Stephanie Davis: Hi guys. Thank you so much for taking my question. I was first hoping to pull on that one Premier threat that you guys had talked about a little bit earlier. As you go through some of these client renewals are there any IT solutions within Performance Services that are resonating the most with your client base? Or is there anything that you’re seeing get prioritized a little bit higher than before just given some of the moving dynamics of the IT landscape?
Mike Alkire: Yeah. I would tell you there’s — I would probably break it down into two areas. So we have roughly half of our health systems that primarily really lean on us for supply chain. So those organizations that lean on us for supply chain are really looking at the pull-through of co-management. They’re looking at pulling through all of our advanced technology where we’re — obviously technology enabling the supply chain, the e-Invoicing, the e-Payables, all the work we’re doing there. So that’s sort of one pocket and you’re pulling through all those capabilities. The other pocket uses us for both supply chain and obviously, performance services and other areas. And I would characterize, those as looking at, as Leigh and Craig both have said, total margin improvement.
So they’re looking at not only ways to drive enhanced reduction of supply chain, but they’re also looking at ways to standardize the way that they’re providing clinical capabilities to the health care systems as well. So, and then that’s bringing in, obviously, all the technology that Leigh just talked about with all the alerting capabilities. So, I’d say, it’s characterized in two different ways in terms of how we’re going out and having those discussions.
Craig McKasson: Yeah. And Stephanie, this is Craig. The only build I would have is, obviously, it depends on the health care institution you’re working with. But specific to Performance Services, we have definitely seen interest in our enterprise analytics. And so bringing — and we talked about the enterprise license component of that, but that would be the area that we’ve seen increased interest in wanting to leverage those technologies to help them with margin improvement, as Mike articulated.
Mike Alkire: Thank you, Craig.
Stephanie Davis: So with that in mind and given the term fee this quarter and some of the client win announcements by your large competitor, are there any themes beyond pricing like clients that are maybe less interested in these IT investments that you’re starting to see in some of the client attrition? Or is it purely still a pricing kind of model?
Mike Alkire: It’s sort of — it’s really — Craig and I’ve been talking about this basically for quarters, but you have some health systems that really do want to look at total value that’s being created, and they want to bring all of the assets that Premier brings because they’ve got huge imperatives. They’ve got huge labor — some have huge labor issues or labor cost issues. Some are trying to transform to new payment models and those kinds of things. So, I will tell you, you do have organizations that are willing to look at total value as opposed to one aspect of value that we create. And so obviously, our job is to do as much as possible, demonstrate what that total value prop decision looks like to relieve some of the pressure on just the admin fee share back.
Stephanie Davis: Helpful. Thanks, guys.
Mike Alkire: Thank you, Stephanie.
Operator: Thank you. And next question comes from Kevin Caliendo with UBS.
Kevin Caliendo: Hi, guys. Good morning. Thanks for taking my question.
Mike Alkire: Good morning.
Kevin Caliendo: On the Performance Services, you talked a lot about the business, but just thinking about the sort of mid-single-digit growth outlook, how much of that is sort of in your control based on customer wins and just the overall? And how much of it — like what are the assumptions around the macro that get you there? What are the puts and takes, just the thinking about how you think about how that business is going to grow both from a micro perspective and a macro?
Mike Alkire: Yeah. I could take the highest level. Look, I think that as we continue to build out services and capabilities, again, to support the health care systems as they’re struggling with increased labor costs, in some cases, struggling with inflation and those kinds of things. And obviously, reimbursement is not necessarily staying up with those extra costs. They’re asking us to come in and really focus in on how can we help them do more with less and basically be incredibly diligent around cost structures, but at the same time, ensuring they’re delivering the highest quality care that they can potentially deliver. So, at the highest level, that’s really what’s driving quite a bit of the market.
Craig McKasson: Yes. The only thing I would add to that Kevin is, I think as we think about — and again, we’ll more formalize our 2025 guidance in August with the underlying assumptions, but at a broad level, the early perspective that we’re trying to provide, we typically go into a fiscal year in our Performance Services business with sort of 70%, 75% visibility to the revenue given that the majority of that business is still SaaS-based on the technology side. So we have good visibility to a large amount of that business. We’ve talked previously about enterprise license agreements and so we have that that we’ll have to — we have a pipeline of them to process but have to work through which leaves some of the judgmental nature of that.
But the combination of those gets us to win the wraparound services component from our advisory services part of our business gets us to the low-single-digit anticipated growth in the provider market. And then as we look at the adjacent markets business, we anticipate double-digit growth in the 15% to 20% type of range that we have seen that as it’s growing ex-Contigo becoming. And that is going to continue to be in the applied sciences business, which we have very sound ongoing relationships with the largest pharma companies in the country and continue to facilitate and enable work with them. Our clinical decision support business has really driven off growth in the coding and documentation capabilities that were asked about earlier. And then our Remitra business in the electronic invoice and processing, those don’t have as high a visibility typically given the nascent nature of those businesses, but continue to feel very comfortable given the pipelines the appreciation for those capabilities to drive the type of double-digit growth that we anticipate from that side of the Performance Services segment, which in combination gets us to the mid-single-digit growth overall.
Kevin Caliendo: That’s super helpful, and a lot more detail than I was even hoping for. So, thank you. One quick follow-up. Just on PPE stuff. I didn’t think we’d be still asking about this. But we have heard that sort of PPE demand and destocking is — has somewhat normalized. I’m wondering if that had any context in your outlook at all. Was that better than expected? Or is it trending as expected? Is that what got you to the sort of the higher end of fiscal 2024?
Craig McKasson: Yes, it’s really trending as expected. I mean we’ve talked about this again in the past couple of quarters as well that we really thought we had hit sort of the bottom in terms of seeing ordering patterns return. I think the thing that we’ve still been managing through is price reductions. I mean we continue to see, in particular, glove pricing, which is the largest component of our PPE portfolio to continue to have very low pricing, although we are — we believe that’s stabilizing now as well. So from a perspective of where we anticipate performance, we talked last quarter and reaffirmed today that we expect sort of direct sourcing to come in where we thought, we expect sort of flat to nominal growth quarter-to-quarter, but I would anticipate that that will step up moving forward.
Kevin Caliendo: Thanks so much, guys.
Mike Alkire: Thank you.
Operator: Thank you. And the next question comes from Jessica Tassan with Piper Sandler.
Jessica Tassan: Hi, guys. Thank you for taking the question. I was hoping that maybe on Contigo and S2S Global, you could describe maybe the type of outside partner you’re looking to engage and kind of how you envision the structure of any future partnership?
Craig McKasson: Sure, Jessica. This is Craig. Happy to take it. Mike, can add any color. With respect to Contigo, I think as we talked about when we announced, looking for partners to help augment the vision and the value of that business that we do still believe in long term, it is looking for organizations that have an interest in the TPA COE type of business. May have existing infrastructure there, that could be strategic partners that could also be strategics that are powered or enabled by financial backers. And so, we think that it is really a platform play, where the idea of taking the capabilities that we have in that business for TPA COE and the network business as well, and actually put it on to what they’re trying to develop and build, would allow it to be a more comprehensive scalable solution in the future, with additional resource capability that we’ve been able to bring to bear.
That’s what I would say, on the Contigo side. On the S2S side, I think that really — from a similar standpoint, we believe there is an opportunity with an organization that has more product breadth and capacity and ability to deliver more scale, while maintaining a strategic focus and view on supply chain resiliency, which we think is really critical and important moving forward for US healthcare would be the ideal partner. And so we are looking at organizations that would have that type of shared vision, as we continue to move forward and think about the ongoing kind of benefit that the S2S business, can have on a go-forward basis for our members and other customers around the country.
Mike Alkire: And thanks, Craig. And then, a couple of builds that I’d like to share on top of Craig’s. As you think about the whole pay wider market space, health systems are continually struggling with slow reimbursement in some cases from payers, and prior authorization issues and those kinds of things. And I will say, that the pay via market space is going to be something, that a number of healthcare systems are going to continue to look at long term. And so, that’s why it’s so important that we believe, we find the right partner that can obviously, add some additional capability to help really beef that capability up to support those health systems. Thank you for the question.
