Phreesia Inc.

09/05/2025 | Press release | Distributed by Public on 09/05/2025 14:03

Quarterly Report for Quarter Ending July 31, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with our unaudited consolidated financial statements and related notes and other financial information appearing elsewhere in this Quarterly Report on Form 10-Q and our financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025, filed with the SEC on March 13, 2025. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. As a result of many factors, including those factors set forth under "Risk Factors" and "Special Note Regarding Forward-Looking Statements": in this Quarterly Report on Form 10-Q, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the follow discussion and analysis.
Financial Highlights
•Total revenue increased 15% to $117.3 million in the three months ended July 31, 2025, as compared to $102.1 million in the three months ended July 31, 2024.
•Total revenue increased 15% to $233.2 million in the six months ended July 31, 2025, as compared to $203.3 million in the six months ended July 31, 2024.
•Net income was $0.7 million in the three months ended July 31, 2025, as compared to net loss of $18.0 million in the three months ended July 31, 2024.
•Net loss was $3.3 million in the six months ended July 31, 2025, as compared to $37.7 million in the six months ended July 31, 2024.
•Adjusted EBITDA was $22.1 million in the three months ended July 31, 2025, as compared to $6.5 million in the three months ended July 31, 2024.
•Adjusted EBITDA was $42.9 million in the six months ended July 31, 2025, as compared to $10.6 million in the six months ended July 31, 2024.
•Net cash provided by operating activities was $14.8 million for the three months ended July 31, 2025, as compared to $11.1 million for the three months ended July 31, 2024.
•Net cash provided by operating activities was $29.7 million for the six months ended July 31, 2025, as compared to $10.3 million for the six months ended July 31, 2024.
•Free cash flow was $9.6 million for the three months ended July 31, 2025, as compared to $3.7 million for the three months ended July 31, 2024.
•Free cash flow was $17.1 million for the six months ended July 31, 2025, as compared to negative $2.5 million for the six months ended July 31, 2024.
•Cash and cash equivalents as of July 31, 2025 was $98.3 million, an increase of $14.1 million as compared to January 31, 2025.
For a reconciliation of Adjusted EBITDA to net income (loss) and a reconciliation of free cash flow to net cash provided by operating activities, and for more information as to how we calculate such measures, see the section below titled "Non-GAAP financial measures."
Overview
We are a leading provider of comprehensive software solutions that improve the operational and financial performance of healthcare organizations and improve health outcomes by helping patients take a more active role in their care. Phreesia's mission is to make care easier every day. We have created an integrated and streamlined system that automates data capture and activates patients before, during and after their interaction with their healthcare services provider. Our solutions include SaaS-based integrated tools that manage patient access, registration and payments. We offer tools to communicate with patients about their health that have demonstrated increased rates of preventive care and vaccinations. Additionally, our solutions include clinical assessments to screen patients for a variety of physical, behavioral and mental health conditions, helping providers better understand their patients and connect them to needed services, resulting in improved health outcomes. We also provide life sciences companies, government entities, patient advocacy, public interest and not-for-profit and other organizations with a channel for direct education and communication with patients in a privacy-protected
environment. Our solutions also include additional products and services such as the MediFind provider directory, which helps patients find care based on providers' specialty and condition expertise.
We serve an array of healthcare services clients of all sizes across over 25 specialties, ranging from single-specialty practices, including internal and family medicine, urology, dermatology, and orthopedics, to large, multi-specialty groups, and health systems as well as other organizations that provide other types of healthcare-related services. Our network solutions clients include life sciences companies in the pharmaceutical, biotechnology and medical device industries, as well as government entities, patient advocacy, public interest and other not-for-profit organizations seeking to activate, engage and educate patients about topics critical to their health. Our goal is to help patients have more informed conversations to help them make decisions about their care.
We derive revenue from (i) subscription fees from healthcare services clients for access to our solutions and related professional services fees, (ii) payment processing fees based on levels of patient payment volume processed through our solutions and (iii) fees from life sciences companies and other organizations for delivering direct communications to help activate, engage and educate patients about topics critical to their health using our solutions. We also generate revenue through our additional products and services such as the MediFind provider directory, which helps patients find care based on providers' specialty and condition expertise. We have strong visibility into our business as the majority of our revenue is derived from recurring subscription fees and re-occurring payment processing fees.
We market and sell our products and services to healthcare services prospects throughout the U.S. using a direct sales organization. Our database team is responsible for the hygiene and health of our data and is tasked with validating information by using various tools to enrich it. This data powers our sales development organization. Our marketing team identifies customer profiles, develops content and deploys one-to-many communications to soften the market. This helps prepare our sales development team to engage with new prospective customers. The sales development team creates opportunities and works with the direct sales team to qualify those opportunities. Our sales force executes on these qualified sales leads, partnering with our sales enablement and client services functions to ensure prospects are educated on the breadth of our capabilities and demonstrable value proposition, with the goal of attracting and retaining clients and expanding their use of our solutions over time. Most of our healthcare services customer contracts are structured as annual, auto-renewing agreements. Our sales typically involve competitive processes, and sales cycles have, on average, varied in duration from three months to six months, depending on the size of the potential client. After we secure new deals, our sales team offers additional add-on solutions and services to healthcare services customers, expanding the breadth of solutions provided to clients, which we believe increases customer satisfaction and retention. In addition, through Phreesia University (Phreesia's in-house training program), live and virtual events, we help our healthcare services clients optimize their businesses and, as a result, support client retention.
We also sell products and services to life sciences companies and other organizations, healthcare advertising agencies, government entities and advocacy groups through our direct sales and marketing teams. Unlike healthcare services programs, most of the life science campaigns need to be measured and resold each year. Like healthcare services, the marketing team supports net new business and client retention for network solutions by educating ideal customer profiles about the value of Phreesia and the positive impact on health outcomes Phreesia campaigns have on patients.
Since our inception, we have focused substantially all of our sales efforts within the United States. Accordingly, substantially all of our revenue from historical periods has come from the United States, and our current strategy is to continue to focus substantially all of our sales efforts within the United States.
Our revenue growth has been primarily organic and reflects our significant addition of new healthcare services clients. New healthcare services clients are defined as clients that go live in the applicable period and existing healthcare services clients are defined as clients that go live in any period before the applicable period.
Recent developments and current economic conditions
AccessOne Acquisition
On August 29, 2025, we entered into a definitive agreement (the "Merger Agreement") to acquire AccessOne Parent Holdings, Inc. (together with its subsidiaries, "AccessOne"), for total cash consideration of $160 million, subject to customary closing and post-closing adjustments (the "AccessOne Acquisition"). The transaction is expected to close during the third quarter or early fourth quarter of our 2026 fiscal year, subject to customary closing conditions and regulatory approvals. In connection with, and concurrently with entry into, the Merger Agreement, we entered into a debt commitment letter which provides for a new senior secured bridge loan facility (the "Bridge Loan"), subject to
the satisfaction of certain conditions. We intend to finance the acquisition through a combination of cash from our balance sheet and proceeds from the Bridge Loan.
AccessOne is a market leader in providing financing solutions for healthcare receivables, working with some of the largest health systems in the U.S. AccessOne takes minimal credit risk and offers healthcare providers a scalable, compliant and operationally efficient tool that improves collections without undermining patient trust. We believe the addition of AccessOne's platform is a natural progression that will integrate well with our existing products.
See Note 17 - Subsequent events in Part I - Item 8 of this Quarterly Report on Form 10-Q for additional information regarding the AccessOne Acquisition.
Macroeconomic environment and geopolitical conditions
Our business is directly and indirectly affected by macroeconomic conditions, geopolitical conditions and the state of global financial markets. Geopolitical uncertainty resulting, in part, from the military conflict between Russia and Ukraine and the conflict in the Middle East, as well as other macro-economic conditions, such as the impact of pandemics, changes in interest rates, inflation in the cost of goods, services and labor, tariff and trade issues, or a recession or an economic slowdown in the U.S. or internationally, have contributed to significant volatility and declines in global financial markets. The uncertainty over the extent and duration of the ongoing conflicts and these macroeconomic conditions continues to cause disruptions to businesses and markets worldwide. Additionally, the change in U.S. presidential administration has resulted in, and may continue to cause, additional geopolitical and macroeconomic uncertainty. While none of these factors individually has had a material impact on our business to date, it is difficult to predict the potential impact these factors may have on our future business results or in the financial condition or purchasing patterns of our customers, partners and suppliers, and each could adversely impact our business operations, financial performance and results of operations. We continue to closely monitor these macroeconomic and geopolitical developments and their potential impact on our business and financial condition.
Key Metrics
We regularly review the following key metrics to measure our performance, identify trends affecting our business, formulate financial projections, make strategic business decisions and assess working capital needs.
Three months ended
July 31,
Six months ended
July 31,
(Unaudited)
2025 2024 2025 2024
Key Metrics:
Average number of healthcare services clients ("AHSCs")
4,467 4,169 4,439 4,117
Total revenue per AHSC $ 26,249 $ 24,494 $ 52,532 $ 49,388
•AHSCs. We define AHSCs as the average number of clients that generate subscription and related services or payment processing fees revenue each month during the applicable period. In cases where we act as a subcontractor providing white-label services to our partner's clients, we treat the contractual relationship as a single healthcare services client. We believe growth in AHSCs is a key indicator of the performance of our business and depends, in part, on our ability to successfully develop and market our solutions to healthcare services organizations that are not yet clients. We believe growth in AHSCs provides useful information to investors as an important indicator of expected revenue growth. In addition, growth in AHSCs informs our management of the areas of our business that will require further investment to support expected future AHSC growth. For example, as AHSCs increase, we may need to add to our customer support team and invest to maintain effectiveness and performance of our solutions for our healthcare services clients and their patients.
•Total revenue per AHSC.We define total revenue per AHSC as total revenue in a given period divided by the number of AHSCs during that same period. Our healthcare services clients directly generate subscription and related services and payment processing fees revenue. Additionally, our relationships with healthcare services clients who subscribe to our solutions give us the opportunity to engage with life sciences companies, government entities, patient advocacy, public interest and not-for-profit and other organizations who deliver direct communication to patients through our solutions. As a result, we believe that our ability to increase total revenue per AHSC provides useful information to investors as an indicator of the long-term value of our solutions. Total revenue per AHSC was $26,249 for the three months ended
July 31, 2025 compared to $24,494 for the same period in the prior year, an increase of 7%. The increase was primarily driven by revenue growth that outpaced AHSC growth.
Additional Information
Three months ended
July 31,
Six months ended
July 31,
(Unaudited)
2025 2024 2025 2024
Patient payment volume (in millions) $ 1,250 $ 1,093 $ 2,564 $ 2,259
Payment facilitator volume percentage 82 % 81 % 82 % 81 %
•Patient payment volume. We believe that patient payment volume is an indicator of both the underlying health of our healthcare services clients' businesses and the continuing shift of healthcare costs to patients. We measure patient payment volume as the total dollar volume of transactions between our healthcare services clients and their patients utilizing our payment platform, including via credit and debit cards that we process as a payment facilitator as well as cash and check payments and credit and debit transactions for which we act as a gateway to other payment processors.
•Payment facilitator volume percentage. We define payment facilitator volume percentage as the volume of credit and debit card patient payments that we process as a payment facilitator as a percentage of total patient payment volume. Payment facilitator volume is a major driver of our payment processing fees revenue.
Components of consolidated statements of operations
Revenue
We generate revenue primarily from providing an integrated SaaS-based software and payment platform for the healthcare industry. We derive revenue from subscription fees and related services generated from our healthcare services clients for access to our solutions, payment processing fees based on the levels of patient payment volume we process, and from fees from life sciences companies and other organizations for delivering direct communications to help activate, engage and educate patients about topics critical to their health.
Our total revenue consists of the following:
•Subscription and related services.We primarily generate subscription fees from our healthcare services clients based on the number of healthcare services clients that subscribe to and utilize our solutions. Our healthcare services clients are typically billed monthly in arrears, though in some instances, healthcare services clients may opt to be billed quarterly or annually in advance. Subscription fees are typically auto-debited from healthcare services clients' accounts every month. As we target and add larger enterprise healthcare services clients, these clients may choose to contract differently than our typical per healthcare services client subscription model. To the extent we charge in an alternative manner with larger enterprise healthcare services clients, we expect that such a pricing model will recur and, combined with our per healthcare services client subscription fees, will increase as a percentage of our total revenue. In addition, we receive certain fees from healthcare services clients for professional services associated with our implementation services as well as travel and expense reimbursements, shipping and handling fees, leasing and sales of hardware (PhreesiaPads and Arrivals Kiosks), on-site support and training.
•Payment processing fees.We generate revenue from payment processing fees based on the number of transactions and the levels of patient payment volume processed through our solutions. Payment processing fees are generally calculated as a percentage of the total transaction dollar value processed and/or a fee per transaction. The remainder of our patient payment volume is composed of credit and debit transactions for which Phreesia acts as a gateway to another payment processor, and cash and check transactions. Patient payment responsibility typically declines as a share of total spending as the calendar year progresses due to benefit design. Consistent with that trend, payment volume on a per client basis has historically been lower in the second half of our fiscal year as compared to the first half of our fiscal year.
•Network solutions. We generate revenue from life sciences companies and other organizations for delivering direct communications to patients. As we expand our healthcare services client base, we increase the number of new patients we can reach to deliver our direct communications to help activate, engage and educate patients about topics critical to their health on behalf of life sciences companies and other organizations.
Cost of revenue (excluding depreciation and amortization)
Our cost of revenue (excluding depreciation and amortization) primarily consists of labor costs, including salaries, stock-based compensation, benefits and bonuses for implementation and technical support, as well as outside services costs. Cost of revenue (excluding depreciation and amortization) also includes infrastructure costs to operate our solutions such as hosting fees and fees paid to various third-party providers for access to their technology, as well as costs to verify insurance eligibility and benefits.
Payment processing expense
Payment processing expense consists primarily of interchange fees set by payment card networks that are ultimately paid to the card-issuing financial institution, assessment fees paid to payment card networks, and fees paid to third-party payment processors and gateways. Payment processing expense may increase as a percentage of payment processing fees revenue if card networks raise pricing for interchange and assessment fees or if we reduce pricing to our clients.
Sales and marketing
Sales and marketing expense consists primarily of labor costs, including salaries, stock-based compensation, benefits, bonuses and commission costs for our sales and marketing personnel, as well as outside services costs. Sales and marketing expense also includes costs for advertising, promotional and other marketing activities, as well as certain fees paid to various third-party partners for sales and lead generation. Advertising is expensed as incurred.
Research and development
Research and development expense consists of costs to develop our products and services that do not meet the criteria for capitalization as internal-use software. These costs consist primarily of labor costs, including salaries, stock-based compensation and benefits for our development personnel, as well as outside services costs. Research and development expense also includes third-party partner fees and third-party consulting fees.
General and administrative
General and administrative expense consists primarily of labor costs, including salaries, stock-based compensation and benefits for our executive, finance, legal, security, human resources, information technology and other administrative personnel, as well as outside services costs. General and administrative expense also includes software costs to support our finance, legal and human resources operations, insurance costs as well as fees to third-party providers for accounting, legal and consulting services, costs for various non income-based taxes and software costs.
Depreciation
Depreciation represents depreciation expense for PhreesiaPads and Arrivals Kiosks, data center and other computer hardware, purchased computer software, furniture and fixtures and leasehold improvements.
Amortization
Amortization primarily represents amortization of our capitalized internal-use software related to our solutions as well as amortization of acquired intangible assets.
Other income (expense), net
Our other income and expense line items consist of the following:
•Other income (expense), net. Other expense, net consists of foreign currency-related losses and gains and other miscellaneous income (expense).
•Interest income. Interest income consists of interest earned on our cash and cash equivalent balances.
•Interest expense. Interest expense consists primarily of the interest incurred on our financing obligations as well as amortization of discounts and deferred financing costs.
Income tax benefit (expense)
Based upon our cumulative pre-tax losses in recent years and available evidence, we have determined that it is more likely than not that substantially all of our U.S. deferred tax assets as of July 31, 2025 will not be realized in the near term. Consequently, we have established a valuation allowance against our deferred tax assets that are not more likely than not to be realized. In future periods, if we conclude we have future taxable income sufficient to realize the deferred tax assets, we may reduce or eliminate the valuation allowance. Benefit (expense) from income
taxes also includes U.S. state and local income taxes and foreign income taxes. We record unrecognized tax benefits as liabilities or as reductions to deferred tax assets and adjust these balances when our judgment changes as a result of the evaluation of new information previously not available.
On July 4, 2025, President Trump signed into law the One Big Beautiful Bill Act ("OBBBA"). We reflected the estimated impact of the OBBBA in the year-to-date and quarterly tax provision as of July 31, 2025. Further analysis will be performed through year-end; however, it is not expected to have a material impact on our effective tax rate due to the valuation allowance position recorded against the Company's deferred tax assets that are not more likely than not to be realized.
Comparison of results of operations for the three and six months ended July 31, 2025 and 2024
(unaudited)
Revenue
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Subscription and related services $ 53,702 $ 48,612 $ 5,090 10 %
Payment processing fees 28,392 25,300 3,092 12 %
Network solutions 35,161 28,203 6,958 25 %
Total revenue $ 117,255 $ 102,115 $ 15,140 15 %
•Subscription and related services. Our subscription and related services revenue from healthcare services organizations increased $5.1 million to $53.7 million for the three months ended July 31, 2025, as compared to $48.6 million for the three months ended July 31, 2024, primarily due to new healthcare services clients as well as expansion of and cross-selling to existing healthcare services clients.
•Payment processing fees. Our revenue from patient payments processed through our solutions increased $3.1 million to $28.4 million for the three months ended July 31, 2025, as compared to $25.3 million for the three months ended July 31, 2024, due to the addition of new healthcare services clients, which drove increases in patient visits and patient payments processed through our platform.
•Network solutions.Our revenue from life sciences companies and other organizations increased $7.0 million to $35.2 million for the three months ended July 31, 2025, as compared to $28.2 million for the three months ended July 31, 2024, due to an increase in engagement, education programs and deeper patient outreach among the existing programs.
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Subscription and related services $ 108,057 $ 95,354 $ 12,703 13 %
Payment processing fees 58,317 52,360 5,957 11 %
Network solutions 66,817 55,618 11,199 20 %
Total revenue $ 233,191 $ 203,332 $ 29,859 15 %
•Subscription and related services. Our subscription and related services revenue from healthcare services organizations increased $12.7 million to $108.1 million for the six months ended July 31, 2025, as compared to $95.4 million for the six months ended July 31, 2024, primarily due to new healthcare services clients as well as expansion of and cross-selling to existing healthcare services clients.
•Payment processing fees. Our revenue from patient payments processed through our solutions increased $6.0 million to $58.3 million for the six months ended July 31, 2025, as compared to $52.4 million for the six months ended July 31, 2024, due to the addition of new healthcare services clients, which drove increases in patient visits and patient payments processed through our platform.
•Network solutions.Our revenue from life sciences companies and other organizations increased $11.2 million to $66.8 million for the six months ended July 31, 2025, as compared to $55.6 million for the six months ended July 31, 2024, due to an increase in engagement, education programs and deeper patient outreach among the existing programs.
Cost of revenue (excluding depreciation and amortization)
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Cost of revenue (excluding depreciation and amortization) $ 17,398 $ 16,143 $ 1,255 8 %
Cost of revenue (excluding depreciation and amortization) increased $1.3 million to $17.4 million for the three months ended July 31, 2025, as compared to $16.1 million for the three months ended July 31, 2024. The increase resulted primarily from a $2.8 million increase in other third-party costs, partially offset by a $1.6 million decrease in labor costs.
Stock compensation incurred related to cost of revenue was $0.9 million and $1.2 million for the three months ended July 31, 2025 and 2024, respectively.
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Cost of revenue (excluding depreciation and amortization) $ 34,035 $ 31,866 $ 2,169 7 %
Cost of revenue (excluding depreciation and amortization) increased $2.2 million to $34.0 million for the six months ended July 31, 2025, as compared to $31.9 million for the six months ended July 31, 2024. The increase resulted primarily from a $5.0 million increase in other third-party costs, partially offset by a $2.8 million decrease in labor costs.
Stock compensation incurred related to cost of revenue was $2.0 million and $2.5 million for the six months ended July 31, 2025 and 2024, respectively.
Payment processing expense
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Payment processing expense $ 20,243 $ 16,668 $ 3,575 21 %
Payment processing expense increased $3.6 million to $20.2 million for the three months ended July 31, 2025, as compared to $16.7 million for the three months ended July 31, 2024. The increase resulted primarily from the increase in payment processing fees revenue and patient payments processed through our solutions, each driven by an increase in patient visits over the prior year.
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Payment processing expense $ 41,671 $ 34,965 $ 6,706 19 %
Payment processing expense increased $6.7 million to $41.7 million for the six months ended July 31, 2025, as compared to $35.0 million for the six months ended July 31, 2024. The increase resulted primarily from the increase in payment processing fees revenue and patient payments processed through our solutions, each driven by an increase in patient visits over the prior year.
Sales and marketing
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Sales and marketing $ 25,396 $ 30,184 $ (4,788) (16) %
Sales and marketing expense decreased $4.8 million to $25.4 million for the three months ended July 31, 2025, as compared to $30.2 million for the three months ended July 31, 2024. The decrease resulted primarily from a $6.2 million decrease in labor costs, partially offset by a $1.4 million increase in other third-party sales and marketing costs.
Stock compensation incurred related to sales and marketing expense was $4.7 million and $5.3 million for the three months ended July 31, 2025 and 2024, respectively.
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Sales and marketing $ 51,439 $ 62,195 $ (10,756) (17) %
Sales and marketing expense decreased $10.8 million to $51.4 million for the six months ended July 31, 2025, as compared to $62.2 million for the six months ended July 31, 2024. The decrease resulted primarily from a $12.2 million decrease in labor costs, partially offset by a $1.5 million increase in other third-party sales and marketing costs.
Stock compensation incurred related to sales and marketing expense was $9.9 million and $11.1 million for the six months ended July 31, 2025 and 2024, respectively.
Research and development
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Research and development $ 29,274 $ 29,542 $ (268) (1) %
Research and development expense decreased $0.3 million to $29.3 million for the three months ended July 31, 2025, as compared to $29.5 million for the three months ended July 31, 2024. The decrease resulted primarily from a $0.6 million decrease in other third-party costs, partially offset by a $0.4 million increase in software costs.
Stock compensation incurred related to research and development expense was $4.2 million and $3.6 million for the three months ended July 31, 2025 and 2024, respectively.
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Research and development $ 61,103 $ 58,423 $ 2,680 5 %
Research and development expense increased $2.7 million to $61.1 million for the six months ended July 31, 2025, as compared to $58.4 million for the six months ended July 31, 2024. The increase resulted primarily from a $1.5 million increase in software costs, a $0.9 million increase in labor costs and a $0.3 million increase in other third-party costs.
Stock compensation incurred related to research and development expense was $8.6 million and $7.3 million for the six months ended July 31, 2025 and 2024, respectively.
General and administrative
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
General and administrative $ 19,042 $ 19,497 $ (455) (2) %
General and administrative expense decreased $0.5 million to $19.0 million for the three months ended July 31, 2025, as compared to $19.5 million for the three months ended July 31, 2024. The decrease primarily resulted from a $1.8 million decrease in labor costs, partially offset by a $1.3 million increase in other third-party costs.
Stock compensation incurred related to general and administrative expense was $6.4 million and $6.3 million for the three months ended July 31, 2025 and 2024, respectively.
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
General and administrative $ 35,450 $ 38,549 $ (3,099) (8) %
General and administrative expense decreased $3.1 million to $35.5 million for the six months ended July 31, 2025, as compared to $38.5 million for the six months ended July 31, 2024. The decrease primarily resulted from a $2.6 million decrease in labor costs and a $0.5 million decrease in other third-party costs.
Stock compensation incurred related to general and administrative expense was $12.9 million and $12.5 million for the six months ended July 31, 2025 and 2024, respectively.
Depreciation
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Depreciation $ 3,279 $ 3,921 $ (642) (16) %
Depreciation expense decreased $0.6 million to $3.3 million for the three months ended July 31, 2025, as compared to $3.9 million for the three months ended July 31, 2024. The decrease was primarily attributable to lower computer equipment depreciation.
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Depreciation $ 6,265 $ 7,445 $ (1,180) (16) %
Depreciation expense decreased $1.2 million to $6.3 million for the six months ended July 31, 2025, as compared to $7.4 million for the six months ended July 31, 2024. The decrease was primarily attributable to lower computer equipment depreciation.
Amortization
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Amortization $ 4,130 $ 3,382 $ 748 22 %
Amortization expense increased $0.7 million to $4.1 million for the three months ended July 31, 2025 as compared to $3.4 million for the three months ended July 31, 2024. The increase was primarily driven by higher amortization of capitalized internal-use software development costs.
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Amortization $ 8,022 $ 6,531 $ 1,491 23 %
Amortization expense increased $1.5 million to $8.0 million for the six months ended July 31, 2025 as compared to $6.5 million for the six months ended July 31, 2024. The increase was primarily driven by higher amortization of capitalized internal-use software development costs.
Other income (expense), net
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Other income (expense), net $ 336 $ (86) $ 422 (491) %
Other income (expense), net was income of $0.3 million for the three months ended July 31, 2025 as compared to expense of $0.1 million for the three months ended July 31, 2024. Other income (expense), net is comprised primarily of foreign exchange gains and losses due to changes in rates and other miscellaneous income (expense).
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Other income (expense), net $ 674 $ (117) $ 791 (676) %
Other income (expense), net was income of $0.7 million for the six months ended July 31, 2025 as compared to expense of $0.1 million for the six months ended July 31, 2024. Other income (expense), net is comprised primarily of foreign exchange gains and losses due to changes in rates and other miscellaneous income (expense).
Interest income, net
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Interest income, net
$ 608 $ 46 $ 562 1222 %
Interest income, net was income of $0.6 million for the three months ended July 31, 2025, as compared to income of less than $0.1 million for the three months ended July 31, 2024. The increase is primarily attributable to the timing of interest received during the three months ended July 31, 2025.
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Interest income, net
$ 378 $ 285 $ 93 33 %
Interest income, net was income of $0.4 million for the six months ended July 31, 2025, as compared to income of $0.3 million for the six months ended July 31, 2024. The increase is primarily attributable to the timing of interest received during the six months ended July 31, 2025.
Income tax benefit (expense)
Three months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Income tax benefit (expense)
$ 1,217 $ (750) $ 1,967 (262) %
Income tax benefit (expense) was a tax benefit of $1.2 million for the three months ended July 31, 2025, as compared to a tax expense of $0.8 million for the three months ended July 31, 2024. The increase in benefit from income taxes relates primarily to a deferred tax benefit recognized as a discrete item during the three months ended July 31, 2025.
Six months ended
July 31,
($ in thousands) 2025 2024 $ Change % Change
Income tax benefit (expense)
$ 482 $ (1,260) $ 1,742 (138) %
Income tax benefit (expense) was a tax benefit of $0.5 million for the six months ended July 31, 2025, as compared to a tax expense of $1.3 million for the six months ended July 31, 2024. The increase in benefit from income taxes relates primarily to a deferred tax benefit recognized as a discrete item during the six months ended July 31, 2025.
Non-GAAP financial measures
Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income or loss or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of our liquidity. We calculate Adjusted EBITDA as net income or loss before interest income, net, income tax (benefit) expense, depreciation and amortization, and before stock-based compensation expense and other (income) expense, net.
We have provided below a reconciliation of Adjusted EBITDA to net income (loss), the most directly comparable GAAP financial measure. We have presented Adjusted EBITDA in this Quarterly Report on Form 10-Q because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short and long-term operational plans. In particular, we believe that the exclusion of the amounts eliminated in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are as follows:
•Although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
•Adjusted EBITDA does not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) the potentially dilutive impact of non-cash stock-based compensation; (3) tax payments that may represent a reduction in cash available to us; or (4) interest income, net; and
•Other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.
Because of these and other limitations, you should consider Adjusted EBITDA along with other GAAP-based financial performance measures, including various cash flow metrics, net income (loss), and our GAAP financial results. The following table presents a reconciliation of Adjusted EBITDA to net income (loss) for each of the periods indicated:
Three months ended
July 31,
Six months ended
July 31,
(in thousands, unaudited) 2025 2024 2025 2024
Net income (loss)
$ 654 $ (18,012) $ (3,260) $ (37,734)
Interest income, net
(608) (46) (378) (285)
Income tax (benefit) expense
(1,217) 750 (482) 1,260
Depreciation and amortization 7,409 7,303 14,287 13,976
Stock-based compensation expense 16,230 16,448 33,455 33,288
Other (income) expense, net (336) 86 (674) 117
Adjusted EBITDA $ 22,132 $ 6,529 $ 42,948 $ 10,622
We calculate free cash flow as net cash provided by operating activities less capitalized internal-use software development costs and purchases of property and equipment.
Additionally, free cash flow is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business, making strategic investments, partnerships and acquisitions and strengthening our financial position.
The following table presents a reconciliation of free cash flow from net cash provided by operating activities, the most directly comparable GAAP financial measure, for each of the periods indicated:
Three months ended
July 31, 		Six months ended
July 31,
(in thousands, unaudited) 2025 2024 2025 2024
Net cash provided by operating activities
$ 14,835 $ 11,061 $ 29,685 $ 10,340
Less:
Capitalized internal-use software (3,435) (2,976) (7,323) (7,546)
Purchases of property and equipment (1,767) (4,427) (5,271) (5,303)
Free cash flow $ 9,633 $ 3,658 $ 17,091 $ (2,509)
Liquidity and capital resources
As of July 31, 2025 and January 31, 2025, we had cash and cash equivalents of $98.3 million and $84.2 million, respectively. Cash and cash equivalents consist of money market mutual funds and cash on deposit.
In addition, we also have potential borrowing capacity under our credit agreement subject to certain restrictive covenants.
Subsequent to quarter end, on August 29, 2025, we entered into the Merger Agreement to acquire AccessOne for total cash consideration of $160 million, subject to customary closing and post-closing adjustments. In connection with, and concurrently with entry into, the Merger Agreement, we entered into a debt commitment letter which provides for a new senior secured bridge loan facility, subject to the satisfaction of certain conditions. The Company intends to finance the AccessOne Acquisition through a combination of cash from its balance sheet and proceeds from the Bridge Loan.
We believe that our existing cash and cash equivalents, along with cash generated in the normal course of business and the Bridge Loan, will be sufficient to meet our needs for at least the next 12 months.
Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under "Risk Factors."
In the event that additional financing is required from outside sources, we may be unable to raise the funds on acceptable terms, if at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition could be adversely affected.
Capital One facility
In December 2023, we entered into a 5-year $50 million senior secured asset-based revolving credit facility ("Capital One Credit Facility") maturing in December 2028, which includes a swingline sub-limit of at least $5.0 million and a letter of credit sub-limit of at least $5.0 million. The Capital One Credit Facility was entered into with Capital One, N.A. ("Capital One") acting as administrative agent and replaces our previous senior secured revolving credit facility with Silicon Valley Bank, which we terminated on the same date. We believe the Capital One Credit Facility will give us additional financial flexibility through fiscal 2028. The facility is available to us for working capital and general corporate purposes.
The obligations under the Capital One Credit Facility are secured by a first priority security interest in substantially all of our tangible and intangible assets, and by pledges of the equity of certain of our U.S. subsidiaries, in each case subject to customary exclusions.
The Capital One Credit Facility includes financial covenants including but not limited to requiring us to maintain minimum Consolidated EBITDA, minimum Liquidity, a minimum Consolidated Fixed Charge Coverage Ratio and limiting the amount of cash and cash equivalents we hold outside Capital One, each as defined in the Credit Agreement. We were in compliance with all covenants related to the Capital One Credit Facility as of July 31, 2025.
We believe that our cash and cash equivalents along with cash generated in the normal course of business are sufficient to fund our operations for at least the next twelve months.
Financing agreements
In June 2023, we entered into a financing agreement to obtain financing for internal-use software and related software support. As of July 31, 2025, there was $1.3 million in outstanding principal and interest due under the agreement. The financing agreement requires us to pay $0.1 million per month for 36 months beginning August 2023. The effective interest rate on the agreement is 10.5% per annum.
The following table summarizes our sources and uses of cash for each of the periods presented:
Three months ended
July 31, 		Six months ended
July 31,
(in thousands, unaudited) 2025 2024 2025 2024
Net cash provided by operating activities
$ 14,835 $ 11,061 $ 29,685 $ 10,340
Net cash used in investing activities (5,202) (7,403) (12,594) (12,849)
Net cash used in financing activities (2,149) (1,381) (2,987) (3,206)
Effect of exchange rate changes on cash and cash equivalents (89) (6) (58) (7)
Net increase (decrease) in cash and cash equivalents $ 7,395 $ 2,271 $ 14,046 $ (5,722)
Operating activities
The primary sources of cash from operating activities are cash received from our customers and interest earned on our money market mutual funds. The primary uses of cash for operating activities are for payroll, payments to suppliers, payments for operating leases, as well as cash paid for interest on our finance leases and other borrowings and cash paid for various sales, property and income taxes.
During the three and six months ended July 31, 2025, net cash provided by operating activities was $14.8 million and $29.7 million, respectively, as our cash received from customers in connection with our normal operations exceeded our cash paid to employees and suppliers.
During the three and six months ended July 31, 2024, net cash provided by operating activities was $11.1 million and $10.3 million, respectively, as our cash received from customers in connection with our normal operations exceeded our cash paid to employees and suppliers.
The change in net cash provided by operating activities was driven primarily by an increase in cash received from customers driven by higher revenues during the three months ended July 31, 2025.
Investing activities
During the three months ended July 31, 2025, net cash used in investing activities was $5.2 million, principally resulting from $3.4 million of capitalized internal-use software costs, as well as $1.8 million of purchases of property and equipment, principally for software and computer equipment.
During the three months ended July 31, 2024, net cash used in investing activities was $7.4 million, principally resulting from capital expenditures, the majority of which consisted of $4.4 million of purchases of property and equipment, principally for software and computer equipment, as well as $3.0 million of capitalized internal-use software costs.
During the six months ended July 31, 2025, net cash used in investing activities was $12.6 million, principally resulting from $7.3 million of capitalized internal-use software costs, as well as $5.3 million of purchases of property and equipment, principally for software and computer equipment.
During the six months ended July 31, 2024, net cash used in investing activities was $12.8 million, principally resulting from capital expenditures, the majority of which consisted of $7.5 million of capitalized internal-use software costs, as well as $5.3 million of purchases of property and equipment, principally for software and computer equipment.
Financing activities
During the three months ended July 31, 2025, net cash used in financing activities was $2.1 million, primarily consisting of $2.8 million used for principal payments on finance leases and financing arrangements, partially offset by $0.7 million in proceeds from our equity compensation plans.
During the three months ended July 31, 2024, net cash used in financing activities was $1.4 million, primarily consisting of $2.3 million used for principal payments on finance leases and financing arrangements, partially offset by $0.9 million in proceeds from our equity compensation plans.
During the six months ended July 31, 2025, net cash used in financing activities was $3.0 million, primarily consisting of $4.5 million used for principal payments on finance leases and financing arrangements, partially offset by $1.6 million in proceeds from our equity compensation plans.
During the six months ended July 31, 2024, net cash used in financing activities was $3.2 million, primarily consisting of $3.9 million used for principal payments on finance leases and financing arrangements and $1.4
million used for principal payments on acquisition-related liabilities, partially offset by $2.2 million in proceeds from our equity compensation plans.
Material cash requirements
Our material cash requirements relate to human capital, contractual purchase commitments, leases and financing arrangements, and the AccessOne Acquisition.
During the three and six months ended July 31, 2025, we entered into a new non-cancelable purchase commitment to support our technology infrastructure. Total undiscounted payments through July 31, 2027 are $12,242.
During the six months ended July 31, 2025, there were no other significant changes in our material cash requirements as compared to the material cash requirements from known contractual and other obligations described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025, filed with the SEC on March 13, 2025.
See "Liquidity and capital resources" above for information regarding the Capital One Credit Facility, the AccessOne Acquisition and the impact on our cash and cash equivalents, liquidity and sources of funds available for our material cash requirements.
Critical accounting policies and estimates
The preparation of the consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenue and expenses during the reporting period. Our most significant estimates and judgments involve revenue recognition, the fair value of assets acquired in business combinations, capitalized internal-use software, income taxes, and valuation of our stock-based compensation. Actual results may differ from these estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations and cash flows will be affected.
There have been no significant changes in our critical accounting policies and estimates during the six months ended July 31, 2025 as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended January 31, 2025, filed with the SEC on March 13, 2025.
Phreesia Inc. published this content on September 05, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on September 05, 2025 at 20:03 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]