We believe we’re at a great spot to really support health care systems as they’re struggling through with the labor issue. The second overall trend is this proliferation of advanced technology, AI and machine learning. And we do think our strategy of focusing on prior authorization on HCC scores, two very, very unique offerings in the market using AI, machine learning leveraging the electronic medical record. We do think those are differentiated capabilities that can show demonstratable value to health care systems as they’re moving from manual to technology-enabled processes. And then finally, in that realm, we do believe this idea of technology-led work with our pharmaceutical companies to identify patients for trials, we do think that’s very unique for us.
So that’s number two. And then the final is really just helping our health care systems create more scale. And as they’re thinking about ways to continue to bend their cost curves, we’re creating shared services capabilities and other offerings that really can sort of help them bend that cost curve. And of course, those are all aligned along our supply chain and our clinical decision support capabilities.
Jessica Tassan: Got it. Thanks again.
Michael Alkire: Thank you.
Operator: The next question comes from Bill Sutherland of the Benchmark Company. Please go ahead.
William Sutherland: Thank you. Good morning, guys. I have, Craig, a little trouble with the math here. As you talked about the rest of the year for Performance Services being sequentially kind of in line with where you came in for the first half. I think that’s what you’ve meant. Maybe if you could just clarify that because it just didn’t seem to add up based on the full year, at least in terms of revenue and wanted your thoughts on adjusted EBITDA as well, if you can provide that.
Craig McKasson: Sure, Bill. So yes, I did say that generally, we would expect Q3 and Q4 to march along with kind of broadly where Q2 came out, although as I indicated, there is some gap closure expectations for Contigo that we need to achieve in order to be on that expectation level. So from a top line standpoint, that is how we are expecting the year to play out. Obviously, we have lots of things to do between now and the end of the year to make sure that happens. But broadly, that’s sort of how we’re thinking about it from a revenue standpoint. From an adjusted EBITDA perspective, overall expectations would be, for the most part, I’ll say, relatively consistent with how the revenue cadence for the fiscal year is playing out when we think about performance services overall.
William Sutherland: Okay. Yes. Okay. And then the as you guys think about the partnering for Contigo and stress. Can you give us a little more color on kind of what that shape might be? Would it be one where there’s majority interest on their part? Or I’m just kind of curious about the control aspect of this and then the investment side of it. Thanks.
Craig McKasson: Sure. This is Craig. So obviously, we’ll go through the process, but certainly, our expectation would be that majority control and leadership of these two businesses would move to somebody else. The question is, whether and to what extent we maintain an ownership interest to further the partnership, but the expectation is that a majority to all of the ownership of those two businesses would go to organizations that have more scale, resources and expertise to take those businesses forward.
William Sutherland: And did you — Craig — I’m sorry, you finish it up. Thank you.
Craig McKasson: But I wanted to clarify your question about investment. I wasn’t — I’m not sure what you meant by investment.
William Sutherland: Well, you kind of explained it. I mean it’s taking all of majority stake, and that’s obviously going to require a direct investment. So — okay, that clarifies that. Thank you. Appreciate it.
Michael Alkire: Thank you.
Craig McKasson: Thanks, Bill
Operator: The next question comes from Eric Percher of Nephron Research. Please go ahead.
Eric Percher: Thank you. I want to just get a little bit more specific on the contribution from sourcing and Contigo. And what I’ll ask precisely is if tomorrow, you saw they’ve moved to a partner and there was no further investment contribution at sourcing, Contigo, would this be immaterial to EBITDA? Or could it be potentially positive, negative material?
Craig McKasson: I would say it would be slightly accretive to EBITDA, but not at a tremendously material level. But it would net-net the two of those, it would be accretive to EBITDA.
Eric Percher: Okay. That’s helpful. And then, Craig, I wanted to ask you, if we look at the businesses and try to look through some of the pressures or challenges or dislocation from the process. Could you speak to what you think the natural growth rate is in the businesses that you expect to own and not partner in — and specifically, I’m not asking relative to ’25, but if you just think about ’23 and ’24 and what these could or should have run, where do you fall out?
Craig McKasson: Yes. I mean relative to GPO, I think we’ve talked about, if you look at it independent of the fee share changes that we’ve talked about, that business generally grows at a low to mid-single-digit level on an overall gross growth basis. But with the fee share pressure and dynamics that we’ve been transparently talking about for quite a while now, we expect that business for — into ’24 being a mid-single-digit decline in terms of the top line because of the change in fee share that we’ve seen on that side of the business. From a Performance Services standpoint, I think the underlying growth assumption that we’ve really talked about has been in our core provider technology that is more of a low stretching to mid-single-digit growth business in that part of the market.
The adjacent markets businesses that we’ve talked about, again, excluding Contigo, would be more of the 30% to 40% type growth business year-over-year that we’ve talked about. Contigo has negatively impacted that with some of the growth that we’ve seen there, which is why we’re at the 20%.
Eric Percher: That’s helpful. And last question would be what will determine if you move these potential partnerships to discontinued ops?
Craig McKasson: Yes, we’ll be evaluating, obviously, internally and with our independent auditors, all of the criteria that are required for held-for-sale classification. And as soon as we have a more formalized plan around the expectations for those we would anticipate and likely expect that that’s where we’ll wind up.
Eric Percher: Thank you for all that.
Craig McKasson: Thank you, Eric.
Michael Alkire: Thank you.
Operator: This concludes our question-and-answer session in Premier’s Fiscal 2024 Second Quarter Conference Call. Thank you for attending today’s presentation and you may now disconnect.
