Phreesia Q1 2026 Earnings Call Transcript

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Operator

Good morning, ladies and gentlemen, and welcome to the Phreesia First Quarter Fiscal twenty twenty six Earnings Conference Call. This time, all participants are in a listen only mode. We will provide instructions for the question and answer session to follow. First, I would like to introduce Balaji Gandhi, Phreesia's Chief Financial Officer. Mr.

Operator

Gandhi, you may begin.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Thank you, operator. Good morning and welcome to Phreesia's earnings conference call for the first quarter of fiscal twenty twenty six, which ended on 04/30/2025. Joining me on today's call is Chaim Indig, our Chief Executive Officer. A more complete discussion of our results can be found in our earnings press release and in our related Form eight ks submission to the SEC, including our quarterly stakeholder letter, both issued before the markets opened today. These documents are available on the Investor Relations section of our website at ir.freesia.com.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

As a reminder, today's call is being recorded and a replay will be available on our Investor Relations website at ir.freesia.com following the conclusion of the call. During today's call, we may make forward looking statements, including statements regarding trends, our anticipated growth, strategies, predictions about our industry and the anticipated performance of our business, including our outlook regarding future financial results. Forward looking statements are subject to various risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from those described in our forward looking statements. Such risks are described more fully in our earnings press release, our stakeholder letter and our risk factors included in our SEC filings, including in our quarterly report on Form 10 Q that will be filed with the SEC later today. The forward looking statements made on this call will be based on our current views and expectations and speak only as of the date on which the statements are made.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

We undertake no obligation to update and expressly disclaim the obligation to update these forward looking statements to reflect events or circumstances after the date of this call or to reflect new information or the occurrence of unanticipated events. We may also refer to certain financial measures not in accordance with generally accepted accounting principles such as adjusted EBITDA and free cash flows in order to provide additional information to investors. These non GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non GAAP results may be found in our earnings release and stakeholder letter, which were furnished with our Form eight ks filed before the markets opened with the SEC and may also be found on our Investor Relations website at ir.frisia.com. I will now turn the call over to our CEO, Chaim Indig.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

Thank you, Balaji, good morning, everyone. Thank you for joining our first quarter of fiscal twenty twenty six earnings call. I'd like to thank and congratulate all my Phreesia colleagues for a strong start to the fiscal year. Balaji will cover the results and update outlook. First, I'd like to provide a few insights into where we are in our positioning for the future.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

Our focus remains to continuously deliver valuable and scalable products that drive meaningful outcomes for patients and providers. Products such as appointment readiness, post script engagement and enhanced bill pay were developed and introduced with long term value in mind and are already showing measurable impact across the network. AI is being integrated across all aspects of our organization and our current and future products. We believe we are well positioned to continue to grow our network through product led growth. Through our strong balance sheet and growing free cash flow, we are also well positioned to allocate capital in ways that drive long term shareholder value.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

I'll now turn it over to Balaji to review our results and updated outlook.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Thank you, Chaim. Let me begin with a review of our first quarter financial performance and we'll then dive into our outlook for fiscal year twenty twenty six. Revenue was $115,900,000 an increase of 15% year over year. We ended the quarter with average healthcare services clients of 4,411, an increase of 70 from the prior quarter and three forty six from the prior year. Total revenue per average healthcare services clients was $26,283 up 6% year over year and up 4% quarter over quarter.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Moving on to profitability. Adjusted EBITDA was $20,800,000 an increase of 16.7% year over year with an adjusted EBITDA margin of 18%. Now turning to the balance sheet and cash flow. We ended the quarter with $90,900,000 in cash and cash equivalents. This compares to $84,200,000 in the prior quarter.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

We maintained positive operating cash flow and positive free cash flow for the fourth consecutive quarter. Operating cash flow remained positive at $14,900,000 up $15,600,000 year over year. Free cash flow remains positive at $7,500,000 in the quarter, up $13,700,000 year over year. We expect that the magnitude of improvement on a quarter to quarter basis to vary based on specific timing of invoicing and payments, which you can see in the working capital along with capital expenditures. Our first quarter results demonstrate our team's focus on growing our network, expanding our offerings and driving operating leverage.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

As our cash position continues to grow, we will remain opportunistic and flexible in our approach to deploying cash to profitable growth and value enhancing opportunities as they arise. I would like to thank all of my Phreesia teammates for their contributions. Transitioning to our financial outlook for fiscal twenty twenty six. We are maintaining our revenue outlook for the fiscal year twenty twenty six at a range of $472,000,000 to $482,000,000 We are updating our adjusted EBITDA outlook for fiscal year twenty twenty six to a range of $85,000,000 to $90,000,000 from a previous range of $78,000,000 to $88,000,000 That's a $4,500,000 increase from the prior guidance midpoint. The revenue range provided for fiscal twenty twenty six assumes no additional revenue from potential future acquisitions completed between now and 01/31/2026.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

We are reiterating our outlook on AHSCs to reach approximately $4,500 in fiscal twenty twenty six and for total revenue per AHSE to increase in fiscal twenty twenty six compared to fiscal twenty twenty five. Operator, I think we can now open up the lines for the Q and A session.

Operator

We will pause for just a moment to compile the Q and A roster. Your first question comes from Anne Samuel with JPMorgan. Please go ahead.

Anne Samuel
Anne Samuel
Executive Director at J.P. Morgan

Hi, guys. Congrats on terrific quarter. You know, maybe just starting with network solutions, you know, you continue to see really, really nice growth there. And I was hoping maybe you could just speak to what your conversations with customers have been like in the current environment. And is there just any hesitancy around decision making like we've heard from others, you know, realizing that you've been more resilient, I would say, than others, you know, because through some of the prior macro volatility that we've seen.

Anne Samuel
Anne Samuel
Executive Director at J.P. Morgan

So just curious to hear any thoughts on how you're thinking about this line in the current environment. Thanks.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yeah. Annie, thanks for the question. I I think, you know, this is probably something we've talked about the entire time we went public. I mean, it's really just a testament to the team we have. We have a great team from, you know, all aspects of of the life sciences.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

And I think the other thing is if you think about Chaim's opening remarks, us being a product led company, it really does also start with, you know, product development end. And so having those products and then having the, network solutions team that can go out and deliver the product and sell it, is really what's driving that result. So nothing really new to report, but, but, yeah, nice to see those results in the quarter.

Anne Samuel
Anne Samuel
Executive Director at J.P. Morgan

That's really helpful. Thank you.

Operator

Your next question comes from Halandra Singh with Truist Securities. Please go ahead.

Jailendra Singh
Jailendra Singh
Managing Director at Truist Securities

Hi. This is Jalan Rasin from Truist. Thanks, and good morning, everyone. So congrats on a strong quarter. I want to stay on the macro, topic.

Jailendra Singh
Jailendra Singh
Managing Director at Truist Securities

You touched on pharma solutions and network solutions business, but, also, any thoughts on the providers market? I mean, clearly, those guys are also immune to all the recent developments. Keeping that in mind, how have your conversations evolved with these clients over the past couple of months? And are you capturing any incremental uncertainty in your outlook in any ways?

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

So, yeah. And just so I make sure we understand the question, Yolanda, you're you're asking about the provider end market and just how, you know, how the conversations have been? Yeah. Yep. I'll start with, you know, if I'm gonna say anything, Ken.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Again, probably not a whole lot new there. I mean, really, know, driving the product. And I think, you know, Phreesia over you know, over its history has always had, you know, a focus on trying to build and deliver products that are driving a lot of value, and that's usually where, you know, a lot of the conversations are anchored around. I don't think things are, you know, easier or harder. I mean, it's it's always been a competitive market.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

All the, you know, opportunities are competitive for us, and and that continues. But I think, you know, the thing we'd want you to take away is is just the products we have and the value they they bring. And I think you can see in our results that we're still adding a lot of new clients and generating a lot of revenue off of existing ones.

Jailendra Singh
Jailendra Singh
Managing Director at Truist Securities

Thank you.

Operator

Your next question comes from Jessica Toussaint with Piper Sandler. Please go ahead.

Jessica Tassan
Jessica Tassan
Senior Equity Research Analyst at Piper Sandler Companies

Hi, guys. Thanks so much for taking the question. So can you maybe talk about just the visibility that your network solutions customers have into ROI campaign success, how much flexibility they kind of have to titrate up or down campaigns, or maybe switch types of media? Just just interested in, like, what data they have on what time frame and then sort of, you know, what to what degree are they able to amend or modify campaigns, in real time? Thanks.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

Hey, Jess. It's Climb. We get most almost all of our campaigns with life sciences clients have to go through, an MLR process or medical legal review. So and it's like that for everyone in the industry. And then those get submitted with FDA.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

So all of our programs, you know, yes, they they can titrate up and down depending on the different streams, and we run thousands of streams of of different programs throughout a year. And, you know, we pace them based on both the appropriate patient and the needs of the of the pharmaceutical or biotech company or life sciences company that we work with. And often throughout the year, you know, as dollars become available, they'll often titrate them higher. And we're more often than not a platform that is the receiver of dollars throughout the year just because of our very strong ROI and our ability to deliver results and frankly the fact that our scale keeps growing.

Jessica Tassan
Jessica Tassan
Senior Equity Research Analyst at Piper Sandler Companies

Thank you.

Operator

Next question Glad

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

you made me speak. He says I never speak anymore on any these calls.

Operator

Your next question comes from Richard Close with Canaccord Genuity. Please go ahead.

Richard Close
Richard Close
Managing Director at Canaccord Genuity Group

Yes, thanks. Congratulations on a great quarter. Maybe talk a little bit about sales and marketing and the G and A lines. Obviously, great performance there in the first quarter. I was curious if there's anything specific to call out.

Richard Close
Richard Close
Managing Director at Canaccord Genuity Group

And then as we think about the rest of the year, maybe anything to keep in mind as we progress through the remaining quarters?

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yes. Thanks, Richard. I think you were probably one of the people, maybe if you go back three or four years when we made the big upfront investment, Richard, you remember a lot of the sort of math sort of thinking around returns that we would get on all those investments and payback periods and how our view was we could grow into them over time. I think what you're seeing is just that, and I think you're seeing it in the numbers. I think it's a testament again to the team because we made a lot of those upfront investments.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

We've obviously continuously made changes to how the team is composed and how the go to market is and introduced some new products along the way. But I think it really does just go back to getting a really good return on that. I think our revenue and EBITDA adjusted EBITDA outlook for the year, you can back into what the expense trend is going to be. I don't think it's going to be particularly different within any of these line items, sort of flattish.

Richard Close
Richard Close
Managing Director at Canaccord Genuity Group

Okay. Thank you.

Operator

Your next question comes from John Ransom with RJF. Please go ahead.

John Ransom
John Ransom
Managing Director, Director of Healthcare Research at Raymond James Financial

Hey, good morning, everybody. Just wondering as your financial position is getting a little better day by day, Are there any kind of potential capital deployments that might make the bar today that maybe wouldn't have been there a year ago or so? And and also just like, are there any end markets that you think are kind of if we wanna get into this end market, it's more of a buy versus build. Thanks.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yeah. That's that's a good question, John. And, yeah, you did you know, you saw you see the cash balance, continuing to grow now. I think philosophically, you know, if you're if you're talking about inorganic opportunities, nothing's really changed. We evaluate lots of opportunities.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

We do it as a team. There's lots of different people at Phreesia who, you know, bring up different ideas that we evaluate. We've done a few of them, as you've seen over the years. I think, you know, it's all in the through sort of through the lens of, buy, build, or rent. And, so there's things that we do in our business that we rent.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Obviously, you know, we've built a lot, but the acquisitions we've made, it's just of there's an equation you got to run through how long would it take to build it, how much would it cost. And those are the kind of things that we've pursued and will continue to. I think we obviously have more capital to deploy, but that doesn't mean, you know, the way we look at opportunities is gonna be any different. We'll continue to look at them, but, you know, don't feel the need to do anything, differently just because we have more more capital.

John Ransom
John Ransom
Managing Director, Director of Healthcare Research at Raymond James Financial

And if and if

John Ransom
John Ransom
Managing Director, Director of Healthcare Research at Raymond James Financial

you had to go back

John Ransom
John Ransom
Managing Director, Director of Healthcare Research at Raymond James Financial

and look at your acquisitions to date, which one would kind of stand out as a star and which one would say maybe that those did not meet our expectations?

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

You know, it's like a portfolio, John, and and we like them all, but they definitely all have different time horizons and, you know, when we thought they would contribute. So every every you know, you just think about it as a portfolio. Everything is contributing in the way we wanted it to. Obviously, we talked about publicly the last setback we had with the acquisition we did on ConnectOnCall, but it's really our team did a great job getting that restored and back out in the market. So that probably cost us, you know, some time, and that's probably the only one I'd call out.

John Ransom
John Ransom
Managing Director, Director of Healthcare Research at Raymond James Financial

Thank you, sir. I'm so I'm sad that Chaim didn't say anything,

John Ransom
John Ransom
Managing Director, Director of Healthcare Research at Raymond James Financial

but I'll I'll get over it. It's fine.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

Well, I was excited to answer that question. He did a great job.

John Ransom
John Ransom
Managing Director, Director of Healthcare Research at Raymond James Financial

I agree. Thank you.

Operator

Your next question comes from Daniel Grosslight with Citi. Please go ahead.

Daniel Grosslight
Daniel Grosslight
Senior Research Analyst at Citi

Hi, guys. Thanks for taking the question. Congrats on the strong quarter here.

Daniel Grosslight
Daniel Grosslight
Senior Research Analyst at Citi

I wanted to focus on

Daniel Grosslight
Daniel Grosslight
Senior Research Analyst at Citi

the on the pavement segment. You know, volume was particularly strong this quarter. I was curious if the later flu season had any kind of outsized impact this quarter, if there or if there were any other tailwinds this quarter to call out? Thanks.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Probably just well, first thing, Daniel, on that, just repeat what we probably said, you know, the last, you know, multiple calls, which is there's not a lot of, you know, fluctuation from things that are other than weather or just sort of the way the days fall on a calendar based on utilization in an office, you know, the days in the calendar. Those are really it. The one thing that you should be aware of is we did introduce our bill pay product, our patient bill pay product last year. And so that continues to get traction in the market. And the way that works is providers utilizing that product, we believe the way drives to our business is more volume.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

So that we expect that to contribute. I don't think in the first quarter that was anything material to call out.

Operator

Your next question comes from William Jellison with D. A. Davidson. Please go ahead.

William Jellison
Associate VP at D.A. Davidson

Hi. Good morning, and thanks for taking my question. You know, pressing rewind real quick. If if if we look at the fiscal twenty five ten k, it actually showed Phreesia adding, you know, quite a bit of net new talent to the organization last year, most of which was international. As we sit here today, I was wondering if you could help us understand a bit better Phreesia's labor strategy moving forward and how we connect those dots to the kind of expense trajectory we've seen over the last, several quarters.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yeah. William, you may have been newer to the story at that time, but the language in the 10 ks you're referencing was a consolidation really that we did at the very beginning of the fiscal year. We had always had, folks we work with, in India, and we consolidated that as Frisia India. So you saw them drop into the headcount number as a consolidation. Understood.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Thank you.

Operator

Your next question comes from Ryan MacDonald with Needham and Company. Please go ahead.

Ryan Macdonald
Senior Analyst at Needham & Company

Hi. Thanks for taking my questions and congrats on a great quarter. I wanted to get your thoughts on the proposed no handouts for drug advertisements act. It aims to eliminate the tax deduction that pharma companies can claim on direct to consumer advertising. I'm just curious if one of the proposed legislation is coming up in conversations with your pharma customers at all, is it resulting in any sort of incremental review on the ROI that Phreesia would generate if sort of the tax deduction for them is eliminated?

Ryan Macdonald
Senior Analyst at Needham & Company

And do you think that this is troublesome for the business? Or does it create incremental opportunity that maybe pharma companies move from lower ROI direct to consumer channels into Phreesia as you think about later this year and into next year? Thanks.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yes. Thanks, Ryan. Look, as you know, there's always legislation floating around topics like this. Know, there's bills that have been introduced this year, including the one you referred to. There's really nothing new, to update there, and we would, you know, always take the practice of waiting until something happened.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

But I think what's probably more important to your question is just thinking about our platform and the value we bring to clients, which is very differentiated. Our platform delivers personalized health content on principles of privacy and consent. And so we feel really good about that value proposition, And there's really nothing new to report on that for the legislation.

Operator

Your next question comes from Jeff Garro with Stephens. Please go ahead.

Jeff Garro
Managing Director at Stephens Inc

Yes. Good morning, guys, and thanks for taking the question. I want to return to the Network Solutions business and talk about the seasonality of that business. Maybe you could remind us what you typically see from Q4 to Q1 in a year and how that played out this year. And then is there any expectation that the rest of the year Network Solutions revenue plays out at a different seasonality cadence than what you've seen historically?

Jeff Garro
Managing Director at Stephens Inc

Thanks.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yeah. Thanks, Jeff. So I think the first thing, just to make sure we bring up, is the visibility we have into the year is the same as it was last year at this time. I think we wouldn't think about it as seasonality so much as if you think about Haim's answer to an earlier question around value and how we work with our life sciences clients. It's really there's pacing of certain programs that can cause fluctuations month to month or quarter to quarter.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

And I think that's some of what you see, especially as the numbers get bigger for us and the revenue gets a lot larger. But no, nothing really to call out beyond that.

Jeff Garro
Managing Director at Stephens Inc

Understood. Thanks for taking the question.

Operator

Your next question comes from Scott Schoenhaus with KeyBanc. Please go ahead.

Scott Schoenhaus
Scott Schoenhaus
Managing Director at KeyBanc Capital Markets

Close enough. Hi, Balaji. Great quarter. I guess my question I want to steer away from Network Solutions and focusing on subscription. Even if we back out that one time $1,000,000 benefit from the extra services for one client, we get to a pretty healthy 3.5% growth rate on the revenue per provider client stat.

Scott Schoenhaus
Scott Schoenhaus
Managing Director at KeyBanc Capital Markets

And that's the best growth rate we've seen since 2021. Maybe talk about this is either for Chaim or Balaji. Maybe talk about how you're seeing the ramp on your modules. You announced last quarter some modules. You're finally monetizing the Phreesia on the call this year, which you weren't able to do last year.

Scott Schoenhaus
Scott Schoenhaus
Managing Director at KeyBanc Capital Markets

Maybe can you talk about the ramp in the modules and what you're seeing in terms of client traction? Yes.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

I mean, Scott, you see it in the numbers, and I think that's how we've always tried to articulate it. And when you look at the total revenue per client, as you pointed out, it's now started to tick up. It's a reflection of exactly that, all those products that have been introduced causing some lift. There's still expansion happening within base clients as well. And then our focus on net new being clients with where there's more dollars associated with those clients when we land with a shorter payback period.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

So it's really all the above. And I think if you just look at the flow of products, it would be unfair to really call out one. I think in the letters in the last couple of quarters, we've highlighted three products, it's really all those three if you want to ask about new products.

Scott Schoenhaus
Scott Schoenhaus
Managing Director at KeyBanc Capital Markets

Great. Thanks.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yep.

Operator

Your next question comes from Jared Haas with William Blair. Please go ahead.

Jared Haase
Equity Research Associate at William Blair

Hey, Thanks for taking the questions. Maybe we'll circle back to AI.

Jared Haase
Equity Research Associate at William Blair

And I think this has come up on some of

Jared Haase
Equity Research Associate at William Blair

the recent calls as well. But number one, just curious if there's any, I guess, incremental to your thinking about the competitive landscape, especially thinking about the potential for new entrants raising venture capital or things like that. And then I'm also curious, are you seeing any changes in customer behavior around AI? So thinking, you know, is is AI maybe becoming a bigger part of RFP processes, or are you even seeing, you know, incremental dollars or or budget capacity available for AI use cases? Just would love to unpack that a little bit more.

Jared Haase
Equity Research Associate at William Blair

Thanks.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

Yeah. So what I would say is that AI is allowing people to do things that weren't we weren't able to do before, and we're seeing the same thing in our products. So we're seeing AI be input like both change how we run our business, but also in the products we roll out, us to do things that twenty years ago, Amin and I could barely even dream about being able to deploy. And so I think it's giving us a new tool in the toolbox, but clients don't buy AI. Right?

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

What they they buy is solutions to really complex problems. And what we're seeing frankly, I think what we're seeing a lot of is really a derivation to more trusted partner. Right? So I don't I think after sort of the COVID boom, a lot of a lot of provider groups got really burned by smaller VC backed businesses that really pivoted strategies a couple dozen times and often just didn't have the capital to invest appropriately. And we're seeing a lot of those customers really come back to us, and say, we don't really want wanna bet on, you know, a 10 person company that promises us the world.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

But AI is enabling us to do things within the free to platform and across our network that we are very excited for and is driving massive value for our clients, and we think over over a very near term, a return for our investors.

Jared Haase
Equity Research Associate at William Blair

That's really helpful. Thank you.

Operator

Your next question comes from Aaron Kimson with Citizens JMP. Please go ahead.

Aaron Kimson
Vice President at Citizens JMP

Thanks for the question. You disclosed on the subsequent events section of the 10 ks that on March 13, the board approved a share repurchase plan for up to 2,500,000.0 shares of common stock. Can you talk about the motivation for the repurchase authorization, the dynamics, whether it's 10b5-one or you have a higher degree of discretion, and how you're thinking about utilizing repurchases now that you're consistently generating cash? Thanks.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yeah. Thanks, Aaron. And that was right after we reported last, so that is a new event. It

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

really, you

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

should just think about it as being opportunistic. Our share price has been very volatile over the time we've been public. And I think as a cash generating company with a lot of capital, we just thought it was sort of good housekeeping to have that in place to be opportunistic around the ability to do that if there were some real market dislocation, the share price got to a level where we wanted to step in. But I don't think there's anything to read into it in terms of some regular sort of change to how we think about capital allocation.

Aaron Kimson
Vice President at Citizens JMP

That's helpful. Thank you.

Operator

Your next question comes from Gene Mannheimer with Freedom Capital Markets. Please go ahead.

Gene Mannheimer
Managing Director, Senior Research Analyst at Freedom Capital Markets

Thanks. Good morning. Nice quarter, great EBITDA. I wanted to just comment on your improvement in free cash flow last few quarters, really positive. How should we think about cash conversion rates going forward?

Gene Mannheimer
Managing Director, Senior Research Analyst at Freedom Capital Markets

And follow-up is with respect to payment processing revenue, we saw that typical seasonality in Q1 due to more out of pockets. How should we think about the cadence of that revenue for the rest of the year? Would it be similar to prior? Thank you.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yes, Gene. Can you repeat the second question again?

Gene Mannheimer
Managing Director, Senior Research Analyst at Freedom Capital Markets

Yes. Payment processing revenue, we saw a nice seasonal bump up, I guess, due to deductible resets and more out of pockets. That kind of the right cadence to think about the rest of the year? Would it be would it track similar to prior years?

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yes. Okay, great. So on your first question, I think it's a bit of a transitional year with the ramp in cash flow with CapEx not ramping as much. So there's a little bit of distortion there. What I what we can tell you is, if you think about conversion of operating cash flow to free cash flow in fiscal 'twenty six, it should resemble what you saw in the first quarter for the rest of the year.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

I think that conversion starts to as as the operating cash flow, gets higher, there's there's more flow through in fiscal twenty seven. So hopefully, that's helpful. And then on your second question, it's yeah. I mean, there's do look. There's some noise around the pandemic years years.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

And then outside of that, it's there's step up in the beginning of the calendar year, which for us includes one month of our previous fiscal year in January. There's bump there, and then it sort of flattens out if you look at the trend in payments over previous years and that should continue again this year.

Gene Mannheimer
Managing Director, Senior Research Analyst at Freedom Capital Markets

Perfect. Thanks a lot.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yeah.

Operator

Your next question comes from Richard Close with Canaccord Genuity. Please go ahead.

Richard Close
Richard Close
Managing Director at Canaccord Genuity Group

Yes. Thanks for the follow-up. Just on Medifine, it was good to see that get called out here. I'm curious your thoughts in terms of where you think you are in terms of monetizing the offering. And then the visits that you talk about in terms of, you know, the people that click on the ads are, you know, are actually going and visiting, scheduling a visit.

Richard Close
Richard Close
Managing Director at Canaccord Genuity Group

I'm curious, are those scheduled those visits scheduled with like Frisia customers? Or how should we think about that?

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yes. So on the first question, it's think about it as the first inning, Richard. And so I think we have been clear that the Medifine is contributing revenue and additional revenue from when we acquired it, which is nice to see. So it's headed in the right direction, and we've invested some capital into it. But it's still very early.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

And, yeah, I mean, one of the reasons we were excited about the opportunity to acquire it was that with our the size of our network growing, it does enable patients to schedule visits with providers when they find one on the Medify platform.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

People look. It's a it's a problem throughout the country. People need help finding the right type of providers to deliver the right type of care, And we think MediFind is a key solution to that problem across the continuum of care. And the feedback we get from patients and providers has been overwhelmingly strong. And we expect to we think this is a very, very big problem, one where we think we're frankly, we're halfway through the first inning.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

So we we expect to continue to invest in this over the next over the coming years, but it also will become a contributor over the coming years to our business. And I'm sure we'll talk more about it in the coming years.

Richard Close
Richard Close
Managing Director at Canaccord Genuity Group

Great. Thanks.

Operator

Your final question comes from Joe Brouinck with Baird. Please go ahead.

Joe Vruwink
Senior Research Analyst at Baird

Great. Thanks. Not to make too much out of the nonrecurring revenue bump to 1Q, but to the extent you took on some extra work maybe in support of a unique client opportunity, I wanted to ask if the nature of engagements are maybe changing for Phreesia or you start to rethink about supporting customer success. And and really, I guess, the heart of the question is with the type of opportunity that is higher ROI and quicker payback, does that account demand something differently from Phreesia or just generally speaking as part of the the planning and go live event?

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

Yeah. No. Thanks, Joe. And look, I think the way you should read into this is that's actually and it's disclosed in all of our 10 Ks over the years that is the related services component of that revenue line, and it's always been there. I we just think it's good practice when, you know, you you you have a quarter to just call something that like that out to be helpful to people to really unpack what's going on in the business.

Balaji Gandhi
Balaji Gandhi
CFO at Phreesia

But there's no there's not like a shift happening underneath, it's really I mean, again, consistent with just trying to add a lot of value to clients. That was an existing client, and we were able to, you know, get get that done quickly in the quarter. So kudos to the team for moving quickly around that. But nothing to call out. We just again, just trying to be helpful.

Operator

That

Operator

will conclude our question and answer session. And I will now turn the call back over to Hyman Digg for closing remarks.

Chaim Indig
Chaim Indig
Co-Founder, CEO & Director at Phreesia

Thank you, everyone, for joining our Q1 earnings call. I hope everyone is doing well, and we'll see hopefully most of you in the coming months, and we'll talk to you again in about ninety days. Cheers.

Operator

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Executives
Analysts

Key Takeaways

  • Revenue & EBITDA growth: Q1 revenue was $115.9 million, up 15% year-over-year, with adjusted EBITDA of $20.8 million, up 16.7% and an 18% margin.
  • Strong cash generation: Operating cash flow rose to $14.9 million (up $15.6 million yoy) and free cash flow was $7.5 million (up $13.7 million yoy), marking a fourth consecutive quarter of positive FCF and boosting the cash balance to $90.9 million.
  • Raised FY26 guidance: Revenue outlook remains $472–482 million while adjusted EBITDA guidance was increased to $85–90 million, a $4.5 million midpoint boost, assuming no contribution from future acquisitions.
  • Management emphasized that product-led growth—supported by AI integrations across offerings like appointment readiness, post-script engagement and enhanced bill pay—continues to drive network expansion despite a competitive and uncertain macro environment.
  • The board approved a share repurchase authorization for up to 2.5 million shares to enable opportunistic buybacks amid stock price volatility.
AI Generated. May Contain Errors.
Earnings Conference Call
Phreesia Q1 2026
00:00 / 00:00

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