Phreesia — Second Quarter Fiscal 2027 Earnings Summary

Financial Performance

• Total revenue for the quarter ended July 31, 2026, was $129.5 million, representing a 10% year-over-year increase.
• Net income was $1.9 million, compared to $0.7 million in the same period of the prior year.
• Adjusted EBITDA was $32.9 million, up from $22.1 million in the prior year period.
• Net cash provided by operating activities was $18.3 million, compared to $14.8 million in the prior year.
• Free cash flow was $13.8 million, compared to $9.6 million in the prior year.
• Cash, cash equivalents, and restricted cash totaled $74.6 million as of July 31, 2026, an increase of $0.8 million from January 31, 2026.
• Debt principal was reduced by over $23 million during the quarter.
• Borrowings outstanding under the credit facility with Capital One were $61 million as of July 31, 2026.
• Average number of healthcare services clients (AHSCs) was 4,744, up 6% year-over-year.
• Total revenue per AHSC was $27,289, up 4% year-over-year.
• GAAP operating expenses for the quarter were $87.9 million, down from $91.1 million in the prior year.
• Stock-based compensation expense included in GAAP operating expenses was $11.9 million for the quarter, down from $16.2 million in the prior year.
• Other items affecting comparability included in GAAP operating expenses were $3.4 million for the quarter, consisting of $0.7 million in acquisition-related costs and $2.8 million in restructuring costs.

Guidance and Future Outlook

• Fiscal 2027 revenue is expected to be in the range of $510 million to $520 million.
• Fiscal 2027 Adjusted EBITDA is expected to be in the range of $125 million to $135 million.
• The revenue outlook assumes approximately $37 million of contribution from AccessOne and no additional revenue from potential future acquisitions completed before January 31, 2027.
• AHSC growth is expected to be in the mid-single-digit percentage range for fiscal 2027.
• Total revenue per AHSC is expected to grow in the low-single-digit percentage range for fiscal 2027.
• Management expects cash, cash equivalents, restricted cash, and cash generated from normal operations to be sufficient to meet obligations for at least the next twelve months.
• Visibility into network solutions revenue forecasting is noted to have increased variability, particularly in the second half of the fiscal year.

Business Segments and Product Lines

• Subscription and related services revenue was $52.7 million for the quarter.
• Payment solutions revenue was $38.5 million for the quarter.
• Network solutions revenue was $38.3 million for the quarter.
• Management identified AccessOne and ProviderConnect as two products expected to drive future growth.
• Artificial intelligence (AI) investments are beginning to impact various aspects of products and the broader organization.
• Total managed payments were $1.626 billion for the quarter, with a payment solutions revenue rate of 2.4%.

Market and Competitive Landscape

• Phreesia enabled more than 180 million patient visits in 2025, representing 1 in 6 visits across the U.S.
• The company operates as a leader in patient activation, serving healthcare providers, life sciences companies, and other organizations.

Risks and Challenges

• Risks include the ability to effectively manage growth and meet growth objectives.
• Potential challenges involve integrating operations or realizing synergies from the AccessOne Acquisition.
• Risks include compliance with covenants in the credit facility with Capital One and the securitization program with PNC Bank.
• Potential impacts from cyberattacks, security incidents, or breaches affecting the platform.
• Risks associated with changes in laws and regulations applicable to the business model.
• Challenges related to the ability to attract, retain, and cross-sell to healthcare services clients.
• Risks regarding the effective operation of a primarily remote workforce and talent retention.
• Potential negative impacts from AI, including security risks, increased regulatory burden, and increased competition.
• General market, political, economic, and business conditions, including U.S. federal government actions, trade issues, and geopolitical instability.

Management Commentary and Tone

• CEO Chaim Indig stated the company delivered a solid fiscal second quarter with revenue growth and profitability expansion in line with expectations.
• Management expressed enthusiasm regarding AccessOne, ProviderConnect, and the impact of AI investments.
• The tone indicates confidence in the company's ability to generate positive operating and free cash flow while reducing debt and maintaining a healthy cash balance.

Other Key Points

• A restructuring plan implemented on May 7, 2026, eliminated approximately 220 positions, with total expected restructuring charges of approximately $10 million.
• Restructuring charges recognized during the second quarter of fiscal 2027 were approximately $2.8 million.
• The restructuring plan is expected to be substantially completed during fiscal year 2027 and result in meaningful annualized run-rate expense savings.
• The AccessOne Acquisition closed on November 12, 2025, leading to the relabeling of "Payment processing fees" to "Payment solutions" and "Payment processing expense" to "Payment solutions expense."
• Total managed payments and payment solutions revenue rate were introduced as new metrics to evaluate the performance of the payment solutions business following the AccessOne Acquisition.
• A conference call to review results was held on September 2, 2026, at 5:00 p.m. Eastern Time.