Phreesia Announces Second Quarter Fiscal 2024 Results

WILMINGTON, Del.–(BUSINESS WIRE)–Phreesia, Inc. (NYSE: PHR) (“Phreesia” or the “Company”) announced financial results today for the fiscal second quarter ended July 31, 2023.


I am incredibly pleased and proud of our team’s accomplishments in the second quarter of fiscal year 2024. We continued to deliver excellent value for our clients and scale our business—all while helping patients take a more active role in their healthcare and achieve improved health outcomes,” said CEO and Co-Founder Chaim Indig.

Please visit the Phreesia investor relations website at ir.phreesia.com to view the Company’s Q2 Fiscal Year 2024 Stakeholder Letter.

Fiscal Second Quarter Ended July 31, 2023 Highlights

  • Total revenue was $85.8 million in the quarter as compared to $67.9 million in the same period in the prior year, an increase of 26%.
  • Average number of healthcare services clients (“AHSCs”) was 3,445 in the quarter as compared to 2,776 in the same period in the prior year, an increase of 24%.
  • Healthcare services revenue per AHSC remained relatively flat at $18,268 in the quarter as compared to $18,248 in the same period in the prior year. See “Key Metrics” below for additional information.
  • Total revenue per AHSC was $24,914 in the quarter as compared to $24,448 in the same period in the prior year, an increase of 2%. The increase was driven primarily by network solutions revenue growth that outpaced AHSC growth. See “Key Metrics” below for additional information.
  • Net loss was $36.8 million in the quarter compared to $46.7 million in the same period in the prior year.
  • Adjusted EBITDA was negative $11.5 million in the quarter compared to negative $26.0 million in the same period in the prior year.
  • Cash and cash equivalents as of July 31, 2023 was $127.7 million, down $49.0 million from January 31, 2023.

Recent Events

On June 30, 2023, we acquired Comsort, Inc. d/b/a MediFind (“MediFind”) (the “MediFind Acquisition”), for total consideration of approximately $9.0 million. Consideration transferred included $4.1 million of cash, 150,786 shares of Phreesia common stock valued at $4.7 million and liabilities of $0.1 million. We acquired $0.2 million in cash in connection with the MediFind Acquisition, and we have presented cash paid to acquire MediFind of $3.9 million in the accompanying consolidated statement of cash flows for the six months ended July 31, 2023. MediFind is a consumer-facing healthcare product that helps patients—especially those with serious, chronic and rare diseases—find better care faster. We acquired MediFind to reinforce our commitment to patient-centered care and expand our offerings to consumers.

On August 11, 2023, we acquired Access eForms, LLC (“Access”), an innovative electronic forms management and automation provider that helps hospitals across the country streamline workflows, improve compliance and deliver a better patient experience, for total consideration of $38.4 million. Consideration transferred included $6.5 million of cash, 1,096,436 shares of Phreesia common stock valued at $30.6 million and liabilities of $1.2 million. We acquired Access to enhance and build on our existing functionality in the acute care space and to expand our network of clients and partners.

Fiscal Year 2024 Outlook

We are maintaining our revenue outlook for the full fiscal year 2024 ending January 31, 2024 at between $353 million and $356 million, implying year-over-year growth of 26% to 27%.

We are raising our Adjusted EBITDA outlook for fiscal year 2024 to a range of negative $54 million to negative $49 million from a previous range of negative $60 million to negative $55 million. The change reflects our strong performance in the second quarter.

We have not reconciled our Adjusted EBITDA outlook to GAAP Net income (loss) because we do not provide an outlook for GAAP Net income (loss) due to the uncertainty and potential variability of Other (income) expense, net and (Benefit from) provision for income taxes, which are reconciling items between Adjusted EBITDA and GAAP Net income (loss). Because we cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP Net income (loss). For further information regarding the non-GAAP financial measures included in this press release, including a reconciliation of GAAP to non-GAAP financial measures and an explanation of these measures, please see “Non-GAAP financial measures” below.

Fiscal Year 2025 Target

We are maintaining our $500 million revenue target to be achieved by annualizing our highest-revenue quarter in fiscal year 20251 and we continue to expect to reach profitability2 during fiscal year 2025. We also believe our cash and cash equivalents, along with cash generated in the normal course of business, can support our path to our fiscal year 2025 targets.

We believe our platform and diverse revenue streams offer us multiple paths for achieving our targets.

1 For our target revenue, “annualized” is defined as multiplying the highest-revenue quarter in fiscal year 2025 by four.

2 For the purposes of this statement, we define “profitability” in terms of Adjusted EBITDA.

Available Information

We intend to use our Company website (including our Investor Relations website) as well as our Facebook, Twitter, LinkedIn and Instagram accounts as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Forward Looking Statements

This press release includes express or implied statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain projections of our future results of operations or of our financial information or state other forward-looking information. These statements include, but are not limited to, statements regarding: our future financial and operating performance, including our revenue, Adjusted EBITDA and our ability to reach profitability in fiscal year 2025; our ability to finance our plans to achieve our 2025 targets with our current cash balance and cash generated in the normal course of business; our outlook for fiscal year 2024 (including with respect to Adjusted EBITDA) and fiscal year 2025 targets; and our belief that our platform and revenue streams offer us multiple paths for achieving our targets; the expected results and benefits of our acquisitions, including our most recent acquisitions of MediFind and Access eForms; and our expectations regarding the expansion of our offerings and our network of clients and partners. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control, including, without limitation, risks associated with: our ability to effectively manage our growth and meet our growth objectives; our focus on the long-term and our investments in growth; the competitive environment in which we operate; our ability to develop and release new products and services; our ability to develop and release successful enhancements, features and modifications to our existing products and services; changes in market conditions and receptivity to our products and services; our ability to maintain the security and availability of our platform; changes in laws and regulations applicable to our business model; our ability to make accurate predictions about our industry and addressable market; the impact of pandemics on our business and economic conditions; our ability to attract, retain and cross-sell to healthcare services clients; our ability to continue to operate effectively with a primarily remote workforce and attract and retain key talent; our ability to realize the intended benefits of our acquisitions and partnerships, including our recent acquisitions of MediFind and Access eForms; difficulties in integrating our acquisitions and investments; and the recent high inflationary environment and other general, market, political, economic and business conditions (including as a result of the warfare and/or political and economic instability in Ukraine or elsewhere). The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those listed or described in our filings with the Securities and Exchange Commission (“SEC”), including in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023 and in our Quarterly Report on Form 10-Q for the fiscal quarter ended July 31, 2023 that will be filed with the SEC following this press release. The forward-looking statements in this press release speak only as of the date on which the statements are made. We undertake no obligation to update, and expressly disclaim the obligation to update, any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

This press release includes certain non-GAAP financial measures as defined by SEC rules. We have provided a reconciliation of those measures to the most directly comparable GAAP measures, with the exception of our Adjusted EBITDA outlook for the reasons described above.

Conference Call Information

We will hold a conference call on Wednesday September 6, 2023, at 5:00 p.m. Eastern Time to review our fiscal 2024 second quarter financial results. To participate in our live conference call and webcast, please dial (888) 350-3437 (or (646) 960-0153 for international participants) using conference code number 4000153 or visit the “Events & Presentations” section of our Investor Relations website at ir.phreesia.com. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

ABOUT PHREESIA

Phreesia is a trusted leader in patient activation, giving providers, health plans, life sciences companies and other organizations tools to help patients take a more active role in their care. Founded in 2005, Phreesia enabled more than 120 million patient visits in 2022 – more than 1 in 10 visits across the U.S. – scale that we believe allows us to make meaningful impact. Offering patient-driven digital solutions for intake, outreach, education and more, Phreesia enhances the patient experience, drives efficiency and improves healthcare outcomes. To learn more, visit phreesia.com.

 

Phreesia, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

 

 

July 31, 2023

 

January 31, 2023

 

(Unaudited)

 

 

Assets

 

 

 

Current:

 

 

 

Cash and cash equivalents

$

127,677

 

 

$

176,683

 

Settlement assets

 

25,158

 

 

 

22,599

 

Accounts receivable, net of allowance for doubtful accounts of $770 and $1,053 as of July 31, 2023 and January 31, 2023, respectively

 

53,913

 

 

 

51,394

 

Deferred contract acquisition costs

 

820

 

 

 

1,056

 

Prepaid expenses and other current assets

 

11,662

 

 

 

10,709

 

Total current assets

 

219,230

 

 

 

262,441

 

Property and equipment, net of accumulated depreciation and amortization of $68,044 and $59,847 as of July 31, 2023 and January 31, 2023, respectively

 

22,816

 

 

 

21,670

 

Capitalized internal-use software, net of accumulated amortization of $41,552 and $37,236 as of July 31, 2023 and January 31, 2023, respectively

 

41,205

 

 

 

35,150

 

Operating lease right-of-use assets

 

227

 

 

 

569

 

Deferred contract acquisition costs

 

1,370

 

 

 

1,754

 

Intangible assets, net of accumulated amortization of $3,256 and $2,549 as of July 31, 2023 and January 31, 2023, respectively

 

12,994

 

 

 

11,401

 

Deferred tax asset

 

 

 

 

81

 

Goodwill

 

40,611

 

 

 

33,736

 

Other assets

 

1,989

 

 

 

3,255

 

Total Assets

$

340,442

 

 

$

370,057

 

Liabilities and Stockholders’ Equity

 

 

 

Current:

 

 

 

Settlement obligations

$

25,158

 

 

$

22,599

 

Current portion of finance lease liabilities and other debt

 

7,112

 

 

 

5,172

 

Current portion of operating lease liabilities

 

416

 

 

 

934

 

Accounts payable

 

7,948

 

 

 

10,836

 

Accrued expenses

 

27,794

 

 

 

21,810

 

Deferred revenue

 

16,441

 

 

 

17,688

 

Total current liabilities

 

84,869

 

 

 

79,039

 

Long-term finance lease liabilities and other debt

 

8,055

 

 

 

2,725

 

Operating lease liabilities, non-current

 

216

 

 

 

349

 

Long-term deferred revenue

 

99

 

 

 

125

 

Long-term deferred tax liabilities

 

183

 

 

 

 

Total Liabilities

 

93,422

 

 

 

82,238

 

Commitments and contingencies

 

 

 

Stockholders’ Equity:

 

 

 

Common stock, $0.01 par value – 500,000,000 shares authorized as of both July 31, 2023 and January 31, 2023; 55,364,795 and 54,187,172 shares issued as of July 31, 2023 and January 31, 2023, respectively

 

554

 

 

 

542

 

Additional paid-in capital

 

971,120

 

 

 

926,957

 

Accumulated deficit

 

(680,382

)

 

 

(606,084

)

Treasury stock, at cost, 1,300,430 and 971,236 shares as of July 31, 2023 and January 31, 2023, respectively

 

(44,272

)

 

 

(33,596

)

Total Stockholders’ Equity

 

247,020

 

 

 

287,819

 

Total Liabilities and Stockholders’ Equity

$

340,442

 

 

$

370,057

 

 

Phreesia, Inc.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share data)

 

 

Three months ended
July 31,

 

Six months ended
July 31,

 

2023

 

2022

 

2023

 

2022

Revenue:

 

 

 

 

 

 

 

Subscription and related services

$

39,301

 

 

$

31,069

 

 

$

77,188

 

 

$

60,170

 

Payment processing fees

 

23,631

 

 

 

19,581

 

 

 

47,884

 

 

 

38,962

 

Network solutions

 

22,898

 

 

 

17,217

 

 

 

44,603

 

 

 

32,089

 

Total revenues

 

85,830

 

 

 

67,867

 

 

 

169,675

 

 

 

131,221

 

Expenses:

 

 

 

 

 

 

 

Cost of revenue (excluding depreciation and amortization)

 

14,449

 

 

 

14,873

 

 

 

29,356

 

 

 

29,259

 

Payment processing expense

 

15,852

 

 

 

12,554

 

 

 

31,942

 

 

 

24,712

 

Sales and marketing

 

37,244

 

 

 

38,341

 

 

 

74,657

 

 

 

78,372

 

Research and development

 

27,471

 

 

 

22,542

 

 

 

53,940

 

 

 

43,177

 

General and administrative

 

20,988

 

 

 

20,073

 

 

 

40,865

 

 

 

40,928

 

Depreciation

 

4,244

 

 

 

4,220

 

 

 

8,748

 

 

 

8,498

 

Amortization

 

2,537

 

 

 

1,599

 

 

 

5,023

 

 

 

3,203

 

Total expenses

 

122,785

 

 

 

114,202

 

 

 

244,531

 

 

 

228,149

 

Operating loss

 

(36,955

)

 

 

(46,335

)

 

 

(74,856

)

 

 

(96,928

)

Other income, net

 

50

 

 

 

38

 

 

 

8

 

 

 

7

 

Interest income (expense), net

 

786

 

 

 

(206

)

 

 

1,504

 

 

 

(589

)

Total other income (expense), net

 

836

 

 

 

(168

)

 

 

1,512

 

 

 

(582

)

Loss before provision for income taxes

 

(36,119

)

 

 

(46,503

)

 

 

(73,344

)

 

 

(97,510

)

Provision for income taxes

 

(648

)

 

 

(213

)

 

 

(954

)

 

 

(448

)

Net loss

$

(36,767

)

 

$

(46,716

)

 

$

(74,298

)

 

$

(97,958

)

Net loss per share attributable to common stockholders, basic and diluted(1)

$

(0.68

)

 

$

(0.89

)

 

$

(1.39

)

 

$

(1.88

)

Weighted-average common shares outstanding, basic and diluted

 

53,794,060

 

 

 

52,325,209

 

 

 

53,574,584

 

 

 

52,135,250

 

(1) Our potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.

 

Phreesia, Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

 

 

Six months ended
July 31,

 

2023

 

2022

Operating activities:

 

 

 

Net loss

$

(74,298

)

 

$

(97,958

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

Depreciation and amortization

 

13,771

 

 

 

11,701

 

Stock-based compensation expense

 

35,786

 

 

 

28,709

 

Amortization of deferred financing costs and debt discount

 

169

 

 

 

144

 

Cost of Phreesia hardware purchased by customers

 

650

 

 

 

546

 

Deferred contract acquisition costs amortization

 

620

 

 

 

905

 

Non-cash operating lease expense

 

342

 

 

 

1,022

 

Deferred taxes

 

142

 

 

 

440

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(2,370

)

 

 

(6,696

)

Prepaid expenses and other assets

 

769

 

 

 

3,190

 

Deferred contract acquisition costs

 

 

 

 

(177

)

Accounts payable

 

(2,415

)

 

 

3,715

 

Accrued expenses and other liabilities

 

6,061

 

 

 

983

 

Lease liabilities

 

(652

)

 

 

(647

)

Deferred revenue

 

(1,565

)

 

 

647

 

Net cash used in operating activities

 

(22,990

)

 

 

(53,476

)

Investing activities:

 

 

 

Acquisitions, net of cash acquired

 

(3,873

)

 

 

 

Capitalized internal-use software

 

(9,820

)

 

 

(10,242

)

Purchases of property and equipment

 

(2,102

)

 

 

(2,634

)

Net cash used in investing activities

 

(15,795

)

 

 

(12,876

)

Financing activities:

 

 

 

Proceeds from issuance of common stock upon exercise of stock options

 

675

 

 

 

1,141

 

Treasury stock to satisfy tax withholdings on stock compensation awards

 

(10,725

)

 

 

(6,309

)

Proceeds from employee stock purchase plan

 

1,863

 

 

 

1,949

 

Finance lease payments

 

(3,427

)

 

 

(2,899

)

Constructive financing

 

1,688

 

 

 

 

Principal payments on financing agreements

 

(45

)

 

 

(216

)

Debt issuance costs and loan facility fee payments

 

(250

)

 

 

(397

)

Net cash used in financing activities

 

(10,221

)

 

 

(6,731

)

Net decrease in cash and cash equivalents

 

(49,006

)

 

 

(73,083

)

Cash and cash equivalents – beginning of period

 

176,683

 

 

 

313,812

 

Cash and cash equivalents – end of period

$

127,677

 

 

$

240,729

 

 

 

 

 

Supplemental information of non-cash investing and financing information:

 

 

 

Property and equipment acquisitions through finance leases

$

7,067

 

 

$

526

 

Purchase of property and equipment and capitalized software included in current liabilities

$

1,509

 

 

$

2,379

 

Capitalized stock-based compensation

$

714

 

 

$

695

 

Issuance of stock to settle liabilities for stock-based compensation

$

7,221

 

 

$

8,814

 

Issuance of stock as consideration in business combinations

$

4,676

 

 

$

 

Issuance of liabilities as consideration in business combinations

$

91

 

 

$

 

Capitalized software acquired through vendor financing

$

2,047

 

 

$

 

Cash paid for:

 

 

 

Interest

$

354

 

 

$

446

 

Non-GAAP financial measures

This press release and statements made during the above-referenced webcast may include certain non-GAAP financial measures as defined by SEC rules.

Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income or loss or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of our liquidity. We define Adjusted EBITDA as net income or loss before interest (income) expense, net, provision for income taxes, depreciation and amortization, and before stock-based compensation expense and other income, net.

We have provided below a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure. We have presented Adjusted EBITDA in this press release and our Quarterly Report on Form 10-Q to be filed after this press release because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short and long-term operational plans. In particular, we believe that the exclusion of the amounts eliminated in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. We have not reconciled our Adjusted EBITDA outlook to GAAP Net income (loss) because we do not provide an outlook for GAAP Net income (loss) due to the uncertainty and potential variability of Other (income) expense, net and (Benefit from) provision for income taxes, which are reconciling items between Adjusted EBITDA and GAAP Net income (loss). Because we cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP Net income (loss).

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are as follows:

  • Although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
  • Adjusted EBITDA does not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) the potentially dilutive impact of non-cash stock-based compensation; (3) tax payments that may represent a reduction in cash available to us; or (4) interest (income) expense, net; and
  • Other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.

Because of these and other limitations, you should consider Adjusted EBITDA along with other GAAP-based financial performance measures, including various cash flow metrics, net loss, and our GAAP financial results. The following table presents a reconciliation of Adjusted EBITDA to net loss for each of the periods indicated:

 

Phreesia, Inc.

Adjusted EBITDA

(Unaudited)

 

 

Three months ended

July 31,

 

Six months ended

July 31,

(in thousands)

2023

 

2022

 

2023

 

2022

Net loss

$

(36,767

)

 

$

(46,716

)

 

$

(74,298

)

 

$

(97,958

)

Interest (income) expense, net

 

(786

)

 

 

206

 

 

 

(1,504

)

 

 

589

 

Provision for income taxes

 

648

 

 

 

213

 

 

 

954

 

 

 

448

 

Depreciation and amortization

 

6,781

 

 

 

5,819

 

 

 

13,771

 

 

 

11,701

 

Stock-based compensation expense

 

18,648

 

 

 

14,558

 

 

 

35,786

 

 

 

28,709

 

Other expense, net

 

(50

)

 

 

(38

)

 

 

(8

)

 

 

(7

)

Adjusted EBITDA

$

(11,526

)

 

$

(25,958

)

 

$

(25,299

)

 

$

(56,518

)

 

Phreesia, Inc.

Reconciliation of GAAP and Adjusted Operating Expenses

(Unaudited)

 

 

Three months ended

July 31,

 

Six months ended

July 31,

(in thousands)

2023

 

2022

 

2023

 

2022

GAAP operating expenses

 

 

 

 

 

 

 

General and administrative

$

20,988

 

$

20,073

 

$

40,865

 

$

40,928

Sales and marketing

 

37,244

 

 

38,341

 

 

74,657

 

 

78,372

Research and development

 

27,471

 

 

22,542

 

 

53,940

 

 

43,177

Cost of revenue (excluding depreciation and amortization)

 

14,449

 

 

14,873

 

 

29,356

 

 

29,259

 

$

100,152

 

$

95,829

 

$

198,818

 

$

191,736

Stock compensation included in GAAP operating expenses

 

 

 

 

 

 

 

General and administrative

$

5,747

 

$

5,206

 

$

11,625

 

$

10,334

Sales and marketing

 

7,111

 

 

5,423

 

 

13,528

 

 

11,077

Research and development

 

4,563

 

 

2,967

 

 

8,441

 

 

5,528

Cost of revenue (excluding depreciation and amortization)

 

1,227

 

 

962

 

 

2,192

 

 

1,770

 

$

18,648

 

$

14,558

 

$

35,786

 

$

28,709

Adjusted operating expenses

 

 

 

 

 

 

 

General and administrative

$

15,241

 

$

14,867

 

$

29,240

 

$

30,594

Sales and marketing

 

30,133

 

 

32,918

 

 

61,129

 

 

67,295

Research and development

 

22,908

 

 

19,575

 

 

45,499

 

 

37,649

Cost of revenue (excluding depreciation and amortization)

 

13,222

 

 

13,911

 

 

27,164

 

 

27,489

 

$

81,504

 

$

81,271

 

$

163,032

 

$

163,027

Contacts

Investor Contact:

Balaji Gandhi

Phreesia, Inc.

investors@phreesia.com
(929) 506-4950

Media Contact:

Maureen McKinney

Phreesia, Inc.

mmckinney@phreesia.com
(773) 330-8908

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