Morning, everyone. Welcome to this session of the Leerink Global Healthcare Conference. I'm Mike Cherny, the healthcare tech distribution analyst. It's my pleasure to have with me Premier. To my immediate left is Glenn Coleman, CFO; Mike Alkire, CEO; Ben Krasinski, who heads up investor relations, is in the audience as well. They have no slides, which I love. We're going to go straight into fireside chat. Maybe just to re-level set for folks, one of the things that especially Mike, you and I have always talked about is the whole dynamic of Premier of the business versus Premier of the partner. When you think about the market right now, and I'm going to go very big picture here, you've had swings in utilization for your customers that are skewing to the upside. You've had now some changes under the new administration in terms of how some of your, especially your academic medical center customers, are faring with potential, either perceived or real cuts that they're dealing with. How does Premier as the partner turn on now, aside from just obviously the ability to drive best-in-class cost and supply spending, but to make sure that your health system partners are achieving the results they want to achieve in terms of running their businesses? Yeah, a lot there. Let me just take it from an industry perspective first, and then we'll jump into Premier a little bit about how we're reacting to it. A lot of stuff happening coming out of the administration. I think our healthcare systems are incredibly worried about what potential Medicaid cuts look like, some impacts on Medicare cuts. Also, the NIH cost reimbursement issue associated with the academics, for those of you in the room, the government funds about 15% or guarantees 15%, but some of the large academics are getting 60%-80% sort of cost reimbursement from NIH. I'll tell you, if you reduce that and that goes down to 15%, there's structural cost reductions that's going to be necessary. I think our health systems are all in a place that they are looking for fairly disruptive things around how they need to continue to transform their business. We literally had 70 healthcare executives in Clearwater last week. We call it our board advisory committee. These executives are CEOs, CFOs of some of the largest health systems in the country. All of them, even those that are driving great margins, are incredibly concerned about some of the impacts that are coming out of the federal government and the administration. What they've challenged us with is, hey, we've got to think differently than we have in the past. Michael, you and I have talked a little bit in the past about total value creation for these healthcare systems. A couple of different things that come to mind and areas of focus that they've really challenged us around. One, from a GPO perspective, how do you continue to drive higher levels of commitment to get better pricing for products? I think you're going to see an extension of our Surpass and our Ascend programs driving much more deeply into the contract base of these healthcare systems. Today we probably do 20%-25% of the contracts in some of those programs. I think you're going to see 50%-75% penetration with those programs. I think it's something that is one of the easiest levers for them to pull, which is to try to drive that clinical standardization. Second is labor. They've been really concerned, obviously, about what's happened with labor since COVID. Lots of retirees. We've got the gray tsunami upon us where more people are retiring, less people to care for them. We've been building out capabilities over the last number of years to build out technology to become labor extenders. Think of things like prior authorization, HCC coding, things of that nature where traditionally you need clinicians that actually do chart reviews and those kinds of things. We're building out technology to actually do that capability. That's another big value capability that we're bringing to the market. Finally, we brought on a gentleman by the name of Dave Zito to run our performance services business. Dave has a very, very long history with he was a partner at Ernst & Young and then really was one of the early leaders at Navigant. Dave has brought a whole different perspective on how we're thinking about building out performance improvements and collaboratives and those kinds of things. I am really looking forward to seeing how he's going to continue to expand that capability because, quite frankly, our healthcare systems are going to need it. One last thing, and then I'll flip it back to you. He's really big into shared services. They build out a pretty substantial and very profitable model about outsourcing revenue cycle and those kinds of things, revenue cycle management. I would guess that we're probably going to be looking at doing a lot more shared services and co-management and those kinds of things, both in the supply chain and other areas within the healthcare delivery system. It's a great perspective to start, Mike. Maybe if I can pull on that a bit, you talked about some of the incremental service capabilities, technology functions that you've rolled out. Clearly, you're in the midst of a contract renewal process as you're pushing through. By no means is this the only time that you talk to your customers about what more you can do, but clearly it opens up a conversation potential to kind of rebase the contracts. You're going to talk price, but you're also going to talk service levels. As you think about the services that you've expanded, especially over the last few years, given the last contract renewal was during the member ownership unwind, it was obviously in the midst of COVID. Can you give us a little more flavor as you go through the renewal process of what the strategic parts of the discussions look like? Beyond the, here is the net admin fee share that we're going to negotiate, it's more, here's what more we want to do for you. Yes. I think it's all driven by value. What kind of savings are we going to be able to create for them over the next period of time? It could be a three-year, four-year, five, six-year contract. They really want to have sort of an understanding of how we're going to do that. As part of that, the focus that we've been making investments around is this technology enablement of supply chain. Really pulling in invoice data. I know this gets into a lot of the weeds, but pulling in all the invoice data and helping them be a lot more efficient with how they're doing invoices and payment. Believe it or not, it's still an incredibly manual process with a lot of faxes and other kind of non-technology-oriented invoicing capability that enters into the healthcare stream. They are very interested in our technology to automate those things and help them become more efficient as a supply chain organization. That is the second area that we spend a great deal of time on. Obviously, we pretty quickly shift into how are we driving better levels of clinical standardization, how are we helping them improve their quality, how are we helping them as they kind of migrate to value-based contracting and value-based care and those kinds of things. Those probably are the three or four big areas that we kind of tease out and then put some numbers around in terms of the value that we are going to create for them longer term. Along those lines, if you think about more recent trends, again, the renegotiations will take time, but your performance year to date, especially the GPO side, has been better than anticipated. Can you give us a sense of what's been driving that outperformance and how you think about it in terms of what's embedded in the guidance for the rest of the year? Yeah, so I'll take this one. Just to remind everybody, some of the comments we made and key messages we had for our Q2 Earnings Call, we were on track for our first six months of the year in terms of revenue, EBITDA, ahead on EPS. For the full year, we reaffirmed our guidance for revenue, EBITDA, and we actually increased our EPS guidance, largely driven by the fact we were doing additional share repurchases. For the full year, we're on track to what we said when we started the year. Having said that, there were some mixed issues between our businesses. Supply chain services has been outperforming. Performance services have been underperforming. In total, obviously no change. If you look at the outperformance on the supply chain side, I would say the thing to highlight there is really the contract penetration momentum that we have. On the earnings call, I mentioned 5% year-to-date growth in our gross administrative fees. It was pretty broad-based. If you look at the categories of med-surg, food, pharmacy, a lot of the facilities areas, really nice growth across the board. If you look at the opportunity for us to grow, it really comes from the gross administrative fee line. That is enabling us to overachieve, coupled with slightly better fee share versus how we started the year and what we modeled. Those two drivers are really important for us. I think as we look forward, this runway is still a long way to go for us on the contract penetration side. I say that because if you look at where we are today, I might comment that before on Surpass and Ascend, I mean, only $30 of our 80 billion is going through those contracts. Lots of opportunity to drive more compliance, get our members more savings. There is a large untapped area I call purchase services, which are non-good areas. Think of this as maintenance services, laundry, landscaping, those types of things. Really untapped, I think, in terms of the opportunity there. Lots of opportunities around the whole physician preference area, which is where you see typically a lot higher products being used because that is how a physician was trained. If you think about equal alternatives at a cheaper cost, that is really what we are trying to drive in terms of some of these member savings. On the whole, those are the areas that have been driving the outperformance. The other thing I would just mention too is we're now starting to see the ramp on some of our newer contracts. These are important wins for us, like AllSpire as an example, where one of our biggest wins, we just started to implement that contract on January 1. That will ramp throughout the year. We will see certainly next fiscal year a lot better performance, but this is ramping nicely for us. We also had another member win that we did not disclose the name of the hospital system, but that is going to contribute to our second half of the year fiscal performance. All that is moving in the right direction, which is why we raised our guidance by $25 million for supply chain services. That was offset by the performance services. Yeah. You are not a company that typically press releases names of wins. AllSpire clearly stood out in terms of a sizable agreement. Maybe using them as an example, what was the biggest drivers that allowed you to win that contract, given that obviously it was a sophisticated organization that was not new to aggregating purchasing? Yeah. Just as a quick reminder, AllSpire is seven or eight health systems, primarily in the New Jersey and sort of that mid-Atlantic kind of market. Hackensack, Lehigh Valley, WellSpan, a number of other institutions. What differentiated us, why we won? Obviously, you have to have fantastic pricing and a strong market basket because it was an HPG customer before. You still have to have those great programs. I think what really pushed us over the top was our technology. If you think about what our technology can do versus either Vizient or HPG, we have the ability to aggregate that spend in a close to real-time way where we're pulling in all that invoice data. We have some algorithms then where we look at what's the best pricing among a collection of healthcare systems. I know that sounds simple, but it's very, very hard to do unless you get all the data. If you can do that on a regular basis, you're going to start to find where there's constantly opportunities for us to continue to drive value because sometimes you want to go to the lowest price if you can make some conversions. Sometimes you just want to standardize on what the majority of those healthcare systems are already using. Maybe a little bit higher price, but then you can also tee up opportunities for the future, which are lower price contracts. Of course, you always have the reaction when you have a supplier or a business partner that loses an opportunity like that, they're oftentimes very hungry to get back in and participate the next go around. Anyway, it creates the kind of friction that you want to create. I will tell you our differentiation contracts and then the technology. We have been making the right investments in the technology to not only help them with how they're doing invoicing, help them how they're doing procure to pay, but also help them to become more efficient in the way that they do things like value analysis and other activities that the general supply chain organization does within the healthcare system. Turning back to some of the high compliance contracts with Surpass and Ascend, to me, it's always seemed very logical that your customers would want to go that direction, especially for commoditized goods, stuff where there's private label opportunities. As you go through the conversion cycle, what is it taking for some of your health systems to get over the hump in terms of moving towards a high compliance contract? What are the hindrances for the ones that don't want to move in that direction? I will tell you, I've seen more of an interest in these last couple of months than I've ever seen before. I think financial pressure is everything. Where if the financial pressure is not there, is it really worth the focus on behalf of these executives to have to potentially get at odds with their clinical staff and try to drive standardization? I will tell you, I think the financial imperative is there and I think that the timing is right to drive a lot of the standardization. It's interesting, we talk a lot about commodities, but I think you're starting to see a lot more interest on clinical preference and even physician preference items too. Because again, as I said earlier, it is probably the easiest lever to pull. We've got some academics that are laying off significant numbers of people for the first time in the history of their business. I think they'd rather try to drive standardization. I'm very excited that the impetus is there to drive this change. What we have to do is not only identify where there's opportunities for great pricing, but we're going to also have to help them as they think about standardizing sort of value analysis across all these healthcare systems and then driving the change. I think the change is a really important aspect of this because oftentimes it's one thing to actually have agreement on, I'm interested in driving to that level of commitment, but many aren't able to actually execute it. Right? The opportunity to really drive the change, I think, is going to be really critical this time around. Yeah, I would just add, Mike mentioned earlier, we were with a number of our key member CEOs and CFOs last week. One of the emphasis items that they put on was we do not need incremental change at this point, incremental savings. We need transformative savings. To Mike's point, we have seen a lot more interest in the last couple of months of really driving significant change here. I think that is the impetus for moving forward and trying to drive more compliant contracts as that is the lower hanging fruit and you can get some meaningful savings by going that route. I think shared services is next. They're going to be looking for ways to create scale and leverage labor across multiple entities as well. Not just what Glenn said, but I will tell you, as we spoke last week with those executives, I mean, many of them are a lot more interested in figuring out ways to create shared services capabilities more than they have in the past. You've been very visible and transparent about the recontracting cycle you're going through, which I think we all appreciate. If I recall, I think you're expected to be 75% done by the end of the fiscal year, the end of June. As you think through getting to the tail end of the recontracting cycle, aside from people like me stopping to ask you about it, what do you see as the biggest opportunities about your positioning in the GPO market post-recontracting? What gets you most excited to continue to drive the Premier story beyond that? Yeah, I will, I'm going to keep coming back to the investments we've made in technology. Because I do think as you get through this cycle, I think everybody's feeling the same amount of pressure. Our ability to continue to evolve our technologies, use some of the advanced technology, machine learning, AI stuff on the EMR, use it as we're building out capabilities to identify where there's opportunities for price savings. Use robotic automation to help streamline the processes that many of these materials execs do on a daily basis. Those are things that are very unique to us. I am very excited that as we get through this, we will have a differentiated offering. I think it will be in combination as Zito comes in and starts to build out more capabilities to do things like shared services and those kinds of things. I think there's going to be substantial opportunities for us to continue to win in the market. I will just comment on the fee share restructure. Just some history and reference here. If you look at the restructure that took place in 2020, about 70% of the gross administrative fees came from those members that were restructured. To your point, we expect to be about 75% of the way through that by the end of this fiscal year. On the last earnings call, I mentioned we were around 69%. I would think we will be at least 75% by the end of our fiscal year. The good news is the vast majority will then be completed in fiscal 2026, which means we are now on the tail end of this fee share restructure. I think that having stability around our fee shares, coupled with the contract penetration and the growth that we're seeing there, coupled with the technology and digital supply chain areas, really enables us to grow our business once we get past this. I think the good news is we're now on the back end of it. Yeah, I like being majority done versus majority not done. Maybe circling back, Mike, you've had a performance services business with various different technological value-added service capabilities for as long as I've known the company. You keep mentioning, rightfully so, the technology you're making and the investments you're making on the supply chain side. Can you maybe just give a sense as you think about the tech platform going forward, what the balance is between technology as a revenue model versus technology as an efficiency enabling agent for your customers and how those interplay with each other? Yeah, boy, I'd like to still keep it at 90%-10%, right? 90% revenue generation, 10% enablement. Some of that enablement is covered by other relationships that we might have. We might have an at-risk deal that we provide the technology as part of them then paying us for driving a significant amount of value. I still want to keep that flexibility there. You brought up a good question. I have been highlighting for the most part the supply chain technology. I have not talked as much about some of the things that we're driving and continuing to build out on the performance services side. If you think about our quality systems and capabilities to help our healthcare systems as they're improving their quality, I could see where we're going to be using clinical decision support to help our healthcare systems standardize around not just star ratings and leapfrog scores, but our own programs, right, on how healthcare systems actually perform from a quality standpoint. Because as this next generation, we already know this, begins to enter into the healthcare ecosystem, they're going to be all about identifying transparently where is the best place for me to get care either from a physician or from a health system. We want to help be that buttress there for those healthcare systems to be the leading quality deliverer in those markets. That's number one. Number two, we're going to continue to refine our operations capability, which is all about appropriate utilization of labor. If you think about that, that's not just in the health system, but it's also from a physician practice standpoint. We've got very, very differentiated capabilities in the physician practice arena where we help healthcare systems identify where there's opportunities for improvement, for better utilization of those physicians to create more throughput, break down the disruptions in care throughout the continuum and those kinds of things. Very, very unique capabilities in that OA stuff. We're going to continue to make significant investments in those areas. As we've talked a little bit about that clinical decision support capability, I think we've just begun to scratch the surface. We've been at it for a couple of years on prior authorization. It's one thing I've not spent any time talking about, but the issue associated with denials and deferrals and all that kind of stuff is putting a heck of a lot of pressure on the healthcare systems from a cash flow standpoint. I think everybody's well aware of this. Sometimes you're getting high-cost procedures being delayed 10 months. The healthcare systems having to kind of foot the bill of covering that for a 10-month period of time. The more that we can drive better prior authorization to ensure that these reimbursements are more timely, I think we're going to be much more needed by these healthcare systems. It will be something that continues to be differentiated in terms of the value we deliver. The final thing is around coding. Today we have world-class capability on HCC, which for those of you that know healthcare, that's all in the outpatient space. We're going to continue to evolve that into the inpatient space. We do think coding and documentation blends itself really well to our technology. I do think that there's an opportunity there for us to continue to expand that and then partner with organizations that have shared services revenue cycle stuff, or it's something that we should be considering that we should be building out. Along those lines, I appreciate it was a great transition onto some of the performance services aspects of your business. We're in the midst of an AI hype reality cycle. You do have real AI-oriented capabilities. You built them out. You've been building them out. Can you remind us about some of the use cases you developed on PINC AI and some of the other machine learning investments you've made that actually drive value for your customers versus just being something that's, call it, cool to adopt? Yeah. It is something that we take incredibly serious. A lot of organizations have been using the AI moniker for a number of years. I've been very specific with the team about let's get very focused on what do we want to be and what do we want to do. Just I think by way of background, I'm a computer science guy. That's what I studied years ago and did a lot of large-scale systems implementation and those kinds of things. From an AI and machine learning perspective, our focus really is all around looking at the unstructured text of the electronic medical record and bringing natural language processing and contextual meaning to that. That's really what differentiates our capability. We also have algorithms, as I've expressed, that use the large sets of data that we have in supply chain to look at better ways to do dynamic pricing and all those kinds of things. We have also some RPA stuff, some robotic automation capabilities that help healthcare systems as they're doing their basic blocking and tackling every day. Those are sort of the characteristics. The big use cases I've talked a little bit about are prior authorization and the expansion of our prior authorization. Coding and documentation blends itself so well because if you think about it, we can pull up, if you look at the unstructured text, maybe the physician didn't check diabetes, but they had a very, very, very, very elevated A1C score that obviously portended that they were potentially diabetic. We asked them, we prompt them, hey, is this person a diabetic? If so, check the box because that actually has an impact on reimbursement and documentation. We have been building out all those capabilities over the last number of years. We are really excited. The last one is identifying patients for trials. We do have capabilities using that same baseline technology to work with medical device and pharmaceutical companies to look at what are the characteristics of patients that they are looking for for their discovery cycles. What we are able to do is create a dropdown or some other method that, when that physician is talking to that patient in real time, we have the ability to say, as you are thinking about managing that disease, here are the four potential options. One of them happens to be there is a trial happening with a drug or a new medical device. We think it is going to be industry changing. We're working with all the significant pharmaceutical companies today and a number of the medical device companies today to really kind of tease that out from a real-world evidence standpoint. Yeah, I would just add, we have access to the data that enables us to actually identify the patients first and then the site versus the other way around, significantly shortening the length of time to actually get a trial up and running, enrolled, and obviously getting products to market faster. We're going to run out of time, but I think this is an important topic. Mike, you've had some incredible pain points in healthcare that I know also are getting a lot of attention right now. Prior authorization, coding changes, appropriate coding. It seems like it's in major publications every day that I'm reading about something related to one of the larger players. Patient trial enrollment has been a pain point for as long as I can recall covering the space. How do you further stimulate demand for these services? You're so ubiquitous with your health system partners. You cover such a large swath of the U.S. healthcare system. How do you drive better demand for these products given especially how in vogue they are right now? It's a great question, and we've got to do it faster. Let me just say it that way. We kind of do it a one and a one and a one, and we need to do this in groupings. For example, I'm going to pick, let's just say there's a state that has a high number of people that smoke. Then we have a partner in pharma that works on drugs and capabilities around smoking cessation. That's how you actually bring the two entities together, right? You bring a need that the community has with the discovery that a pharmaceutical or medical device company has. That's what drives, I think, the success. We just have to do it faster. Because we do it as a one and a one, we're doing it at chronic kidney disease, smoking cessation. We're doing it in a number of areas, but I'd like to see us exponentially increase that to actually do a more effective job of actually pooling a number of large IDNs across regions and even potentially across the country that are all struggling with the same community issues. I won't show anyone the list of questions we didn't get to, but this is great. Thank you so much for being here. Really appreciate the update on the story. Yeah, thank you, Mike. I appreciate it.