Q4 2012 Earnings Call Transcript

Transcript Call Date 05/10/2012

Now, before I turn it over to Gary for a closing comment, I want to take just a minute or two to share some historical perspective on the transformation plan we announced today. When I joined PSS little over 10 years, the Company was in the beginning stages of a similar transformation. That plan, which rolled out over about three years, basically reinvented the Company. We divested our imaging business, which due to fundamental changes in that industry no longer fit our service model or our core competencies.

We consolidated the distribution infrastructure, rationalizing about half of the existing locations, implementing a standardized ERP system and improving efficiencies, service levels and customer satisfaction in the process. We launched a global sourcing effort to take more control of our profitability. We designed and implemented a shared service approach for back office functions. We instituted a long-term strategic planning process and implemented long-term incentive programs throughout the organization that were aligned with those plans.

The results – that plan and our successful execution of it positioned the Company to double in revenues in the ensuing five years, improving margins from 2% to 6% and increasing return on capital from 12% to 30% plus. Investors were rewarded with a share price that went from $5 to $6 a share, to north of $20.

I share this bit of history because as we look back all those initiatives looked very challenging at the time, as do those that we announced today, but this is by-and-large the same team and having a accomplished this type of transformation before gives us confidence that we can do it again, leading change both internally and within our industry.

We look forward to sharing more details of what we're calling Healthcare 2.0 including the year one key milestones of our transformation at our upcoming Investor Day on May 24.

Now, I'll turn the time back over to Gary.

Gary A. Corless - President and CEO: Thank you, David. This is an important time for our nation, specifically our healthcare system. There will be a prominent place for those who are part of this solution, those players who are helping our caregivers adapt to the new realities and requirements to provide quality care efficiently and effectively. We are proud to have that opportunity.

Healthcare 2.0 is about the acceptance of new realities, the opportunities these create and the ability to adapt to where healthcare is going. It's about being humble enough to know what others do better and bold enough to invest in your proven strength. It's about being in the place of choice for the caregivers, our family and friends depend upon, the best talents in our industry who are helping them adapt and the shareholders who make it all possible. We are more than excited to make this a reality for all. One purpose, one mission and one team focused for growth, this is Healthcare 2.0.

I'd now like to turn the call over to our operator Sharon and begin the Q&A.

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