Premier Inc
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Good morning and welcome to Premier's Fiscal 2025 First Quarter Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ben Krasinski, Senior Director, Investor Relations. Please go ahead.
Thank you, and welcome to Premier's Fiscal 2025 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.
Before we get started, I want to remind everyone that our earnings release and the supplemental presentation accompanying this call are available in the Investors section of our website at investors premierinc.com.
Please be advised that management's remarks today contain certain forward-looking statements such as statements regarding our strategies, plans, prospects expectations and future performance, and actual results could differ materially from those discussed today. These forward-looking statements speak as of today, and we undertake no obligation to update them. Factors that might affect future results are discussed in our filings with the SEC, including our most recent Form 10-K and our Form 10-Q for the quarter, which we expect to file soon. We encourage you to review the detailed forward-looking statements and risk factor disclosures in these reports.
Also, during this presentation, we will refer to adjusted and other non-GAAP financial measures, including free cash flow to evaluate our business. Information on why we use these measures in addition to GAAP financial measures and reconciliations of these measures to our GAAP financial measures are included in our earnings release and in the appendix of the supplemental presentation accompanying this call. Information on our non-GAAP financial measures will also be included in our Form 10-Q for the quarter and our earnings Form 8-K, both of which we expect to file soon.
I will now turn the call over to Mike Alkire.
Good morning, everyone, and thank you for joining us today. I'm pleased to report that fiscal 2025 first quarter results slightly exceeded our expectations for total net revenue and profitability, giving us confidence in reaffirming our fiscal 2025 guidance.
From a segment perspective, Supply Chain Services revenue exceeded our expectations while Performance Services revenue fell slightly short of what we anticipated for the quarter. Craig will provide more details later in the call. In addition, we returned capital to stockholders through our quarterly cash dividend and the repurchase of Class A common shares during the quarter under our previously announced $1 billion share repurchase authorization. Today marks election day in the United States, as a reminder, our strategies are designed to be less reliant on political and regulatory influences and more concentrated on addressing the core challenges faced by our members and other customers. Our strategies and member relationships are founded on the understanding and improving health care delivery for patients relies on reducing costs and improving outcomes through technologies. Regardless of the outcome, our commitment to improving the health of communities we serve remains unwavering.
Turning to our business. Momentum continues to grow in the market for Premier's technology-driven supply chain strategy. By collaborating closely with our members and leveraging technology and services, we're identifying additional cost savings opportunities for our members while enhancing contract penetration in our group purchasing programs. Our strong member relationships have driven progress in contract renewals, which are also opening the door for us to have deeper and more strategic data-driven discussions with members on opportunities for improvement. Our high renewal rate reflects our commitment to collaboration and the trust we've built with our members over the years.
In addition, we continue to partner with our members manufacturers, government agencies and other stakeholders to help mitigate the impact that recent hurricanes have had on supply chains and hospital operations across the American communities. With these challenges, the need for Premier to support our member hospitals and health systems remains at an all-time high. Premier's response to each disaster reinforces our commitment to enhancing the overall health care systems predictability resilience and response through technology enablement. These trying times have been particularly challenging for our health system members. Our job is to minimize the impact to be a vital ally in building the future of health care.
Turning to our Performance Services business. We continue to focus on opportunities to utilize our robust data and AI-enabled technology to deliver unparalleled insights and efficiencies for our members and other customers. For example, we were pleased to renew and extend our engagement with a government agency that leverages Premier's dataset and proprietary performance improvement methodologies to scale improvements in maternal and infant health outcomes in hospitals across the nation. We also expanded our partnership with one of the top pharma companies in the world to include additional real-world evidence and observational research related to their innovations in Alzheimer's disease. This work underscores our unique differentiation in the marketplace that facilitates better, smarter, faster health care, better with national scale, smarter with real-time actionable insights and faster with AI-enabled technologies. We also continue to advance our sustainability efforts. A few weeks ago, we published our 2024 Sustainability Report and climate resilience plan, highlighting our many practices and initiatives aimed at improving health care, operating responsibly and positively impacting communities.
Before I hand it over to Craig, I want to take a moment to express our gratitude for his 27 years of service. He has been an incredible leader for Premier and exemplifies integrity and all he does. We wish him the best in his retirement. We also look forward to introducing you to our new Chief Administrative and Financial Officer, Glenn Coleman, during our second quarter earnings call in February.
Craig?
Thanks, Mike. I truly appreciate your kind words. First, I would like to note that resulting from our divestiture of the S2S Global Direct sourcing business, unless otherwise indicated, all results discussed during this call reflect our continuing operations. .
In addition, as the divestiture process for the Contigo Health business remains ongoing, actual results will continue to include contributions from that business, although it will be excluded from guidance given the expectation that it will be divested and moved to discontinued operations. As such, we have included a table in our earnings release and supplemental presentation that reconciles the impact of the Contigo Health business on certain financial measures for the quarter.
Now turning to our fiscal 2025 first quarter results. Total net revenue of $248.1 million, decreased 8% from the prior year period. In our Supply Chain Services segment, lower net administrative fees revenue was driven by an expected increase in the aggregate blended member fee share to the low 60% level in the quarter. However, gross administrative fees revenue was better than expected, resulting from ongoing growth in member purchasing as we continue to drive higher penetration of our existing member spend.
To provide an update, the group of GPO members that were part of the August 2020 restructure represent approximately 70% of our total gross administrative fees. As of September 30, we have addressed members representing approximately 55% of this group's associated gross administrative fees. We currently plan to address and finalize additional member renewals during the current fiscal year that would result in over 3/4 of this group's gross administrative fees being through the renewal process by the end of fiscal 2025, with the remainder occurring in fiscal 2026 and 2027.
Additionally, we experienced growth in our other supply chain services revenue, driven by new agreements in our supply chain comanagement business where members continue to express interest in leveraging Premier's expertise to help manage their end-to-end supply chain operations. In our Performance Services segment, the revenue decline was mainly driven by lower demand in the consulting business compared to the prior year period; continued pressure in the Contigo Health business and timing of engagements in the Applied Sciences business.
Turning to profitability. GAAP net income was $72.9 million for the quarter, which benefited from a $57 million nonoperating gain from the derivative lawsuit settlement in the current year period. Total adjusted EBITDA of $62.4 million was better than expected in the quarter, resulting from our GPO performance. However, compared to the prior year period, adjusted EBITDA declined due to the following factors. First, Supply Chain Services adjusted EBITDA declined mainly due to the decrease in net administrative fees revenue as a result of the expected increase in feature as well as additional investments in the supply chain comanagement business to support ongoing growth. And second, Performance Services adjusted EBITDA decreased mainly due to the decline in revenue in the consulting and Applied Sciences businesses.
Adjusted net income decreased primarily as a result of the same factors that impacted adjusted EBITDA, partially offset by a decrease in our effective income tax rate in the current year period. Adjusted earnings per share was affected by the same factors as well as completion of the $400 million accelerated share repurchase transaction in July. Then in August and September, we repurchased an additional $58 million of shares in the open market. As of September 30, we have repurchased and retired nearly 23 million Class A common shares under the $1 billion share repurchase authorization.
From a liquidity and balance sheet perspective, cash flow from continuing operations for the fiscal 2025 first quarter of $80 million increased from the prior year period, primarily due to cash received from the derivative lawsuit settlement of $57 million in the current year period, partially offset by higher performance-related compensation payments resulting from better fiscal 2024 performance against expectations than in the prior year period where performance was lower than expectations. Free cash flow for fiscal 2025 first quarter of $16.2 million increased from the prior year period primarily due to the same factors that impacted cash flow from operations as well as a decrease in purchases of property and equipment. These were partially offset by a full quarter of cash payments in the current year period to OMNIA related to the sale of future revenue compared to a partial quarter in the prior year due to timing of the sale of the non-health care GPO operations in fiscal 2024. As a reminder, free cash flow is typically lowest in the first quarter since our fiscal year ends in June and payment of certain expenses, including annual performance-related compensation occurs in the first quarter.
Cash and cash equivalents totaled $87 million as of September 30, 2024, compared with $125.1 million as of June 30, 2024. The decrease was primarily driven by the use of cash for share repurchases. Our 5-year $1 billion revolving credit facility continued to have no balance as of the end of the quarter. With respect to the sale of the non-health care GPO operations, we received the final payment of $42.3 million in the first quarter, resulting in cumulative proceeds of $723.8 million.
With respect to capital deployment, we continue to remain disciplined and focused on taking a balanced approach while also remaining focused on return of capital to stockholders in the near term. As a reminder, in August, we announced that our Board approved execution of another share repurchase of $200 million under our $1 billion share repurchase authorization. We continue to repurchase shares under that program. And following completion, our Board and management team will evaluate the remaining $400 million available under the current $1 billion authorization. This augmented our quarterly cash dividend, which totaled $21.3 million in the first quarter of fiscal 2025. In addition, our Board recently declared a dividend of $0.21 per share payable in December. We will continue to evaluate opportunities to invest in organic growth and potential acquisitions to differentiate our core offerings in the marketplace.
Turning to our fiscal 2025 guidance. Based on performance for the first 3 months of the fiscal year and our outlook for the remainder of the year, we are reaffirming the guidance that we introduced on our earnings call in August. Please note that while we have begun to repurchase shares under the $200 million share repurchase program, we are not planning to update adjusted earnings per share guidance until we have completed the program.
From a cadence perspective, we currently expect the following: in our GPO business, we expect a sequential decline in net administrative fees revenue in the second quarter as we continue to work through the ongoing contract renewal process. In the back half of the year, we expect relatively comparable performance with the first half as the impact of contract renewals is offset by the ongoing impact of residual purchasing from departed members.
In our Performance Services business and based on the current expectations for the timing of engagements, we still anticipate revenue will be more back half weighted with the second quarter at or slightly above the first quarter. As a reminder, due to the timing and magnitude of enterprise license agreements and certain consulting arrangements, there may be periodic variability in the recognition of the revenue and profitability associated with these engagements between quarters.
From a profitability perspective, we continue to expect adjusted EBITDA and adjusted earnings per share to be more back half weighted mainly due to the revenue cadence in the Performance Services business. In addition, we expect a sequential decline in second quarter, mainly due to the impact of the GPO contract renewal process.
Before I conclude, I would like to remind everyone that this will be my last earnings call with Premier as I am retiring in December. It's truly been an honor to work with such an amazing team, be part of our strong culture and to contribute to Premier's mission to improve the health of communities. I'd also like to thank the financial community for their collaboration over the years. It has indubitably been a pleasure to work with you, and I believe you will be in good hands going forward as I have full confidence in Glenn and the rest of the team.
We appreciate your time today, and we'll now open the call for questions.
[Operator Instructions] The first question comes from Eric Percher with Nephron Research.
Craig, I'll wish you look and appreciate that you managed to fit the word inducibly, into the last call here. I do want to ask about the admin fees. It's been very difficult to get views from health system customers on where they believe this falls out. but we hear about the renewal process. And it sounds like Q1 is relatively in line with expectations with the step down in Q2. I just want to check that assumption given where it appears you're running for the year that there's no change relative to the full year expectation of admin fees and any other nuances around that second half, first half?
Yes. Sure, Eric. Thanks, first of all. relative to the GPO business, the renewal process is going right according to plan in terms of the renewals that we're doing being in sync with our expectations of where the renewal renewed contracts would come out. What I'd say from a standpoint of the overall GPO is we actually had a stronger underlying performance in the actual purchasing from our health systems in the first quarter, which led to a stronger Q1 than we thought. We are actually monitoring sort of elective procedures given the situation with Baxter and IV fluids and things like that. But overall, yes, on track and expect to continue to have fee share be in the low 60s throughout fiscal 2025 as we've guided to and would expect that we'll continue to see good performance from our underlying purchasing through the Supply Chain Services business.
Okay. And then Baxter was actually where I was going to go on the follow-up. Can you give us an update on what you've been doing to help offset the shortages and where we stand today as they're trying to get that up and running?
Yes. So thank you, Eric. A whole bunch of stuff. They actually have a website out where they keep the health care community up to speed. And I think I saw something in the last couple of weeks where they got that factory back up and running not necessarily back to 100%, but it's back up and running. So there's been a number of things that we've been focused on. First of all, we've been working obviously with the health systems. We've been working with the federal government as well to figure out ways to mitigate the overall issue. And those things include coordinating with the FDA and HHS the White House and other agencies to look at ways to fast track the potential of bringing additional IV solution online. And that -- so that obviously is a big part of our discussion.
Secondarily, we've been working with our health systems on looking at ways to conserve IV solution. And it's really interesting. In some of these cases, we might have found some opportunities where long term, there might be some practices that we can leverage that can drive more effective utilization -- or more effective efficiency and the utilization of those IV solutions. So conservation, obviously, is the second.
And then the third is that we are working with other suppliers to look at where we can get IV solution that's either produced or get a potentially additional lines up and running to support the needs of the health system. So this is going to continue to play out over the end of this quarter and into the next quarter. But we're going to be focused on all 3 of those phases, working with obviously, the federal government; number two is, looking at ways to conserve the supply that we have; and number three, we're going to look for additional capacity.
Next question comes from Michael Cherny with Leerink.
I'll echo Eric's comments, Craig, it's been a great run, very helpful since before the IPO and best of luck in your retirement and whatever you're doing next.
Thank you, Michael.
Maybe just to touch on the underlying core. Great to see the pull-through on better spending. Obviously, I don't think anyone would disagree a high utilization environment. from a macro level beyond the renegotiations, what else do you feel like your customers are preparing for in terms of the sustainability of cartelization, how are they thinking through the impact both of proposed in place and potentially in place tariffs as they think through their purchasing decisions now and plan accordingly for whatever inventory levels they want to keep in a post-COVID world?
Yes. So there's a lot there. So let me see if I can unpack some of that. From a -- just a utilization standpoint of the health system in general, we're seeing pretty stable to slight increases of utilization. Now that is being tampered by this IV solution issue. So we're keeping an eye on that to see how those -- the IV issue is having an impact on elective procedures and such. As it relates to the utilization of our contracts. one of the things, Michael, we've been making significant investments in technologies to identify those areas where there's been spend that we don't have contracts for. And so leveraging that information, leveraging that technology. We've been building out different forms of advanced technologies to identify where those high areas of spend are and to put contracts around that. So we're going to obviously continue to do that and drive up. Obviously, the opportunity for us to continue to contract in areas that historically, we've not done -- we've not delivered contracts. So that's number one. Number two, health systems are really struggling right now with, obviously, the continual high cost of labor. And so what I am seeing is we're out having conversations with health systems is this idea that revenue seems to be growing, especially in those strong economic areas. But the profit isn't following. So we're seeing sort of this marginal pressure on these health systems. And so where we're really doubling down on is what can we be creating? And what can we be driving that are really labor extenders, so leveraging our technology to help them be more efficient in terms of their back office, leveraging our technologies to drive more throughput through the health care system, identifying where they've got gaps or maybe areas that they've got high cost that we could help them sort of manage through. So all of those things are obviously building up into our strategy of how we're driving performance improvement today. But Make no mistake, it's really all technology driven, where we're identifying these opportunities and then wrapping around services to help drive these performance improvement solutions.
And Mike, you alluded to my thoughts on my second question, and that's the idea of technology development. As you think through the adjustments you made in the portfolio, the changes on divestiture of S2S Global. How do you think about your development pipeline, both for internal technology, making the core administrative fee capabilities and GPO better? And then also areas, especially as health systems settle into this new normal areas where you can be more helpful by further developing your Performance Services Suite.
Yes, that's a great question. So as you think about the evolution of our organic capital investment, we're continuing to think through, especially in the areas of HCC and prior authorization. How are we extending our current offering? So we're very, very good, for example, in radiology benefit management. And we're looking at other areas where we're now investing additional internal capital to grow where we have the opportunities to drive that technology into the health systems. So that's number one. Number two, when you think about inorganic, as Craig said, we've always got that balanced approach to capital utilization number one, in supply chain. We want to continue to make investments to expand the portfolio. So where are those areas that we're not covering today. You've heard us talk about PPI and purchase services in the past, non-acute areas. Those are areas that we're going to continue to look for.
Number two, in the supply chain is that whole ordering platform. We do believe that to the degree that we can continue to evolve our offering there where we can tee up appropriate pricing and appropriate alternatives for products that there's a huge opportunity. So we're going to continue to make investments there. Performance Services, we talked a little bit about -- as I opened this up with HCC prior authorization. So we want to continue to make the appropriate investments there. And then finally, as we think about what we're doing in life sciences, continue to deploy capital to build out services around real-world evidence and those kinds of things for our life science companies. Craig?
Michael, this is Craig. One other point from an organic standpoint. As we've highlighted, we moved the historical Remitra platform into our supply chain services business this year, and it really is about aligning our digital supply chain technology development to better align with the GPO and the technology enabled the ability to get much tighter and fuller throughput of purchasing through the GPO as well as potentially getting to the point that we actually have an ability to invoice suppliers for the administrative fees due to Premier versus historically relying on a supplier paid model.
The next question comes from Jessica Tassan with Piper Sandler.
So I wanted to start with just the current portion of the liability related to the sale of future revenues to OMNIA. Is that $41.3 million kind of reflecting the level above which Premier would be able to retain the associated operating income in FY '25? And then just -- is that outperformance relative to the current portion of the liability included in your guidance? Or would that be upside to that?
Yes. Thanks, Jessica. This is Craig. So first of all, the current portion is just the anticipated amounts that we will need to actually pay back to OMNIA during the given year during fiscal 2025 as a result of their purchasing. So it's not above and beyond the expected purchasing. I think what you're referring to, just to others understand is there's a baseline of $50 million to $55 million of purchasing that we would expect to come through OMNIA. Anything above and beyond that, that comes through the OMNIA purchasing of our portfolio, we get to retain 30% of that upside. We would anticipate that for this fiscal year, depending on how performance goes, that's only going to be a few million dollars in this initial year, given that it's early in the life of the OMNIA relationship. So that nominal amount of a few million dollars would have been factored into our expectations for fiscal 2025 guidance, but it's not the magnitude of the whole current liability.
Okay. Got it. And then just another quick clarification question, and then a real one. Why would the liability grow quarter-over-quarter in from 4Q to 1Q?
It was due to the finalization of the OMNIA transaction. So we actually, as I noted in my commentary, and you'll see in the release, we had a final payment of $42.3 million when we actually put a bow around the transaction in July. So that's why it went up. You would now expect to see it continue to come down quarter after quarter after quarter over the remaining life of the 10-year agreement.
Got it. And then my question is, is the increased purchasing you saw in the first quarter kind of indicative of -- from your having reached a level of fee share back rates that customer -- that induces customer purchasing? Or was it really more a matter of expanding categories and diversification of purchasing? Congratulations on your retirement.
Thank you, Jessica. I appreciate it. The first quarter performance is really much more about driving contract penetration and just undergoing pull-through leveraging our technology and our field resources to identify opportunities for savings as opposed to it being tied to any change in the fee share percentage.
The next question comes from Kevin Caliendo with UBS.
And Craig, congratulations. Best of luck. And hopefully, everything going forward will be relaxing, fun and enjoyable. My question really is on if there was any behavior ahead of tariffs or if you're expecting any behavior in terms of purchasing, people building inventories, you building inventories, if that affects how you think about cadence or anything else for the business? That was my first one. And we heard from a couple of supply chain companies that COVID impact came earlier this year because of timing, FDA, whatever, I was wondering if that had an undue benefit for you in any way, shape or form in the quarter if that impacts cadence, sorry.
No, no. Sorry about that, Kevin. This is Mike. Let me hit the COVID first. Just as a reminder, we didn't really see that kind of impact from COVID. And part of that -- and this is why I was saying just as a reminder, flu doesn't necessarily drive a significant amount of supply. So we didn't really see that impact from COVID this year. As it relates to -- to the tariffs, that's a bit more of a complex question. So as you think about what our strategies have been over the last number of years, it's really as much as possible to try to reduce our dependence. Obviously, in Southeast Asia and look for ways to create resiliency across the supply chain. And we did that. So we've created capabilities to produce masks. We've created domestically and nearshore. We've done the same with isolation gowns and other products. So to some degree, we've been sort of building out the capability where tariffs wouldn't necessarily have a significant impact on a number of our categories. Having said that, we've not seen a significant pull on suppliers thinking through that there might be these tariffs that come out and that obviously increase the price of products. But instead, what we're seeing is organizations asking us to continue to look for more domestic and nearshore capabilities where the tariffs may not have that significant of an impact. But so far, we've not seen some of the focus on building out inventory as a concern as it relates to tariffs.
Got it. If I can ask one quick follow-up. You talked a little bit about the IV bags and the weather, but how did it actually -- as you think about your -- the December quarter, how did it actually affect your numbers and it didn't, in any way, shape or form your guidance, your expectations? Like was there a drag because of this like lower procedure volumes expected or anything like that?
Yes. Kevin, it really varies depending on the status of where each individual health system was and the amount of product they had in inventory to manage procedures regionally in various locations, we are aware that they had to be a little more conservative in terms of some of their elective procedures, but -- but we aren't currently expecting that it will have a material impact on our second quarter performance.
The next question comes from Richard Close with Canaccord Genuity.
This is John Penny on for Richard Close. I guess, first question, with the GPO contract renewals, can you discuss like how it's been potentially trying to cross-sell other services and as the renewals come up in this quarter? Any movement there in that regard?
Yes. So thank you. So while we're going through this, obviously, it's an opportunity for us to spend time with the executive teams to ensure they understand the value that we can create. And in fact, that's actually what's happening. So as you -- as we're entering through these contract renewals, we see significant opportunities for us to cross sell, obviously, our technology and on our advisory services, very, very high percent of these renewals are including that additional capability because at the end of the day, the health care systems are really looking for total value, and we've been talking about that for years. But they're looking for total value in terms of what we can do to help them bend the cost of supplies for them and also look at ways to use our technologies to help them be a lot more efficient in how they're caring for patients.
All right. Great. And then just one follow-up. The Supply Chain segment adjusted EBITDA margin was -- if I'm getting this number correct, like around 50%. I believe last quarter you're talking supply chain against the EBITDA being in like low to mid-40s, like is this like a sustainable level? Or is there anything to -- any commentary there of why it was above your expectation?
Yes. As a reminder, we've discontinued the S2S Global business in the first quarter. So that was a low-margin business, so it really affected the EBITDA margin for the segment the 51% that you saw in Q1 is indicative of sort of the range and level we would expect in fiscal 2025. So we would expect to have margins in that sort of 50% ballpark on a fiscal 2025 basis.
The next question comes from Stephanie Davis with Barclays.
And Craig, you will be so missed.
Stephanie, Glenn is going to do a fantastic job to get about me in.
I'm sure you're not going to miss either earnings calls, but we're going to miss you a lot, and I hope you are in distant happy hours.
Thank you very much.
So Mike, a lot of the prepared remarks talking about AI. You called out license sales upside in supply chain of all segments. And then Craig call it having Remitra in SDF. So is it right to think that now that you're kind of done with the reshuffling and gotten to the right businesses for your forward, you're going to lean into tech investments in the supply chain business. And if so, can you just walk us through the top items, what's in your wish list?
Yes, yes, yes. And I apologize if I -- there must be a bit of a delay, Stephanie. I apologize if I jumped in there too early technology, supply chain, yes. So we've been making that significant investment in e-invoicing and e-payables, but the invoicing capability allows for us to do, obviously, is to look at everything that a health care system buys and put contracts around that. So that's really, really important. Number two, the last quarter, we talked about the -- all Spire win. So that was a win where there are a number of health care systems that came together to pull their volumes to look at ways to reduce overall supply cost. Well, that technology can layer on top of these ERPs and identify where there's opportunities from a price parity standpoint, of contract spend, all those kinds of things. So it is a critical differentiator, we believe, in the market. not only to help us continue to drive and evolve obviously, our contract penetration models and obviously, therefore, more revenue, but also differentiate us for those entities that pull together health care systems as well as large IDNs that are still struggling with managing their entire invoice process. So very excited about that investment and looking for that forward for that to continue to penetrate the market.
I guess a follow-up on the supply chain side and the last tech have part of it. You are seeing -- I'm acknowledging that there's a co-optation dynamic between GPOs and distributors. But you've seen a lot of distributors in the medical side leading to this prime vendor relationship and trying to have more of their own branded product sales. So was that kind of going a little bit more head-to-head with your business? How are you thinking about those competitive dynamics? And how are you working with these players as they try to be more of a direct relationship?
Yes. So actually, we work very closely with the distributors. As there -- and this has been going on for a number of years that they've been building out their private label programs and those kinds of things. Obviously, many of those are on our current contracts. So we -- obviously, they're very, very important trading partner of ours. Number two, as we think about other areas, we really do lean into the distributor partnerships that we have in the food program, for example, it truly does differentiate the value that we can create for our health care systems. And then similarly, in the nonacute area. We have very strong partnerships there with a distributor where we create differentiated value for those non-acute players in health care. So Stephanie, it's kind of interesting, depending on where they play within the health care ecosystem, we have basically a different playbook, but we do want to leverage their scale where it makes sense.
This concludes our question-and-answer session and Premier's Fiscal 2025 First Quarter Conference Call. Thank you for attending today's presentation. You may now disconnect.