Premier (PINC) 7 Nov 232024 Q1 Earnings call transcript

Good morning, and welcome to Premier's Fiscal 2024 First Quarter Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to the call over to Ben Krasinski, Senior Director of Investor Relations. Please go ahead.

Thank you, and welcome to Premier's Fiscal 2024 First Quarter Conference Call.

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

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

us. joining Good for morning, thank and you

care. with you to in and strategy to to advancing be results progress health provide XXXX better, are We on quarter smarter technology-enable our update pleased today discuss fiscal an first our

actively managing execution quarter first business. our in Our reflect disciplined results

the time, revenue, below were for slightly and our of will than profitability. net better As a we performed result, anticipated Craig later. segment same consolidated discuss expectations At which in we terms

ongoing process. review our me let address First, strategic

Our actions. to advisers management potential team work evaluate and continue outside to with Board

subject in approximately this announced care of to As the assessment, for million our value operations of to for price purchase part $XXX adjustments certain shareholders. GPO cash, unlock non-health previously post-closing we sale our

thoughtful I that diligent to to urgency our process not a process. our employees be As continue executing growth of conclusion opportunities, sense delivering we a in focused to proud ensuring of to our of emphasize to very a and reaching people. this other remain our adaptability, on and additional and their our incredibly our evaluation is Premier, continue to At value our our in and which culture team's and the agility We ability we distraction strategies do of for defining success become have members our strength and have of is are business. core customers. I'm our company. They characteristics and want

One are U.S. XXXX incredibly honored The Best XXXX Companies be of to We in by For and recently Work to named

Report. World News and

a the platform. business to also and confidence resilience It Our improvement through performance outcomes long-term as people technology-enabled providers role reduce improve reinforce enable in partner of gives us for our our and trusted positioning our members ability our and to customers. and costs safely our other

in part normalization been reduce help to models. Many can providers important. role interest shared in and within systems. them more We our alleviate increased the Our co-management and costs shortages. and their and due our for believe financial models never workforce members help These are has workforce with grapple plan to future overall continued continue expressing recovery challenges services to pressures

health and we improve their release care program. to acquisition which were continues, is strategic XX serving to reduce about help quality to many and Premier performance discussions with point with drive Fortune health this top hospitals established why have market improvement. recently our As systems of technology These providers XXXX, new to are credible pressure made costs systems performance can to entry reports as services Magazine, turn with and of by how possible pleased help an Premier and together top the differentiation, health XXX

on We play unique artificial important also learning the and and focused in in have health remain Premier intelligence to care. and very rapid machine health role innovation advancing a accelerating care. believes that technology

excited are given users these to our in differentiated AI our from the at the experience We ability data this years our in the of this be solutions space. With alongside are others of we technologies, members, forefront of and market. co-develop robust assets movement, end to

future, I'm cases Chief our being Andy Vice innovation successful incubate, Brailo Commercial to AI innovation Chain to drive catalyst around excited Senior mindset. Services. to of that Bruce growth scalable and additional be in grow implementation the Officer are the future. In innovative, Premier President Radcliff, includes our transform of spur committed to we with remain Premier These by that We to will can team move our Chief the with on health role, use believes innovation. To to continued scale. members This and capabilities those our recent and to promotions precision customers need to other strategies to other position leadership and successful forward identifying solutions. about One Leigh enable the our Anderson Supply on our and and members customers promotions, deliver our focused with Operating the Officer role strategy our continuing executing summary, execute partnering care

creation term. term stakeholders. Thank call of relationships discussion the challenges We other component of of to long a customers in the with business I turn Craig long-term And our the environment our and continued health in now the for will are financial to for performance. higher-quality foundation operational trusted and us a over to navigate over the short key the current will them position and and our We our lower-cost, believe you. value them position members care and help growth continue provide for

Mike. Thanks,

is $XXX the including decrease clinical address markets continue segment compared natural need; October period. We prior care providers, of health help intelligence, learning embedded and in increase certain year reduce excited translates the our an remain agreements prior believe clinical our opportunity acquisition these revenue Performance the several a Chain a period were evolution of which coding services net of increase for with of prior our we from costs; to business our leverage decreased following the license Supply use automated Chain XXXX period, as period, million, our an processing, XX%; compared sciences year operating capabilities, to as clinical and and our Services segment, partners capabilities support an contributions leverage segment, growth from more revenue enterprise fees driven For to with capabilities X% workflow prior this to fiscal the and three, administrative with Supply identify and use our from and businesses, two, revenue revenue our working net about typically EMR Services asset compared Performance the to trials. In million, AI the by including XX% to life to documentation XX% revenue candidates environment language revenue as systems $XXX.X due consulting quarter year easily streamline care patients primarily results X%; quality businesses fiscal decline basis, acute authorization growth On in adjacent coding of in by purchasing XXXX, member unmet period, purchasing. of $XXX.X higher total include: meaningful increase current of prior due which for continued fiscal market to quarter increased cases in of artificial lower-than-anticipated drive machine year-over-year increase in year Services a the our grew first group prior X%. In combined slight markets with in for which or was over program segment the the improvement offset first emerging non-acute factors: a and million, compared our decision of the a businesses. of of adjacent certain year continue Services in TRPN to one, revenue year challenging and continuum a to period, in continued in care categories, purchasing partially in to margin an

level experience the purchasing the Sourcing we was quarter. In group overall prior discussed aggregate impacted business and mid-XX% by As our blended fee Direct previously increase an the which contributed business, and the current XX% lower in pricing in decline customers' to demand in revenue. anticipated quarters, levels, in in to and administrative members supply share products and inventory first during excess the to other of continue we market a year impact period, resulting

and it believe normalize. may take to a continue fully We of until quarters additional couple demand pricing

liquidity result an million earnings EBITDA, sheet paid product period. in period, increased the for primarily increased property and receipts received the offset million increase and cash from million prior the offset perspective, rate in that increase first compared revenue was effective our in in costs, factors: the in to payments million an for onetime were net partially Turning first a from partially a quarter expense, chain of minority flow XXXX by EBITDA year period, compared period Adjusted a our year the year $XX.X period. These each from in the increase driven quarter. as supply adjacent the decrease year as and as interest in increased per and and investments by for EBITDA, adjusted by current million the a a due decrease non-GAAP the GPO and year XX%, year increase made increase cash and in to in lower to Sourcing current Chain of dividend same EBITDA, XX%. From following sales amounts tax logistics offset offset equipment. in year of of the partially revenue, driven to as higher due a due prior factors of in businesses. Compared from expenses comanagement an higher first which profitability. mainly adjusted purchases the in Services income certain during cost in business adjusted increase our the cash $XX.X X% a flow an period, impacted by to and year balance an in due fiscal adjusted income Performance expenses to increases in the depreciation partially of share increase margin first, Direct period, flow prior was $XX.X investment prior driven prior $XX.X quarter profit for net cash to well well the period higher by mainly in expected an an performance-related income by the and operating increase collections by in from Free flow $XX.X prior GAAP due income with the increase prior estimated markets increased adjusted compensation support revenues as offset in from to in Services operations the our XX% quarter related second, operations, amortization from businesses; primarily partially Supply cash by in to of

fiscal from the of first used million ended sale while free quarter. Cash billion of no down a $XX.X these and September The flow the we XX, and lowest the compensation our sheet $X plan equivalents June cash care in facility, of is As payment reminder, quarter currently the XX, We company's our year previously of GPO portion in we to XXXX, pay alternatives. and as as non-health remaining certain we primarily million in expenses, a with $XXX.X proceeds complete of and in this including announced cash on compared cash ends revolving our annual cash outstanding credit cash proceeds occurs June typically evaluation maintain totaled the with was respect balance. With X-year operations. to due cash first of the performance-related equivalents to to increase our balance XXXX. since proceeds, strategic quarter

return share However, via to to the may use proceeds, repurchase. capital and/or opportunities evaluate the the we business reinvestment return include the in eventual of continue of highest which for stockholders

record XX, During the $XX.X dividends to declared payable dividend quarterly of to December of paid we on Directors stockholders Board cash million. of as stockholders quarter, XXXX, $X.XX totaling December a our X. of share Recently, first per

potential to in of Services at now GPO mid- certain In supply business, expect digits a last flat this discussed growth an Board the we remainder will said, management not XXXX continue to levels, mid-single-digit and to over net full evaluation relatively fee guidance some in in range. to our adjacent ongoing result which may mid- for fees continue blended I revenue our in the fiscal time. XXXX. In for commentary in and are to share member revenue revenue As GPO We business, alternatives, aggregate directional fiscal reinforce the expect contribute excess market decrease fiscal given team's revenue businesses our segment providing Sourcing the we strategic That the to administrative year. our did XX% In impact in in collectively, our to to single dynamics, of formal high our inventory growth want XXXX. in given XX% excess we be quarter, of this market the we given anticipate increase this Direct markets overall of our growth expect high Performance segment, year. ongoing products

fiscal in second anticipated on that year. a impact year-over-year considerations implemented to a fees XXXX, the year the profitability profitability to we our the you quarter quarter. From second revenue this a fiscal in compared a enterprise and license agreements. would net As it One, deals the we of reminder, and had period, like year very results we prior a the cost quarter plan impact growth fiscal expect could in strong performance few timing remind in our Depending had of lower incentive comparisons of this fiscal achievement perspective, decline administrative savings XXXX. impact revenue. Two, I to of for

While us fiscal long-term benefit investing in value creation. overall to the areas to cost position our in higher savings growth the are of continue we for and certain a portion business growth sustainable of XXXX,

expect flexible summary, execute our to In investments equity on we we achievement in more low on the would EBITDA cash normalized adjusted a sheet flow free significant hand these balance range facility. return are continue XXXX. In generally our on XX% cash our strategy, currently factors, maintain measures. Considering consolidated generate in with non-GAAP no margin fiscal we profitability levels. Three, including no performance-based balance in and longer we our earnings significant and to our addition, expect to from be minority to credit

we evaluate your time long-term Looking business strong and and support today, opportunities foundation, believe and to of now appreciate we'll our sustainable has high-return questions. up forward, growth value continue to our return to the for call a we open further will stockholders. We

[Operator Instructions] from Nephron Our Research. first Percher question Eric comes from

is achieving Sourcing market Craig. the your I material pricing the commentary, below Direct this comment a in that your you you a And represents would outlook you is what levels. want to seeing start can for the thought there? with what Are year, around pricing if the reasonable And today us particularly stability consider tell change on in margin?

in it's for the say Sure, the Eric. wouldn't Thanks question. I outlook. a material shift

we I relatively sort expected think nominal we're quarter, of talked and we last now I it said growth, when seeing is flat.

of there's back there now the excess and cases, our So the level the I normalized is one is just would the pre-pandemic don't come levels. certain think for supply it's a manufactured at although significant an out we to say, try particularly, categories quickly. pricing, where originally pricing bleed for change capacity expectations supply in a normalize continuing then and the longer even major marketplace pricing, excess say getting in the product and of at overall, I to business. we was certain through taking what for continue pre-pandemic which -- than down. they pricing gloves, people is and of think occur. Relative in seen sort given I opportunity relatively generally, contemplated below that that levels But inventory that's is I I'll channel say, bit are levels, little anticipated discounted have would would of is members move to

any existing And of through its change available to stock is stock the there market? relative versus at on way nuance kind working customers in the

certain is procured that excess gowns. the But would to relative the The more return I What to had certain something I levels. historical broadly, really would beginning of stock only to be are be we exception to I in gloves. question. now of members, amounts dynamic would they members, continue gowns case say ordering see excess is clarifying the capacity really would primarily at Good around say market, that in around patterns are say more

from The question comes Piper from Jessica Sandler. next Tassan

buying follow have Eric's of all purchased? you Direct to on it XX months how purchasing calendar Direct a are any purchasing X-month color on years, how clarify in you quickly kind Or Just in question. visibility into Sourcing Sourcing you patterns? wanted the up Do interested next some store of cycle? upcoming Is like visibility? you the Can can have of products much I the business. give just

Sourcing, Direct Yes. initially around COVID. has especially it's -- been our focus during PPE,

the So that the it various was access care quite focus a a systems bit sure lines. product on had play, just resiliency making of health

have We of inventories utilization care the a utilization of what those and really such. the health depending view What's like. hard for a systems judge look quarter inventories the of to or probably us is into on X

our is to where and to to just the understand out signals capabilities So think that continuing those lack members we build there's resiliency. focus to support out a demand really build capabilities continue of

And versus versus GPO helpful. then it. any net non-acute XQ the finally, for purchasing parse and how revenue all fee Got trends acute kind then follow-up, you Any Can sale expectations the color just out wanted in care non-health just year. the of on about be you use from to I proceeds just the And non-health as the admin would then of a business? are just the in ask planning thoughts care? to

This Jessica. Craig. is Sure,

quarter, a normalize So We level below terms business nonacute begins or GPO, but being of expected in care the food as relative down utilization of to continuum We saw inflation there. year-over-year normally less gross saw I first the expectation a fees. in as bit part in to we of around of would in administrative increase bit have a we little where the indicated of nonacute growth did see acute purchasing. sort in slight the the care

distribution that think through around change of say We no would rest the I'd move channel a how in the continuing to have we we GPO care the expected. terms We on breaks we our that that bit then originally will relative our the part through have little move of business have also lighter than GPO saw recover as And the year of proceeds of flowing to sheet. out. to the kind care is cash do from sale balance would how expected. of operations, use we the planned of non-health according non-health the

make need a to proceeds in will quarter. those second payment We with associated cash tax the

will said one something have be [ will in will that and nature in utilized remaining commentary, that, giving So is evaluate, the that share cash the plan alternative on ] I thought repurchase of that to the continue proceeds based of to million, we be consideration aspect via complete $XXX million to certainly reinvestment $XXX about return beyond need to amount today. The be we the my business. strategic capital once our and use and/or review as

And question of Bank comes Lutz our next from Allen from America.

really book some driving growth all Performance systems helping are talked you that post-COVID? within then And major of what the during of strong improvement? from the to business curious, has business. evolved about margin health Craig, the COVID I'm consulting you're at Services drive areas

it and here. add Allen. then jump I'll can Thanks. to off, I Sure, would color kick some that and tell like in already Mike

facing. relative So really health that pressures business, given margin financial the systems to improvement are it's around the consulting our care

expense So it's can just around non-labor performance reduction. But tell you'd also like Mike, to I in. jump improving clinical but

Yes. No.

Craig think hit I it.

that of there's think come improvement margin prongs sort of that. couple I a of think -- off I

First, the nonlabor as Craig said, stuff.

on health to DRGs. our So to our benchmarking data our around looking then rationalize at using utilization, specific again, as appropriate using buying data to working And systems and and we're relates care our -- it we're labor. technology going technology with

high health very COVID. of temporary coming Our utilization systems through to are a very, staff care get off

rightsize areas. And finally, to look what in relate on need initiatives different so to scale supply other to through labor out sort to relates costs services a then to build ways a of those in basis. And supply really in And or it their go-forward standpoint, from a drive continuing we are capability. where chain help of helping we're improvement like we're at of opportunities also we them overall operations chain obviously co-management couple a and number as number performance look a managing involved down to technologies. co-management. providing technology, then applications create of to And are One,

top piece there for mentioned those systems discussion XXX to his last our hospitals top recent One color this about improvement may would opportunities Craig. provided remarks, is say Mike opportunity publication of health and prepared I an the add. for and this but has where be of outreach also performance And in XX institutions.

around uptick well. some outreach So we're seeing as that an of

This Premier's session concludes Conference for in presentation. today's our Call. attending fiscal Fiscal XXXX Quarter Thank question-and-answer you

You disconnect. now may