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PINC Premier

Participants
Angie McCabe Vice President of Investor Relations
Susan DeVore Chief Executive Officer
Mike Alkire President
Craig McKasson Chief Administrative & Financial Officer
Eric Percher Nephron Research
Jared Haase William Blair
Jailendra Singh Credit Suisse
Donald Hooker KeyBanc
David Larsen Verity
Steven Valiquette Barclays
Sandy Draper Truist Securities
John Ransom Raymond James
Richard Close Canaccord Genuity
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Premier, Inc. Fiscal 2020 Fourth Quarter and Full year Conference Call. At this time all participant lines are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference may be recorded. now today, hand of Angie would to conference Investor I speaker your McCabe, Instructions] like the to over Relations. [Operator Vice President ahead. go Please,

Angie McCabe

Thank quarter XXXX you, Premier's call. Sarah. fourth to Welcome conference fiscal

are speakers Craig and Administrative Susan Our Chief morning DeVore, Executive Alkire, McKasson, Officer; Officer. Financial Chief and President; Mike this

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

Susan DeVore

fiscal quarter execute Thanks, Angie. Premier morning for we our to deliver and well full strategy fourth XXXX year review joining Good our and the responding is from performance, value pandemic how the COVID-XX today. thank you us we're and believe morning, everyone, why discuss positioned and This our to to we'll highlights discuss stakeholders.

fiscal platforms. very evolve with achieved, We and on I'm back enterprise pleased to and that to programs as analytics supply group we our Looking supply XXXX. all expanded continued chain our chain we healthcare domestic our respond equipment. growth against to our providers manufacturing our promote progress the longer-term immediate to for members needs our to personal capacity alongside and invested We of continue protective COVID-XX during purchasing strategy.

continued to reach invest during the adjacent expand services We our improvement year. to in performance organically our we completed three and And and markets. acquisitions technology in

under in And A restructuring and entered demonstrates long-standing stock We long-term also over provided of through the agreements our the shareholder our and extended of current especially we value overwhelming of level we the $XXX million and repurchase The our separately members. strength on completed into support stock recently of common repurchase embarked purchasing program. of and Class return our XX% members corporate by our relationships group provide, environment. with the this amended

applicable. decrease Compared growth and in our full income earnings share increased our X% with revenue, and basis with XXXX, in on a results adjusted across Our both consistent year net financial with reflect the solid quarter expectations and EBITDA as GAAP finished execution GAAP year fourth were and we businesses. adjusted net and a per fiscal

continuously much we the pressure but as detail by predict fourth are and schools exactly we difficult had many technology, hotspots, in and data expect businesses. it's business, at phased and our will remarks, of his this COVID-XX the variables utilization There we by discuss and monitoring patterns, difficult quarter. here extremely continued on the how in reliable healthcare reopening environment. and to potential unprecedented play pandemic states, As our geography in anticipated do COVID-XX for And pandemic current make and Using COVID-XX accurate the what forecasting duration our are resurgence affected business time. from of Craig in more that was

result, this detail this possible guidance we a his it As our impact fiscal remarks. what in XXXX not will And not on us currently to therefore, at predict time. be is Craig accurately are in for year. full more establishing will address business the this fiscal

mid growth ago, though, adjusted adjusted communicated fiscal consolidated high in Importantly, to multi-year in revenue, EPS. single XXXX, the to digits as weeks for and expect rate annual beginning two net a compound we target EBITDA

we levels, demand program increased opportunity the programs, critical for affect generic contract, and an member significant with shortage it and members our XXXX, demonstrate product the presented our and drug providers. to systems strategic demand business we pandemic our us Through able of and to partnerships, for operations participating portion forward-buy fiscal other historical alignment were has address to our GPO providers. value categories expect capabilities, While the direct a further healthcare our health of differentiated non-traditional our sourcing to in member many

system of have a leadership future. COVID-XX resurgence care more a taking challenging a in begin and steps current mitigate this health We care create environment, the supply played manage the key providers helping and and in role chain health through resilient to impact future

our improvement in in four, technology-enabled belief enterprise on care diagnosed for The continuing providers. months health and the and further to care two, elective our flu season position and prepare on time reinforces the quarter one, discussed care care surges additional the discover member resume for U.S. COVID-XX well confidence and while COVID-XX; costs; both performance them performance. three, impact end-to-end As market to potential over build communities; procedures, our in health their To to opportunities efficiency and normal pandemic strategies. call, coronavirus at their and upcoming past and financial same for as system delivery health help chain patients with supply delayed and as infrastructure validates predict improve fully earnings care analytics partner third are the our with continuing we several

automation insights also and are providers by our In with alignment to expand members longer their we and clinical believe connect leveraging simplified With costs. payers, sciences to chain we've believe in we predictability more support to following actions execute enterprise value position business. ago, outcomes level on corporate addition to to for strategy our analytics further improve we providers, reach all the employers improvements strong are provide for announced Through companies we supply continuing significant transparency restructuring, structure to and and the unique to capabilities to reduce driving life our market of our our we and penetrate order positioned the strategic over our our weeks and our term. two stakeholders stability, markets, deliver XX% well and

through extended We our our members them GPO vast the agreements amended alignment long-term have strategy. unique members' demonstrate and with and with majority commitment deeply that recently our with embedded relationships of and to

quarterly flow generate sheet we We a deployment have balanced also cash of believe capital the balance flexible consistent will and that a and including payment dividend. strong operating our cash approach support to

transform the care of of success thoughts challenges continued mission we said we've engagement our before, many members, and complex health our the Premier's today. country and our need cross-cultural is within to communities As societal our improve within which diverse communities, diversity workforce. the facing representation health to improve to support of own across order are In times and

training, further enhanced this implementation including program for In of inclusive been resource XXXX, and more program inclusion open diversity have we support belonging committed groups, We continuing this, and of and forums. to inclusion remain fiscal expansion a support and have engagement the additional Premier. at achieve to initiatives through several formation we diverse To culture. a diversity comprehensive well-established of employee our and additional

supply to for Before want of over I thank the our member on more the predict resurgence used their employees continued of technology for treating disease, their suffering and frontline to COVID-XX, focus and resuming to and systems term. Mike, safely resilient our services care health turn procedures a surveil commitment all chain the delayed patients and to effectively workers effects creating call innovating longer from to health and while treat, more and elective and and I

Alkire, over Mike turn Now President. to the I'll call our

Mike Alkire

start I'll XXXX. for operational achievements fiscal with of few Susan. you, Thank our a

we among approximately and others. Health base the new through Virginia expanded have Health, CommonSpirit VCU year Children's providers now our health with First, as relationships and and alliance Mason during grew X,XXX Health We as with and hospitals well other organizations. XXX,XXX Hospital member than an system, Boston more systems

purchasing the running GPO to $XX billion. increased volume contracts Second, more our through we than

business actually and institutional that do Third, a that in rate member an that renewal owners we XX% years, a member organization. or very fiscal retention us high of tenure satisfaction fourth, as value our achieved an rates. with they strategic bring And group indicating long-standing own as survey members approximately XX% not their Premier demonstrating annual view for our vendor average partner a purchasing showed SaaS view the XX% XX retention rates of again our to extension with we XXXX a nearly our have

evolving We achieved a pandemic. role with in health strength recognizable Fortune Score critical the some manage high-performing of the accomplishments believe environment by through to now care members. help playing most of Promoter our partners of I'll In COVID-XX is is our companies and the relationships than XX. which XX%, Net unprecedented addition, the we the our discuss on Premier with the caused more par these underscore

procedures product appear to of surgical spreads, elective remained they Although to spring, in shortages the strained the the medical supply further severe of disease than chain be were supplies. due resumption stockpiling and less

potential areas GPO redistribute process portfolio work business; in co-investing with surges nearshore to domestic demand equipment XX pervasive contracts nature products new manufacturer; addition by supply sourcing that these supply identify the offshore exchange direct our of previously and With trade to personal finally, on onshore, themselves shortages monitor. and equipment technology critically clinical of the and domestic is that our with chain of that to pharmacy of chain of COVID-XX-related needed area expediting diligently protective an suppliers; expanding needs members COVID-XX continue in protective future We continuous areas Ameritech supplies vetting services providers to in contracting the developing through can surveillance better concern; excess anticipate and through COVID a products brokers new and address addressing potential our and the for respect to among portfolio personal predict untapped enables and this creating and of primarily, for healthcare as such risk drug and our over sources and supplies. manufacturing need; our investment X,XXX Prestige

than program more drugs program ProRx address focus FFF; distributing ProvideGx care specialty through vaccines COVID-XX-specific sources and and drugs for including safety minority-owned and drugs the concern complications are rates through contracts; more through drug for procedures; following private necessary list; of pharmaceuticals. well providing our access these and elective to at-risk finally, the drug to for stock shortage greater label shortage XXX continue our fill of and in areas as ways: XXX supply emergency continued weekly monitoring of manufacturing We as distributor securing that Premier the on enabling domestic through multi-source on and dedicated than

our span chain to continue processing cycle integrated purchasing service the fully into front-end e-invoicing outcomes their by a from of advance member continuum supply the will purchasing with supply payment to We and supply platform a beyond and business to and technology partner capabilities. that back-end services providing e-commerce supply services co-manage chain our capabilities full traditional chain GPO

believe we partner, as well a member compelling grow as able an business our continue cost our even savings As more health as proposition we provide be providers and significant for through insights value to will we to efficiencies. trusted operating care

our also advancing analytics for by strategy improvement performance diversifying enterprise progress address healthcare make new to continue capabilities our to further markets. and and enhancing We providers

Plus and is system participants. progressing offers for of Health this improving Health of one costs Our of the provide customer of at our in care care, this. now centers Demonstrating development is the to administrator clients the our their value customized strategy, decision revenue further partnering system third-party centers and we health well. excellence enhanced generating with excellence health of employer care on advance that employers made care Health high-quality, partners. specializing associates through administration reducing of and to combination, of programs Through initiative strategic Contigo of high-value standardizing for nationally Health is extend benefit we to acquisition management Design The Contigo a care focused for long-time and our provide a their recent and direct-to-employer Contigo recognized by integration to Contigo families. relationship the management are core the business value-based program example Walmart associates the solutions health continuing Health

bariatric health to through We supporting on spine and employees' their programs. cardiac, joint will focus continue

was Plus to support of of centers with Lowe's for centers partner held which programs. Health continue excellence We Contigo acquisition a Design our variety first to of associates excellence the through Health innovative through customer their

recently engaged to our of to organization Schools XXX,XXX-member SISC a employees also or excellence We access Self-Insured of provide California program. oncology their centers

regarding turning I driving call Craig, diversity the comments reiterate of Susan's the our and Before in over our want to members' to importance success.

to as our the of our inclusion supplier We well they jobs. life addition improve for and small compete, diversity and our diversity communities years help enterprises more members thrive. members' minority, share we commitment as serve business in create businesses established better-known a In and helping suppliers women grow the belonging to than our quality and programs XX program. robust employees, Diverse ago

and I they COVID-XX Officer. meaningful Finally, navigate to appreciate our the our communities hard I Craig their and for greatly work made. Chief thank Financial members employees pandemic. want have they the and the the will McKasson, over to all difference our as that also turn Administrative call help now commitment I to

Craig McKasson

our XXXX communicated with COVID-XX I'll some of on significant range a this our call, near our our restructuring might and the revenue around some of thoughts and pandemic to we financial thoughts the anticipated fiscal successfully and exceeding additional results, our term. last performance begin today provide on impact guidance of the we related COVID-XX guidance the with close Mike. business. our quarter nearly earnings expectations XXXX discussion impact for announced impact how fourth businesses despite Thanks financial brief in recently outlook year and general our Overall, by profitability achieving the and finished ranges achieving our fiscal

as fiscal Net result million, administrative increased a volume XXXX, decline of fourth X% $XXX.X net increased primarily fees a supplies fourth the pandemic. of the the Services XX% result slowdown increased consolidated revenue prior protective that the from supply of care-related from and XX% volumes. lower decreased for overall COVID-XX XX% chain quarter compared interruption revenue of segment site of caused a of members a purchasing high-demand of $XXX.X due to ago. Products revenue efforts by Supply secure an procedures, spending quarter. personal the our Chain equipment For quarter member and the revenue pandemic non-health our driven elective year quarter-over-quarter, million, with in as other alternate to utilization ongoing fiscal COVID-XX XXXX and year

hospital part on discontinuation decrease network planned the on Turning by and overall decreased to a ago, Performance Services. issues Revenue The of COVID-XX government pandemic. technology $XX.X of quarter, also providers million to the consulting of fourth primarily of driven the focusing was former our result XX, related by as a XXXX. the care contract as driven ended a that innovation CMS in health in X% and purchases was program year improvement decrease from engagements March

balance X% million $XX.X and XX% revenue adjusted a meeting flow was the $XX.X XXXX. and $XXX.X XXXX contract fiscal for due addition operations distributed with result as decreased million factors: Acurity growth earnings members was declines of decrease for asset XX% associated quarter, fully its in and pandemic Health the $XX.X our a of and incremental increase for million million primarily of by $XX.X in fiscal in adjustments our of Nexera. based products the offset quarter the in In Supply was $XXX.X the income the with million, of the per $XX.X on and as a Nexera share to the Services' $XX.X primarily pandemic. network. by first, fully a a XXXX net associated one-time related of from Contigo decreased assets certain After Services with the to negative administrative $XXX.X a increase million, expenses our to aforementioned to B decreased the acquisitions of an following a in in expenses price rebates Net well Class reflect million $X.XX increase compared $X.XX and the administrative Chain purchase FFF of from share. price to business, CMS of a Consolidated a unit was This The fourth decrease profitability. of agreement loss million partially to fee pandemic. liquidity and travel ago our $XXX.X result stock adjusted revenue GAAP from in partners pandemic. net a earnings million From EBITDA adjusted of the as purchase segment, year. in interest expenses revenue paid decrease ownership result and by prior income primarily the a was Acurity These required which the the partially Medpricer quarter-over-quarter the the XX% driven value EBITDA adjusted Adjusted year as fees perspective, year Premier, due and our travel as sheet was entering redemption of decreased net with during Performance minority government excluded quarter at decline declines the non-cash in cash into by the last meeting year in Acurity XX% attributable of prior the prepaid the limited decreased were from Looking and to decrease attributable with EBITDA compared to from fiscal contract to expenses per common investments of for stockholders share lower million offset of as ago. to continued agreed in quarter fourth acquisition. Acurity by with distributed

prepayments And million or for protective the primarily The for third, due of that critically Services flow and affected Free million, decrease offset cash driven tax procurement was decreased and or XX% adjusted $XX million for XXXX. by XXXX fiscal to to distribution by members. Performance lower $XXX.X of partners cash compared approximately in needed EBITDA acquisition-related of with same was flow limited equipment related in approximately and from factors $XXX.X a to fiscal partially XX% the payments the expenses the change fund pandemic, deployment ownership. to Second operations revenue. was personal

the and XXXX fees full the was the of cash our net free due result a flow of fiscal effect to quarter revenue year also pandemic on Our fourth cash of impacted administrative necessary these cash our in PPE sourcing procure for members' to strategic to increased resulting outflows address products need inflows direct and decision operating flow use from to products. our timing

result at of and in five-year amount. a demand, June timing made a million XX, cash $XX affected As repaid payments subsequently with XXXX, of member revolving to million product June $XXX.X sales. with flow at surge quarter collection XXXX. our balance of $X million an the subsequent ended by of Cash were COVID-related $XX.X have XX, totaled million We we purchase products and and facility credit cash $XX on cash when on equivalents routine billion the compared outstanding the was that

and item the $XXX corporate amended the million as cash to these we announcement From net years. XXXX, section cash previously of a our flow be approximately fiscal operating administrative payment to our reduction several additional tax $XXX our fees flow the actions GPO financing the to There fiscal receivable a anticipated expect in perspective, an or operations. and next to our will actions result of cash aggregate TRA, sole corresponding we amended of requires million agreements, The which like be revenue from over some in This also strategic as impact million recent agreement to the restructuring extended to of communicated, statement. be income termination of $XXX the year reflected the from around will impact activity Following continue will separately provide clarity operations would of I GPO impact flow in from a agreements. XXXX. the

quarter beginning pay installments equal balance the to quarterly ending reminder, less $XX with the As this March a XX, than in quarter be to million paid in XXXX. expect we XX

A B common result historical expected common recent the all of cumulative shares shares stock, when Next, to units the with from into be per $XX million a to $XXX exchange which positively cash and combined XX Class and This of impact expected in is exchanges million benefit next $XXX to operations $XX by savings. year over is tax million flow million in to the future Class years. realized from cash

restructure of the $XX from to to of XXX% several attributable other the related now of expect in impact years operating the The to million flow that have tax next on fiscal $XX Premier similar a we income impact could positive factors. impact depending and being other Inc. XXXX a cash of million benefit is over to operations

To from reporting This benefit million period also our tax earnings provided. cash expect cash rate benefits, that impact of GAAP I for one-time periods. Premier's will further rate years. be million included tax X% tax several already $XXX a be will cash in And result spread of But to a savings to XXXX. cash just impact income with prior are over the will a and range tax XX-year future approximately tax the in million use from simplify impact tax $XXX of benefit XX% consistent to to all per and tax the over $XX of the We calculating is adjusted XX% perspective, simplified fiscal in expected $XX deferred generally our will effective a share or we expect the purposes that million. continue of to we aggregate to rate in that estimate next

a to allocation. around would thoughts like to I moment Finally, capital take our share

acquisitions and strategic initiated to we of Given a share. flexible and ability weeks recently support Two of stockholders. sheet, well we as dividend continue that the that have through strong investments both believe reinvestment, our cash to our investing cash ago goals in our per and quarterly announced capital we $X.XX Board also declared flow our as returning business disciplined while our organic balance Directors

is approval in subject growth the general dividend business by future future conjunction nominally expectation While with be market dividends our to to years. the Board, in conditions expected grow and will

we to we discussed given the our XXXX. guidance earlier, the on not at time. related Therefore uncertainty fiscal estimate impact Susan currently pandemic unable to accurately this are the XXXX fiscal establishing in As are of COVID-XX, performance

We commentary forward ability on currently will we expect the we as to move may That do provide our said, like directional business our progress how throughout the I'd assess continue short so term. to to some in year.

Our be GPO net administrative EBITDA overall care certain continue fees lower revenue, utilization, will a to purchasing significant in deferral which by slowdown and elected pressured generates procedures in the health of non-health care-related areas.

Our than revenue, benefit our lower our of which direct members. as the other supplies a to products continue sourcing will generates title critically PPE margins taking ongoing our secure high result in from demand to GPO, for product needed to and efforts

in Services existing and Our businesses new engagements. finally, engagements we of to potential decision continue making Performance the also to and place balanced delayed environment. timing take company delays post-COVID the will we will that resources have technology current some between continue future And a while to our growth experience related approach for completion in the in environment, in consulting diligently ensuring appropriate expenses a position for to managing

and to as the net target can. have through annual adjusted EBITDA adjusted indicated, in you Thank high environment EPS as consolidated for beginning pandemic XXXX. We multiyear compound single in for as fiscal growth digits to the a will we And revenue, mid to continue we we expect time manage today. your rate effectively

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

Susan DeVore

appreciate the we call to different Operator, Please in me questions. either, because questions all on participation call you accordingly. them address we locations. are Mike, Thanks, we your open and Craig. today, address Craig And for will the may your or

Operator

with Thank line Instructions] you. the Our of [Operator Percher Research. comes first Eric question Nephron from

open. is Your now line

Eric Percher

with a Thank you. question for I'll start Mike.

levels of dynamics seen but your levels that PPE. you up? for costs of procurement along about understand go help talked at now? present? demand much the elevated some able meeting right to are us you Have customers pass How you of Can procurement to historical You not with

Mike Alkire

Yeah.

So just take highest me level. the at your let question

in very the surges is we So what significant saw demand. obviously

saw XXX%; surges surgical XXX%; with we XXXX%. almost – of almost NXX mask, gowns So, starting XXX respirators isolation

demand So be there on was – obviously to continues chain. supply incredible this and this the

you obviously that versus the all And so continue that the supply, raw not that only to that of amount cost go the up. occurs, – significant when the goods amount but goes when demand materials imbalance of finished of goods the have go up, into the

increase depends seen So the by but all most – category, PPE the part significant across it we – all categories. for cost the we've a

back Some of come down, see – prices to slow to we as we to demand back you'll down. just them are most go are down then beginning for sort part, the as come But when we – are continues offering prices the we best and procure the go of But the product, we the price we that how out try into to factor we membership products get. at to get to we prices that can obviously, membership. the continue

Eric Percher

on of hospitals what reaching it demand? the gap those giving when are at That's looking you of kind today? Are need we rates products, they a healthy majority comes get helpful. to the to meeting And still

Mike Alkire

Yeah.

still stabilizing. think getting still There categories I are we're things gowns. are around isolation needs struggling. So We're obviously, still that

are to about with the vaccines. be thinking going You're and that things still we're as needed hypodermics hearing issues associated

build online So products as additional out continuing well. resiliency to support bringing and we're those to strategies

Eric Percher

at being year, And business end ask fiscal in the update non-health much can the there total of the on how areas? care I is is of an

Mike Alkire

Craig…

Craig McKasson

Craig. Sure, This Eric. is Yeah.

Mike. Sorry,

it's care non-health today. our but X% areas things of like other about of our hospitality colleges business about that GPO business if our nature, of represents and venues think you X% about So and universities GPO,

Eric Percher

that, for you. Thank Craig. Thanks

Operator

Thank you.

from Blair. Ryan comes question line next Daniels of William Our with the

Your line is now open.

Jared Haase

questions. Yeah. Thanks Hi. for Good morning. This the is in Jared for Ryan. Haase

of single-digit of and at or this environment, more comfortability maybe this terms you XXXX to be growth we back growth any are how in FY profile to I split actually needed the customers existing maybe I Just acceleration customers? new you. in visibility support about for getting about should is normalized And that talk – Craig, point? think investments back this that a maybe about year either could there the I drivers to you world? the wanted the range. of post-pandemic to the specific versus guess, to growth made give just talk mid in with high of

Craig McKasson

the Sure. question. Appreciate Thanks.

growth purchase So chain will of growth the expansion we alternate to and the purchasing The business penetration business. we base the continued consistent return pandemic growth services our at newer relative low majority capabilities to anticipated history categories, rates site will such that single-digit to as areas, of longer expansion areas believe mid additional look we once and past subsides, as driving existing services, that into our in growth term into group supply membership of and the physician side et with cetera. from the come our preference

continue we would direct And in back as to we so and some footprint X,XXX hospitals the that growth the low our first million of we get talked see penetration GPO seen tail across coming more that in the We direct products. critical group continuing already and normalized in these of about But levels, incremental half in large from end procure we business, use percent return some and in sourcing The from growth. providers. that of XXXX. direct categories sourcing. fiscal XXXX that's for with revenue over We get purchasing systems health additional sourcing the we've our for very we'll today component business the with and our XX-plus for double-digit outsized we've But XXX,XXX have of growth once supply of to other place fiscal way typically obviously factor expect $XX the membership services. new product forward to growth the chain expand to always buys after

our side to those on see in the then fiscal services consulting single-digit business. business did declines the Performance of good the will And chain that So in but in the growth in solid technologies mid supply for yield mid we to XXXX, business high growth of Services single-digit fiscal part of combination growth have XXXX. continued with

look it's to consulting we whether we as so wraparound fiscal implementation XXXX, think And that have we business the technology tied reset the services to business.

and to ongoing past and to talked huge we've that That amounts question in with in investments, fiscal adjacent working run terms $X beyond about and doing years your come rates. such make not so growth. science ongoing with at analytics million incremental and initiatives then from in strategically providers, but companies. and we'll expansion Contigo single-digit Health above get to think will our to our continue suite both mid high our technology-enabled million And back that chain services strategic capabilities employers been payers, to expanding $XX investments providers, initiative looking dollar to as And further we in relative providers as we've of the range life XXXX, and supply will in our new markets we of couple

Jared Haase

it Okay, great. leave that’s helpful Yeah, hop the there and color. Thanks. I back queue. in

Operator

Thank you.

Our next line of Jailendra the with from Singh Credit Suisse. question comes

open. now Your line is

Jailendra Singh

opportunities like you Can for explore or would invest will implement bit capabilities? ventilators, the investment manufacturing thanks Hi, additional And do similar that provide Ameritech helpful. other little to guys Prestige domestic a in products color guys color How there similar plan critical much testing program programs everyone. gowns, more be add? your kits? on will you Any capacity

Susan DeVore

Yeah.

Mike So take for the you don't detail? this why

Mike Alkire

Yes.

the events level, we manufacturing yeah, going -- care like our highest at just natural need want future pandemic a that those on we in health about obviously, just focus to So to are a or disaster. think areas as providers domestic

adds product. we and in of made the So, Prestige investment obviously, units Ameritech it millions of

with domestic that bring the Prestige investment online. really Ameritech happy we're to manufacturing in So

be to continuing look in going are domestic additional PPE other areas of manufacturing. We to for

that process manufacturing near-shore products come prices or Southeast that opportunity gowns. the those of prices either other products a for We long-term, bring Asia huge there's from entire like to think think and automate places. close what So isolation to are

We in are pharmaceuticals. considering also areas

program, the drugs investments manufacturers for ProvideGx good see domestic definitely short in in the domestic API. that we can sorry both as obviously supply. I make as us manufacturers of have which for well finished are investments I'm pharmaceuticals -- We the additional Provider making in

areas So thinking those we're would about. be other

Susan DeVore

and capital our commitments and the the And to invest we can we at philosophy. not Ameritech, expend competitive alongside that's can then philosophy Prestige what is we meaning long-term with is can if get that, prices Jailendra our significant which of we product our just minority investments add members, here levels did for concurrently make buying

the right limit may the members the us. critical outlay have categories these maximize have to and long-term the and there trying of most commitment some of capital So level alongside in we

the that's So philosophy.

Jailendra Singh

Plus, on you experience update Health Any Okay. And Design share here. to you quarter? then question a or can flag? success acquisition quick last HDP follow-up early announced Any there

Mike Alkire

I'll Susan start. So,

than in. You're welcome jump to more

So, yeah, Lowe's we re-signings have had talking my points, in some, obviously, Walmart. by and I mentioned them had nice we've and some

Contigo into obviously to help real happening focus expand support our what's So more employers. there. we're services to health different providers initiative, happy the with continuing which work entire is to closely -- Health we're with our care We've

Jailendra Singh

Thanks. Okay.

Mike Alkire

you. Thank

Operator

you. Thank

the question with KeyBanc. Hooker next line from of comes Donald Our

Your line open. is now

Donald Hooker

question you And character question Great. is everyone. much margin was there was than up going year-over-year June curious had in in -- forward line that the revenue about know have morning quantify June any the revenue. quarter. a anything revenue I significantly of it was as the revenue of of the the Can unusual we personal the But as big is terms obviously on just margin? quarter? in lower Obviously, that might how equipment? maybe implications I margin if think was of Good changed that the on the product's the products the protective there detailed margin. character GPO

Craig McKasson

I'll Don. Sure happy to that. is This address Craig. be

in in response, and of quarter PPE my $XX would critical million, base $XX normal we of a over So as experience beyond above I with mentioned little associated about procurement our previous supplies of the what be. fourth the million had kind revenue

is we're potentially building cetera uncertain the sort to are XXXX, we as long pandemic and given this persist. excess likely demand of quarters. As look But treat people that thinking stockpiles that this first again, to at for the on fiscal go couple will patients, and of time, continuing et to how

We fiscal early XXXX, to relative United a margins a direct pandemic terms little for crisis when of in stages getting the kind over products the our business in the single-digit on of in of the half front So margin pressured sourcing low being to is of to were characterization it States. of revenue the the bit margin. of similar there was more

to sort it the overall. our of distribution into direct of getting over on say, with much stages on we that in here back normal early product channels, with tail it the of incurred I'd single-digit business We've and portfolio expense more overall in additional of quarter now So getting back the sort and get so whatever planes quarter, the to we're and it took the states. some returned third fourth end consistent margins sourcing to kind low of

Donald Hooker

you. you I stockpiling. there guess, mentioned Thank And Okay. Super. then, about

about I be go to of think of sort as But clear there health any been think are strategies terms time? kind just your the regarding in do you have folks of kind all in terms we guess as any in of Just just-in-time longer-term, out toward inventory pretty over of is how levels sense past we Is systems come -- could there inventories? inventorying. what And that changes kind suspect oriented members change general by forward, of sustained any this? your of

Susan DeVore

We do is sustained change. think there

them we've need helped XX-day of XX they critical-to-operations believe the then their stockpiles. or that think and is identifying own do And who building those providers need We've been or now that XX identifying inventory categories. I PPE levels they longer-term. have what We folks experiencing

as in on relying aren't think stockpiles. confident they certainly or I state federal

have their don't two they of three be of to and days moved to four them from weeks got just-in-time in ever down need position that mindsets the for so to Many again. weeks, want weeks, And supply. supplies

what through And with it get more and building said, will and folks a think so stockpiles. I of those you it's those normal stockpiles, consistent be then replenishment Craig once

definitely more So a in year we mindset. of first the half half than second think in year that's the half happening the shift second happening than the the But maybe there's and of of the year.

Donald Hooker

you. Thank

Operator

you. Thank

of question with the line Larsen Our Verity. next from David comes

open. now is line Your

David Larsen

pandemic Hi. working Congratulations through and hospital clients your challenging assisting through time. a on the very all

guys played that. key obviously role a You in

XXXX? So the well of, what, just you expect, XXXX on should maybe EBITDA there's then pressure And recontracting fiscal million saw? sort going margin GPO to be drag that about margin? is a hear we efforts? And forward talk revenue through in and that EBITDA we flow you and supply done correctly And congratulations. chain on fiscal bit Can fiscal the going is And chain all Thanks. XXXX? little of, the I $XXX sort through did to that supply all margin going from

Craig McKasson

Sure. McKasson. to happy handle Craig that. I'll This is be

the an of Chain result a pandemic as quarter GPO, million economy to $XX kind in the respect et fourth from elective from Services with approximately procedures cetera. impact slowdown the EBITDA So the revenue margin the from pressure of pandemic Supply and see shutdown and our did negative the on of the we

saw significant our a we portfolio portfolio pharmacy pretty and food portfolio, impact declines as declines result in So in also very services the our significant in the of surgical of pandemic. our

from a quarter. result our magnitude and XXXX corporate in resources restructuring Services, and back travel ongoing And I our about is part third result I yes, EBITDA and comment FFF. of kind of offset minority separately impacted and of to EBITDA back to million there strong the diligently come EBITDA I'll because some margins entered slowdown and come a the had million two as very $XXX Chain about our on to in want with we last the net-net significant through But fourth GPO that. the I'll EBITDA as specialty found do to net And also We managing and on that into performance drag revenue Relative hiring of meetings mitigate investment so agreements. elimination were a $XXX of sort of to and in we the distributor address the talked Supply fourth quarter. in -- the weeks as adjusted impact amended our apologize margins able as that our savings fiscal the we of extended ago

the that basis prospective corporate on we've a once be basis, XX% pandemic the the would range fiscal margin business When on come bypass a in reset so annual supply to implications. multiyear think a to by we'll in to adjusted We high mid rates we mid-XX% that been will we'll COVID in restructuring that then margins more growth about. be in down about level the as EBITDA historically talked sort see chain low result the and and prospective on the -- anticipate path of that we've the margin for compound And we've we And range. XXXX. single-digit of the adjusted

David Larsen

Thanks very much.

Operator

Thank you.

comes the question from Steven with next Valiquette Our line of Barclays.

is line now open. Your

Steven Valiquette

everyone. Thanks. morning, Great. Good

the shares, the in to rules elimination some now So common member guess, open-ended dual-class the the and in to on sell of be place will forward? member curious structure owners of new is to be the the and/or that stock, ability restrict I still Class going where of going or there will I the more whether now govern A were regards was majority agreements just owners that

Craig McKasson

Sure. restrictions on the This aren't Craig. is stock. There

So freely tradable. it is

on based a business, our tradable. and continue In historically discussions as indications and of large freely freely ownership in have significant are were to talked to about healthcare desire a the many Our they we've have strategic but indicated want tradable. the have systems they that past interest they

and process. of, through know over this eligible the you as just to see those that they transact they they they fit. exchange time But the line the as shares sort As at seven became, ability it have went are year was point

Steven Valiquette

is current have XX%, this around GPO for mischaracterization. won't some to asked that's now but to be be reset call investors rates that to But some us somewhat notion a have it admin range market fee below the then about share by to a five answered years the that still seven another investors from question perceived probably the unless thankfully. Okay. that's mid-XX% And

still we So might five to I share as that us? question I investors of Maybe smaller to go just to still that are know have through in as guess GPO another Thanks. kind about nuances fee thinking seven owners there. of up comparing some with reset member some have years. albeit, to address Premier the to investors it's since or simple quite bring rates not another market

Susan DeVore

in the then about public our Craig access years pricing, product, start. about we savings, fill it's analytics. almost this and And ago, system day some seven went the other to we've the of you can contract the value to it's from about can Yes. And details. and from proposition it's said technology health perspective, the it's I -- about

then If had tax IPO also effective to you we generated additional fee XX% back the XX% of share that fee time at share. we XX% had a and recall kind distribution our

were to high restructuring away essentially took they portion took range. reform mid that of significant the then and a away. of that XX% in rest the So that Tax

view that, it's our value is proposition. so, of And the this total

value XX fee other For savings going-forward replace all share essentially restructuring. is share seven economics years we on trying XX%, X%, I mid-XXs that that believe a we to been at depending have, we share it. numbers. total XX, because admin the are basis, X%, years, components we the that value we've the X% XX%, been the proposition and needed combined will fee at generate on to an share those that of five share of and kind purchased we're as And that, volume the the XX, of we category. more their big at did the product have are and mean, average The fee years fee administrative on

and supply so, we significant and believe proposition. And going all chain after of that driving savings, owning value that's the long spend end-to-end that that term

of view our that. changed haven't we so And

Steven Valiquette

Thanks. Okay. color. Appreciate the extra

Susan DeVore

Yes. Thanks.

Operator

Thank you.

comes the question with next of Securities. Truist Sandy Our from Draper line

Your line open. is now

Sandy Draper

you and my questions Thank very asked of much. A have lot answered. been

Craig, sure, on a for just follow-up appreciate then So, million fiscal for $XXX revenue XXXX. probably or in maybe want clarification of and I one one impact make million Susan. Mike Craig quick maybe $XXX to the to the

in no just on on sure was to fourth impact. the COVID I contractual accurate make to Just lower fees, that? make want quarter purely admin want I'm impact That there the the sure, there. was

Craig McKasson

correct. are X. The contracts effective new July GPO That's

the continuing resume, was the due impacted. we -- quarter, million procedures sites to alternate fourth $XX impacted, obviously, while pandemic. to procedures is to So fully have expect, I to about COVID-XX drag continuing elective would started And be talked non-healthcare be

in as of as XXXX, forward, pressure the see well. do we we move amendments contract So irrespective fiscal

Sandy Draper

it. Got

too selling Susan, change structure, of business an it's the a structure sell? cetera. was there things bringing say new to business Susan, there value, then, or customers anything to it how an Okay. selling around pitch, if new the how And how net That's are helpful. But getting you customers, fees. customers? how of And early our you offset, Thank I'm point reacting or to does Mike forward? bit going owner you that and new do be you're really maybe little that? the maybe of what previously? et a as was And you. curious those potential obviously, terms obviously But contracting for on mean, of to backwards, to the a was that as important be would in how to looking you important admin potential GPO is I need talk out, is just big -- you do the pointed the

Susan DeVore

recruited newly the have years, over of not health last all for systems in several come the owners. as And you. Thank Yes. they

And looking proposition. that for that value so value they're savings, the on of is you've proposition. it's And investment all return got the resources, about about when technology, retention levels XX%, all

I wouldn't we've that had. drives level say that recruiting retention that or the So ownership success

vendor, owners ideas. I the of contract portfolio, savings, is as owners said recruited value strategic their as proposition I as extension to think think, they're and group the Mike typically we insights. actually but customers about services, innovation consistent and that, a lot in provide drive do partner of a existing And way not come value owners does lot a what ownership the think that the or that, view think the our clarify, buying. an script that that alignment I proposition, mentioned that the It us, Having talked do provides for that. of But view strategic around that's a newly with of strategic themselves. I just the us our in not all not his

Sandy Draper

Okay.

Mike Alkire

add a couple interesting. Sandy, a -- It's couple of could things. other I Susan, and just Hey, just

Sandy Draper

Yeah.

Mike Alkire

communities manufacturers of obviously is provide about is this right? but U.S. driving So, only very like for. we healthcare Prestige that the includes back think, innovative the all terms the down, value and chain, supply systems diversifying into in care And helps Susan that the in bringing more cost that this proposition are -- initiatives on I investment domestic not these being focused part of describing, Ameritech, differentiation also our fully

So just on. I think that also big that's that Susan a of and the a value proposition differentiator commented significant part

Sandy Draper

and Susan, thanks helpful. so that. Mike That’s Appreciate really much.

Mike Alkire

Thank you.

Susan DeVore

Thank you.

Operator

Thank you.

James. with of line Ransom next question John the comes from Our Raymond

Your line is open. now

John Ransom

morning. good Hey,

bit of discernible What utilization. little of there would this decline talking a seeing And of is you're morning right any trend now high patterns of say that in out a single-digit electives. on Medtronic in Just to seen question July you late from is August? utilization? a current of you've terms beginning about that kind

Susan DeVore

which it so is varies geography. Yes. about That's right, hard what's this, by

And spots trends. COVID lower seeing got that in so, you've hotspots, growth you've got are

And I members varies ER maybe to July members site all not see see think of but with survey and the They frame, When because uncertainty in settings. and it utilization But are challenges levels, the they're back utilization have ambulatory to in some challenge and their is settings XX% a by look utilization when continuing that and the are lot we back-and-forth time our surges. alternate August currently them data XX% about to we they ramping up yet started full additional people at settings so back talking to we elective being geography. in there believe rates. to of

variable need. hard effect the season, make full now and makes I plus for it's their sure for what have think the is the causing of that so of they surges that additional to color…. all to right going the it that's PPE volumes, are the them normal resumption they're COVID But of them supplies plus to predict year. of the flu procedure planning many That's

Mike Alkire

Because if at... you look

Susan DeVore

don't or know …I Craig would add. I Mike? if

John Ransom

at Susan, a And mean, supply. there's this dynamics, you COVID are mean there's bed do Texas is just surge I if mean for COVID current us. right? at So think point, -- like down month Arizona three XX%. Florida I look hospitalizations behind and Sure. you the inpatient it's I supply,

still be do So it's PPE the you Medicare a think Do is? supply? it's standpoint. patient folks issue in-patient capacity shortages you down, an out? think still come from main to If particularly it's afraid you just a Do think just to at there and demand, factor appear of point what this wouldn't

Susan DeVore

they do so direct supply. contracts our help have I about it's Most company supplies supplier that our not inadequacy our health think up been and through the with have. of of systems good the sourcing our they feel additional building

patients, other have have they said, seeing not things. and Mike that some think don't are But worries I they As syringes don't because they supplies.

nervousness, just think confidence a it's I patient issue. patient a it's

John Ransom

Okay.

Susan DeVore

first it's historical be place to causing opening of back slower the they're at then them engaging to make comfortable, everybody marketing sure completely And just levels. just think they're is come in in safe back that bit And see getting back know than they some and a us so and to experience we time. the it what environments And I a people safety but But and think that's that tell other into. coming the lot door up not.... ramp-up and actually patients their it's of are level that come fully activities of the once little precautions in in

Mike Alkire

add could I other or if Susan, one two. anecdote

decline and all or frankly large quite recently that that were right? the to will as it. of even access they ensure on ICU with the protecting the both with for So of the last need down I -- patients were week I calls executives beds, just tell the within their they've got Susan, job So is were systems you two, virus, as Craig the still health

there about kinds those of that things. bit little of think still I concern was resurgence and a So

So it's a point. business

back I -- think those get get in and procedures try elective be beginning to those soon open as possible. elective to much they're more as

John Ransom

you see clients I extended of and much trying tougher an and just your guess If my got your to I'm this a lower and struggling recut don't question shares, other little I not the I deal, look fees Because was got a like at phrase what than side then meaner know was this just it. tradable And term. bit. to question I'm shareholder really to how what -- Okay. sounds

was in little this maybe bringing is the just to fee shareholder bring other was perspective. than factor looks just it to you plug deal the And and could only structure market. market. it maybe to structure fee structure to your from the So market me feedback term, had this your a bit But channel, your above you -- cut unbalanced tax the and a from savings while the the longer back a fee

pretty of So both in and is in thing, some where two kind this? Because in you large fees. else resulted deals got they we're missing the you've same there -- exchange intangible recut for pretty benefits that something deals, sharply for lower

the side So of are apparent be And cycle? end negotiation missing we what on are of other the that not we may at analysts? as the this public

Susan DeVore

Yeah.

from having been those longer-term simpler and order think to the appropriate structure a and lot execute the I we and of that. overhang contract on our there's the kind for are relationships. focused our relative to in perspective, long strategy of So execution We to and term concern think uncertainty member relative structure

those and that through down earlier continuing with and proactive those be generally for the very it about to do commitment sat long-term So renewals member we have of did wait tighter member strategy, We termination which contract to decided the what for contracts. with not we is overhang. provisions, got in went convenience owners no We had the contracts get to validated that. all

tax year liability. We a benefits. more revenue We We predictability We also longer-term got dividend. simplified got We structure TRA got rid got of the with a a implemented the We waterfall. five, seven six, agreements. those got of streams.

think of are all things those we shareholders. for so good And a lot

all strategic and done, on future we that And that now long-term for And XX% so the the contracts lined longer on and taking a obviously performance, got all is XX% significant can done up focus out us uncertainty it, got kind balance and operating of viewed significant initiatives support that's fully that, the completely how we implementing equation relationship. term. restructuring of

thought that So to it. stockholders. that and of And view we – that's think was our we good for continue all

Craig McKasson

is did there the just their a own all would of advisers best GPO to this And special independent interest evaluate and only was overall last Susan, that I is restructuring quickly but arrangement financial think the kind of the on the that and engage the shareholders known directors merits found separate committee that the to yeah, I legal of thing, which of in extend and and amend The only we have agreements add long – Craig. term.

John Ransom

Great. Thanks so much.

Operator

Thank you.

from with last Our the Close Canaccord question comes line of Richard Genuity.

Your line is now open.

Richard Close

Great. Thanks question. here. for squeezing Two-part me in

the Contigo. second First, Has at materialized the changed heightened highlight? Services would the side, COVID seeing look has what does on during we demand to Performance service be once it anything that significant And of or COVID maybe exit product pipeline a specific And where like? drive could area the interest on Mike, pipeline for the part then maybe you're pandemic all?

Susan DeVore

Yeah.

said, Services can for start Mike Performance – then you to single-digit we high on businesses that as mid insights In provide growth. to targeting and XXXX more I'll in as Contigo. we're well So

cost technology the surveil productivity the for did building to required the technologies but diseases. think improvement physician during our clinical surges COVID-XX, I of other technology, to Richard support, that we predict not our labor our and operations, areas build the continue Also, for kinds so decision also supply have in our be growth could symptoms COVID, type ERP, used technologies. are only been management all and good and to experience predict demand pandemic

consulting get sort wraparound with to on that you growth for what back the to back challenging, is COVID, normal to rate. with high details the as see we to certainly us then comfortable trends. having those Mike, opportunities So, growth And together a that single-digit growth growth in was add several but areas during of the think of technologies getting that mid- want of Contigo. we the that that more us future map gets we some see if level technology road

Mike Alkire

Yeah.

of on if – So Susan. couple just just, I comments could add a

going at this, at made predict – or ability and of happening So to I look able she what's just to whether with symptoms the want to to those the be comment patients kinds not potentially about are things. hospitalization need truly point-of-care now our and the

occurred for as learned application of lessons patient use So out right? coding high-cost and think there that that, point-of-care are kinds understand surveillance, those at those new COVID So we to that building learning of cases were of a the things. sort that machine

with really of can used sort technology. created we're types the in that that excited use and right So cases be hardwired we additional that

Just the get to back normal more out they're figure to services, point do comment systems wraparound need around ways it to our as a profitable. going to health much operations, to on care refining Susan's start

helping actually systems and So, care that. to the do we've to health services and get that's our got an the health help offering basically back technology them

Contigo on still and our for an elective look resurgence procedures. so the on some again, really far, excited to we're both the we things and the as on of with these looks believe Lowe's. what's impacts budgets achieve of track about We're with be far recent But going Health to and we the those done the we're with various in get eye markets keeping year. pipeline really Walmart wins happening and strong. – to As obviously continues can procedures And kinds had

Richard Close

Okay. Thank you.

Mike Alkire

you. Thank

Susan DeVore

Thank you, Richard.

Operator

now the Susan would I for like session. question-and-answer today's DeVore back remarks. to closing concludes turn This to call

Susan DeVore

everyone joining much. We coming weeks you look so today. with Thanks months. continuing for and in talk forward Thanks to to the

Operator

your call. participation. gentlemen, you for and today's this concludes conference Thank Ladies

You disconnect. day. may now great have Everyone a