Agreement and Plan of Merger Preamble [Preamble and Parties Involved](index=1&type=section&id=Preamble) This section introduces the merger agreement between AccessOne Parent Holdings, Inc. and Phreesia, Inc., outlining the merger and its core conditions - The merger involves AccessOne Parent Holdings, Inc. (Company) being acquired by Phreesia, Inc. (Acquiror) through its subsidiary Ace Merger Sub, Inc. (Merger Sub)[11](index=11&type=chunk) - The Company will survive the merger as a wholly-owned subsidiary of Acquiror[12](index=12&type=chunk) - Key conditions for the merger include **Support Agreements** from stockholders (at least 92%), **Requisite Stockholder Approval**, **Restrictive Covenant Agreements**, **Employment Arrangements**, and **Option/Warrant Cancellation Agreements**[12](index=12&type=chunk)[13](index=13&type=chunk) Table of Contents This section provides an organized listing of all chapters and their respective page numbers within the agreement Exhibits This section lists all supplementary documents and forms appended to the main agreement [Form of Support and Joinder Agreement](index=6&type=section&id=Exhibit%20A) This exhibit refers to the standard form for the Support and Joinder Agreement, critical for securing stockholder consent for the merger - Exhibit A is the Form of Support and Joinder Agreement[9](index=9&type=chunk) [Form of Option Cancellation Agreement](index=6&type=section&id=Exhibit%20B) This exhibit outlines the form for the Option Cancellation Agreement, addressing outstanding employee stock options in the merger - Exhibit B is the Form of Option Cancellation Agreement[9](index=9&type=chunk) [Warrant Surrender Agreement](index=6&type=section&id=Exhibit%20C) This exhibit specifies the Warrant Surrender Agreement, detailing terms for warrant surrender and cancellation in the merger - Exhibit C is the Warrant Surrender Agreement[9](index=9&type=chunk) [Form of Certificate of Merger](index=6&type=section&id=Exhibit%20D) This exhibit provides the form for the Certificate of Merger, to be filed with the Delaware Secretary of State to effectuate the merger - Exhibit D is the Form of Certificate of Merger[9](index=9&type=chunk) [Form of Letter of Transmittal](index=6&type=section&id=Exhibit%20E) This exhibit details the form for the Letter of Transmittal, used by stockholders to exchange shares for merger consideration - Exhibit E is the Form of Letter of Transmittal[9](index=9&type=chunk) [Escrow Agreement](index=6&type=section&id=Exhibit%20F) This exhibit refers to the Escrow Agreement, governing escrow funds for merger adjustments and indemnification - Exhibit F is the Escrow Agreement[9](index=9&type=chunk) [Paying Agent Agreement](index=6&type=section&id=Exhibit%20G) This exhibit specifies the Paying Agent Agreement, outlining the paying agent's role in distributing merger consideration to stockholders and warrantholders - Exhibit G is the Paying Agent Agreement[9](index=9&type=chunk) [Form of FIRPTA](index=6&type=section&id=Exhibit%20H) This exhibit provides the form for FIRPTA certification, relevant for tax compliance in the transaction - Exhibit H is the Form of FIRPTA[9](index=9&type=chunk) [Example Calculation of Working Capital](index=6&type=section&id=Exhibit%20I) This exhibit provides an illustrative example for calculating working capital, a component in determining the final merger consideration - Exhibit I provides an example calculation of Working Capital[9](index=9&type=chunk) The Merger This article details merger provisions of the merger agreement [The Merger Mechanics](index=8&type=section&id=1.01.%20The%20Merger) This section details the legal mechanics of the merger, where Merger Sub merges into the Company, which survives as a wholly-owned subsidiary of Acquiror, succeeding to all assets and liabilities upon filing the Certificate of Merger - Merger Sub will merge into the Company, with the Company surviving as a wholly-owned subsidiary of Acquiror[15](index=15&type=chunk) - The merger becomes effective upon filing the Certificate of Merger with the Delaware Secretary of State[16](index=16&type=chunk)[17](index=17&type=chunk) - The Surviving Corporation will succeed to all assets, rights, privileges, powers, franchises, liabilities, restrictions, and duties of both the Company and Merger Sub[17](index=17&type=chunk) [Share Conversion and Consideration](index=9&type=section&id=1.02.%20Conversion%20of%20Preferred%20Shares%20and%20Common%20Shares) At the Effective Time, all outstanding Preferred and Common Shares (excluding treasury and dissenting shares) convert into the right to receive cash consideration, conditional upon the holder executing a Support Agreement and Letter of Transmittal - Each Preferred Share and Common Share (excluding treasury and dissenting shares) will be converted into the right to receive cash from the Acquiror[18](index=18&type=chunk)[19](index=19&type=chunk) - Payment is contingent on the holder executing a Support Agreement and a Letter of Transmittal[18](index=18&type=chunk)[19](index=19&type=chunk) - Shares held by the Company, its Subsidiaries, Acquiror, Merger Sub, or their Affiliates will be canceled without payment[20](index=20&type=chunk) [Payment Procedures and Certificate Exchange](index=9&type=section&id=1.03.%20Payment%3B%20Exchange%20of%20Certificates%3B%20Lost%20Certificates) This section outlines the payment process for merger consideration, including the Paying Agent's role, stockholder requirements for payment, provisions for lost certificates, and the reversion of unclaimed consideration to Acquiror after two years - The Company will deliver Letters of Transmittal and Support Agreements to stockholders, and Option Cancellation Agreements to optionholders, for escrow prior to closing[22](index=22&type=chunk)[23](index=23&type=chunk) - The Paying Agent will facilitate the exchange of cash for Company Shares and warrants, contingent on certificate surrender (if applicable), executed Letter of Transmittal, and Support Agreement[25](index=25&type=chunk) - Unclaimed merger consideration will be returned to Acquiror after **two years** from the Closing Date[27](index=27&type=chunk) [Treatment of Options and Warrants](index=11&type=section&id=1.04.%20Options%20and%20Warrants) All outstanding Options (vested or unvested) will be canceled for a cash payment, conditional on the Optionholder executing an Option Cancellation Agreement within 15 days post-closing, with the Warrant also being surrendered for cash - All outstanding Options (vested or unvested) will be canceled and converted into a cash payment from Acquiror, subject to taxes and execution of an Option Cancellation Agreement within **15 days** post-closing[28](index=28&type=chunk) - Failure to deliver an Option Cancellation Agreement within **15 days** post-closing results in forfeiture of consideration for Options[28](index=28&type=chunk) - The Warrant will be surrendered and canceled for a cash payment as per the Merger Payout Schedule[30](index=30&type=chunk) [Surviving Corporation's Certificate of Incorporation](index=12&type=section&id=1.05.%20Certificate%20of%20Incorporation) At the Effective Time, Merger Sub's Certificate of Incorporation will be amended to "AccessOne Parent Holdings, Inc." and will serve as the Surviving Corporation's Certificate of Incorporation - Merger Sub's certificate of incorporation will be amended to 'AccessOne Parent Holdings, Inc.' and become the Surviving Corporation's certificate[31](index=31&type=chunk) [Surviving Corporation's Bylaws](index=12&type=section&id=1.06.%20Bylaws) At the Effective Time, Merger Sub's Bylaws will be amended to "AccessOne Parent Holdings, Inc." and will then serve as the Surviving Corporation's Bylaws - Merger Sub's bylaws will be amended to 'AccessOne Parent Holdings, Inc.' and become the Surviving Corporation's bylaws[32](index=32&type=chunk) [Leadership of Surviving Corporation](index=12&type=section&id=1.07.%20Directors%20and%20Officers) Upon the Effective Time, the directors and officers of Merger Sub will become the directors and officers of the Surviving Corporation until their successors are duly elected or appointed - Directors and officers of Merger Sub at the Effective Time will become the directors and officers of the Surviving Corporation[33](index=33&type=chunk) [Estimated Closing Merger Consideration](index=12&type=section&id=1.08.%20Calculation%20of%20Closing%20Merger%20Consideration) Five business days before closing, the Company must provide an Estimated Statement detailing the estimated consolidated balance sheet, Closing Merger Consideration, and Merger Payout Schedule, with Acquiror retaining the right to challenge the final calculation - The Company must deliver an Estimated Statement **five business days** prior to closing, detailing the estimated consolidated balance sheet, Closing Merger Consideration, and Merger Payout Schedule[34](index=34&type=chunk) Components of Estimated Closing Merger Consideration | Component | Description | | :---------- | :---------- | | Base Purchase Price | Starting point for calculation | | Estimated Indebtedness | Subtracted from Base Purchase Price | | Estimated Transaction Expenses | Subtracted from Base Purchase Price | | Estimated Working Capital Adjustment | Added/subtracted from Base Purchase Price | | Estimated Closing Cash | Added/subtracted from Base Purchase Price | | Estimated Taxes Payable | Subtracted from Base Purchase Price | - Acquiror's non-comment on the Estimated Statement does not waive its right to challenge the final calculation[35](index=35&type=chunk) [Determination and Adjustment of Final Merger Consideration](index=13&type=section&id=1.09.%20Final%20Closing%20Merger%20Consideration) Within 90 days post-closing, Acquiror delivers a Closing Statement for final merger consideration, subject to Representative's objection and independent accounting firm resolution, with adjustments made from the Adjustment Escrow Fund and treated as tax adjustments - Acquiror will deliver a Closing Statement within **90 days** post-closing, detailing the Final Closing Merger Consideration[36](index=36&type=chunk) - The Representative has **30 days** to object to Disputed Items in the Closing Statement; unresolved disputes are submitted to an independent Accounting Firm[37](index=37&type=chunk)[38](index=38&type=chunk) - Adjustments to the merger consideration (upward or downward) are made from the Adjustment Escrow Fund, with any remaining funds distributed to Equityholders or paid to Acquiror[40

Group 1 - Phreesia Inc. is transforming the way healthcare providers interact with their clients, indicating a significant shift in the healthcare industry [1] - The company is publicly traded on the NYSE under the ticker symbol PHR, highlighting its status as a publicly listed entity [1] Group 2 - Nabeel Bukhari, a law graduate with expertise in corporate law and financial analysis, provides valuable insights into business dynamics, enhancing the understanding of companies like Phreesia [2] - His work has been published in reputable platforms, indicating a strong credibility in financial analysis and industry insights [2]

Core Viewpoint - Phreesia (PHR) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - An increase in earnings estimates typically leads to higher fair value calculations by institutional investors, resulting in buying or selling pressure that affects stock prices [4]. Company Performance and Outlook - The recent upgrade for Phreesia reflects an improvement in its underlying business, suggesting that investors may respond positively by driving the stock price higher [5]. - For the fiscal year ending January 2026, Phreesia is expected to earn -$0.17 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 41.5% over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with only the top 20% receiving a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [9][10]. - Phreesia's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Company Overview - Phreesia is a leading provider of comprehensive solutions that transform the healthcare experience by engaging patients in their care[8] - The company operates a SaaS platform to manage patient intake and offers an integrated patient payments solution[8] - Phreesia processed $1.4 billion in patient payments in FY19[8] - The company serves approximately 1,600 healthcare provider organizations[8, 22] Financial Performance and Market Opportunity - Phreesia's revenue in FY19 was $100 million, demonstrating over 25% growth[8, 9] - The company estimates a total addressable market (TAM) of approximately $7 billion[9] - Subscription and related services accounted for 44% of FY19 revenue, while payment processing contributed 37%, and life sciences 19%[34] - In Q2 2020, total revenue reached $30.8 million, a 24.4% increase compared to Q2 2019[42] Growth Strategy - Phreesia aims to land new clients, grow its footprint within existing clients, and cross-sell new applications[27] - The company focuses on margin expansion through scale and strategic partnerships and M&A[27] - Phreesia achieved a 107% dollar-based net retention rate in FY19[27]

Company Overview - Phreesia is a leading provider of comprehensive solutions that transform the healthcare experience by engaging patients in their care[12] - The company processes approximately $1.9 billion in patient payments in FY20[12] - Phreesia's revenue in FY20 was $125 million, representing a 25% growth[12] - The company estimates a total addressable market of approximately $9 billion[13] Financial Performance - Total revenue increased from $99.9 million in FY2019 to $124.8 million in FY2020, a 25% year-over-year growth[51] - Subscription and related services revenue was $56.4 million in FY2020[51], which accounts for 45% of FY20 revenue[44] - Payment processing revenue was $46.5 million in FY2020, representing 37% of FY20 revenue[44] - Life Sciences revenue contributed $21.9 million in FY2020, accounting for 18% of FY20 revenue[44] - Adjusted EBITDA increased from $3.5 million in FY2019 to $4.8 million in FY2020[53] Key Metrics - The average number of provider clients increased by 5% from 1,490 in FY19 to 1,571 in FY20[47]

Core Viewpoint - Phreesia (PHR) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on the consensus measure of EPS estimates from sell-side analysts, reflecting the company's changing earnings picture [1][2]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, particularly due to the actions of institutional investors who adjust their valuations based on these estimates [4][6]. Recent Performance and Projections - For the fiscal year ending January 2026, Phreesia is expected to earn -$0.04 per share, representing a 96.1% change from the previous year's reported number [8]. - Over the past three months, the Zacks Consensus Estimate for Phreesia has increased by 42%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7]. - Phreesia's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Group 1 - The article discusses the positive growth outlook for Phreesia (PHR), highlighting the potential for new logo additions to drive business expansion [1] - The author emphasizes a fundamentals-based approach to value investing, focusing on companies with long-term durability and robust balance sheets [1] - There is a critique of the misconception that low multiple stocks are inherently cheap, advocating for a focus on long-term growth rather than immediate price concerns [1] Group 2 - The article does not contain any disclosures related to stock positions or business relationships with the companies mentioned [2] - It clarifies that past performance is not indicative of future results and that no specific investment recommendations are provided [3]

Financial Performance - Total revenue increased 15% to $115.9 million for the three months ended April 30, 2025, compared to $101.2 million for the same period in 2024[145] - Net loss was $3.9 million for the three months ended April 30, 2025, compared to a net loss of $19.7 million for the same period in 2024[145] - Adjusted EBITDA was $20.8 million for the three months ended April 30, 2025, compared to $4.1 million for the same period in 2024[145] - Free cash flow was $7.5 million for the three months ended April 30, 2025, compared to negative $6.2 million for the same period in 2024[145] - Total revenue for the three months ended April 30, 2025, was $115.9 million, an increase of $14.7 million or 15% compared to $101.2 million in the same period of 2024[167] - Adjusted EBITDA for the three months ended April 30, 2025, was $20.8 million, compared to $4.1 million in the same period of 2024[186] Client and Revenue Metrics - Average number of healthcare services clients (AHSCs) increased to 4,411 for the three months ended April 30, 2025, from 4,065 in the same period in 2024[154] - Total revenue per AHSC increased by 6% to $26,283 for the three months ended April 30, 2025, compared to $24,900 for the same period in 2024[154] - Subscription and related services revenue increased by $7.6 million to $54.4 million, primarily due to new healthcare services clients and expansion of existing clients[167] - Payment processing fees revenue rose by $2.9 million to $29.9 million, driven by an increase in patient visits and payments processed[175] - Patient payment volume increased to $1,314 million for the three months ended April 30, 2025, compared to $1,166 million for the same period in 2024[155] - Payment facilitator volume percentage increased to 82% for the three months ended April 30, 2025, compared to 81% for the same period in 2024[155] Cash and Liquidity - Cash and cash equivalents as of April 30, 2025, were $90.9 million, an increase of $6.7 million compared to January 31, 2025[145] - As of April 30, 2025, cash and cash equivalents totaled $90.9 million, up from $84.2 million as of January 31, 2025[189] - The company believes its existing cash and cash equivalents, along with cash generated from operations, will be sufficient to meet its needs for at least the next 12 months[189] Expenses and Cost Management - Research and development expenses increased by $2.9 million to $31.8 million, attributed to higher labor and software costs[174][176] - Sales and marketing expenses decreased by $6.0 million to $26.0 million, primarily due to a reduction in labor costs[172] - General and administrative expenses decreased by $2.6 million to $16.4 million, mainly from lower third-party costs and labor costs[177] Other Financial Information - Other income (expense), net improved to income of $0.3 million from an expense of less than $0.1 million year-over-year[181] - Provision for income taxes increased by $0.2 million to $0.7 million, primarily due to higher Canadian and Indian income tax expenses[183] - Interest expense income, net was a loss of $0.2 million for the three months ended April 30, 2025, compared to income of $0.2 million in the prior year[182] Cash Flow Activities - For the three months ended April 30, 2025, net cash provided by operating activities was $14.85 million, compared to a net cash used of $0.72 million for the same period in 2024[199] - Free cash flow for the three months ended April 30, 2025, was $7.46 million, a significant improvement from a free cash flow of $(6.17) million in the prior year[197] - Net cash used in investing activities for the three months ended April 30, 2025, was $7.39 million, primarily due to $3.89 million in capitalized internal-use software costs and $3.50 million in property and equipment purchases[201] - Net cash used in financing activities for the three months ended April 30, 2025, was $0.84 million, mainly for principal payments on finance leases[204] - The company has a financing agreement with an outstanding principal of $1.6 million as of April 30, 2025, requiring monthly payments of $0.1 million for 36 months at an effective interest rate of 10.5%[195] Foreign Currency Exposure - Approximately 86% of the company's expenses for the three months ended April 30, 2025, were denominated in US Dollars, exposing it to foreign currency exchange risks[213] - Foreign currency gains for the three months ended April 30, 2025, were $0.3 million, while losses for the same period in 2024 were less than $0.1 million[214] Financial Flexibility - The company entered into a 5-year $50 million senior secured asset-based revolving credit facility in December 2023, enhancing financial flexibility through fiscal 2028[191]

Core Insights - Phreesia (PHR) reported revenue of $115.94 million for the quarter ended April 2025, marking a year-over-year increase of 14.5% and exceeding the Zacks Consensus Estimate by 1.09% [1] - The company posted an EPS of -$0.07, a significant improvement from -$0.35 a year ago, resulting in an EPS surprise of 46.15% compared to the consensus estimate of -$0.13 [1] Financial Performance Metrics - Average healthcare services clients reached 4,411, surpassing the average estimate of 4,373 [4] - Patient payment volume was reported at $1.31 billion, exceeding the average estimate of $1.25 billion [4] - Payment facilitator volume percentage was 82%, slightly above the estimated 81.3% [4] - Revenue from subscription and related services was $54.36 million, exceeding the estimate of $52.43 million, reflecting a year-over-year increase of 16.3% [4] - Revenue from network solutions was $31.66 million, below the average estimate of $33.40 million, but still showing a year-over-year increase of 15.5% [4] - Revenue from payment processing fees was $29.93 million, surpassing the estimate of $28.87 million, with a year-over-year change of 10.6% [4] Stock Performance - Phreesia's shares have returned +0.4% over the past month, while the Zacks S&P 500 composite has increased by +7.4% [3] - The stock currently holds a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Financial Performance - Revenue for the first quarter of fiscal 2026 was $115.9 million, representing a 15% year-over-year increase [10] - Adjusted EBITDA was $20.8 million, an increase of 16.7% year-over-year, with an adjusted EBITDA margin of 18% [11] - Cash and cash equivalents at the end of the quarter were $90.9 million, up from $84.2 million in the prior quarter [11] - Positive operating cash flow of $14.9 million, up $15.6 million year-over-year, and positive free cash flow of $7.5 million, up $13.7 million year-over-year [12] Business Lines Performance - Average healthcare services clients increased to 4,411, up 70 from the prior quarter and 346 from the prior year [10] - Total revenue per average healthcare services client was $26,283, up 6% year-over-year and 4% quarter-over-quarter [10] Market Data - The company is maintaining its revenue outlook for fiscal 2026 at a range of $472 million to $482 million [13] - The adjusted EBITDA outlook for fiscal 2026 has been updated to a range of $85 million to $90 million, an increase of $4.5 million from the previous guidance midpoint [13] Company Strategy and Industry Competition - The company focuses on delivering valuable and scalable products that drive meaningful outcomes for patients and providers, with an emphasis on AI integration across all aspects of the organization [8] - The company aims to grow its network through product-led growth and is well-positioned to allocate capital for long-term shareholder value [8] Management Commentary on Operating Environment and Future Outlook - Management noted that conversations with customers remain strong, with no significant hesitancy in decision-making despite macroeconomic conditions [19][25] - The company continues to see strong demand for its network solutions and is focused on building and delivering products that provide value [25] - Management expressed confidence in the company's ability to adapt to changing market conditions and maintain growth [8][25] Other Important Information - The company has approved a share repurchase plan for up to 2.5 million shares of common stock, aimed at being opportunistic in response to market conditions [81] - The company is optimistic about the potential of its Medifine platform, viewing it as a long-term contributor to revenue [93][95] Q&A Session Summary Question: Insights on network solutions growth and customer conversations - Management highlighted strong growth in network solutions and emphasized the importance of product development and delivery in driving results [19][20] Question: Provider market conversations and outlook - Management indicated that conversations with providers remain focused on delivering value through products, with no significant changes in the competitive landscape [25] Question: ROI visibility for network solutions customers - Management explained that clients can adjust campaigns based on performance, with a strong emphasis on delivering results [31] Question: Sales and marketing performance - Management noted that previous investments in sales and marketing are yielding returns, with expectations for continued growth [36] Question: Capital deployment opportunities - Management stated that while the cash position is improving, the approach to evaluating opportunities remains consistent, focusing on buy, build, or rent strategies [40][42] Question: Impact of proposed legislation on pharma advertising - Management acknowledged ongoing legislative discussions but emphasized the differentiated value of their platform [58] Question: Seasonality in network solutions revenue - Management clarified that fluctuations in revenue are more related to program pacing rather than strict seasonality [62] Question: Labor strategy and expense trajectory - Management explained that recent headcount changes were due to consolidation rather than new hiring strategies [54] Question: Cash conversion rates and payment processing revenue - Management indicated that cash conversion rates are expected to resemble first-quarter performance for the rest of the year [86] Question: Monetization of Medifine offering - Management described Medifine as still in early stages but showing positive revenue contributions [93][95]