Premier, Inc. (NASDAQ:PINC) Q2 2023 Earnings Call Transcript

Mike Alkire: No, no, no. Good question. So just as a quick reminder as you think about anything — any decision from a sourcing standpoint that happens here it’s primarily happening in one of our sourcing committees, which is made up entirely of our healthcare system executive. So when we get a price increase or somebody that wants to do a price increase that goes by that committee. That committee makes the decision as to whether or not they’re going to agree to that. And there’s a number of factors that they weigh in terms of determining whether or not to allow that price increase. And obviously profitability of the supplier is important. The second is how healthy is the market, if they don’t allow for a price increase and that supplier does not provide that product are we going to create a monopoly or duopoly or whatever.

So they put all of those, sort of, ideas into their decision process. And then that really determines whether they take a price increase. But for the most part any increase that we take is based upon our member input. So I don’t — there’s not a difference as to whether or not Premier takes one versus the members because we are very, very aligned in those areas.

Kevin Caliendo: That’s actually really helpful. If I can get one last one in. We’ve all seen and read how shipping costs and some of the big inflationary pressures that were hurting the supply chain in 2020 and 2021. Those have come meaningfully down. I’m just wondering as you see that are you changing or is it creating more opportunity to source for yourself more effectively? Is that something that’s happening now, or is that something that might happen in the future? And how would that impact the business for you?

Mike Alkire: No. So it is but we’re always — it’s a great question, but we always have an eye towards another event like this. So obviously we want to take advantage of any synergies that are happening from a logistics standpoint and make sure that that value gets obviously driven into the contracts and then our health systems are paying less for products. Having said that, we want to make sure that we are building more resiliency into the supply chain so that if there is ever a huge logistical challenge in the future we have the ability to pull a lever that has more nearshore onshore capability. So we are going to continue to build out that resilient model. So even though today, we’re seeing the logistical costs come down we want to make sure we have the right optionality in the event that costs significantly go up in the future.

Operator: This concludes our question-and-answer session and Premier’s fiscal 2023 second quarter earnings conference call. Thank you for attending today’s presentation. You may now disconnect.