Phreesia, Inc. (NYSE: PHR) (“Phreesia”) announced financial
results today for the first quarter ended April 30, 2020.
Fiscal First Quarter 2021 Highlights
- Revenue was $33.4 million in the quarter as compared to $28.3
million in the same period in the prior year, an increase of
18%.
- Average number of provider clients was 1,632 in the quarter as
compared to 1,549 in the same period in the prior year, an increase
of 5%.
- Average revenue per provider client was $16,735 in the quarter
compared to $15,649 in the same period in the prior year, an
increase of 7%.
- Adjusted EBITDA was positive $1.5 million in the quarter
compared to negative $0.3 million in the same period in the prior
year.
- Cash on the balance sheet as of April 30, 2020 was $90.3
million, consistent with January 31, 2020.
Conference Call Information
The Company will hold a conference call on Tuesday, June 9,
2020, at 8:30 a.m. Eastern Time to review the Company’s first
fiscal 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 1055118 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 Company filed a Current Report on Form 8-K on April 6, 2020
(the “8-K”) to provide an update related to the outbreak of a novel
strain of Coronavirus (“COVID-19”) and its impact on the Company’s
business. As set forth in the 8-K, COVID-19 has and could continue
to materially and adversely impact Phreesia’s business and results
of operations. However, the rapid development and fluidity of this
situation precludes any prediction as to the ultimate adverse
impact of COVID-19. During the interim period since the filing of
the 8-K, there has been no change to the information disclosed
therein. From the middle of March through the end of April, patient
visits declined approximately 50% compared to the beginning of
March. The visit decline significantly impacted our payment
processing revenue in our fiscal first quarter 2021. Consequently,
our average revenue per provider client growth was negatively
impacted. We estimate that the impact of these trends on provider
revenue to be approximately $3.0 million or approximately 13
percentage points of year-over-year average revenue per provider
client growth. Patient visit trends across our provider network
continue to be below their pre-COVID-19 levels. Further, 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
April 30, 2020
January 31, 2020
(unaudited)
Assets
Current:
Cash and cash equivalents
$
90,252
$
90,315
Settlement assets
8,672
12,368
Accounts receivable, net of allowance of
$1,353 and $943
24,223
21,978
Deferred contract acquisition costs
1,788
1,720
Prepaid expenses and other current
assets
5,435
5,157
Total current assets
130,370
131,538
Property and equipment, net of accumulated
depreciation and amortization of $37,813 and $35,551
14,986
14,487
Capitalized internal-use software, net of
accumulated amortization of $20,847 and $19,554
9,198
8,735
Operating lease right-of-use assets
(1)
2,795
—
Deferred contract acquisition costs
1,715
1,594
Intangible assets, net of accumulated
amortization of $331 and $271
1,139
1,199
Long-term deferred tax assets
719
775
Goodwill
250
250
Other assets
128
180
Total assets
$
161,300
$
158,758
Liabilities, Redeemable Preferred Stock
and Stockholders’ Equity
Current:
Settlement obligations
$
8,672
$
12,368
Current portion of finance lease
liabilities (1)
2,366
2,324
Current portion of operating lease
liabilities (1)
1,414
—
Accounts payable
7,649
6,017
Accrued expenses
11,374
9,243
Deferred revenue
6,629
5,401
Total current liabilities
38,104
35,353
Long-term debt
19,470
19,444
Finance lease liabilities, noncurrent
(1)
2,234
2,096
Operating lease liabilities, noncurrent
(1)
1,578
—
Total liabilities
61,386
56,893
Commitments and contingencies (Note
12)
Stockholders’ Equity:
Common stock, $0.01 par value—500,000,000
shares authorized as of April 30, 2020 and January 31, 2020,
respectively; 37,599,441 and 36,610,763 shares issued and
outstanding as of April 30, 2020 and January 31, 2020,
respectively
376
366
Additional paid-in capital
390,981
386,383
Accumulated deficit
(290,597
)
(284,485
)
Treasury stock
(846
)
(399
)
Total stockholders’ Equity
99,914
101,865
Total Liabilities, Redeemable Preferred
Stock and Stockholders’ Equity
$
161,300
$
158,758
(1) Figures as of April 30, 2020 reflect
the Company's February 1, 2020 adoption of Accounting Standards
Update ("ASU") No. 2016-02, Leases.
Phreesia, Inc. Statements of
Operation (Unaudited) in thousands, except for shares and per
share data
Three months ended April
30,
2020
2019
Revenue:
Subscription and related services
$
15,599
$
12,683
Payment processing fees
11,707
11,557
Life sciences
6,090
4,070
Total revenues
33,396
28,310
Expenses:
Cost of revenue (excluding depreciation
and amortization)
4,734
3,996
Payment processing expense
6,848
6,949
Sales and marketing
9,434
7,702
Research and development
5,005
4,299
General and administrative
8,720
6,245
Depreciation
2,268
2,155
Amortization
1,353
1,219
Total expenses
38,362
32,564
Operating loss
(4,966
)
(4,255
)
Other income (expense)
(715
)
(1,145
)
Change in fair value of warrant
liability
—
(423
)
Interest income (expense)
(320
)
(804
)
Total other income (expense)
(1,035
)
(2,372
)
Loss before provision for income
taxes
(6,001
)
(6,627
)
Provision for income taxes
(111
)
(68
)
Net loss
$
(6,112
)
$
(6,695
)
Accretion of redeemable preferred
stock
—
(7,863
)
Net loss attributable to common
stockholders, basic and diluted
$
(6,112
)
$
(14,558
)
Net loss per share attributable to
common stockholders, basic and diluted
$
(0.16
)
$
(7.23
)
Weighted-average common shares
outstanding, basic and diluted
37,308,084
2,013,839
Phreesia, Inc. Statements of
Cash Flows (Unaudited) in thousands, except for shares and per
share data
For the three months ended
April 30,
2020
2019
Cash flows from operating
activities:
Net loss
$
(6,112
)
$
(6,695
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization
3,621
3,374
Stock-based compensation expense
2,872
599
Change in fair value of warrants
liability
—
423
Amortization of debt discount
126
108
Loss on extinguishment of debt
—
1,073
Cost of Phreesia hardware purchased by
customers
172
84
Deferred contract acquisition costs
amortization
525
484
Non-cash operating lease expense
389
—
Deferred tax asset
56
—
Changes in operating assets and
liabilities
Accounts receivable
(2,245
)
137
Prepaid expenses and other assets
1,614
(585
)
Deferred contract acquisition costs
(714
)
(455
)
Accounts payable
(998
)
1,285
Accrued expenses and other liabilities
1,871
2,297
Lease liability
(502
)
—
Deferred revenue
1,228
(98
)
Net cash provided by operating
activities
1,903
2,033
Cash flows used in investing
activities:
Capitalized internal-use software
(1,160
)
(1,411
)
Purchase of property and equipment
(1,917
)
(1,314
)
Net cash used in investing
activities
(3,077
)
(2,725
)
Cash flows from financing
activities:
Proceeds from revolving line of credit
—
7,376
Proceeds from term loan
—
20,000
Repayment of term loan
—
(1,042
)
Repayment of loan payable
—
(20,000
)
Finance lease payments
(525
)
(518
)
Debt extinguishment costs
—
(300
)
Debt issuance costs
—
(112
)
Proceeds from issuance of common stock
upon exercise of stock options
1,736
37
Payment of offering costs
—
(378
)
Loan facility fee payment
(100
)
—
Net cash provided by financing
activities
1,111
5,062
Net increase in cash and cash
equivalents
(63
)
4,370
Cash and cash equivalents – beginning
of period
90,315
1,543
Cash and cash equivalents – end of
period
$
90,252
$
5,913
Supplemental information of non-cash
investing and financing information:
Right-of-use assets obtained in exchange
for operating lease liabilities
$
3,185
$
—
Property and equipment acquisitions
through finance leases
$
827
$
—
Deferred issuance costs included in
accounts payable and accrued expenses
$
—
$
1,658
Purchase of property and equipment and
capitalized software included in accounts payable
$
791
$
471
Issuance of warrants related to debt
$
—
$
833
Cash payments for:
Interest
$
306
$
924
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 net interest expense
(income), provision for income taxes, depreciation and
amortization, and before non-cash based compensation expense,
non-cash change in fair value of warrant liability and net 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
Three months ended April
30,
(in thousands, unaudited)
2020
2019
Net loss
$
(6,112
)
$
(6,695
)
Interest (income) expense
320
804
Depreciation and amortization
3,621
3,374
Stock-based compensation expense
2,872
599
Change in fair value warrant liability
—
423
Provision for income taxes
111
68
Other (income) expense
715
1,145
Adjusted EBITDA
$
1,527
$
(282
)
Phreesia, Inc. Reconciliation
of GAAP and Adjusted Operating Expenses (Unaudited)
Three months ended April
30,
(in thousands)
2020
2019
GAAP operating expenses
General and administrative
$
8,720
$
6,245
Sales and marketing
9,434
7,702
Research and development
5,005
4,299
Cost of revenue
4,734
3,996
$
27,893
$
22,242
Stock compensation included in GAAP
operating expenses
General and administrative
$
1,606
$
321
Sales and marketing
728
156
Research and development
452
89
Cost of revenue
86
33
$
2,872
$
599
Adjusted operating expenses
General and administrative
$
7,114
$
5,924
Sales and marketing
8,706
7,546
Research and development
4,553
4,210
Cost of revenue
4,648
3,963
$
25,021
$
21,643
Phreesia, Inc. Key
Metrics
Three months ended April
30,
2020
2019
Key Metrics:
Provider clients (average over period)
1,632
1,549
Average revenue per provider client
$
16,735
$
15,649
Patient payment volume (in millions)
$
454
$
461
- 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 84% and 83% of our patient payment volume in the
three months ended April 30, 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200608005679/en/
Investors: Balaji Gandhi Phreesia, Inc. investors@phreesia.com
(929) 506-4950 Media: Maureen McKinney Phreesia Inc.
mmckinney@phreesia.com 773-330-8908
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