the Medicare exceed we're the full balance We our impacting our stockholders, of repeal with on additional new debt and adjusted stock low navigating our EBITDA generated for political environment the Affordable on focused Directors'

unlikely regulatory quite a and is environment. future. these believe will changing here perspective, to positioned Premier, our is because the The it's of that our lead care insights well deep health salient through in believe we uncertain foreseeable point of integrated we reforms versatility reality forward-looking become However, capabilities, and that the the our is that

patients, that between Our and further integrate, is care than providers will friction will reduce and policy successful rather expectation delivery. fragment payers

to larger operational expect expect data-driven drive role health as also play improved clinical to And systems to integration and We improvement. in a system leverage and enterprise analytics partner the their with the chains or key Premier to a success financial, continue. improve supply ability and consolidation we co-manage of these

opportunities These to transition their and payment larger services. recently away fee-for-service capitated models lead and budgets federal Premier's The shift X continues and alternative risk to provide addition, care as in health primary include payments government physicians voluntary care physicians of we're products X value-based models by and models unveiled systems health use their designed to care recent systems policy new move year health for models. Premier for primary from to In global for encouraged support announcements, providers. providers. CMS and

next in organic to of fiscal driven the we do digit ongoing fiscal business our Looking single a year. environment a the the slower generally year, ahead, of anticipate that with factors have current over impacted low continuation the mid growth, continuation by growth

we expect our and future leadership strong rigorous long-term high-quality, regular your We now the and to [Technical through continue focusing evaluation core America, care remain review environment and to of health capabilities me role our assisting the nation's expenses We foundation. and managing call diligently by assets expect Thanks Difficulty] financial in time and growing members in cost-effective by our to today, turn preserving on this our transformation in to for Alkire. let that of in care. play the Mike over health our

Michael Alkire

emerging time reviewing operational nation's further in to company, capabilities. challenge drug on strategy I'd enhancing network, our ongoing clinical decision Today, Susan. our you, the our generic our our our specifically, address purchasing of efforts committed highly core like discussing to support spend integration continuing Stanson to Thank the some our focus performance, shortage More program. high-value Health, and

new clinical sales another support and continue Stanson, strong our enhance analytics Regarding capabilities of to report solutions. integrating progress that to we quarter clinical Stanson further to decision happy these performance and bookings. had differentiate make I'm improvement

We total are care. care improve both large analytics our of promoting partnership a pharmacy to medical also providers. our assets, currently directly strategy prior and solution providers key authorization network also with enabler developing, to overall clinical develop benefits. engage unique to and and outcomes leverages and payer, the This payers for capabilities represents direct cost between covering reduce a and a Stanson longer-term employers contracting in other with employers a enable data high-value to for automated initiative

this but early remain drive business. noted, growth is As we potential about to its excited we of initiative future its previously still our stages, have help in

generic continue as We Turning differentiates we in the drugs believe delivers our to program reliable shortage offering for further challenge. members and value supply. GPO more ProvideGx and a additional to drug our stable to chain short our supply develop

are allow adequate shortages in of for five drugs Premier NDC. with to complete, enable another We supply of a address critical to total will the for medications. XXX manufacturer injectable currently this Once working approximately process shortage high-quality by drug

products, we XX supply addition, months to continuous more plan with needs solutions list address are a products market guaranteed than from specific shortage manufacturers shortage and drugs In in secure We come. explore to of to identify a to target introduce supply. other additional working the of

savings program of inaugural clinically best well purchasing beyond market for on awarded set agreements top-tier a GPO offering and We recently XX significant retain believe and members our a compliance scale help we products supplier program have our want members. as the SURPASS. purchasing achieve incremental highly strategies This pre-existing pricing. our achieved effective contract as greater the to Lastly, core longer-term update with SURPASS in program We have driving provide play and it opened and I pricing central the over for launched GPO Today, an members. health in have of systems. initially committed to role recruit augments our will by additional to

system health of and closing, Tennessee financial its in quality the In market total full All as Virginia, with new transform facilities we organization, leverage significantly across quarter, a In Premier's goal Health, merged SURPASS fact, well hospitals expanded as beyond this a across includes a Ballad Health and partnership integrated purchasing newly community will Ballad the including our group health Northeast that strong us set you XX Southwest balanced with current investing approach while suite solutions. our to differentiated of region. past take challenges environment, capabilities, today. workforce and value we your navigate a believe for and continue the analytics Thank unique cost, growth. future reporting time enable to of position proposition we to will to that

McKasson. me Now the to Craig over turn let call

Craig McKasson

Mike. Thanks,

year the I want to modified fiscal through did XXXX, XXX, standard. beginning standard, the the means which using everyone results, in restate we ASC prior new walk remind the we we approach, recognition revenue Before new that adopted not under results retrospective

comparing may of nine means fiscal year standard be meaningful. results the the a previous prior these our are some result, results recognition XXXX and which new standard, revenue As to using we comparisons under not three month

extent, pressures That to below investments primarily relative pricing in continuing the performed first in of This the As incremental consolidated EBITDA, discussed. quarter, the year well a the said, under year-over-year to tougher reimbursement timing-related expectations revenue where quarter's of margin close under growth have been largely which remained due the the a for impact to as result we expectations, that pressure just results our expected of to products as adjusted has future and half the in new margins back to opportunities. we last the pressures to non-GAAP revenue profitability compression I of fiscal came exception the to competitive and, with discussed comparisons recognition Susan headwinds business noted reflect as earlier, lesser standard half.

are year-to-date the the X show period in helped fees results on articulated respectively. up distributed we Supply also of up X% the share year we X%, perform XX%, within Chain fiscal administrative earnings X%, adjusted beginning the and the full month reform. to part Net year. at ago. a EBITDA track adjusted of are Additionally, expectations share over repurchase our non-GAAP X% that tax for Services is by fully Non-GAAP Performance impact and revenue ahead and is per Services are and up guidance

to associated Now which standpoint, net year penetration is revenue quarter's last a let's was relatively ago. by ago. assumptions more was and consistent the $XXX.X by walk members. the Within Chain compared of a which performance third the Services of primarily standard, million X% further contract in of by the unchanged the quarter by period impacted Supply driven third revenue $XXX.X the specialty recognition administrative million from oncology-related fees margin the noted. a we a was consolidated primarily Net net $XXX.X changes discussed revenue to with Supply From a from million year in revenue with gross ago. pressures offset net million Chain existing pharmacy the $XX.X million, revenue our increased GAAP products revenue Growth cadence detail. $XXX.X compared new quarter. $XXX.X $XXX.X ago, to of adoption Services, same revenue period revenue impact year from already million Growth and million $XXX.X was million I of was negatively same through year

Services. Turning to Performance

performance to in and incentives resulting year Growth was exemptions revenue support applied based lower for quarter ongoing was periodic engagements. reporting well million reporting by as clinical variability quality sciences, and ago. of in technology to from population low revenue subject consulting the same in our health timing and a due revenue than ambulatory lower period are compared business regulatory on $XX.X businesses, Third offset reporting decision the as million which to expected $XX.X

the comparisons in and now half performance highlighted met. year. ago the recognized the year previously I first the of when half conditions stronger XXXX, for to as Additionally, services we the resulted calls, fiscal certain no relative recognition year-over-year is this some in under this prior longer defer standard, difficult to comparisons accounting are period, to fiscal have In of quarter second resulted revenue and provided revenue new on more has proportionally until are but

income the net Looking million compared $XX.X high-value related revenue non-cash period ago. redemption to for in to to million lower was GAAP quarter adjustment to primarily specialty ownership million result GAAP a value certain strategy, GAAP Services, EBITDA year perspective, based $XX.X product-related sourcing. non-GAAP EBITDA unit on million reduced million reflect was Supply quarter largely million headcount partially business our $XXX.X adjusted From at of B offset million prior investments between Consolidated ago. adjusted ago. compared revenue change network profitability. the by was incremental compared ago. decrease Class costs periods, in a and of non-GAAP in required administrative $XX.X reimbursement partners' the million increases the of In in decrease same to limited year price net year. Performance a was by for to income share. $XXX.X positive lower offset pharmacy by $XX.X same $XXX.X per Services non-GAAP and in was a for the year compression a was million the adjusted Stanson partially of Chain compared After common the fees period in the the segment expenses Growth the EBITDA direct and net a we $XXX.X stock for to compared reported $X.XX $XXX.X year The

reimbursement distributed a in million quarter EBITDA fully Non-GAAP fees specialty cash liquidity operations for and our period with was million per non-GAAP fully net $XXX.X adjusted adjusted in flow share a for $X.XX non-GAAP $XXX.X period XX% for were adjusted $X.XX the Increases EBITDA. compression administrative approximately sheet for flow offset balance adjusted for compared our business. currently with of by increased net last a $XX.X totaled the ago. perspective, period compared product XX% year. distributed million X-month free flow cost year to million the year From year, same cash fiscal pharmacy X-month or non-GAAP and million $XXX.X ago. $XX.X ago, income million with representing the non-GAAP will compared we full expect exceed And the of that a year same non-GAAP $XXX.X free compared of cash period Third from was earnings

amount on March and cash an million repurchase completed XX, in ended totaled revolving of equivalents $XXX our repurchasing for future and if program of outstanding any, million share of we repaid balance diluted be at approximately repurchase our $X additional market an And credit X.X with factors. will and billion Class This cash million million XXXX. XXXX, compared A the to million million April. June approximately a on based $XXX.X which at Our shares. $XXX.X repurchases, timing stock. other results X-year conditions, period. We facility, $X.XX share Susan million of $XXX XX, share per the price March, as noted, with the added our We $XXX determined The total has X-month of authorized quarter Board of in $XX share

complete at current fiscal let's turn year performance the our XXXX we the X to we detail more of the quarters and first fourth expect guidance on guidance. the Now year. the the in quarter, ranges for to our our outlook Based for within established of beginning

closed. does well and to the end the the midpoint distributed This Specifically, plan range, range. our reflect we adjusted and transaction not this to EBITDA exit the end the Services we since share adjusted decision at pharmacy financial include related our quarter the to of revenue Performance near earnings the range, non-GAAP impact guidance yet non-GAAP Services per specialty Chain higher fully the segment range near of the update expect Supply midpoint do lower has of business the segment not are revenue into fourth We to at impact. of the not

as EBITDA flow, and Cash will impacted, XX% margin million. corresponding annual in to the key be materially components are mid-XXs. for fully be not total will EBITDA earnings approximately adjusted net a from the increase $XXX per non-GAAP revenue a by distributed resulting of products However, fiscal level consolidated the to share reduced non-GAAP and our consolidated adjusted in low- XXXX follows:

adjusted like year. at note I'd more the business that to level EBITDA a established when as originally higher we for specialty a beginning guidance accounted fiscal However, on this anticipated in we pharmacy business $X impact margin million our non-GAAP of compression XXXX the has the profitability from already of than negative performance

on to like Class shares On brief process. XXX,XXX units a provide A on Class would approximately update I for B ongoing XX, were one-for-one exchange a exchanged common our April of Finally, stock. quarterly basis

your on you today. for Our next exchange quarterly XX. Thank July occurs time

call me over Susan. back Let turn the to

Susan DeVore

Thanks, Craig.

with close me Let X points.

progress First, we're generate flow from operate cash and environment, foundation. a growth and we steady in stable making continue a financial strong slower to challenging

by managing is growth specialty and supply Second, to of we know improvement actively analytics our targeted jour, And decision our care our health regardless we're as resources that exit portfolio capabilities. to around third, performance pharmacy, the core du changing. rhetoric political chain, enterprise evidenced focus across

quality part the of enable for that fact, members system resources, open our and In outcomes health you Thanks call the manage in for a could is your the technology Operator, today. world. care we to and successfully to expertise changing deliver provide cost, reason improve time better questions? exist change please

Operator

Cherny Instructions] question Our from America. first comes you. Thank of [Operator Michael Yes. Bank of

queston. your with proceed You

Michael Cherny

the for question. things. Two Good morning. And thanks taking

of think guess, you a jump pre-guidance, pre-guidance talked how end-market Susan, speak? organic And expectation what in without thinking about a terms see you both the bit giving growth 'XX? expect, I dynamics fiscal to so remaining to segments to First, about moderate to and into that the Would about your of little across dynamic. continued

Susan DeVore

Yes.

low- As environment. mid-single environment. of and call, is I segments think growth we indicated, are we contract on digit Michael, for see do by utilization this GPO largely stable both in kind utilization the we penetration, to and driven

drive penetration. to contract continue We

the Performance some well seeing of that us Services support management for encouraged programs On with decision we're growth-oriented a area the the we clinical growth as out. Stanson. still new side, as by are coming from are Cost services

in we're you I regulatory environment in sort that fair put when business. environment growth the of sides we thinking think are all both has that uncertainty, to still amount low- together the So mid-single-digit a on of of of this

Michael Cherny

just without then, specialty think performance And entity pharmacy lot Thanks. would the overall on a profit I divestiture, the clearly, this, look the better. across

you And this you forward, do get about of confidence, going profit what the part on stabilize across the views think any the about does portfolio? the think how biggest to improve what thereof, review approach you lack change of overall As of a the the and decision might I to you as or having acquire? this you to to entity, assets that want other you or have the this through improved portfolio think give -- guess, punt, you versus attempt were drivers that

Michael Alkire

This is Mike.

dislocation me of our pharmacy the overview future you of Let the broader of address can a just asset, a sort then Susan give thinking.

the of dynamics creating and what overall best pharmacy in the us of since interest growing this this the by to basically, strategy. significantly selling it was that asset. just changed And drove the undertook at thought long-term point we shareholder was moving we value this So has in time market business specialty place

Susan DeVore

as think about acquisitions, Michael, a very The have valuations multiples Yes. process. and I high. we disciplined still other are And

Services. and businesses areas Supply the have in Performance core targeted Chain We in in

discussed, as some growth to market, to We opportunities, support, decision the clinical our management. cost future are pivoting employer of assets I relative

to the very market-changing as market conditions have for our last both we'll inorganically. transitioned. scale, around effectively not focused years. and organically make, it be make us sense population and strategy, this to entered market but so models, in to And And and at to X reimbursement capability are be transition point to changed very just CVS about we the size conditions pharmacy disciplined and specialty health pretty members that dramatically we And sure X that investments over continue a directly and business, that the in that made

Michael Cherny

the on Congrats Great. divestiture.

Susan DeVore

Thanks.

Operator

question Thank William you. next comes And our Ryan Blair. from Daniels of

with proceed question. may You your

Ryan Daniels

that early for groups a you've I'm coming Susan, about the taking to curious then, guess, questions. the do to Pathways start good the savings little Yeah, And I XXXX, feedback of be in XXXX, the January from one. question Thanks would potential talked out shared to physician some feedback my X, any date the Success? shared under you for the also larger new models And on of get novel got number Medicare morning. on savings CMS. follow-up bit getting programs you're any

Susan DeVore

Yes.

couple A of Ryan. thanks, questions there. So

models, for physician new On made I are CMS both clear I has systems. for and payment mean, think, to that the very health models, physicians they it moving risk-based

from the think these and reporting I is employ primarily, exemptions model. less MIPS that, of because all are Premier moving because there incentive was more and the quarter think, I ambulatory the there XX,XXX physicians. into the physicians the last said challenges members MIPS program reporting and Having are about and alternative part payment there expected models than

think understand that movement is real. I members to risk this our

opportunity these I And an think health be our programs systems so physicians new into us to organize models. for within these will

we the think is they for and to to bit. those investing to that movement, move relates continue need growth those risk-based in good It a sense It's models. slower Medicare the that in to that in little but double-sided pretty models, infrastructure models. about and participate be risk understand those ACO models ACOs in staying are do models, how those growth think also continuing they affected be and a to rate, folks going CMS it all we the our the feel models is and And learning has that that, are it in those to going our the Advantage As to systems health models.

Ryan Daniels

then it's actually, doing the in but that a out it these before given risk? that, in, seen want two were it but you have Maybe will entities some demand results were drop of solutions to sided downside others partner model? And for stay help that that your drive to given need accelerate a some risk of

Susan DeVore

if Yes. risk protocols the of can We you your the and you analytics, you're a more manage day, you're acquisition you health and them patient that that on inside system need basis. real-time a do double-sided risk, think, need moving clinical Stanson, particularly every workflow, you to every so with need

We create that to will also continue for risk. and by-product care think pressure these systems services create consulting cost a new -- the to significant data wraparound to and related to cost models analytics and health technologies movement continue this be management of will

Ryan Daniels

queue. Thank great. I’ll Okay, the hop you. in back

Susan DeVore

Thanks.

Operator

Thank question Demko Stephanie you. And of our from next comes Citi.

You may proceed your question. with

Stephanie Demko

Hey, guys. and Craig Mike these for congrats questions on Thank you titles. and taking to my

Michael Alkire

you. Thank

Stephanie Demko

where offering? in just business? prop you Services you just follow-up given strategy divestitures of of a the walk health through us of the Could And us pharmacy Performance consolidated that, kind as overall Thanks. to walk through in today the specialty your GPO you your could pop stand value

Susan DeVore

we population the first where are health strategy. and in so Yes,

new with really systems I wraparound think where we collaboratives to strategy models. services is the in by are these the and related that working health technology, risk-based the providing

continue So pharmacy those how to the of part in we technology think strategy members, medication that physician they strategy, health we ongoing fully ACOs, programs medication be specialty actually active, to ourselves of our think a CMS -- way seem fits accomplish in were says They're has was and ability they're through to to those could We payment, fast do roll it out, population best-in-class that and the services The in granted, of ourselves what with the our the to terms going we we operating of Premier. and relationship management specialty dispensing do is management, only it with place. but transition new and we're it pharmacy all starts and the that these bundled CVS thought continue that continue using it have very our and but models, the We collaborative. still that. market. didn't

Michael Alkire

systems longer-term about Advantage. is, really Susan, as health One three things. are could, helping down if our health, on add Medicare strategy think care you pop for And doubling our we with

we're their care services, help technology ability environment. maximize So to both advisory health in capabilities, as well the Advantage function sort building as really Medicare to a of out systems

number this network. we little that's So notion bit a this talked high-value about Number one. two, of

a as So employers large as you and continuing the but payer, we a technologies think capabilities about shift government the federal as you go to shift and large population providers. build-out to to from health directly to are help you payer employers

value about leverage So our we're really getting out through care population our can thinking thinking to, about is of as workflow, we're lot out Stanson health And systems way the into how thing. in course, believe to model. that embed obviously, new analytics it, population those the again, help all of they're analytics about that of we health of going and to health think we then, how to drive think sort a acquisition, you a Stanson as our that strategy of data of the that

Susan DeVore

relationship GPO, indicative, win, market. in includes question is that of Performance second relationship analytics an the around new the enterprise was and and a Your wraparound consulting services. for proposition Services. which is consolidation that and the includes that this all-in And We I GPO of articulated continuing Ballad the our think, the value several merger

dollars systems we continue this believe movement continue well And will to the so health that improvement for cost significant from drive platform integrated invested quality embedded return inside the their insights quality be organizations look management, means value risk on improvement and us and to as proposition technology cost to the of outcomes and improvement. data and an to services total total as and to

that and changed being enhanced portfolio by it's So SURPASS high-compliance Stanson and the segments two the just other, for the and the discussed. value Mike hasn't proposition other the initiatives

Stephanie Demko

health to a like know All guys Stanson out-of-the-box how right. something do One little systems just value that's prop given do make on that to you for sure that bit do follow-up the question the have, using. a Understood. you is that they're compared what

Susan DeVore

Yes.

out the in because mean, consultants, embedded the force got embedded an and XXX have or we've and have the who health of So because we live I XXX we channel field in systems. marketplace people

time in we members a the a sure organically invest the in launch acquisition. sort direct of the significant out we that after capabilities Sunday happening aware. so sends we ability the we channel that lives, summary that the are Blair has. -- entire market have We to And for or result a make everything actually we something Stanson our consultants pipeline our that the immediately to advocacy company adviser guide D.C., is collaborative, the and happening of or think any do sales the night force, mobilize all we in Premier acquire everything sends out our webinars, it and of field, to of take

Stephanie Demko

Good to hear.

forward Looking you, guys. how it evolves. see to Thank

Susan DeVore

Thank you.

Operator

Thank And our question next Dodge comes of Sean you. Jefferies. from

question. with may You proceed your

Sean Dodge

Good Or on the you back pharmacy specialty pivoting portfolio on maybe about specialty morning, the the thanks. any least other evaluating constantly your you're businesses, it, are at you selling? the talk mentioned guess, there pharmacy and you extent to I some divestiture, being, considering? intend Susan, is all potential divestitures that can for time

Susan DeVore

on guidance are an and constantly ongoing mentioned, we business to as expect currently said year the do perform ranges. And evolving having in so Yes, I full managing we basis. our that,

also the market to discontinue announced the within doing continue making investments enterprise discrete business to approach family sure and is making looking But we'll So we're assets in we exit Premier specialty that analytics, capabilities strategic the have and we'll nimble that acquisition the and targets, have the at we and are chain we're and a our supply capabilities. we're and specialty evolving disciplined evaluate pharmacy -- marketplace to everything we businesses Premier. yesterday of of continue in we decided pharmacy, within to core to portfolio that

Sean Dodge

And sourcing sourcing be the the last after the of And be will helpful. the year? than the that business in insight left all sale how over has what year? this little profile then pharmacy direct products Okay. assets, specialty to That's then the give can of just segments And you that growth contribute into direct a revenue business? will much us been

Craig McKasson

Sean, Craig. is Sure, this

business growing in $XXX terms that in remaining of $XXX business. to yes, business our double-digit the has sourcing the is products revenue of our range today. of So size It component business been, will the in the the direct historically, That at million business million some of levels. be to of high it's we current plans that the been double-digit mid- can a go-forward basis. that, year, on a and I of have about, expectations headwinds that be This business a year continue growth talked given to the single-digit in but more

Sean Dodge

great. that’s Okay, Thanks again.

Susan DeVore

Thank you.

Operator

you. Thank from UBS. Caliendo our comes And next question of Kevin

with proceed question. may your You

Kevin Caliendo

morning, guys. Good Hi. questions. of Couple

come about XXXX First, the and the capital buybacks how M&A I a environment, did what can get months? is to next big M&A trying I'm a your guess, share the of XX from -- to of is between is you acquisition about But do going growth Stanson, repurchase, at piece over know bit your think just given allocation I and we XX you which renewed. often how big little thinking new to priorities think

Susan DeVore

strong So, sheet, we of have lot I a mean, as free a flow. know, you cash balance

a and X-pronged targeted a to marketplace, so meaning makes of million capital our We we employers enhances the approach, level purchase areas it in that at be couple approach grow to capital to We acquisitions, chain and chain and Performance end-to-end million, part we to buybacks and have approach continue analysis, $XX ambulatory claims have interested sciences ability In deployment. supply sense We our supply deployment. really things organic still strategy. combination think have acquisitions will we and the really as areas a go have balanced to data to data the in up as focused of then Services, and targeted I $XX investment and and of the data a enhance our business. discussed, that it services in in continuing applied around do really value to have really disciplined

Kevin Caliendo

follow-up. quick And one

You you've that sort bookings forward? give mentioned growth or moving growing on applied a of digit, segment And mid-single segment the due talked us and can you I of Is speaking that about down science seasonality there know what in the low backlogs revenue that to timing. generally to partly little bit any talk in growth? sense segment? to about maybe but segment that a seasonality type of to was to

Craig McKasson

Sure, this additional then can Mike add color. start, is I'll Craig,

I year-end of projects While see and do a fiscal say level at higher that not periodically we year-end. at tremendous will calendar our typically then seasonality,

to and QX to tend are tend typically I'll that of, see projects science say, in contrast be management the much So Those many duration. it QX in to business. does we applied type cost higher engagements shorter

recognizing the we tail have So long don't revenue over time.

So some about very moving they other fourth still pipeline that the do the do through to long-term quarter more of of manufacturers strong implications and are timing business. advisory services very so growth subject still than feel We of the lot rate with pharmaceutical engagements. a have our of good a type

digit While is engines to single within growing at level, actually today. business of mid low the business that the higher overall sciences one growth applied is Services Performance that

Kevin Caliendo

Great. Thank so much. you

Operator

from our of Charles comes Cowen. Rhyee And you. next Thank question

You with question. proceed your may

Charles Rhyee

taking Thanks Yeah. for question.

your it on pressure you putting sort the last changing relates I is little capabilities changing you PBM And does about some a part about sort well, guess, been think bit about last -- like, the you factor I kind seems you with other sort dynamics pharmacies years. as integrated just It couple as of change -- sort Just that of sort talked business? of of on market sort the the about pharmacy, trends - years when that decision your few of guess, of have in then think dynamics? specialty the the a understand when that businesses of the particular, in think market to your of of PBMs seen specialty larger that network, over how to Susan, where, you've

Susan DeVore

Yes, question. great

different ago from X things today. combination So to years of or are it a X that was

a X double-digit X years it today, definitely market. back or market. not, ago, It's a growth growth double-digit was definitely First,

and much sort Secondly, of more consolidation the for the fees industry challenge DIR implementation the DIR ramping PBM made of financially networks. just the fees and thirdly, smaller it of up and consolidation mentioned you significant And challenging.

an we a and we to continue not it's something our I a financials, to that perspective, impact PBM. have immaterial think, from It's partnership for PBM own directly.

a back So as out sort we that make the -- I And see, future, in think our didn't we members. there's move to really no we looked a into did sense we specialty the to see did nor so level see industry, lessening us for slowdown just nor to make continue in the be fees of consolidation a of business. we change growth didn't double-digit we that how in to available in of pharmacy, to DIR it

Charles Rhyee

market this this And for level big do a see there's Great. of contracting think -- about market of how you I the between maybe just a just when and part yourself? of this have to the today, follow-up, providers of employers market as that you kind type mix go certain in providers, That's sort when this -- and for in expanding do direct general try in you move to and the helpful. talk be could of

Susan DeVore

Yes. addressable of It's and channel. analytics us, have and and data provider a a we a new lot market information for meaning big

delivery. major employers have sciences cost the with it and large of channel ability during year. a provider care This with a using in business. to plan sciences pivoting in marketplace It them We companies' to to addition the applied them is and that use is employer design insurance a their assets primarily who benefit for historically on drive the time very out takes happens sector, long drive with in the and improvement variation in cycles where served certain and taking life our frustrated the really own provider are those

is this or employers relationships if market our segment, view for providers. element because fit that as where critical you market protocols installed the will, the We're a with the Getting do the employers we the Stanson collaborative, that's of and building so the the base now. for we're in and member addressable longer-term another And will rollout building payers.

me for year, as sort of low to this think in long-term there heard the a longer-term And some mid-single it's And play. growth environment there, we of but next be digit you've the will a is describe so strategy. that

Charles Rhyee

And was think to X like, a so that or we maybe further X bit when you say you years say that, little should it out? would

Susan DeVore

No.

years right to X seeing kind X the addressable think frame of time movement I to is that market. in start new the

Charles Rhyee

lot. a Thanks Great.

Susan DeVore

Thank you.

Operator

of our Thank question next comes from Piper And Wieland you. Sean Jaffray.

proceed with your may You question.

Sean Wieland

Thank you. Good morning.

come. new to so stuff And on question another

bit prior wondering a of just specifically, if and customers? the could a talk on into capability, was of -- and how workflow about And there. existing You fitting you see mentioned expand development you your it that auth timing little how

Susan DeVore

Yes.

capability prior with the have So an with. a we that relationship major payer we authorization ongoing together are building

built. we that -- to kind capability -- get technology I a think that's and frame as XX next month XX of that those that time

payers. a out XX to XX of building it will opportunity. to other extendable It have other that will next growth we're months And I who be that over play be in in think it. interested we terms payers for will pipeline the

Michael Alkire

so using believe, authorization. occur going patients learning a Sean, the things. really tool way then, quicken is, of they provide the the is, therapies And working the providers prior are getting and to a to out Yes. with is able it's to what kinds and know, play be pace Stanson will are already that those this embedded of and have Mike, as technology And procedures as going our patients approval providers algorithms the obviously, in mechanisms with we of we're big lot actually dissatisfier you with that to of set doing the

be it'll getting approved. think to a novel approach do the we reducing So time to very things

Sean Wieland

All right. you. Thank

Operator

you. Barclays. Thank next of And question from our comes Steve Valiquette

your You proceed with question. may

Jonathan Yong

Hi. on This Steve. Jonathan Yong is for

back pretty this going to I impacting your view your that mean, All, for but clients' Just comments the general thought Medicare your this on is business how odds, processes is right now? low and is

Susan DeVore

Yes.

Medicare uncertain more a of Affordable an for think repeal uncertain -- the create Care the well as I for just environment Act All as members.

it it's on members away providers be the platform those what going whether I I to our it's that the delivery Care in from after going whether risk. so to figure in think to care a just, Medicare for moving -- going is All, care and of happens focus and environments. Medicare costs happens care Medicare going it's fee-for-service, the manage Medicare with assuming Act, and whether variation environment they're think a I going the rhetoric focus grow is to to how manage the trying But focus getting are on health and momentum. the can and that out administration, be they go how on election the election, affects for to a all they new rid going be for what think, are think All, revenue-pressured to in Affordable is cost, the standardized in Advantage they is

solve, I think in but the long same and term, with in you're creates short term, end the up same problems uncertainty. to place confusion trying you the that

Jonathan Yong

the SURPASS How And you many systems. And That's Okay. have what's up two that it like? look up program, the opened mentioned taken you systems up? more since then on pipeline just health helpful. you opened additional

Michael Alkire

the opened are are approximately the - is literally evaluating XX, just so got Mike. expecting. the process program SURPASS this actually can probably whether participate we have commitment this and they not in higher in through or levels going we've handful We a that that that drive the There right up, program. Yes, now, the of of that is program is

Susan DeVore

to on they X pressure commitment come larger and it, we It their will we've And rolled it so think, of the built membership the intensifies. situation built. portfolio baseline the a XX% and we've XX the get level, volume, as financial billion on to wanted into which first really Mike discussed. does require We contracts, out the

Jonathan Yong

great. Okay, Thanks.

Operator

Thank you. question Larsen And next David our of comes from Leerink.

your You may question. proceed with

David Larsen

Hi.

can Thanks. admin like talk your they hospital nature hospital customers, the market? very any share-backs the And demanding I your trending? more consolidate, about how the earnings as are are color you helpful. there side, GPO of not? the little fee is Any be per, So guess, they will of a On bit or customer

Susan DeVore

think So we there said, I will consolidation. has as hospital fair a continue. been And of amount that

We portfolio, table this clinical analytics, savings talk about about is and clinical got are a can improvement. are biggest I is an We we chain. of and talk utilization spend bring improvement say we've technology their situations, talk we about by and we always far we've clinical platform fee savings compliance technology, we've consulting and the data. we've where always -- risk. driver But of resource all admin those being when a to the what there's enterprise got Premier we what GPO, talk savings, got think we've about talking opportunity in in GPO, can talk a the got got about the about wraparound, we we we supply share-back, high the brings

so competitive. whole we will it's create have the is be for proposition, market competitive, and competitive market value different every system. be we we to health market and The And and

David Larsen

on color the And how Great. the then, far dollars into like? Okay. And And investment that any around generics program? the are along incremental you look what program?

Craig McKasson

Sure. This is Craig.

have So as systems. To investment. shortage manufacturers, a we capacity making we we're talked about of fiscal opportunities working where to date, health the our manufacturers -- made or so not with been investment for in look material chain but capital, one material to can It's last component we more that's to existing getting we put into not pharmaceutical material of quarter, into will for provide it's and approval investments areas XXXX. that has the been continue although in assisting drugs potential those not some that. that But not get with capital, substantial

David Larsen

Great. very Pharmacy. Congrats Thanks selling on much. Specialty

Susan DeVore

you. Thank

Operator

Nephron you. And question Research. comes our Percher of from next Eric Thank

question. your with proceed may You

Eric Percher

relative closing 'XX? one the with question when year this financial numbers may of will expect you sale, you that the the year? fiscal impact Thank you. the of on A quick And those maybe a to line expect gave, do up fiscal the numbers, you annualized occur is

Craig McKasson

Yes, this is Craig.

impact were XXXX that year that the of yes, full fiscal divestiture. anticipated So our provided are numbers

our to We we pharmacy is why have is the anticipated point, fiscal year. then, have it reflected the year do obviously, in and the of still obviously, quarter assuming adjustments at -- this which close, to process but a get discontinued we're for operation fourth the full impact as will, specialty not making a

Eric Percher

in than more a of all environments. of lot then, through worked your of you a three lot And plans way a Okay. spent have decade here, long-range

next you the into that look the of relative the but selling XX process like I'll I marketplace, year, the ask that into I that in as go next challenges you where end up today, come to we of the last won't head you guess, planning and you year, forward level do some year clarity about you As see volatility the you through to the specialty, stack now feel years? or ask

Susan DeVore

I've here been know, You than here Mike's that, more that. Craig's been been here almost XX,

deep lot have that's of chronic I I happening, the think member technology a the with long-term guess to And an technology, machine and so what a insights collaboration, in I think the for challenges data-driven channel insights, we and learning.. about are the health think care I means care. of think like ups system, data the I when I conditions, the and population, downs player big solution challenges say long-term the marketplace. we infrastructure the Premier would the and demographics in data need in health relationships about years that of aging And big do the innovation the the that is

said be I care the I think of short I a my and environment, as transformation or it term, the long-term think, in comments, health think current will continue, will industry. transition I

we focus. a And long-term have so

pivot embedded building this journey we the on they and using markets. to be care are employer in systems same data sides long-term drive of those and insights payer assets are both to fully markets, business sciences technologies markets, we We as so can the life that health

momentum more term performance continue in and have manage that operational and term, about And the short disciplined because be so the to long bullish I feel the of growth challenging short-term. is very we to the in

Michael Alkire

Eric, And this Mike. is

purchases I'm very efficiency us supply really chain the workflow our do and and focus think the two the and drive e-commerce term. exchange supply automating I big ability differentiates surprised to excited front-end a out say, automated technology building long standpoint. be and about in the the that help by I creating really what to from won't on the chain You in that strategies e-enabled that overreaching but drive

SURPASS think program very I the is well. very, doing

in continuing Our to this very co-managing are to of positioned their are well expand supply idea chain need that. we're they in members as support and them

is Performance Susan creating that I the So in about and workflow, feel the about really which Services the feel insights chain, -- our and as equally taking insights I embedding those I and and data think said, things differentiate all the supply good about we're really assets our all good us. truly and

Eric Percher

Thank you the for color.

Susan DeVore

you. Thank

Operator

over further I'm Susan remarks. this showing DeVore to time. at to would call for turn not you. like back any any further I now Thank the And questions

Susan DeVore

Thanks, we results quarter again for XXXX. look establish so you will everybody, we Okay. and in speaking joining for fourth with fiscal forward Thanks report guidance when us to August and today, much.

Operator

does for today's you. you disconnect. in Thank and a Ladies conference. This day. today's conclude participating and thank you Everyone gentlemen, program all may have wonderful