Premier (PINC) 1 Nov 222023 Q1 Earnings call transcript

Good morning, and welcome to the Premier Inc. Fiscal 2023 First Quarter Results and Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. to of conference Investor like McCabe, to now President Vice Relations. would turn over the Angie I Please go ahead.

Thank you. call. first quarter Welcome to Premier's fiscal XXXX conference

and our this and Officer. speakers morning Mike Premier's Our are Craig Administrative Chief President McKasson, and Financial Alkire, CEO;

soon. are of Mike? harbor Form this included now Alkire. free adjusted of review the non-GAAP earnings measures file to refer GAAP financial financial to to measures, SEC We I and I the get remind or you to factor actual to those business. expect the our of discussed Management's at slides soon. our Investors Mike and discussed quarter, section the evaluate which the presentation started, earnings appropriate, that conference call no call update remarks flow speak everyone recent will to to with non-GAAP accompanying today. our might where investors.premierinc.com. appendix These forward-looking which XX-K as certain will such and supplemental including our Factors of to risk turn in our measures results we in slides Before today, materially this our expect forward-looking the and Also, obligation release, X-K, in Form financial in statements and today are as release SEC, XX-Q from over earnings them. are want undertake accompanying we and we we encourage safe most that the differ the we for available results supplemental our filings affect statements, cash contain furnish to other detailed future on our Reconciliations could these to disclosures. website Form

and our earnings morning, Thanks, reported expectations first Angie. call. introduced consistent at fiscal which our results, we This joining thank today. August with morning, which our are XXXX for guidance, we reaffirming we were Good quarter you us our and everyone

insights objectives. technology-enabled we our Our in value performance growth members strategy will Through decision that solutions demonstrating result decision some evolving among and more the a enhance for share financial the other fiscal support environment. our value towards morning, our we reflects in and can our improve create and our in to review long-term customers trusted value payer to analytics and outlook to our provider continued are the making authorization I'll and of data provide expect execution of highlights influence our our innovative and are growth through every as care, XXXX health detail. experience. that members navigate and business, we our AI partner clinical our virtually quarter helping challenging we Craig an This stakeholders. and sustainable, result PINC prior progress achieving our from continue solutions, will In others long-term to patient,

our delivered. UM, or management has the We capabilities beyond are expanding utilization UM way, currently

to most medical more appropriate into transform technology efficient their clinician, We and leverage the for decision embedded less solution payer. to options the soon clinical expect leverage authorization providers directly appropriate support that ensure service clinicians the provider treatment. offering This the technology into begin to enables scaling making the This it most process and and thereby patient, payers one to UM the the patients. patients our help partner evidence-based electronic is workflow new guides and full record prior burdensome medical to of a that evidence to receive will

it patients time takes the connected accelerate appropriate and to for simple, to is therapies to be outcomes. to improve goal Our health

non-acute prevention, to surveillance among quality capabilities, planning and market. core solutions introduced others. the now technologies infection made some also improve have including technology, are for These growing enterprise investments being to clinical We products our analytics of our better resource serve

development call, are identify our we partnerships AI earnings is evidence nodules work of diagnostic XXXX third PINC highlighted and advance further the that for our patients We or doing companies pulmonary quarter the that Sciences AI innovations. fiscal device with IPNs. real-world commercialization expanding research with Applied to and capabilities PINC pharmaceutical, data and medical leverage idiopathic clinical also On to

Applied We for Boston's are care that for have with together that Sciences, weeks IPNs. recently technology-enabled to and working health use medicine identify Awards We biotech proud PINC our Winner solutions AstraZeneca the as AI digital partners, innovative were along BWB we recognized of chosen category. of patients Clinithink, in XXXX

X.X the in assets transaction As Devon part over and well if during expand for tech-enabled Direct be which of scans us New structured as contracts markets. most the million and data IPNs, create not exchange largest adjacent capabilities to XXX,XXX overlooked. and Pay efforts, to market. our we U.S. efforts help we and announced cost We're key COVID-XX information include and assets XX% earlier of identified Health more of XXX,XXX York with TRPN. of X% early-stage improve These previously October, costs This containment review than on TRPN, pre-metastatic, we technology progress the that capabilities lung providers pandemic done using licenses adding locations strategy acquire or our been health have unmatched believe highlights to technology. to unstructured solutions, could collectively across recent as were diagnostic In our our our to We positions our to at into forefront recognition reduce cancer and further making the it to quality. and analytics also completed could

as contracts the new their and to Health ConfigureNet, medical wrap it named care discounts offering. reduce and access pre-negotiated health are Contigo on payers are patients This developing acquired members will through network the our help is to cost health out-of-network focused savings expected to claim We integrating product improve into the with plan and the new assets provider into provide providers. a business plan now health

to its expected network Work and underway is base expand We social for Health other acquisition, build offerings have Serves. efforts Contigo and value of complement our existing governance, over the way our specialized of Excellence customers we or of of manner proud help improve the with Health's In of to last in the communities. the to and meet our to initiatives impacting are to positively responsibly and recently highlighting a operating advanced health also mission in to are many also aimed our ESG will improving published environmental, administration strategies include and that provider XXXX our specialized providers that established new communities, and our Contigo plans, health to grow stakeholders, Contigo health our customer of which year sustainability building addition, create of plan companies. and through other is network which supports report, I'm Centers needs national this lines business. insurance trust critical all stakeholders. health care, practices asset at all ConfigureNet the Health

our addition, we focused and enables Health as use long-term We while We a U.S. recognize We Department foundation fiscal and health on sustainable mission ongoing to strong will customers delivery to footprint. other alongside of and we help advancing also growth. climate across carbon that having commitment In with strategy stability we now to discussion provides to In to and members strong generate their impact our achieve care. multiyear a strategy ESG reduce develop business and to longer-term providers summary, that mission financial and signed innovative, care delivers our other emissions a and we goals. practices resilience. global Together solutions a a and the over in provide support Craig our care ensure our have efforts Equities gas our working also cash Office turn Climate impact. are greenhouse positive health McKasson on flow balance our growth We stakeholders our Services technology-enabled of the Human increase Pledge vision, guideposts reduce flexible sheet. guidance. and is of have of operational I our Change of call financial values, in built Craig? XXXX we climate responsibility help part Health and the performance Climate for in to our and and reducing remain sector the their are

through will first outlook Thanks, we year, discuss introduced on it of fiscal earnings our the for August. Mike. from morning, XXXX our the fiscal quarter This our results in and remainder walk call which when I remains unchanged

offset in as the not year quarter, million, growth, did of the was in a business Supply to portfolio, respect renew that the of administrative to few decrease expectations categories, business, calls. increased offset experienced decrease quarter primarily of by period. first our calls, demand as as pharmacy $XXX.X pharmacy, experienced price of segment XXXX the XX%. first impact previous that a on an Supply to and for with GPO net services with as reductions their well on increase $XXX.X our further normalization the Chain continue and consistent the Services compared stronger Performance due fiscal members increases flat XXXX's care Turning revenue of as a well compared strong were fees we of member amend category category essentially partially have or including XXXX segment quarter, manage supplies ago $XX.X price August members. by as on earnings XX% of acute In net million, revenue agreements our Within of with which communicated growth food and the was revenue non-acute health prior provider with continued GPO revenue the in purchasing GPO of by to related million, our spend to earnings of existing segment, recent across Services we year pandemic inflation, X%. With Chain total Services and in driven continued penetration price discussed our COVID-XX our partially as in behalf results

some increases significant Although, an have date. a had inflationary across have impact they impact portfolio, the on our contracts had to business on not price

due increased or of current timing revenue of offset prior Performance continued a demand segment, increased result expand member first businesses associated in continue the due the for more markets by X% consulting the we year as license prior to such quarter, by as expected, ongoing partially product partially revenue COVID-XX was was year’s catheters compared normalization the pandemic. to This and last with PPE, and in compared analytics other offset the safety this clinical our our growth equipment and revenue portfolio agreements to declined as personal with continued In year. to As the and pricing products and supplies for of adoption. we adjacent to the Services primarily our drive enterprise include year products, products progression of quarter from demand protective

driven which primarily delivered quarter in the in we income million We XX%, same revenue $XX AI, quarter, our the With growth adjacent track fiscal addition, over to was expected, primarily XX% $XXX.X businesses Health quarter. Contigo year in year of Sciences, to of XX% grew to Adjusted million and from by quarter XXXX PINC target of net our remain over due markets profitability, fiscal EBITDA growth for $XX our million businesses, GAAP year-over-year Remitra. In last adjacent to markets ago, the two respect on year. as prior the a XX% Applied first decreased achieve factors.

and driven that First, EBITDA was well a direct expected, by in decrease decline our impacted revenue, This for experienced costs Supply logistics demand to decreased in products business, adjusted sourcing million we higher quarter-over-quarter. due which as lower given $XXX.X Services PPE as as Chain margins. profitability, a pricing of mainly

as decreased our Second, quarter, $XX.X higher businesses, adjusted additional $XX.X per of revenue Compared timing head selling, to anticipated decreased to million Services mainly general primarily due quarter, administrative million in enterprise Health as to from related growth year agreements support prior well decreased share and adjacent and expense, income EBITDA with the count XX% to to the license a the particularly valuation quarter Contigo of segment year Performance XX% primarily the of to related XX% the $X.XX. adjusted ago earnings adjusted Remitra. and earnings markets expense net adjusted of and and respectively. was an ultimately occur expected due in effective XX% tax XXXX for XXXX. a second effective first of at subsidiary of rate did quarter first release of and The impact reflect fiscal XXXX and the XXXX, net fiscal quarters was result to rate reorganization allowance to share of fiscal Adjusted tax estimated per income lower the income in that the

flow partially liquidity higher purchases year as We million as with the was from From cash from and growth continue flow operations perspective, direct for same a normalized due increase continues year. million minority in effective increased of cash demand cash September $XX.X to sourcing was ago. to investments, one the as of rate flows and that property $XX.X quarter for a a at for be first XXXX. $XX.X fiscal in XXXX of The three our a in our our increase expect primarily tax Services compared XX% of offset receipts the months decrease Free from by for as affected to our compared supplies business The and result sheet from million for cash in pandemic-related more mainly XXXX, flow lower to revenue as for was balance to of cash received same ended XX% was normalize. level Performance decrease was with XX, prior the with operations business to associated dividend as cash a fiscal million due $XX.X equipment. factors continued the period well a that well a the

As occurs typically a certain cash annual is compensation, first quarter. reminder, expenses, incentive the ends lowest in payment since in our year fiscal first including quarter in free of and June the employee flow

fiscal to our to $XXX.X totaled ended we September facility approximately to TRPN outstanding a million $XXX as million balance on balance continue balanced will million XXXX, acquisition a end an flow our in as free our equivalents of through respect approach XX% October. utilized million rising XX, rate XX, environment, bringing million XXXX, June expect disciplined fund the assets, deployment, With and $XX.X as we to of interest taking $XXX to of additional five-year remain offerings dividend. well the capital of of subsequently our and of of We Cash growth cash EBITDA. investments adjusted in XXXX. our stockholders capabilities strengthen, and our with For with quarterly of the compared $XXX in complement quarter existing billion to marketplace through cash targeting the acquisitions and return outstanding revolving capital to an or enhance $X credit differentiate as and as XX% organic of on focused

opportunities are previously stockholder we also to integrating and generate believe on continue We at look acquisitions. will value focused long-term announced that successfully

discussed for advance utilizing our combination Mike closed and hand As the assets we to of through a Health’s acquisition key assets cash of strategy of earlier, facility. paid Contigo our and on TRPN growth credit

XXXX focused are into and it the business We acquisition our the integrating positioning marketplace. in in fiscal on

the $X.XX we communicated As expected when we in we announced accretion XXXX. of transaction, to to generate fiscal $X.XX

the $XX transaction to three EBITDA We result in scaled in XX% fully that it is revenue five million margin incremental once also in $XX and will to contribute XX% anticipate in will million years. to net adjusted next the annual

quarter share that first declared totaling During the introduced cash the of per on payable our first in to we are remainder quarter fiscal quarter we stockholders and reaffirming guidance $X.XX quarterly XX, we this XXXX year, our of on of stockholders our Recently, paid to X. of our December dividends $XX.X Board December fourth Directors XXXX, Based record dividend call fiscal August. million. XXXX earnings of our initial as performance for on of outlook a

business in Products that and fiscal renew In impact to mentioned business, the reminder business, business quarter. now range of provided cadence pandemic beyond the are the our the EPS we continue billion $X.XX From year. COVID-XX Specifically, on a range as in in our their we agreements and be we million of $X.XX. basis GPO be quarter, had to to are Direct expect growing amend range beginning perspective, adjusted $XXX be begin of sequential revenue of XXXX, impact on not $XXX grow total generally or the $X.XX and to a second that August expect and in sequential to this a in of the Sourcing the net EBITDA it in members we we a to previously beyond to last adjusted of billion, basis million this the next $X.XX to the quarter expect this did expectations on to GPO

revenue increased revenue business, with which Services fiscal the However, of to year increase still lower of prior due benefited perspective, earnings pandemic. the the there recognition three we expect given fiscal the impact arrangements, demand In pricing although variability by and our from period, magnitude in second to to this half compared of periodic quarters be to expect sequentially we the related year and quarter factors. enterprise year. the the we quarter during in agreements consulting from remainder year, affected profitability the be first first Performance the the and XXXX to certain expect license engagements in timing be of fiscal with and revenue profitability From of a any of these between associated the may throughout

demand XXXX pandemic-driven purchases of other the first fiscal in of First, business. half and with higher sourcing PPE benefited supplies from direct our and pricing associated

EBITDA continues retain Second, our approximate to business particularly the be labor mid-single-digit to third, fiscal our not August to adjacent or are the are in of And in anticipated that incremental an market. the in decline expected a growth, in year-over-year fiscal across to quarter what agreements These result first and amend XXXX related recruit half impact making members in businesses investments we of factors and GPO business GPO drive our in to challenging markets the the XXXX. in aforementioned talent on first did XXXX. renew adjusted

to a in of grow growth execute to our XXXX objectives. we this open we other now We’ll the we value your to summary, to for in on to deliver In the to We on trend second deliver time and market our as focused for environment. reverse the commitments executing Thank and this we challenging members business. achieve our customers strategy, are expect question. up long-term believe you and fiscal continue track this our call we half continue Importantly, on remain morning. fiscal year and

will [Operator Instructions] first from our come Stephanie Please question Davis ahead. SVB And go Securities. of

How baked post the you the close. still of should this a maybe to as how taking start the you I outlook? had the different the within my into think already you acquisition’s little through on wanted guidance range questions. you of much of light area us Thank bit getting acquisition was we to the for walk range or Can contributions close? a in of Contigo

Sure. Thanks, Stephanie.

established not factored August, it’s when So in in assets, to we originally TRPN complete be a the going back year. had guidance although not we full

As announced we the It’s we it accretive result of benefit contribution. we a as $X.XX full it early obviously, in are the to guidance talked transaction, be incremental $X.XX about so will the in fiscal guidance year, our when that not adjusting is to overall But a year XXXX. range.

Understood.

you opposed sales as license to think on I for when the acquisition from XQ on beat the that sales a as get follow-up in base you’re derisk already So so the first surprised about miss of quarter, with me first last derisk lower the normal the in quarter, the a close. in One license year.

of So a the XXXX? a to Or take us give think versus revenues? to color should kind is sales first can license XXXX that broader way there as timing back, in we in half for benefit environment step demand we a on the about XQ

we the is cross happen another point, can across one that macro we end they of quarter have not exactly that depending discuss we about, demand. timing to is to on will in end as since when But I enterprise have did when enterprise had on this perspective but predict let the expected did the – that license occur say some close environment I quarter there I’ll Relative had that one implication that provide it’s talked say at the did we’ve licenses, we was hit. and quarter, first to what but we the they more can that quarters regularly close. before can Yes. agreements Mike close. hard

and under broader And these pressure. market enterprise demand the systems health just of – are a so the then in lot it’s of licenses, Stephanie, terms the on

enterprise these short-term. also And licenses them not drives a in obviously, so we’re way that but trying only, long-term actually value, from a to helps configure

expand so ability accounts. And it’s that there just reduce is the able our longer-term, and potentially but out to really getting cost, to be agreements have message longer-term these capabilities there into that

matter demand market the it’s the of still making we’re in the that So is there, sure and appropriate us messages. a with just

Very Understood. you. Thank helpful, guys.

you. Thank

comes question from Eric Please next of The go ahead. Research. Percher Nephron

around to helping interested capital there’s reaching looking and Thank entities market that you. I’m I are to deployment, you – much the end that if seen more maybe funding. hear follow for want some up of activity the comments and the in seeing you’re or on Have M&A customers. year? like acceleration? see TPRN terms of extending Or metrics a current do both hits hard to an those just in And lot business find? different this we think accretive being uptick feels very it you Are and of can in the and

Yes.

So this we past. more year Eric, at the than might been reasonably they be the are have in that assets in for market priced broadly, obviously, more looking

ways We cost. in leverage health truly tech are our the to the and helping truly on buying which that really chain, them capability focus our really committed channeling helps to enabling and our areas current reduce into to supply going continue programs extend that systems are a them appropriate look capabilities,

have market. And environment. build that systems plans, is, going do have systems to them allow a TRPN, Supply either Services TRPN do platform navigating it’s create the can that our look to of but all those not health also talked for the platforms of how those extend businesses it’s allow really, help at that area, sort Performance has they’re our we we’ve continue been, health in them these just really us So that Chain to for their to our partnerships many care longer-term to or like opportunities. – to adjacent And a or look into help only buy going what with of about. got Craig is focus them can services today, area, support In difficult as that health

eye continue assets to an but more will towards are a assets platform. with look we reasonably really for that priced So

Obviously, would have Yes. are we rate will The a Eric, balanced our interest is add thing that, to environment. we approach. only I rising continue in to

we’ve to financial differentiate thoughtful that assets are execution/cultural fit the strategic be our through we financial terms and plan going analysis they’re but got of alignment strategically going we’re us, going So to the in expect. to capital we fit, when of deliver returns

we an So pipeline. to have continue active

We look, of we’ll accomplishing in we think be continue to but terms balanced how that. about

impacts when looking that at Craig, your rate look higher cash how comes And at a it interest consideration possibility of balance, do obviously as return the course you’ve you to in the share But share over the repurchase. this financed year? of repurchase still

yes. in we’ll terms to continue use something It’s capital, of of best assess

you. Thank

Thank you.

The from of Please next Caliendo question UBS. comes go ahead. Kevin

Thanks understand is have change if for my purchasing to A patterns trying happening any I at taking call. the question hospital. there’s in Hi.

had in shape if supply chain or you’re form? in if past think be any in wondering as or way, else? how the maybe it’s anything not other or as impacting the the in any checks in some we’ve categories, and just of pricing supplies I things. or we’ve seeing form? behavior might they And replenishing much that on inventories shape heard buying way, done, I’m companies PPE are any Are there

Yes. certainly. No,

a thoughts So on couple different Kevin. that, of

is environment now continuing it chain, is right that to supply an in evolve. First,

products. ensure So our that, progressed, as them investments the made they if number wanted pretty of systems, to in had health a enough and remember, virus you care stockpiles significant

acute are – those that utilization So on through also just all X.X%. stockpiles, which been that of of those does a decreased, on a that a care health pressure system, June standpoint the I supplies. putting pressure That’s terms obviously decreased from you utilized systems obviously demand Chain utilizing health of in by our utilization think number would tell a procedures. those the acute I That’s in will also for some PPE. put utilizing Supply standpoint. that quarter, consumers the the the have Obviously, do

that a but in continue needs tell that that terms care return Services our some And a also standpoint, corporate we health can to our message but unique capability of issues have drive them On for the an help to figure only that will bringing I really overlay offer some how got Performance we of that you, only systems that standpoint, can or short-term. and side, their health of from these solutions their health not some can systems, of value cost, we really, efficient in we’ve more creates many also not from customers are meet short-term, system overall to create the with. to meet corporate trying their down out operating be long-term

I to that procured normalization. kind to Yes. that expectations, And contemplate would which the direct did only continuing is add going were thing they see Kevin, business, that that, of our sourcing to had we’re in be that our our particularly buildups members PPE down, bleeding why is

the so to business growth in is Now start we forward. moving think first the direct watermark, do will quarter see low the sourcing we sequential

into slowdown was said will to as the still some they still because built of expectations of second year in Although, at there a level over time. time. I that in our quarter of due up that factored be terms of was that my decline in this remarks, the had last But occurring what purchasing

ask quick or saying, full you’re helpful. more people That’s but Is If like... you know can I are what I going also on of customers would it it’s kind formulary? a feel follow-up. – seeing

Yes.

save a right? for well, way actually a as that’s money, positive you to incremental In

doubt. a Without

not care committed onto as formulary. up this aka, utilization objectives we at is picking health they So expected. systems feeling more pressure – get yes, a primary obviously is are of of But our and seeing pace these are committed people that cases to one interest programs, models lot some quite and the back in those

Great. so much. Thank helpful. you That’s

you. Thank

The comes Baird. ahead. next Coldwell of Please from Eric go question

but original Stephanie’s at going around question numbers very and acquisition. a the Thank Services Performance up on you, you much. of I’m to lot I’m following throw

So $XXX million you fiscal and doing is XXXX guidance did segment million, to is revenue. this $XXX million TRPN $XX million to million. year $XX in $XXX Performance the Services

Performance or And are organic doesn’t and included $XX Services revenue a growing So the down TRPN it year. non-adjacent up-to-date down wasn’t last million revenue that actually Services that guidance markets imply to $XX year-over-year year Performance markets face on about up the of is guidance XX% adjacent to this we for hold organically XX%, segment’s – as if be like original the bit guidance accurate. confused about million? just does this that I’m revenue look about if implied that about made are I’m XX% in

question. previous offsetting range Again, have are Thanks, we’re communicated appear. growth, negative I going overall it’s say rapid nominal say adjacent and those would partial part we but Services our change guidance markets to calls, have contribution. that that business, seeing it's of at of from not in will have that's TRPN, which Performance I in will slower I your it the to the given Yes. given that the are appreciate Eric. can growth based the seeing we understand, this we’re point numbers year on early on a growth, wouldn't only why to I the And point, contribution guidance year. elected the how

a and year We will continue revisit to assess goes on our guidance performance as basis. our go-forward on revenue the

on – that And obviously, closed one, we transaction. we are just

a of integrating So through over we've process asset got next this few the weeks. to go

better lot So do what place a in we'll suggested. exactly be to Craig

to on just there mechanics to guidance? is TRPN discounting get If in comes – us revenue the be there there going is follow-up. that consider not Are in, of that any revenue a that could anything Street? how visible terms on the might revenue I with of Or immediately one quick

plan, revenue original network model, wouldn't But question, necessarily in capabilities was contributions going be Contigo it's guidance. network was there discounting. in would Yes, great was in there our their will an capabilities. is was business us I subsequently some is I Health's contemplated and they Eric. contribution expectation that would and say for that We what I say give TRPN, original out a which which to closed – it building call

asset we expecting TRPN we approach had a our basically to XXXX. fiscal So to for benefits the net having different than from the out in business mix were get

Thanks guys. helpful. Okay, that’s very

Thank you.

Please ahead. Genuity. go from Richard question comes The Canaccord of next Close

thanks for question. the Yes,

on me, million when business, the expect question wasn't be follow the scaled $XX or integrated. $XX that million you to discussion. clear last rate to and is to run Just for is up that the it to acquired It now and

release out Yes. Thank the current the rate $XX acquisition, three is go run million that million the all. the if at $XX and you, when has been next built read years, back not five No, you to to Richard. the announcing over

that? Who back about Can the Okay. you Just details I and Mike. there That's just offering management, more customers? helpful. the model and go-to-market want associated talk would be go the are utilization like revenue the to with that to helpful.

Certainly.

in we're enabling about stages. early you this the obviously, But So focus prior authorization. whole heard technology on talk in us past

in just has another prior very, a authorization is step and you or out been category offering. building that very know, cumbersome as this process. So that And manual

capability. so to technology are use unique focus is And machine to our very that learning to a that in language automate really enable spot we and natural processing,

organizations to over different build with that working couple a out capability. been the we've months year, of XX last Now

So are. we where comfortable feel really we

goal health reduce obviously improve to is systems quality cost. our help Our the and really leverages

the obviously one then the with of is obviously, and with is our And of focus directly working payers. working providers. health obviously, So areas other area, systems

to And very entire specific protocols actually have areas, more we to do imaging automate labor enabled those especially them that cost capabilities charts can some look and we values lab as of help many using and around other read the manual technology high those function. of capabilities, and have that all to using are we where kinds become in payers of various So and at things. efficient

it. question two, on provider excited So market. and the both payer – really focused markets we're that to two But your the areas answer we're about

a additional Richard, color. just little And

to provider side, typically capability. would be our SaaS that a clinical subscription on So the decision support

would that So model provider on be revenue side. the the

contractual manual On the it a capability with automation to relationship eliminate their to and payer that office back payer AI-enabled side, is provide a labor.

thank Okay, you.

Thank you.

from go comes Tassan ahead. of question next The Sandler. Jessica Piper Please

TRPN talk you hoping can you bit addressable Hi, products is little question. maybe the for thank for a much the Direct this about I'm wrap out-of-network so taking Pay. from market who

how be? selling of who end estimate and supplement are guys customer how the plan is of market to might sort sold, large ASO the then to interested is to you Just growing? how be know, the employer's you that quickly Or and that is whatever just sort do a it's

Yes.

the hit stuff strategy first. the level let of highest me So just

excited this found we incredibly asset. asset. So this We're about

most so our their those they as And to And look continue plans, those part, health well need as for to them staff, services the providing characterize systems, health own right. at to care for health you are provider-sponsored as they Jess, we what services plans. more of many think about – are to provide ways communities patients. their have as Obviously,

them of are self-insured. many So

either if wrapper footprint, of a have or them to to capability. outside somebody those with plans this of so of that this health you services done now if or bought have plan footprint, these – to with you're service this have asset you're And is actually what that a what when provide an kind we have can employee the capability employees wrapper if have provider's provider or provide typically, and acquisition. health we outside through customers that of you're go this to does a you those patient have So we contracts contract is that that that customer else go

think exciting. we it's So, incredibly

up, And assets. kind we health have those now obviously, provide only plan of wrapper, to ability now really We capability to market, aware into systems well of this Excellence but TPA health wrapper so the health provide capabilities, not capabilities you're of the – sort that that wants this program. as of think, Centers capability we our stand that side we that a plan of, if looking virtual supports can also that have payer have to are the we expand that capability provider with

those about we're those in So both options. excited both of really of activities

there's And carve providers is their a have out We reps. potential Craig. do think or case, be out-of-network to Yes. could this third business employers which

which opposed a could future, as separate this their into carved we've provided that having the the be going out offering. well. is of as capability brand could bundled name be in to ConfigureNet, overall said be it be capability to So and actually

just have helpful. it. And Got quick one follow-up. That's I

think related you And those to outside kind back to wanted you direct year. how And some just just the were I it. of that were clarify through mentioned XQ business, were, headwinds COVID clarify lapped of XQ to half? those what headwinds last those if or big? the there not sourcing Thanks. exactly pricing in then that case, of And that's in I can you the related that do they were XQ persist

Yes.

year-over-year going I two that impact, really year, again, last mean, to were affecting us there's back I – standpoint. headwinds the pricing think from

So year pricing continued Prices indirect sourcing, yes, down. ago. of we higher have a had commodity products to come

of seeing headwind the we're terms direct in that that in sourcing So business. margins is our a

We that also a in couple ago implications the from margins impacting business. freight have expense are months that of

created those are GPO had then direct business. in sourcing the not the had GPO in the business. have in pricing that so about last year the headwinds GPO they my ago. year a So commentary, a up, of amended year-over-year GPO and a ago, agreements, also which And quarter, to the headwinds because headwind restated Those now folks participation I lower talked their agreements the had their we stepped

Thanks Jess.

Guggenheim. Wallace ahead. next from go Please The of Jack question comes

want expected the on a year cadence? my Can year the for macros, question. just and impact throughout fees Looks net given the think talk just the of there's you through the guidance GPO that business. admin ramp first the about to steep like taking and just of just us help impact the number. fairly in I volumes the Thanks layering sequential

Jack. Yes. we as of GPO that then for we QX increases mentioned, I the fiscal the expect throughout would from expect And about, talked sequential year. reasons I do watermark perspective, was mean, a the just the low remainder I've

business up of in side are expect us is now QX significant the four in in a about continuing walls business, get non-acute talked will up QX business That the of is which in we've utilization the a and performance to about continue that then of So within and QX, the step the performance the stronger acute range for be within XX% in in growth hospital. GPO stepping care ramp-ups and again lower of acute contemplate slight we step to to up not and the the year. the as

Got to quarter. on want call front about year made back you. mid-single-digit having a And EBITDA of half little last go That's bit this decline about We're just the the a year-over-year. then higher comments than helpful. I to the that

in second any quarter that much takes of was there the how license Just puts there? are and the that impact if the wondering of sale or other slipped into

direct the from purchasing. affecting and significant the was Yes. sourcing of the that headwinds of had in I've that The the impact impact first more discussed GPO terms quarter then margin impact normalization

level a from contribution fiscal that that the gross Services, significant to we're EBITDA Within are if direct of the down at half impacting the did margins the benefit timing the had the going come margin ocean think of think look are of Performance think which – We headwinds of in half freight expense I first us step sourcing really that's revenue and affecting But you year. the this down you're in those do agreements. margin us. get quarter business, about year. yes, see seeing we that in will implications the because a we we've in freight talked by license two of decreased nature, of enterprise the lower affected things and standpoint back the the us

Got you. That’s from you. it Thank me.

Thank you.

attending conference now our Thank concluded. concludes for The may and question-and-answer presentation now This session. disconnect. you also has you today's