Release Date: September 04, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Phreesia Inc (PHR, Financial) achieved positive free cash flow for the first time as a public company.
- Q2 revenue was $102.1 million, up 19% year over year.
- Adjusted EBITDA was $6.5 million, up $18 million year over year.
- Operating cash flow was positive at $11.1 million, up $20.4 million year over year.
- Phreesia Inc (PHR) is maintaining its revenue outlook for fiscal year 2025 at a range of $416 million to $426 million.
Negative Points
- Total revenue per healthcare services client (HSC) was $24,494, down 2% year over year.
- Q2 fiscal 2025 total revenue per HSC was flat year over year when compared to Q2 fiscal 2020.
- Sales and marketing expenses have been high, although they have trended down from a peak of $40 million to $30 million.
- The company faces variability in revenue from its Network Solutions segment, which adds uncertainty to financial projections.
- Phreesia Inc (PHR) has not provided specific guidance on the impact of new integrations and partnerships, such as with Meditech and Oracle EHR.
Q & A Highlights
Phreesia Inc (PHR) Q2 2025 Earnings Call Highlights
Q: Can you discuss the drivers of revenue growth per provider client and the key factors behind the significant inflection expected?
A: Chaim Indig, CEO: The pipeline has been as large in the first half of fiscal 2025 as it was in the first half of 2024, with win rates remaining consistent. The total value of transactions has increased by about 20% year-over-year, indicating strong growth potential.
Q: Could you provide more color on the patient bill pay products and how they differ from current transaction methods?
A: Chaim Indig, CEO: The patient bill pay product leverages card-on-file technology, offering a significantly better experience by simplifying the payment process. Initial client response has been very positive.
Q: Is the current level of sales and marketing spend sustainable, or should we expect it to increase?
A: Balaji Gandhi, CFO: The sales and marketing spend has been stable around $31-32 million for 11 quarters. We expect to continue getting leverage out of this number, supporting a larger organization revenue-wise.
Q: Will Meditech be a reseller of Phreesia products, and when will the full product integration be available?
A: Chaim Indig, CEO: Meditech will resell a small piece of our technology. The full integration will roll out continuously over the coming years, with current integrations already in place.
Q: What is driving the confidence in the fiscal 2026 targets for average revenue per HSC?
A: Chaim Indig, CEO: The broader suite of solutions and intentional business strategies put in place over the past two years are now yielding results. The pipeline size and deal values have increased, providing a solid foundation for future growth.
Q: Can you provide more details on the PAM renewal and its importance?
A: Chaim Indig, CEO: The patient activation measure (PAM) is crucial, especially in nephrology, where it is required by the Centers for Medicare and Medicaid Innovation. The renewal allows for integration into new models, enhancing product stickiness and client value.
Q: How much visibility do you have on provider adds for fiscal 2026?
A: Chaim Indig, CEO: We have significant visibility, especially in the provider space, with about 90% visibility entering the year. Most variability lies in Network Solutions, which we monitor closely.
Q: What are the key factors behind the EBITDA outperformance and guidance raise for this fiscal year?
A: Chaim Indig, CEO: The outperformance is due to focused efforts on cost efficiencies and leveraging growth opportunities. The company continuously seeks ways to be more efficient while investing in long-term growth.
Q: What is the current SDR count, and any guidance on this metric by the end of the fiscal year?
A: Balaji Gandhi, CFO: The sales and marketing organization includes about 500 people, with a spend of over $120 million. The focus is on overall sales and marketing efficiency rather than specific SDR counts.
Q: How do you view industry penetration rates for automated solutions, and have you seen any changes in the competitive landscape?
A: Chaim Indig, CEO: The company continues to invest in product development and diversification, which helps win more deals. The competitive landscape includes venture-backed and private equity-backed businesses, but Phreesia's continuous investment in product gives it a competitive edge.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
