Q2 2026 Phreesia Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the Phreesia Inc. Second Quarter Fiscal 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will provide instructions for the question and answer session to follow. First, I would like to introduce Balaji Gandhi, Phreesia Inc.'s Chief Financial Officer. Mr. Gandhi, you may begin.

Good morning, ladies and gentlemen, and welcome to the freezia second quarter pistol 20206 earnings conference call.

At this time, all participants are in a listen-only mode.

We will provide instructions for the question and answer session to follow.

First, I would like to introduce Balaji Gandhi.

Previous Chief Financial Officer.

Mr. Gandhi, you may begin?

Balaji Gandhi: Thank you, Operator. Good morning and welcome to Phreesia Inc.'s Earnings Conference Call for the second quarter of Fiscal 2026, which ended on July 31, 2025. Joining me on today's call is Chaim Indig, our Chief Executive Officer. A more complete discussion of our results can be found in our earnings press release and in our related Form 8-K submission to the SEC, including our quarterly stakeholder letter, both issued after the markets close today. These documents are available on the Investor Relations section of our website at ir.phreesia.com. As a reminder, today's call is being recorded, and a replay will be available on our Investor Relations website at ir.phreesia.com following the conclusion of the call.

Thank you, operator.

Good morning and welcome to frieza's earnings conference call. For the second quarter of fiscal 2026 which ended on July 31st of 2025.

Executive officer.

A more complete discussion of our results can be found in our earnings press release, and in our related Form, 8K submission to the SEC.

Including our quarterly stakeholder letter, both issued, after the markets closed today.

These documents are available on the investor relations section of our website at IR fia.com.

As a reminder, today's call is being recorded.

Balaji Gandhi: During today's call, we may make forward-looking statements, including statements regarding trends, our anticipated growth, our strategies, predictions about our industry, and the anticipated performance of our business, including our outlook regarding future financial results and acquisitions. Forward-looking statements are subject to various risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to differ materially from those described in our forward-looking statements. Such risks are described more fully in our earnings press release, our stakeholder letter, and our risk factors included in our SEC filings, including in our quarterly report on Form 10-Q that will be filed with the SEC tomorrow. The forward-looking statements made on this call will be based on our current views and expectations and speak only as of the date on which the statements are made.

And a replay will be available on our investor relations website at ir.phreesia.com following the conclusion of the call. During today's call, we may make forward-looking statements, including statements regarding trends, our anticipated growth, our strategies, predictions about our industry, and the anticipated performance of our business, including our outlook regarding future financial results and acquisitions.

Forward-looking statements are subject to various risks, uncertainties and other factors that may cause our actual results performance or achievements to differ materially from those described in our forward-looking statements.

Such risks are described more fully in our earnings press release, our stakeholder letter, and our risk factors included in our SEC filings, including in our quarterly report on Form 10-Q that will be filed with the SEC tomorrow.

Balaji Gandhi: We undertake no obligation to update and expressly disclaim the obligation to update these forward-looking statements to reflect events or circumstances after the date of this call or to reflect new information or the occurrence of unanticipated events. We may also refer to certain financial measures not in accordance with generally accepted accounting principles, such as adjusted EBITDA and free cash flow, in order to provide additional information to investors. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. Our reconciliation of GAAP to non-GAAP results may be found in our earnings release and stakeholder letter, which were furnished with our Form 8-K filed after the markets close today with the SEC, and may also be found on our Investor Relations website at ir.phreesia.com. I will now turn the call over to our CEO, Chaim Indig.

The forward-looking statements made on this call will be based on our current views and expectations and speak only as of the date on which the statements are made. We undertake no obligation to update and expressly disclaim the obligation to update these forward-looking statements to reflect events or circumstances after the date of this call, or to reflect new information or the occurrence of unanticipated events.

We may also refer to certain Financial measures not in accordance with generally accepted accounting principles such as adjusted Ava and free cash flows in order to provide additional information to investors.

Chaim Indig: Thank you, Balaji, and good evening, everyone. Thank you for joining our second quarter of fiscal year 2026 earnings call. I'd like to begin with some exciting news. Earlier today, Phreesia Inc. announced a definitive agreement to acquire AccessOne for $160 million. AccessOne is a market leader in healthcare provider financing, serving many of the nation's largest health systems. We have followed AccessOne's progress over many years and admired its approach to addressing a critical gap in care that is consistent with our mission of making care easier every day. AccessOne will expand our addressable market by roughly $6 billion and strengthen our ability to help providers improve collections while preserving patient trust. We believe this acquisition is a natural extension of our payment strategy and will complement Phreesia Inc.'s existing products. Balaji will provide some details on the transaction.

These non-gaap measures should be considered in addition to and not as a substitute for or in isolation from our Gap results. Our reconciliation of gaap to non-gaap results may be found in our earnings release and stakeholder letter, which were furnished with our form AK filed. After the markets closed today with the SEC and may also be found on our investor relations website at IR fia.com. I will now turn the call over to our CEO time ending.

Thank you and good evening, everyone. Thank you for joining our second quarter of fiscal year, 2026 earnings call.

I'd like to begin with some exciting news.

Earlier today, Fria announced a definitive agreement to acquire access 1 for 160 million.

Access 1 is a market leader in healthcare provider financing, serving many of the nation's largest health systems.

We have followed Access 1's progress over many years and admired its approach to addressing a critical gap in care that is consistent with our mission of making care easier every day.

Access 1.

Will expand our addressable Market by roughly 6 billion dollars and strengthen our ability to help providers improve collections while preserving patient. Trusts

Chaim Indig: We look forward to welcoming the AccessOne team to Phreesia Inc. following the close of the transaction. I am also proud to share that Phreesia Inc. achieved an important milestone in the second quarter. For the first time in our history, we were net income positive. As with all of our milestones, achieving positive net income does not represent a finish line. However, this milestone does give us all a great sense of pride and accomplishment in that it captures the power of our unique business and financial model and our team's ongoing commitment to being good stewards of capital. Before turning the call over to Balaji, I would like to congratulate my Co-founder, Evan Roberts, and David Lenetsky on being named President of Provider Solutions and President of Network Solutions, respectively.

We believe this acquisition is a natural extension of our payment strategy and will complement fia's. Existing products alloy will provide some details on the transaction. We look forward to welcoming the access 1 team to Frieza following the close of the transaction.

I am also proud to share that Frieza achieved an important milestone in the second quarter for the first time in our history. We were net income positive. As with all of our milestones, achieving positive net income does not represent a finish line. However, this milestone does give us all a great sense of pride and accomplishment, as it captures the power of our unique business.

And financial model and our team's ongoing commitment to being good, stewards of capital.

Chaim Indig: These titles reflect their leadership of the Provider Solutions and Network Solutions teams, meeting the needs of our clients and executing on our mission, vision, and values. Evan and David are also invaluable thought partners to me, and I am pleased to share their titles with you. I'll now turn it over to Balaji to provide some additional details on the AccessOne transaction and provide a review of our results and updated outlook.

Before turning the call over to Balaji, I would like to congratulate my co-founder, Evan Roberts, and David Lonesky on being named President of Provider Solutions and Network Solutions, respectively.

These titles, reflect their leadership of the provider and Network Solutions teams meeting the needs of our clients and executing on our mission vision and values.

Evan and David are also invaluable thought partners to me, and I am pleased to share their titles with you.

Balaji Gandhi: Thank you, Chaim. First, I also want to congratulate Evan and David on their new titles. Now, for some details on the AccessOne transaction. As outlined in our press release and stakeholder letter, the purchase price for AccessOne is $160 million in cash. Phreesia intends to finance the acquisition through a combination of cash from our balance sheet and a new, fully committed bridge loan facility. The transaction is expected to close during the third quarter or early fourth quarter of Phreesia's 2026 fiscal year, subject to customary closing conditions and regulatory approvals. We currently expect AccessOne to contribute approximately $35 million in annualized revenue and approximately $11 million in annualized adjusted EBITDA. Once the acquisition is closed, we plan to update our fiscal 2026 outlook to reflect the expected contribution to our results.

I'll now turn it over to Balaji to provide some additional details on the Access 1 transaction and provide a review of our results and updated outlook.

Thank you, hon.

First, I also want to congratulate Evan and David on their new titles.

Now, for some details on the Access 1 transaction.

The purchase price for Access 1 is 160 million in cash?

Fria intends to finance the acquisition through a combination of cash from our balance sheet and a new fully committed Bridge Loan facility.

The transaction is expected to close during the third quarter or early fourth quarter of fia's, 2026, fiscal year subject to customary closing conditions and Regulatory approvals.

We currently expect access 1 to contribute approximately 35 million in annualized revenue, and approximately 11 million in annualized adjusted ibida.

Balaji Gandhi: Overall, we believe this transaction will strengthen Phreesia's financial profile, add profitable growth, and enhance our ability to support clients with innovative payment solutions. We look forward to closing the transaction and working with the AccessOne team. I would also like to touch on our updated total addressable market. The AccessOne acquisition is expected to expand our addressable market by about $6 billion by extending our reach in the payment solutions space. We also increased our network solutions TAM by $6 billion, as we expect to be able to draw from a larger pool of life sciences marketing dollars as our products become more ubiquitous across our network. Combined, the expansion of our payments and network solutions addressable markets is expected to increase our TAM to approximately $24 billion from approximately $10 billion. Now, let me provide a few comments around our second quarter results.

Once the acquisition is closed, we plan to update our fiscal 2026 Outlook to reflect the expected contribution to our results. Overall, we believe this transaction will strengthen Freeze's Financial profile. Add profitable growth and enhance our ability to support clients with Innovative Payment Solutions.

We look forward to closing the transaction and working with the access 1 team.

I would also like to touch on our updated total addressable Market.

The access 1.

We also increased our Network Solutions Tam by 6 billion dollars. As we expect to be able to draw from a larger pool of Life Sciences marketing dollars, as our products become more ubiquitous across our Network,

Combined the expansion of our payments and Network Solutions. Addressable markets, is expected to increase our Tam to approximately 24 billion dollars from approximately 10 billion dollars.

Balaji Gandhi: Total revenue was $117.3 million, an increase of 15% year-over-year. We are very pleased with our performance on the top line. We ended with average healthcare services clients of 4,467, an increase of 56 AHSCs from the prior quarter and 298 from the prior year. This result was in line with our expectation. Total revenue per average healthcare services client was $26,249, up 7% year-over-year and flat quarter-over-quarter, also in line with our expectation. Moving on to profitability, as Chaim mentioned, we achieved another major milestone this quarter with net income of $700,000, our first-ever positive net income quarter. Adjusted EBITDA was $22 million, an increase of $16 million year-over-year, with an adjusted EBITDA margin of 19%. Now, turning to the balance sheet and cash flow, we ended the quarter with $98.3 million in cash and cash equivalents. This compares to $90.9 million in the prior quarter.

Now, let me provide a few comments around our second quarter results.

Total revenue was $1,177.3 million, an increase of 15% year-over-year. We are very pleased with our performance on the top line.

We ended with an average of 4,467 Healthcare Services clients, an increase of 56 clients from the prior quarter and 298 clients from the prior year.

This result was in line with our expectation.

Total revenue per average Healthcare Services clients.

Was 26,249 up 7% year-over-year.

And flat quarter over quarter. Also in line with our expectation

Moving on to profitability, as Haim mentioned, we achieved another major Milestone. This quarter with net income of 700,000, our first ever positive net, income quarter.

Adjusted IBA was 22 million. An increase of 16 million year-over-year with an adjusted ibaa, margin of 19%.

Now, turning to the balance sheet and cash flow.

Balaji Gandhi: Operating cash flow was $14.8 million, up $3.8 million year-over-year. Free cash flow was $9.6 million, up $6 million year-over-year. We have now achieved positive operating cash flow and free cash flow for four consecutive quarters. We expect that the magnitude of cash flow improvement on a quarter-to-quarter basis to vary based on specific timing of invoicing and payments, which you can see in working capital along with CapEx. Our second quarter results reflect the continued strength of our operating leverage and revenue growth. I would like to thank the entire Phreesia team for being able to balance the priorities associated with our mission and values and being good stewards of capital, which helped us to achieve positive net income for the first time in our history. Transitioning now to our financial outlook for fiscal 2026.

We ended the quarter with 98.3 million in cash and cash flows. This compares to 90.9 million in the prior quarter.

Operating cash flow was $14.8 million, up $3.8 million year-over-year. Free cash flow was $9.6 million, up $6 million year-over-year.

We have now achieved positive, operating cash flow, and free cash flow for 4 consecutive quarters.

We expect that the magnitude of cash flow improvement on a quarter-to-quarter basis to vary based on the specific timing of invoicing and payments, which you can see in working capital along with CapEx.

Our second-quarter results reflect the continued strength of our operating leverage and revenue growth.

I would like to thank the entire Freezer team for being able to balance the priorities associated with our mission and values, and for being good stewards of capital.

Which helped us to achieve positive. Net income for the first time in our history.

Balaji Gandhi: We are maintaining our revenue outlook for fiscal year 2026 at a range of $472 million to $482 million. We are updating our adjusted EBITDA outlook for fiscal year 2026 to a range of $87 million to $92 million, from a previous range of $85 million to $90 million. That's a $2 million increase at the top and bottom ends of the previous range. We are reiterating our outlook on AHSCs to reach approximately 4,500 in fiscal year 2026 and for total revenue per AHSC to increase in fiscal 2026 compared to fiscal 2025. As I mentioned earlier, we expect to update our fiscal 2026 financial outlook following the close of the AccessOne transaction. Operator, we can now begin the Q&A session.

Transitioning now to our financial outlook for fiscal 2026.

We are maintaining our Revenue outlook for fiscal year 2026 at a range of 472 to 482 million.

We are updating our adjusted ebit dial, look for fiscal year, 2026 to a range of 87 million to 92 million from a previous range of 85 million to 90 million.

That's a $2 million increase at the top and bottom ends of the previous range.

We are reiterating our outlook on AHSC to reach approximately 4,500 in fiscal year 2026, and for total revenue per AHSC to increase in fiscal 2026 compared to fiscal 2025.

As I mentioned earlier, we expect to update our fiscal 2026 Financial Outlook following the close of the access 1 transaction.

Operator. We can now begin the Q&A session.

Operator: We will now begin the question and answer session. If you'd like to ask a question at this time, please press star, followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. We will be limiting participants to one question to ensure we give everyone a chance to ask one and come back for follow-ups. Your first question comes from the line of Jared Haas with William Blair. Please go ahead.

We will now begin the question and answer session.

If you'd like to ask a question at this time, please press star followed by the number 1 on your telephone keypad.

If you would like to withdraw your question, press star 1 again.

We will be limiting participants to one question to ensure we give everyone a chance to ask one and come back for follow-ups.

Your first question comes from the line of Jared Has with William Blair.

Please go ahead.

Speaker 7: Hey, hey guys. Thanks for taking the questions and congrats on the deal. Maybe I'll just ask the first one on AccessOne. Would love to hear a little bit more just how that deal developed over time and I guess what gives you the comfort that this is the right asset and the right market for what seems like a fairly large-scale deal relative to what you've done in the past.

Hey. Hey guys. Um, thanks for taking the questions and congrats on the deal. Um, maybe I'll just ask the first 1 on access. 1 would love to hear a little bit more just how that deal developed over time. And I guess what gives you the Comfort uh that that this is the the right asset and the right Market uh for for what seems like a fairly large scale deal relative to what you've done in the past,

Chaim Indig: Yeah, so look, we've been looking at the space for years. We've known this company for many, many years and a lot of the executives there. We felt a lot of comfort just having watched it. It's a part of the market we haven't been able to play because of both product and regulatory requirements. It's something our customers have said would really be beneficial to them. We felt pretty good about that. Also, frankly, we think it aligns really well with our mission of making care easier every day. All the pieces sort of came together and when it became available, we moved pretty aggressively. It's something we've been watching and paying attention on for years. It wasn't a last-minute decision. It was actually something we've talked about as a team for years.

Chaim Indig: We thought it was something in our arsenal that frankly would just make a lot of sense to the patients that we serve and the providers we serve.

Yeah, so look, we've we've been looking at the space for years, we've known this company for many, many years and a lot of the executives there. Uh, we talked a lot of comfort just having watched it and look, it's a part of the market. We haven't been able to play because of both product and Regulatory um, requirements and it's something, our customers have said would would really be beneficial to them. Uh, so we felt pretty good about that. We also, like, frankly, we think it aligns really well with our mission of making care easier every day. And so, we like all the pieces sort of came together and, uh, when it became available. Uh, we moved pretty aggressively, but it's something. We've been watching and paying attention on for years and so it wasn't uh, wasn't a last minute decision. It was actually something, we thought we talked about as a team for years.

And we thought it was something in our arsenal that frankly would just make a lot of sense to the patients that we serve and the providers we serve.

Speaker 7: All right. Next.

All right.

Next.

Operator: Your next question comes from the line of Jalendra Singh with Piper Sandler. Please go ahead.

Your next question comes from the line of Golinda Singh with Truist Securities.

Speaker 8: Thank you. Thanks for taking my questions. Congrats on the AccessOne deal, but I want to ask about the Phreesia Voice AI product you guys launched during the quarter. Seems like a pretty exciting product for both patients and providers, but can you help us better understand how this product will drive opportunities in the network solutions business because that's where you are increasing the TAM pretty substantially, just given all the incumbent players in SEP, pharma marketing. Just explain that to us. What gives you confidence in terms of getting some traction in that market?

Please go ahead.

Thank you. Uh, thanks for taking my questions. Uh, congrats on access 1 D, but I want to ask about the FIA voice, AI product, you guys launched in during the quarter, seems like a pretty exciting product for both patients and providers. But can you help us better understand how this product will drive opportunities in Network Solutions business? Because that's where you are increasing the time. Please substantially this given all the, you know, incumbent players in SCP Farah marketing. Just just explained to us like, how what gives you confidence in terms of getting some Traction in that market?

Speaker 7: Yeah, thanks, Jalendra. We did want to take the opportunity to talk about this product because we're very excited about it. It's off to a great start. I think, as we've talked about really over several years now, we think about the business holistically. These products that we introduce in the market, when they benefit providers and benefit patients, there are opportunities that create more engagement opportunities for our network solutions revenue. This is just one example. We also want to take the opportunity to explain that sizing and that TAM that's been increased. I wouldn't read too much into the timing of the two being linked. It's probably something we would have introduced earlier and we're choosing to do it now.

Yeah. Thanks Joel lyndra. Um, we did want to take the opportunity to um, talk about this product because we're very excited about it. It's off to a great start. I think, um, as we've talked about really over several years now, we think about the business holistically these products that we introduced in the market when they benefit providers and benefit patients. Um, there are opportunities that you know, creates more uh engagement opportunities for our Network Solutions Revenue. This is just 1 example. We also want to take the opportunity to to explain that sizing and that

Chaim Indig: We are very excited about this product, though, Jalendra. It's growing rapidly. Our providers are getting phenomenal feedback. The feedback we're getting from this product from the provider network is like nothing I've seen ever before. We are really excited and the investments we're making in it, these are a lot of these are investments we've been making for quite some time, and now we feel more comfortable talking about them as it's really, this product's been fluctuating across the network. We expect to hear more and more applications around Voice AI in the coming quarters.

Pam that that's been increased. I don't, I wouldn't read too much into the timing of the 2 being linked. It's probably something we would have introduced earlier, and we're choosing to do it. Now, we are very excited about this product, our children, it's growing rapidly. Our providers are getting on. We're the feedback we're getting from this product from the provider network is, like nothing I've seen ever before. Uh, so we're really excited and the, the, the Investments we're making in it, and these are a lot of these are investments. We've been making for quite some time and now we feel more comfortable talking about that as it's really, this product has been operating across the network.

We expect to hear more and more applications around voice Ai and the in the coming quarters.

Operator: Your next question comes from the line of Jeff Garrow with Stephens Incorporated. Please go ahead.

Your next question comes from the line of Jeff. Go with Stevens Incorporated.

Please go ahead.

Speaker 7: Yeah, thanks for taking the question. Maybe we'll stick with Voice AI. I want to ask kind of where this product sits between a call center type answering service and a nurse triage line. Relatedly, it sounds like it can handle some clinical questions, but do you think it can handle more clinical questions in time? Thanks.

Yeah, thanks for taking the question. Maybe we'll stick with with voice Ai. And you know what? F where this product sits between a call center type answering service and a a nurse triage line and and relatedly. It sounds like it can handle some clinical questions. But do do you think it can handle more clinical questions in time? Thanks.

Chaim Indig: Yes, we think it will. We think it's really, it's not I think. I know today it is also already providing massive value to doctors. They're using it. The feedback is phenomenal from the providers that are using it. Yes, it's also helping, you know, call center folks. It's helping prescription refills. It's helping with appointment booking. It is rapidly helping all of our clients in all different types of scenarios. I'm just, I'm so freaking excited about this product. It's something that's been rolling out in the network for quite some time. We're just excited that we get to talk about it.

So the answer is yes, we think it will, and we think it's really, it's not, I think, I know today. It is also already providing massive value to doctors, right? They're using it, and the feedback is phenomenal from the providers that are using it. And yes, it's also helping, you know, call center folks. It's helping with prescription refills, it's helping with appointment booking. It is rapidly.

I'm just, I'm so freaking excited about this product!

And it's something that's been rolling out in the network for quite some time. Now we're just excited that we get to talk about it.

Operator: Your next question comes from the line of Richard Close with Canaccord Genuity. Please go ahead.

your next question comes from the line of Richard close with canaccord genuity

Please go ahead.

Speaker 9: Yeah, thanks for the questions. Congratulations on the quarter and the acquisition. Just on the new products, Voice AI, the AI referrals, and the auto-network tags, I'm just curious, are all three on this no-risk, no-cost model right now here initially? How long do you think that'll be until, you know, some of these new products, new functionality can begin to be a positive driver to the revenue per AHSC? Just curious.

Yeah, thanks for the questions. Uh, uh, congratulations on the quarter and the acquisition.

Speaker 7: We believe very strongly as a company that when you have good products, the products should lead with themselves. We let all of our products, at any time, any one of our clients could use them at no cost. We expect over time all of these products will have material impact on our revenue, right? Frankly, they'll also just have material impact on the revenue and the productivity of our clients, which also flows through to our core value proposition. I am not worried about them in the near future having an impact on our financials as they're already having an impact on the financials of our clients.

Just on the new products, voice AI, the AI referrals and the Auto Network tags. Um, uh, I'm I'm just curious are all 3 on this. Uh, no risk. No cost, um, model right now, here initially. And then how long um, do you think that'll be until, you know? Uh, some of these new products new functionality can begin to be a positive driver to uh the revenue per um a ahsc just curious.

So we believe very strongly as a company that when you have good products, the products should lead with themselves. And so, yeah, we let our all of our products at any time. Anyone, anyone of our clients could use them at no cost and we expect over time all of these products will have material impact on our Revenue.

Right. And frankly, they also just have a material impact on the revenue and the productivity of our clients, which, you know, also flows through to our core value proposition. So, I am not worried about them in the near future having an impact on our financials, as they're already having an impact on the financials of our star clients.

Balaji Gandhi: Richard, in terms of the actual flow-through, I don't think any of this is different than some of the products we introduced in 2021, 2022, 2023, where it's contributing today and the total revenue per AHSC growth that you're seeing is sort of that waterfall effect. This will be no different. That's a big strength of Phreesia's business models.

And and Richard, I'm just in terms of the actual flow through. I don't think any of this is a different than some of the products we introduced. You know, 2021 2022 2023 where it's contributing today and the total revenue per ahsc growth that you're seeing is sort of that waterfall effect and this will be no different and uh that's sort of, you know

That's, you know, that's a big strength of Phreesia's business model.

Operator: Your next question comes from the line of Scott Schoenhaus with KeyBanc Capital Markets. Please go ahead.

Your next question comes from the line of Scott shouse with keybanc capital markets.

Please go ahead.

Speaker 10: Hey guys, congrats on the quarter in acquisition. You reported a healthy 25% growth rate in network solutions. AccessOne expands your team in life sciences. It seems like just from a quick glance, AccessOne is already embedded in health systems with specialty network groups. Maybe you could just walk through the opportunities on the network solution side. It seems like you have now more touchpoints with patients in the payment process, multiple points of engagement, and maybe you can drive more incremental revenue opportunities in network solutions via this acquisition. Just help us walk through those opportunities, please.

Congrats on the quarter and acquisition. Um, so you reported a healthy. 25% growth rate in Network Solutions access 1 expanded Life Sciences. It seems like just a real quick glance access 1 is already embedded in health systems with specialty. Network groups, maybe you could just walk through the opportunities on the network solution side. Seems like you've now more touch points with patients in the payment process, multiple points of Engagement. Um, and maybe you can drive more incremental Revenue opportunities in network

Balaji Gandhi: Yeah, Scott, let me correct you on one thing, and hopefully this is all clear. We see the AccessOne acquisition aligned with the increase in the TAM in our payment solutions category, which is about $6 billion. I'd read the whole footnote and back up to the TAM for you, but I think you can go look it up yourself. That's how you should think about AccessOne in terms of the near-term opportunity for us. They work, as I think we talked about in the press release and in the letter, they do have a great footprint and work closely with lots of great partners in the health system space, but also with other types of medical groups.

Solutions via this acquisition um so just help us walk through those opportunities, please.

Yeah, so, uh, Scott, let me correct you on 1 Thing. Uh, and hopefully this is all clear. The, we we see, uh, the access 1 Acqua in our Payment Solutions category, which is about 6 billion dollars and, you know, I read the whole footnote and and back back up to the table for you, but I think you can go look it up yourself but really, that's, that's how you should think about access 1. Um, you know, in terms of the near-term opportunity for us. Um and you know they worked as I think we, we talked about in the pressure release and and in the letter, um, they do have a great footprint and work closely with lots of great Partners in the in the health system space. Um, but also with other types of, uh, medical groups

Operator: Your next question comes from the line of Jessica Tasson with Piper Sandler. Please go ahead.

Your next question comes from the line of Jessica tan with Piper Sandler.

Speaker 11: Hi guys, thanks so much for taking the question and congrats on the deal. On the AccessOne, just the payment extensions to patients, can you help us understand who bears risk for those dollars as you wait to collect? Thanks.

Please go ahead.

Hi guys, thanks so much for taking the question and congrats on the deal. Um, on the Access 1, just the, um, payment extensions to patients. Can you help us understand who bears risk? Um,

For those dollars as you wait to collect. Thanks.

Balaji Gandhi: Sure. Thanks, Jess. This is really important to understand. We are not the risk bearer in this relationship. We're able to offer the provider clients of AccessOne, or I should say AccessOne is able to offer their clients a more robust payment offering and payment plan offering. The capital, there's an important partner in this relationship, and there are press releases that you can look up from 2023, and that partner is PNC Bank, obviously one of the largest banks in the country. The risk is actually shared between PNC Bank and the provider itself. You should think about us as really helping drive a lot more, you know, just better solutions to patients in a pretty, you know, technology-first way.

To to patients, um, in a, in a, in a pretty, you know, technology first way.

Operator: Your next question comes from the line of Ryan McDonald with Needham & Company. Please go ahead.

Your next question comes from the line of Ryan McDonald with Needleman Company.

Please go ahead.

Speaker 7: Hi, thanks for taking my questions. Maybe on AccessOne, how should we think about the mix of revenue between just pure interest being collected from payment plans relative to, say, fees charged for the 0% interest rate plan they're offering? As we think about the cross-sell opportunity once the acquisition's integrated here, do you think there is a nearer term opportunity to cross-sell AccessOne into your core base or move more of your core subscription offerings, core product offerings up into the health system base that AccessOne's already serving? Thanks.

Balaji Gandhi: Yeah, first of all, we'll reiterate we're very excited about this and excited to talk about it today, but the transaction hasn't closed. I think we're more than happy to talk a lot more about some of our plans, but we have to get to close this transaction first, so hopefully everyone appreciates that.

Uh thanks for taking my questions. Maybe on access 1. How should we think about the mix of revenue between sort of just pure interest being collected. Um from payment plans relative to say fees charged for the 0% interest rate plan. They're offering and then as we think about the cross sell opportunity, once the Acquisitions integrated here, do you think there is a near-term opportunity? To sort of cross sell access 1 into your core base or move more of your core subscription offerings, core product offerings up into the health system base of that access 1's already serving. Thanks.

Yeah, so first of all, just to reiterate, we're very excited about this and excited to talk about it today, but the transaction hasn't closed. Um, so I think, you know, we're more than happy to talk a lot more about some of our plans, but we have to get to the closest transaction first. So, hopefully everyone appreciates that.

Operator: Your next question comes from the line of Daniel Goslite with Citi. Please go ahead.

Your next question comes from the line of Daniel gosite with City.

Speaker 10: Hi, guys, thanks for taking the question. I want to go back to some of your new product development, specifically your AI initiatives. If I look back a few quarters ago, most of your AI initiatives were internal in nature, you know, improving operating leverage, et cetera. Now you're actually shipping monetizable external-facing AI products. As you make that shift from internal-facing to external product shipping, how are you thinking about the balance between investing in AI for internal improvement versus, you know, external product development? What does a product roadmap look like in the future? It sounds like you're most excited about Voice AI, but I'm sure there's many more products you guys are, you know, having in the pipeline. Finally, how do you intend to price these new products? Is it similar to the non-AI products, or will they be priced at a premium? Thanks.

Hi. Hi, guys. Thanks for taking the question. I want to go back to some of your, um, new product development, specifically your AI initiatives. As I look back a few quarters ago, most of your AI initiatives were internal in nature, you know, improving operating leverage, etc. And now you're actually shipping monetizable.

External facing AI products. So as you make that shift, from internal facing to external product shipping, how are you thinking about the balance between investing, in AI for internal Improvement versus, um, you know, external product development? What is a product roadmap look like in the future? It sounds like you're most excited about voice AI, but I'm sure there's many more products. You guys are, you know, having the in the pipeline. And then, finally, how do you intend to to price these, um, new products similar to the, the non AI products or will they be? Will they be priced at a premium price?

Chaim Indig: Sorry, there's a lot of questions. We had it limited to one question. If you have more, we can come back to it. Why don't I start with, we've been investing in both internal and external-facing AI tools. I don't think the answer is one or the other. I think now we just feel more comfortable talking about them publicly. These are things that we've been rolling out to our clients for some time. I think our general view is lean in first and making sure that the product's really valuable. When you provide a ton of value to clients, you know, and they're appreciative of it and they see it, it's like monetizing. It becomes an afterthought. We've generally focused first on building amazing products and making them very valuable to our clients. After that, the dollars generally have flown.

Sorry, I I there's a lot of questions, we got a limited to 1 question, and if you have more, we can come back to it. But why don't I, um, start with? We've been investing in both internal and external facing AI tools. I don't think the answer is 1 of the other, I think, now we just feel more comfortable talking about them publicly. Uh, these are things that we've been rolling out to our clients for some time. And look, I think, our general view is like lean in first and making sure that the products really valuable. And when you provide

Chaim Indig: We expect to continue to invest both in internal use and external. I think we're now comfortable saying we have multiple sets of AI products that are actively being used by our clients across the board. We are monetizing them today.

Buy a ton of value to clients, you know, and they're appreciative of it and they see it. It's like monetizing, it becomes a becomes an afterthought and we've generally focused first on building, amazing products and making them very valuable to our clients. And then, you know, the after that the dollars generally have flown. So we we expect to continue to invest both in internal use and external, but I think we're we're now. Comfortable saying like we we have multiple sets of AI products that have been actively that are actively being used by our clients across the board.

And we are monetizing them.

Today.

Operator: As a reminder, we will be limiting participants to one question in order for everyone to have a chance to ask a question and come back for follow-ups. Your next question comes from the line of Steven Valachet with Mizuho Securities. Please go ahead.

As a reminder, we will be limiting participants to one question.

In order for everyone to have a chance to ask a question and come back for follow-ups.

Your next question comes from the line of Stephen valakut with mizuho securities.

Speaker 10: Great, thanks. Good afternoon. Thanks for taking the question here. Another question here on the pending AccessOne acquisition. Within the class industry rankings, which I know are not always critical, it looks like they ranked number three or number four in the patient financing services category over the past couple of years. My question is really just about their market share, you know, against similar other players. The $35 million in revenue seems kind of low within a $6 billion TAM. I'm not sure that's the right way to think about market share or not, but just curious to get thoughts on just market share and positioning relative to the size of other players in that space. Thanks.

Please go ahead, great, thanks. Yeah, thanks, good afternoon. Thanks, uh, taking the question here. So, yeah, another question here on the, uh, the pending access 1 AC. Yeah, I guess within the, uh, the class industry rankings, which I know are not always critical. It looks like they ranked the number 3 or number 4 in the uh patient financing Services category over the past couple of years. But really my question is really just about their uh market share. You got some of those other players, you know, the 35 million dollars in Revenue seems, you know, kind of low within a 6 billion Tam.

I'm not sure that's the right way to think about market share or not, but just curious to get thoughts on just market, share and positioning relative to the, you know, size of other players in that space. Thanks.

Balaji Gandhi: Yeah, Steven, thanks for the question. We're trying to be as helpful as we can because, you know, one, we're excited about this, but two, it's also the largest acquisition we've done to date. We also have to be kind of respectful of the process and get to the other side of things before we could talk more about it. You've got the sort of backup on the TAM in the TAM slide, and you've got the revenue, so I think you can do some math there yourself.

Chaim Indig: We expect to continue to invest in the platform, in the product.

Yeah, Stephen, thanks for the question. And again, we're trying to be as helpful as we can because you know, 1 we're excited about this but 2. It's also the largest acquisition. We're, you know, we've done to date but also have to be kind of respectful of the process and get to the other side of things before we could talk, uh, more about it. But you've got the sort of back up on the table, um, in in the table slide and you've got the revenue. So I think you can do some math. There yourself.

Balaji Gandhi: Absolutely.

In the product, absolutely.

Operator: Your next question comes from the line of Brian Tanquilut with Jefferies. Please go ahead.

Your next question comes from the line of Brian Tankette with Jefferies.

Speaker 10: Hey, good afternoon, guys, and congrats. Just maybe a question on sales and marketing. Obviously, that continues to go down. Just curious, you know, how much more runway do you think we can bring that down both at a dollar basis versus % of revenue? Thanks.

Please go ahead.

Hey, good afternoon guys and congrats. Um just maybe a question on sales and marketing uh obviously that continues to go down so just curious.

You know how much more runway do you think we can bring that down, and both at a dollar basis soon as this percentage of revenue? Thanks.

Balaji Gandhi: Yeah, I mean, I think what we've seen there, and we've talked a lot about this, is just the productivity we've gotten, but also the type of, you know, the profile of clients that we're trying to add on the provider side. We also continue to get a lot of deepening relationships and new ones on the network solution side. We're getting good productivity, and I think we both like to remind people that we are investing pretty significantly in sales and marketing as a dollar amount, and you should expect it to kind of be in these levels, but we're getting some good productivity there.

Yeah, I mean I think what we've what we've seen there and we've talked a lot about this, just the, the, the productivity we've gotten, but also the type of, you know, the profile of clients um, that we're trying to add on the on the provider side but also just, you know, continue to get a lot of, uh, deepening relationships and new ones on the network solution side. So we're getting good productivity. But, you know, I think I, you know, we both like to remind people that we are investing pretty significantly in sales and marketing as a dollar amount, um, and you should expect it to kind of be in these levels. But, you know, we're we're getting some good productivity there.

Operator: Your next question comes from the line of Gene Manheimer with Freedom Capital Markets. Please go ahead.

Your next question comes from the line of Gene Mannheimer with Freedom Capital Markets.

Please go ahead.

Speaker 12: Thank you, and congrats, guys, on the good numbers this quarter. Just revisiting AccessOne, I know you say you're somewhat limited in what you can talk about, but historically, can you talk about the growth rate of the company in the last couple of years and whether you think that you can accelerate it as part of the Phreesia portfolio?

Thank you. And, uh, congrats, guys, on the good numbers this quarter. Um, just revisiting Access 1, I know you say you're somewhat limited in what you can talk about. But historically, can you talk about the growth rate of the company over the last couple of years and whether you think that you can accelerate it as part of the freeze?

Portfolio.

Balaji Gandhi: I think what we can say, Gene, is we didn't acquire it to not grow it. Obviously, Chaim mentioned we're also going to invest in it. We're not going to be able to provide historical numbers on that. The company has a good reputation, and Chaim said we followed it for a long time, but we absolutely intend to invest and grow that.

I think what we can say, Gene, is that we didn't inquire at, you know, to kind of not grow it. And, as obviously I mentioned, we're also going to invest in it. Um, you know, we're not going to be able to provide historical numbers on that. The company has, you know, a good reputation, and as time said, we followed it for a long time, but we absolutely intend to, you know, invest in and grow that.

Operator: As a reminder, if you'd like to ask a question, please press star, followed by the number one on your telephone keypad. Your next question comes from the line of Richard Close with Canaccord Genuity. Please go ahead.

As a reminder, if you would like to ask a question, please press star followed by the number 1 on your telephone keypad.

Your next question comes from the line of Richard Close with Canaccord Genuity.

Speaker 9: Yeah, thanks for the follow-up. Balaji, I wanted to go back to Jalendra's question on network solutions TAM because, you know, I guess I just don't understand why Voice AI specifically drives, you know, such a large increase in TAM of like $6 billion. Is there any way you can provide some examples or maybe more thoughts on that TAM growth?

Balaji Gandhi: Yeah, Richard, first of all, I think you know how we operate. We want to be really thoughtful about what we share. There are competitive reasons, et cetera. I think to the specific question on the TAM, the point we're trying to make with Jalendra was that this opportunity in the new TAM is big in and of itself. It's not exclusive to the Voice AI product. We think that could be one area that could help us penetrate it, but there will be others that you will hear about. You're getting the opportunity set first, and I think, in our fashion, you'll hear more about other ones in the future. That's about all we could say.

Please go ahead. Yeah, yeah thanks for the follow-up. Yeah I I I wanted to go back to Jill Linda's. Question a Network Solutions Tam cuz you know I I guess I just don't understand um why voice AI specifically drives uh you know such a large increase in Tam of like 6 billion. So is there any way you can provide some examples or maybe more thoughts on that Tam growth?

Yeah, so Richard, first of all, I think, you know, you know, sort of how we operate we want to be very thoughtful about what what we share, there's competitive reasons, Etc. But I think to the specific question around the Tam, um, the point I think is we're trying to make with chillendra was that we this that opportunity in the new Tam is big in and of itself. Um, it's not exclusive to, you know, the voice AI product we think that could be 1 area that could help us penetrate it, but there will be others that you will hear about. So you're getting sort of the opportunity set first and I think, you know in our fashion you'll hear you'll hear more about other ones in the future. That's that's about all we could say.

Operator: Your next question comes from the line of Jeff Garrow with Stephens Incorporated. Please go ahead.

Your next question comes from the line of Jeff. Go with Stevens Incorporated.

Please go ahead.

Speaker 7: Yeah, thanks for taking the follow-up question. We want to make sure we hit network solutions and an updated discussion on visibility the rest of the year and progress to date on the upsell season for pharma advertising. Thanks.

Yeah thanks for taking the follow-up question. I want to make sure we we hit Network Solutions and an updated discussion on visibility that the rest of the year and um progress to date on the the upsell season for Pharma advertising. Thanks.

Balaji Gandhi: I can start, and Chaim can fill anything in. It's still early, Jeff, in that, you know, sort of in the calendar, but I think things are off to a good start. Long way to go. I think we can say that as we sit here today, we're in a similar place we were last year at this time, the data that we look at. We'll give you updates along the way, and the next one will be in December.

Um, yeah, I can start in Haim can fill anything in. Um, it's still early, um, Jeff in that, you know, sort of in the calendar, but I think things are off to, um, you know, good start, um, a long way to go. Um, I think I, we can say that as we sit here today, we're in a, in a similar place, we were last year at this time. Um, and the data that, you know, we look at, um, and, you know, we'll, we'll sort of, you know, give you give you updates along the way and

You know, the next one will be in December.

Operator: Your next question comes from the line of Steven Balachet with Mizuho Securities. Please go ahead. Mr. Balachet, your line is open. Please go ahead.

Your next question comes from the line of Steven Valakut with Mizuho Securities.

Please go ahead.

Mr. Valakut, your line is open. Please go ahead.

Speaker 10: Oh, sorry. My follow-up question was just sort of touched on a little bit, but I was just curious again with the network solutions, as far as the reacceleration and growth there, is there any color on whether you were maybe able to add more pharma brands or maybe just better revenue per pharma brand? Just curious if you could then provide any more color just from that direction as far as that reacceleration or maybe it was something else altogether, just curious to hear about more of the drivers of the reacceleration and growth. Thanks.

Balaji Gandhi: Yeah, let me, there's sort of two pieces to that, Steven. One is yes, obviously, you know, our relationships have grown, but there's also just the campaigns that we've sold into the year that we're just pacing throughout the year. I think that's something that came up in a lot of the follow-ups from last quarter, that we expected to see the growth that we saw in the first quarter, and we expected to see the growth we saw in the second quarter. We sort of look at these things over the course of the year and why we don't guide on a quarterly basis on that. I don't think you should, I don't know if reacceleration is really the way to think about it, but the team's performing really well and feel good about where we are.

Just from that direction. As far as that re-acceleration, or maybe something else altogether, but just curious to hear about more of the drivers of the reel and growth. Thanks.

Yeah. And and so let me there's there's sort of 2 pieces to that Stephen. So, 1 is yes, I mean, obviously, you know, our our relationships have grown, um, but there's also just the campaigns that we've, you know, sold into the year that we're just, you know, pacing throughout the year. And I think that's something that came up in a lot of the follow-ups from last quarter that we expected to see the growth that we saw in the first quarter and we expected to see the growth we saw in the second quarter but we, you know, we sort of look at these things over the course of the year and why we don't guide, you know, on a quarterly basis on that. But I don't think you should, you know. I don't know if we you know acceleration is really the way to think about it but you know teams performing really well and feel good about where we are.

Operator: Your next question comes from the line of Gene Manheimer with Freedom Capital Markets. Please go ahead.

Your next question comes from the line of Gan Mannheimer with Freedom Capital Markets.

Please go ahead.

Speaker 12: Thanks for the follow-up. I just wanted to ask if you can share what is the customer overlap, say, between Phreesia's intake solutions and AccessOne's customers?

Thanks for the follow-up. Um I just wanted to ask if you can share, what is the customer overlap.

Say between freezy as intake Solutions and and access 1's. Customers.

Balaji Gandhi: Gene, again, you know, got to be careful and wait until we close on more detail, but we thought about this topic and that it would be helpful to you. Obviously, we shared one in the press release, and that was intentional. There's a client mentioned there, but there are others, and that was another reason we have some familiarity and history with the company from following it for many years is that we do have overlapping customers. I think when we close the transaction, we will incorporate that into our AHSC count.

So um yeah, so Jean again, you know, got to be got to be careful and wait until we close on more detail. But we we thought about this topic and that it would be helpful to you. So obviously we shared 1 in the press release and that was, you know, intentional, um, and, and there's a client mentioned there, but there are others and that was another, you know, reason, you know, we have some

You know, familiarity in history with the company, from, from following it, for many years, is that we do have overlapping customers. Um, I think when we close the transaction, um, we will, you know, you you, you know, we we'll, we'll incorporate that into our, uh, ahsc count.

Operator: Your next question comes from the line of Ryan McDonald with Needham & Company. Please go ahead.

Your next question comes from the line of Ryan McDonald with Needham & Company.

Speaker 7: Hi, I figured I'd take a second crack at one here as well. Maybe just to talk about the AI competitive landscape. Chaim, did you say in one of your earlier responses that you are monetizing AI solutions at the moment? If so, I'd just be curious, you know, now that we're seeing larger platform vendors like Epic starting to release some of their AI functionality, you know, Doximity taking various AI functionality and sort of building it in and offering it for free, could you just talk about what the evolution here is within your customer base on willingness to pay for AI functionality and what the runway is here for monetization of those features? Thanks.

Please go ahead.

Hi. I figured I'd take a second crack at 1 here, too, as well. Um, maybe just to talk about the AI competitive landscape. I'm, did you say uh, in 1 of your earlier responses that you are monetizing AI Solutions at the moment? And if so, I just be curious, you know, now that we're seeing larger platform vendors, like epic starting to release some of their AI functionality, uh, you know, doximity taking various AI functionality and sort of building it in and offering it for free. If you just talk about sort of what the evolution here is within your customer base on willingness to pay for AI functionality and sort of what the runway is here for monetization of those features. Thanks.

Chaim Indig: I think the market is massive, right? When we talk to customers, it's not a solution. It's their look at this is game-changing, and we see it ourselves, right? We're able to do things that people always frankly dreamed about or could never even imagine dreaming about. The idea of like being able to answer a phone call and help someone schedule a visit is pretty game-changing, right? We think the market is massive, and frankly, we have, yes, to very clearly state, we have and are monetizing this product today. We expect to continue to monetize it, and it is growing rapidly.

I, I think that market is massive, right? Um, when we talk to customers, it's not a solution. See if they're looking, this is game-changing and we see it ourselves, right? We're able to do things that people always, frankly, dreamed about, or could never even imagine dreaming about.

Um, you know, the idea of being able to answer a phone call and help someone, uh, schedule a visit is pretty game-changing, right? So, we think the market is massive.

And frankly, we have yes to very clearly state we have and are monetizing this product today.

And we expect to continue to monetize it.

And it is growing rapidly.

Operator: Your next question comes from the line of Richard Close with Canaccord Genuity. Please go ahead.

Your next question comes from the line of Richard Close with Canaccord Annuity.

Please go ahead.

Speaker 9: Yeah, thanks for the follow-up. All right, on the R&D leverage.

Chaim Indig: Number three.

Balaji Gandhi: I was saying we don't give you chances, Richard.

Speaker 9: Oh, we're excited.

Yeah, thanks for the follow-up. I'm not R&B leverage number 3; don't say we don't give you chances with, "Oh, we're excited."

Chaim Indig: Yeah.

Speaker 9: All right. You cited repurposing tools to revenue-generating activities. Can you go into any more detail what exactly that was, and can that continue going forward?

Balaji Gandhi: No, Richard, that was very much a one-off sort of thing that we wanted to call out. Similar to the earlier question about sales and marketing, we're getting lots of productivity. Sometimes you're getting productivity in different areas, but we're investing a lot in R&D and that's going to continue. We just wanted to call out that nuance in the quarter.

All right, um, so you cited repurposing tools to revenue-generating activities. Um, can you go into any more detail? What exactly was that and, uh, can that continue going forward?

Chaim Indig: Richard, here I thought you were going to ask about Sesame Street.

No, that was that, Richard. That was very much like a one-off sort of thing that we wanted to call out. And again, similar to the earlier question about sales and marketing, I mean, we're getting lots of productivity. Sometimes, you know, you're getting productivity in different areas. But, um, again, we're investing a lot in R&D, and that's going to continue. But that was, we just want to call out that, um, you know, Nuance in the quarter. Richard, here, I thought you were going to ask about sesame.

Street.

Operator: There are no further questions at this time. I will now turn the call back over to Chaim Indig for closing remarks. Please go ahead.

Chaim Indig: Thank you, everyone, for joining our earnings call. We look forward to talking to everyone again in 90 days, and I hope everyone has a great fall. Have a great day.

There are no further questions at this time. I will now turn the call back over to Chaim Indig for closing remarks. Please go ahead.

Thank you, everyone, for joining our earnings call. We look forward to talking to everyone again in 90 days, and I hope everyone has a great fall. Have a great day.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.