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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________
FORM 8-K
___________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported)
March 22, 2023
___________________________________
Phreesia, Inc.
(Exact name of registrant as specified in its charter)
___________________________________
Delaware
(State or other jurisdiction of incorporation or organization)
001-38977
(Commission File Number)
20-2275479
(I.R.S. Employer Identification Number)
1521 Concord Pike, Suite 301 PMB 221
Wilmington, Delaware 19803
(Address of principal executive offices and zip code)

(888) 654-7473
(Registrant's telephone number, including area code)
___________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading symbol(s) Name of each exchange on which registered
Common Stock, par value $0.01 per share PHR The New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company  ☐   
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Item 2.02 - Results of Operations and Financial Condition

On March 22, 2023, Phreesia, Inc. (the “Company”) announced its financial results for the fiscal year ended January 31, 2023 by issuing a Letter to Stakeholders (the "Letter") and a press release. Copies of the press release and the Letter are furnished as Exhibits 99.1 and 99.2 to this Current Report on Form 8-K, respectively, and are incorporated by reference herein.

The information furnished under this Item 2.02 and in the accompanying Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.


Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
Exhibit Number Description
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)




SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: March 22, 2023 Phreesia, Inc.
By: /s/ Randy Rasmussen
Name: Randy Rasmussen
Title: Chief Financial Officer



EX-99.1 2 phr-ex991q4fy23.htm EX-99.1 Document

Exhibit 99.1
Phreesia Announces Fourth Quarter Fiscal 2023 Results
WILMINGTON, Delaware, March 22, 2023 – Phreesia, Inc. (NYSE: PHR) (“Phreesia” or the "Company") announced financial results today for the fiscal fourth quarter and fiscal year ended January 31, 2023.

"There were many accomplishments and milestones achieved during Phreesia’s 18th year and fourth as a public company. We experienced challenges, opportunities and successes, and we greatly appreciate the hard work of our team members as well as the support and partnership of our clients and investors", said CEO and Co-Founder Chaim Indig.

Please visit the Phreesia investor relations website at ir.phreesia.com to view the Company's Q4 Fiscal Year 2023 Stakeholder Letter.


Fiscal Fourth Quarter Ended January 31, 2023 Highlights
•Revenue was $76.6 million in the quarter, up 32% year-over-year.
•Average number of healthcare services clients ("AHSCs") was 3,140 in the quarter, up 36% year-over-year.
•Healthcare services revenue per AHSC was $17,705 in the quarter, down 4% year-over-year. The decline was primarily driven by healthcare services client growth significantly outpacing growth in payment processing volume and payment processing revenue. See "Key Metrics" below for additional information.
•Total revenue per AHSC was $24,390 in the quarter, down 3% year-over-year. The decline was primarily driven by healthcare services client growth significantly outpacing growth in payment processing volume and payment processing revenue. See "Key Metrics" below for additional information.
•Net loss was $38.0 million in the quarter compared to $46.5 million in the same period in the prior year.
•Adjusted EBITDA was negative $17.6 million in the quarter compared to negative $30.5 million in the same period in the prior year.
•Cash and cash equivalents as of January 31, 2023 was $176.7 million, down $32.9 million from October 31, 2022.
Fiscal Year Ended January 31, 2023 Highlights
•Revenue was $280.9 million in fiscal year 2023, up 32% year-over-year.
•AHSCs were 2,856 in fiscal year 2023, up 38% year-over-year.
•Healthcare services revenue per AHSC was $72,599 in fiscal year 2023, down 6% year-over-year. The decline was primarily driven by AHSC growth significantly outpacing growth in payment processing volume and payment processing revenue. See "Key Metrics" below for additional information.
•Total revenue per AHSC was $98,358 in fiscal year 2023, down 4% year-over-year. The decline was primarily driven by AHSC growth significantly outpacing payment processing volume and revenue growth. See "Key Metrics" below for additional information.
•Net loss was $176.1 million in fiscal year 2023, as compared to $118.2 million in fiscal year 2022.
•Adjusted EBITDA was negative $92.5 million in fiscal year 2023, as compared to negative $59.0 million in fiscal year 2022.
•Cash and cash equivalents as of January 31, 2023 was $176.7 million, down from $313.8 million as of January 31, 2022.

Recent Events
On March 10, 2023, Silicon Valley Bank ("SVB") was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation ("FDIC") as receiver. On March 9, 2023, we transferred a substantial portion of our cash and cash equivalents from SVB to other financial institutions.


We had total cash and cash equivalents of approximately $170 million as of March 10, 2023.
On March 12, 2023, a Joint Statement by the U.S. Treasury, Federal Reserve, and FDIC, and a statement by the Federal Reserve Board, was issued stating that actions were approved enabling the FDIC to complete its resolutions of SVB in a manner that fully protects all depositors. As a result of our actions to move a substantial portion of our cash to other financial institutions and the actions taken by the FDIC on March 12, 2023, we have determined that all of our cash and cash equivalents continue to be available for our use.
We are also party to the Third SVB Facility which contains certain restrictive covenants including a covenant that limits our ability to retain specified levels of cash in accounts outside of SVB. On March 10, 2023, in connection with the transfer of a substantial portion of our cash and cash equivalents from SVB to other financial institutions, we obtained consent from SVB to hold up to $165 million of cash in accounts outside SVB until May 15, 2023. The consent serves to permit us to borrow against the Third SVB Facility once the cash and cash equivalents retained outside of SVB are compliant with the covenant and so long as we remain in compliance with all other covenants under the Third SVB Facility. With the exception of this consent, the SVB developments and related FDIC actions noted above have not materially impacted our financial position or our operations.
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 12 months.

Fiscal Year 2024 Outlook
For the full fiscal year 2024 ending January 31, 2024, we expect revenue to be between $353 million and $356 million, implying year-over-year growth of 26% to 27%. For the full fiscal year 2024, ending January 31, 2024, we expect Adjusted EBITDA to be between negative $65 million and negative $60 million.

We have not reconciled our Adjusted EBITDA outlook to GAAP Net income (loss) because we do not provide an outlook for GAAP Net income (loss) due to the uncertainty and potential variability of Other (income) expense, net and (Benefit from) provision for income taxes, which are reconciling items between Adjusted EBITDA and GAAP Net income (loss). Because we cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP Net income (loss). For further information regarding the non-GAAP financial measures included in this press release, including a reconciliation of GAAP to non-GAAP financial measures and an explanation of these measures, please see “Non-GAAP financial measures” below.

Fiscal Year 2025 Target

We are maintaining our $500 million revenue target to be achieved by annualizing our highest-revenue quarter in fiscal year 20251 and continue to expect to reach profitability2 in fiscal year 2025. We also believe our cash and cash equivalents, along with cash generated in the normal course of business, can support our path to our fiscal year 2025 targets.

We believe our platform and diverse revenue streams offer us multiple paths for achieving our targets.

1 For our target revenue, annualized is defined as multiplying the highest-revenue quarter in fiscal year 2025 by four.
2 For the purposes of this statement, we define "profitability" in terms of Adjusted EBITDA.
Available Information
We intend to use our Company website (including our Investor Relations website) as well as our Facebook, Twitter, LinkedIn and Instagram accounts as a means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Forward Looking Statements
This press release includes express or implied statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain projections of our future results of operations or of our financial information or state other forward-looking information. These statements include, but are not limited to, statements regarding: our future financial and operating performance, including our revenue, Adjusted EBITDA and our ability to reach profitability in fiscal year 2025; our ability to finance our plans to achieve our 2025 targets with our current cash balance and cash generated in the normal course of business; our outlook for fiscal year 2024 (including with respect to Adjusted EBITDA) and fiscal year 2025 targets.


In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control, including, without limitation, risks associated with: our ability to effectively manage our growth and meet our growth objectives; our focus on the long-term and our investments in growth; the competitive environment in which we operate; our ability to develop and release new products and services; our ability to develop and release successful enhancements, features and modifications to our existing products and services; our ability to maintain the security and availability of our platform; changes in laws and regulations applicable to our business model; our ability to make accurate predictions about our industry and addressable market; the impact of pandemics or epidemics on our business and economic conditions; our ability to attract, retain and cross-sell to healthcare services clients; our ability to continue to operate effectively with a primarily remote workforce and attract and retain key talent; our ability to realize the intended benefits of our acquisitions; the recent high inflationary environment and other general, market, political, economic and business conditions (including as a result of the warfare and/or political and economic instability in Ukraine or elsewhere). The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those listed or described in our filings with the Securities and Exchange Commission (“SEC”), including in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023 that will be filed with the SEC following this press release. The forward-looking statements in this press release 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, any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law.

This press release includes certain non-GAAP financial measures as defined by SEC rules. We have provided a reconciliation of those measures to the most directly comparable GAAP measures, with the exception of our Adjusted EBITDA outlook for the reasons described above.

Conference Call Information
We will hold a conference call on Wednesday March 22, 2023, at 5:00 p.m. Eastern Time to review our fiscal fourth quarter and fiscal year 2023 financial results. To participate in our live conference call and webcast, please dial (888) 350-3437 (or (646) 960-0153 for international participants) using conference code number 4000153 or visit the “Events & Presentations” section of our Investor Relations website at ir.phreesia.com. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.



ABOUT PHREESIA
Phreesia provides healthcare organizations a suite of robust applications to manage the patient intake process. Our innovative SaaS platform engages patients in their healthcare and provides a modern, convenient experience, while enabling our clients to enhance clinical care and drive efficiency.

Investor Relations Contact:
Balaji Gandhi
Phreesia, Inc.
investors@phreesia.com
(929) 506-4950

Media Contact:

Nicole Gist
Phreesia, Inc.
nicole.gist@phreesia.com
(407) 760-6274



Phreesia, Inc.
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share data)
January 31, 2023 January 31, 2022
Assets
Current:
Cash and cash equivalents $ 176,683  $ 313,812 
Settlement assets 22,599  19,590 
Accounts receivable, net of allowance for doubtful accounts of $1,053 and $863 as of January 31, 2023 and 2022, respectively 51,394  40,262 
Deferred contract acquisition costs 1,056  1,642 
Prepaid expenses and other current assets 10,709  11,043 
Total current assets 262,441  386,349 
Property and equipment, net of accumulated depreciation and amortization of $59,847 and $53,321 as of January 31, 2023 and 2022, respectively 21,670  34,645 
Capitalized internal-use software, net of accumulated amortization of $37,236 and $31,139 as of January 31, 2023 and 2022, respectively 35,150  17,643 
Operating lease right-of-use assets 569  2,337 
Deferred contract acquisition costs 1,754  2,437 
Intangible assets, net of accumulated amortization of $2,549 and $1,178 as of January 31, 2023 and 2022, respectively 11,401  12,772 
Deferred tax asset 81  515 
Goodwill 33,736  33,621 
Other assets 3,255  4,157 
Total Assets $ 370,057  $ 494,476 
Liabilities and Stockholders’ Equity
Current:
Settlement obligations $ 22,599  $ 19,590 
Current portion of finance lease liabilities and other debt 5,172  5,821 
Current portion of operating lease liabilities 934  1,281 
Accounts payable 10,836  5,119 
Accrued expenses 21,810  20,128 
Deferred revenue 17,688  16,493 
Total current liabilities 79,039  68,432 
Long-term finance lease liabilities and other debt 2,725  7,423 
Operating lease liabilities, non-current 349  1,276 
Long-term deferred revenue 125  65 
Total Liabilities 82,238  77,196 
Commitments and contingencies (Note 11)
Stockholders’ Equity:
Common stock, $0.01 par value—500,000,000 shares authorized as of both January 31, 2023 and 2022; 54,187,172 and 52,095,964 shares issued as of January 31, 2023 and 2022, respectively 542  521 
Additional paid-in capital 926,957  860,657 
Accumulated deficit (606,084) (429,938)
Treasury stock, at cost, 971,236 and 301,003 shares as of January 31, 2023 and 2022, respectively (33,596) (13,960)
Total Stockholders’ Equity 287,819  417,280 
Total Liabilities and Stockholders’ Equity $ 370,057  $ 494,476 



Phreesia, Inc.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share data)
 
  Three months ended
January 31,		 Fiscal Year ended
January 31,
  2023 2022 2023 2022
Revenue:
Subscription and related services $ 35,813  $ 26,445  $ 128,975  $ 95,514 
Payment processing fees 19,780  16,140  78,368  65,201 
Network solutions 20,993  15,435  73,567  52,518 
Total revenue 76,586  58,020  280,910  213,233 
Expenses:
Cost of revenue (excluding depreciation and amortization) 15,123  12,459  58,944  42,669 
Payment processing expense 12,841  9,897  50,323  38,719 
Sales and marketing 36,260  37,206  151,263  106,421 
Research and development 25,398  17,495  91,244  52,265 
General and administrative 19,856  21,738  80,384  68,674 
Depreciation 4,625  4,268  17,988  14,985 
Amortization 2,296  1,573  7,316  6,317 
Total expenses 116,399  104,636  457,462  330,050 
Operating loss (39,813) (46,616) (176,552) (116,817)
Other income (expense), net 29  60  (175) (78)
Interest income (expense), net 1,592  (328) 1,064  (1,084)
Total other income (expense), net 1,621  (268) 889  (1,162)
Loss before benefit from (provision for) income taxes (38,192) (46,884) (175,663) (117,979)
Benefit from (provision for) income taxes 171  433  (483) (182)
Net loss $ (38,021) $ (46,451) $ (176,146) $ (118,161)
Net loss per share attributable to common stockholders, basic and diluted(1)
 $ (0.72) $ (0.90) $ (3.36) $ (2.37)
Weighted-average common shares outstanding, basic and diluted 52,873,139  51,354,953  52,440,067  49,888,436 
(1) Our potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same.


Phreesia, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
  Fiscal Year ended January 31,
  2023 2022 2021
Operating activities:
Net loss $ (176,146) $ (118,161) $ (27,292)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization 25,304  21,302  15,908 
Non-cash stock-based compensation expense 58,775  36,144  13,489 
Amortization of deferred financing costs and debt discount 310  288  389 
Cost of Phreesia hardware purchased by customers 1,598  672  762 
Deferred contract acquisition costs amortization 1,696  2,211  2,025 
Non-cash operating lease expense 1,768  1,004  1,766 
Change in fair value of contingent consideration liabilities —  258  — 
Deferred tax asset 434  143  (65)
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (11,132) (10,216) (6,619)
Prepaid expenses and other assets 250  (7,192) (1,600)
Deferred contract acquisition costs (427) (3,349) (1,652)
Accounts payable 4,774  2,881  (3,821)
Accrued expenses and other liabilities 2,720  (2,983) 6,004 
Lease liability (1,302) (1,060) (1,786)
Deferred revenue 1,255  3,348  5,382 
Net cash (used in) provided by operating activities (90,123) (74,710) 2,890 
Investing activities:
Acquisitions, net of cash acquired —  (34,423) (6,510)
Capitalized internal-use software (21,471) (12,385) (7,334)
Purchases of property and equipment (4,732) (18,420) (11,241)
Net cash used in investing activities (26,203) (65,228) (25,085)
Financing activities:
Proceeds from issuance of common stock in equity offerings, net of underwriters' discounts and commissions —  245,813  174,800 
Proceeds from issuance of common stock upon exercise of stock options 1,603  4,889  4,385 
Treasury stock to satisfy tax withholdings on stock compensation awards (19,383) (8,995) (4,965)
Payment of offering costs —  —  (290)
Proceeds from employee stock purchase plan 3,321  1,979  — 
Insurance financing agreement —  —  2,009 
Finance lease payments (5,731) (4,267) (2,630)
Principal payments on financing agreements (216) (1,039) (1,691)
Debt issuance costs and facility fees (397) (125) (294)
Financing payments of acquisition-related liabilities —  (3,286) — 
Payments of revolving line of credit —  —  (20,663)
Net cash (used in) provided by financing activities (20,803) 234,969  150,661 
Net (decrease) increase in cash and cash equivalents (137,129) 95,031  128,466 
Cash and cash equivalents—beginning of year 313,812  218,781  90,315 
Cash and cash equivalents—end of year $ 176,683  $ 313,812  $ 218,781 


Supplemental information of non-cash investing and financing information:
Right-of-use assets recorded in exchange for operating lease liabilities $ —  $ 81  $ 4,359 
Property and equipment acquisitions through finance leases $ 526  $ 7,394  $ 8,885 
Capitalized software acquired through vendor financing $ —  $ —  $ 174 
Purchase of property and equipment and capitalized software included in accounts payable and accrued liabilities $ 2,345  $ 1,124  $ 3,359 
Cashless transfer of term loan and related accrued fees into increase in debt balance $ —  $ —  $ 20,257 
Cashless transfer of lender fees through increase in debt balance $ —  $ —  $ 406 
Receivables for cash in-transit on stock option exercises $ 97  $ 169  $ 915 
Cashless exercise of common stock warrants $ —  $ —  $ 3,060 
Capitalized stock based compensation $ 1,372  $ 489  $ — 
Issuance of stock to settle liabilities for stock-based compensation $ 12,284  $ —  $ — 
Cash paid for:
Interest $ 763  $ 802  $ 1,465 
Income taxes $ 39  $ 49  $ 64 

Non-GAAP financial measures
This press release and statements made during the above-referenced webcast may include certain non-GAAP financial measures as defined by SEC rules.

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 define Adjusted EBITDA as net income or loss before interest (income) expense, net, (benefit from) provision for income taxes, depreciation and amortization, and before stock-based compensation expense, change in fair value of contingent consideration liabilities and other (income) expense, net.
We have provided below a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure. We have presented Adjusted EBITDA in this press release and our Annual Report on Form 10-K to be filed after this press release 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. We have not reconciled our Adjusted EBITDA outlook to GAAP Net income (loss) because we do not provide an outlook for GAAP Net income (loss) due to the uncertainty and potential variability of Other (income) expense, net and (Benefit from) provision for income taxes, which are reconciling items between Adjusted EBITDA and GAAP Net income (loss). Because we cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP Net income (loss).
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) expense, 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 loss, and our GAAP financial results. The following table presents a reconciliation of Adjusted EBITDA to net loss for each of the periods indicated:

Phreesia, Inc.
Adjusted EBITDA
(Unaudited)
 
  Three months ended
January 31,		 Fiscal Year ended
January 31,
(in thousands) 2023 2022 2023 2022
Net loss $ (38,021) $ (46,451) $ (176,146) $ (118,161)
Interest (income) expense, net (1,592) 328  (1,064) 1,084 
(Benefit from) provision for income taxes (171) (433) 483  182 
Depreciation and amortization 6,921  5,841  25,304  21,302 
Stock-based compensation expense 15,284  10,258  58,775  36,234 
Change in fair value of contingent consideration liabilities —  49  —  258 
Other (income) expense, net (29) (60) 175  78 
Adjusted EBITDA $ (17,608) $ (30,468) $ (92,473) $ (59,023)

Phreesia, Inc.
Reconciliation of GAAP and Adjusted Operating Expenses
(Unaudited)
 
  Three months ended
January 31,		 Fiscal Year ended
January 31,
(in thousands) 2023 2022 2023 2022
GAAP operating expenses
General and administrative $ 19,856  $ 21,738  $ 80,384  $ 68,674 
Sales and marketing 36,260  37,206  151,263  106,421 
Research and development 25,398  17,495  91,244  52,265 
Cost of revenue (excluding depreciation and amortization) 15,123  12,459  58,944  42,669 
$ 96,637  $ 88,898  $ 381,835  $ 270,029 
Stock compensation included in GAAP operating expenses
General and administrative $ 5,508  $ 4,418  $ 21,160  $ 15,655 
Sales and marketing 5,563  3,490  22,183  12,536 
Research and development 3,270  1,745  11,777  5,957 
Cost of revenue (excluding depreciation and amortization) 943  605  3,655  2,086 
$ 15,284  $ 10,258  $ 58,775  $ 36,234 
Adjusted operating expenses
General and administrative $ 14,348  $ 17,320  $ 59,224  $ 53,019 
Sales and marketing 30,697  33,716  129,080  93,885 
Research and development 22,128  15,750  79,467  46,308 
Cost of revenue (excluding depreciation and amortization) 14,180  11,854  55,289  40,583 
$ 81,353  $ 78,640  $ 323,060  $ 233,795 



Phreesia, Inc.
Key Metrics
(Unaudited)
  Three months ended
January 31,		 Fiscal Year ended
January 31,
  2023 2022 2023 2022
Key Metrics:
Average healthcare services clients ("AHSCs") 3,140  2,311  2,856  2,074 
Healthcare services revenue per AHSC $ 17,705  $ 18,430  $ 72,599  $ 77,478 
Total revenue per AHSC $ 24,390  $ 25,106  $ 98,358  $ 102,812 

We remain focused on building secure and reliable products that derive a strong return on investment for our clients and implementing them with speed and ease. This strategy continues to enable us to grow our network of healthcare services clients. The investments we make to grow, strengthen and sustain our network of healthcare services clients lead to growth in all of our revenue categories. For this reason, we are relabeling and expanding our key metrics related to revenue and healthcare services clients.

During the three months ended January 31, 2023, we relabeled our key metric “Average revenue per healthcare services client” to “Healthcare services revenue per AHSC”. We did not make any changes to the calculation of this metric in connection with relabeling this metric, and we have not changed any previously reported amounts.

During the three months ended January 31, 2023, we have added a key metric for Total revenue per AHSC. The definitions of our key metrics are presented below.

•AHSCs. We define AHSCs as the average number of clients that generate subscription and related services or payment processing 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 Platform to healthcare services organizations that are not yet clients. While growth in AHSCs is an important indicator of expected revenue growth, it also 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 Platform and software for our healthcare services clients and their patients.

•Healthcare services revenue per AHSC. We define Healthcare services revenue as the sum of subscription and related services revenue and payment processing revenue. We define Healthcare services revenue per AHSC as Healthcare services revenue in a given period divided by AHSCs during that same period. We are focused on continually delivering value to our healthcare services clients and believe that our ability to increase Healthcare services revenue per AHSC is an indicator of the long-term value of the Phreesia platform.

•Total Revenue per AHSC. We define Total revenue per AHSC as Total revenue in a given period divided by AHSCs during that same period. Our healthcare services clients directly generate subscription and related services and payment processing revenue. Additionally, our relationships with healthcare services clients who subscribe to the Phreesia Platform give us the opportunity to engage with life sciences companies, health plans and other payer organizations, patient advocacy, public interest and other not-for-profit organizations who deliver direct communication to patients through our Platform. As a result, we believe that our ability to increase Total revenue per AHSC is an indicator of the long-term value of the Phreesia Platform.



Additional Information
(Unaudited)
  Three months ended
January 31,		 Fiscal Year ended
January 31,
  2023 2022 2023 2022
Patient payment volume (in millions) $ 821  $ 689  $ 3,284  $ 2,769 
Payment facilitator volume percentage 81  % 79  % 80  % 79  %


•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 payment volume 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 revenue. Our payment facilitator volume percentage could decline slightly over time should we increase our penetration of enterprise customers that are less likely to use Phreesia as a payment facilitator.


EX-99.2 3 phr-ex992q4fy23.htm EX-99.2 phr-ex992q4fy23
Quarterly Stakeholder Letter FOURTH QUARTER | FISCAL YEAR 2023

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 2 Dear Phreesia stakeholders, Phreesia achieved many accomplishments and milestones during our 18th year and fourth as a public company. We experienced challenges, opportunities and successes, and we greatly appreciate the hard work of our team members as well as the support and partnership of our clients and investors. We exceeded the financial outlook we provided at the beginning of the fiscal year1. Among all the positive numbers, perhaps the most rewarding was the 120 million-plus patient visits the Phreesia platform enabled during fiscal year 2023, representing more than 1 in 10 patient visits across the United States2. Behind those numbers, there were many exciting developments across our organization. In the provider space, we launched automated Appointment Reminders to help reduce no-shows and get patients the care they need sooner. In the life sciences market, we published proprietary PatientInsights studies on asthma, type 2 diabetes, constipation, LGBTQ+ patients’ experiences with preventive care, and rural populations’ access to and experience with digital health tools. We also announced our entrance into the payer space through our MemberConnect solution, which helps health plans drive member growth, as well as engage with and better understand their existing membership. This offering represents a new market opportunity that we currently estimate to be worth approximately $1 billion for Phreesia. When Evan and I founded the company, we wanted Phreesia to be a place where people could learn different aspects of our industry and business and grow their careers over a long period of time. We take great pride in the fact that we have many long-tenured employees who have contributed to a multitude of different initiatives and developed into strong, effective leaders. Among those leaders, we are proud to recognize the many women who have made meaningful contributions to Phreesia over the years. The substantial representation of women at Phreesia led to the establishment of the Phreesia Women’s Network, an employee resource group committed to supporting women and those who identify as women to empower their professional and personal growth through career development, education and advocacy. This resource group has also had an important influence on our decisions about how to create an inclusive workplace. MARCH 22, 2023 1 See Phreesia Stakeholder Letter for the fourth quarter of the fiscal year ended January 31, 2022, filed March 30, 2022. 2 Based on patient visits during 2022. William Blair & Company, LLC, Healthcare Mosaic Report: Analyzing the Clinical Workforce Issue: A Clear and Present Danger for U.S. Healthcare Systems, January 24, 2022.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 3 We believe our recruiting and training programs make us an attractive employer and give us a competitive advantage. During fiscal 2023, we were selected by Modern Healthcare as one of its 2022 Best Places to Work in Healthcare for the sixth time, by Becker’s Healthcare as one of the 150 Top Places to Work in Healthcare in 2022, and by MM+M as one of its Best Places to Work 2022. Phreesia was also named to The Software Report’s list of the Top 100 Software Companies of 2022, an annual award that evaluates companies based on product quality, organizational effectiveness and management caliber. We are incredibly proud of our team’s achievements in fiscal year 2023. Our community of 1,546 Phreesians remain focused on growing our network, deepening our client relationships, strengthening our platform, building new products and delivering on our fiscal 2024 outlook and fiscal 2025 financial targets. We thank you for your support, trust and interest in Phreesia and look forward to updating you on our future progress. Chaim Indig Chief Executive Officer and Co-Founder

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 4 Fiscal Year 2023 Fourth Quarter Highlights3 REVENUE Total revenue was up 32% year-over-year to $76.6 million in the fourth quarter. Year-over-year growth was led by Network Solutions at 36%, followed closely by Subscription and Related Services at 35%. Payment Processing fees revenue was up 23%, consistent with the Payment Processing fees growth we had factored into our December 2022 total revenue outlook. QUARTERLY REVENUE1 (FY2019-FY20232) Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Subscription and related services Payment processing fees Network Solutions $10M $10M $11M $13M $13M $14M $15M $15M $16M $17M $17M $19M $22M $23M $24M $26M $29M $31M $33M $9M $9M $9M $9M $12M $12M $12M $12M $12M $12M $13M $13M $16M$17M $16M $16M $19M $20M $20M $5M $5M $5M $5M $4M $5M $7M $6M $6M $6M $8M $12M $10M $10M $15M $15M $15M $17M $20M $24M $25M $25M $26M $28M $31M $33M $33M $33M $35M $38M $42M $48M $51M $56M $58M $63M $68M $73M $36M $21M $20M $77M 1 Revenue may not add up due to rounding. 2 FY ended January 31 Average Healthcare Services Clients In the fourth quarter of fiscal 2023, we supported 3,140 Average Healthcare Services Clients (“AHSCs”),4 an increase of 158 AHSCs over the third quarter of fiscal year 2023 and an increase of 829 AHSCs (or 36%) year-over-year. The sequential increase of 158 AHSCs is consistent with the expectations we communicated in our December 8, 2022 earnings release and reflects improving productivity across our Demand Generation, Sales, Marketing and Client Success, Implementation and Support teams. We expect AHSC to increase by a similar range (as we saw in the fiscal fourth quarter) in the first quarter of fiscal year 2024 ending on April 30, 2023. We expect Subscription and Related Services revenue per AHSC to remain roughly in line with our fiscal fourth quarter 2023 results. 3 Fiscal year ended January 31, 2023 and fiscal quarter ended January 31, 2023 should be considered ‘unaudited’. 4 We define AHSCs as the average number of clients that generate subscription and related services or payment processing 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. There were no changes in the methodology we use to calculate AHSCs during the fourth quarter of fiscal 2023.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 5 AVERAGE HEALTHCARE SERVICES CLIENTS (“AHSCS”)1 (FY2019-FY20232) Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 1 We define AHSCs as the average number of clients that generate subscription and related services and payment processing 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. 2 Fiscal year ended January 31 Total Revenue and Healthcare Services Revenue Per AHSC A recurring topic in our discussions with the investment community is our philosophy on capital allocation and return on investment. In these discussions, we consistently emphasize the importance of measuring any investment we make against its overall value to all of our stakeholders. From a revenue perspective, we view the overall value to Phreesia in terms of total revenue, inclusive of all three revenue categories – Subscription and Related Services, Payment Processing and Network Solutions. The investments we make to grow, strengthen and sustain our network of Average Healthcare Services Clients are monetized in multiple ways, often across all three of our revenue categories. For this reason, we have added a key metric that we will begin using in this fiscal fourth quarter: total revenue per AHSC, defined as total revenue in a given period divided by AHSCs during that same period. We believe this is an important metric to track in addition to the existing metrics we share each quarter. Our network growth has enabled us to enter new relationships in the payer market and expand our life sciences relationships over time as illustrated in the chart below. Our go-to-market and product investments and strategies are focused on driving improvement in total revenue per AHSC over the long-term. In the near-term and on a quarter-to-quarter basis, we expect to see variability. In the fiscal fourth quarter of 2023, total revenue per AHSC was $24,390, down 3% year-over-year and down 1% from the previous quarter.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 6 Healthcare services revenue5 per AHSC for the quarter was $17,705, a 4% decline year-over-year, roughly flat compared to the last quarter. The decline from fiscal 2022 to fiscal 2023 was primarily driven by AHSC growth significantly outpacing Subscription and Related Services and Payment Processing revenue growth. As our business continues to grow and mature, we believe it is important to reiterate the factors that drive each of our three revenue categories. Subscription and Related Services’ and Network Solutions’ revenue growth is driven by two factors: 1) the growth of our network of healthcare services clients and 2) our ability to drive more value for our existing clients across the solutions within each of our revenue categories. In contrast, our Payment Processing revenue is almost entirely driven by the growth of our provider network. Existing clients have only nominal additional payments to process on our network after we have transitioned them to our payment-facilitator model. We are comfortable with the recent trend in healthcare services revenue per AHSC because we believe our focus on building great products that offer clients significant value will drive an increase in this metric over time. We have a history of testing and refining different go-to-market strategies that we believe yield the best long-term outcomes for our stakeholders. We believe that this differentiates us in our space, and that our results will continue to reflect this process. TOTAL REVENUE1 PER AHSC (FY2019-FY2023)2 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Subscription and related services Payment processing fees Network Solutions $6.9K $7.1K $7.3K $8.1K $8.2K $9.0K $9.3K $9.4K $9.6K $10.3K $10.1K $10.4K $3.2K $3.5K $3.2K $3.0K $2.6K $3.3K $6.4K $6.3K $6.0K $6.1K $7.5K $7.5K $4.3K $7.3K $3.8K $3.7K $3.6K $7.3K $7.2K $7.1K $4.6K $7.4K $5.3K $11.5K $11.5K $11.6K $11.4K $6.0K $8.2K $5.1K $7.4K $8.8k $7.4K $6.7K $11.5K $5.9K $11.2K $11.1K $6.1K $6.8K $7.7K $7.0K $7.7K $7.1K $6.6K $16.5K $16.9K $16.5K $17.2K $18.3K $19.8K $20.9K $20.5K $20.5K $21.0K $22.1K $23.1K $25.4K $25.7K $26.7K $25.1K $25.1K $24.4K $24.5K $11.4K $6.7K $6.3K $24.4K 1 Revenue may not add up due to rounding. 2 Calculated by revenue stream for each period presented as revenue for such period divided by AHSCs for the same period. There were no changes in methodology for calculating revenue per AHSC during the fourth quarter of fiscal 2023. 5 During the three months ended January 31, 2023, we re-labeled our key metric “Average revenue per healthcare services client” to “Healthcare services revenue per AHSC.” We did not make any changes to the calculation of this metric in connection with re-labeling this metric, and we have not changed any previously reported amounts. We define Healthcare services revenue as the sum of subscription and related services revenue and payment processing revenue. We define Healthcare services revenue per AHSC as healthcare services revenue in a given period divided by AHSCs during the same period.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 7 Subscription and Related Services Subscription and Related Services revenue grew 35% in the fourth quarter of fiscal year 2023 compared to the fourth quarter of the prior fiscal year. Subscription and Related Services revenue per AHSC was $11,405 in the fourth quarter, up $341 sequentially from $11,064 in the third quarter. The sequential increase in Subscription and Related Services revenue per AHSC slightly exceeded the expectations we set on December 8, 2022, driven by the efforts of our client teams, who took a larger than internally anticipated number of clients live during the fourth quarter. As we have indicated in the past, we expect contributions resulting from an increase in our overall number of AHSCs, as well as Subscription and Related Services revenue per AHSC, to vary from quarter to quarter, but we expect both areas to meaningfully contribute to our overall growth when measured over a longer period of time. Payment Processing Our patient-payment volume and payment processing revenue grew 19% and 23%, respectively, year-over-year, most significantly reflecting the addition of new clients over the prior year’s fiscal fourth quarter. Payment Processing revenue generally grows in line with our network growth. In the fiscal fourth quarter, patient-utilization trends were slightly higher than we had internally expected. We expect our payment processing revenue to return to the level of predictability we experienced prior to the COVID-19 pandemic. Our payment processing gross margin6 was 35% in the fourth quarter, compared to 35% and 39% in the third quarter of fiscal 2023 and the fourth quarter of fiscal 2022, respectively. The year-over- year decline of 4% stems from elevated payment processing gross margin during the pandemic due to a higher mix of more profitable card-not-present transactions and delayed interchange price increases. Our payment-facilitator volume percentage has been relatively consistent over time, coming in at 81% in the fourth quarter of fiscal year 2023, flat and up 2 percentage points on a sequential and year-over-year basis, respectively. 6 We define payment processing gross margin as the difference between payment processing fees revenue and payment processing expense, divided by payment processing fees revenue.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 8 PATIENT PAYMENT STATISTICS (FY2019-FY2023) Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 Q4’20 Q1’21 Q2’21 Q3’21 Q4’21 Q1’22 Q2’22 Q3’22 Q4’22 Q1’23 Q2’23 Q3’23 Q4’23 Payment Facilitator Volume Percentage3 Take Rate Percentage1 Patient Payment Volume (in millions)2 $360 $358 $358 $370 $461 $464 $463 $477 $454 $466 $524 $552 $701 $696 $682 $689 $837 $811 $815 3.06% 3.09% 3.09% 3.08% 3.02% 3.04% 3.04% 3.01% 3.08% 3.11% 3.09% 3.08% 3.04% 3.00% 2.99% 2.96% 2.89% 3.01% 2.97% $821 2.97% 81% 81% 80%82%84%82%82%83%83%83%82%83%84% 80%80%79%79%78%78%79% 1 Take rate percentage is defined as: payment processing fees / (patient payment volume x payment facilitator volume percentage). 2 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 who utilize our payment platform, including via credit and debit cards that we process as a payment facilitator, as well as through cash and check payments, and credit and debit transactions for which Phreesia acts as a gateway to other payment processors. 3 Payment facilitator volume percentage is defined as the volume of credit and debit card patient payment volume 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 revenue.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 9 Network Solutions Our Network Solutions revenue includes fees from life sciences companies and payers for direct communications designed to educate, engage and activate patients on topics critical to their health through the Phreesia platform. Fiscal fourth quarter 2023 Network Solutions revenue increased 36% compared to the fourth quarter of fiscal year 2022. Fiscal fourth quarter 2022 Network Solutions revenue increased 62% over the fourth quarter of fiscal year 2021. Our fiscal fourth quarter 2023 Network Solutions revenue growth exceeded our internal expectations of fiscal fourth quarter Network Solutions growth that we factored into our December 2022 total revenue outlook. We believe these slightly better-than-expected results are attributable to the following: 1) our fourth fiscal quarter patient visit volume exceeded the internal assumptions built into our December 2022 total revenue outlook; and 2) we took more programs live earlier in the calendar year than we had internally assumed in our December 2022 total revenue outlook, due to investments in people, process and infrastructure, which we believe have driven greater speed and efficiency. Life Sciences As part of an ongoing partnership with the Ad Council, a nonprofit organization at the forefront of driving change through social-impact marketing, our Life Sciences team brought three public health campaigns directly to patients and caregivers in fiscal 2023. The three campaigns respectively directed patients and caregivers to informational resources and fact sheets designed to educate them about pediatric COVID-19 vaccine safety and efficacy, the risks of vaping and ways to talk to young people about it, and high blood- pressure control. Within the first six months of launching the campaigns, the collaboration collectively reached more than 500,000 patients and caregivers, which helped raise awareness about critical health issues at the point of care and encouraged engaged conversations between patients, caregivers and healthcare providers. The results also demonstrated the breadth of Phreesia's network and its ability to reach patients at scale with important health content.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 10 Payer We completed our first full annual enrollment period helping payer clients achieve member growth using our MemberConnect solution. We also continued to expand adoption of the Patient Activation Measure (PAM®) in quality programs during the quarter. As part of our work with the Center for Medicare and Medicaid Innovation, we completed our first operational year with the Kidney Care Choices Model (KCC), and we’re thrilled that the model is expanding to new participants. KCC is able to focus on patient needs and better able to understand each individual. We believe this is a great example of rewarding providers for using patient activation as a part of their care model. We would like to congratulate all of the teams who have helped support our entry into the payer space. Additionally, last November, Phreesia participated in the National Committee for Quality Assurance’s (NCQA) Health Innovation Summit. Phreesia was represented by Judith Hibbard, PhD, the lead author of PAM, and Hilary Hatch, PhD, our Chief Clinical Officer, at a speaking session about PAM’s evolution. Dr. Hibbard presented an overview of the measure, explained how its evidence base has been built over time and shared examples of how it is used to improve outcomes. Phreesia Platform Update Phreesia’s platform brings value to different clients in different ways as we continue to enhance our products across four groups. In addition to introducing new products within our Access and Network Connect groups, we have continued to make investments in our Registration and Revenue Cycle solutions, as well as in our platform’s data architecture, security, scale and reliability. Our engineering and product teams have worked tirelessly to keep our platform strong and resilient, which we believe is critical to our ability to drive organic growth across all three of our revenue categories. These teams have balanced a variety of priorities throughout the year, and we are grateful for their ongoing commitment to Phreesia’s long-term success. Our clients continue to use our platform to better understand the patient populations they serve. One example is the over 7 million social determinants of health (SDOH) screeners that we have facilitated on our platform since 2019. We’ve seen 3.7 million digital SDOH screenings in over the past twelve months on Phreesia. In addition to the insights gained through measuring SDOH, screening is increasingly required by quality programs to promote health equity. For example, Phreesia offers the California Department of Health Care Services (DHCS) Staying Healthy Assessment (SHA).

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 11 The Staying Healthy Assessment is required for all individuals who are covered by California Medicaid, or Medi-Cal Part B. The Staying Healthy Assessment helps providers identify, prioritize and track high-risk patient behaviors and can improve the patient-provider relationship by allowing for more personalized care plans. We believe Phreesia’s integration of the Staying Healthy Assessment supports providers by streamlining documentation that is needed for preventative health visits that are critical for keeping individuals healthy and can be used for quality measurement as well. Between 2021 and 2022, we doubled the number of SHA screenings completed on our platform. INNOVATIVE SOFTWARE TO IMPROVE EFFICIENCY, CASH FLOW AND THE PATIENT EXPERIENCE Mobile and in-office intake modalitiesAppointment reminders Point-of-service payments Insurance verification Card on file and payment assurance Payment plans Online payments Specialty-specific workflows Registration for virtual visits Consent management Self-service, patient-reported outcomes, and screenings Patient and member education and engagement Referral management Patient and member insights Integrated patient scheduling Automated appointment rescheduling ACCESS REGISTRATION REVENUE CYCLE NETWORK CONNECT Patient text messaging Culture Gender-Equality Index In January, we were included in the 2023 Bloomberg Gender-Equality Index (GEI) for our third consecutive year. At Phreesia, we recognize that our ability to execute on our mission of creating a better, more engaging healthcare experience depends on our people. We are committed to supporting gender equality across our organization through our inclusive culture, board representation, leadership pathways for women, pay equity, strong family leave policies and other initiatives.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 12 Dan Nathan Named Top 25 Software CTOs We are proud of our colleague and leader, Chief Technology Officer Dan Nathan, who was recently named to The Software Report’s list of the Top 25 Software CTOs of 2023. Honorees were chosen based on their demonstrated leadership capabilities, career track record and contributions to the Software-as-a-Service industry. Activate 24 We wrapped up our fiscal year by bringing more than half of our organization together in Washington, D.C. for Activate 24. The successful event provided a much-needed opportunity for old and new colleagues to gather and celebrate our wins, and prepare for another exciting year of growth and innovation. Operating Leverage Cost of Revenue Cost of revenue (excluding depreciation and amortization) increased $16.3 million to $58.9 million for fiscal 2023, as compared to $42.7 million for fiscal 2022. The increase resulted primarily from a $6.8 million increase in employee compensation costs driven by higher compensation for existing employees and a higher average headcount, as well as a $2.5 million increase in outside services costs and a $1.2 million increase in software costs, each driven by growth in revenue. Stock compensation incurred related to cost of revenue was $3.7 million and $2.1 million for fiscal 2023 and fiscal 2022, respectively.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 13 Sales & Marketing Sales and marketing expense increased $44.8 million to $151.3 million for fiscal 2023, as compared to $106.4 million for fiscal 2022. The increase was primarily attributable to a $37.6 million increase in total compensation costs driven by higher compensation for existing employees and a higher average headcount, as well as a $3.8 million increase in outside services costs, a $1.5 million increase in travel and entertainment costs and $1.3 million increase in software costs. Stock compensation incurred related to sales and marketing expense was $22.2 million and $12.5 million for fiscal 2023 and fiscal 2022, respectively. Research & Development Research and development expense increased $39.0 million to $91.2 million for fiscal 2023, as compared to $52.3 million for fiscal 2022. The increase resulted primarily from a $26.8 million increase in total compensation costs driven by higher compensation for existing employees and a higher average headcount, as well as a $6.8 million increase in outside services costs and higher software expenses. Stock compensation incurred related to research and development expense was $11.8 million and $6.0 million in fiscal 2023 and fiscal 2022, respectively. General & Administrative General and administrative expense increased $11.7 million to $80.4 million for fiscal 2023, as compared to $68.7 million for fiscal 2022. The increase resulted primarily from a $11.0 million increase in total compensation and benefits costs driven by a higher average headcount, as well as a $2.2 million increase in outside services costs, partially offset by decreases in other third- party general and administrative expenses. Stock compensation incurred related to general and administrative expense was $21.2 million and $15.7 million in fiscal 2023 and fiscal 2022, respectively.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 14 OPERATING EXPENSE TRENDS 27% 29% 29% 30% 33% 31% 27%Subscription & Network Solutions1 Cost of Revenue % Rev Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Q4 FY23 Q4 FY23 Q4 FY23 Q4 FY23 Q4 FY23 58% 59% 59% 61% 63% 64% 65% Payment processing2 expense % Rev Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 Sales & Marketing $ / % of Rev Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 31% 43% 57% 64% 63% 56% 50% $15 $22 $32 $37 $40 $38 $37 17% 22% 27% 30% 33% 33% 31% Research & Development $ / % of Rev Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 $8 $11 $15 $17 $21 $23 $23 26% 32% 32% 37% 33% 30% 27%General & Administrative $ / % Rev Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Q1 FY23 Q2 FY23 Q3 FY23 $13 $16 $18 $22 $21 $20 $20 27% 65% 47% $36 33% $25 26% $20 1 Subscription & Network Solutions Cost as a % of Revenue equals cost of revenue (excluding depreciation and amortization), divided by the sum of Subscription and related services revenues and Network solutions revenues. 2 Payment processing expense as a % of Revenue equals payment processing expense divided by payment processing fees revenues.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 15 Cash Flow Statement, Balance Sheet and Liquidity As of January 31, 2023 and January 31, 2022, we had cash and cash equivalents of $176.7 million and $313.8 million, respectively. Cash and cash equivalents consist of money market funds and cash on deposit at various financial institutions. We note that certain cash payments are made in individual quarters, causing some quarter-to-quarter fluctuations in cash flow from operations and free cash flow. We are comfortable that our current cash and cash equivalents balance, along with cash generated in the normal course of business, are sufficient to finance our plans to achieve our fiscal year 2025 targets. ($ in thousands) For the fiscal years ended January 31, 2023 2022 2021 Net cash (used in) provided by operating activities $ (90,123) $ (74,710) $ 2,890 Investing activities: Acquisitions, net of cash acquired — (34,423) (6,510) Capitalized internal-use software (21,471) (12,385) (7,334) Purchases of property and equipment (4,732) (18,420) (11,241) Net cash used in investing activities $ (26,203) $ (65,228) $ (25,085) Fiscal Year 2024 Outlook Our revenue outlook for fiscal year 2024 is $353 million to $356 million, implying year-over-year growth of 26% to 27%. Our Adjusted EBITDA outlook for fiscal year 2024 is negative $65 million to negative $60 million. During fiscal year 2024, we expect to see continued operating leverage, resulting in progressively higher gross margins (excluding payments revenue and payment processing expenses)7, as well as progressively lower sales and marketing and general and administrative expenses as a percentage of total revenue. We expect that the magnitude of improvement on a quarter-to-quarter basis will vary based on the timing of certain investments and our revenue mix. 7 We define gross margins (excluding payments revenue and payment processing expenses) as the excess of the sum of Subscription and related services revenue and Network solutions revenue over cost of revenue (excluding depreciation and amortization), divided by the sum of Subscription and related services revenue and Network solutions revenue.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 16 Fiscal Year 2025 Target We are maintaining our $500 million revenue target to be achieved by annualizing our highest- revenue quarter in fiscal year 20258 and continue to expect to reach profitability9 during fiscal year 2025. We believe our cash and cash equivalents, along with cash generated in the normal course of business, can support our path to our fiscal year 2025 targets. We believe our platform and diverse revenue streams offer us multiple paths for achieving our targets. About Phreesia Phreesia provides healthcare organizations a suite of robust applications to manage the patient intake process. Our innovative SaaS platform engages patients in their healthcare and provides a modern, convenient experience, while enabling our clients to enhance clinical care and drive efficiency. INVESTOR RELATIONS CONTACT: Balaji Gandhi investors@phreesia.com MEDIA CONTACT: Nicole Gist nicole.gist@phreesia.com Non-GAAP Financial Measures We have not reconciled our Adjusted EBITDA outlook to GAAP Net income (loss) because we do not provide an outlook for GAAP Net income (loss) due to the uncertainty and potential variability of Other (income) expense, net and (Benefit from) provision for income taxes, which are reconciling items between Adjusted EBITDA and GAAP Net income (loss). We also have not reconciled our gross margins (excluding payments revenue and payment processing expenses)10 to GAAP gross margin due to the uncertainty and potential variability of reconciling items between gross margin (excluding payments revenue and payment processing expenses) and GAAP gross margin. 8 For our target revenue, “annualized” is defined as multiplying the highest-revenue quarter in fiscal year 2025 by four. 9 For the purposes of this statement, we define “profitability” in terms of Adjusted EBITDA. 10 We define gross margins (excluding payments revenue and payment processing expenses) as the excess of the sum of Subscription and related services revenue and Network solutions revenue over cost of revenue (excluding depreciation and amortization), divided by the sum of Subscription and related services revenue and Network solutions revenue.

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 17 Because we cannot reasonably predict such items, a reconciliation of the non-GAAP financial measure outlook to the corresponding GAAP measure is not available without unreasonable effort. We caution, however, that such items could have a significant impact on the calculation of GAAP Net income (loss). Forward-Looking Statements This stakeholder letter includes express or implied statements that are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events or our future financial or operating performance and may contain projections of our future results of operations or of our financial information or state other forward-looking information. These statements include, but are not limited to, statements regarding: our future financial and operational performance, including our revenue, margins, Adjusted EBITDA, cash flows and our ability to reach profitability in fiscal year 2025; our outlook for fiscal year 2024 (including with respect to Adjusted EBITDA) and fiscal year 2025 targets; our expectation that the increase in AHSCs during the first quarter of the fiscal year 2024 will be in the same range as the increase in AHSC in the fourth quarter of the fiscal year 2023; our expectation regarding the increase in healthcare services revenue per AHSC over time and the underlying contribution to the increase attributable to subscription and related services revenue per AHSC; our expectations that we will see variability in total revenue per AHSC in the near-term and on a quarter-to-quarter basis; our ability to finance our plans to achieve our 2025 targets with our current cash balance along with cash generated in the normal course of business, our business strategy and operating plans; industry trends and predictions; our estimated total addressable market (including any components thereof); our anticipated growth and operating leverage; our expectation that Network Solutions will more meaningfully contribute to revenue over time; our expectation that increases in our overall number of AHSC and subscription and related services revenue per AHSC will contribute to our overall growth; our expectations regarding the value and potential of our MemberConnect solution; our expectation that payment processing revenue will return to the level of predictability we experienced prior to the COVID-19 pandemic; and successful implementation of our solutions under development. In some cases, you can identify forward-looking statements by the following words: “may,” “will,” “could,” “would,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “project,” “potential,” “continue,” “ongoing,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Furthermore, actual results may differ materially from those described in the forward-looking statements and will

 
QUARTERLY STAKEHOLDER LETTER | FOURTH QUARTER 2023 | 18 be affected by a variety of risks and factors that are beyond our control, including, without limitation, risks associated with: our ability to effectively manage our growth and meet our growth objectives; our focus on the long-term and our investments in growth; the competitive environment in which we operate; our ability to develop and release new products and services; our ability to develop and release successful enhancements, features and modifications to our existing products and services; our ability to successfully complete our data center migration; our ability to maintain the security and availability of our platform; changes in laws and regulations applicable to our business model; our ability to make accurate predictions about our industry and addressable market; the impact of pandemics on our business and economic conditions; our ability to attract, retain and cross-sell to healthcare services clients; our ability to continue to operate effectively with a primarily remote workforce and attract and retain key talent; our ability to realize the intended benefits of our acquisitions; the recent high inflationary environment and other general market, political, economic and business conditions (including as a result of the warfare and/or political and economic instability in Ukraine or elsewhere). The forward-looking statements contained in this letter are also subject to other risks and uncertainties, including those listed or described in our filings with the Securities and Exchange Commission (the "SEC"), including in our Annual Report on Form 10-K for the fiscal year ended January 31, 2023 that will be filed with the SEC after this letter. The forward-looking statements in this letter 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, any forward-looking statements made in this letter to reflect events or circumstances after the date of this letter or to reflect new information or the occurrence of unanticipated events, except as required by law. This letter also includes statistical data, estimates and forecasts that are based on industry publications or other publicly available information, as well as other information based on our internal sources. This information may be based on many assumptions and limitations, and you are cautioned not to give undue weight to such information. We have not independently verified the accuracy or completeness of the information contained in these industry publications and other publicly available information. Conference Call Information We will hold a conference call on March 22, 2023 at 5:00 PM ET to review our fiscal year 2023 and fiscal fourth quarter financial results. To participate in our live conference call and webcast, please dial (888) 350-3437 (or (646) 960-0153 for international participants) using conference code number 4000153 or visit the “Events & Presentations” section of our Investor Relations website ir.phreesia.com. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.