Okay, good morning. My name is Jessica Tassan. I'm the healthcare services analyst at Piper, and I'm so excited to be here with Premier, one of healthcare's leading supply chain optimization companies. CEO Mike Alkire and CFO Craig McKasson are with us this morning. Mike and Craig, welcome back, and thank you so much for joining. Thank you for having us. So I was hoping to kick off with just a kind of overview of the strategic review, which commenced on 5/9/2023. What prompted the company to undertake a strategic review, and what were kind of your goals when that review was launched? , I think that the board and management certainly are always looking for ways to maximize value for the organization. We had been having conversations at various levels with different entities over the past, and it just made sense at that time to be a bit more public with the things that we were doing. And after, you know, obviously subsequently to announcing that, we did sell off our non-healthcare GPO for $800 million to OMNIA Partners. But Craig and I, and as well as the rest of the board, are very committed to bringing this to a conclusion as quickly as possible. That's, that's really helpful. So maybe just on that, on the sale of the non-healthcare GPO to OMNIA Partners, announced on 6/14, what was the strategic rationale there? Was it just to generate cash for a particular purpose or to streamline the portfolio? Kind of, how did that deal come about, and what was the strategic rationale? , I think at the time, you know, it was, it made a lot of sense. So we'd been working with OMNIA Partners for a number of years. They had expressed interest in that asset. For the period of time that we were focused in that non-healthcare area, we had a partner that we grew pretty significantly through. And as we thought about the continued growth of that part of the business, it was gonna require significantly more investment to continue to have the same kind of growth trajectory. So we thought that coupling together with OMNIA Partners, it made a lot of sense to create a bit more scale in that area, leverage their assets and our assets, and then obviously do that transaction. And as just a quick reminder, it's roughly a 10-year deal, in that we share in 30% of the growth, higher than what we did the transaction at. I think a couple points of additional color I would provide. Our entrance into the non-healthcare GPO was not an intentional strategic move initially. It was basically just an adjunct to our healthcare GPO. So we had specific contracts, particularly in the area of such as food service, that were naturally extended to the non-healthcare space. But what we didn't actually do was build out a comprehensive portfolio for actual non-healthcare type customers. OMNIA was actually a customer of ours, accessing those contracts that made sense for them to get leverage to in the non-healthcare space, but they have more of a comprehensive portfolio for those types of customers outside of the healthcare realm, and so that's why it made sense. Our core mission is for healthcare, and we had the ability to unlock value, as Mike articulated. That's very helpful. So, Mike, you kind of alluded to this, but can you just remind us, how did you structure that transaction to ensure aligned incentives over the next 10 years? And then any color you can give us on the fee share level in non-healthcare versus healthcare, qualitative or we'd gladly take quantitative? So the structure is very interesting, actually. We're gonna continue to do the contracts that we have been doing in that area, as Craig said, in some very, very specific categories, as I think they're very interested in leveraging the scale that we can create across all of healthcare as well. So we'll continue to operate those contracts for them. And then, as I said, we'll share in 30% of the growth from where we are today. , I think, because the nature of the transaction is that we are actually still executing the GPO contracts for our healthcare customers that they access. That's why the transaction's a bit unique in that it wasn't a typical sale of an entire business. It was just the sale of the customer revenue that gets access for those contracts. And I do want to clarify, it's at least for a 10-year period. Okay. So they are accessing our contracts for that 10-year period, but there's nothing to say that they... And based on discussions, their intention would be to continue to leverage our contracts beyond that. It's just that we had to set some time period, so there's this 10-year period. But it, that, so it's not - you didn't have a sale of a trans... of a company, you had a sale of customer contracts, effectively. We're continuing to provide the infrastructure in the back office through our GPO that exists for all of our healthcare members. Okay, that's helpful. And then just any color on kind of the difference between Fee Share levels in non-healthcare versus healthcare, and maybe just the pace of growth in the non-healthcare business. , I wouldn't say there is a different necessarily fee share complement in non-healthcare versus healthcare, but there is in non-acute versus acute. Okay. So I would say the non-healthcare fee share dynamic is similar in non-healthcare as it is in the non-acute part of the healthcare spectrum. What, what I mean by that is that it tends to be lower than you see in the larger, more scaled, integrated delivery health systems on the acute side of the business, because they are smaller customers, and what they're really focused on is the magnitude of price savings they get through accessing contracts through the scale of the portfolio. So we do see a lower fee share in non-healthcare. Some of them are very small, individual types of organizations that are just getting access to pricing. They may not have any fee share.... Larger organizations that have some scale, there's some fee share component, but it's not at the levels that you see in the health system market. Okay, that's very helpful. Before we wrap up on the strategic review, any kind of last thoughts that you want to leave investors with as we approach, or I guess we're not quite at the one-year mark, but any last thoughts on the strategic review? No, I just think that the board and management all appreciate the sense of urgency to bring the strategic review to a conclusion. So, you know, that's how we are driving the process with that level of passion. Okay. That's great to hear. So I want to move into the SCS segment. Healthcare there drove 90% of Net Admin Fee revenue in FY 2023. It has a high Net Admin Fee share rate, but on a consolidated basis, you've let us know that Net Admin Fee share is expected to go from low 50s in FY to mid- to high 50s in FY 2024, I believe. I just I want to kind of get some color what's going on there, and what should investors expect over the course of FY 2024 from a Fee Share perspective? Sure, happy to address that. So relative to the first quarter of 2024, we addressed, we were actually at the mid-50s in the first quarter, not the low. So we historically were in the high 40s-low 50s. We've had market dynamics causing fee share to go up in the acute market, in particular, with members that either are new to the organization, that have gone through a consolidation, so merger and acquisition activity, or certain members that had renegotiated agreements. We have seen pressure on the fee share, increasing that in the first quarter to the mid-50% range. We have indicated that for the full year, while we haven't given specific financial guidance this year, given the strategic review, we did want to provide some directional commentary, and we articulated that we expect the full year to get to the mid- to high-50s by the end of the year. So what that means from a sequential standpoint is that mid-50s Q1 level will inch up a bit throughout the fiscal year as some of the new contracts continue to become more of a component of the overall portfolio, and that we will end the year in the mid- to high-50% range. Got it. And so this is, this is kind of a small nuance. I just want to be very clear. Mid- to high 50% is exiting FY 2024, not on average over the course of FY 2024. It will be the level of fee share as we exit 2024. It also will be the overall average for the fiscal year. Okay. Great. So, you kind of alluded to this, but are the concessions in FY 2024 occurring among customers who renewed effective kind of July of calendar year 2020, or among the handful that did not renew at that time, or both? , it's really a combination of both. So we have—we've always had customers that were not part of the restructuring we did in August 2020. So as they come up for regular renewals, we're obviously renegotiating agreements. We did have the acquisition of Acurity, which was an organization with hospitals in the Greater New York marketplace. Their contracts come up in December 2024, so some of those have already been renewed that have had changes. We did have a very large consolidation of two significant health systems in the country, that formed one of the largest organizations in the United States. That combination opened up their contract for renewal, and then we also had members that did not elect to participate in the restructuring, so their contracts have been renewed over time. And we had a very, very small handful of members that had an ability still to open up their contract for a renegotiation. Generally, when we did the restructuring in August 2020, we removed what was called a Termination for Convenience Clause, so that people couldn't come back and actually say they were going to exit. But there was a very small number that retained that right, and some of those have come back through this time period as well. Okay, that's helpful. So before we move into... I have a few questions on the Greater New York Hospital Association contract, but just as we think about FY 2025, can you give us a sense of maybe what% of purchasing volume could still be vulnerable to concessions or up for renewal? , I don't have a specific percentage. What I would say is that when we did the restructuring in August 2020, that was for what were our historical member owners. At the time, they represented somewhere in the range of 65%-70% of the business. Some of those, again, because of consolidation and other reasons, have already been renewed, so it's not that whole book that's coming up. And of that amount that went through that restructuring, about 70% had 5-year contracts that would come up at June 30, 2025, and then the remaining 30% were spread over a 6- and 7-year contract, so run through June 30, 2026 and June 30, 2027. And so that's sort of the machination of how renewals will happen over time. That's really helpful. So I wanted to just ask on the Greater New York Hospital Association, did I hear you correctly, that some of that contract has already been renewed in advance? Yes. Okay, great. , and I wanna. It's not one contract, just to clarify. So when we acquired their GPO, we got all of their New York members that all had individual contracts. I see. And so similar to our business, we have to go out and actually renew all of those individual members when they come up. Okay. Some of those individual- Got it Health systems in the New York Greater New York marketplace have already been renewed. Some are in a renewal process. Some will just renew when the 12/31/2024 time period comes up. Okay, that's extremely helpful. So some of the Greater New York Hospital Association contracts have been renewed. Yes And are included in the, I wanna—I don't want to call it guidance, but the FY 2024 commentary? That's correct. Okay, great. A historical 8-K indicates that the Greater New York Hospital Association contract is priced somewhat lower from a Fee Share perspective than the rest of the book. Can you just help us understand how to think about the historical pricing of that contract and whether that, those contracts have grown in line with kind of the rest of Supply Chain Services or Net Admin Fees? I would say that the Greater New York book of business has grown in line with the rest of the Premier membership in terms of just the business. Fee Share, as we've renegotiated, we have seen higher Fee Share on renewals than at the time of the original agreement. But again, it does vary based on the size and scale. Similar to Premier, Greater New York had members of all sizes. They had, obviously, the very large health systems here in the city, but they had members all around the Greater New York area and the Tri-State Area, some smaller that don't command that level of Fee Share. Okay, great. And I just—this is sort of my, my final question on the supply chain services part of the business. You know, historically, Premier was, was priced slightly below market. I think you guys have migrated to be in line with the market. By FY 2026, FY 2027, are you kind of exactly at parity with competitors and, and, you know, any additional concession? You're not—you're no longer vulnerable to additional concessions. Can we, can we conclude that? Well, I will just say, there really isn't a market 'cause we are different businesses. So if you think about Premier, we have a pretty robust technology organization that we will often create value with that technology organization that maybe some competitors can't. So when Craig and I say there really isn't a market, there really isn't sort of this standard that everybody goes to because of the value that you can create outside of just providing GPO services and an admin fee share back. So just one example of that is our focus really on really creating true value around E-invoicing and E-payables. We have a very, very unique solution that helps healthcare systems centralize the way they actually do invoicing and do payables. Provides a ton of value to them in terms of cost takeout, cost efficiency, and those kinds of things, when you can technologically automate those processes. So those are things that we add in addition to an admin fee share back, hence the reason Craig and I always say there really isn't a market, because we will be providing other technologies and services as well., and the only thing I would add to that is that with the market dynamics and the pressure that we are seeing from competitors, at times, not in all cases, but it is putting pressure on fee share as well, despite us having differentiated value. I think that as we renegotiate agreements, if we do see fee share increase, obviously as that happens, it is only eliminating the ability for them to for competitors to differentiate only on fee share. Right. Okay, that's, that is very helpful. I wanted to just ask, any change in kind of the scope of the GPO contracts, either that you've observed or that is your intention, or should we expect purchasing to kind of grow low to mid-single digits over the long term in aggregate? , strategically, our focus is, continues to be through technology, enabling the entire supply chain is to capture more spend. We actually do see today, so it's not a change as we move forward, but when we actually are winning new members from our competitors, we see a greater level of spend coming through our GPO contract portfolio than what they were purchasing historically. That's been intentional through our process of technology, enabling to actually identify off-contract spend, to make sure there are opportunities to move it, and to have a broader contract portfolio to enable that. So I wouldn't say it's a differing trend. That's a historical trend that we will continue to try and administer. Overall, just given market dynamics, we would expect overall GPO spend to continue to be in that low to mid-single digit growth. But obviously, our focus is on how do we continue to grow to capture more and more of that. Okay. That's, that's really helpful. Final question on SCS, just does Net Admin Fee kind of flow through at its either incremental or decremental 100%-ish or so EBITDA margin? And then are you all contemplating any, you know, OpEx cuts to kind of offset some of that pressure? , I mean, the nature of the GPO business, obviously, is you've got the manufacturing line of generating the contracts and then access into the contracts. So by default, it is effectively all incremental margin. There's not a lot of variable cost associated with driving an additional dollar of purchasing through the GPO. Having said that, we will continue to be very focused on managing the infrastructure. It is, in large part, the rationale for the technology enablement again, so that you're eliminating manual process that is more expensive to actually administer the program. We have already been taking cost out over the past couple of years, recognizing this trend. So I wouldn't say that there's a large amount of additional operating expense leverage we can get out of that side of the business. Okay, that's very helpful. I want to move on to performance services. In terms of business mix, how much of performance services is kind of core provider services, and how much is adjacent markets, Remitra, Applied Sciences, CDS, Contigo, and anything I'm missing in that list? About three-fourths of our performance services segment is what we would call core healthcare provider business, and then about a little under a quarter is the adjacent markets, which, as you indicated, is our Applied Sciences, Clinical Decision Support, Remitra, and Contigo. Okay, great. And then maybe which of those businesses are kind of multiyear, recurring, or high visibility revenue? And then, how much is kind of transactional or engagement-based? Really, for all of the business and performance services, it's a mix of both. So it's not that there's a distinct one or the other. So within our performance services healthcare provider market, we have our core technology assets. A large portion of those are either SaaS-based or license agreements are long-term contracts, more so than episodic. Within our advisory services component of the healthcare market, which is consulting, again, we have a combination. A lot of it is regular consulting, which is more ad hoc as you go. But as part of the larger engagements Mike talked about earlier, when we do an all-in engagement with a member around supply chain and performance services, that can be a long-term labor expense project over multiple years in order to help the healthcare provider improve their performance. We also have what we call Performance Collaboratives in that part of our business, which you should think of as subscriptions, like a 3-year program to actually access and improve a particular objective, be it participation in Accountable Care Organizations, or Bundled Payments, or things of that nature. So that's the healthcare provider side. As you look at the adjacent markets, it is a combination. So in life sciences, as an example, I won't run through every one of them, but in life sciences, as an example, we have long-term engagements. We announced a big engagement to help a very significant life sciences company with a clinical trial. That is a 3-year contract, so it's recurring for the next few years. And then we also do ad hoc sort of data extracts and individual projects that might be shorter in duration. That applies for all of those businesses. Remitra is more of a longer-term, recurring type business, given the nature of the transaction of that piece. Okay. That's helpful. I do have just a quick one on Remitra, but first, I wanted to ask you... I think you've spoken to low- to mid-single-digit, kind of core growth in performance services, 20% plus in adjacent services. How much visibility do you have into those growth rates maybe entering the year? You know, what's the level of visibility and how much is kind of go get? Yep. That's a great question. So typically, when we enter a fiscal year for performance or services overall, we have between 70%-75% visibility to the full year revenue. It does vary by those subcomponents of the business. So, for example, in the technology aspect of the provider market, we're probably in the mid-80s in terms of visibility for the year. Our advisory services, which is a consulting business, historically would be more like 50% visibility. I will say, coming into fiscal 2024, and we actually talked about this a couple of quarters ago, we had more visibility coming into 2024 than historical, so it was actually about 80% visibility to the advisory services part of our business for this year. As you get into the adjacent markets, some of those are more nascent in nature, so you would expect there is not as much book under contract moving forward. So Remitra and Contigo, as examples, would be more in the 60% kind of visibility range. But overall, 70%-75% is under contract and in place for the year. That's, that's very helpful. I don't know that I appreciated you had higher visibility on the consulting side, into 2020- or FY 2024, so that's helpful. Can you give us a sense of just how many of your GPO members kind of subscribe to either a core provider service or an adjacent service? And what's the opportunity to attach a performance services contract to some of your GPO renewals as kind of a condition of the repricing? . So broadly speaking, about a third of our membership is supply chain services only, primarily GPO. About a third is actually performance services only, and then about a third is actually in between, so leveraging across both parts of the business. That has inched up over time as we do continue to focus on it, in terms of the types of business that we're delivering. Relative to your last question, we absolutely try to bundle everything in. Mike talked about that earlier as a differentiation that we have. I wouldn't say it's a condition of a renewal, but it is absolutely an intention. And strategically, we have been able to prove with data when we show members, the more they engage with us, the better their performance from both an outcomes and a cost standpoint. And so some people might ask the next logical question, which is, why is it only a third? Why isn't everybody using everything across both your businesses? You know, we have very, very long-standing relationships with a lot of these health systems. Some of them know us for 20 years at what we did. They were supply chain customers. That's what they do. We do have a large footprint, some smaller, rural, community health systems around the country that don't have the bandwidth necessarily to subscribe to some of the clinical capabilities. They're more focused on just keeping their doors open and delivering supply chain every day. So there are lots of reasons, but it is a focus to absolutely try and further engage with them every day. And I do think it's a pretty unique aspect about around our business model, in that as we think about creating services for those healthcare systems, we have many opportunities to sit down with those healthcare systems, as many of them participate in either the governance of the organization or they, they provide an advisory sort of role to the governance of the organization, where they're sharing with us, you know, what the issues are that they're dealing with, what kinds of technologies they think they're gonna need to drive efficiency, higher levels of quality, move to more value-based care, kind of payment models. So where we sit, obviously, we have the ability to continue to create or change the offerings that we have to meet their needs on a pretty regular basis. That changes quite a bit, as we have seen in healthcare, a significant focus more towards labor, just because of what's happening in the labor markets and the high cost of labor as we come out of COVID. So many of our activities are really focused on building out labor extenders, for the healthcare system. So, you know, technologies, as I said, with Remitra, and I think you have another question on Remitra, you know, how do we centralize invoicing across a healthcare system that will reduce the amount of labor costs associated with actually providing that, invoicing capability? Or if you think about things like Prior Authorization, where you have clinicians that are doing chart reviews and those kinds of things to do approvals, to look at authorizing procedures going forward. To the degree that we can use technology to enable that process, as opposed to having manual efforts, we're gonna continue to build out those kinds of capabilities. One thing I would add, because you asked about this, I just want to clarify. With respect to the adjacent markets business, a large, actually, the majority of that, of those businesses, is actually outside of the provider market, because it's actually adjacent. So it's in the life sciences business, it's actually with life science and med device companies, as opposed to providers. So we're leveraging the data and capabilities that we get from providers to go to that market, but that revenue and that opportunity to grow is actually with other stakeholders. Contigo is with employers, although there's a piece where we actually do try to go to provide capabilities for payviders, which are health systems that are actually operating health plans. Remitra is both suppliers and members, and then our Clinical Decision Support business is automating Prior Authorization for payers, but there is also a HCC coding accuracy component of that business, which would apply to providers as well. Okay, that's very helpful. So my Remitra question may have to wait till your next earnings call. But Mike, I want to wrap with your first two and a half years as CEO, CEO were marked by half a pandemic, a couple of tuck-in acquisitions, and a comprehensive strategic review. Considering all these events, what have you learned about your customers, and how is Premier kind of poised to create more value in FY 2024 or FY 2025 than, than ever before? , I think our... What I've learned is it's an incredibly dynamic market, a lot of pressure on healthcare deliverers. As I said over my last couple of minutes of conversation, our focus is really gonna be focused on technology enablement of services and processes, specifically in supply chain and performance improvement for our healthcare systems, to help them obviously drive more efficiency, reduce costs, again, improve quality and safety, and then help them as they're journey on to moving to value-based healthcare delivery. Awesome. Thank you very much- Thank you ... for the time, both of you. Appreciate it. Thank you. Look forward to the F2Q call- Thank you -and, catching up on Remitra then.