Phreesia Inc (PHR) 2026 Q2 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Phreesia second quarter fiscal 2026 earnings conference call. (Operator Instructions)

First, I would like to introduce Balaji Gandhi, Phreesia's Chief Financial Officer. Mr. Gandhi, you may begin.

Thank you, operator. Good morning, and welcome to Phreesia's earnings conference call for the second quarter of fiscal 2026, which ended on July 31 of 2025. Joining me on today's call is Chaim Indig, our Chief Executive Officer.

A more complete discussion of our results can be found in our earnings press release and in our related Form 8-K submission to the SEC, including our quarterly stakeholder letter, both issued after the markets closed today. These documents are available on the Investor Relations section of our website at ir.phreesia.com.

As a reminder, today's call is being recorded, and a replay will be available on our Investor Relations website at ir.phreesia.com following the conclusion of the call.

During today's call, we may make forward-looking statements, including statements regarding trends, our anticipated growth, our strategies, predictions about our industry, and the anticipated performance of our business, including our outlook regarding future financial results and acquisitions. Forward-looking statements are subject to various risks, uncertainties, and other factors that may cause our actual results, performance or achievements to differ materially from those described in our forward-looking statements. Such risks are described more fully in our earnings press release, our stakeholder letter, and our risk factors included in our SEC filings, including in our quarterly report on Form 10-Q that will be filed with the SEC tomorrow.

The forward-looking statements made on this call will be based on our current views and expectations and speak only as of the date on which the statements are made. We undertake no obligation to update and expressly disclaim the obligation to update these forward-looking statements to reflect events or circumstances after the date of this call or to reflect new information or the occurrence of unanticipated events.

We may also refer to certain financial measures not in accordance with generally accepted accounting principles, such as adjusted EBITDA and free cash flows, in order to provide additional information to investors. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release and stakeholder letter which were furnished with our Form 8-K filed after the market closed today with the SEC and may also be found on our Investor Relations website at ir.phreesia.com.

I will now turn the call over to our CEO, Chaim Indig.

Thank you, Balaji, and good evening, everyone. Thank you for joining our second quarter fiscal year 2026 earnings call. I'd like to begin with some exciting news.

Earlier today, Phreesia announced a definitive agreement to acquire AccessOne for $160 million. AccessOne is a market leader in healthcare provider financing, serving many of the nation's largest health systems. We have followed AccessOne's progress over many years and admired its approach to addressing a critical gap in care that is consistent with our mission of making care easier every day.

AccessOne will expand our addressable market by roughly $6 billion and will strengthen our ability to help providers improve collections while preserving patient trust. We believe this acquisition is a natural extension of our payment strategy and will complement Phreesia's existing products. Balaji will provide some details on the transaction. We look forward to welcoming the AccessOne team to Phreesia following the close of the transaction.

I am also proud to share that Phreesia achieved an important milestone in the second quarter. For the first time in our history, we were net income positive. As with all of our milestones, achieving positive net income does not represent a finish line. However, this milestone does give us all a great sense of pride and accomplishment in that it captures the power of our unique business and financial model and our team's ongoing commitment to being good stewards of capital.

Before turning the call over to Balaji, I would like to congratulate my Co-Founder, Evan Roberts; and David Linetsky, on being named President of Provider Solutions and Network Solutions, respectively. These titles reflect their leadership of the provider and network solutions teams, meeting the needs of our clients and executing on our mission, vision, and values. Evan and David are also invaluable thought partners to me, and I am pleased to share their titles with you.

I'll now turn it over to Balaji to provide some additional details on the AccessOne transaction and provide a review of our results and updated outlook.

Thank you, Chaim. First, I also want to congratulate Evan and David on their new titles.

Now, for some details on the AccessOne transaction. As outlined in our press release and stakeholder letter, the purchase price for AccessOne is $160 million in cash. Phreesia intends to finance the acquisition through a combination of cash from our balance sheet and a new fully committed bridge loan facility. The transaction is expected to close during the third quarter or early fourth quarter of Phreesia's 2026 fiscal year, subject to customary closing conditions and regulatory approvals.

We currently expect AccessOne to contribute approximately $35 million in annualized revenue and approximately $11 million in annualized adjusted EBITDA.

Once the acquisition is closed, we plan to update our fiscal 2026 outlook to reflect the expected contribution to our results. Overall, we believe this transaction will strengthen Phreesia's financial profile, add profitable growth, and enhance our ability to support clients with innovative payment solutions. We look forward to closing the transaction and working with the AccessOne team.

I would also like to touch on our updated total addressable market. The AccessOne acquisition is expected to expand our addressable market by about $6 billion by extending our reach in the payment solutions space. We also increased our network solutions TAM by $6 billion as we expect to be able to draw from a larger pool of life sciences marketing dollars as our products become more ubiquitous across our network. Combined, the expansion of our payments and network solutions addressable market is expected to increase our TAM to approximately $24 billion from approximately $10 billion.

Now let me provide a few comments around our second-quarter results. Total revenue was $117.3 million, an increase of 15% year over year. We are very pleased with our performance on the top line. We ended with average healthcare services clients of 4,467, an increase of 56 AHSCs from the prior quarter and 298 in the prior year. This result was in line with our expectations.

Total revenue for average healthcare services clients was $26,249, up 7% year over year and flat quarter over quarter, also in line with our expectations.

Moving on to profitability. As Chaim mentioned, we achieved another major milestone this quarter, with net income of $700,000, our first-ever positive net income quarter. Adjusted EBITDA was $22 million, an increase of $16 million year over year, with an adjusted EBITDA margin of 19%.

Now turning to the balance sheet and cash flow. We ended the quarter with $98.3 million in cash and cash equivalents. This compares to $90.9 million in the prior quarter. Operating cash flow was $14.8 million, up $3.8 million year over year. Free cash flow was $9.6 million, up $6 million year over year.

We have now achieved positive operating cash flow and free cash flow for four consecutive quarters. We expect that the magnitude of cash flow improvement on a quarter-to-quarter basis to vary based on specific timing of invoicing and payments, which you can see in working capital, along with CapEx.

Our second-quarter results reflect the continued strength of our operating leverage and revenue growth. I would like to thank the entire Phreesia team for being able to balance the priorities associated with our mission and values and being good stewards of capital, which helped us to achieve positive net income for the first time in our history.

Transitioning now to our financial outlook for fiscal 2026. We are maintaining our revenue outlook for fiscal year 2026 at a range of $472 million to $482 million. We are updating our adjusted EBITDA outlook for fiscal year 2026 to a range of $87 million to $92 million from a previous range of $85 million to $90 million. That's a $2 million increase at the top and bottom ends of the previous range.

We are reiterating our outlook on AHSCs to reach approximately 4,500 in fiscal year 2026 and for total revenue per AHSC to increase in fiscal 2026 compared to fiscal 2025. As I mentioned earlier, we expect to update our fiscal 2026 financial outlook following the close of the AccessOne transaction.

Operator, we can now begin the Q&A session.

(Operator Instructions) Jared Haase, William Blair.

Congrats on the deal. Maybe I'll just ask the first one on AccessOne. Would love to hear a little bit more just how that deal developed over time. And I guess what gives you the comfort that this is the right asset and the right market for what seems like a fairly large-scale deal relative to what you've done in the past?

Yeah. So look, we've been looking at the space for years. We've known this company for many, many years and a lot of the executives there. We felt a lot of comfort just having watched it. And look, it's a part of the market we haven't been able to play because of both product and regulatory requirements.

And it's something our customers have said would really be beneficial to them. So we feel pretty good about that. We also, like frankly, we think it aligns really well with our mission of making care easier every day. And so we like all the pieces sort of came together and when it became available, we moved pretty aggressively. But it's something we've been watching and paying attention on for years.

And so it wasn't a last-minute decision. It was actually something we talked about as a team for years. And we thought it was something in our arsenal that frankly would just make a lot of sense to the patients that we serve and the providers we serve.

Jailendra Singh, Truth Securities.

Congrats on AccessOne deal, but I want to ask about the Phreesia voice AI product you guys launched during the quarter. It seems like a pretty exciting product for both patients and providers. But can you help us better understand how this product will drive opportunities in Network Solutions business because that's where you are increasing the TAM pretty substantially, just given all the incumbent players in SCP Pharma marketing? Just explain to us like what gives you confidence in terms of getting some traction in that market.

Yeah. Thanks, Jailendra. We did want to take the opportunity to talk about this product because we're very excited about it. It's off to a great start. I think as we've talked about really over several years now, we think about the business holistically, these products that we introduced in the market, when they benefit providers and benefit patients, there are opportunities that creates more engagement opportunities for our Network Solutions revenue. This is just one example.

We also want to take the opportunity to explain that sizing and the TAM that's been increased. I wouldn't read too much into the timing of the two being linked. It's probably something we would have introduced earlier, and we're choosing to do it now.

We are very excited about this product, Jailendra. It's growing rapidly. Our providers are getting -- well, the feedback we're getting from this product from the provider network is like nothing I've seen ever before. So we're really excited and that the investments we're making in it, a lot of these are investments we've been making for quite some time, and now we feel more comfortable talking about them as it's really -- this product has been proliferating across the network. We expect to hear more and more applications around voice AI in the coming quarters.

Jeff Garro, Stephens Incorporated.

Maybe we'll stick with voice AI. And want to ask where this product sits between a call center-type answering service and a nurse triage line and related. Sounds like it can handle some clinical questions, but do you think it can handle more clinical questions in time? Thanks.

So the answer is, yes, we think it will. And we think it's really -- it's not like -- I know today, it is also already providing massive value to doctors, right? They're using it. The feedback is phenomenal from the providers that are using it.

And yes, it's also helping call center folks, it's helping prescription refills, it's helping with appointment booking. It is rapidly helping all of our clients in all different types of scenarios. And I'm so freaking excited about this product. And it's something that's been rolling out in the network for quite some time. And we're now we're just excited that we get to talk about it.

Richard Close, Canaccord Genuity.

Congratulations on the quarter and the acquisition. Just on the new products, voice AI, the AI referrals, and the auto network tags, I'm just curious, are all three on this no risk, no cost model right now here initially? And then how long do you think that will be until some of these new products, new functionality can begin to be a positive driver to the revenue per AHSC? Just curious.

So we believe very strongly as a company that when you have good products, the products should lead with themselves. And so yeah, we let all of our products at any time, any one -- any one of our clients could use them at no cost. And we expect over time, all of these products will have a material impact on our revenue. right?

And frankly, it also just had a material impact on the revenue and the productivity of our clients, which also flows through to our core value proposition. So I am not worried about them in the near future having an impact on our financials as they're already having an impact on the financials of our clients.

And Richard, just in terms of the actual flow through, I don't think any of this is different than some of the products we introduced 2021, 2022, 2023, where it's contributing today and the total revenue per AHSC growth that you're seeing is sort of that waterfall effect, and this will be no different. And that's sort of -- it's a big strength of Phreesia's business model.

Scott Schoenhaus, KeyBanc Capital Markets.

Congrats on the quarter and acquisition. So you reported a healthy 25% growth rate in Network Solutions. Access One expands your team in life sciences. It seems like just from a quick glance, AccesOne is already embedded in health systems with specialty network groups.

Maybe you could just walk through the opportunities on the network solutions side. It seems like you've now more touch points with patients in the payment process, multiple points of engagement, and maybe you can drive more incremental revenue opportunities in network solutions via this acquisition. So just help us walk through those opportunities, please.

Yeah. So Scott, let me correct you on one thing, and hopefully, this is a little clear. We see the AccessOne acquisition aligned with the increase in the TAM in our payment solutions category, which is about $6 billion. And I read the whole footnote and back up to the TAM for you, but I think you can go look it up yourself. But really, that's how you should think about AccessOne in terms of the near-term opportunity for us.

And I think we talked about in the press release and in the letter, they do have a great footprint and work closely with lots of great partners in the health system space but also with other types of medical groups.

Jessica Tassan, Piper Sandler.

Thanks so much for taking the question, and congrats on the deal. On the AccessOne, just the payment extensions to patients. Can you help us understand who bears risk for those dollars as you wait to collect? Thanks.

Sure. Thanks, Jess. So this is really important. You have to understand this. We are not the risk-bearer in this relationship. And so we're able to offerthe provider clients of AccessOne, or I should say, AccessOne is able to offer their clients a more robust payment offering and payment plan offering.

The capital, there's an important partner in this relationship and there are press releases that you could look up from 2023, and that partner is PNC Bank, obviously, one of the largest banks in the country. So the risk is actually shared between PNC Bank and the provider itself. And you should think about us as really helping drive a lot more better solutions to patients in a pretty technology-first way.

Ryan MacDonald, Needham & Company.

Maybe on AccessOne, how should we think about the mix of revenue between sort of just pure interest being collected from payment plans relative to, say, fees charged for the 0% interest rate plan they're offering? And then as we think about the cross-sell opportunity once the acquisition is integrated here, do you think there is a near-term opportunity to sort of cross-sell AccessOne into your core base or move more of your core subscription offerings, core product offerings up into the health system base that AccessOne is already serving? Thanks.

Yeah. So first of all, just to reiterate, we're excited about this and excited to talk about it today, but transaction hasn't closed. So I think we're more than happy to talk a lot more about some of our plans, but we have to get to close this transaction first. So hopefully, everyone appreciates that.

Daniel Grosslight, Citi.

I want to go back to some of your new product development, specifically your AI initiatives. If I look back a few quarters ago, most of your AI initiatives were internal in nature, improving operating leverage, et cetera. Now you're actually shipping monetizable external-facing AI products.

So as you make that shift from internal facing to external product shipping. How are you thinking about the balance between investing in AI for internal improvement versus external product development? What does the product roadmap look like in the future? It sounds like you're most excited about voice AI, but I'm sure there's many more products you guys are having in the pipeline.

And then finally, how do you intend to price these new products, similar to the non-AI products? Or will they be priced at a premium?

Sorry, there's a lot of questions. We got to limit it to one question. And if you have more, you can come back to it.

But why don't I start with -- we've been investing in both internal- and external-facing AI tools. I don't think the answer is one or the other. I think now we just feel more comfortable talking about them publicly. These are things that we've been rolling out to our clients for some time. And look, I think our general view is like lean in first and making sure that the product is really valuable. And when you provide a ton of value to clients and they're appreciative of it, and they see it, it's like monetizing it becomes an afterthought.

And we're generally focused first on building amazing products and making them very valuable to our clients. And then after that, the dollars generally have flown. So we expect to continue to invest both in internal use and external. But I think we're now comfortable saying like we have multiple sets of AI products that have been actively -- they are actually being used by our clients across the board, and we are monetizing them today.

(Operator Instructions) Steven Valiquette, Mizuho Securities.

So another question here on the pending AccessOne acquisition. And I guess, within the class industry rankings, which I know are not always critical, looks like they ranked the number three or number four in the patient financing services category over the past couple of years. But really, my question is really just about their market share.

I guess some of those other players, $35 million in revenue seems kind of low within a $6 billion TAM. I'm not sure if that's the right way to think about market share or not, but just curious to get thoughts on just market share and positioning relative to the size of other players in that space. Thanks.

Yeah, Steven, thanks for the question. And again, we're trying to be as helpful as we can because when we're excited about this, but it's also the largest acquisition we've done to date, but also have to be kind of respectful of the process and get to the other side of things before we could talk more about it. But you've got to sort of back up on the TAM. In the TAM slide, you've got the revenue, so I think you can do some math there yourself.

And we expect to continue to invest in the platform in the product.

Absolutely.

Brian Tanquilut, Jefferies.

Just maybe a question on sales and marketing. Obviously, that continues to go down. So just curious how much more runway do you think we can bring that down both on a dollar basis versus a percentage of revenue? Thanks.

Yeah. I mean, I think what we've seen there, and we've talked a lot about this, just the productivity we've gotten, but also the type of the profile of clients that we're trying to add on the provider side, but also just continue to get a lot of deepening relationships and new ones on the network solutions side. So we're getting good productivity.

But I think we both like to remind people that we are investing pretty significantly in sales and marketing in the dollar amount, and you should expect it to kind of be in these levels. But we're getting some good productivity there.

Eugene Mannheimer, Freedom Capital Markets.

Thank you, and congrats guys on the good numbers this quarter. Just revisiting AccessOne, I know you say you're somewhat limited in what you can talk about. But historically, can you talk about the growth rate of the company in the last couple of years and whether you think that you can accelerate it as part of the free portfolio?

I think what we can say, Gene, is like we didn't acquire it to kind of not grow it, and obviously, I mentioned we're also going to invest in it. We're not going to be able to provide historical numbers on that. The company has a good reputation. And as Chaim said, we followed it for a long time. But we absolutely intend to invest in and grow that.

(Operator Instructions) Richard Close, Canaccord Genuity.

Balaji, I wanted to go back to Jailendra's question on network solutions TAM because I guess I just don't understand why voice AI specifically drives such a large increase in TAM of like $6 billion. So is there any way you can provide some examples or maybe more thoughts on the TAM growth?

Yeah. So Richard, first of all, I think you know sort of how we operate. We want to be really thoughtful about what we share. There's competitive reasons, et cetera.

But I think to the specific question around the TAM, the point I think we're trying to make with Jailendra was that opportunity in the new TAM is big in and of itself. It's not exclusive to the voice AI product. We think that could be one area that could help us penetrate it, but there will be others that you will hear about. So you're getting sort of the opportunity set first, and I think in our fashion, you'll hear you'll hear more about other ones in the future. That's about all we can say.

Jeff Garro, Stephens Incorporated.

I want to make sure we hit network solutions and an updated discussion on visibility the rest of the year and progress to date on the upsell season for pharma advertising. Thanks.

Yeah, I can start, and Chaim can throw anything in. It's still early, Jeff, in that sort of in the calendar. But I think things are off to a good start, long way to go. I think we can say that as we sit here today, we're in a similar place we were last year at this time, the data that we look at. And we'll sort of give you updates along the way, and the next one will be in December.

Steven Valiquette, Mizuho Securities. Mr. Valiquette, your line is open. Please go ahead.

Oh, sorry. Yeah, my follow-up question was just sort of touched on a little bit, but I was just curious again with the network solutions as far as the reacceleration of growth there. Is there any color on whether you were going to be able to add more pharma brands or maybe just better revenue per pharma brand? Just curious if you could provide any more color just from that direction as far as that reacceleration or maybe something else altogether, but just curious to hear about more of the drivers of the reacceleration of growth. Thanks.

Yeah. And so let me -- there's sort of two pieces to that, Steven. So one is, yes, I mean, obviously, our relationships have grown. But there's also just the campaigns that we've sold into the year that we're just pacing throughout the year. And I think that's something that came up in a lot of the follow-ups from last quarter that we expected to see the growth that we saw in the first quarter, and we expected to see the growth we saw in the second quarter.

But as we sort of look at these things over the course of the year and why we don't guide on a quarterly basis on that. But I don't think you should -- I don't know if acceleration is really the way to think about it. But the team is performing really well, and so good about where we are.

Gene Mannheimer, Freedom Capital Markets.

I just wanted to ask if you can share what is the customer overlap, say, between Phreesia's intake solutions and AccessOne's customers?

So yeah, so Gene, again, got to be careful and wait until we close on more detail, but we thought about this topic and that it would be helpful to you. So obviously, we shared one in the press release, and that was intentional. And there's a client mentioned there.

But there are others, and that was another reason we have some familiarity in history with the company from following it for many years is that we do have overlapping customers. I think when we closed the transaction, we'll incorporate that into our AHSC count.

Ryan MacDonald, Needham & Company.

I think I take a second crack at one here too as well. Maybe just to talk about the AI competitive landscape. Chaim, did you say in one of your earlier responses that you are monetizing AI solutions at the moment? And if so, I'd just be curious, now that we're seeing larger platform vendors like Epic starting to release some of their AI functionality, Doximity taking various AI functionality and sort of building it in and offering it for free, can you just talk about sort of what the evolution here is within your customer base on willingness to pay for AI functionality and sort of what the runway is here for monetization of those features? Thanks.

I think the market is massive, right? When we talk to customers, it's not our solution. This is game changing and we see it ourselves, right? We're able to do things that people always frankly dreamed about or could never even imagine dreaming about. The idea of like being able to answer a phone call and help someone schedule a visit is pretty game-changing, right?

So we think the market is massive. And frankly, we have -- yes, to very clearly say we have and are monetizing this product today. And we expect to continue to monetize it, and it is growing rapidly.

Richard Close, Canaccord Genuity.

On the R&D leverage (inaudible) Yeah. All right. So you cited repurposing tools to revenue-generating activities. Can you go into any more detail what exactly that was? And can that continue going forward?

No, Richard, that was like very much like a one-off sort of thing that we wanted to call out. And again, similar to the earlier question about sales and marketing, I mean, we're getting lots of productivity. Sometimes you're getting productivity in different areas. But again, we're investing a lot in R&D, and that's going to continue, but that was -- we just wanted to call out that nuance in the quarter.

Richard, here I thought you were going to ask about Sesame Street.

There are no further questions at this time. I will now turn the call back over to Chaim Indig for closing remarks. Please go ahead.

Thank you, everyone, for joining our earnings call. We look forward to talking to everyone again in 90 days, and I hope everyone has a great fall. Have a great day.

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