Premier, Inc. (NASDAQ:PINC) Q1 2020 Earnings Conference Call - Final Transcript

Nov 05, 2019 • 08:00 am ET


Premier, Inc. (NASDAQ:PINC) Q1 2020 Earnings Conference Call - Final Transcript


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Susan DeVore

We believe this focus generates strong member satisfaction and has been the key driver of our high GPO retention rate, which has averaged in the mid-to-high 90% range over the last decade.

The fact is GPO switching occurs infrequently in our industry, due largely to the considerable complexities involved and we believe our members will continue to evaluate their relationship with Premier, based on our total value proposition, the several components of which include contract pricing, total cost savings, analytic capabilities, resources dedicated to their accounts and fee share. We also enjoy longstanding collaborative relationships with our member owners, the average tenure of which is about 20 years. These member owners, many of which continue to hold a significant equity interest in our company, have worked with us over decades to build Premier into a powerful shared resource that provides the comprehensive cost, quality and safety solutions that they require to succeed in this dynamic and evolving marketplace. In short, we have very sticky relationships with our members.

As we move forward, we expect to continue to win new business while retaining existing members. With respect to retention, our two, 7-year group purchasing contract relationships with Yankee Alliance and Greater New York Hospital Association each have initial terms originally running to September 30, 2020. I'm very pleased to announce that Yankee, representing approximately 85 hospitals has now renewed its relationship with Premier through September 2027. We are also in active and collaborative discussions with Greater New York. And while there can be no assurances, we expect that our relationship with Greater New York and its members will continue for years to come.

Looking at new business growth, i'm pleased to welcome VCU Health System, a comprehensive Medical Center in Central Virginia to Premier. We are working with VCU to leverage our supply chain services, analytics and insights in support of their mission to preserve and restore the health of their communities through innovative patient care, research and education.

As we think ahead about our evolving member relationships in this highly competitive and rapidly changing marketplace, we expect average fee share could trend incrementally higher over time as one variable component within our total value proposition. However, we also believe that our members are focused on the total return on their relationship with Premier not merely this one component.

Within this total value relationship, we continue to work together with our members to expand initiatives designed to deliver more supply chain savings through contract expansion and penetration. We continue to target the profitable low-to-mid single-digit Supply Chain Services revenue growth that we have steadily produced since our IPO. Significant initiatives underway include leveraging new opportunities in the area of purchased services, continuing to expand our high compliance purchasing programs, continuing to build out our ProvideGx drug shortage program and rolling out our new e-commerce platform stockd. As Mike will discuss shortly, some of these initiatives helped drive our 8% revenue growth in Supply Chain Services in the first quarter.

So let