Phreesia, Inc. Q4 FY2025 earnings call

• Phreesia celebrated 20 years of operation, founded by Evan and Chaim Indig. • Introduced new products over the past several quarters to improve patient and provider experience. • The Phreesia platform was used in approximately 14% of patient visits across the United States, totaling approximately 170 million visits. • Strong fourth quarter results with revenue growth, improving cash flow, and continued operating leverage across the company.

In the fourth quarter, Phreesia reported Q4 revenue of $109.7 million, up 15% year-over-year. Adjusted EBITDA was $16.4 million, a year-over-year increase of $19.9 million with an adjusted EBITDA margin of 15%. The average health care services clients reached 4,341, an increase of 104 from the prior quarter and 379 from the prior year. Total revenue per AHSC was $25,266, up 5% year-over-year. Operating cash flow was positive $16.3 million, up $19.3 million year-over-year, and free cash flow was positive at $9.2 million, up $20.1 million year-over-year. Cash was $84.2 million on January 31, up $2.5 million from October 31, 2024.

• Fiscal 2026 revenue outlook ranges from $400 million to $482 million. • EBITDA outlook for fiscal 2026 remains at a range of $78 million to $88 million. • Maintains outlook on AHSC and expects revenue per AHSC to increase in fiscal 2026 compared to fiscal 2025.

• Forward-looking statements subject to various risks, uncertainties, and factors in SEC filings. • Calendar and weather can impact business, such as earlier Christmas timing and regional events like L.A. fires affecting comps. • Macro factors like Medicaid, enhanced subsidies, and physician payment rates may impact the business.

Q: Great. Congratulations on 20 years, what an accomplishment. So your gross margin once again saw some really nice expansion. And I know gross margin was kind of the first leg of the leverage story, but you're already seeing this really nice leverage on your other expense line. As we think about gross margin moving forward, how much more room is there for expansion? And then just how should we be thinking about the contribution it should have to overall leverage?

A: Yes. Anne, thanks. The -- on gross margin, I think we've talked about this in the past. -- mix at this point is one of the biggest drivers of that. And as you know, processing is associated with lower margins and [indiscernible] is slower. So I think just the growth expectations are higher and the other 2 revenue lines would contribute to some gross margin. I don't think there's anything really else to call out in terms of that being a driver of operating leverage might be better in some quarters than others.

Q: I was hoping that maybe you could talk to us a little bit about postscript engagement. How does the product work, what data informs the product maybe what does the patience? And is payment kind of contingency based? Or is it based on whether the patient picks up the prescription or is it based on impression-based.

A: Yes. Okay. There’s a lot in there. I think to answer the last part of that question, you should think about it as impression-based. It’s similar to the other campaigns that we run, Jess? And so if you think about it, we’re leveraging a lot of the data that we have in our platform to be able to remind you about a prescription that was filled. And so that’s very valuable to our clients. And that’s sort of – that’s what really drives the product and the value of the customers. But it's both to the life sciences clients, but also to the providers and the patients as well.

Q: This is Jailendra Singh from Triust Securities. So I want to ask about the total revenue per AHSC metric, nice growth of 5% year-over-year, 7% if you exclude the clearinghouse impact, but it was flat sequentially. How meaningful was the impact of Q4 from the way calendar paid out in terms of business days in terms of how holidays plays out in terms of year-over-year trends in Q4. And as we think about '26, clearly, we have one less day in fiscal Q1, but anything else we should keep in mind in terms of that quarterly progression of that metric?

A: No. Great questions there, Jailendra. As I think you picked up on the fact that the way the calendar falls and weather really wind up being pretty big factors in our business. And so one thing about the fourth quarter that we point out is Christmas fell earlier in the week, right on top of a weekend last year in the comp period, whereas in the middle of the week, this season. So there were sort of a harder comp tougher comp for us. We also had the L.A. fires and that was obviously very unfortunate and have some clients in that region. And then even just on a comp basis, the year-over-year and the weather in the Northeast and in the Southeast was also pretty challenging in January. And I think as we've talked about, these are things we're used to. And when we think about modeling internally and sharing our views externally, we try to build those in and shout out to our FP&A team who does a very good job of staying on top of that. So that was largely baked into our expectations for the year, Jailendra, and I think you brought up a good point, which is, yes, it was a leap year in '24, a leap year in '25. I think you could probably spend some time looking at how the calendar falls and Mondays and Fridays are interesting things to look at year-over-year. But in the fourth quarter, there was a little bit of a tougher comp for us than last year.