Premier Q4 2025 Earnings Report

Premier EPS Results

• Actual EPS: N/A
• Consensus EPS: $0.34
• Beat/Miss: N/A
• One Year Ago EPS: $0.69

Premier Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $247.10 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Premier Announcement Details

• Quarter: Q4 2025
• Date: 8/19/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 19, 2025
• Conference Call Time: 8:00AM ET

Premier (NASDAQ:PINC), together with its subsidiaries, operates as a healthcare improvement company in the United States. It operates in two segments, Supply Chain Services and Performance Services. The Supply Chain Services segment offers its members with an access to a range of products and services, including medical and surgical products, pharmaceuticals, laboratory supplies, capital equipment, information technology, facilities and construction, and food and nutritional products, as well as purchased services, such as clinical engineering and workforce solutions. This segment also provides the ASCENDrive programs for members to receive group purchasing programs, tiers, and prices; SURPASS Performance Group services; and STOCKD, an e-commerce platform, as well as direct sourcing business; SaaS informatics products; supply chain co-management services; purchased services contracts; direct sourcing solutions; and supply chain resiliency programs. The Performance Services segment provides technology and services platform with offerings that help optimize performance in three main areas, including clinical intelligence, margin improvement, and value-based care under the PINC AI brand; third party administrator services and management of health benefit programs under the Contigo Health brand; and digital invoicing and payables services that offers financial support services to healthcare product suppliers and service providers under the Remitra brand. The company was incorporated in 2013 and is based in Charlotte, North Carolina.

Premier Q4 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Premier closed fiscal 2025 with net revenue of $986 million—$11 million above midpoint guidance—and adjusted EPS of $1.54, $0.11 above the high end of its range.
• Positive Sentiment: The Supply Chain Services segment outperformed expectations with over 3% growth in gross administrative fees, broad category gains in pharmacy, food and med-surg, and GPO renewals set to lift fee share into the mid-60% range.
• Positive Sentiment: Performance Services’ advisory business gained traction by signing four major multi-year deals, driving a robust pipeline and targeting >25% growth for a return to double-digit expansion in fiscal 2026.
• Positive Sentiment: The acquisition of Illumicare bolsters AI-powered clinical decision support, expected to add $8–10 million in revenue at breakeven EBITDA in fiscal 2026 and expand addressable markets.
• Neutral Sentiment: For fiscal 2026, Premier guides to $940–1,000 million in net revenue, $230–245 million in adjusted EBITDA and $1.33–1.43 in EPS, forecasting stabilization this year and renewed growth in fiscal 2027.

Presentation

[Operator]

Good morning, and welcome to Premier's Fiscal twenty twenty five Fourth Quarter and Full Year Conference Call. All participants will be in a listen only 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.

[Ben Krasinski, Senior Director - IR at Premier]

Thank you, and welcome to Premier's fiscal twenty twenty five fourth quarter and full year conference call. Our speakers this morning are Mike Alkire, Premier's President and CEO and Glenn Coleman, 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.

[Ben Krasinski, Senior Director - IR at Premier]

Factors that might affect future results are discussed in our filings with the SEC, including our fiscal twenty twenty five Form 10 ks, 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 fiscal twenty twenty five Form 10 ks and our earnings Form eight ks, both of which we expect to file soon.

[Ben Krasinski, Senior Director - IR at Premier]

I will now turn the call over to Mike Alkire.

[Michael Alkire, Director, President & CEO at Premier]

Thanks, Ben. Good morning, everyone, and thank you for joining us for Premier's fiscal year twenty twenty five fourth quarter and full year earnings call. Glenn will share a more detailed review of our results later in the call. But overall, I'm pleased with our strong finish to the year. Our overall revenue and profitability exceeded expectations, largely due to better than anticipated performance in the Supply Chain Services segment, where we continue to see better contract penetration and ramp up of new member spend.

[Michael Alkire, Director, President & CEO at Premier]

In addition, we also continue to return meaningful capital to stockholders through our quarterly cash dividend and the completion of our $200,000,000 accelerated share repurchase program. From a macro perspective, we continue to see mounting financial pressures for many of our member hospitals and health systems, both in the current environment and looking ahead. These broader market dynamics are accelerating demand for the kind of value based strategic support that we uniquely provide. Significant headwinds such as reimbursement are forcing health systems to rethink their cost structures and long term sustainability. Many of our members are proactively moving beyond short term cost containment towards structural changes that strengthen operational resilience and unlock long term value.

[Michael Alkire, Director, President & CEO at Premier]

We are well positioned to help them on that journey. The breadth of our GPO portfolio, the depth of our advisory expertise and the promise of our technology are differentiating us in the market, enabling us to deliver measurable impact at scale and deepen our strategic partnerships across the health system landscape. This is evident in the fact that we recently signed four very large advisory deals and have a robust pipeline heading into fiscal twenty twenty six. As a result of our efforts to reinvigorate our Performance Services segment and the new talent that we have brought into the company, we are seeing meaningful momentum in our advisory business, a strong validation of the differentiated expertise and capabilities we bring to our members. These health systems are turning to Premier for enterprise wide transformation.

[Michael Alkire, Director, President & CEO at Premier]

In June, we were excited to announce the acquisition of Illumicare, a strategic move that significantly strengthens our ability to deliver real time insights at the point of care leveraging our AI capabilities. This solution not only complements our existing clinical decision support offering, but also expands our addressable market, especially as providers face mounting pressure to improve clinical and financial performance simultaneously. Importantly, our pipeline continues to build and we're encouraged by the level of strategic engagement we're seeing. These are not one off projects. Our members are increasingly recognizing the need for fundamental change.

[Michael Alkire, Director, President & CEO at Premier]

In our Supply Chain Services segment, our core GPO business remains strong. We're seeing increased demand for members looking for margin improvement solutions amid ongoing cost pressures, reimbursement uncertainty and potential tariff impacts. We continue to focus on delivering stability and long term value creation. Our pharmacy and food portfolios continue to serve as key differentiators within our GPO. Both are delivering steady meaningful growth, not only among our current members, but also by attracting non premier organizations seeking distinctive high impact savings with built in supply assurance.

[Michael Alkire, Director, President & CEO at Premier]

These categories are proving to be powerful entry points and based on historical performance, we believe they are strong leading indicators of broader engagement across our portfolio. This momentum reinforces the critical value we deliver in helping members and future partners navigate today's operational and financial challenges. Taken together, the strength of our business, the commitment of our team and the growing strategic needs of our members give us confidence in our ability to drive growth moving forward. With that, I'll now turn the call over to Glenn for a deeper dive into our financial results and outlook for the year ahead.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Thanks, Mike. As a reminder, all results discussed during this call reflect continuing operations and do not reflect S2S Global, which was divested in October 2024. In addition, we continue to transition and wind down the remaining Contigo Health assets by the end of this calendar year. As such, actual results for the quarter include contributions from the Contigo Health business. However, we're continuing to exclude the results of Contigo Health in our guidance and our discussion of revenue and adjusted profitability for the fourth quarter and full year on today's call.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Now turning to our financial results. Total full year revenue, adjusted EBITDA and adjusted EPS exceeded our expectations. We closed out fiscal year twenty twenty five on a positive note with net revenue of $986,000,000 being $11,000,000 above the midpoint of the guidance range, while adjusted EPS of 1.54 was $0.11 above the high end of our guidance range. Moving to our fourth quarter results. Net revenue of $258,000,000 increased 1% on a sequential basis, but declined from the prior year period largely driven by higher fee share from contract renewals, which are now mostly completed.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

GAAP net income and EPS from continuing operations of $18,000,000 or $0.22 per share decreased from the prior year period mainly due to lower revenue in the current year quarter. Adjusted EBITDA of $71,000,000 was flat on a sequential basis and translated to a margin of 27.6%. This was better than expected as the revenue outperformance in Supply Chain Services had high margin flow through to profitability. Adjusted EPS of $0.46 was well ahead of our expectations due to better than expected revenue in our Supply Chain Services segment and a lower share count. In mid August, we completed our $200,000,000 accelerated share repurchase program, bringing the total amount of common stock repurchase to $800,000,000 under our $1,000,000,000 authorization, which expired on June 30.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Turning to segment results. Supply Chain Services continued to perform above expectations despite the increase in the aggregate blended fee share in the quarter. This increase was partially offset by continued growth in gross administrative fees, which grew over 3% in fiscal year twenty twenty five, driven by higher contract penetration with existing members and onboarding of new members. In addition, we continue to see broad growth across key categories such as med surg, pharmacy, food and purchased services. We've also made meaningful progress in contract negotiations with GPO members that were part of the August 2020 restructure.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

As of June 30, contracts representing less than 20% of this group's fees remain with the majority expected to be addressed in fiscal year twenty twenty six. As such, we anticipate fee share will increase to the mid-sixty percent range in fiscal year twenty twenty six and will stabilize in the high-60s on an annualized basis once we've addressed all renewals. Lastly, given we are on the back end of renewals, this will be our final report on the process. Also in this segment, other supply chain services revenue was driven by 17% growth in our supply chain co management business resulted from new engagements with members. In addition, our digital supply chain business grew 15% due to further expansion of our solutions to providers and suppliers.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Both of these areas represent growth opportunities for us in fiscal year twenty twenty six and beyond. Moving to the Performance Services segment, we delivered another quarter of sequential improvement in our advisory business. However, it was lower compared to the prior year period as we're still working to rebuild our sales funnel, but are very encouraged by the large engagements that we've recently won. We also have a robust pipeline of additional opportunities that we're working to close and expect our advisory business to return to double digit growth in fiscal year twenty twenty six. In the fourth quarter, we also had lower enterprise license revenue due to a tough comp to the prior year quarter.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Shifting to the balance sheet. In fiscal year twenty twenty five, free cash flow was above our expectations amounting to $181,000,000 which translated to a free cash flow conversion of 69%. Year over year, free cash flow decreased $48,000,000 mainly due to higher performance related compensation payments and the timing of payments to Omnia. These were partially offset by cash received from the derivative lawsuit settlement and a dividend distribution from one of our minority investments in the current year. In fiscal year twenty twenty six, we expect free cash flow conversion in the range of 70% to 80% and we continue to anticipate that our cash tax rate will be less than 5% over the next five years.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Cash and cash equivalents totaled $84,000,000 as of June 30, and we ended the quarter with an outstanding balance of $280,000,000 on our credit facility. With respect to capital deployment, we continue to remain disciplined and focused on taking a balanced approach. As I mentioned earlier, we recently completed the $200,000,000 accelerated share repurchase program. In fiscal year twenty twenty five, our quarterly dividends totaled $77,000,000 and represented a nearly 4% dividend yield. Going forward, our priority on capital deployment will be driving revenue growth through organic investments as well as potential tuck in acquisitions to further enhance our core offerings in the marketplace.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

As Mike mentioned earlier, we recently acquired Illumicare to further expand our clinical decision support capabilities. Lastly, we made the final payment associated with the termination of the tax receivable agreement in connection with our August 2020 restructure. These payments have been approximately $100,000,000 per year and beginning 07/01/2025, they no longer negatively impact our free cash flow providing us more capacity to support our long term growth plans. Let me now turn to our outlook. At a high level, I would generally characterize fiscal year twenty twenty six as a year of expected stabilization and transition as we finalize the GPO contract renewal process.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

As such, we expect to return to positive growth for total net revenue, adjusted EBITDA and adjusted EPS in fiscal year twenty twenty seven. With that said, our fiscal year twenty twenty six guidance ranges are as follows. Total net revenue of $940,000,000 to $1,000,000,000 our segment guidance assumed in this range is Supply Chain Services revenue of $590,000,000 to $620,000,000 and performance services revenue of $350,000,000 to $380,000,000 We also expect adjusted EBITDA to be in the range of $230,000,000 to $245,000,000 and adjusted EPS of $1.33 to $1.43 In terms of operating expense, we took meaningful steps to reduce our expenses by $40,000,000 on an annual run rate basis in the fourth quarter, which is expected to result in a slight year over year reduction in fiscal year twenty twenty six operating expenses, despite reinvesting some of these savings back into faster growing areas of our business. In terms of our quarterly cadence, we expect lower revenue and profitability in the first half of the year, mainly due to the ramp up of headcount to support the recent success of our advisory business. Importantly, we anticipate this impact will be transitory and that margins will improve as we begin to recognize the associated revenue later in the year.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Although we don't typically provide quarterly guidance given this dynamic, we're providing the following guidance for Q1. Total net revenue of between $230,000,000 and $245,000,000 adjusted EBITDA of $45,000,000 to $50,000,000 and adjusted EPS of $0.27 to $0.32 In summary, we finished the year on a positive note as overall revenue and profitability exceeded our expectations for the year. This provides us momentum heading into fiscal year twenty twenty six. Second, supply chain services continued to perform better than expected and we're on the back end of the contract renewals for GPO members. We also continue to execute our plan to reinvigorate Performance Services with significant contract wins in advisory services and are building a robust pipeline of future opportunities.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Third, we expect an inflection back to growth in key consolidated financial metrics in fiscal year twenty twenty seven. In closing, we have a flexible balance sheet and meaningful cash flow that provide us with the ability to continue to grow our business and return value to stockholders. We appreciate your time today and we'll now open the call for questions.

[Operator]

We will now begin the question and answer session. The first question today comes from Michael Cherny with Leerink Partners. Please go ahead.

[Daniel Clark, VP - Equity Research at Leerink Partners]

Great. Thanks. Good morning. This is Dan Clark on for Mike. First question, just wanted to ask about customer buying behavior you saw in the Supply Chain Services segment in the quarter.

[Daniel Clark, VP - Equity Research at Leerink Partners]

Was there any changes or any pull forward ahead of potential tariffs that you observed and what are you kind of seeing here generally?

[Michael Alkire, Director, President & CEO at Premier]

Hey, this is Mike Alkire. Hey, we did not see a significant pull forward of any buying behavior. In certain areas, you might have seen some increases, but that was primarily due to some regional issues and things like that, but nothing significant due to the tariffs.

[Daniel Clark, VP - Equity Research at Leerink Partners]

Great. And then just a second question on the momentum in the advisory business. Can you just talk about a little more what's driving that? Is it how much of it is execution on your collection of kind of the services that you offer and how much of it is just sort of market driven? Thanks.

[Michael Alkire, Director, President & CEO at Premier]

Yes. So, I'm going to introduce Dave Zito here in just a second. So Dave is on the call. So Dave is the obviously the leader of performance services. But let me just start by saying, I think the number one thing that's driving it is obviously we've hired Dave and Dave's got a long history of a lot of success in advisory.

[Michael Alkire, Director, President & CEO at Premier]

And with all that success and with what's happening with the market, the dynamics happening with the cost pressures, the labor issues, some of these issues associated with potential cuts in Medicaid and those kinds of things. It's a market that needs some very, very strong solutions to help these health systems transform. So the markets there, we've got a strong team led by Dave and these guys have recently signed four very large deals. But with that Dave, I'll turn it over to you for some color.

[David Zito, President - Performance Services at Premier]

Thank you. I would just echo Mike's comments. I think it's one is market for sure. I think people are concerned about the impacts of the one big beautiful bill from a Medicaid perspective on both top and bottom line. So they're trying to prepare for that.

[David Zito, President - Performance Services at Premier]

And secondly, I think it's we have the right capabilities, breadth and depth of resources, the technology enablement that Premier's investment over time is differentiator. And probably most importantly is that Premier is a trusted brand in the market in terms of delivering results for customers. So, they look to us, they trust that we'll help them address their concerns. So, I think it's a combination of all those things that's allowing us to be successful.

[Michael Alkire, Director, President & CEO at Premier]

Thank you.

[Operator]

The next question comes from Eric Percher with Nephron Research. Please go ahead.

[Eric Percher, Research Analyst - Pharma Supply Chain & Digital Health at Nephron Research LLC]

Thank you. It's good to hear the progress on the admin fee renewal now being below 20% for that August 20 group. Given that you said it's a final report you'd like to give here, can you provide us with a bit of color on the cadence over the year as you get to the stabilization level in the high 60s? Is it fair to expect that we may see more of that in the first half of the year versus second half? And then also can you tell us what the underlying admin fee share growth assumption is for fiscal year twenty twenty six?

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Yes, Eric, this is Glenn. Thanks for the questions. Before I get into that, I just first want to highlight outstanding quarter we had in Supply Chain Services. We actually beat our guidance midpoint by about $21,000,000 on the top line and that drove a significant beat on both our EBITDA and EPS. So we were very pleased overall with how we ended up the year with Supply Chain Services, which was pretty consistent throughout the year.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

If I look at the components of our fee share, our gross administrative fees grew about 3% on a full year basis. We saw growth year over year in all four quarters with the largest being in the fourth quarter and we also saw growth in both acute and non acute. So the growth we're seeing across our portfolio food pharmacy, med surg, acute non acute, very broad based growth and we're expecting that to continue heading into fiscal year twenty twenty six. So I would say on the gas side, with the increase we're seeing in contract penetration, more uptake on our surpass contracts, we're expecting that 3% number to go up in 2026. So think of that as a 4% type number.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

On the fee share, we ended the year in 2025 in the low 60% range that was consistent with our guidance. Based upon our 2026 guidance numbers, we're anticipating the fee share amount to go in the mid-60s range and that will ramp up throughout 2026. So expect to see the slight increase throughout the year. And then by the 2026, we should be essentially complete with all of the 2020 restructured contracts. So maybe a couple still out there, but we're now on the back end of this.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

We're going to be done for the majority of these contracts by the 2026 and that's why we're no longer going to give specific numbers on our fee share percentages moving forward. If anything changes in a significant way, obviously we would call that out. But hopefully that gives you enough to give you a sense about where we're at.

[Eric Percher, Research Analyst - Pharma Supply Chain & Digital Health at Nephron Research LLC]

Yes, that's helpful. I think where I'm trying to get is the segment EBITDA levels based on what you stated. It appears that PS will be down. I think you just gave us why. But we should assume the pull through on the admin fee and supply chain looks similar to what we saw this quarter as we're modeling next year. Is that fair?

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Well, again, we're not going to give specific segment guidance for EBITDA. I would just directionally tell you, I'm expecting to see a nice EBITDA margin expansion in our Performance Services business. That's largely driven by the fact that Advisory Services is expected to ramp. We talked about the meaningful contracts that we've won recently. There's four of them.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

We've got a robust pipeline of additional opportunities. So even with some of our software business declining in 2026, we're expecting EBITDA margin expansion because of better productivity largely coming from our advisory business. So I'm really excited about that turnaround. On the supply chain services side, we would expect to see a decline in our EBITDA margins because we're not through the fee share resets yet. So even with the GAAP growth I talked about, overall I'm expecting our EBITDA margins to go down in Supply Chain Services.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

And then obviously as we get to 2027, we would expect the overall business to show an improvement. And I think for the first time now we've got good line of sight to say we feel good we're going to be growing across all of our key financial metrics in 2027.

[Eric Percher, Research Analyst - Pharma Supply Chain & Digital Health at Nephron Research LLC]

Thanks for that.

[Michael Alkire, Director, President & CEO at Premier]

Thanks, Eric.

[Operator]

The next question comes from Eric Coldwell with Baird. Please go ahead.

[Eric Coldwell, Managing Director at Baird]

Thanks very much and good morning. I was hoping you could help us with sizing on Illumicare in terms of both revenue and EBITDA profile? And then secondarily, I know you're guiding fiscal twenty twenty six without Contigo, but could you let us know what you're thinking results might look like if we continue to model that from what's left on revenue and EBITDA?

[Michael Alkire, Director, President & CEO at Premier]

Sure. But let me start real quick on Olumicare, because I want to make sure everybody understands that the asset that we've acquired. First of all, LumiCare solves a very, very critical member pain point. It addresses the concerns that we've been speaking about, which is margin compression. And so all these things that both Dave Zito and I have talked about with labor shortages, reimbursement cuts, rising costs and those kinds of things, Olumicare is going to be a proven lever to actually drive value there.

[Michael Alkire, Director, President & CEO at Premier]

It drives demonstratable difference in terms of delivering about $100 savings per inpatient discharge. So I think it has a huge opportunity to have significant penetration in our health systems and importantly can really help our healthcare systems perform in a very, very difficult time. It also has some wonderful real time clinical decision support capability that actually works across all EMRs or the significant chunk of EMRs. So we're very excited about that. And then obviously, we think it's going to be a really nice addition to our stance and health capability and it's going to be a very robust solution using AI machine learning in clinical decision support.

[Michael Alkire, Director, President & CEO at Premier]

But with that Glenn, I'll flip it over to you to get into the details on the numbers.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Yes. Would just add to your comments on the $100 per discharge savings. It's a 10 to one return on investment for our customers, which is a meaningful return that they get almost immediate. So we're really excited about that acquisition. In terms of the size of the numbers, Illumicare, you could think of as an 8,000,000 to $10,000,000 revenue business for us in fiscal year twenty twenty six and breakeven on the bottom line.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

So no impact to our adjusted EPS or adjusted EBITDA. And obviously, we're expecting this to be one of the growth engines for us going forward as it integrates with our Stanson business. So between the clinical decision support and financial decision support now, we have a really nice synergistic business that we're expecting to generate double digit growth moving forward. As it relates to Contigo Health, I would just say we're winding that business down. Right now, we've modeled about $9,000,000 of revenue in 2026 and a $6,000,000 EBITDA loss.

[Eric Coldwell, Managing Director at Baird]

Thank you very much. It's great.

[Michael Alkire, Director, President & CEO at Premier]

Thank you. Appreciate it.

[Operator]

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

[Jessica Tassan, VP & Senior Research Analyst at Piper Sandler Companies]

Hi, guys. Thank you so much for the question and congrats on the really strong fourth quarter and fiscal twenty twenty five.

[Michael Alkire, Director, President & CEO at Premier]

Thank you.

[Jessica Tassan, VP & Senior Research Analyst at Piper Sandler Companies]

You all have an interesting yes, so you guys have an interesting perspective because I think the group and you mentioned this in your prepared remarks, the group purchasing portfolio includes food and perishable items. I guess, are you observing any divergence in typical food purchasing patterns versus med surg purchasing patterns that would indicate increased intensity per unit of care delivered in FY 2025 either because of kind of deliberate hospital actions or because patients are preparing to lose coverage in 2026? Just any color on trends in intensity per unit of care that you might be able to glean based on just MedSurg versus food purchasing?

[Michael Alkire, Director, President & CEO at Premier]

That's a great question. It's very tough to glean it out of those two portfolios. We look at we have all the data and other measures from a clinical standpoint, lab values and those kinds of things that we can understand and glean that a little bit more effectively. And I would tell you, there's nothing that's we see that's significantly changing from a dynamic that you're speaking about. From a food standpoint, as just a quick reminder, our food program is truly differentiated in the industry.

[Michael Alkire, Director, President & CEO at Premier]

We use it as sort of a pointing into the spear in terms of getting access into accounts that might not be premier accounts. So you heard me talk a little bit about that in those opening remarks. We want to continue to do that, just because that program continues to grow and evolve and drive a significant amount of value to these health systems, especially when there's a lot of fiscal pressures they're facing.

[Jessica Tassan, VP & Senior Research Analyst at Piper Sandler Companies]

Got it. That's helpful. And then just my second question is how big is the advisory business within and apologies if I missed this. How big is advisory within Performance Services? And then I think you mentioned that business is expected to grow double digits in FY 2026.

[Jessica Tassan, VP & Senior Research Analyst at Piper Sandler Companies]

Do those four big contracts get you there? Just how much visibility do you have into that double digit growth? Thanks again.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Yes. Thanks for the question. We don't break out advisory in Performance Services, but I'll just give you a rough sizing. It's about 50,000,000 to $100,000,000 And I talked about double digit growth. I would say we're expecting the growth to be above 25% in fiscal year twenty twenty six.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

A lot of these contracts keep in mind are multi year contracts. So we will recognize that revenue over in many cases eighteen to twenty four months, but I'm expecting at least 25% growth coming from advisory, largely coming from these four deals. If we get more deals closed, it could even be greater upside to our numbers. But right now, we feel very confident given what we've closed. And obviously, we've to execute on these deals to get that revenue.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

But really nice turnaround in our advisory business and it's not going to be a one time blip. We're really creating a sustainable long term business that we expect to grow meaningfully over the next five years.

[Michael Alkire, Director, President & CEO at Premier]

Thank you, Jess.

[Operator]

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

[Kevin Caliendo, Managing Director at UBS Group]

Thanks. Thanks for taking my question. Glenn, on the free cash flow guidance, appreciate the color on that. It's always helpful. I'm just wondering how the TRA plays into that.

[Kevin Caliendo, Managing Director at UBS Group]

Like is that included in the free cash flow conversion? Or should we think about the TRA as incremental for fiscal twenty twenty six free cash flow?

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Yes. No, it's included in our free cash flow guidance. Overall, our free cash flows, if you look at the numbers year to year are pretty flat. So there's a couple of dynamics in place here. Number one, we've got the positive $100,000,000 TRA benefit, but there was a couple of items in fiscal year twenty twenty five that helped us as well.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

That's one time in nature. So the derivative lawsuit that I mentioned along with this minority investment dividend that received pretty much offset that year over year. So that's why you don't see the big pop in free cash flow. But going forward, we expect now not to have this $100,000,000 headwind, which is a big positive for us.

[Kevin Caliendo, Managing Director at UBS Group]

Got it. And I know you guys said there wasn't any forward buying around tariffs and the like, but was there any activity services activity, other activity that you found because of the fear of tariffs and the changes that were taking place that were a benefit or continuing to be a benefit? Like how should we think about because obviously occupied a ton of our mental well-being, but I'm just wondering how customers behave and if that continued or carried momentum or if it was a benefit in fiscal twenty twenty five that wouldn't be a benefit in fiscal twenty twenty six?

[Michael Alkire, Director, President & CEO at Premier]

Yes, it's a little bit I would characterize it as more a focus on like the psyche of what's happening. So obviously tariffs are incredibly dynamic as you are well aware and everybody on the call is well aware. As we've said in the past, our tariffs are firm for the term I'm sorry, our contracts are firm for the term. So that means that for the most part, there's not necessarily going to be significant impacts from tariffs. We have this member led contracting process as we have spoken about in the past.

[Michael Alkire, Director, President & CEO at Premier]

So this, when we talk about this, that doesn't mean that suppliers aren't coming and saying, hey, we've got issues with tariffs, we might want some price increase, those kinds of things. But the member led contracting process is really what dictates whether or not we decide to have a tariff or not. And I think that comes down to obviously what if we have a healthy market, if there's multiple suppliers in a market and many of them are not asking for tariff relief or any of that stuff, Obviously, then you're not the tariffs are going to have a de minimis impact on the business. So I will just say that, so far things are pretty stable as it relates to tariffs. That does not mean there's not a lot of work that's actually happening in concert with our suppliers, in concert with our members to minimize the impacts of these tariffs.

[Michael Alkire, Director, President & CEO at Premier]

So there is a lot of work happening under the sort of under the water level, if you will. But so far, the teams are working through these without having a significant impact on the healthcare systems.

[Kevin Caliendo, Managing Director at UBS Group]

Fantastic. Thanks so much guys.

[Michael Alkire, Director, President & CEO at Premier]

Thank you.

[Operator]

The next question comes from Allen Lutz with Bank of America. Please go ahead.

[Allen Lutz, Senior Equity Research Analyst at Bank of America Merrill Lynch]

Good morning and thanks for taking the questions. Glenn, you mentioned that you expect to return to revenue and EBITDA growth in fiscal twenty twenty seven. And then you talked about the increasing contract penetration and maybe a stabilization of revenue share backs. What is embedded or what needs to happen in fiscal twenty twenty seven for revenue and EBITDA to increase? Can you just provide some high level framing of what utilization has to do, revenue share backs? Just any high level thoughts would be helpful.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Yes, sure. I'll give you a couple of points on why we're confident in the recovery to growth in 2027. So I think first and foremost, when we look at our enterprise license agreements and our software deals, we have a bit of a trough here in 2026. We have fewer renewals coming due just based upon timing. That's going to pick up in 2027.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

And so we're expecting an increase in our software business starting in 2027. Advisory, as we talked about, is going to continue to ramp into fiscal year twenty twenty seven. And I think we're expecting to see some good double digit growth coming from the synergies of our clinical decision support business in Olumicare. So those are areas, I would say, of growth that will continue to help us moving forward. On the supply chain services side, this gas growth should continue.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

We're seeing great momentum in our food and pharmacy portfolios. So 3% this year, we're expecting faster growth in 2026. That should continue into 2027. So there's good momentum on our gross administrative fees. Both our digital supply chain and co management business are growing double digits.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

That should continue as we go into 2027. And then most importantly, we're going to have lower fee share headwinds, right? We'll be through the 2026 negotiations and those headwinds and it'll still probably be a slight headwind in 2027 will be much less than what we've seen in 2025 and 2026. So those are the key items. And as we look at our plans for 2027 now we're saying, we expect to see a rebound back to growth across all of our key financial metrics. Thanks for the question.

[Allen Lutz, Senior Equity Research Analyst at Bank of America Merrill Lynch]

That's helpful. Thank you for that. And then you mentioned last quarter you were expecting a client termination payment in 4Q. Did that take place? And is there any way to size that? Thank you.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Yes. So it did take place. We received the cash as well and the sizing was previously given several quarters ago as part of our guidance increase for supply chain services. Back at that point in time, I believe we raised our guidance by $15,000,000 and it was one of the components of the $15,000,000 raise. So that just gives you a general idea about what that could be, but there's other areas as well.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

But it was consistent with our expectations and that was all booked and cash received in Q4.

[Allen Lutz, Senior Equity Research Analyst at Bank of America Merrill Lynch]

Great. Thanks Glenn.

[Michael Alkire, Director, President & CEO at Premier]

Thank you.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Thank you, Alan.

[Operator]

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

[Richard Close, MD - Digital & Tech-Enabled Health Equity Research at Canaccord Genuity Group]

Yes. Thanks for the questions. A lot of the questions I had on advisory were asked. But I'm curious just the magnitude of the headcount additions. Can you give any color there?

[Richard Close, MD - Digital & Tech-Enabled Health Equity Research at Canaccord Genuity Group]

And just curious how long those people take the ramp up to being productive?

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Yes. I'll start here and Dave Zito, I think you're still on, if you can maybe add some color. I think first and foremost, the reason why we're winning is the deep subject matter expertise we're building in our advisory business along with our tech enablement. And we've ramped resources. We've pretty much added roughly 10 senior leaders across our business.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

We've got more people we're going be adding here based upon the support needed for these advisory wins and what we're seeing in the funnel. But I would expect probably another 20 people or so will be added in the not too distant future. And these engagements, I would say, range everywhere from cost reduction, margin improvement to revenue opportunities. So it's everything from revenue optimization to clinical delivery, workforce optimization, supply chain optimization and those are areas that we're going after. But Dave, did you want to add any more color?

[David Zito, President - Performance Services at Premier]

Yes, I would. Just a couple of things. We've been making the investments since the beginning of the calendar year and the additions of those 10 people that were referenced really helped drive, again partnering with the team premier team that was here to build that pipeline and close those deals. So the people we're hiring now are really going to be deployed immediately to work. We're really staffing as people come on board, are deploying them right to project work.

[David Zito, President - Performance Services at Premier]

So ramp up will not be an issue as we move forward. So right now, we're really trying to fill gaps in our end capacity to deliver the work that we have sold. So ramp up will be very, very positive in Click.

[Richard Close, MD - Digital & Tech-Enabled Health Equity Research at Canaccord Genuity Group]

Okay. As a follow-up, maybe on the tech side of the Performance Services, I'm just curious how you're viewing demand, I guess, post July 4 and the signing of the big beautiful bill. I'm just curious with respect to maybe the SaaS offerings and then enterprise. I know you said there's not going to be many renewals here in fiscal twenty twenty six on the enterprise license. But just any changes in demand since July 4 or anything you can provide would be helpful.

[Michael Alkire, Director, President & CEO at Premier]

Yes, a couple of thoughts on that. And then again, Dave, Zito, if you'd like to add in, please do. So in general, I will tell you there's still a lot of interest in our clinical decision support capabilities. So think of things around prior authorization, clinical coding and documentation and those kinds of things. So because of the investments we've made with Stanson and the additional capital outlay, those technologies are still doing are still having a phenomenal or getting phenomenal interest in the market.

[Michael Alkire, Director, President & CEO at Premier]

And so, just as a quick reminder, AI enabled machine learning natural language processing, It's in a very efficient way to help these health systems with prior authorization and coding and documentation. I think Dave and team are looking to continue to expand those capabilities given the success they've had so far. But I sense that there's a significant interest in a lot of that activity just because of the dynamics of the market with some of the slow pay stuff coming from payers and those kinds of things and our capabilities really help offset that. Secondarily, I will say that, what's unique about Premier is that not only can we get work with our health systems and benchmark their performance and have them understand how they're performing, but we've got this fantastic ability with advisory to drive significant change for those health systems. And then we can use this technology really to sort of codify or leave as an artifact, you know, the record, within the workflow, all the change that we've driven.

[Michael Alkire, Director, President & CEO at Premier]

So it's very, very unique, some of the things that we can do to help, drive performance improvement for these health systems. Dave, not sure if you have any other builds.

[David Zito, President - Performance Services at Premier]

I would just echo the last thing you said. I mean, basically, if you look at the way we've developed and deployed technology is to drive performance improvement. So we view the tools and I think as customers need to improve performance, they're looking for and we're deploying technology that will enable change as well as change. So, it's actually a driver of demand not a the current environment is a driver of demand not a deterrent. And my as long as we can demonstrate how our tech drives and supports enables change, I think that our demand will increase.

[Michael Alkire, Director, President & CEO at Premier]

Thank you, Thank you, Richard.

[Operator]

The next question comes from Eric Coldwell with Baird. Please go ahead.

[Eric Coldwell, Managing Director at Baird]

Hey, thanks so much. Your good answers to my first questions enticed me to get back on and ask some more. So on the advisory deals, would we be thinking about something in the ballpark of $5,000,000 a year on average as a typical sizing for what you would consider a large deal?

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Then Higher than that. Than Higher

[Eric Coldwell, Managing Director at Baird]

than that. Okay. So the 25% growth in advisory off of 50,000,000 to 100,000,000 the reason you're that makes sense. So other areas of the business may be a bit weaker. So these are bigger deals that help offset challenges elsewhere it sounds. Correct.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

And just to be clear to the point, so we are expecting our enterprise license deals to be down in 2026 because of fewer renewals. Advisory is helping to offset that. And based upon the midpoint of our guidance for Performance Services as a total segment, we are expecting to grow in fiscal year twenty twenty six. But it's driven by the advisory deals, yes.

[Eric Coldwell, Managing Director at Baird]

That's helpful. And then are there rev rec or profit triggers in these deals that we should be aware of such as performance or milestone based items or true ups at the end of a fiscal year or a calendar year? Is there anything of that nature? Or is the billing and performance profit performance fairly ratable throughout the engagement?

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

No. There are milestones in these deals and it's one of the reasons why the revenue recognition at least for fiscal year twenty twenty six will be more back end loaded because we have to ramp the resources. And as we hit the milestones, which will be later this year, we'll start to recognize the revenue. So that's one of the dynamics about why Q1 is going to be a lower quarter than the second half of the year.

[Eric Coldwell, Managing Director at Baird]

If I might, just one or two quick ones. So I'd really like to hear what you're doing. Could you give us some anecdotes of a unique advisory contract? And quite frankly, I've always struggled a bit with the difference between advisory and consulting. So maybe you could help parse out the nuance there between what maybe to a less informed person like myself, is the difference between a consulting engagement and an advisory engagement?

[Michael Alkire, Director, President & CEO at Premier]

So, Dave, I'm going to ask you to join in here in just a second. I think people use those terms interchangeably. When we talk about advisory though in the broader scope, Glenn hit this, it's about revenue optimization, clinical delivery, it's workflow workforce and productivity and those kinds of things and then obviously all things supply chain. But Dave Zito, any builds?

[David Zito, President - Performance Services at Premier]

I would answering the second part first. I would say consulting and advisory are the same. They're interchangeable in my mind. These are traditional consulting and their performance improvement. Clients have large they estimate what they need to how they need to improve their performance.

[David Zito, President - Performance Services at Premier]

They break it into categories, whether it's workforce or supplies or clinical or revenue cycle or strategic growth. And then we develop strategies to achieve those help them achieve their expectations and goals. And we deploy resources to partner with them to drive that change. So they're very comprehensive in nature as they try to transform their business and modify their cost structure to perform in a new revenue world. So it's really a strategic and operational transformation of their business.

[Eric Coldwell, Managing Director at Baird]

Thanks, Dave. That's helpful. Last one, we didn't seem to get any updates on the life sciences or pharma support businesses this quarter. Just curious what you're seeing on that front?

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Yes. I think overall that business is performing as we had expected. It was not a key driver of our results in the quarter. And so that's why we haven't called it out. But there's lots of exciting growth opportunities in terms of how we leverage our data and sell into life sciences companies and that's a plan for us moving forward.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

We do expect that business to be one of the areas of growth for us in 2026 and beyond.

[Eric Coldwell, Managing Director at Baird]

Thanks again. Appreciate it.

[Glenn Coleman, CFO & Chief Administrative Officer at Premier]

Thank you.

[Michael Alkire, Director, President & CEO at Premier]

Thank you.

[Operator]

This concludes our question and answer session and Premier's fiscal twenty twenty five fourth quarter and full year conference call. Thank you for attending today's presentation. You may now disconnect.

Participants

Executives

• Ben Krasinski, Senior Director - IR
• Michael Alkire, Director, President & CEO
• Glenn Coleman, CFO & Chief Administrative Officer
• David Zito, President - Performance Services

Analysts

• Daniel Clark, VP - Equity Research at Leerink Partners
• Eric Percher, Research Analyst - Pharma Supply Chain & Digital Health at Nephron Research LLC
• Eric Coldwell, Managing Director at Baird
• Jessica Tassan, VP & Senior Research Analyst at Piper Sandler Companies
• Kevin Caliendo, Managing Director at UBS Group
• Allen Lutz, Senior Equity Research Analyst at Bank of America Merrill Lynch
• Richard Close, MD - Digital & Tech-Enabled Health Equity Research at Canaccord Genuity Group