[PART I — FINANCIAL INFORMATION](index=7&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) Presents Phreesia's unaudited consolidated financial statements for periods ended July 31, 2023, along with notes on accounting policies and recent acquisitions [Consolidated Balance Sheets](index=7&type=section&id=Consolidated%20Balance%20Sheets) | Balance Sheet Item | July 31, 2023 (in thousands) | January 31, 2023 (in thousands) | Change | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $127,677 | $176,683 | ▼ $49,006 | | Total current assets | $219,230 | $262,441 | ▼ $43,211 | | Goodwill | $40,611 | $33,736 | ▲ $6,875 | | Total Assets | $340,442 | $370,057 | ▼ $29,615 | | Total current liabilities | $84,869 | $79,039 | ▲ $5,830 | | Total Liabilities | $93,422 | $82,238 | ▲ $11,184 | | Accumulated deficit | $(680,382) | $(606,084) | ▲ $74,298 | | Total Stockholders' Equity | $247,020 | $287,819 | ▼ $40,799 | [Consolidated Statements of Operations](index=8&type=section&id=Consolidated%20Statements%20of%20Operations) | Metric (in thousands) | Three Months Ended July 31, 2023 | Three Months Ended July 31, 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Total revenues | $85,830 | $67,867 | +26.5% | | Operating loss | $(36,955) | $(46,335) | +20.2% | | Net loss | $(36,767) | $(46,716) | +21.3% | | Net loss per share | $(0.68) | $(0.89) | +23.6% | | Metric (in thousands) | Six Months Ended July 31, 2023 | Six Months Ended July 31, 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Total revenues | $169,675 | $131,221 | +29.3% | | Operating loss | $(74,856) | $(96,928) | +22.8% | | Net loss | $(74,298) | $(97,958) | +24.2% | | Net loss per share | $(1.39) | $(1.88) | +26.1% | [Consolidated Statements of Stockholders' Equity](index=9&type=section&id=Consolidated%20Statements%20of%20Stockholders%27%20Equity) - The accumulated deficit increased by **$74.3 million** during the first six months of fiscal 2024, from **$(606.1) million** at January 31, 2023, to **$(680.4) million** at July 31, 2023, primarily driven by the net loss for the period[27](index=27&type=chunk) [Consolidated Statements of Cash Flows](index=10&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Activity (in thousands) | Six Months Ended July 31, 2023 | Six Months Ended July 31, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(22,990) | $(53,476) | | Net cash used in investing activities | $(15,795) | $(12,876) | | Net cash used in financing activities | $(10,221) | $(6,731) | | **Net decrease in cash and cash equivalents** | **$(49,006)** | **$(73,083)** | - Cash used in operating activities decreased significantly year-over-year, from **$53.5 million** in the first six months of fiscal 2023 to **$23.0 million** in the same period of fiscal 2024, despite the ongoing net loss. This improvement was mainly due to smaller negative changes in working capital and higher non-cash stock-based compensation expense[29](index=29&type=chunk) [Notes to Unaudited Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20Unaudited%20Consolidated%20Financial%20Statements) - The company has a history of net losses and negative cash flows, which management expects to continue for at least the next year. Operations are primarily funded through proceeds from stock issuances and debt[35](index=35&type=chunk) - On June 30, 2023, the company acquired MediFind for an aggregate consideration of **$8.9 million**, consisting of cash and stock, to expand its consumer-facing healthcare offerings[128](index=128&type=chunk) - Subsequent to the quarter end, on August 11, 2023, the company acquired Access eForms for total consideration of **$38.4 million** in cash and stock to enhance its capabilities in the acute care market[136](index=136&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Phreesia's financial performance for the three and six months ended July 31, 2023, highlighting revenue growth, narrowed net loss, and liquidity [Financial Highlights](index=31&type=section&id=Financial%20Highlights) | Metric | Three Months Ended July 31, 2023 | Three Months Ended July 31, 2022 | | :--- | :--- | :--- | | Total revenue | $85.8 million | $67.9 million (+26%) | | Net loss | $(36.8) million | $(46.7) million | | Adjusted EBITDA | $(11.5) million | $(26.0) million | | Net cash used in operating activities | $(9.3) million | $(19.8) million | [Key Metrics](index=33&type=section&id=Key%20Metrics) | Key Metric | Three Months Ended July 31, 2023 | Three Months Ended July 31, 2022 | | :--- | :--- | :--- | | Average number of healthcare services clients (AHSCs) | 3,445 | 2,776 | | Healthcare services revenue per AHSC | $18,268 | $18,248 | | Total revenue per AHSC | $24,914 | $24,448 | - Patient payment volume increased by **22%** to **$989 million** for the three months ended July 31, 2023, compared to **$811 million** in the prior year period, indicating strong underlying activity on the platform[154](index=154&type=chunk)[156](index=156&type=chunk) [Comparison of results of operations](index=36&type=section&id=Comparison%20of%20results%20of%20operations) | Revenue Stream (in thousands) | Three Months Ended July 31, 2023 | Three Months Ended July 31, 2022 | YoY Change | | :--- | :--- | :--- | :--- | | Subscription and related services | $39,301 | $31,069 | +26% | | Payment processing fees | $23,631 | $19,581 | +21% | | Network solutions | $22,898 | $17,217 | +33% | | **Total revenue** | **$85,830** | **$67,867** | **+26%** | - Research and development expenses increased by **22%** to **$27.5 million** for the quarter, primarily due to a **$4.2 million** increase in compensation and benefits costs from higher headcount and compensation[180](index=180&type=chunk) - Sales and marketing expenses decreased by **3%** to **$37.2 million** for the quarter, mainly driven by a **$2.0 million** decrease in compensation costs due to lower average headcount[176](index=176&type=chunk) [Liquidity and capital resources](index=42&type=section&id=Liquidity%20and%20capital%20resources) - As of July 31, 2023, the company had cash and cash equivalents of **$127.7 million**, a decrease of **$49.0 million** from January 31, 2023. Management believes existing cash is sufficient to meet needs for at least the next 12 months[205](index=205&type=chunk)[141](index=141&type=chunk) - Following the closure of Silicon Valley Bank (SVB), the company transferred most of its cash to other institutions. While it has a **$100 million** credit facility with SVB (now First Citizens), a covenant restricts borrowing while significant cash is held outside the bank. The company obtained a temporary consent extension through November 15, 2023[212](index=212&type=chunk)[213](index=213&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate and foreign exchange, mainly affecting interest income on cash and cash equivalents, with minimal variable-rate debt exposure - The company's main market risk exposure is to interest rates, which primarily impacts the interest income earned on its cash and cash equivalents[232](index=232&type=chunk)[233](index=233&type=chunk) - As of July 31, 2023, the company had no debt outstanding under its variable-rate credit facility, mitigating risk from rising interest expenses[234](index=234&type=chunk) [Item 4. Controls and Procedures](index=45&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective as of July 31, 2023, with no material changes to internal controls during the quarter - Based on an evaluation as of July 31, 2023, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[237](index=237&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter ended July 31, 2023[238](index=238&type=chunk) [PART II — OTHER INFORMATION](index=46&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently a party to any legal proceedings that would materially adversely affect its business, operating results, financial condition, or cash flows - As of the filing date, Phreesia is not involved in any legal proceedings that are expected to have a material adverse effect on the company[241](index=241&type=chunk) [Item 1A. Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks and uncertainties associated with the company's business, including operational, financial, data security, and regulatory challenges - The company has experienced rapid growth and increasing expenses, and failure to manage this growth effectively could prevent revenue increases and hinder the implementation of its business strategy[243](index=243&type=chunk) - Phreesia has a history of net losses, including **$36.8 million** for the quarter, and may not achieve profitability in the future as it continues to invest in its business[255](index=255&type=chunk) - The company faces significant risks related to privacy and security breaches of its platform, which could lead to economic loss, reputational damage, and legal liability due to the sensitive patient data it handles[259](index=259&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=78&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the quarter ended July 31, 2023, that were not previously reported on a Form 8-K - There were no unregistered sales of equity securities during the quarter ended July 31, 2023, that had not been previously disclosed[413](index=413&type=chunk) [Item 5. Other Information](index=78&type=section&id=Item%205.%20Other%20Information) This section discloses that David Linetsky, SVP of Life Sciences, terminated a prior Rule 10b5-1 Trading Plan and adopted a new one on July 19, 2023 - On July 18, 2023, David Linetsky, SVP of Life Sciences, terminated his existing Rule 10b5-1 trading plan and adopted a new one on July 19, 2023, covering the sale of up to **77,473 shares** plus additional shares from future vested equity awards[416](index=416&type=chunk)[418](index=418&type=chunk) [Item 6. Exhibits](index=81&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the company's amended certificate of incorporation, equity plan documents, and required certifications

Financial Data and Key Metrics Changes - Revenue in the first quarter was $84 million, up 32% year-over-year, marking the ninth consecutive quarter of over 30% year-over-year revenue growth [28][41] - Adjusted EBITDA outlook for fiscal 2024 was raised to a range of negative $60 to negative $55 million, showing continued improvement on the path to profitability [56] Business Line Data and Key Metrics Changes - Average number of healthcare services clients was 3,309, up 31% year-over-year, with total revenue for average healthcare services clients at $25,338, up 1% year-over-year [41] - Subscription and related services revenue grew 30% year-over-year, payment processing revenue grew 25% year-over-year, and network solutions revenue was up 46% year-over-year [41] Market Data and Key Metrics Changes - The company maintained its revenue outlook for fiscal 2024 in the range of $353 million to $356 million, implying growth of 26% to 27% over fiscal 2023 revenue [56] - A significant increase in payment volume was noted, with a $1 billion volume quarter in payment processing, indicating strong market demand [101] Company Strategy and Development Direction - The company is focused on maintaining revenue and profitability targets for fiscal 2025, aiming for $125 million of revenue in a quarter, which implies $500 million of annualized revenue [43] - Continued investment in R&D is emphasized as a key area for future growth, with the company planning to enhance its product offerings and capabilities [70] Management's Comments on Operating Environment and Future Outlook - Management noted that patient volumes in the first quarter were stronger than anticipated, indicating a positive trend in demand [58] - The company expressed confidence in its ability to finance its fiscal 2025 targets with its current cash position, which stands at approximately $150 million [86] Other Important Information - The company is actively exploring partnerships and integrations with other healthcare IT service offerings to drive incremental subscription growth [103] - Management highlighted the importance of client satisfaction and product quality as key drivers of business success [94] Q&A Session Summary Question: What contributed to the higher patient volumes in the first quarter? - Management attributed the stronger-than-expected volumes to seasonal strength and effective campaign pacing [58] Question: How should we think about the sales and marketing expenses going forward? - Management indicated that operating leverage on sales and marketing expenses will be a source of achieving EBITDA positivity [63] Question: What is the outlook for the Medicare Advantage market? - Management acknowledged headwinds in the Medicare market but remains optimistic about the growth potential of the MemberConnect product [180]

Financial Performance - Total revenue increased 32% to $83.8 million for the three months ended April 30, 2023, compared to $63.4 million for the same period in 2022[127] - Net loss was $37.5 million for the three months ended April 30, 2023, an improvement from a net loss of $51.2 million in the same period in 2022[127] - Adjusted EBITDA improved to negative $13.8 million for the three months ended April 30, 2023, compared to negative $30.6 million in the same period in 2022[127] - Total revenue for the three months ended April 30, 2023, was $83.8 million, a 32% increase from $63.4 million in the same period of 2022[146] - Subscription and related services revenue increased by $8.8 million to $37.9 million, representing a 30% growth year-over-year[148] - Payment processing fees revenue rose by $4.9 million to $24.3 million, a 25% increase compared to the prior year[146] - Network solutions revenue grew by $6.8 million to $21.7 million, marking a 46% increase from the previous year[146] Client Metrics - Average number of healthcare services clients (AHSCs) increased to 3,309 for the three months ended April 30, 2023, from 2,526 in the same period in 2022[134] - Healthcare services revenue per AHSC decreased by 2% to $18,779 for the three months ended April 30, 2023, compared to $19,193 in the same period in 2022[134] - Total revenue per AHSC increased by 1% to $25,338 for the three months ended April 30, 2023, compared to $25,081 in the same period in 2022[134] Cash Flow and Liquidity - Cash and cash equivalents decreased by $26.9 million to $149.8 million as of April 30, 2023, compared to January 31, 2023[127] - Net cash used in operating activities improved to $13.7 million for the three months ended April 30, 2023, from $33.6 million in the same period in 2022[127] - Free cash flow for the three months ended April 30, 2023, was $(19.7) million, an improvement from $(40.7) million in the same period of 2022[167] - As of April 30, 2023, the company had cash and cash equivalents of $149.8 million, down from $176.7 million as of January 31, 2023[168] - Net cash used in operating activities was $(13.7) million for the three months ended April 30, 2023, compared to $(33.6) million in the same period of 2022, reflecting improved cash flow management[178] - The company incurred $6.1 million in net cash used in investing activities during the three months ended April 30, 2023, primarily for capitalized internal-use software costs[180] - Financing activities resulted in a net cash outflow of $7.2 million for the three months ended April 30, 2023, mainly due to treasury stock purchases[182] Expenses - Research and development expenses increased by $5.8 million to $26.5 million, reflecting a 28% rise year-over-year[154] - Sales and marketing expenses decreased by $2.6 million to $37.4 million, a 7% decline compared to the same period in 2022[152] - General and administrative expenses decreased by $1.0 million to $19.9 million, a 5% reduction year-over-year[156] - Payment processing expenses increased by $3.9 million to $16.1 million, a 32% increase from the previous year[151] - Amortization expenses rose by $0.9 million to $2.5 million, a 55% increase compared to the same period in 2022[159] Interest and Debt - Interest income for the three months ended April 30, 2023, was $0.7 million, compared to an expense of $0.4 million in the same period of 2022[161] - The company has potential borrowing capacity under its credit agreement, which was increased to $100 million with an interest rate of 7.50% as of April 30, 2023[171] - As of April 30, 2023, the company had no outstanding debt under the Third SVB Facility[193] - The company recorded a finance lease with total undiscounted payments of $7.7 million through the fiscal year ended January 31, 2027[185] Market and Risk Factors - 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[168] - Changes in interest rates are not expected to materially affect the company's financial condition, even with a 100 basis point increase or decrease[192] - Future borrowing against the Third SVB Facility may be impacted by changes in interest rates, affecting interest expense[194] - Changes in interest rates will also impact the discount rate and resulting interest expense for any new finance leases[194] - There were no significant changes in the company's market risk disclosures compared to the previous fiscal year[195] - The company will continue to evaluate its investment policy to meet overall objectives in future periods[192]

Financial Data and Key Metrics - Revenue in Q4 was $77 million, up 32% YoY, marking the eighth consecutive quarter of over 30% YoY revenue growth [9] - Average number of healthcare services clients in Q4 was 3,140, up 36% YoY, with 158 clients added sequentially [10] - Total revenue per average healthcare services client was $24,390, down 3% YoY and 1% sequentially, driven by client growth outpacing revenue growth in subscription and payment processing [11] - Subscription-related services revenue grew 35% YoY, payment processing revenue grew 23% YoY, and network solutions revenue grew 36% YoY [11] - For fiscal 2024, revenue is expected to be in the range of $353 million to $356 million, implying 26% to 27% growth over fiscal 2023 [12] - Adjusted EBITDA for fiscal 2024 is expected to be in the range of negative $65 million to negative $60 million, showing continued improvement toward profitability [12] Business Line Data and Key Metrics - Healthcare services revenue, combining subscription and related services with payment processing, grew 31% YoY in Q4 [10] - Network solutions revenue saw strong growth, driven by client focus on ROI and the effectiveness of the company's team [22] - The company facilitated over 120 million visits in fiscal 2023, up 20% YoY, with healthcare services client growth slightly outpacing visit growth [38] Market Data and Key Metrics - The company expects a sequential increase in average healthcare services clients in Q1 of fiscal 2024, similar to the 158-client increase seen in Q4 of fiscal 2023 [13] - The company remains comfortable with its ability to finance fiscal 2025 targets, including reaching $500 million in annualized revenue and achieving adjusted EBITDA profitability [14] Company Strategy and Industry Competition - The company is focused on delivering durable and profitable growth, with a strong emphasis on ROI and client value [22] - The company is investing in product development and new markets, with a goal of returning to adjusted EBITDA profitability in fiscal 2025 [14] - The company is well-positioned to capitalize on the growing demand for healthcare automation and patient engagement solutions [22] Management Commentary on Operating Environment and Future Outlook - Management highlighted the strong performance of the network solutions segment, attributing it to client focus on ROI and the effectiveness of the company's team [22] - The company is optimistic about its ability to achieve fiscal 2025 targets, including reaching $500 million in annualized revenue and achieving adjusted EBITDA profitability [14] - Management emphasized the importance of maintaining a culture of ownership and stewardship of capital, which has contributed to the company's strong financial performance [49] Other Important Information - The company announced a CFO transition, with Balaji Gandhi taking over as CFO on March 24, 2023 [6][7] - The company introduced a new key metric, total revenue per average healthcare services client, which was $24,390 in Q4 [11] Q&A Session Summary Question: Growth in Network Solutions Segment - The company attributed strong growth in the network solutions segment to client focus on ROI and the effectiveness of its team [22] - Management expects continued growth in this segment, driven by client demand for ROI-focused solutions [22] Question: Outlook for Fiscal 2024 - The company expects revenue growth of 26% to 27% in fiscal 2024, driven by client growth and stable revenue per client [12][35] - Management highlighted the importance of maintaining operating leverage and achieving adjusted EBITDA profitability in fiscal 2025 [14] Question: Payment Processing Revenue - Payment processing revenue grew 23% YoY in Q4, with management expecting stable growth in fiscal 2024 [11][35] - The company is focused on improving payment processing margins and expects to see improvement as it scales [95] Question: Social Determinants of Health Screening Tool - The company provides social determinants of health modules as part of its package but does not currently monetize this offering [42] - Management believes this is the right thing to do for clients and patients, and there are no plans to charge for this service [42] Question: EBITDA Performance and Guidance - Management discussed the factors that contributed to better-than-expected EBITDA performance in fiscal 2023, including improved productivity and cost management [46][48] - The company expects continued improvement in EBITDA, with a goal of achieving profitability in fiscal 2025 [14] Question: New Metric - Total Revenue per Average Healthcare Services Client - The company introduced this metric to provide a more comprehensive view of revenue performance across subscription, payment processing, and network solutions [52] - Management expects this metric to fluctuate based on the contribution of different revenue streams in any given quarter [52] Question: Long-Term Growth and Client Retention - The company is focused on both client acquisition and expansion, with a strong emphasis on delivering value to existing clients [50][52] - Management highlighted the importance of cross-selling and upselling to drive long-term growth [100] Question: R&D Investments and Product Development - The company is investing in R&D to drive product innovation and expand into new markets [122] - Management expects R&D expenses to grow in line with revenue, contributing to long-term operating leverage [124] Question: Payer and Referral Management Growth - The company is seeing early success in the payer space, with the first enrollment period for MemberConnect performing better than expected [26][27] - Management is optimistic about the growth potential of these newer vectors but is still in the learning phase [27] Question: Commercial Team and Cross-Selling - The company has separate teams for new client acquisition and client expansion, both of which are performing well [92] - Management is focused on cross-training and enabling the commercial team to sell the full suite of solutions [100] Question: Payment Fees per Provider Client - Payment fees per provider client declined 10% YoY in Q4, driven by a mix of client types [119] - Management expects this metric to stabilize and return to more normalized growth in fiscal 2024 [120] Question: Capital Allocation and Acquisitions - The company is committed to being a good steward of capital and will consider acquisitions if they align with strategic goals and deliver strong returns [149] - Management emphasized the importance of acquiring great capabilities rather than just good deals [149] Question: Life Sciences Growth - Growth in the life sciences segment is being driven by greater wallet share from existing clients, new client acquisitions, and strong execution [151] - The company is focused on delivering value to life sciences clients and expanding its footprint in this market [151] Question: Hospital Market Expansion - The company has seen success in various hospital segments, including children's hospitals, community hospitals, and regional hospitals [170] - Management is focused on delivering value to hospitals through automation and improved workflows [170]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended January 31, 2023 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 Other J ...

Phreesia, Inc. (NYSE:PHR) Q3 2023 Earnings Conference Call December 8, 2022 5:00 PM ET Company Participants Balaji Gandhi - SVP, IR Chaim Indig - CEO & Co-Founder Randy Rasmussen - CFO Conference Call Participants Anne Samuel - JPMorgan Ryan Daniels - William Blair Richard Close - Canaccord Genuity Jessica Tassan - Piper Sandler Stephanie Davis - SVB Securities Glen Santangelo - Jefferies Daniel Grosslight - Citi John Ransom - Raymond James Scott Schoenhaus - KeyBanc Joe Vruwink - Baird Ryan MacDonald - Nee ...

Revenue Growth - Total revenue increased 31% to $73.1 million for the three months ended October 31, 2022, compared to $55.9 million for the same period in 2021[130] - Total revenue increased 32% to $204.3 million for the nine months ended October 31, 2022, compared to $155.2 million for the same period in 2021[130] - Total revenue for the three months ended October 31, 2022, increased by $17.2 million, or 31%, to $73.1 million compared to $55.9 million for the same period in 2021[152] - Subscription and related services revenue rose by $8.6 million, or 35%, to $33.0 million for the three months ended October 31, 2022, driven by new healthcare services clients and expansion to existing clients[154] - Total revenue for the nine months ended October 31, 2022, increased by $49.1 million, or 32%, to $204.3 million compared to $155.2 million for the same period in 2021[153] Financial Losses - Net loss was $40.2 million for the three months ended October 31, 2022, compared to $36.3 million for the same period in 2021[130] - Adjusted EBITDA was negative $18.3 million for the three months ended October 31, 2022, compared to negative $17.6 million for the same period in 2021[130] - Adjusted EBITDA for the three months ended October 31, 2022, was a loss of $18.3 million, compared to a loss of $17.6 million for the same period in 2021[187] - Free cash flow was negative $27.5 million for the three months ended October 31, 2022, compared to negative $39.0 million for the same period in 2021[130] - Free cash flow for the three months ended October 31, 2022, was a negative $27.5 million, an improvement from negative $39.0 million in the same period of 2021[189] Cash and Cash Equivalents - Cash and cash equivalents as of October 31, 2022, were $209.6 million, a decrease of $104.2 million compared to January 31, 2022[130] - As of October 31, 2022, the company had cash and cash equivalents of $209.6 million, down from $313.8 million as of January 31, 2022[191] - The company believes that existing cash and cash equivalents, along with available financial resources, will be sufficient to meet its needs for at least the next 12 months[192] - The net decrease in cash and cash equivalents for the nine months ended October 31, 2022, was $104.2 million, contrasting with an increase of $181.6 million in the same period of 2021[197] Operating Activities - Net cash used in operating activities was $20.7 million for the three months ended October 31, 2022, compared to $24.5 million for the same period in 2021[130] - Cash used in operating activities for the nine months ended October 31, 2022, was $74.2 million, an increase from $36.7 million in the same period of 2021, reflecting higher employee compensation costs and outside services costs[199] - The increase in cash used in operating activities was driven by higher employee headcount and compensation costs, partially offset by increased cash received from customers due to higher revenues[200] Expenses - Cost of revenue (excluding depreciation and amortization) increased by $2.9 million, or 25%, to $14.6 million for the three months ended October 31, 2022, primarily due to higher employee compensation and benefits costs[156] - Research and development expense increased by $7.4 million, or 48%, to $22.7 million for the three months ended October 31, 2022, driven by higher compensation and increased headcount[166] - Sales and marketing expense rose by $4.6 million, or 14%, to $36.6 million for the three months ended October 31, 2022, primarily due to increased compensation and third-party costs[162] - General and administrative expense increased by $1.6 million, or 9%, to $19.6 million for the three months ended October 31, 2022, mainly due to higher compensation costs[170] - Payment processing expense increased by $8.7 million, or 30%, to $37.5 million for the nine months ended October 31, 2022, driven by an increase in patient payments processed[161] Depreciation and Amortization - Depreciation expense increased by $1.1 million to $4.9 million for the three months ended October 31, 2022, representing a 31% increase compared to $3.7 million for the same period in 2021[174] - For the nine months ended October 31, 2022, depreciation expense rose by $2.6 million to $13.4 million, a 25% increase from $10.7 million in the prior year[175] - Amortization expense increased by $0.3 million to $1.8 million for the three months ended October 31, 2022, reflecting a 20% increase from $1.5 million in the same period of 2021[176] Financing Activities - Net cash used in financing activities for the nine months ended October 31, 2022, was $10.4 million, compared to a net cash inflow of $242.9 million in the same period of 2021, which included $245.8 million from a common stock offering[203][204] - The Third SVB Facility allows for borrowings up to $100.0 million, with an interest rate of 5.75% as of October 31, 2022, and no outstanding balance[194] - The company was in compliance with all covenants related to the Third SVB Facility as of October 31, 2022[196] Market Risks and Accounting Policies - The company continues to be exposed to market risks, including interest rate and foreign exchange risks, with no significant changes reported during the nine months ended October 31, 2022[210] - There were no significant changes in critical accounting policies and estimates during the nine months ended October 31, 2022[208] - The primary sources of cash from operating activities include cash received from customers and interest earned on money market mutual funds[198]

Financial Data and Key Metrics Changes - Revenue for Q2 2023 was $68 million, representing a 33% year-over-year increase, marking the sixth consecutive quarter of over 30% revenue growth [12][11] - Health care services revenue, which includes subscription and related services and payment processing revenue, increased by 29% year-over-year [13] - Adjusted EBITDA outlook for fiscal 2023 was raised to a range of negative $109 million to negative $106 million, improved from the previous range of negative $126 million to negative $122 million [17] Business Line Data and Key Metrics Changes - The average number of health care services clients reached 2,776, with an addition of 250 clients sequentially, achieving a 40% year-over-year growth [12] - Payment processing revenue grew by 20% year-over-year, following a 38% growth in the same quarter last year [14] - Life Sciences revenue saw a significant increase of 46% year-over-year, building on a 95% growth from the previous year [15] Market Data and Key Metrics Changes - Phreesia now impacts over 10% of patient visits in the U.S. daily, indicating a strong market presence [15] - The company expects to end fiscal 2023 with cash and cash equivalents between $165 million and $170 million, supporting its growth plans [18] Company Strategy and Development Direction - The company is focused on maintaining a best-in-class product offering, expanding relationships with existing clients, and growing its network with new clients [18] - Investments in product development and client success are seen as critical to driving future growth and shareholder value [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving adjusted EBITDA profitability by fiscal 2025, supported by strong performance and effective cost management [17][33] - There is a pragmatic approach to utilization expectations, with no anticipated significant increases in the second half of the year [54] Other Important Information - The company has not observed any significant trends in rising patient self-pay balances affecting its payment processing outlook [56] - Management emphasized the importance of building trust with clients and providing value to drive expansion within existing accounts [81] Q&A Session Summary Question: Insights on EBITDA guidance raise - Management highlighted a focus on smart spending and careful evaluation of expenses as key factors in the improved EBITDA outlook [21][22] Question: Life Sciences business performance - Management noted that investments in network growth and product development have significantly contributed to the strong performance in Life Sciences [23] Question: Visibility on digital advertising and Life Sciences growth - Management indicated decent visibility for the fiscal year but noted January as a month with less visibility due to client fiscal year-end contracts [27][29] Question: Cash flow guidance and balance sheet confidence - Management confirmed confidence in cash balances and the ability to execute on the fiscal 2025 plan without any borrowings [33][34] Question: Average revenue per client trends - Management clarified that the decline in average revenue per client is primarily due to the growth in the payments business, while subscription revenue per client has remained stable [49][50] Question: Utilization expectations - Management does not expect a significant increase in utilization in the second half of the year, based on current data and provider feedback [54][76] Question: Competition and market dynamics - Management acknowledged ongoing competition but emphasized the complexity of their offerings and the value they provide to clients [61][62] Question: Payment processing ramp-up for new clients - Management explained that there is typically a ramp-up period of three to four months for new clients to fully transition to their payment solutions [69] Question: Client retention and health care services - Management reported consistent client retention rates, with no significant changes observed in the macro environment affecting retention [117][118]

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 July 31, 2022 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 othe ...

Financial Data and Key Metrics Changes - The average healthcare services clients increased by 33% year-over-year [10] - Revenue outlook for the year is maintained at $271 million to $275 million, implying a growth of 27% to 29% year-over-year [11] - Adjusted EBITDA outlook improved to a range of negative $126 million to negative $122 million, up from a prior outlook of negative $154 million to negative $149 million [13] Business Line Data and Key Metrics Changes - Life sciences growth was up 51% year-over-year, although revenue decreased slightly by $563,000 sequentially from Q4 [12] Market Data and Key Metrics Changes - Patient utilization trends were slightly below expectations, which may persist throughout the year [11] Company Strategy and Development Direction - The company focuses on building great products and expanding its client base, emphasizing a "land and expand" strategy [21][24] - Management is committed to addressing social determinants of health, aiming to empower providers rather than monetizing these services [33] Management's Comments on Operating Environment and Future Outlook - Management noted a mixture of COVID-related issues affecting both staff and patient attendance, impacting overall patient utilization trends [30] - The company is confident in its ability to achieve profitability by fiscal 2025, with expected revenue growth at a CAGR of 28% and expenses growing at 10% to 11% [77] Other Important Information - The company has maintained a consistent subscription revenue per provider client at $11,500 for several quarters [21] - The current cash balance and line of credit are deemed sufficient to finance the company's plans to achieve its 2025 targets [77] Q&A Session Summary Question: Dynamics around revenue per provider client and decline - Management explained that the decline is due to a "land and expand" strategy where new clients initially generate lower revenue [21] Question: Update on patient utilization trends - Management indicated that trends are influenced by a combination of COVID impacts and staffing issues [30] Question: Update on social determinants of health offering - Management emphasized the importance of addressing social determinants without monetizing them, focusing on empowering providers [33] Question: Insights on subscription revenue per client - Management noted low churn rates and success in upselling and cross-selling, indicating a strong customer retention strategy [64] Question: Pipeline for enterprise clients - Management stated that the go-to-market strategy remains consistent, focusing on delivering value and continuous engagement with clients [104] Question: Changes in marketing and campaign scrutiny - Management acknowledged increased scrutiny on marketing effectiveness and a shift away from traditional advertising methods [94]