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PINC Premier

Participants
Jim Storey Investor Relations
Susan DeVore Chief Executive Officer
Mike Alkire President
Craig McKasson Chief Administrative Officer & Chief Financial Officer
Anne Samuel J.P. Morgan
Ryan Daniels William Blair
Donald Hooker KeyBanc Capital Markets
Chun Yong Barclays
Richard Close Canaccord Genuity
Adam Noble UBS Securities
Jason Plagman Jefferies
Jailendra Singh Credit Suisse
Michael Polark Robert W. Baird
Sean Wieland Piper Sandler & Co.
Andrew Cooper Raymond James & Associates
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Premier Fiscal Year 2020 Second Quarter Results and Conference Call. [Operator Instructions] Please be advised that today’s call maybe recorded. [Operator Instructions]

I would now like to hand the call over to Jim Storey. Please go ahead.

Jim Storey

welcome, Premier’s and quarter XXXX Michelle call. conference you, everyone fiscal to second Thank

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

are Investor supplemental remind those our earnings of section we Before slides this website Management's that accompanying everyone at get the materially and started, certain remarks I copies results available conference our of today from call and could today. differ Relations forward-looking want the in actual to investors.premierinc.com. discussed release statements contains

might today we the discussed as review forward-looking are expect these detailed obligation the affect in factor encourage speak our These Harbor soon. filings that risk quarter, to including second undertake to for future and disclosures. XX-Q statements file our Form We and with results to of we no which SEC, fiscal Factors update Safe them. you

non-GAAP to we earnings presentation of and which our the are we release, measures financial that our in our the X-K, measures financial financial of continuing slides refer to following our XXXX. reflect operations results June Reconciliations Specialty where expect this accompanying to today non-GAAP evaluate release business SEC presented completion X in Also, appropriate, in note of to on and of the included Pharmacy financial measures GAAP supplemental the exit appendix furnish sale earnings to also the soon. will Form business. Please

Susan to over call the turn me let Now, DeVore.

Susan DeVore

morning, This ongoing anticipated. last revenue, fiscal of let's chain discussed share our driven Performance softness continued core as financial call. in steady business. which performance our call, Services services exceeded was segment second get our the management's with welcome started. offset solid everyone largely we you the a supply growth We’ve on Jim, our to lot and by results expectations, quarter Overall, to so this Thanks,

Based including than the that our performance first revenue in services, we outlook ongoing fiscal the in increased year, impact offset on Services. expectations the the reflect Performance segment growth half more year-over-year acquisitions, for chain the supply our to revising will and challenges of guidance remainder of are

the As we reaffirming consolidated for range also for result, adjusted a adjusted are fully the increasing distributed share. revenue, per EBITDA guidance guidance while earnings net and non-GAAP ranges current

proposition our Before helps Premier importance our I business total we what initiatives historically about a review in members, a our our quarter, said unique want performance strategic delivers be on them detail, and produced to for steady business. both compelling in enabling and overstated to highly cannot and And of new and for last each total value The achieve as a it return I integrated reiterate their retain existing it us growth consistent Premier. this marketplace. profitable investment. has members of competitive consistent win

Greater capability. that agreement and New Group the Health I'm differentiation when Association, pleased Health, Acurity Nexera backdrop, CommonSpirit including mergers, the our value Ballad successes services Health are demonstrate health significant These and coupled sourcing, wins other morning. system the integrated this with achieved Aurora/Advocate and technology huge further we've with of announced York just our with we partnership Hospital acquire last comprehensive this Against the businesses Consulting and week. our And purchasing about very to announced which from

XXXX. in a in combined and the merger $XX Premier's few to revenues two Dignity operates ability These Health when cost among a year-ago CommonSpirit and from about was fiscal others synergies are Catholic health systems than over years more and XXX Initiatives across the created Health. XX a states validate drive wins past large It merging. hospitals XXX sites billion of care generated

more clinical opportunities perspective alignment will in Our on we with partnership just a will see and minutes. provide operational on few improvement the Mike new focus and CommonSpirit opportunities.

with agreement the know of acquire and Turning to relationship been our our future New businesses, I the question Acurity investors. York Nexera Greater a Hospital the minds major to on our Association has

So let on a few that. moments spend me

Acurity regional to more facilities X,XXX we New is a comprising GPO than operates members business Tri-state. consulting co-management hospital chain health-related large own capabilities. highly with XXX operates a and supply and business consulting Nexera York the hospital believe in complementary that our

fees generated generated In contracts Nexera we when acquiring XXX% the the growth contracts been XXXX, very of will extended X-year as we member of This through will are of has receive revenue long-term Premier more administrative most members familiar Acurity growth accessing with early XXX% And renew containing have than Acurity termination and includes contracts provision. by already XX% December by revenue these Acurity. businesses, these Acurity. fees that and the time comes, remaining that been Premier GPO believe through our with administrative no the of

is York individual with deliver aggregator this services. large long-term and to collaborate our customer. a believe added regional members technology acquisition opportunity positive members We and considering through closely the systems health streams both the value This secures significant outcome, the more is us of provides revenue greater biggest Acurity a and New from and very our with

in New York our have driven believe, approach, value Acurity and Association highly and confidence and we transaction by consulting total the this analytics underscores Hospital Further, that GPO, the Premier's differentiated capabilities. is Nexera industry-leading which members Greater

financial discuss into the he financials. in when The acquisitions its of impact impact detail XXXX and our has financial revised the guidance. acquisition reviews more will the Craig factored fiscal been

our steady compelling the include total in and continuing Turning to a proposition our share. Services, proposition value deliver In to broadly. contract continue back resources, distribution, savings, analytics, payments value comprehensive on of and members this on pricing, achieving components The investment by return Supply Chain relationship. focused to TRA fee cost dedicated more businesses we growth remain

uncertainty. to at political the think Services, we in we through by to regulatory We Presidential spent Looking is challenging restrained a environment, election. and where likely provider believe Performance operate been least market at continue healthcare this has ongoing continue

and and will at services Mike provider our as remain we of hard our products, and capabilities. evolution to of where other combination pivoting ongoing At through adjacent we member opportunities unique analytics new the integration wraparound healthcare can time, of services. said markets enhancing relationships, in and shortly, we discuss value work the deep leverage integrated the are proposition That solutions, our core same

new core we So balanced to investments to approach take sum and evolving remaining while strategic a on up, proposition continue strengthening making of businesses, value in focused the areas. by our

said pursue since to we’ve continue will our value sustainable, long-term we opportunities As stockholders. create for all IPO, to

initiatives some the Alkire Mike call we're to let President, walk of who that pursuing. turn the Now our will over you me through

Mike Alkire

thanks down Today call. review our initiatives. are discussing new performance. some Susan, ongoing and and everyone for operational and Thank drill the operational and our joining we specific making on you, strategic progress I’m will I

protective However, supply before the personal get chain impacting for developments global started, we would recent on like I healthcare market provide to some apparel. perspective

you are As the around know, the systems in health spreading stages coronavirus. early the world with of rapidly dealing

a While U.S., product items. also and gowns, managing drapes surgical impacting through here the recall large in we're other

inventory a supply Premier both manufacturers maintain is source of suppliers and products. suppliers from crisis. we focused supply, supply in sourcing on working of and direct consistent with Through ensure consistent products multiple world high-quality build contracting and and capabilities, chain particularly members around the to our our times to

providers. flow everything consistent healthcare our and we power in to products ensure While of can't safe, we're future, continuous our doing predict nation's to the

a program Now in and for opportunities to high Chain our to area expanding let's second of new Services steady ongoing leveraging the into our supply operations our turn to on focus technology chain In segment, quarter. ongoing our our strategies. include programs, work continue expansion review continuing purchasing purchase drug services, ProvideGX growth integrate shortage compliance capabilities of our the the fiscal of that through the we Supply achieve initiatives

drill a services. moment on for Let's down purchase

our component or ability supply strategy, we're technology provided longer-term manage building clinical services out of help to by part which and locally purchase better those systems enabled regionally our a the services, third of challenging As health often of key which routine non-clinical focus, a area chain are parties. end-to-end is

U.S for benchmark healthcare address analyze, that shows source and services purchase which to enable contracts. our hospitals hospitals MedPricer, account this of to Research that of acquisitions continuing recent we other To solutions average, expense. opportunity, non-labor leverage purchase a provides services up are XX% providers typical to and on technology

business for critical our value early still to nicely. progressing as I’m for harness members to more area on, happy spend. this And this we report is and Premier purchase to we While services even growth look driving forward continue of

Services. Performance at Looking

which ability health to are clinical support record we deliver acquired provides the platform development of We analytics workflow. within decision year-ago. the clinical over Health technology, This decision with Stanson a support just electronic the about excited ongoing our

authorization further continues prior to to component next care of our facilitate it's solution, Utilizing proving member our growing of machine as our high number initiatives, well platform quality at platform learning in generate reduced a Services. delivery develop fastest to one critical This the Performance has including businesses strong help our automated interest been and intelligence, to a and within as of standardized cost. a generation artificial initiative a be

a decision One or platform to X, forfeit clinical imaging requiring PAMA Medicare a by for approved creating support CMS consult XXXX decision January catalyst support system for tailwind regulation, the all clinical for procedures providers is a healthcare reimbursement. advanced

Contigo I program employer integrating develop Health on announce initiative. to its for the am just with a employees major care employer We its health. care focus a also to a regard, value pilot our direct that into to high Health, improve Contigo network are to that program initiated maternal capabilities advancing has In designed thrilled with clinical national

this costs that this eliminate quality help in initiatives of maternal higher new As variation on proven and lead Fortune to has provide a part program, company Contigo of with care is lower Health to unwarranted outcomes. XX working pilot series providers to

XX% large a Contigo pilot during last year. is with complications stays chronic fact, fiscal childbirth target hospital's a and employer another major the in planning more. employer second stages signing month, mother's common also showing program current study up lengthen In just costs and released that this or condition to and by for third hospital the continues increase Premier Health

our to briefly initiative. Turning drug shortage

and shortage supplying XXX nearly the now partnered with new program We Drug by to Code. In portfolio. drugs added manufacturers ProvideGX XXXX have drugs XX alone, National reliably our our are

We are that to a care. patient absolutely additional vital XX currently drugs of with are working shortage pipeline

Nexera the ahead Looking and Acurity, at a the few we minutes opportunities CommonSpirit. discuss want see with I to future, take further to

We relationships Premier directly us wraparound with tightly our to our technology, excited more these providers and to forward analytics of broader relationships driving for with Acurity. about Premier are suite integrated These provides our be and healthcare these agreement and continue our with acquire incremental GPO business. services and through to members to value for Acurity's look by members. now we delivering the acquired indeed opportunity can very long-term expand This

Turning to Nexera.

a and customer brings compelling capabilities As consulting base, to a loyal unique business portfolio. standalone management offerings with hospital and Premier's and complementary Nexera

expect Nexera's supply next chain is accelerate chain service enabled Premier's We hospital us strategy. end-to-end co-management technology supply help to

to of customers. and expect technology analysis chain provide buying outside expand a Tri-State business array York and virtual further to of the New area capabilities. We business broader to intelligence enabled Supply functions Nexera's value consolidated

Health, will CommonSpirit, CommonSpirit Dignity this offerings merged Health execution chain. converting previously Premier's entity, Catholic integrated accelerate Improvement of and strengthen and used Premier's and Technologies as supply at Chain partnership analytics the to Services. we'll be Premier's team leverage Purchasing and of Group Looking focused access new clinically experts our fully Initiative Health Organization, to into the tap Premier's Services comprehensive Performance a will Supply and Premier's

today. and developing further future. our enterprise ones, our Thank while and into We In the technology on enabled core now on well closing, analytics you enhancing capabilities, chain our and focus strategies. for supply believe positions performance new developing we Premier continuous focused time improvement your remain

to turn McKasson, Administrative over Now the Craig our and Officer. let me Financial call Chief

Craig McKasson

Thanks, Mike.

detail. a GAAP million through from segment Now revenue of the year-ago. Chain $XXX.X X% let's $XXX.X in second more financial walk million from million. From quarter Services Supply results $XXX.X standpoint, consolidated revenue second of increased quarter net a X% increased $XXX.X

and of businesses. suppliers Net high the contract driven site new programs compliance $XXX.X acute million, of our penetration, increased and X% from resulting across administrative portfolio and alternate contract both fees million care by our primarily addition ongoing partly revenue categories from $XXX.X

product million, of million U.S. $XX.X commodity $XX purchases. and Pro XX% increased increased revenue demand sales by categories, our continued growth aggregated Products in products last year, driven from foods member primarily for Premier

Performance to Turning Services segment. the

million million from revenue quarter $XX a second X% anticipated, year decreased As $XX.X earlier. of

and when with Performance segment year As reduced from to of Improvement we impacting with multiple Services were discussed, CMS conjunction recruitment revenue Network several factors Hospital engagements revenue engagements previously relative the our medical Innovation earlier consulting included academic underway contract fewer centers. in last

contracts. certain growth year-over-year support lower revenue, sciences technology decision timing was certain This new technology the experienced as contracts to the business. and Additionally, as largely in well business in our the related quarter, license partially applied of clinical by offset SaaS

Looking $XX.X to resulting due compared to in remeasurement was at deferred profitability, tax law, in last This North a benefits. quarter a income year. state related future the was primarily balances of GAAP $XXX.X million reduction Carolina's net income for tax the income tax million of change to

After GAAP of Class common in noncash $X.XX based increase redemption negative GAAP to partners the during price quarter, B adjustment million stock the the a required, share. reflect $XXX.X limited our per unit in loss net of increase we the on of value ownership reported second

$XXX in year-ago. million Services Consolidated revenue. growth for the The was EBITDA from non-GAAP of administrative adjusted non-GAAP perspective, million and EBITDA from year. driven $XXX million increase a quarter primarily million fees X% net adjusted of $XXX.X XX% a year-over-year last Chain $XXX.X Supply by with increased From compared segment products

of Services, employer technology the non-GAAP support that XX% high primarily discussed, network. associated factors was $XX.X a decision Contigo EBITDA ongoing our as $XX Performance direct as and in revenue our earlier. from year impacting Health, million value investment The same to with by decreased clinical driven adjusted expenses care In I well decline million by just

income million share earnings $X.XX non-GAAP and of X% $XX.X Second fully per year-ago from $XX. increased to quarter adjusted non-GAAP XX% net distributed adjusted fully million distributed $XX.X increased a from

$XX.XX for value, of long-term share. deliver average part second X.X an our repurchased approximately to $XXX.X million As during price million of of total per the a fiscal at commitment quarter shares stockholder we

first months for of total fiscal shares X.X the XXXX, repurchased we've million $XXX.X million. of a For six approximately

increase increased From period operations driven for administrative last cash driven related administrative net revenue initiatives and due in and product decreased higher primarily X-month Performance primarily million Services capital, expenses. in from from million the cash strategic primarily expenses is acquisitions. and increased and by The associated perspective, offset certain disposition acquisition and $XXX contract cash with the was a and year. flow sheet by increase assets. liquidity working and higher balance with These was in The operations an revenue and flow expenses for on fees $XXX.X collections were increase period same by primarily general selling, to compared SG&A expenses

and XX% compared flow primarily due same flow free from Non-GAAP in of well will of equipment $XXX.X adjusted fiscal decreased X-month results change non-GAAP to earlier. approximately distributions cash with growth million $XXX.X period a growth million, for year limited for driving decrease continue cash free non-GAAP that with to and the The consistent to EBITDA due non-GAAP we XX% as operations, was the EBITDA cash factors cadence expect full approximate or and performance, cash The to year. X-month XX% as their is in free flow historical the ownership. or flow partners adjusted of property and to a is purchases XX% of

million balance $XXX.X facility, $X XXXX on Our million have repaid. the with an with compared We outstanding quarter June equivalents of at totaled X-year our cash $XX million credit $XXX.X cash at billion we XXXX. revolving XX, ended December subsequently and which XX,

our a to overview turning acquire financial the Greater York Acurity Nexera guidance, Hospital to quick Before Association. let businesses agreement provide and me New the of from

As and all generated by of of Susan will revenue gross noted, all the receive Acurity. these acquiring the businesses, in administrative fees we Nexera

and directly fees that mid we with fees aggregate the will administrative in range fee members administrative Acurity's Regarding accordance share is administrative aggregate the an of members with those overall consistent GPO, share our contracts share. XX% with underlying contracted

prepaid an administrative non-cash in disclosed that is share treat certain fee its one-time as of fee from amortized the required financial range. providing the the contracts life press in Premier to statements. release, perspective, effective the acquired this under accounting to When Acurity our expense members on as is and the members of addition, over amortization, the payments Acurity In considering low rebate administrative share to XX% averages contracts

approximately on $XXX.X anticipated due impact The of $XX a for of renewal based in consideration total million member certain guidance. including is revised contingent of and acquiring the our sellers fiscal reflected XXXX potential these in achievement fiscal to initial to the the a objectives. up businesses synergies, are of We payment million transaction, XXXX

million performance than indicating anticipated growth now X% XX% Chain So for to XX%, and months million, year, and updating impact revenue, in to the through $XXX X we Services revenue outlook and follows: products and and is Nexera the the of guidance current remainder turning project year respectively. $XXX acquisitions. growth to expected of assumptions the guidance. financial Based of are to by to stronger net Acurity X%. be assumes of of anticipated of are the Supply not the first a our anticipated we which X% increasing upon segment fiscal and Acurity outlook range the fiscal administrative impacted full-year we This acquisitions Nexera, year-over-year previously to materially to Revenue at fees X% as

We decreasing $XXX year-over-year Services in our an than X%. is anticipated technology Health growth ramp and slower million, million of businesses to the Performance to indicating This up a X% expected slower Contigo originally of segment than decline our due range $XXX consulting to revenue are of planned initiative. to and primarily

growth growth Supply to increased guidance $X.XXX billion, consolidated anticipated $X.XXX is billion X%. due consolidated Services, for revenue to to However, of Chain year-over-year indicating being X% range net the revenue to the in

million X% expected impact are million, a year-over-year $XXX associated We at the range and continued expenses with due for the to EBITDA adjusted for year This fiscal acquisitions. for growth. to million negative to million indicating incorporates guidance expectations EBITDA Nexera the to $XX of reaffirming $XX non-GAAP $XXX X% business adjusted of Acurity

with by additional reaffirming non-GAAP are amortization to and members, associated distributed we non-cash fully $X.XX of acquired the for businesses. the fiscal as per acquisition Similarly, its a adjusted range I the to the includes of year infrastructure negative $X.XX, the Acurity of related at to to related rebate primarily impact discussed, to overall $X.XX are indicating payments expenses X%. the to the just growth This costs $X.XX earnings share same These to X% of expenses. expected related one-time

one-for-one I'd January on exchange like On class-B were shares Finally, brief of common to million process. quarterly on A units for a X.X stock. update a XX, exchanged approximately provide our Class ongoing basis

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

me let over Now the turn back Susan. call to

Susan DeVore

to questions. opening A few call closing the Craig. Thanks, thoughts before

quarter, First, Premier the businesses. led direct our purchasing expectations sourcing in and outperformed management's group by

partnership win. It a market we Second, marketplace. reinforces is as further value momentous our position comprehensive, health validates our our and delivering CommonSpirit merging approach business with a compelling for the consolidating systems in leader believe to integrated

our Hospital X-year lastly, York transaction with purchasing believe contract management our with members. chain early secures retains drive assets, adds And no long-term enterprise Nexera's provision, our that supply significant New to help streams supply Greater termination with existing accelerate Premier, Acurity's strategy reinforces and revenue strategic Group end-to-end which and relationship Association the chain members will we Acurity consulting extensions

so the for Thanks your line open for please questions. time Operator, much today.

Operator

Our question Morgan. of [Operator Gill from first comes Lisa J.P. Instructions]

line Your open. is

Susan DeVore

Hi, Lisa.

Anne Samuel

Lisa. Annie Good for morning. on It's

Susan DeVore

Hi, Annie.

Anne Samuel

hoping little start back the when was thinking the you more of we bit expectations think the still a Contigo could to speak half? maybe segment the we I the in in timing the Hi. And in to about mid-XXs should benefiting model? about Health Should there? margins reduced what Services be Performance drove

Craig McKasson

the Thanks Craig. for Sure. is This question.

be we at timeline with lower we of expected. the a associated EBITDA employers margins the half Contigo it's bit some diligently a as not coming given primarily then of timing as in reduced to little that it's taking Health discussed, our continue up that XXs slower to here. expectations had back large we business are just consulting technology the The but would still have had to and expenses on lower of manifest the mid And in year, the up pace ramp we'd revenue Initiative, along the the anticipated that are and I ramp expectations growth. really related manage hoped than the expecting function, we the First, to

it's with. see Although And will launched we continue that future, XXXX. contribute into we into we meaningfully. employer that of on move the taking we off major growth the when first the from are pilot more see to timeline see calls, a really XXXX extremely expect that talked as we likely standpoint in about currently as when really program about that the to excited we we start previous But we've have

Anne Samuel

one then what's improved utilization. on about thanks. more spoken in be And maybe Great, just guidance? and should your utilization we you’ve that about recently trends. thinking forward And How going baked

Craig McKasson

again. is This thanks. Craig, Yes,

at quarters. couple or We that So indicated last from we've two utilization quarter to ago actually still we call did positive talk that we positive the And analysis in a a a increases declining a some had a utilization a and the well. at are consistent second to at inpatient continuing quarter sustainable for a point, in utilization flip our monitor the point are environment utilization utilization experiencing that. Conference about ambulatory weeks outpatient of as J.P. that seen been fact with this standpoint, Morgan the would trends. second trend, quarters, slightly for so we number We, that not with flat of

in of the could the We that have in being of implications marketplace future. mindful and potentially considerations related product are the the and recalls certain also surrounding supply what coronavirus some

trends So utilization what continuing be of mindful be might to moving forward.

Anne Samuel

very Thanks Great. much.

Operator

Ryan question from comes of Blair. next Daniels Our William

line is open. Your

Ryan Daniels

about for questions. A business. of detail? Thanks think prepared didn't morning. said got bit good Again, transaction. go X-year in M&A the you've quick that Susan, XX% the I on your Can what a was. renewals, I one little you you quite Yes, the into that taking catch comments more

Susan DeVore

Yes.

Acurity and you Greater base. as So, member New large a the Hospital businesses York know, cover

big contracts waterfalls. procure years, for members other and systems contracts lot contracts. there have A of difficulty] health largest years the using Acurity been we different around target And [technical was so what did those that and the

take XX% business business. on revenue all are the and they of But And bolus get of both just the the acquiring the lockdown, other so, XXX% come Consulting to GPO we extensions of as the renew we and that and then up. wanted or contracts we of will

Ryan Daniels

or And of been that Right. Understood. they’ve that bigger generating? revenue does got clients the -- then XX%, the clients. XX% the You’ve

Susan DeVore

the It's revenue.

Craig McKasson

Ryan. revenue, the of XX%

Ryan Daniels

perfect. Thank you. Okay,

Craig McKasson

it's more to be And clear. XX%, than

Ryan Daniels

And anticipate EBITDA Okay. year-to-date, it continues bit I adjusted profits, that at the off, and little XX%, think like XX%. the Services. continuing follow-up underperform are mean, a Is to if sounds look Performance I then there the any on obviously little a of you cost-cutting the the restructuring there? contemplation help of more further required. back or profitability in think growth revenue Thanks. kick you a that’s Do half with not to will in that bit drive and year, such we that

Mike Alkire

This Ryan. Alkire. Mike is Hey,

drive path actually on from and standpoint, people we've kind bringing We’ve actually that think obviously growth a been with of So capabilities that is market. doing deals. can additional focused the leadership, be different help what the appropriate in large-scale commercial of services us efficient that need clinical we We’ve been new restructuring. streamlined transformation driving down business rightsizing been to going of on advisory to the more the more parts

pretty the been changes two those transformational three better months. much of we’ve or So the last part making for

Ryan Daniels

Okay. queue. Thank I will the hop you. back in

Operator

Our comes of Donald from next question KeyBanc. Tucker

Your line open. is

Donald Hooker

Great. Good morning.

really Obviously, this interested numbers there CommonSpirit very at are So the deal. big.

to So it be could what's I in other not? be 'XX? the needle what of part was mover their that? part about a and it 'XX, Would but spend, Is that not new? commented servicing, upside? that Dignity You Is material I to think completely of fiscal incremental fiscal this the were already I you sense -- as when was trying guess, supply chain a and sort to just get

Susan DeVore

Yes.

supply to the CHI So side. think on the have supply we our first, are the it about of big on win no ability mergers. market chain in We We is indicative really really healthcare side. excited a consolidating business business did We Dignity Don, CommonSpirit. had chain the

we business are CHI are side. So we getting the GPO the acquiring -- on the

are at also, system. supply technologies Health Corporate, We chain for and embedded that though, we several and analytics adding the to Systems CHI had entire

that, to have we addition might savings imagine. you of target, in so, a And big as

with in the centralization We the supply on ground saving. partnership of will making have dedicated a chain resources deliver their to leadership, the number desired

of take technologies. And a are there seven always the GPO of the it ramp or So lot of some there to install are. relationship will the and components new six up time conversion as the

excited so, couple it a business very And ways. we're different but incremental of is about in it, new yet

Donald Hooker

of of guess target but back I economics anyhow. that you I But tend this, of is -- vary. the I CommonSpirit GPO at ask when about of think that take your and realize incremental shot the share CHI are relationship answer about Super. will to I XX% think one opportunity kind But won't I sort can with the how and Okay. probably you mean, the a a there? GPO might side the

Susan DeVore

gone significant don’t contract share page we process on the ground. resources Well, we’ve you the the I of a target. was member. same were typically part significant tell There There other was fee the their in was on disclose administrative level and investment value largest any individual the proposition. at the merger technology at of competitive of savings proposition. the on bid which the the value This number total a single part acquisition the was total way went it details big for we will and deals, is the

competitive to our So different in the through levers we in process, all a that feel we bid like creation came can that differentiation for total them. bring value

Donald Hooker

on maybe in one one will Okay. and back And queue. Well, last congrats jump I that. then

whether which something is or real qualify in are is driver, GPO an participation? compliance, And it on can terms the here, -- maybe drivers programs ASCEND update that? just SURPASS those member of of terms obviously and beyond us the important In you

Mike Alkire

we spend. as membership core And $XX for represent the I open a join just in And But until we’ve I -- supply about core then, on a in Mike. XX is annual up will actually billion more you X,XXX will let $X.X numbers. SURPASS, didn't last reminder, we’ve just got the the real a in in quarter. this let that now, about SURPASS. annual quick spend to representing quick hospitals drivers chain than Craig to talk ASCEND up about billion opportunity update SURPASS members

their gauge to program. interest high members additional with that discussions in in we're obviously, compliant So, joining

Craig McKasson

I vast indicated includes our from remarks, This compliance in growth about and ASCEND is is membership. the that majority portfolios. my chain prepared in high across would Craig. only of add last And penetration quarter as I The of is coming the in our kind SURPASS that, talked we color as uptake supply continued

growth adoption good and those seeing programs. are into We

And even about early. somewhat of the underpinned talked the membership utilization some growth, drive improvements are our it that so by but we and it's of seeing balance the helping across I

Donald Hooker

Thank you.

Operator

of Valiquette Our Barclays. next Steve comes question from

Your line is open.

Chun Yong

Hi. This is Jonathan Yong for Steve. on

impetus in GMI? acquiring acquisitions, X, relation moving Premier I that a forward? the of And GNY just the be release, did the press partner the I this so what in Because want November how color limited to to on that. the in impact says get kind assets won't on see was to Just relationship from

Susan DeVore

Yes.

you know, Essentially, aggregator. York member other as GPO. from owners different Greater they’re So, is regional a our that a New in they’re

And association there so had be associated clear decades therefore have are we and and together. relationships of their was GPOs, would the both acquiring us it members. with the two with we that synergies both two both of It bringing to and

chain particular consulting are were capabilities. co-management. in expertise Consulting there very lots chain supply also and We Nexera interested There of with supply in the FTEs

some the most make we thought areas so, made together of in businesses our the out duplicative And an discussions, combining pretty our that getting technologies, two as sense. synergies those people, capabilities, our on the acquisition, early bringing of

way just that things members. the both own the do we opinions went And our And our best long-standing the had continue and the this we through Board committees. relationship those was needed we've with so that to we agreed to with and got fairness process,

Chun Yong

it the to will some why to to Okay, essentially great. healthcare the Services like? the And guess future down, Performance just And with of I with side? Nexera, what still relation related Services, in uncertainty is relation political down uncertainty slow the Performance look I the on to guess in given double kind in extent market

Mike Alkire

Yes.

Mike. is this So

pass this. So let me take a first at

And towards? the uncertainty, healthcare government the continue is those build questions in making our thinking of just a So, systems are yes, in are -- just federal the about. what terms is lot where about it political that thinking of out. They’re that to capabilities investments the direction to for moving of need terms causes that they they

plays of So decision-making process. their sort that uncertainty in

Nexera supply is the primarily As in is Nexera area. far focused as concerned, chain

most you're the performance aware, as chain of products in transformation, Nexera primarily the in focused standardization part services is things. well whereas the best of and is of and business, on driving kinds of the which is focused use clinical all products clinical part so for our standardization driving those supply And about

the different a Nexera capability of bit table. is in bringing So what little to terms

Susan DeVore

very to the with Nexera, is from wraparound Acurity. And perspective, natural our a GPO

co-management relationships a chain their that strategy. relationships So our chain the whole are supply lot and consistent very for enterprise today supply with was ongoing of

Chun Yong

Understood. That’s helpful. Thank you.

Operator

comes Our next Genuity. Close Canaccord question Richard from of

open. Your line is

Richard Close

Great. Thanks for questions. the

in Supreme the on you're conversations terms where, need ready go Susan on gain is position customers, see they’re thoughts the perspectives Mike see trigger on turns okay, that of Is a to the and political comfortable out Performance waiting agreements Just the or are? And or with the having to ACA? them the with ruling to ACA uncertainty, to Services it the and any you results maybe something of these maybe Court what guys. do it the to ruling hit just with the election that to of anything maybe In here. your pull what election customers they’re new to the

Susan DeVore

Yes.

we and in we technologies the see, is, couple Richard. performance the services things they’re that of maintaining information have. So that One technologies services a

retention rates So in we the still technology. have high

being eventually that coming. based that’s think quality, things we paid in So that believe those global and think on we of analytics believe the clinical models, kinds they safety, they

those much it today. are is models just to still not is announce new health, really urgency of right population will consulting They're government how XX% and payment sort value-based the on that new of And a seems federal talking get I start new how goes with that of world it as Medicaid grants. such fast the their bundles, the the streams. now, retention and block there's there's that they high. lot new in depend turmoil think the And We So fee-for-service revenue we think through rates political programs, about programs. continuing election,

they have. momentum And think will have just so we the that they don't

programs he that a term that we initiate. new have about Now whether believe second Democrat, its worried not a wants Trump or Trump we be therefore believe will a and to election in

with we so administration. And think get it on the Trump back track could

back forward. would a Democrat, were they it that if ACA try think also want drive pick to and We up to

going So and our pivot models markets. of momentum Contigo payment and Part think to fast to we Stanson is going using our think and is safety prior part that we sciences of our for create are quality, being cautious tied to pivot to authorization that outcomes about how to of applied to answer Health But to do we pivot change. the ultimate be Technology additional capabilities part total our here is cost.

momentum it'll the that But not work about two Performance and out continue we're itself year in we to take to we’ve that on in as that or that. be past. dependent a Services So had consistent

Richard Close

cited? applied over follow-up the what specific or Okay. the can And Craig is, go sciences, generated there, decline my maybe on year-over-year what you the you was

Craig McKasson

indicated hit. Yes. when timing What I was really of contracts of the sort

as lesser we So quarter life we are business on to enhance sciences a a saw more we still our amount of in pivoting second in than move on the basis, have and a had and We opportunities indicated, slower, contracts a as forward. fiscal Susan current year-ago. focused year-over-year

Richard Close

you. Thank Okay.

Operator

next comes Our of from question Caliendo UBS. Kevin

open. Your line is

Adam Noble

for for in question. This is Thanks Great. Noble Adam Kevin. the

your volumes of within current have as of Just servicing they book customer both York wanted the your well or Association base? are outside for to New confirm completely Nexera, overall in customers do existing any Acurity within as Greater they business, --

Mike Alkire

primarily it's within base. Yes, our customer current

Adam Noble

do, product they expand in Got any what that you talk you I more already simply for already you. you do but you broader it could of you some same between Nexera additional that servicing service customer the services clients. Nexera? base, and about could overlap or think specifically, the capabilities do, different is Are mean, your there offering that And FTEs

Mike Alkire

Yes.

what a value at value standardize areas One that work healthcare to so analysis, they is I think across clinical their they working analysis do our are offer. data level offer we that there primary than a higher with. systems with two they great those job organizations leveraging of

of And the So co-management supply that’s is two chain. number then one. the number

healthcare built help a some to services area. co-management their chain very systems they from supply and standpoint in very, strong out So the measures

Susan DeVore

a And market tougher we think most. actually the market than New is York

and cost supply chain so, it supplement and build management strategy. will supply for And our the chain need end-to-end co-management, really savings of that enterprise

do to we duplicative view So what to not it have, we complementary as what we’ve.

Adam Noble

question. if And you. one I more sneak Got in just could

product year the back a color more half in growth the of what and On give drove as growth well we this in the the could as quarter, do the the quarter the into is XXXX? specific little growth as into sustainable product think revenue of categories you you how level cycle

Craig McKasson

Yes. Craig. This is

revenue products showing strong Pro core primarily candidly, standpoint, actually products, continued in just really our a products protective across incontinence product our from growth attire, United primarily who We products So a have Premier commodity growth. line, direct of strong relationship of gloves, all those leverage very ongoing their a all States. our facilities actually gloves they to do US into across systems, is distribute healthcare for with sourcing personal and distributor of Foods, our food our capabilities

excess opportunities in sell the purchases in market also buys a members about, called we marketplace there it growth as take talked the to what we are to or to substantial of, strong And will quarter. we based on can then etcetera. then say discounts in the at we spot take bulk aggregated advantage very I that so product demand title kind do where of And have

as And quarter in so, we’ve second the from that growth well. strong

really all its from performing a across very business of the of capabilities top So well line sort standpoint.

Adam Noble

for Got Thanks the questions. you.

Operator

comes from Our next question Plagman of Jason Jefferies.

open. is line Your

Jason Plagman

for questions. Thanks morning. Good the

for second can half going helpful. be and we to expect QX Should you’re thinking growth be Services, quarter-over-quarter QX trajectory QX level, from back color on more that the or the of the expecting revenue should second you the it we half? one, about of any First trajectory kind the provide Performance in kind is growth in would

Craig McKasson

Yes.

you I a in so of as benefit of good I as technology Good my think the that expectations year, side through the strong the at really a We first obviously in did up meet side, the have sales didn’t and comments. had we a think it's the quarter, second given sort lower quarter. step quarter our second level. indicated a some been the broader consulting cadence on

basis as then into year, for think slight guidance came expect think in we QX updated where the that the the would and into of the second of I half of QX and us look QX kind get balance this And a at over we a in we back step that up the the at point I would quarter, year. be rate run provided. we consistent will range

Jason Plagman

grow Okay. segment, does margin Chain , that of Supply gears That’s helpful. for a positive business, switching that And you portion On on Supply the any the as Chain then the little profile or negative co-management have segment? impact bit.

Susan DeVore

of direct is to of for business include co-management consulting it the that and additional penetration of the driven. view businesses our GPO, Well, are consulting services sourcing is use going -- that people contract payment the potentially that additional

businesses, a that margin have that with our couple revenue, actually mix doesn't And arrangement. it that, occur co-management It's it. kinds but so which somewhat, is might get administrative different all of replace we just revenue of better shift the a of enhances think anticipation we GPO

Jason Plagman

question. the for Thanks Great.

Operator

Jailendra Singh comes of Our from Suisse. next Credit question

is open. Your line

Jailendra Singh

lot. a Thanks Hi.

with get understand a reflecting puts Services Still pretty to Chain help more Guidance around all and growth function wanted takes not there? around in color lower Just half. Supply range utilization little a trends? much us second end wide the you of the million of and Can the bit Is a segment. expectations the $XX

Craig McKasson

is Sure. Craig. This

prevent will our the downstream we expanding, from market optimistic could those deliver that that us. care, happened implications the procedures careful indicated gowns coronavirus of on to utilization relative and aware that as are we're to the response, of that of marketplace and still the potential have by recalls around monitoring around supplies want impacts and and So while mindful providers that etcetera. utilization and that the And their arms use the could earlier we impact healthcare in in further of which the on guidance product elective potential the implications ability impacts get and I the certainly have to around then be

we the sure careful Utilization, bit that we’ve overall, little of this side we're a on trend to being long-standing just we're had. that. manage of So assuming on make sort we're that kind

plans, an be thing when in emphatically reset quarter deductible yet there new would once update that calendar say I the rise calendar and conclude utilization have to fourth calendar of at you high move those health utilization end times wouldn’t all into in met people higher to year, have deductibles, we we the does think But the increase and tend year. The from this. say I always you other at their standpoint the as a about

can so utilization. have And on also impact that an

standpoint there lot could a of a from back year Supply sort Chain of the where out that are could the of Services there's half factors come that impact So in.

left where And range so downside. we’ve purposely is to the it those contemplate potential

potentially that to we to path first managed recalls are On the provides in half that utilization, and do the that the see appropriately, and strong perform higher coronavirus continue think we the upside end. had continue positive the extent the we to those actually

Jailendra Singh

Contigo of understanding that was majority to going respect with fiscal then was until And benefit our the Okay. Health, 'XX. to be not

outlook. of it investments, is There revenue revenue? So business up was better Is or more comments the really slow on that the as understand expectations it impacting to around some the well. segment just ramp want

Craig McKasson

a pilot working contemplated the we we're employers little I out. off We -- 'XX that of programs. fiscal pilot through our back in Those had we with rolling It originally there those ramp programs year Yes. taken say benefit decision-makers the would as was expectation half than of revenue faster would bit an anticipated in get some calendar have is as were these additional longer to XXXX, up in that the a work discussions with. large fiscal we ground

in contribution then candidly the the fiscal still expected ramp there growth point, in a lower revenues. perspective into your in result And and that in and significant begin do fiscal To increases from fiscal as a slower originally was we XXXX. so more a 'XX. we than impacted 'XX revenue guidance anticipate a up to business, But is of

stand on continuing cost that. a to investments up make are side to We

one and as We are indicated. national signed significant the second very very up getting first Mike to excited employer very this about close

than expected. things So just bit It's little off are to longer a taking way. trending the in ground positive originally very a get

Jailendra Singh

All lot. a right. Thanks

Operator

Michael Polark question of next from Our Baird. comes

is line Your open.

Michael Polark

own good this their Premier morning. Eric Question everything that direct on questions. for for basis, portfolio. Coldwell not in morning. some on a had Acurity. the Thanks contracts of understand Stepping flow taking Hey, through the I

help rate us of you Acurity of as what net fee the run transaction revenue sort from can going purchase? part generated basis So understand gross be this incremental and/or on a it's to

Craig McKasson

is This Sure. Craig.

York carve-outs there and New our generally aligned with minor all on categories. excluded they in incentive. was So or actually were very There some Greater Premier was speaking, whether contracts contracts, did collectively, part of historical relationship so that some the came specific provide the actually fees their we of shared portfolio. in all But broadly very regional revenue of

getting change already result the regional the in credit I wouldn't acquisition, material vast contract a of we majority for fees past. the of because were our share there's those suggest a So that of as

Michael Polark

at The base Similar that question revenue be least business. going you it's segment, piece. supply the like Nexera, business in suggests Reporting on fee is to core into Helpful. leverage that incorporated Okay. can press chain to sounds a It correct? Supply that written enable is Nexera release about the way the consulting your Chain

Craig McKasson

That is correct.

Michael Polark

business of extract? frame you the magnitude any synergies that can to before today aspire And Okay. that you

Craig McKasson

to that would tell in that $XX of levels basis revenue. the we business are an run million on you disclosing million I the mean $XX not range. specifically But was rate annual I

Michael Polark

Thank much. you Okay. very

Operator

next Our of Piper comes question Wieland Sandler. from Sean

line Your open. is

Sean Wieland

Hi. Thanks.

-- you the contribution there guidance is revenue confused and I'm the no Are acquisitions. your follow-up relative to or that, disclosing just impact? a not on just So on revenue

Craig McKasson

share prepaid acquisition. the making component is allocate are then amortize and to For picking consideration all a non-cash as to contract the revenue revenue of to do payment the But is administrative portion our actually impact and one-time fee members, amortization indicated, material I the Nexera of from at acquisitions, not fiscal the because up have rebate its the XXXX, that we Acurity that of of take we’ve that. that we

up picking which revenue business. actually we're is reduces the from that amortization, that contributions Nexera offsetting So net the

Sean Wieland

a what's perspective, reasonings acquisition? rationale aside, strategic from putting why maybe the for -- the So doing financial

Susan DeVore

termination Board with securing agreed those consolidating gaining strategic synergies made a that capabilities the unanimously financial You in that sense GPO, provisions, base, and our convenience customer and streams, revenue huge for what know are Nexera from removing that all associated the locking perspective.

Sean Wieland

Okay. Thanks much. very

Susan DeVore

you. Thank

Operator

Andrew next James. of question Our from comes Cooper Raymond

line Your is open.

Andrew Cooper

here. a little on to of as A deals I keep for it larger heard question, I of willingness sort why to and control transformation this a of take time to for smaller bit question. of there But answers tower go will we've earlier the deals the Hey. and on Everybody, go before, Performance as some type commentary to willing to after thanks think clinical think of when of is all going opposed be high-level in pause at after bigger piecemeal, an those this. these being think for strategically until just deals now right think it about, comment there's the to potentially lots one that least Services go may we covered, back uncertainty sorts the I so we kind more being and kind the

seen? and uncertainty any come that about of you to started think do sort fruition relative has evolving to we've So that the of how to

Mike Alkire

Yes.

Mike. is this So

cost. So word, say I would one just in

really about to system standardizations, drive waste the reducing are I healthcare systems overall trying to when and getting we're clinical -- of costs. think that when out trying

in answer overall that focused question healthcare continues happens control a that tower ways. want they simple a done very variation. it as high to government, really these leveraging differentiated value healthcare evolve just we're from So efficient But but reduce no on quality, standpoint to large for federal the employees, your very, the expecting, a -- their I are think what is, with employers and matter as cost really with

Susan DeVore

long-term a small, We all resources answer solution,. and performance. that technology that will Services that do being The consultant scale and sustainable long-term right drive a be the clinical is bring and have to the cost we Consulting. cost And to Performance point and embedded technology and will engagements differentiation, medium-sized have is big clinical because transformation answer. in believe we, right and large not long-term

other do companies which we our being most today, consulting, not the to is technology vision So, an both but differentiation ability to do. have do clearly of able our consulting to add

we're building and make making continuing investment for that So we're and the an investment future. to it's

Andrew Cooper

[technical Okay. chat Thanks. a stop and thanks. difficulty] on I if That’s will anything. there follow-up,

Susan DeVore

you. Thank

Operator

Susan At this over the DeVore turn call time, like any for closing to back I would remarks. to

Susan DeVore

everybody So, thanks questions for time today. your and

for update quarterly scheduled so currently is Thanks next May X. much. Our

Operator

Ladies and gentlemen, this concludes today's conference call.

now may day. disconnect. You Everyone, have great a