Phreesia, Inc. (NYSE:PHR) Q4 2022 Earnings Conference Call March 30, 2022 5:00 PM ET Company Participants Balaji Gandhi - SVP, IR Chaim Indig - CEO and Co-Founder Randy Rasmussen - CFO Conference Call Participants Anne Samuel - JPMorgan Thomas Kelliher - RBC Capital Markets Jessica Tassan - Piper Sandler Richard Close - Canaccord Genuity Daniel Grosslight - Citigroup John Ransom - Raymond James Joy Zhang - SVB Leerink Glen Santangelo - Jefferies Ryan MacDonald - Needham & Company Joe Vruwink - Robert ...

Part I [Item 1. Business](index=7&type=section&id=Item%201.%20Business) Phreesia offers a SaaS platform for healthcare organizations, enhancing patient access, payments, and clinical support, with growth driven by client expansion, innovation, and strategic acquisitions [Overview](index=7&type=section&id=Item%201.%20Business%23Overview) Phreesia's SaaS platform optimizes healthcare operations and patient engagement, serving over 2,000 clients and processing nearly $2.8 billion in payments in fiscal 2022 - Phreesia's SaaS platform offers integrated solutions for patient access, registration, payments, and clinical support to healthcare organizations[28](index=28&type=chunk) - In fiscal 2022, the platform facilitated visits for over **2,000 healthcare clients** and processed nearly **$2.8 billion** in patient payments, with **79%** of that volume being credit/debit card payments processed as a payment facilitator[28](index=28&type=chunk) - The company has been recognized by KLAS as a market leader for its integration capabilities, broad adoption, and client satisfaction, particularly in its response to the COVID-19 pandemic[29](index=29&type=chunk) [Our Platform and Market Opportunity](index=7&type=section&id=Item%201.%20Business%23Our%20Platform%20and%20Market%20Opportunity) Phreesia's platform provides comprehensive solutions across patient access, revenue cycle, and life sciences, targeting an estimated $9.0 billion addressable market - The Phreesia Platform is a comprehensive suite of solutions covering patient access, registration, revenue cycle, clinical support, and life sciences marketing[32](index=32&type=chunk)[38](index=38&type=chunk) - The company estimates its total addressable market to be approximately **$9.0 billion**[36](index=36&type=chunk) - The market opportunity is derived from potential subscription revenue from **~1.3 million** U.S. healthcare organizations, payment processing fees from **~$93.0 billion** in annual out-of-pocket patient spending, and a portion of the **$6.0 billion** spent by life sciences on direct-to-consumer marketing[36](index=36&type=chunk) [Our Value Proposition and Growth Strategies](index=8&type=section&id=Item%201.%20Business%23Our%20Value%20Proposition%20and%20Growth%20Strategies) Phreesia delivers value to patients, healthcare clients, and life sciences firms, pursuing growth through client expansion, upselling, innovation, and strategic acquisitions - Value Proposition for Healthcare Clients: Aims to improve cash flow, profitability, and clinical outcomes while simplifying operations and enhancing patient experience[40](index=40&type=chunk) - Value Proposition for Life Sciences: Provides a targeted digital channel to activate patients, improve brand conversion, and gather patient feedback[41](index=41&type=chunk) - Growth is pursued through **five key strategies**: expanding to new healthcare organizations, deepening existing client relationships, innovating the platform, opportunistic acquisitions, and enhancing margins via strategic growth[46](index=46&type=chunk) - Recent acquisitions include Insignia Health (December 2021) for its Patient Activation Measure (PAM®), QueueDr (January 2021) for appointment scheduling, and others to expand clinical and patient activation offerings[50](index=50&type=chunk) [Our Products, Services, and Technology](index=11&type=section&id=Item%201.%20Business%23Our%20Products%2C%20Services%2C%20and%20Technology) Phreesia's product suite spans Access, Registration, Revenue Cycle, Clinical Support, and Life Sciences, powered by a scalable, secure SaaS platform integrated with healthcare systems - Product offerings are divided into **five main categories**: Access, Registration, Revenue Cycle, Clinical Support, and Life Sciences[52](index=52&type=chunk)[55](index=55&type=chunk)[57](index=57&type=chunk) - The platform supports COVID-19 workflows, including vaccine management, risk screening, and contactless check-in for in-person and telehealth visits[61](index=61&type=chunk) - The technology platform is a single, unified, multi-tenant system with robust integration capabilities for PM and EHR systems, operating across four co-located data centers and Microsoft Azure and Amazon Web Service environments[61](index=61&type=chunk)[64](index=64&type=chunk) [Sales, Marketing, and Support](index=15&type=section&id=Item%201.%20Business%23Sales%2C%20Marketing%2C%20and%20Support) Phreesia employs a direct sales model with a 3-6 month cycle, supported by dedicated client service teams for onboarding, retention, and technical support - A direct sales organization is used to sell products and services to healthcare services clients and pharmaceutical brands throughout the U.S[66](index=66&type=chunk)[67](index=67&type=chunk) - The average sales cycle varies from **three to six months**, depending on the potential client's size[66](index=66&type=chunk) - Client support is structured around dedicated teams for Client Services (onboarding/implementation), Client Success (retention/expansion), and Client Support (technical issues)[68](index=68&type=chunk)[74](index=74&type=chunk) [Regulatory Matters and Human Capital](index=16&type=section&id=Item%201.%20Business%23Regulatory%20Matters%20and%20Human%20Capital) Phreesia operates under strict healthcare regulations like HIPAA and CCPA, employing 1,701 full-time remote staff as of January 2022, with a focus on diversity and inclusion - Phreesia is subject to extensive healthcare regulations, including HIPAA, where it is classified as a 'business associate', making it directly liable for certain compliance requirements and breach notifications[71](index=71&type=chunk)[72](index=72&type=chunk) - The company must also comply with state privacy laws like the California Consumer Privacy Act (CCPA) and California Privacy Rights Act (CPRA), as well as federal laws like the Telephone Consumer Protection Act (TCPA)[76](index=76&type=chunk)[84](index=84&type=chunk) - As of January 31, 2022, the company had **1,701 full-time employees** (1,146 in the U.S. and 555 internationally) and has operated as a fully remote company since 2020[97](index=97&type=chunk)[101](index=101&type=chunk) - The company is committed to diversity and inclusion, supported by employee resource groups (ERGs), and was added to the Bloomberg Gender Equality Index in January 2022[99](index=99&type=chunk)[100](index=100&type=chunk) [Item 1A. Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) Phreesia faces significant risks including rapid growth management, intense competition, net losses, data security, IP infringement, evolving regulations, third-party reliance, and financial constraints - Business and Industry Risks: Challenges in managing rapid growth, intense competition from niche and large companies including EHR/PM systems, a history of net losses, and the impact of economic disruptions[107](index=107&type=chunk)[110](index=110&type=chunk)[118](index=118&type=chunk) - Data, IP, and Regulatory Risks: Vulnerability to security breaches and privacy concerns, potential IP infringement lawsuits, and navigating a complex web of regulations like HIPAA, CCPA, GDPR, and anti-kickback statutes[127](index=127&type=chunk)[172](index=172&type=chunk)[191](index=191&type=chunk) - Dependence and Financial Risks: Reliance on third-party vendors and payment processors, potential need for additional capital, restrictive debt covenants, and limitations on the use of net operating loss (NOL) carryforwards[224](index=224&type=chunk)[242](index=242&type=chunk)[244](index=244&type=chunk) - A **material weakness** in internal control over financial reporting was previously identified related to segregation of duties and review of manual journal entries, which has since been remediated[133](index=133&type=chunk) [Item 1B. Unresolved Staff Comments](index=49&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - There are no unresolved staff comments[256](index=256&type=chunk) [Item 2. Properties](index=50&type=section&id=Item%202.%20Properties) Phreesia leases its corporate headquarters in Raleigh, NC (16,120 sq ft) and an office in Kanata, Ontario (4,322 sq ft), with both leases expiring in 2023 - The company leases its corporate headquarters in Raleigh, NC (**16,120 sq ft**) and an office in Kanata, Ontario (**4,322 sq ft**)[257](index=257&type=chunk) - Both primary office leases expire in **2023**[257](index=257&type=chunk) [Item 3. Legal Proceedings](index=50&type=section&id=Item%203.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings that would adversely affect its business or financial condition - Phreesia is not presently a party to any material legal proceedings[258](index=258&type=chunk) [Item 4. Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[259](index=259&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=51&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Phreesia's common stock (PHR) trades on the NYSE, with no history or current intent to pay cash dividends, restricted by its credit facility - Common stock (**PHR**) has been trading on the NYSE since **July 18, 2019**[261](index=261&type=chunk) - The company has never declared or paid cash dividends and does not anticipate doing so in the foreseeable future[267](index=267&type=chunk) - As of **March 25, 2022**, there were approximately **49 stockholders of record**[266](index=266&type=chunk) [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=53&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Phreesia's fiscal 2022 revenue grew 43% to $213.2 million, but net loss widened to $118.2 million due to significant growth investments, despite strong liquidity from a follow-on equity offering [Financial Highlights and Recent Developments](index=53&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Financial%20Highlights%20and%20Recent%20Developments) Fiscal 2022 saw Phreesia's revenue grow 43% to $213.2 million, but net loss increased to $118.2 million, alongside strategic acquisitions and an expanded credit facility Financial Highlights | Metric | Fiscal 2022 | Fiscal 2021 | | :--- | :--- | :--- | | Total Revenue (in millions $) | $213.2 | $148.7 | | Net Loss (in millions $) | ($118.2) | ($27.3) | | Adjusted EBITDA (in millions $) | ($59.0) | $3.8 | | Cash used in operating activities (in millions $) | ($74.7) | $2.9 (provided) | - Acquired Insignia Health, LLC for **$37.2 million** in cash in December 2021 to gain its exclusive worldwide license to the Patient Activation Measure (PAM®)[286](index=286&type=chunk) - Acquired QueueDr Inc in January 2021 to enhance appointment solutions for a total consideration including **$5.8 million** in cash[287](index=287&type=chunk)[288](index=288&type=chunk) - In March 2022, increased the borrowing capacity of its Silicon Valley Bank credit facility from **$50.0 million** to **$100.0 million**[289](index=289&type=chunk) [Key Metrics](index=55&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Key%20Metrics) Phreesia's fiscal 2022 key metrics show client growth (21% to 2,074), increased average revenue per client (11% to $77,478), and a 39% rise in patient payment volume to $2.8 billion Key Operational Metrics | Key Metric | FY 2022 | FY 2021 | % Change | | :--- | :--- | :--- | :--- | | Healthcare services clients (average) | 2,074 | 1,711 | 21% | | Average revenue per healthcare services client ($) | $77,478 | $69,499 | 11% | Additional Information | Additional Information | FY 2022 | FY 2021 | % Change | | :--- | :--- | :--- | :--- | | Patient payment volume (in millions $) | $2,769 | $1,997 | 39% | | Payment facilitator volume percentage | 79% | 81% | (2)% | [Results of Operations](index=57&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Results%20of%20Operations) Fiscal 2022 total revenue grew 43% to $213.2 million, but operating expenses surged 89% to $330.1 million, resulting in a widened operating loss of $116.8 million and a net loss of $118.2 million Revenue Stream | Revenue Stream (in thousands $) | FY 2022 | FY 2021 | % Change | | :--- | :--- | :--- | :--- | | Subscription and related services | $95,514 | $69,042 | 38% | | Payment processing fees | $65,201 | $49,900 | 31% | | Life sciences | $52,518 | $29,735 | 77% | | **Total revenue** | **$213,233** | **$148,677** | **43%** | Expense Category | Expense Category (in thousands $) | FY 2022 | FY 2021 | % Change | | :--- | :--- | :--- | :--- | | Cost of revenue (excl. D&A) | $42,669 | $23,461 | 82% | | Payment processing expense | $38,719 | $28,925 | 34% | | Sales and marketing | $106,421 | $42,972 | 148% | | Research and development | $52,265 | $22,622 | 131% | | General and administrative | $68,674 | $40,460 | 70% | | **Operating loss** | **($116,817)** | **($25,671)** | **355%** | - The increase in operating expenses was primarily driven by higher employee compensation costs due to increased headcount and higher pay, as well as increased third-party marketing, advertising, and software costs to support growth[307](index=307&type=chunk)[311](index=311&type=chunk)[313](index=313&type=chunk)[315](index=315&type=chunk) [Non-GAAP Financial Measures](index=61&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Non-GAAP%20Financial%20Measures) Phreesia's fiscal 2022 Adjusted EBITDA was a loss of $59.0 million, and free cash flow was negative $105.5 million, reflecting increased net loss and higher capital expenditures Reconciliation to Adjusted EBITDA | Reconciliation to Adjusted EBITDA (in thousands $) | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net loss | ($118,161) | ($27,292) | | Interest expense (income), net | 1,084 | 1,573 | | Provision for income taxes | 182 | 49 | | Depreciation and amortization | 21,302 | 15,908 | | Stock-based compensation expense | 36,234 | 13,489 | | **Adjusted EBITDA** | **($59,023)** | **$3,797** | Reconciliation to Free Cash Flow | Reconciliation to Free Cash Flow (in thousands $) | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($74,710) | $2,890 | | Less: Capitalized internal-use software | (12,385) | (7,334) | | Less: Purchases of property and equipment | (18,420) | (11,241) | | **Free cash flow** | **($105,515)** | **($15,685)** | [Liquidity and Capital Resources](index=63&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Liquidity%20and%20Capital%20Resources) Phreesia's cash and equivalents rose to $313.8 million by January 2022, primarily from a $245.8 million equity offering, despite $74.7 million cash used in operations, with sufficient liquidity for the next 12 months - Cash and cash equivalents increased to **$313.8 million** as of Jan 31, 2022, from **$218.8 million** a year prior[329](index=329&type=chunk) - Completed a follow-on offering in April 2021, raising net proceeds of **$245.8 million**[329](index=329&type=chunk)[341](index=341&type=chunk) - Net cash used in operating activities was **$74.7 million** in fiscal 2022, compared to **$2.9 million** provided by operating activities in fiscal 2021, driven by higher employee compensation and other operating costs[335](index=335&type=chunk)[337](index=337&type=chunk)[338](index=338&type=chunk) - As of Jan 31, 2022, there were no outstanding borrowings under the revolving line of credit with SVB. In March 2022, the borrowing capacity was increased from **$50.0 million** to **$100.0 million**[331](index=331&type=chunk)[332](index=332&type=chunk) [Critical Accounting Policies and Estimates](index=65&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%23Critical%20Accounting%20Policies%20and%20Estimates) Phreesia's critical accounting policies involve significant estimates in revenue recognition, business combinations, capitalized software, income taxes, and stock-based compensation, particularly regarding performance obligations and asset valuations - Revenue Recognition: Critical judgments include identifying performance obligations, determining standalone selling prices (SSP), estimating variable consideration, and assessing principal versus agent status for payment processing fees, which are recognized on a gross basis[348](index=348&type=chunk)[359](index=359&type=chunk) - Business Combinations: Fair value of acquired assets and liabilities is determined using estimates and third-party appraisers, with methods like relief-from-royalty for licenses and multi-period excess earnings for customer relationships[361](index=361&type=chunk) - Capitalized Internal-Use Software: Costs for developing the Phreesia Platform are capitalized during the development phase and amortized over an estimated useful life of **three to five years**[363](index=363&type=chunk) - Income Taxes: The company has significant net operating loss (NOL) carryforwards of **$332.5 million** as of Jan 31, 2022. A valuation allowance of **$97.3 million** is recorded against deferred tax assets due to uncertainty of their realization[366](index=366&type=chunk)[368](index=368&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures about Market Risk](index=69&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Phreesia's market risks are primarily interest rate (minimal) and foreign currency (Canadian dollar expenses), with no material impact on financial statements to date - Primary market risks are interest rate and foreign currency exchange risk[375](index=375&type=chunk) - Interest rate risk is low due to cash and cash equivalents being held in short-maturity accounts[376](index=376&type=chunk) - Foreign currency risk relates to expenses in Canadian dollars. The company has used forward contracts to mitigate this risk, but none were outstanding at year-end[377](index=377&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=70&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Phreesia's audited consolidated financial statements for fiscal 2022, with KPMG's unqualified opinion and critical audit matters regarding performance obligations and intangible asset valuation [Report of Independent Registered Public Accounting Firm](index=71&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%23Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on Phreesia's financial statements and internal controls, highlighting critical audit matters concerning performance obligations and Insignia acquisition intangible asset valuation - KPMG LLP issued an **unqualified opinion** on the consolidated financial statements and the effectiveness of internal control over financial reporting[383](index=383&type=chunk)[400](index=400&type=chunk) - A **critical audit matter** was the identification of performance obligations for larger enterprise healthcare services contracts due to the varying nature of promises and contract terms[389](index=389&type=chunk)[391](index=391&type=chunk) - A second **critical audit matter** was the evaluation of the acquisition-date fair value of intangible assets from the Insignia acquisition, specifically the PAM License and customer relationships, due to the high degree of subjectivity in assumptions like forecasted revenue, EBITDA margins, and discount rates[394](index=394&type=chunk)[395](index=395&type=chunk) [Consolidated Financial Statements](index=76&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data%23Consolidated%20Financial%20Statements) Phreesia's fiscal 2022 consolidated financial statements show total assets of $494.5 million, a net loss of $118.2 million, and a $95.0 million net increase in cash Consolidated Balance Sheet | Balance Sheet (in thousands $) | Jan 31, 2022 | Jan 31, 2021 | | :--- | :--- | :--- | | Total Assets | $494,476 | $326,666 | | Total Liabilities | $77,196 | $63,360 | | Total Stockholders' Equity | $417,280 | $263,306 | Consolidated Statement of Operations | Statement of Operations (in thousands $) | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Total Revenue | $213,233 | $148,677 | | Operating Loss | ($116,817) | ($25,671) | | Net Loss | ($118,161) | ($27,292) | | Net Loss Per Share | ($2.37) | ($0.69) | Consolidated Statement of Cash Flows | Statement of Cash Flows (in thousands $) | FY 2022 | FY 2021 | | :--- | :--- | :--- | | Cash (used in) provided by Operating Activities | ($74,710) | $2,890 | | Cash used in Investing Activities | ($65,228) | ($25,085) | | Cash provided by Financing Activities | $234,969 | $150,661 | [Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=112&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting principles or financial disclosure - None[596](index=596&type=chunk) [Item 9A. Controls and Procedures](index=112&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of January 31, 2022, following remediation of a prior material weakness - Management concluded that disclosure controls and procedures were effective as of **January 31, 2022**[596](index=596&type=chunk) - A **material weakness** in internal control over financial reporting identified as of January 31, 2021, related to user access and program change controls, was remediated during fiscal year 2022[602](index=602&type=chunk)[603](index=603&type=chunk) - Management concluded that the company maintained effective internal control over financial reporting as of **January 31, 2022**[600](index=600&type=chunk)[604](index=604&type=chunk) Part III [Items 10, 11, 12, 13, and 14](index=115&type=section&id=Items%2010%2C%2011%2C%2012%2C%2013%2C%20and%2014) Information for Items 10-14, covering governance, compensation, and related party disclosures, is incorporated by reference from the forthcoming 2022 proxy statement - Information for Items 10, 11, 12, 13, and 14 is incorporated by reference from the forthcoming 2022 proxy statement[609](index=609&type=chunk)[610](index=610&type=chunk)[611](index=611&type=chunk) Part IV [Item 15. Exhibits, Financial Statement Schedules](index=116&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits filed with the Form 10-K, including financial statements, corporate governance documents, material contracts, and required certifications - This section lists all exhibits filed with the Annual Report on Form 10-K[616](index=616&type=chunk) - Filed exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, employment agreements with key executives, the credit agreement with Silicon Valley Bank, and various required certifications[617](index=617&type=chunk)[618](index=618&type=chunk) [Item 16. Form 10-K Summary](index=118&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable to the company's filing - Not applicable[620](index=620&type=chunk)

Investor Presentation January 2022 DISCLAIMERS AND FORWARD-LOOKING STATEMENTS This presentation includes express or implied statements that are not historical facts and are considered forward- looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Forward-looking statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain projectio ...

Phreesia, Inc. (NYSE:PHR) Q3 2022 Earnings Conference Call December 9, 2021 8:45 AM ET Company Participants Balaji Gandhi - SVP, IR Chaim Indig - CEO and Co-Founder Randy Rasmussen - CFO Conference Call Participants John Ransom - Raymond James Anne Samuel - JPMorgan Richard Close - Canaccord Genuity Glen Santangelo - Jefferies Ryan MacDonald - Needham Donald Hooker - KeyBanc Scott Schoenhaus - Stephens Daniel Grosslight - Citi Operator Good morning, ladies and gentlemen, and welcome to the Phreesia Fiscal T ...

Investor Presentation December 2021 DISCLAIMERS AND FORWARD-LOOKING STATEMENTS This presentation includes express or implied statements that are not historical facts and are considered forward- looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Forward-looking statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain projecti ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-38977 PHREESIA, INC. (Exact name of registrant as specified in its charter) Delaware 20-2275479 (State or o ...

Investor Presentation September 2021 DISCLAIMERS AND FORWARD-LOOKING STATEMENTS This presentation includes express or implied statements that are not historical facts and are considered forward- looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Forward-looking statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain project ...

Phreesia, Inc. (NYSE:PHR) Q2 2022 Earnings Conference Call September 2, 2021 8:30 AM ET Company Participants Balaji Gandhi - Senior Vice President, Investor Relations Chaim Indig - Chief Executive Officer and Co-Founder Randy Rasmussen - Chief Financial Officer Conference Call Participants Anne Samuel - JPMorgan Ryan Daniels - William Blair John Ransom - Raymond James Donald Hooker - KeyBanc Sean Wieland - Piper Sandler Scott Schoenhaus - Stephens Iris Long - Berenberg Joe Goodwin - JMP Securities Richard ...

[PART I — FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=7&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents Phreesia, Inc.'s unaudited consolidated financial statements for the quarter ended July 31, 2021, showing revenue growth, widening net losses, and a substantial cash increase from an April 2021 equity offering [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) The financial statements show total assets growing to **$551.2 million**, driven by a **$221.1 million** increase in cash, with total revenue up **45%** to **$99.3 million**, but net loss widened to **$35.4 million** due to higher operating expenses, offset by **$243.3 million** in financing cash flow Balance Sheet Highlights (in thousands) | Financial Metric | July 31, 2021 (in thousands) | January 31, 2021 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $439,854 | $218,781 | | Total assets | $551,226 | $326,666 | | Total liabilities | $64,662 | $63,360 | | Total Stockholders' Equity | $486,564 | $263,306 | Consolidated Statements of Operations (in thousands) | Income Statement (in thousands) | Three Months Ended July 31, 2021 | Three Months Ended July 31, 2020 | Six Months Ended July 31, 2021 | Six Months Ended July 31, 2020 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $51,007 | $35,009 | $99,298 | $68,405 | | Operating loss | $(23,808) | $(6,310) | $(34,461) | $(11,276) | | Net loss | $(24,393) | $(6,371) | $(35,367) | $(12,483) | | Net loss per share, diluted | $(0.48) | $(0.17) | $(0.73) | $(0.33) | Consolidated Statements of Cash Flows (in thousands) | Cash Flow (in thousands) | Six Months Ended July 31, 2021 | Six Months Ended July 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,202) | $(520) | | Net cash used in investing activities | $(10,053) | $(7,396) | | Net cash provided by financing activities | $243,328 | $1,800 | [Notes to Unaudited Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial items, including a **$245.8 million** net proceeds from an April 2021 equity offering, revenue breakdown by stream, a doubling of stock-based compensation to **$13.1 million**, and details on debt and lease obligations - On April 12, 2021, the company completed a follow-on public offering, issuing 5,175,000 shares of common stock and generating net proceeds of **$245.8 million** after deducting underwriting discounts and expenses[34](index=34&type=chunk) - Revenue is derived from three primary sources: subscription fees from provider customers, payment processing fees based on patient payment volume, and fees from life sciences companies for digital patient engagement[60](index=60&type=chunk) Stock-Based Compensation Expense (in thousands) | Stock-Based Compensation (in thousands) | Six Months Ended July 31, 2021 | Six Months Ended July 31, 2020 | | :--- | :--- | :--- | | RSUs | $10,842 | $4,842 | | Stock options | $1,150 | $1,458 | | PSUs | $1,037 | $0 | | ESPP | $100 | $0 | | **Total** | **$13,129** | **$6,300** | [Item 2. Management's Discussion and Analysis (MD&A)](index=29&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, noting a 45% revenue increase, significant operating expense growth leading to wider net losses and negative Adjusted EBITDA, and a strengthened liquidity position from an equity offering [Overview and Key Metrics](index=29&type=section&id=Overview%20and%20Key%20Metrics) Phreesia provides a SaaS platform for patient intake, payments, and life sciences marketing, tracking performance through key metrics like average provider clients and revenue per client, with patient payment volume significantly increasing to **$1.4 billion** Key Operating Metrics | Key Metric | Six Months Ended July 31, 2021 | Six Months Ended July 31, 2020 | | :--- | :--- | :--- | | Provider clients (average) | 1,945 | 1,650 | | Average revenue per provider client | $39,932 | $34,099 | | Patient payment volume (in millions) | $1,397 | $921 | [Results of Operations](index=35&type=section&id=Results%20of%20Operations) This section details financial results, showing total revenue growth of **46%** for the quarter and **45%** for six months, with Life Sciences revenue up **95%**, but operating expenses, particularly Sales & Marketing (**120%**) and R&D (**107%**), significantly increased, leading to wider operating losses Revenue Growth by Segment (in thousands) | Revenue Growth (Three Months Ended July 31) | 2021 (in thousands) | 2020 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Subscription and related services | $22,885 | $17,129 | 34% | | Payment processing fees | $16,306 | $11,828 | 38% | | Life sciences | $11,816 | $6,052 | 95% | | **Total revenue** | **$51,007** | **$35,009** | **46%** | - Sales and marketing expenses increased by **120%** to **$22.2 million** for the three months ended July 31, 2021, primarily due to a **$10.8 million** increase in compensation and benefits from higher headcount[156](index=156&type=chunk) - Research and development expenses grew **107%** to **$11.4 million** for the quarter, driven by a **$2.4 million** increase in compensation costs and a **$2.8 million** increase in outside services costs to support product development[160](index=160&type=chunk) [Non-GAAP Financial Measures](index=39&type=section&id=Non-GAAP%20Financial%20Measures) The company uses Adjusted EBITDA and Free Cash Flow as non-GAAP measures, with Adjusted EBITDA declining to negative **$11.0 million** and Free Cash Flow to negative **$22.3 million** for the six-month period, reflecting increased operating losses and capital expenditures Adjusted EBITDA Reconciliation (in thousands) | (in thousands) | Three Months Ended July 31, 2021 | Three Months Ended July 31, 2020 | | :--- | :--- | :--- | | Net loss | $(24,393) | $(6,371) | | **Adjusted EBITDA** | **$(11,045)** | **$1,160** | Free Cash Flow Reconciliation (in thousands) | (in thousands) | Six Months Ended July 31, 2021 | Six Months Ended July 31, 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,202) | $(520) | | **Free cash flow** | **$(22,255)** | **$(7,916)** | [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity significantly improved with **$245.8 million** net proceeds from an April 2021 equity offering, resulting in **$439.9 million** cash and equivalents, deemed sufficient to fund operations for at least 12 months - In April 2021, a follow-on offering of common stock resulted in net proceeds of **$245.8 million**, significantly boosting liquidity[184](index=184&type=chunk) - As of July 31, 2021, the company had cash and cash equivalents of **$439.9 million** and no outstanding balance on its **$50.0 million** revolving credit facility[185](index=185&type=chunk)[188](index=188&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=42&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are minimal interest rate exposure and foreign currency risk from Canadian dollar expenses, with no outstanding hedging contracts as of July 31, 2021 - The company is exposed to interest rate risk, but does not believe a **100 basis point** change would have a material effect on operating results[208](index=208&type=chunk) - Foreign currency risk is related to expenses denominated in Canadian dollars. No foreign currency forward contracts were outstanding as of July 31, 2021[209](index=209&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were ineffective due to a material weakness in IT general controls over financial reporting, with remediation efforts ongoing but not yet complete - Management concluded that disclosure controls and procedures were not effective due to a material weakness in internal control over financial reporting[210](index=210&type=chunk) - The material weakness is due to ineffective user access and program change management controls over certain IT systems that support financial reporting processes[213](index=213&type=chunk) - A remediation plan is in progress, which includes hiring more IT personnel and enhancing controls, but the material weakness was not fully remediated as of the end of the quarter[214](index=214&type=chunk) [PART II — OTHER INFORMATION](index=44&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks, including the impact of COVID-19, growth management challenges, internal control weaknesses, historical net losses, intense competition, data privacy concerns, and an evolving regulatory landscape - A material weakness in internal control over financial reporting has been identified, which could lead to material misstatements in financial statements or a failure to meet reporting obligations[227](index=227&type=chunk)[228](index=228&type=chunk) - The company has a history of net losses, including a **$35.4 million** loss for the six months ended July 31, 2021, and may not achieve profitability as it continues to invest heavily in growth[235](index=235&type=chunk) - The company faces intense competition from a fragmented market and could also compete with its own partners, such as EHR and PM solution providers[244](index=244&type=chunk)[245](index=245&type=chunk) - The business is subject to numerous data privacy and security laws, including HIPAA. A security breach could result in significant economic loss, reputational damage, and legal penalties[279](index=279&type=chunk)[282](index=282&type=chunk) - The healthcare regulatory framework is uncertain and evolving, with potential impacts from changes to the ACA and new rules from ONC and CMS regarding data interoperability and information blocking[310](index=310&type=chunk)[311](index=311&type=chunk) [Other Part II Items](index=44&type=section&id=Other%20Part%20II%20Items) This section covers other disclosures, including no material legal proceedings, no unregistered equity sales, no material change in IPO proceeds use, and no defaults on senior securities - The company is not currently subject to any legal proceedings that would have a material impact on its financial condition or results of operations[112](index=112&type=chunk)[219](index=219&type=chunk) - There has been no material change in the planned use of proceeds from the company's initial public offering as described in the final prospectus[369](index=369&type=chunk)

Investor Presentation June 2021 DISCLAIMERS AND FORWARD-LOOKING STATEMENTS This presentation includes express or implied statements that are not historical facts and are considered forward- looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Forward-looking statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain projections ...