Phreesia's Thriving Q3 Performance: Key Financial Highlights

Phreesia Reports Third Quarter Financial Results

As a fully remote company, Phreesia, Inc. has made significant strides in delivering robust financial results for its fiscal third quarter, highlighting its growth and future potential. Despite various challenges in the healthcare industry, Phreesia has managed to increase its total revenue to $106.8 million, reflecting a noteworthy 17% rise compared to the previous year.

CEO Insights

CEO and Co-Founder Chaim Indig expressed optimism about the Company’s trajectory. He noted, "We are thrilled about our future here at Phreesia. Our network is expanding, and we are witnessing a surge in the adoption of our offerings. Additionally, we are starting to see the benefits of our new solutions that we are investing in." Indig’s statements resonate with the Company’s continuous improvement strategy and commitment to enhancing patient engagement.

Key Highlights from the Q3 Report

Several vital metrics emerged from the report reflecting the Company’s overall health and operational success:

• The average number of healthcare services clients (AHSCs) reached 4,237, up 15% year-over-year.
• Total revenue per AHSC showed modest growth, amounting to $25,207, while healthcare services revenue per AHSC saw a slight decrease, settling at $17,481.
• The net loss for the quarter was reported at $14.4 million, a significant reduction from the $31.9 million loss seen in the same quarter last year.
• Notably, Adjusted EBITDA was $9.8 million, showcasing a strong turnaround from the previous negative figure.
• Lastly, net cash provided by operating activities was recorded at $5.8 million, exemplifying a shift from previous operational deficits.

Adjustments for Fiscal 2025 Outlook

The Company has narrowed its revenue outlook for fiscal 2025 to between $418 million and $420 million, previously anticipating a range of $416 million to $426 million. The revised forecast indicates an expected year-over-year growth rate of 17% to 18%, which reflects growing confidence in its business model.

Additionally, Phreesia has updated its Adjusted EBITDA outlook for fiscal 2025 to a target range of $34 million to $36 million, up from the previous $26 million to $31 million forecast. This revision demonstrates the company’s ongoing focus on margin enhancements and operational efficiency.

Looking Towards Fiscal Year 2026

As part of its long-term strategy, Phreesia has set a goal to achieve revenue between $472 million and $482 million in fiscal 2026. This guidance is given with the understanding that there will be no contributions from potential future acquisitions completed prior to the end of that fiscal year.

To further fortify its financial position, Phreesia expects to see AHSCs rise to about 4,500 in fiscal 2026. The company remains committed to increasing total revenue per AHSC in alignment with its operational growth.

Cash Management and Flexibility

Phreesia's current cash and cash equivalents stand at $81.7 million, down from $87.5 million at the beginning of the fiscal year. The company has highlighted this cash position as crucial for supporting its planned growth and for maintaining flexibility across its operational and strategic initiatives. Furthermore, Phreesia has access to additional capital through its agreements, which enables it to seize new growth prospects.

Understanding Non-GAAP Measures

Phreesia often references non-GAAP measures like Adjusted EBITDA and Free Cash Flow to better illustrate the company's health. Adjusted EBITDA is defined as net loss before interest income, income tax provisions, and other specified expenses. Free Cash Flow is calculated as net cash provided by operating activities, less capitalized software development and property purchases—this metric underscores the cash available for strategic initiatives in growth, acquisitions, or investments.

Frequently Asked Questions

1. What are the key financial highlights reported by Phreesia?

In Q3, Phreesia reported $106.8 million in revenue, a 17% increase year-over-year, and significantly reduced its net loss to $14.4 million.

2. How does Adjusted EBITDA reflect Phreesia's operational performance?

Adjusted EBITDA of $9.8 million indicates a strong operational turnaround and focuses on core profitability while excluding non-cash charges.

3. What is Phreesia's revenue outlook for fiscal 2025?

The revenue forecast for fiscal 2025 is now set between $418 million and $420 million, reflecting expected growth in the healthcare sector.

4. How is Free Cash Flow defined by Phreesia?

Free Cash Flow is defined as net cash provided by operating activities, less capital expenditures, highlighting cash available for strategic investments.

5. What is the expectation for AHSC growth in the coming years?

Phreesia expects to increase its number of healthcare services clients to approximately 4,500 by fiscal year 2026.

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