Phreesia, Inc. — FY2022 Form 10-K
Reporting period: Fiscal year ended January 31, 2022, compared with fiscal 2021 ended January 31, 2021. This is an annual report, not a standalone fourth-quarter report. Phreesia provides healthcare software for patient access, registration, payments and clinical support, alongside patient-targeted life sciences services.
Financial and operating results
| Metric | FY2022 | FY2021 |
|---|---|---|
| Revenue | $213.2 million | $148.7 million |
| Operating loss | $116.8 million | $25.7 million |
| Net loss | $118.2 million | $27.3 million |
| Adjusted EBITDA (non-GAAP) | $(59.0) million | $3.8 million |
| Cash from (used in) operations | $(74.7) million | $2.9 million |
| Free cash flow (non-GAAP) | $(105.5) million | $(15.7) million |
| Cash and cash equivalents at year-end | $313.8 million | $218.8 million |
Revenue mix in FY2022: subscription and related services $95.5 million (up 38%); payment processing fees $65.2 million (up 31%); and life sciences $52.5 million (up 77%). Total revenue grew 43%. Average healthcare services clients increased 21% to 2,074, and average revenue per client rose 11% to $77,478. Patient payment volume grew 39% to $2.77 billion; 79% was processed by Phreesia as payment facilitator.
Operating expenses rose substantially, notably sales and marketing (up 148%), research and development (up 131%), and general and administrative (up 70%). The filing attributes much of the increases to hiring, compensation and investment to support growth. Cost of revenue, excluding depreciation and amortization, was $42.7 million; payment processing expense was $38.7 million. The filing does not present a single gross-margin measure.
Year-end current assets were $386.3 million and current liabilities $68.4 million. Finance lease liabilities and other debt totaled $13.2 million, including $5.8 million current; there were no revolving-credit borrowings at year-end. Cash provided by financing was $235.0 million, principally reflecting $245.8 million of net proceeds from the April 2021 stock offering. The company reported $34.4 million of net cash paid for the Insignia acquisition in investing activities.
Changes, outlook and notable items
- Net loss widened to $118.2 million from $27.3 million, and operating cash flow shifted from a $2.9 million inflow to a $74.7 million outflow. Management cited higher employee compensation and headcount as principal drivers of the cash-flow change.
- In December 2021, Phreesia acquired Insignia Health for $37.2 million of consideration, including the exclusive worldwide license to the Patient Activation Measure (PAM). The acquisition added $25.4 million of goodwill and $10.7 million of identifiable intangible assets.
- Management said hiring and overall investment accelerated in FY2022 and expected growth in team size and compensation to moderate in FY2023 and thereafter. It expects continued investment in growth and stated that profitability and margins are expected to improve over time; the filing provides no quantified earnings guidance.
- Management believed available cash, normal-course cash generation and credit availability would fund operations for at least 12 months, while also expecting net losses and negative cash flows to continue for at least the next year. On March 28, 2022, after year-end, the company amended its SVB facility, increasing revolving capacity from $50 million to $100 million.
- Material risks include continued losses and cash use; execution and integration of acquisitions; competition, including from EHR and practice-management vendors; client retention and implementation delays; dependence on payment processors; cybersecurity and privacy exposure; and changing healthcare, payment and data-protection regulation. The filing also highlights potential disruption to third-party development resources in Russia and Ukraine.
- The previously reported material weakness in internal controls was remediated during FY2022. Management and KPMG reported effective internal control over financial reporting as of January 31, 2022; KPMG issued unqualified opinions on the financial statements and internal controls. No legal proceeding was disclosed as expected to have a material adverse effect.
Key investor verification points
- Assess whether revenue growth and client expansion can translate into improved operating leverage as expense growth moderates.
- Track cash burn, capitalized software and equipment spending, and the use of equity or credit to fund operations.
- Verify payment-volume trends, payment facilitator mix, processing economics and reliance on third-party processors.
- Evaluate Insignia’s integration, PAM-related growth and the assumptions underlying acquired intangible-asset valuations.
- Monitor client concentration and renewal, sales and implementation cycles, privacy/security incidents, and compliance with evolving regulations.
- Consider stock-based compensation and dilution: FY2022 stock-based compensation expense was $36.2 million, and the company issued 5.175 million shares in its April 2021 offering.