Exchange: NYSE | Sector: Healthcare | Industry: Medical Healthcare Information Services
Q1 2026
Published: May 28, 2025
Earnings Highlights
Revenue of $115.94M up 14.5% year-over-year
EPS of $-0.07 increased by 81% from previous year
Gross margin of 67.2%
Net income of -3.91M
"“AI is being integrated across all aspects of our organization and our current and future products. We believe we are well positioned to continue to grow our network through product-led growth.”" - Chaim Indig
Phreesia Inc (PHR) QQ1 2026 Earnings: Revenue Rises to $115.9M on Network Solutions Growth; AI-Enabled Product Expansion Supports a Path Toward Profitability
Executive Summary
Phreesia reported a solid start to fiscal 2026 with QQ1 revenue of $115.9 million, up 15% year-over-year, underpinned by continued strength in the Network Solutions business and momentum from new product modules. Management highlighted a product-led growth strategy, with AI integration advancing across the platform to deliver measurable outcomes for patients and providers. The quarter delivered positive operating cash flow of $14.9 million and positive free cash flow of $7.5 million, placing the company on a path toward greater cash generation as the revenue base expands.
Key Performance Indicators
Revenue
115.94M
QoQ: 5.70% | YoY:14.54%
Gross Profit
77.87M
67.17% margin
QoQ: 2.31% | YoY:29.07%
Operating Income
-3.29M
QoQ: 56.82% | YoY:83.07%
Net Income
-3.91M
QoQ: 38.75% | YoY:80.15%
EPS
-0.07
QoQ: 39.64% | YoY:81.03%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $115.936 million in QQ1 2026; YoY +15% (14.5% reported YoY revenue growth in the earnings materials).
Gross Profit: $77.871 million; gross margin 67.17%, up 29.07% YoY and 2.31% QoQ.
- Revenue: $115.936 million in QQ1 2026; YoY +15% (14.5% reported YoY revenue growth in the earnings materials).
- Gross Profit: $77.871 million; gross margin 67.17%, up 29.07% YoY and 2.31% QoQ.
- Operating Income: -$3.287 million; operating margin -2.84%; EBITDA: $4.134 million; EBITDA margin ~3.56%.
- Net Income: -$3.914 million; net margin -3.38%; EPS -$0.0664 (basic and diluted).
- Adjusted EBITDA: $20.8 million; adjusted EBITDA margin 18%.
- Customer/Engagement metrics: average AHSCs 4,411, up 70 QoQ and 346 YoY; revenue per AHSC $26,283, up 6% YoY and 4% QoQ.
- Cash flow and liquidity: operating cash flow $14.85 million; free cash flow $7.46 million; cash balance at period end $90.87 million; net debt of -$75.0 million (cash greater than debt).
- Balance sheet: total assets $400.4 million; total liabilities $118.2 million; stockholders’ equity $282.2 million; cash and short-term investments $90.9 million; net receivables $108.1 million.
- Guidance: FY2026 revenue guidance $472–$482 million; adjusted EBITDA guidance $85–$90 million; AHSCs expected to reach ~4,500; revenue per AHSC anticipated to be higher than FY2025.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
115.94M
14.54%
5.70%
Gross Profit
77.87M
29.07%
2.31%
Operating Income
-3.29M
83.07%
56.82%
Net Income
-3.91M
80.15%
38.75%
EPS
-0.07
81.03%
39.64%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management themes from the QQ1 2026 earnings call:
- Strategy and AI: Chaim Indig emphasized a focus on delivering scalable, value-driven products and the strategic role of AI across the organization. “AI is being integrated across all aspects of our organization and our current and future products,” and Phreesia aims to grow the network through product-led growth. This frames the quarterly results within a longer-term, AI-enabled product roadmap that should support higher retention and expanded wallet share.
- Capital allocation and financial flexibility: Balaji Gandhi underscored a strong balance sheet and growing free cash flow, enabling opportunistic capital deployment to profitable growth opportunities. “As our cash position continues to grow, we will remain opportunistic and flexible in our approach to deploying cash to profitable growth and value enhancing opportunities.”
- Product performance and ROI focus: Management attributed Network Solutions’ strength to a product-led, value-centric approach and highlighted the ROI-driven, scalable nature of campaigns, including MLR reviews for pharma programs and real-time titration of campaigns as dollars become available. Chaim Indig noted, “clients don’t buy AI… they buy solutions to really complex problems,” reinforcing the emphasis on delivering trusted, results-oriented capabilities.
- Medaphine and growth opportunities: The executives described Medaphine as “in the first inning” and still early in monetization, signaling potential long-term upside as the network expands and patients move through the platform. Balaji Gandhi called it a contributing revenue line, with ongoing investment to scale.
- Capital return signal: The board-authorized share repurchase plan (up to 2.5 million shares) was characterized as opportunistic and a sign of capital-management discipline in a volatile price environment.
- Outlook and cadence: Management reaffirmed FY2026 revenue guidance and raised the adjusted EBITDA range, acknowledging that quarterly timing of invoicing and working capital can influence quarter-to-quarter movement, but the trend remains positive as the network scales.
“AI is being integrated across all aspects of our organization and our current and future products. We believe we are well positioned to continue to grow our network through product-led growth.”
— Chaim Indig
“Clients don’t buy AI… they buy solutions to really complex problems. And we’re seeing a lot of the derivation to more trusted partner … AI is enabling us to do things within the Phreesia platform and across our network that we are very excited for.”},
— Chaim Indig
Forward Guidance
Phreesia’s FY2026 outlook reflects a cautious, upside-ready stance consistent with a growth-stage SaaS/healthcare IT platform. Key drivers include:
- Revenue trajectory: FY2026 revenue guidance of $472–$482 million implies mid- to high-single-digit growth relative to the QQ1 base, supported by expanding AHSCs and higher revenue per AHSC through ongoing product monetization (bill pay, appointment readiness, and enhanced billing/payments features).
- Profitability path: Adjusted EBITDA guidance of $85–$90 million signals improving operating leverage as the company scales its fixed-cost base and leverages the higher-margin, value-added modules. The company cautions that inorganic growth will be discretionary and conditionally dependent on opportunities meeting return thresholds; no acquisitions are assumed in the guidance through January 31, 2026.
- Portfolio evolution: Continued emphasis on AI-enabled products and a product-led growth model should improve client retention, drive up revenue per AHSC, and broaden the addressable market with new modules.
- Risks and monitoring: Key factors to monitor include (1) tempo of AHSC onboarding and churn, (2) customer adoption of new modules and bill-pay improvements, (3) ROI realization and cost of customer acquisition in larger enterprise deals, (4) potential macro headwinds affecting provider budgets and pharma campaigns, and (5) integration/operational execution on Medaphine as it scales.
Overall, investors should monitor the quarterly cadence of cash conversion, any deviations in AHSC growth, and the realization of the AI-enabled product stack where management remains focused on delivering measurable outcomes.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
PHR Focus
67.17%
N/A
N/A
N/A
HCAT
45.60%
-25.40%
-6.30%
-3.27%
DH
73.90%
-3.12%
-33.20%
-76.00%
PRVA
9.53%
1.09%
0.64%
160.43%
NRC
56.50%
25.60%
19.50%
12.70%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Phreesia’s QQ1 2026 results underscore a trajectory toward higher profitability driven by product expansion, higher monetization of the AHSC base, and expanding non-transactional revenue (e.g., bill pay, AI-enabled campaigns). The company’s balance sheet remains robust, with a cash position that supports continued investment in growth initiatives and opportunistic capital allocation (including a 2.5M share repurchase authorization). The guidance for FY2026 implies modest revenue growth, with a meaningful uplift in EBITDA as scale accelerates and operating leverage improves. The Medaphine asset represents a potential longer-term upside as the network matures and patients engage with provider ecosystems via Phreesia’s platform. Key investor takeaways: maintain a constructive view on the long-term margin and cash-flow trajectory anchored by AI-enabled product expansion and a scalable go-to-market model, while monitoring AHSC growth, campaign ROI dynamics, and any regulatory or macro headwinds that could alter the timing of revenue recognition and cash collections.
Key Investment Factors
Growth Potential
- Large addressable network expanding beyond traditional healthcare providers through the Phreesia Platform modules (appointment readiness, post-script engagement, enhanced bill pay) and Medaphine’s provider-finding/appointment-scheduling capability. AI integration is positioned to boost efficiency, personalize patient communications, and unlock expanded wallet share across AHSCs. The company targets ~4,500 AHSCs in FY2026 with rising revenue per AHSC, suggesting continued upside from existing clients and net-new logos.
- Monetization of new modules appears to be gaining traction, as revenue per AHSC has risen 6% YoY and 4% QoQ, signaling effective upsell and cross-sell within the installed base.
Profitability Risk
- Profitability remains modest with negative net income in QQ1 2026 and modest operating margins; continued investment in growth initiatives may pressure near-term EBITDA unless leverage improves.
- Customer concentration and macro volatility in healthcare/pharma budgets could impact campaigns and ROIs; management notes ongoing MLR/approval reviews that can cap campaign agility in the near term.
- Acquisition risk remains a function of capital allocation; management emphasized opportunistic buy/build/rent decisions rather than a prescriptive M&A plan, implying execution risk if inorganic opportunities do not meet internal hurdle rates.
Financial Position
- Balance sheet is strong with cash and cashequivalents of $90.9M and net debt of -$75.0M, indicating substantial liquidity to fund growth and potential buybacks.
- Positive operating cash flow of $14.9M and free cash flow of $7.5M in QQ1 2026 demonstrate improving cash generation as revenue scales, with an expected continued cash conversion in FY2026 and into FY2027.
SWOT Analysis
Strengths
Product-led growth strategy with a scalable, integrated Phreesia Platform
AI-enabled product stack across operations and client solutions
Large, expanding client network (AHSCs) with per-client monetization via modules
Healthy balance sheet with positive operating and free cash flow trajectory
Strategic acquisitions to date (e.g., Medaphine) enhancing network effects
Weaknesses
Near-term profitability remains negative (net income and operating margin despite adjusted EBITDA growth)
Dependence on pharma and provider budgets which can be cyclical and influenced by macro conditions
Acquisitions and integration risk could affect execution and financials if ROI hurdles are not met
Opportunities
Monetization and scale of new modules (bill pay, appointment readiness, enhanced bill pay)
Medaphine expansion as a patient-provider matching lever across the network
Continued AI integration to improve ROIs and client retention
Potential opportunistic capital deployment (buybacks, bolt-on acquisitions) in a favorable market
Geographic and market expansion within healthcare IT and life sciences workflows
Threats
Regulatory and legislative risk affecting pharma advertising and data privacy
Competitive intensity in healthcare IT and patient engagement platforms
Macro headwinds impacting provider spending and marketing ROI
Integration risk from inorganic growth and product diversification