Phreesia, Inc. (NYSE:PHR) Q4 2024 Earnings Call Transcript March 14, 2024
Phreesia, Inc. beats earnings expectations. Reported EPS is $-0.00056, expectations were $-0.58.
PHR isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good evening, ladies and gentlemen. Welcome to the Phreesia’s Fiscal Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will provide instructions for the question-and-answer session to follow. First, I would like to introduce Balaji Gandhi, Phreesia’s Chief Financial Officer. Mr. Gandhi, you may begin.
Balaji Gandhi: Thank you, operator. Good evening, and welcome to Phreesia’s earnings conference call for the fiscal fourth quarter of 2024, which ended on January 31, 2024. Joining me on today’s call is Chaim Indig, our Chief Executive Officer. A more complete discussion of our results can be found in our earnings press release and in our related Form 8-K submission to the SEC, including our quarterly stakeholder letter, both issued after the markets closed today. These documents are available on the Investor Relations section of our website at ir.phreesia.com. As a reminder, today’s call is being recorded and a replay will be available on our Investor Relations website at ir.phreesia.com following the conclusion of the call.
During today’s call, we may make forward-looking statements, including statements regarding trends, our anticipated growth, our strategies, predictions about our industry, and the anticipated performance of our business, including our outlook regarding future financial results. Forward-looking statements are subject to various risks, uncertainties, and other factors that may cause actual results, performance or achievements to differ materially from those described in our forward-looking statements. Such risks are described more fully in our earnings press release, our stakeholder letter, and our risk factors included in our SEC filings, including in our quarterly report on Form 10-K that will be filed with the SEC tomorrow. The forward-looking statements made on this call will be based on our current views and expectations and speak only as of the date on which the statements are made.
We undertake no obligation to update and expressly disclaim the obligation to update these forward-looking statements to reflect events or circumstances after the date of this call or to reflect new information or the occurrence of unanticipated events. We may also refer to certain financial measures not in accordance with generally accepted accounting principles in order to provide additional information to investors. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release and stakeholder letter, which were furnished with our Form 8-K filed after the market closed today with the SEC and may also be found on our Investor Relations website at ir.phreesia.com.
I will now turn the call over to our CEO, Chaim Indig.
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Q&A Session
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Chaim Indig: Thank you, Balaji, and good evening, everyone. Thank you for participating in our fourth quarter earnings call. Our stakeholder letter and earnings release were published about an hour ago. Let me start the call with a couple of highlights. I am very pleased with our fourth quarter and fiscal year performance both financially and operationally. Phreesia is in a new era that extends our impact beyond patient intake. Our growing set of solutions expands our capabilities outside of the point of care, while still aligning with our mission to make care easier every day. In fiscal 2024, we facilitated more than 150 million patient visits, approximately 25% more than fiscal 2023. For the fourth quarter, total revenue was $95 million, up 24% year-over-year.
Adjusted EBITDA was negative $3.5 million, a $14 million improvement year-over-year. Before I turn it to Balaji to discuss our fiscal 2025 outlook, I would like to thank my Phreesia colleagues for their hard work and commitment to our mission. I’d also like to thank our clients and investors for their continued support. We are all very proud of the work we do and are excited to continue to deliver growth while returning to profitability in fiscal 2025. Let me now hand it over to Balaji.
Balaji Gandhi : Thanks, Chaim, and good evening, everyone. We provided our initial outlook for fiscal 2025 when we released our fiscal third quarter results on December 5 last year. Today, we are maintaining our revenue outlook for fiscal year 2025 at $424 million to $434 million. We are also updating our adjusted EBITDA outlook for fiscal year 2025 to a new range of $12 million to $20 million from a previous range of $10 million to $20 million. Our updated outlook reflects our ongoing focus on improving efficiency and operating leverage. We are also providing a forecast for the number of average healthcare services clients or AHSCs we expect to add in the first quarter of fiscal 2025. We expect to see AHSCs increase by at least 100 in the first quarter compared to the fourth quarter as we prioritize AHSC prospects that we believe can drive profitable revenue growth across subscription and related services, payment processing, and network solutions.
It is worth noting that our forecast for AHSC growth in the first quarter was incorporated into our fiscal 2025 revenue outlook, which we provided back in December and we are now maintaining. One final note. We believe, that our current cash and cash equivalents balance, along with cash generated in the normal course of business, give us sufficient flexibility to reach our outlook for fiscal 2025 and to plan for continued profitable growth in fiscal 2026. Operator, I think we can now open it up to Q&A.
Operator: The floor is now open for your questions. [Operator Instructions] [Audio Gap] The next question comes from the line of Ryan Daniels with William Blair.
Ryan Daniels : Balaji, I want to ask you a question about the 100 average client adds. It seems very deliberate in your language about prioritizing prospects that can drive profitable growth. Can you dive into that? Is that really more of a focus on certain specialties that can add more growth and things like network solutions or have higher billing prospects, a better payment processing sales? Just any color there as that stood out to me?
Balaji Gandhi: Sure, Ryan. And, I apologize for the, I think we had some technical difficulty on the first question. So whoever that was dialing in, maybe come back into the queue. And Ryan, on your question, I think this goes back to some comments we made last quarter in our letter. And I think you’re hitting on some of the points, which is, it’s revenue, it’s profitability, but it’s also payback and the return we get. So, we feel really good about the clients that we’re adding currently and expect to in the future in terms of the type of revenue and the type of profit we expect to generate off them. And that’s really probably all we’d say at this point.
Ryan Daniels : And then a quick follow-up for you. Anything we should consider with the profitability cadence in Q1 given number one, some of the noise would change? And then number two, I noticed you had an all employee event probably have some cost associated with that. I don’t know if it’s enough to move the needle, but any of those two things can have an impact?
Balaji Gandhi: So I think the event that we talked about was a Q4 event. So those costs were largely in the fourth quarter. In terms of change, I think we can maybe talk a little bit more about that if anyone answers the question. But I think in terms of guidance or the outlook and the cadence, nothing really to call out, Ryan. I think we’d call out though there is seasonality around payments, which are stronger, which has an impact on margin. That’s nothing new this year versus previous years.
Operator: Our next question comes from the line of Richard Close with Canaccord Genuity.
Richard Close: Maybe just go down the change path a little bit farther. I noticed in the letter you talked about security investments. And just curious what you’re doing there? How you’re helping clients with security? And maybe just discuss your high level thoughts on change, the change hack and any impacts, positive, negative, that you see?
Chaim Indig: Yes. So I think thanks for the question, Richard. This is Chaim. I’ll try to break down the question a little bit and then we’ll try to answer some of the commentary around change. In the letter, we reference our investment security and I think that’s really wanting to call out to all of our stakeholders that we, over the last couple of years, have been dramatically increasing our internal spend, both as an absolute dollar and as a percentage in security and compliance. And we think it is really important. We take our role as a steward of data and unbelievably seriously. But also to be fair, we know how much our clients depend on our service, and we expect to keep increasing that investment and it’s baked into our R&D number and Balaji, I’m sure can talk more about that.
