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Phreesia Announces Fiscal Second Quarter 2021 Results

09/08/2020

NEW YORK--(BUSINESS WIRE)-- Phreesia, Inc. (NYSE: PHR) (“Phreesia”) announced financial results today for the second quarter ended July 31, 2020.

“I am proud of Phreesia’s ability to serve our clients, take care of our team and further our mission of creating a better, more engaging healthcare experience as our communities grapple with the current pandemic,” said Phreesia CEO Chaim Indig.

Fiscal Second Quarter 2021 Highlights

  • Revenue was $35.0 million in the quarter as compared to $30.8 million in the same period in the prior year, an increase of 14%.
  • Average number of provider clients was 1,668 in the quarter as compared to 1,558 in the same period in the prior year, an increase of 7%.
  • Average revenue per provider client was $17,360 in the quarter compared to $16,472 in the same period in the prior year, an increase of 5%.
  • Adjusted EBITDA was positive $1.2 million in the quarter compared to positive $0.7 million in the same period in the prior year.
  • Cash on the balance sheet as of July 31, 2020 was $84.2 million, a decrease of $6.1 million compared to January 31, 2020.

Conference Call Information

The Company will hold a conference call on Wednesday, September 9, 2020, at 8:30 a.m. Eastern Time to review the Company’s second quarter financial results. To participate in the Company’s live conference call and webcast, please dial (866) 211-4557 (or (647) 689-6750 for international participants) using conference code number 7396120 or visit the “Events & Presentations” section of 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.

Recent Events

The Coronavirus (“COVID-19”) pandemic has and could continue to materially and adversely impact Phreesia’s business and results of operations. The Company provided an update on the impact of COVID-19 in a Current Report on Form 8-K filed on April 6, 2020 (“the 8-K"). Since the filing of the 8-K, many healthcare provider groups have reopened, however patient visit trends across our provider network continue to be below their pre-COVID-19 levels. In light of the evolving and unpredictable effects of COVID-19, Phreesia is currently not in a position to forecast the expected impact of COVID-19 on its financial and operating results for the remainder of fiscal 2021.

Phreesia, Inc.

Balance Sheets

in thousands, except for shares and per share data

 

 

July 31, 2020

 

January 31, 2020

 

(unaudited)

 

 

Assets

 

 

 

Current:

 

 

 

Cash and cash equivalents

$

84,199

 

 

$

90,315

 

Settlement assets

10,717

 

 

12,368

 

Accounts receivable, net of allowances

22,972

 

 

21,978

 

Deferred contract acquisition costs

1,684

 

 

1,720

 

Prepaid expenses and other current assets

8,378

 

 

5,157

 

Total current assets

127,950

 

 

131,538

 

Property and equipment, net of accumulated depreciation and amortization of $40,219 and $35,551

17,070

 

 

14,487

 

Capitalized internal-use software, net of accumulated amortization of $22,420 and $19,554

9,501

 

 

8,735

 

Operating lease right-of-use assets (1)

2,406

 

 

 

Deferred contract acquisition costs

1,256

 

 

1,594

 

Intangible assets, net of accumulated amortization of $390 and $271

1,080

 

 

1,199

 

Deferred tax assets

666

 

 

775

 

Goodwill

250

 

 

250

 

Other assets

108

 

 

180

 

Total assets

$

160,287

 

 

$

158,758

 

Liabilities and Stockholders’ Equity

 

 

 

Current:

 

 

 

Settlement obligations

$

10,717

 

 

$

12,368

 

Current portion of debt and finance lease liabilities

4,939

 

 

2,324

 

Current portion of operating lease liabilities (1)

1,221

 

 

 

Accounts payable

5,103

 

 

6,017

 

Accrued expenses

9,838

 

 

9,243

 

Deferred revenue

6,257

 

 

5,401

 

Total current liabilities

38,075

 

 

35,353

 

Long-term debt and finance lease liabilities

23,131

 

 

21,540

 

Operating lease liabilities, noncurrent (1)

1,394

 

 

 

Total liabilities

62,600

 

 

56,893

 

Commitments and contingencies

 

 

 

Stockholders’ Equity:

 

 

 

Common stock, $0.01 par value—500,000,000 shares authorized as of July 31, 2020 and January 31, 2020, respectively; 37,882,837 and 36,610,763 shares issued and outstanding as of July 31, 2020 and January 31, 2020, respectively

379

 

 

366

 

Additional paid-in capital

395,145

 

 

386,383

 

Accumulated deficit

(296,968)

 

 

(284,485)

 

Treasury stock

(869)

 

 

(399)

 

Total Stockholders’ Equity

97,687

 

 

101,865

 

Total Liabilities and Stockholders’ Equity

$

160,287

 

 

$

158,758

 

(1) Figures as of July 31, 2020 reflect the Company's February 1, 2020 adoption of Accounting Standards Update ("ASU") No. 2016-02, Leases.

 

 

 

Phreesia, Inc.

Unaudited Statements of Operations

(in thousands, except for shares and per share data)

 

 

Three months ended July 31,

 

Six months ended July 31,

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

Subscription and related services

$

17,129

 

 

$

14,004

 

 

$

32,728

 

 

$

26,686

 

Payment processing fees

11,828

 

 

11,665

 

 

23,535

 

 

23,222

 

Life sciences

6,052

 

 

5,148

 

 

12,142

 

 

9,218

 

Total revenues

35,009

 

 

30,817

 

 

68,405

 

 

59,126

 

Expenses:

 

 

 

 

 

 

 

Cost of revenue (excluding depreciation and amortization)

5,271

 

 

4,210

 

 

10,005

 

 

8,206

 

Payment processing expense

6,747

 

 

7,101

 

 

13,595

 

 

14,050

 

Sales and marketing

10,098

 

 

8,120

 

 

19,532

 

 

15,822

 

Research and development

5,530

 

 

4,690

 

 

10,535

 

 

8,989

 

General and administrative

9,631

 

 

7,421

 

 

18,351

 

 

13,665

 

Depreciation

2,410

 

 

2,136

 

 

4,678

 

 

4,291

 

Amortization

1,632

 

 

1,279

 

 

2,985

 

 

2,498

 

Total expenses

41,319

 

 

34,957

 

 

79,681

 

 

67,521

 

Operating loss

(6,310)

 

 

(4,140)

 

 

(11,276)

 

 

(8,395)

 

Other income (expense)

424

 

 

327

 

 

(291)

 

 

(818)

 

Change in fair value of warrant liability

 

 

(2,884)

 

 

 

 

(3,307)

 

Interest income (expense)

(419)

 

 

(745)

 

 

(739)

 

 

(1,549)

 

Total other income (expense)

5

 

 

(3,302)

 

 

(1,030)

 

 

(5,674)

 

Loss before provision for income taxes

(6,305)

 

 

(7,442)

 

 

(12,306)

 

 

(14,069)

 

Provision for income taxes

(66)

 

 

(51)

 

 

(177)

 

 

(119)

 

Net loss

$

(6,371)

 

 

$

(7,493)

 

 

$

(12,483)

 

 

$

(14,188)

 

Preferred stock dividend paid

 

 

(14,955)

 

 

 

 

(14,955)

 

Accretion of redeemable preferred stock

 

 

(48,312)

 

 

 

 

(56,175)

 

Net loss attributable to common stockholders, basic and diluted

$

(6,371)

 

 

$

(70,760)

 

 

$

(12,483)

 

 

$

(85,318)

 

Net loss per share attributable to common stockholders, basic and diluted

$

(0.17)

 

 

$

(10.42)

 

 

$

(0.33)

 

 

$

(19.20)

 

Weighted-average common shares outstanding, basic and diluted

37,523,966

 

 

6,793,363

 

 

37,735,155

 

 

4,443,155

 

 

 

 

 

 

 

 

 

Phreesia, Inc.

Unaudited Statements of Cash Flows

(in thousands, except for shares and per share data)

 

 

Six months ended July 31,

 

2020

 

2019

Cash flows from operating activities:

 

 

 

Net loss

$

(12,483)

 

 

$

(14,188)

 

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

 

 

 

Depreciation and amortization

7,663

 

 

6,789

 

Stock-based compensation expense

6,300

 

 

2,067

 

Change in fair value of warrants liability

 

 

3,307

 

Amortization of debt discount

245

 

 

265

 

Loss on extinguishment of debt

 

 

1,073

 

Cost of Phreesia hardware purchased by customers

439

 

 

319

 

Deferred contract acquisition costs amortization

1,775

 

 

974

 

Non-cash operating lease expense

777

 

 

 

Deferred tax asset

109

 

 

 

Changes in operating assets and liabilities

 

 

 

Accounts receivable

(994)

 

 

(679)

 

Prepaid expenses and other assets

(2,892)

 

 

(3,657)

 

Deferred contract acquisition costs

(1,401)

 

 

(858)

 

Accounts payable

(1,275)

 

 

4,548

 

Accrued expenses and other liabilities

1,116

 

 

3,330

 

Lease liability

(755)

 

 

 

Deferred revenue

856

 

 

(705)

 

Net cash (used in) provided by operating activities

(520)

 

 

2,585

 

Cash flows used in investing activities:

 

 

 

Capitalized internal-use software

(2,737)

 

 

(2,878)

 

Purchase of property and equipment

(4,659)

 

 

(2,754)

 

Net cash used in investing activities

(7,396)

 

 

(5,632)

 

Cash flows from financing activities:

 

 

 

Proceeds from IPO, net of underwriters' discounts and commissions

 

 

130,781

 

Proceeds from revolving line of credit

 

 

9,876

 

Payments of revolving line of credit

 

 

(17,676)

 

Proceeds from term loan

 

 

20,000

 

Repayment of term loan

 

 

(1,042)

 

Repayment of loan payable

 

 

(20,000)

 

Payment of preferred stock dividends

 

 

(14,955)

 

Insurance financing arrangement

2,009

 

 

 

Principal portion of finance lease payments

(1,301)

 

 

(1,164)

 

Principal payments on financing arrangements

(220)

 

 

 

Debt extinguishment costs

 

 

(300)

 

Debt issuance costs

(69)

 

 

(112)

 

Proceeds from issuance of common stock upon exercise of stock options

2,475

 

 

78

 

Purchase of treasury stock

(869)

 

 

 

Payment of offering costs

 

 

(3,930)

 

Loan facility fee payment

(225)

 

 

 

Net cash provided by financing activities

1,800

 

 

101,556

 

Net (decrease) increase in cash and cash equivalents

(6,116)

 

 

98,509

 

Cash and cash equivalents – beginning of period

90,315

 

 

1,543

 

Cash and cash equivalents – end of period

$

84,199

 

 

$

100,051

 

Supplemental information of non-cash investing and financing information:

 

 

 

Right-of-use assets recorded in exchange for operating lease liabilities (1)

$

3,183

 

 

$

 

Property and equipment acquisitions through finance leases

$

3,657

 

 

$

1,510

 

Capitalized software acquired through vendor financing

$

174

 

 

$

 

Deferred issuance costs included in accounts payable and accrued expenses

$

 

 

$

1,958

 

Purchase of property and equipment and capitalized software included in accounts payable

$

1,358

 

 

$

699

 

Issuance of warrants related to debt

$

 

 

$

833

 

Cashless transfer of term loan and related accrued fees into revolving credit facility

$

20,257

 

 

$

 

Cashless transfer of lender fees through increase in debt balance

$

406

 

 

$

 

Cash payments for:

 

 

 

Interest

$

833

 

 

$

1,347

 

(1) Includes $2,741 initial right of use asset recorded upon adoption of ASC 842.

 

 

 

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 define Adjusted EBITDA as net income or loss, before interest (income) expense, provision for income taxes, depreciation and amortization, and before non-cash stock-based compensation expense, non-cash change in fair value of warrant liability and other (income) expense.

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 release and our Annual Report on Form 10-K 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; or (3) tax payments that may represent a reduction in cash available to us; (4) other interest (expense); 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 July 31,

 

Six months ended July 31,

(in thousands, unaudited)

 

2020

 

2019

 

2020

 

2019

Net loss

 

$

(6,371)

 

 

$

(7,493)

 

 

$

(12,483)

 

 

$

(14,188)

 

Interest (income) expense

 

419

 

 

745

 

 

739

 

 

1,549

 

Depreciation and amortization

 

4,042

 

 

3,415

 

 

7,663

 

 

6,789

 

Stock-based compensation expense

 

3,428

 

 

1,467

 

 

6,300

 

 

2,067

 

Change in fair value warrant liability

 

 

 

2,884

 

 

 

 

3,307

 

Provision for income taxes

 

66

 

 

51

 

 

177

 

 

119

 

Other (income) expense

 

(424)

 

 

(327)

 

 

291

 

 

818

 

Adjusted EBITDA

 

$

1,160

 

 

$

742

 

 

$

2,687

 

 

$

462

 

Phreesia, Inc.

Reconciliation of GAAP and Adjusted Operating Expenses (Unaudited)

 

 

 

Three months ended July 31,

 

Six months ended July 31,

(in thousands)

 

2020

 

2019

 

2020

 

2019

GAAP operating expenses

 

 

 

 

 

 

 

 

General and administrative

 

$

9,631

 

 

$

7,421

 

 

$

18,351

 

 

$

13,665

 

Sales and marketing

 

10,098

 

 

8,120

 

 

19,532

 

 

15,822

 

Research and development

 

5,530

 

 

4,690

 

 

10,535

 

 

8,989

 

Cost of revenue

 

5,271

 

 

4,210

 

 

10,005

 

 

8,206

 

 

 

$

30,530

 

 

$

24,441

 

 

$

58,423

 

 

$

46,681

 

Stock compensation included in GAAP operating expenses

 

 

 

 

 

 

 

 

General and administrative

 

$

1,928

 

 

$

992

 

 

$

3,534

 

 

$

1,313

 

Sales and marketing

 

794

 

 

270

 

 

1,522

 

 

426

 

Research and development

 

573

 

 

164

 

 

1,024

 

 

253

 

Cost of revenue

 

133

 

 

41

 

 

220

 

 

74

 

 

 

$

3,428

 

 

$

1,467

 

 

$

6,300

 

 

$

2,067

 

Adjusted operating expenses

 

 

 

 

 

 

 

 

General and administrative

 

$

7,703

 

 

$

6,429

 

 

$

14,817

 

 

$

12,352

 

Sales and marketing

 

9,304

 

 

7,850

 

 

18,010

 

 

15,396

 

Research and development

 

4,957

 

 

4,526

 

 

9,511

 

 

8,735

 

Cost of revenue

 

5,138

 

 

4,169

 

 

9,785

 

 

8,132

 

 

 

$

27,102

 

 

$

22,974

 

 

$

52,123

 

 

$

44,615

 

Phreesia, Inc.

Key Metrics (Unaudited)

 

 

 

Three months ended July 31,

 

Six months ended July 31,

 

 

2020

 

2019

 

2020

 

2019

Key Metrics:

 

 

 

 

 

 

 

 

Provider clients (average over period)

 

1,668

 

 

1,558

 

 

1,650

 

 

1,554

 

Average revenue per provider client

 

$

17,360

 

 

$

16,472

 

 

$

34,099

 

 

$

31,126

 

Patient payment volume (in millions)

 

$

466

 

 

$

464

 

 

$

921

 

 

$

925

 

  • Provider clients. We define provider clients as the average number of healthcare provider organizations that generate revenue each month during the applicable period. In one specific case wherein, we act as a subcontractor providing white-label services to our partner’s clients, we treat this contractual relationship as a single provider client. We believe growth in the number of provider clients 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 provider organizations that are not yet clients. While growth in the number of provider clients 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 provider client growth. For example, as the number of provider clients increases, we may need to add to our customer support team and invest to maintain effectiveness and performance of our platform and software for our provider clients and their patients.
  • Average revenue per provider client.We define average revenue per provider client as the total subscription and related services and payment processing revenue generated from provider clients in a given period divided by the average number of provider clients that generate revenue each month during that same period. We are focused on continually delivering value to our provider clients and believe that our ability to increase average revenue per provider client is an indicator of the long-term value of our existing provider client relationships.
  • Patient payment volume. We measure patient payment volume as the total dollar volume of transactions between our provider clients and their patients utilizing our payment platform, including via credit and debit cards, cash and check. Patient payment volume is a major driver of our payment processing revenue, and we believe that patient payment volume is an indicator of both the underlying health of our provider clients’ businesses and the continuing shift of healthcare costs to patients. Credit and debit patient payment volume processed through our payment facilitator model represented 82% and 83% of our patient payment volume in the three months ended July 31, 2020 and 2019, respectively. Credit and debit patient payment volume processed through our payment facilitator model represented 83% and 83% of our patient payment volume in the six months ended July 31, 2020 and 2019, respectively. 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.

Available Information

Phreesia intends to use its Company website (including its Investor Relations website) as well as its Facebook, Twitter and LinkedIn accounts as a means of disclosing material non-public information and for complying with its disclosure obligations under Regulation FD.

Forward Looking Statements

Statements we make in this press release may include statements which are not historical facts and are considered forward-looking within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “going to,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern Phreesia’s plans, intentions, expectations, strategies and prospects. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that the plans, intentions, expectations or strategies will be attained or achieved. 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, statements about our future financial performance, including our revenue, costs of revenue and operating expenses; our anticipated growth; our predictions about our industry; the impact of the COVID-19 pandemic on our business and our ability to attract, retain and cross-sell to healthcare provider clients. The forward-looking statements contained in this release are also subject to other risks and uncertainties, including those more fully described in Phreesia’s filings with the Securities and Exchange Commission (“SEC”), including in our Annual Report on Form 10-K for the fiscal year ended January 31, 2020 and in our Quarterly Report on Form 10-Q that will be filed with the SEC following this earnings release. The forward-looking statements in this release are based on information available to Phreesia as of the date hereof, and Phreesia disclaims any obligation to update any forward-looking statements, 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.

ABOUT PHREESIA

Phreesia gives healthcare organizations a suite of robust applications to manage the patient intake process. Our innovative SaaS platform engages patients in their care and provides a modern, consistent experience, while enabling healthcare organizations to optimize their staffing, boost profitability and enhance clinical care.

Investors:

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

Maureen McKinney
Phreesia Inc.
mmckinney@phreesia.com
773-330-8908

Source: Phreesia, Inc.

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