Phreesia Inc (PHR) 2021 Q1 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Phreesia Fiscal First Quarter 2021 Earnings Conference Call. (Operator Instructions)

I would now like to introduce Balaji Gandhi, Vice President, Investor Relations for Phreesia. Mr. Gandhi, you may begin.

Thank you, operator. Good morning and welcome to Phreesia's earnings conference call for the first quarter of fiscal year 2021, which ended on April 30, 2020. Participating on today's call from Phreesia are Chief Executive Officer and Co-Founder, Chaim Indig; and Chief Financial Officer, Tom Altier. Following prepared remarks from Chaim and Tom, we will conduct a Q&A session.

The complete disclosure of our results can be found in our earnings press release issued yesterday evening as well as in our related Form 8-K submission to the SEC, both of which 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 following the conclusion of the call.

During today's call, we will make forward-looking statements pursuant to the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, including statements relating to the expected performance of our business, future financial results, our strategy, our partnerships, expected launches of products and services, long-term growth, overall future prospects and the impact of the COVID-19 pandemic on our business. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call, in particular, those described in our risk factors included in our Form 10-Q, which will be filed with the SEC later today. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligation to update them, except as required by applicable law.

We will also refer to certain financial measures not in accordance with generally accepted accounting principles 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 press release and supplemental materials, which were furnished through our Form 8-K filed after the market closed on June 8 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. Good morning, everyone. We hope that everyone listening to today's call is safely adjusting to the challenging guidelines related to the pandemic and are engaged in the activities in your communities that are helping drive much needed social change. We are participating on the call from 3 different locations, so we appreciate your patience with us.

Let me start by acknowledging all of the health care provider organizations and medical professionals for their continued bravery and dedication. We are pleased with our fiscal first quarter results and are proud of our entire team's ability to deliver our results in the challenging pandemic environment. I would like to specifically acknowledge our sales and client services colleagues. These teams exhibited agility and flexibility under rapidly changing circumstances. Their ability to embrace adversity aligns with Phreesia's mission to create a better, more engaging health care experience and is something I admire, particularly as we continue to operate in an uncertain environment into the summer and fall.

For the fiscal first quarter, total revenue was $33.4 million, up 18% year-over-year. The average number of provider clients was 1,632, up 5% year-over-year. Average revenue per provider client was $16,735, up 7% year-over-year.

Adjusted EBITDA was $1.5 million, up $1.8 million year-over-year. Health care providers across the country are beginning to book more appointments. Access to health care is not optional. Patients need to be seen by providers and safety needs to be prioritized.

Now I'll turn the call over to Tom.

Thank you, Chaim, and good morning, everyone. I'll review the income statement, balance sheet and cash flows for the fiscal first quarter, including some considerations for modeling for the rest of the fiscal year.

First, revenue. As Chaim mentioned, total revenue was $33.4 million, up 18% year-over-year. We report our revenue in 3 line items: subscription and related services, which were $15.6 million in the quarter, up 23% year-over-year; payment processing fees, which were $11.7 million in the quarter, up 1% year-over-year; and life sciences, which was $6.1 million in the quarter, up 50% year-over-year.

Let's start with provider revenue, which combines revenue from subscription and related services and payment processing fees. Provider revenue was $27.3 million, up 13% year-over-year. And the 2 drivers of the 13% provider revenue growth were average provider client growth and average revenue per provider client. Average provider clients grew 5% year-over-year, and average revenue per provider client grew 7% year-over-year. Average revenue per provider client growth was directly impacted by a decline in patient visits for our provider clients as the outbreak of COVID-19 resulted in various responses, including government-imposed quarantines.

From the middle of March through the end of April, patient visits declined approximately 50% compared to the beginning of March. The visit decline significantly impacted our payment processing revenue. Consequently, our average revenue per provider client growth was negatively impacted.

We estimate that the decline in patient visits negatively impacted provider revenue growth by approximately $3 million in the quarter and year-over-year average revenue per provider client growth by approximately 13 percentage points. Patient visit trends across our provider network continue to be below pre-COVID-19 levels.

I will now cover life sciences revenue, which was $6.1 million, up 50% year-over-year, and our life science revenue is based largely on the delivery of messages at contracted price per message to targeted patients. Messaging campaigns are sold for a specified number of messages delivered to qualified patients over an expected time frame, and revenue is recognized as the messages are delivered. Strong fiscal first quarter performance was driven by our team successfully selling and expanding some of our current programs. It is also worth noting that we had an easier comparable quarter in life sciences, which impacts the year-over-year growth rate.

Moving on to expenses. I'll review several expense line items on an adjusted non-GAAP basis, which excludes stock-based compensation expense for each line item. Please note that a full reconciliation of GAAP to non-GAAP measures, including adjusted EBITDA, is included in our earnings press release and our form filed with the SEC.

Cost of revenue was $4.6 million or 13.9% of total revenue, which is down 10 basis points year-over-year. Sales and marketing expense was $8.7 million or 26.1% of total revenue, down 60 basis points year-over-year. Research and development expense was $4.6 million or 13.6% of total revenue, down 120 basis points year-over-year. General and administrative expenses were $7.1 million or 21.3% of total revenue, up 40 basis points year-over-year. As we have previously indicated, this figure will increase as a result of continued ramping of public company expenses. From a modeling perspective, we expect to see operating leverage in G&A during fiscal 2022. Payment processing expense was $6.8 million, which declined 1% year-over-year due to lower payment processing volume and some lower-cost payment routing.

It's also worth noting that payment processing revenue was up 1% year-over-year, while expenses were down 1% year-over-year, which is due to a mix of transactions priced with higher per transaction revenue, offset by a decrease in the volume of patient payments.

Adjusted EBITDA was $1.5 million, up $1.8 million year-over-year. This increase reflects the combination of higher total revenue and delayed spending and hiring and lower payment processing expense. Shares outstanding as of April 30 was 37.6 million. Cash on the balance sheet at April 30 was $90.3 million, flat from January 31, 2020, which includes the benefit of $1.7 million in proceeds from the issuance of common stock upon the exercise of stock options.

Cash flow from operations for the quarter was an inflow of $1.9 million versus an inflow of an even $2 million in the prior year quarter. Capital expenditures for the quarter were $3.1 million, up $400,000 year-over-year, and the $3.1 million includes $1.2 million of capitalized software development.

In summary, we're proud of our performance in the quarter in spite of the effects of the pandemic, and I think we're ready to take your questions now. Operator?

(Operator Instructions) Your first question comes from the line of Anne Samuel with JPMorgan.

You spoke on the last call about virtual waiting rooms and other ways to help your patients feel safe returning. So what kind of demand are you seeing for those products? And is that still within your existing customer base? Are you starting to see maybe demand from new customers for that?

Thanks for the -- thanks, Anne, for the question. We -- it's mostly been with our existing clients. The -- and it's placed a ton of demands on our organization, setting up those workflows. We turned on 2-way texts so that you could actually wait in your car for the -- while you're waiting for the doctor. That's been wildly successful. I personally have used Phreesia's virtual waiting room. My youngest had broke her leg about 3 weeks, I guess, 5 weeks ago at this point. And I went to a Phreesia client, waited in the car and in a 2-way text, checked in. And then I -- they told me when it was time to come in, and it was an amazing experience. So we also -- I think there was an article that came out yesterday in The Wall Street Journal, which referenced one of our clients using virtual waiting room. That's -- and that's a good example of that.

That's great. I went to the doctor this week, and waited an hour in the waiting room and wished that they had, had the Phreesia virtual waiting room so I could have sat in my car.

My next question is around the subscription base. You were still able to achieve mid-single-digit growth in provider clients. So is it fair to assume that the sales process saw little impact? Or was there some maybe February outperformance that drove that?

No. I think it would be wrong to say the sales organization hasn't been impacted or implementation. What we saw a lot of the quarter was just carryover from what -- if you think that most of our clients go live within 90 days historically from when we've sold them. We really worked really hard to get as many clients live as we always do at the front of the quarter. And then a lot of those clients, we converted over to what we call ZCI, so Zero-Contact Intake, and kept taking them live all throughout the quarter. So a lot of that is the effect of a very strong execution from the implementation team and a strong quarter end in Q4 last year.

Your next question comes from the line of Ryan Daniels with William Blair.

This is Jared in for Ryan. I'm curious, we've heard a lot about companies focusing on digital patient-focused solutions, things like virtual waiting rooms, intake and telehealth and all this sort of thing. I'm curious if you've seen any early signs of changes in terms of market dynamics or your conversations with providers. Specifically wondering if there are maybe any new players that you're starting to hear about in those conversations in this space that maybe you hadn't competed against in the past. Just any color here would be great.

We -- in the 15, 16 years that we've been doing Phreesia, we've continuously seen new entrants come into the space and try their hand at what is -- what looks like a pretty easy thing to do. What's hard to do is patient intake at scale. And I sort of welcome the idea that there's more companies sort of making noise in the space, because it's sort of rising tide lifts all boats. And most organizations, when they're looking for a solution, tend to look at us at the same time, right, as the market leader. But health care needs innovation, and the more companies investing in that innovation, the better.

Yes. Got it. Yes, that's really helpful. And then maybe just a quick follow-up on the average revenue per provider client in the quarter. Obviously, there were some headwinds related to COVID-19, but you still saw growth there. I'm curious if you've seen any shifts to the extent that there is growth driving that line. Has there been any shift in terms of the specific drivers just around whether the sort of balance between expanding and adding incremental seats of your existing base, clients adding more solutions or selling to larger clients overall?

There's been some shift. I don't think we're prepared to go into detail about that. But that's a great question.

Your next question comes from the line of Stephanie Davis Demko with SVB Leerink.

Just following up on the prior sales question from the queue. When you were not able to close a sale this quarter, how much of that would you attribute to a pushout in demand versus a competitive takeaway versus maybe something else?

I don't think we've seen any change in competitive dynamics. I think mostly we've seen the same thing we've always seen, which is just bandwidth and budget when we haven't won a deal. And I'd say it's probably shifted way more to bandwidth and budget in conversations than traditionally. But I don't think we've seen something unnatural happen. I think it's just hard. People don't -- it's hard to make decisions right now in health care in economic environment that's rapidly changing.

Yes. It's tough to make choices in a very uncertain environment. So continuing on that thread with the uncertainty, you've seen some very early utilization improvements. Looking ahead, do you expect any areas where the recovery could be a bit more elongated, such as surgery centers where it's just -- it would take a little more time in scheduling so we can see some plateau in this recovery?

So I'm sure that you guys have people with MPHs or PhDs and MDs that could give you a better view on what's going to open when. We understand when it's happening, but despite my mother's best desire, I never became a doctor. So I don't think I'm in a position to give a view on how and when pandemics will change and/or when health policy will change in certain states.

I know that people need to get that care, and doctors want to treat their patients. And we know that PPE's become more widely available, and best practices are starting to change rapidly. So do I think that this is a need or a want? I think it's a need, and I think it's going to happen as soon as governments, health care professionals and patients feel comfortable about their safety.

So maybe putting that another way, looking towards the end of the year, would it be wrong to assume a recovery back to par?

Stephanie, I don't know. I have no idea. Like if there's another massive second wave or a third wave, I have absolutely no idea, and I don't want to predict on it. That would be a disservice to all of those people that have a lot more -- a lot better background in that and to our investors.

Our next question comes from the line of Sean Wieland with Piper Sandler.

So the numbers were clearly better than we expected. You braced us last quarter for an air pocket, and maybe we got it in the payment processing business. But clearly, it's not as bad as it could have been. So my question is, is this -- was this market related? Was the market -- did the market stay stronger than you anticipated? Was there elements of the model that were more resilient than you anticipated?

I -- Sean, that's a great question. If I had to put it on one thing, I'd put it on the just phenomenal execution of all parts of the Phreesia organization. We were able to come out with product at breakneck speed that -- such as the things we do for virtual intake, the things we do for Zero-Contact Intake, and those things allowed us to just sort of be top of mind for our implementations that we were kicking off and for our customers that we were a needed solution.

Yes. So -- and then our implementation teams just front-end loaded as much as possible. And our client success team flipped over hundreds and hundreds and hundreds of practices to all different types of workflows in the middle of taking care of their kids. And we did it with like less resources than we probably would have had normally. So I would say it could have gone the other way. And the reason it didn't is just purely the team. Like I -- and I'm just sort of both thankful and proud of them.

Okay. So the follow-up to that is, it sounds like the new client adds in the quarter were mostly signed before the pandemic hit. So what's the cadence here that we should be looking at? If we saw an air pocket in the payment processing growth this quarter, what -- is there an air pocket in new client growth to come? And how should we model that in the back half of the year?

I'm looking -- I miss having Tom next to me at the table, because he'd probably be winking, telling me what to say and -- there's no winking and nodding and Tom telling me what to say, which happens when we're all in different states right now.

I would say that we -- it is not the same selling environment. Where January, we had 65 SDRs, which are sales development reps, right now, I think we have 6 to 7, right? The rest have been reallocated to other parts of the organization. Although we are starting to ramp up hiring again to support our clients and our future prospects, I would say it's not a -- I'd say our offering is something people want, but it's -- I don't think we're going to see that same type of growth for the next couple of quarters that we thought, and it's definitely going to impact some of the subscription. And frankly, it's going to impact cash flow.

Okay. I'm sorry. I got to ask a follow-up to the follow-up. I didn't understand that SDRs. Can you press on that again.

Those are our sales development representatives. So we -- those are the people that do most of our prospecting and qualifying and our future sales reps. So it's part of our early career program.

Okay. You had how many?

We had 65 people doing it, 65. Now we've got 7.

Where did those extra 58 people go?

We spread them around the company, and they volunteered to do any and all types of jobs to sort of make sure that we could support our clients and move over their workflows. We basically moved them to all different roles in the company, support the organization. And it was important to us and important to them. It's been a great experience.

Your next question comes from the line of Matthew Gillmor with Baird.

Chaim, you mentioned cash flow, and DSOs were up a little sequentially. Was that due to the deferral program that you mentioned last call? And more broadly, could you just give us a sense for the financial health of the client base? And are you seeing any type of uptick with bad debt?

I'll take the first part, and then I'll pass it to Tom to answer some of it. Look, I think, health care organizations are hurting. One of the reasons why we wanted to aggressively publish that data to now with The Commonwealth Fund and Harvard is because we wanted to highlight the material impact ambulatory care was having by this pandemic. And you could see in the payment volume, we make a tiny piece of what they make. So if we're down this much, they are. And so I think all providers right now across the country are generally feeling some type of pain.

But we have -- I'll let Tom talk about -- to the days outstanding, and I'm sure that we've seen some -- I know that we've seen a fair bit of impact from that. But I think most doctors went to medical school because I think they wanted to take care of patients, and I don't think this is to deter them from doing more of that. I think it's just caused an economic hardship, which is very sad. And I hope that as a society, we could support all these health care organizations. Tom, do you want to answer the second part of that?

Matt. Yes. Yes, Matt, we are seeing some stretching out of payments. It was not unexpected, and we did increase our allowance. You'll see on the balance sheet a little bit during the period. So we are going to see a reduction in cash flow from operations in the second quarter as a result of that issue. And receivables did increase, which you've noted on the balance sheet.

Got it. That's helpful. And then as a follow-up, I was hoping you could talk a little bit more specifically on the life science revenue. You continue to really meaningfully outperform. I think Tom had mentioned good momentum with the sales front. I was just hoping you could kind of give us a sense for what's going on. Are you delivering more messages? Or do you just have a sort of more opportunities given that the sales are up? Just trying to understand that dynamic and the sustainability.

Our life sciences organization has just done a phenomenal job of supporting their client -- of all of our clients, being able to explain and educate the clients on the changing dynamics. Our life sciences partners have been wildly supportive of the work we've been doing. But just last year, Q1 was frankly lower than we had hoped. But -- so I don't want to say it was an easier comp, but it was a significantly lower comp. And the team just executed and made sure that we had a seamless Q1, so a lot of the programs that had to be resubmitted and redone just sort of went through as early as possible, giving us as much headroom as possible for the quarter.

So just yet again, that team -- and I think I brought it up last quarter, they just did a really good job of just executing, focusing on our clients and making sure that we are able to deliver the most valuable messages to the right patients.

Your next question comes from the line of John Ransom with Raymond James.

Clearly, you've got a piece of your business that's very volume centric, which is the payment side. And you've got the subscription side of the business, which should be less volume weighted. But if we think about the subscription business, let's just say hypothetically, visits are down 25% in a given quarter. How should we think about the effect on that business from a volume standpoint?

Tom?

Chaim, do you want me to answer that one?

Yes. John, could you repeat the...

So how do we think about the sensitivity of the subscription -- so revenue per -- the subscription revenue per provider, how was that, if at all, weighted to changes in volume?

There is some. The overwhelming majority, though, is not as much tied to volume. I'd say, yes. Tom, did I get that right?

Yes, that's correct. Very few customers have revenue tied to visits. It's -- generally, we're on a per provider per month revenue basis.

And I know your provider is not always a provider. A provider can include a large system or it could be an individual doctor practice. But just at a high level, to use the baseball analogy, what inning are you in, in terms of up-tiering your customers from, say, the base subscription rate to something closer to the full monty in terms of your -- all your full package of services?

Oh, well, that's such a new way to ask a question. I don't think we'll ever -- I don't think I've ever thought I'd be saying the full monty on an earnings call. So I think the best way to think about that is we're continuously trying to drive more of our clients to use more parts of our products. And I'd say we're in the very early parts of that for the vast majority of our clients. And frankly, we have parts of our offering that weren't around at the start of this year, such as Zero-Contact Intake and telehealth. So I think what I want to impress upon our investors is something that's been important to us for our entire existence, is that we're going to keep investing in innovation in health care. And so it's not just what we have today. It's what we will have. And we think that's really important for just -- for our mission, improving the health care experience. And I think that health care needs a lot of innovation, whether from us or from other stakeholders. And I think that's important.

And just the last follow-up. The -- we shouldn't expect when you do your third survey with The Commonwealth Fund, at that time, you might give the market a glimpse of what's happening intra-quarter with your volume trends.

I think I'm pretty sure that they're going to do another -- we're going to do another release with The Commonwealth Fund. And frankly, I think I saw internally a conversation around that. And if that's the case, I know Balaji will file a -- work with the team and will file an 8-K, and you should be able to see some trends. And we think that's important to drive the conversation on the impact this pandemic's having on the health care system and patients.

Your next question comes from the line of Donald Hooker with KeyBanc.

So just to follow up on the earlier question on the life sciences revenues. I think you mentioned -- I was scribbling notes down here, but I think you mentioned that there was a nice year-over-year -- an easy year-over-year comp. But I guess the truth is, even on a rolling 4-quarter basis, those revenues have been really strong. Is there any kind of large project? I mean how many programs are you working on there? Is there anything kind of one time? Because I know that you've mentioned in the past, there's some lumpiness there. But is there any one kind of drug or a brand that's maybe driving abnormally strong demand?

It's a great question. I'm not going to provide any guidance or view on that. But it's a great question, and I would ask the same kind of one. And I would say that we don't provide much visibility on the number of programs we're doing and who we're doing them for. And if you're really interested, you should go check into a doctor's office. And if that program is needed for your health, you could definitely see it.

Okay. Fair enough. And then maybe just my one follow-up would be, you commented and we all see the sort of the struggles of ambulatory providers in the U.S. right now. Has there been much need on your behalf to provide any sort of price concessions temporarily? Or I think Tom mentioned some -- maybe some lenient payment terms. But maybe on the revenue line, would there be any sort of concessions there that we should sort of brace ourselves for in the coming months?

We -- I'll let Tom answer. We haven't really -- we just tried to be as flexible to our provider organizations and health system clients as possible. I think if you do the right thing, you take the high road, you usually -- that's the road that's less traveled than the one I'd prefer to be on. So we'll do as much as possible to try to help our clients out, whether it's with products or workflow or implementation or training or pricing and/or deferral. So we try as best as we can. These people are doing really, really important work, treating their patients. And I think that we have alignment between our Board, our employees. And most of the investors that we've talked to have been not only supportive but very happy that we're doing that.

Your next question comes from the line of Glen Santangelo with Guggenheim.

Chaim, just let me ask you quickly about the balance sheet. A few minutes ago, you talked about that the company wants to continue to invest in innovation. And I'm kind of curious if any of the dramatic changes in the market are making you rethink some of the strategic priorities or uses for the cash on your balance sheet, maybe with respect to M&A or any new strategic growth opportunities.

I -- that's a great question. I think my general view is the balance sheet that we have is really there to support our planned growth. We've looked at things over the years. I think our core focus has been continuously innovating and meeting the needs of our clients and investing in the people we have and will have and the clients that we will have.

M&A is not something that's top of mind, and -- but it's not something that's off the table. Really, if it accelerates product development or adds the right members to the team, it's something we'll consider. But I feel pretty strongly in our ability to continuously innovate and invest in client growth organically. And it's just been the way we've operated for 15, 16 years since Evan and I started the company.

Okay. Maybe if I can just ask one quick follow-up question on the 5% client growth. It kind of sounds like -- asking the question in a different way. It kind of sounds like that the result this quarter was really due to strong execution from 4Q and maybe some good implementation in terms of this quarter. But as we think about the environment having changed pretty dramatically in mid-March, and you commented that it's impacting the selling process going forward, is it fair to say that we should maybe expect a little bit of an air pocket in terms of client growth as we look out to fiscal 2Q, just given the environment that we find ourselves in right now?

Our seasoned IR guy, Balaji, says we shouldn't make those type of forward statements. So I'm looking at him shaking his head dramatically. So I would say that we had -- the team has worked really hard. We did have a couple of decent weeks at the start of Q1. So -- and it's not just the selling motion. It's our implementation organization, our customer success team and the deployment of products that we've had. So I'm not going to comment on air pocket, but I will say just flat out, this is a very, very different environment than the one we were in January and February, March -- and the first couple of weeks of March.

Your next question comes from the line of Jamie Stockton with Wells Fargo.

I guess, maybe the first one, the Commonwealth data, the last release that I saw on that, I think, was kind of second week of May data. That was down something like 30% year-over-year or maybe versus the baseline, I guess. Is there any more recent kind of view of what you guys are seeing that you could give us closer to the end of May or the first week of June?

I don't think we're prepared to give any view on volume or how it's structured. If we do, it's going to be released in conjunction with The Commonwealth Fund and Harvard, and it's really not -- we're not doing this to give visibility to our investors. We're doing this to help participate in the policy debate and educate all the stakeholders in what's happening in the health care ecosystem, right? And if you guys get benefit from it, then that's good. But it's generally our view that we're going to publish this in the same way we have been.

And when we won't publish it anymore, we won't publish it anymore with them. But I think we still have -- I think it's coming out in a couple of weeks. Balaji, is that right?

Yes, that's right. At the end of June.

I think they're targeting end of June.

Okay. And then maybe just a quick question on the cost front. So I don't know if Tom wants to take this or not. But the second quarter should reflect kind of the full quarter of trying to make sure that you guys are doing what you can to keep costs down. I guess I would be curious. I know you don't have a ton of visibility into what the revenue is going to look like. But theoretically, maybe there's a little more on the cost front from a visibility standpoint. Is there anything specifically that we should be watching out for as we kind of model the second quarter from a cost standpoint?

Jamie, I think we mentioned on the earlier call that we had frozen hiring. And we're going to be looking at that again in the second quarter. I think we're going to be increasing hiring. And obviously, on travel, I think we're still going to be highly restricted, so I'm not sure we're going to see much movement there. But we are going to see -- we should expect some increase in expenses, and we're going to definitely see a reduction in cash flow from operations in the second quarter.

Your next question comes from the line of Sean Dodge with RBC Capital Markets.

Maybe Chaim or Tom, taking a little bit of a longer-term view of Jamie's question. You mentioned restarting hiring. I guess with visit volumes tracking back up again and looking like maybe on a path back to normal, is this a large-scale restart? Or how are you thinking about balancing the reramping of spending and investing against what could be still a somewhat depressed revenue environment for the next couple of quarters?

I think we have -- I think we've decided as an organization to start rehiring in our early career program. And we have a whole bunch of people starting next week in that program. You should expect larger cash flows this fiscal year versus last. I'll let Tom handle that. But one of the things that we found in sort of the long-term growth of Phreesia, is that if we don't hire into our early career program now, it has a material, long-lasting effect in the years to come. Those people become our senior implementation leads in a couple of years. And some of them, like I've watched them. Some of you have met them, but I've watched them, start their careers at Phreesia and turn into just these phenomenal leaders and rock stars at our organization. And so a lot of the bet we're making is not just now, it's on our future growth. Tom, do you want to handle the cash outflow issue?

Yes. As I mentioned, Sean, we expect cash flow from operations to be negative in the quarter and also for the full year, a little bit higher than last year, a higher outflow than last year in terms of your modeling.

Okay. That's helpful. And then maybe a quick one on the telehealth offering. Is there any updates you can give us on things like what proportion of your provider clients are using this solution or maybe what proportion of the payments you processed during the quarter were derived from telehealth visits?

I'm not going to give visibility on the payment flow. I will say the majority of our clients are -- some more than 50% of our clients, I believe approximately, have the telehealth offering. In fact, that's probably more info than I usually give.

(Operator Instructions) Your next question comes from the line of David Larsen with Verity.

Can you talk a little bit about your relationship with RCM? And they obviously recently acquired Cerner RevWorks solution or services tied to that. Like is there any sort of near-term in-sell opportunity into Cerner's base? And how far along are you with the hospital solution in an ideal world? Like when would that be up and running?

Those are some great questions. First, I'll make a comment on -- Joe and his team at RCM have been great partners. They have been -- they're just phenomenal operators. And I think that they're -- they have just the ability internally to be able to execute really well, and we're proud to have partnered with them until now and into the future. And we've really done a phenomenal amount of innovation with them.

And I'll let them talk about the Cerner acquisition because, frankly, they know more about it than I ever will. And so all I can say there is that it's a really strong partnership that's just making a material difference to patients and health care systems. And we're really proud of that partnership, and I think Joe and his team have done a phenomenal job, and we're really proud to partner with them. And I could promise you that as we have something to say around the hospitals and the acute space, Balaji will create a slide and will make us talk about it. So that's sort of our view and doing -- we've sort of stuck to it. We think hospital and acute is really hard, and we've done a little bit, Memorial, which is -- which The Wall Street Journal published an article about yesterday. Memorial is using our solution in acute, probably much sooner than we would have anticipated.

So we think we have something long term that could be of value. And when we have more visibility about it, we think it's our responsibility to educate our investors about that. And until then, we'll sort of punt on it.

Okay. So Memorial is actually using your solution for acute care intake at their registrar sites now? It's fully functional.

That's correct.

Okay. Great. And then with these 58 SDRs, what's keeping them from selling right now? I imagine that you have probably at least one SDR in each state, so they could probably drive to different physician offices. I mean when will they be sort of back selling to doc offices in your mind? And if you have patient volumes of holding maybe 20%, I mean, physician offices are still seeing 80% of their workload. There's still activity there. What's preventing them from getting on the road right now and selling? When in your mind will they all be back in their roles, operating in a sales capacity?

I think we'll -- so first off, just to clarify, most of them are in the RTP, North Carolina business triangle area, not in the field. And it was mostly phone-based prospecting. I think we'll start slowly ramping them up over the quarter, and a lot of it has to do with a lot of practices in calling on them. We found that a lot of it just had to do with bandwidth, right? So they still have a tremendous amount of furloughed staff, right? They still -- they're getting their volumes back and just what we have to be thoughtful about is what and how do they want calls placed in them. Because we're playing a long game here, and a lot of this has to do with reputation. And I've done that job early in my career, and you want to make sure that you're not on the wrong end of too many really angry people when you're cold calling.

So we think that, that's -- it's important, and we'll ramp it up slowly over the next couple of months. And I know those folks are itching to get back on the phones. They're -- it is a phenomenal group of individuals.

Okay. Great. And then just last one, any color around bookings for the quarter or signed contracts that you can share? And if not, that's totally understandable.

That is not something we have or ever will give visibility on. So -- but it's a great question.

This concludes our question-and-answer session. I will now turn the call back over to Chaim Indig for closing remarks.

Thank you, everyone, and I really appreciate everyone's interest in Phreesia and your support. We hope that everyone is staying safe and is really advocating for the needed social change that our society needs. And I just want to thank all of my peers and teammates at Phreesia for their dedication and hard work. It means -- it's the most proud thing to be able to work next to them. And I miss them, seeing them in person. Cheers, everybody.

Ladies and gentlemen, this concludes today's conference call. On behalf of Phreesia, thank you for participating. You may now disconnect.