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Good morning, and welcome to Premier's Fiscal 2025 First Quarter Conference Call. Excuse me - Premier's Fiscal 2025 First Quarter Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. [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 statement 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 and 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 healthcare 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 at 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 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 impacts 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 healthcare 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 healthcare. 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 data set and proprietary performance improvement methodologies that scale improvements in maternal and infant Health outcomes in hospitals across the nation. We also extended 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 and Alzheimer's disease. This work, underscores our unique differentiation in the marketplace that facilitates better, smarter, faster healthcare. Better with national scale, smarter with real-time actionable insights and faster with AI-enabled technologies. We also continued 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 healthcare, 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 exceptional integrity in 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 low 60% level in 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, a group of GPO members that were part of the August 2020 restructure, represent approximately 70% of our total gross administrative fees. AS of September 30th, 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 three fours 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 Co-Management 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 non-operating 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 fee share, as well as additional investments in the Supply Chain Co-Management 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 30th, 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-healthcare 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 five-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-healthcare 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 three 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 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 the 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 Premiere 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 been 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 will now open the call for questions.

[Operator Instructions] The first question comes from Eric Percher with Nephron Research. Please go ahead.

Thank you. And Craig, I'll wish you luck and appreciate that you managed to fit the word indubitably 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 there's no change relative to the full year expectation of admin fees and any other nuances around that second half, first half?

Yeah, 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 renewing 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?

Yeah, so, thank you, Eric. Whole bunch of stuff, they actually have a website out where they keep the healthcare community up to speed. And I think I saw something in the last couple weeks where they got that factory back up and running not necessarily back to 100%, but it’s back up and running. So, there has been a number of things that we 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 Leather agencies that look at ways to fast track the potential vein 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 could drive more effective utilization - or more effective efficiency in 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 are going to be focused on all three of those phases working with the – obviously, the federal government, number two is looking at ways to conserve the supply that we have. And number three, if we're going to look for additional capacity.

Thank you.

Thank you, Eric.

The next question comes from Michael Cherney with Leerink. Please go ahead.

Good morning. And I'll Echo Eric's comments, Craig, it's been a great run, very helpful since even before the IPO and best of luck in your retirement and whatever you are doing next.

Thank you, Michael.

May 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 as the high utilization environment from a macro level beyond the renegotiation, what else do you feel like your customers are preparing for in terms of the sustainability of core utilization? How are they thinking through the impacts both of proposed in place and potentially in place tariffs as I think through the purchasing decisions now in plan accordingly for whatever inventory levels they want to keep in a post-COVID world?

Yeah, so there's a lot there. So let me see if I can unpack some of that. From a, just to utilization standpoint of the Health Systems and 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 it’s having an impact on electro procedures and such. As it relates to the utilization of our contracts, one of the things Michael you know, 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 or 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 healthcare 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 those things are obviously, building up into our strategy of how we are 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 the my thoughts on my second question and that's the idea of technology development. As you think through the adjustments you made on 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 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.

Yeah, that's a great question. So, as you think about the evolution of our organic capital investment, we are continuing to think through, especially in the areas of HCC and prior authorization, how are we extending our current offering. So we are very, very good, for example, in radiology, benefit management and we are 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, that's number one. Number two, when you think about inorganic, as Craig said, we 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 are going to continue to look for. Number two, in the supply chain is that the 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 to products that there's a huge opportunity. So we are going to continue to make investments there. Performance Services, we talked a little bit about as I open 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?

And 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 businesses this year and it really is about aligning our digital supply chain technology development to better align with the GPO and to technology enable 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 based model.

Great. Thanks so much.

Thank you, Michael.

The next question comes from Jessica Tassan with Piper Sandler. Please go ahead.

Hi. Thank you, guys for taking the question. So I wanted to start with 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, is that outperformance relative to the current portion of the liability included in your guidance or would that be upside to that?

Yeah, 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 are referring to just to others understand is there is 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 off 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 in the magnitude of 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 have 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 ten year agreement.

Got it. And then, my question is, just if the increase purchasing you saw in the first quarter kind of indicative of Premier having reached a level of these share back rate that induces customer purchasing or was that really more a matter of expanding categories and the prettification of purchasing? Thanks. Well, 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.

Thank you, Jessica.

The next question comes from Kevin Caliendo with UBS. Please go ahead.

Thank you, thanks for taking my question. And Craig congratulations. Best of luck. And hopefully everything going forward will be relaxing fun and enjoyable. Guys, 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’ve heard from a couple of the supply chain companies that COVID impacts 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?

Yeah, let me hit that.

If that impacts cadence? Sorry.

No, no. Sorry about that. Kevin. This is Mike. Hey, 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 supplies. So, we didn't really see that impact from COVID this year. As it relates to COVID, the tariffs that's a bit more of a complex question. So, as you think about what our strategy has 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 would necessarily have a significant impact on a number of our categories. Having said that, we've not seen a significant pool on suppliers thinking through that there might be these tariffs that come out and 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 then, did it in any way, shape, or form your guidance or your expectations like is, was there a drag because of this, like lower procedure volumes expected or anything like that?

Yeah. 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 and various locations we are aware that they had to be a little more conservative in terms of some of their elective procedures. But we aren’t currently expecting that it will have a material impact on our second quarter performance.

Great. Thank you so much.

Thank you.

The next question comes from Richard Close with Canaccord Genuity. Please go ahead.

Hi, this is John Penney on for Richard Close. Thanks for the questions. I guess first question, with the GPO contract renewals, can you discuss like how it’s been potentially joined to cross-sell other services and as the revenues come up in this quarter any movement there in that regard?

Yeah. 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 we are entering through these contract renewals, we see significant opportunities for us to cross-sell obviously our technology and our advisory services. A very, very high percent of these renewals are including that additional capability because at the of the day the Healthcare Systems are really looking for total value. And we've been talking about that for years. But they are 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 are caring for patients.

All right. Great. Thanks. And then just one follow-up. The supply chain segment adjusted EBITDA margin was, I am getting the number correct like around 50%. I believe last quarter you're talking supply chain adjusted EBITDA being in like low to mid-40s, like is stayed at the levels or is there anything to – any commentary there of – there was above your expectation?

Yeah, as a reminder, we’ve discontinued their S2S Global business in the first quarter. So that was a low margin business. So really affected the EBITDA margin for the segment. So 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.

All right. Great. Thanks.

Thank you.

The next question comes from Stephanie Davis with Barclays. Please go ahead.

Hey guys. Thanks for taking my question. And Craig, you will be so missed.

Stephanie, Glenn's going to do a fantastic job.

I'm sure you're not going to miss these earnings calls. But we're going to miss you a lot. And I hope you understand your happy hours.

Thank you very much.

So, Mike, a lot of the prepared remarks, you're talking about AI. You called up license sales upside in supply chain in all segments and then Craig call it, having Remitra in SCS. So was it right to think that now that you're kind of done with the reshuffling and got into the right businesses for your forward, you're going to lean into tech investments and the Supply Chain business? And if so, can you just walk us through the top items? What’s in your wish list?

Yes, sure. So, I apologize if I – there must be a bit of a delay, Stephanie. I apologize if I jumped in there too early.

No.

Technology, supply chain, yeah so we've been making that significant investment in e-invoicing and e-payables. What the e-invoicing capability allows for us to do obviously is to look at everything that a healthcare system buys and put contracts around that. So that's really, really important. Number two, the last quarter we talked about the AllSpire win. So that was a win where there are a number of Healthcare Systems that came together to pull their volumes to look at ways to reduce overall supply costs. Well, that technology can layer on top of these ERPs and identify where there is opportunities from a price parity standpoint, off 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 Healthcare Systems as well as large IDNs that are still struggling with managing their entire invoice process. So very excited about that investment and looking forward for that continue to penetrate the market.

I guess a follow-up on the Supply Chain side and the last tech heavy part of it. You are seeing and acknowledging that there's a co-op – competition dynamic between GPOs and distributors, but you’ve seen a lot of distributors in the medical side lean into this prime vendor relationship and trying to have more of their own branded product sales. So, will that kind of bring 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?

Yeah, so, actually, we work very closely with the distributors as there, this is the thing going on for a number of years that they've been building up their private label programs and those kinds of things obviously, many of those are on our current contracts. So, we obviously they are 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 really does differentiate the value that we can create for our Healthcare Systems. And it’s similarly in the non-acute area. We have very strong partnerships there with a distributor, where we create differentiated value for those, non-acute players in healthcare. So, Stephanie, it’s kind of interesting depending on where they play within the healthcare ecosystem. We have a – basically a different playbook, but we do want to leverage their scale where it makes sense.

Very helpful. Thank you, guys. Craig, come to Miami.

Yeah, thanks, Stephanie.