Phreesia, Inc. (NYSE: PHR) (“Phreesia”) announced financial
results today for the fiscal third quarter ended October 31,
2020.
"Our third quarter results reflect our entire team’s commitment
to our clients and Phreesia's mission of creating a better, more
engaging healthcare experience,” said Phreesia CEO Chaim Indig.
Fiscal Third Quarter 2021 Highlights
- Revenue was $38.5 million in the quarter as compared to $32.8
million in the same period in the prior year, an increase of
17%.
- Average number of provider clients was 1,737 in the quarter as
compared to 1,573 in the same period in the prior year, an increase
of 10%.
- Average revenue per provider client was $17,490 in the quarter
compared to $16,637 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 $3.0 million in the same period in the prior
year.
- Cash and cash equivalents as of October 31, 2020 was $254.1
million, an increase of $163.8 million compared to January 31,
2020, driven primarily by our follow-on offering of common stock,
which generated net proceeds of $174.5 million.
Conference Call Information
The Company will host a conference call and webcast on
Wednesday, December 9, 2020, at 8:30 a.m. Eastern Time to review
the quarterly results. To participate in Phreesia's live conference
call and webcast, please dial (866) 211-4557, or (647) 689-6750 for
international participants, using conference code number 2375761,
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 “Events & Presentations” section of ir.phreesia.com, and
will remain available for approximately 90 days.
Recent Events
COVID-19
In December 2019, an outbreak of a novel strain of coronavirus
(COVID-19) originated in Wuhan, China and spread to a number of
other countries, including the United States and Canada. In March
2020, the World Health Organization declared the COVID-19 outbreak
a pandemic and the United States declared a national emergency with
respect to COVID-19. The impact of the outbreak has been rapidly
evolving and has led to the implementation of various responses,
including government-imposed quarantines, travel restrictions,
business and school closures and other public health safety
measures. It has also disrupted the normal operations of many
businesses, including ours. COVID-19 has also disrupted, and we
believe will continue to disrupt, the normal operations of our
clients, which are primarily healthcare providers. Because our
business relies, in part, on the growth and success of our clients,
any disruption to our clients' operations will impact our revenue
as follows:
- Subscription and related services: Disruptions to provider
operations, including travel restrictions and provider office
closures, impact our subscription and related services revenue
because of disruptions to sales processes and client
implementations.
- Payment processing: The decline in non-essential and elective
patient visits directly impacts the revenue we receive from payment
processing tools.
- Life sciences: Because our life sciences revenue is driven by
the number of patients receiving targeted messages, a decline in
patient visits may impact our revenue earned through patient
engagement.
Beginning in early September 2020, we saw patient visits return
to pre-pandemic levels as some of the restrictions and other safety
measures have been lifted. We have seen positive trends as a result
of our ability to use our Platform and solutions to assist our
healthcare provider clients as they implement new safety protocols
in order to continue to see patients, including minimizing contact
during intake of patients, mobile check-in, transitioning patients
to telehealth visits and enabling providers to screen patients for
COVID-19 risk factors. Our COVID-19 module was used in over 30
million patient screenings between February 10, 2020 and November
30, 2020.
Given the unknown timeline and the near-term uncertainty of
COVID-19 on our business, there continues to be uncertainty as to
the extent to which the global COVID-19 pandemic may adversely
impact our business operations, financial performance, and results
of operations at this time. Further, due to recent surges of
COVID-19 cases in many states, or a second wave, we may see
quarantines and additional restrictions being put in place again,
which could impact patient visits across our provider clients
similar to the trends during the earlier periods of the
pandemic.
Principal Executive Offices
In March 2020, in the wake of the pandemic, we prepared the
Company for indefinite remote work. Consistent with our long-term
plans for remote work, we made the decision to allow our New York
City Office lease to expire at the end of January 2021. We will
continue to have a significant employee presence in the New York
City area, including our Chief Executive Officer and our Chief
Operating Officer. However, effective December 9, 2020, our
Raleigh, North Carolina office will become our principal executive
offices.
Outlook for Fiscal 2021 and Fiscal 2022
For the full fiscal year 2021, ending January 31, 2021, the
Company expects to report revenue of $146 to $147 million. For the
full fiscal year 2022, ending January 31, 2022, the Company expects
revenue to grow between 20 and 25 percent over fiscal year
2021.
Phreesia, Inc. Balance
Sheets in thousands, except for shares and per share data
October 31, 2020
January 31, 2020
(unaudited)
Assets
Current:
Cash and cash equivalents
$
254,118
$
90,315
Settlement assets
12,267
12,368
Accounts receivable, net of allowances
27,594
21,978
Deferred contract acquisition costs
1,708
1,720
Prepaid expenses and other current
assets
6,825
5,157
Total current assets
302,512
131,538
Property and equipment, net of accumulated
depreciation and amortization of $42,665 and $35,551
19,160
14,487
Capitalized internal-use software, net of
accumulated amortization of $23,907 and $19,554
9,986
8,735
Operating lease right-of-use assets
(1)
3,192
—
Deferred contract acquisition costs
1,227
1,594
Intangible assets, net of accumulated
amortization of $450 and $271
1,020
1,199
Deferred tax assets
496
775
Goodwill
250
250
Other assets
207
180
Total assets
$
338,050
$
158,758
Liabilities and Stockholders’
Equity
Current:
Settlement obligations
$
12,267
$
12,368
Current portion of debt and finance lease
liabilities
4,722
2,324
Current portion of operating lease
liabilities (1)
1,288
—
Accounts payable
4,215
6,017
Accrued expenses
12,662
9,243
Deferred revenue
6,623
5,401
Total current liabilities
41,777
35,353
Long-term debt and finance lease
liabilities
24,439
21,540
Operating lease liabilities, noncurrent
(1)
2,158
—
Total liabilities
68,374
56,893
Commitments and contingencies
Stockholders’ Equity:
Common stock, $0.01 par value—500,000,000
shares authorized as of October 31, 2020 and January 31, 2020,
respectively; 44,039,563 and 36,610,763 shares issued and
outstanding as of October 31, 2020 and January 31, 2020,
respectively
440
366
Additional paid-in capital
573,786
386,383
Accumulated deficit
(303,681
)
(284,485
)
Treasury stock
(869
)
(399
)
Total Stockholders’ Equity
269,676
101,865
Total Liabilities and Stockholders’
Equity
$
338,050
$
158,758
(1) Figures as of October 31, 2020 reflect
the Company's February 1, 2020 adoption of Accounting Standards
Codification 842, Leases (ASC 842).
Phreesia, Inc. Unaudited
Statements of Operations (in thousands, except for shares and
per share data)
Three months ended October
31,
Nine months ended October
31,
2020
2019
2020
2019
Revenue:
Subscription and related services
$
17,468
$
14,606
$
50,196
$
41,292
Payment processing fees
12,917
11,559
36,452
34,781
Life sciences
8,079
6,678
20,221
15,895
Total revenues
38,464
32,843
106,869
91,968
Expenses:
Cost of revenue (excluding depreciation
and amortization)
6,472
4,388
16,477
12,594
Payment processing expense
7,530
6,902
21,125
20,952
Sales and marketing
10,481
8,348
30,013
24,170
Research and development
5,732
4,774
16,267
13,762
General and administrative
10,370
7,184
28,721
20,849
Depreciation
2,447
2,153
7,125
6,444
Amortization
1,546
1,325
4,531
3,823
Total expenses
44,578
35,074
124,259
102,594
Operating loss
(6,114
)
(2,231
)
(17,390
)
(10,626
)
Other income (expense)
62
77
(229
)
(740
)
Change in fair value of warrant
liability
—
—
—
(3,307
)
Interest income (expense)
(467
)
(219
)
(1,206
)
(1,769
)
Total other income (expense)
(405
)
(142
)
(1,435
)
(5,816
)
Loss before provision for income
taxes
(6,519
)
(2,373
)
(18,825
)
(16,442
)
Provision for income taxes
(194
)
(64
)
(371
)
(183
)
Net loss
$
(6,713
)
$
(2,437
)
$
(19,196
)
$
(16,625
)
Preferred stock dividend paid
—
—
—
(14,955
)
Accretion of redeemable preferred
stock
—
—
—
(56,175
)
Net loss attributable to common
stockholders, basic and diluted
$
(6,713
)
$
(2,437
)
$
(19,196
)
$
(87,755
)
Net loss per share attributable to
common stockholders, basic and diluted
$
(0.17
)
$
(0.07
)
$
(0.51
)
$
(5.85
)
Weighted-average common shares
outstanding, basic and diluted
38,511,370
35,790,951
37,855,503
15,007,247
Phreesia, Inc. Unaudited
Statements of Cash Flows (in thousands, except for shares and
per share data)
Nine Months Ended October
31,
2020
2019
Cash used in operating
activities:
Net loss
$
(19,196
)
$
(16,625
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
11,656
10,267
Stock-based compensation expense
9,616
3,832
Change in fair value of warrants
liability
—
3,307
Amortization of debt discount
318
412
Loss on extinguishment of debt
—
1,073
Cost of Phreesia hardware purchased by
customers
604
512
Deferred contract acquisition costs
amortization
2,280
1,465
Non-cash operating lease expense
1,228
—
Deferred tax asset
279
—
Changes in operating assets and
liabilities
Accounts receivable
(5,616
)
(3,899
)
Prepaid expenses and other assets
(1,940
)
(2,943
)
Deferred contract acquisition costs
(1,901
)
(1,414
)
Accounts payable
(2,300
)
1,629
Accrued expenses and other liabilities
3,982
3,098
Lease liability
(1,419
)
—
Deferred revenue
1,222
(1,162
)
Net cash used in operating
activities
(1,187
)
(448
)
Cash used in investing
activities:
Capitalized internal-use software
(4,663
)
(4,329
)
Purchase of property and equipment
(6,440
)
(4,826
)
Net cash used in investing
activities
(11,103
)
(9,155
)
Cash provided by financing
activities:
Proceeds from issuance of common stock in
equity offerings, net of underwriters' discounts and
commissions
174,800
130,781
Payment of preferred stock dividends
—
(14,955
)
Proceeds from issuance of common stock
upon exercise of stock options
3,351
445
Purchase of treasury stock
(869
)
—
Payment of offering costs
(226
)
(5,944
)
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 and loan
payable
—
(21,042
)
Insurance financing arrangement
2,009
—
Principal portion of finance lease
payments
(1,797
)
(1,624
)
Principal payments on financing
arrangements
(881
)
—
Debt extinguishment costs
—
(300
)
Debt issuance costs
(69
)
(112
)
Loan facility fee payment
(225
)
—
Net cash provided by financing
activities
176,093
99,449
Net increase in cash and cash
equivalents
163,803
89,846
Cash and cash equivalents – beginning
of period
90,315
1,543
Cash and cash equivalents – end of
period
$
254,118
$
91,389
Supplemental information of non-cash
investing and financing information:
Right-of-use assets recorded in exchange
for operating lease liabilities (1)
$
4,420
$
—
Property and equipment acquisitions
through finance leases
$
6,050
$
1,738
Capitalized software acquired through
vendor financing
$
174
$
—
Purchase of property and equipment and
capitalized software included in accounts payable
$
1,681
$
546
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
$
—
Deferred offering costs included in
accounts payable and accrued liabilities
$
64
$
—
Cashless exercise of common stock
warrants
$
—
$
2,521
Cash payments for:
Interest
$
1,047
$
1,834
(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) cash payments for interest and other non-operating expenses;
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 October
31,
Nine Months ended October
31,
(in thousands, unaudited)
2020
2019
2020
2019
Net loss
$
(6,713
)
$
(2,437
)
$
(19,196
)
$
(16,625
)
Interest (income) expense
467
219
1,206
1,769
Depreciation and amortization
3,993
3,478
11,656
10,267
Stock-based compensation expense
3,316
1,766
9,616
3,832
Change in fair value warrant liability
—
—
—
3,307
Provision for income taxes
194
64
371
183
Other (income) expense
(62
)
(77
)
229
740
Adjusted EBITDA
$
1,195
$
3,013
$
3,882
$
3,473
Phreesia, Inc. Reconciliation
of GAAP and Adjusted Operating Expenses (Unaudited)
Three Months ended October
31,
Nine Months ended October
31,
(in thousands)
2020
2019
2020
2019
GAAP operating expenses
General and administrative
10,370
7,184
28,721
20,849
Sales and marketing
10,481
8,348
30,013
24,170
Research and development
5,732
4,774
16,267
13,762
Cost of revenue
6,472
4,388
16,477
12,594
$
33,055
$
24,694
$
91,478
$
71,374
Stock compensation included in GAAP
operating expenses
General and administrative
$
1,635
$
1,040
$
5,169
$
2,353
Sales and marketing
1,008
437
2,530
863
Research and development
470
232
1,494
485
Cost of revenue
203
57
423
131
$
3,316
$
1,766
$
9,616
$
3,832
Adjusted operating expenses
General and administrative
$
8,735
$
6,144
$
23,552
$
18,496
Sales and marketing
9,473
7,911
27,483
23,307
Research and development
5,262
4,542
14,773
13,276
Cost of revenue
6,269
4,331
16,054
12,463
$
29,739
$
22,928
$
81,862
$
67,542
Phreesia, Inc. Key Metrics
(Unaudited)
Three months ended October
31,
Nine months ended October
31,
2020
2019
2020
2019
Key Metrics:
Provider clients (average over period)
1,737
1,573
1,679
1,560
Average revenue per provider client
$
17,490
$
16,637
$
51,604
$
48,768
Patient payment volume (in millions)
$
524
$
463
$
1,445
$
1,388
- 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 80% and 82% of our patient payment volume in the
three months ended October 31, 2020 and 2019, respectively. Credit
and debit patient payment volume processed through our payment
facilitator model represented 82% and 83% of our patient payment
volume in the nine months ended October 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,
operating expenses, cash flows and our business outlook for the
fiscal years ended January 31, 2021 and 2022; 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201208006116/en/
Investors: Balaji Gandhi Phreesia, Inc. investors@phreesia.com
(929) 506-4950 Media: Maureen McKinney Phreesia Inc.
mmckinney@phreesia.com
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