Phreesia, Inc. (NYSE: PHR) (“Phreesia” or the "Company")
announced financial results today for the fiscal first quarter
ended April 30, 2024.
"I am tremendously proud of our team’s commitment to our growth
and profitability1 objectives." said CEO and Co-Founder Chaim
Indig.
Please visit the Phreesia investor relations website at
ir.phreesia.com to view the Company's Q1 Fiscal Year 2025
Stakeholder Letter.
Fiscal First Quarter Ended April 30, 2024 Highlights
- Total revenue was $101.2 million in the quarter, up 21%
year-over-year.
- Average number of healthcare services clients ("AHSCs") was
4,065 in the quarter, up 23% year-over-year.
- Healthcare services revenue per AHSC was $18,243 in the
quarter, down 3% year-over-year. See "Key Metrics" below for
additional information.
- Total revenue per AHSC was $24,900 in the quarter, down 2%
year-over-year. See "Key Metrics" below for additional
information.
- Net loss was $19.7 million in the quarter compared to net loss
of $37.5 million in the same period in the prior year.
- Adjusted EBITDA was $4.1 million in the quarter compared to
negative $13.8 million in the same period in the prior year.
- Cash and cash equivalents as of April 30, 2024 was $79.5
million, down $8.0 million from January 31, 2024.
Fiscal Year 2025 Outlook
We are updating our revenue outlook for fiscal year 2025 to a
range of $416 million to $426 million from a previous range of $424
million to $434 million. The updated revenue range incorporates the
accelerated wind-down of a clearinghouse client relationship. For
additional information regarding this client relationship refer to
the Stakeholder Letter filed together with this earnings release.
The revenue range provided for fiscal 2025 assumes no additional
revenue from potential future acquisitions completed between now
and January 31, 2025.
We are also updating our Adjusted EBITDA outlook for fiscal year
2025 to a range of $21 million to $26 million from a previous range
of $12 million to $20 million. Our outlook reflects the slight
impact of the accelerated wind-down of the clearinghouse client
relationship and our greater focus on growing profitably1 through a
combination of growth and continued margin improvement.
We believe our $79.5 million in cash and cash equivalents as of
April 30, 2024, along with cash generated in our normal operations
gives us sufficient flexibility to reach our fiscal 2025 revenue
and Adjusted EBITDA outlook. Additionally, our available borrowing
capacity under our credit facility with Capital One provides us
with an additional source of capital to pursue future growth
opportunities not incorporated into our fiscal 2025 revenue and
Adjusted EBITDA outlook.
Non-GAAP Financial Measures
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.
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, margins and Adjusted EBITDA; our ability to
finance our plans to achieve our fiscal year 2025 outlook with our
current cash balance and cash generated in the normal course of
business; our outlook for fiscal year 2025; the impacts of the
accelerated wind-down of our relationship with a clearinghouse
client; and our belief that our revolving credit facility with
Capital One gives us additional financial flexibility. 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 comply
with the covenants in our credit agreement with Capital One;
changes in market conditions and receptivity to our products and
services; our ability to develop and release new products and
services and successful enhancements, features and modifications to
our existing products and services; our ability to maintain the
security and availability of our platform; the impact of
cyberattacks, security incidents or breaches impacting our
business, such as the cyberattack affecting ConnectOnCall, or the
recent cyberattacks announced by Change Healthcare and Ascension
Health; changes in laws and regulations applicable to our business
model; our ability to make accurate predictions about our industry
and addressable market; 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; and 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, the
Middle East 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, 2024 and in our Quarterly Report on Form 10-Q for the fiscal
quarter ended April 30, 2024 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 Thursday May 30, 2024, at 5:00
p.m. Eastern Time to review our fiscal 2025 first 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, life sciences companies, payers and other organizations
tools to help patients take a more active role in their care.
Founded in 2005, Phreesia enabled approximately 150 million patient
visits in 2023—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.
_________________ 1 During the first quarter of fiscal 2025, our
net loss was $19.7 million and our Adjusted EBITDA was $4.1
million. We define “profitability” and “profitably,” discussed
herein, in terms of Adjusted EBITDA. See Non-GAAP Financial
Measures for a reconciliation of our Net loss to Adjusted
EBITDA.
Phreesia, Inc.
Consolidated Balance
Sheets
(in thousands, except share and
per share data)
April 30, 2024
January 31, 2024
(Unaudited)
Assets
Current:
Cash and cash equivalents
$
79,527
$
87,520
Settlement assets
30,063
28,072
Accounts receivable, net of allowance for
doubtful accounts of $1,480 and $1,392 as of April 30, 2024 and
January 31, 2024, respectively
66,255
64,863
Deferred contract acquisition costs
768
768
Prepaid expenses and other current
assets
14,288
14,461
Total current assets
190,901
195,684
Property and equipment, net of accumulated
depreciation and amortization of $80,377 and $76,859 as of April
30, 2024 and January 31, 2024, respectively
22,112
16,902
Capitalized internal-use software, net of
accumulated amortization of $48,048 and $45,769 as of April 30,
2024 and January 31, 2024, respectively
48,248
46,139
Operating lease right-of-use assets
857
266
Deferred contract acquisition costs
794
986
Intangible assets, net of accumulated
amortization of $5,796 and $4,925 as of April 30, 2024 and January
31, 2024, respectively
30,754
31,625
Goodwill
75,845
75,845
Other assets
2,575
2,879
Total Assets
$
372,086
$
370,326
Liabilities and Stockholders’
Equity
Current:
Settlement obligations
$
30,063
$
28,072
Current portion of finance lease
liabilities and other debt
7,745
6,056
Current portion of operating lease
liabilities
558
393
Accounts payable
6,684
8,480
Accrued expenses
33,227
37,130
Deferred revenue
24,075
24,113
Other current liabilities
5,930
5,875
Total current liabilities
108,282
110,119
Long-term finance lease liabilities and
other debt
8,690
5,400
Operating lease liabilities,
non-current
512
134
Long-term deferred revenue
79
97
Long-term deferred tax liabilities
333
270
Other long-term liabilities
1,448
2,857
Total Liabilities
119,344
118,877
Commitments and contingencies
Stockholders’ Equity:
Preferred stock, undesignated, $0.01 par
value—$20,000,000 shares authorized as of both April 30, 2024 and
January 31, 2024; no shares issued or outstanding as of both April
30, 2024 and January 31, 2024
—
—
Common stock, $0.01 par value -
500,000,000 shares authorized as of both April 30, 2024 and January
31, 2024; 58,711,456 and 57,709,762 shares issued as of April 30,
2024 and January 31, 2024, respectively
587
577
Additional paid-in capital
1,060,365
1,039,361
Accumulated deficit
(762,691
)
(742,969
)
Accumulated other comprehensive income
1
—
Treasury stock, at cost, 1,355,169 shares
as of both April 30, 2024 and January 31, 2024
(45,520
)
(45,520
)
Total Stockholders’ Equity
252,742
251,449
Total Liabilities and Stockholders’
Equity
$
372,086
$
370,326
Phreesia, Inc.
Consolidated Statements of
Operations
(Unaudited)
(in thousands, except share and
per share data)
Three months ended
April 30,
2024
2023
Revenue:
Subscription and related services
$
46,742
$
37,887
Payment processing fees
27,060
24,253
Network solutions
27,415
21,705
Total revenues
101,217
83,845
Expenses:
Cost of revenue (excluding depreciation
and amortization)
15,723
14,907
Payment processing expense
18,297
16,090
Sales and marketing
32,011
37,413
Research and development
28,881
26,469
General and administrative
19,052
19,877
Depreciation
3,524
4,504
Amortization
3,149
2,486
Total expenses
120,637
121,746
Operating loss
(19,420
)
(37,901
)
Other expense, net
(31
)
(42
)
Interest income, net
239
718
Total other income, net
208
676
Loss before provision for income
taxes
(19,212
)
(37,225
)
Provision for income taxes
(510
)
(306
)
Net loss
$
(19,722
)
$
(37,531
)
Net loss per share attributable to
common stockholders, basic and diluted
$
(0.35
)
$
(0.70
)
Weighted-average common shares
outstanding, basic and diluted
56,666,311
53,347,709
(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
Comprehensive Loss
(Unaudited)
(in thousands)
Three months ended
April 30,
2024
2023
Net loss
$
(19,722
)
$
(37,531
)
Other comprehensive income, net of
tax:
Change in foreign currency translation
adjustments, net of tax
1
—
Other comprehensive income, net of
tax
1
—
Comprehensive loss
$
(19,721
)
$
(37,531
)
Phreesia, Inc.
Consolidated Statements of
Cash Flows
(Unaudited)
(in thousands)
Three months ended
April 30,
2024
2023
Operating activities:
Net loss
$
(19,722
)
$
(37,531
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
6,673
6,990
Stock-based compensation expense
16,840
17,138
Amortization of deferred financing costs
and debt discount
61
85
Cost of Phreesia hardware purchased by
customers
343
416
Deferred contract acquisition costs
amortization
192
340
Non-cash operating lease expense
173
233
Deferred taxes
63
217
Changes in operating assets and
liabilities:
Accounts receivable
(1,393
)
(1,538
)
Prepaid expenses and other assets
414
1,152
Accounts payable
(2,936
)
(2,983
)
Accrued expenses and other liabilities
(1,155
)
1,822
Lease liabilities
(219
)
(247
)
Deferred revenue
(55
)
247
Net cash used in operating
activities
(721
)
(13,659
)
Investing activities:
Capitalized internal-use software
(4,570
)
(4,732
)
Purchases of property and equipment
(876
)
(1,347
)
Net cash used in investing
activities
(5,446
)
(6,079
)
Financing activities:
Proceeds from issuance of common stock
upon exercise of stock options
347
249
Treasury stock to satisfy tax withholdings
on stock compensation awards
—
(6,950
)
Proceeds from employee stock purchase
plan
913
967
Finance lease payments
(1,280
)
(1,444
)
Principal payments on financing
agreements
(289
)
—
Debt issuance costs and loan facility fee
payments
(152
)
—
Financing payments of acquisition-related
liabilities
(1,364
)
—
Net cash used in financing
activities
(1,825
)
(7,178
)
Effect of exchange rate changes on cash
and cash equivalents
(1
)
—
Net decrease in cash and cash
equivalents
(7,993
)
(26,916
)
Cash and cash equivalents – beginning
of period
87,520
176,683
Cash and cash equivalents – end of
period
$
79,527
$
149,767
Supplemental information of non-cash
investing and financing information:
Right of use assets acquired in exchange
for operating lease liabilities
$
764
$
—
Property and equipment acquisitions
through finance leases
$
6,529
$
7,067
Purchase of property and equipment and
capitalized software included in current liabilities
$
2,440
$
3,485
Capitalized stock-based compensation
$
348
$
337
Issuance of stock to settle liabilities
for stock-based compensation
$
6,177
$
5,297
Cash paid for:
Interest
$
483
$
58
Income taxes
$
1,593
$
40
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, net,
provision for income taxes, depreciation and amortization, and
before stock-based compensation expense and other expense, 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, 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
April 30,
(in thousands)
2024
2023
Net loss
$
(19,722
)
$
(37,531
)
Interest income, net
(239
)
(718
)
Provision for income taxes
510
306
Depreciation and amortization
6,673
6,990
Stock-based compensation expense
16,840
17,138
Other expense, net
31
42
Adjusted EBITDA
$
4,093
$
(13,773
)
Phreesia, Inc.
Reconciliation of GAAP and
Adjusted Operating Expenses
(Unaudited)
Three months ended
April 30,
(in thousands)
2024
2023
GAAP operating expenses
General and administrative
$
19,052
$
19,877
Sales and marketing
32,011
37,413
Research and development
28,881
26,469
Cost of revenue (excluding depreciation
and amortization)
15,723
14,907
$
95,667
$
98,666
Stock compensation included in GAAP
operating expenses
General and administrative
$
6,209
$
5,878
Sales and marketing
5,766
6,417
Research and development
3,627
3,878
Cost of revenue (excluding depreciation
and amortization)
1,238
965
$
16,840
$
17,138
Adjusted operating expenses
General and administrative
$
12,843
$
13,999
Sales and marketing
26,245
30,996
Research and development
25,254
22,591
Cost of revenue (excluding depreciation
and amortization)
14,485
13,942
$
78,827
$
81,528
Phreesia, Inc.
Key Metrics
(Unaudited)
Three months ended
April 30,
2024
2023
Key Metrics:
Average number of healthcare services
clients ("AHSCs")
4,065
3,309
Healthcare services revenue per AHSC
$
18,243
$
18,779
Total revenue per AHSC
$
24,900
$
25,338
We remain focused on building secure and reliable products that
derive a strong return on investment for our clients and
implementing them with speed and ease. This strategy continues to
enable us to grow our network of healthcare services clients. The
investments we make to grow, strengthen and sustain our network of
healthcare services clients lead to growth in all of our revenue
categories.
The definitions of our key metrics are presented below.
- AHSCs. We define AHSCs as the average number of clients that
generate subscription and related services or payment processing
revenue each month during the applicable period. In cases where we
act as a subcontractor providing white-label services to our
partner's clients, we treat the contractual relationship as a
single healthcare services client. We believe growth in AHSCs is a
key indicator of the performance of our business and depends, in
part, on our ability to successfully develop and market our
solutions to healthcare services organizations that are not yet
clients. While growth in AHSCs is an important indicator of
expected revenue growth, it also informs our management of the
areas of our business that will require further investment to
support expected future AHSC growth. For example, as AHSCs
increase, we may need to add to our customer support team and
invest to maintain effectiveness and performance of our solutions
for our healthcare services clients and their patients.
- Healthcare services revenue per AHSC. We define Healthcare
services revenue as the sum of subscription and related services
revenue and payment processing revenue. We define Healthcare
services revenue per AHSC as Healthcare services revenue in a given
period divided by AHSCs during that same period. We are focused on
continually delivering value to our healthcare services clients and
believe that our ability to increase Healthcare services revenue
per AHSC is an indicator of the long-term value of our
solutions.
- Total revenue per AHSC. We define Total revenue per AHSC as
Total revenue in a given period divided by AHSCs during that same
period. Our healthcare services clients directly generate
subscription and related services and payment processing revenue.
Additionally, our relationships with healthcare services clients
who subscribe to our solutions give us the opportunity to engage
with life sciences companies, health plans and other payer
organizations, patient advocacy, public interest and other
not-for-profit organizations who deliver direct communication to
patients through our solutions. As a result, we believe that our
ability to increase Total revenue per AHSC is an indicator of the
long-term value of our solutions.
Additional Information
(Unaudited)
Three months ended
April 30,
2024
2023
Patient payment volume (in millions)
$
1,166
$
1,016
Payment facilitator volume percentage
81 %
82 %
- Patient payment volume. We believe that patient payment volume
is an indicator of both the underlying health of our healthcare
services clients’ businesses and the continuing shift of healthcare
costs to patients. We measure patient payment volume as the total
dollar volume of transactions between our healthcare services
clients and their patients utilizing our payment platform,
including via credit and debit cards that we process as a payment
facilitator as well as cash and check payments and credit and debit
transactions for which we act as a gateway to other payment
processors.
- Payment facilitator volume percentage. We define payment
facilitator volume percentage as the volume of credit and debit
card patient payment volume that we process as a payment
facilitator as a percentage of total patient payment volume.
Payment facilitator volume is a major driver of our payment
processing revenue. Our payment facilitator volume percentage could
decline slightly over time should we increase our penetration of
enterprise customers that are less likely to use Phreesia as a
payment facilitator.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240530581595/en/
Investor Relations Contact: Balaji Gandhi Phreesia, Inc.
investors@phreesia.com (929) 506-4950
Media Contact: Nicole Gist Phreesia, Inc.
nicole.gist@phreesia.com (407) 760-6274
Phreesia (NYSE:PHR)
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