Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the Phreesia Third Quarter Fiscal 2026 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star 1 a second time. Thank you. And I would now like to turn the conference over to Balaji Gandhi, Chief Financial Officer. You may begin.

Thank you, operator. Good morning, and welcome to Phreesia's earnings conference call for the 2026 which ended on 10/31/2025. 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 closed 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. 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 and 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. We undertake no obligation to update and expressly disclaim the obligation to update 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 flows, 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. A 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 market closed 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.

Thank you, Balaji, and good evening, everyone. Thank you for joining our third quarter fiscal 2026 earnings call. I'm very proud and thankful of our team, the work they do for our clients, and their contribution to another solid quarter of growth and profitability. Balaji will review some of the highlights of our results and update our outlook. Before I hand it off to Balaji, I'd like to frame our view of Phreesia's next three years for all of you. Today, we have a large network of healthcare providers who rely on Phreesia's products and services. We also have new emerging products that extend our reach in ways that are consistent with our mission to make care easier every day. We believe these emerging products will enable us to sustain growth and enhance stakeholder value. I'd like to highlight two of the product areas we are excited about.

First, provider financing. It's no secret that patient financial responsibility has been rising in this country, and we expect this trend to continue. People can't afford to pay their bills all at once. Our platform has enabled us to track this trend for years. For healthcare providers, this means more patient balances go unpaid, payment cycles get longer, and 28% since 2022. As a result, providers need tools to convert patient receivables into predictable cash flow. Patient balances often take years to resolve, which creates working capital pressure for providers. Our financing solutions improve days cash on hand and decrease days outstanding. Financing or payment plan programs can significantly improve the patient experience and affordability and decrease the need to use credit cards or a home equity line.

Our extension into the provider financing market through the acquisition of AccessOne helped us solve this large and growing problem with a market-leading solution. We believe we have a new growth lever to complement our existing solutions for providers and are excited about this opportunity. A second emerging market for us is healthcare provider or HCP marketing. HCP engagement is a natural extension of the offering that works so well to engage patients. We help providers and life sciences partners engage patients just before key visits where important health decisions are made, supporting behavioral change and positive measurable outcomes. Now we're extending that same proven playbook to engage healthcare providers in addition to patients. This positions Phreesia to participate in a multibillion-dollar HCP digital marketing opportunity while leveraging the trusted relationships and infrastructure we've already built. Our approach differentiates Phreesia by closing the loop between patient and provider engagement. Because we're embedded in clinical workflows, we help coordinate consumer and HCP messaging, ensuring that both are prepared for upcoming appointments, reaching physicians with relevant evidence-based information before they see the right patient, not weeks or months later. Our ability to align both sides of the care conversation is something we believe no one else in the market can do as comprehensively as Phreesia. Our acquisitions are central to our ability to understand, reach, and engage healthcare providers. MediFine brings deep insights into appointments with active providers and specialty care patterns, helping us identify when specific clinicians need information about specific conditions or treatments based on their upcoming appointments. Connect on call, now Phreesia on call, along with our voice AI capabilities, allow us to introduce iValue moments directly into the provider workflow. Together, these assets create a premium endemic offering and help us reach a broad set of providers in the natural level of care, not just when they're off the clock. This new initiative plays into our strength. We have two decades of experience working with thousands of provider organizations and the top 10 pharma companies, earning a reputation for performance, compliance, and truly consultative partnerships. By making HCP activation available within that same trusted ecosystem and centered on real care encounters, we believe it will deepen our relationship with both providers and life sciences clients while adding a durable differentiated revenue stream to Phreesia's growth story. We look forward to updating you on these two important initiatives when we speak in 2026. I'll now turn it over to Balaji to walk through the Q3 results, our updated outlook for fiscal 2026, and an initial view into fiscal 2027.

Thank you, Chaim. Let me start with a quick review of our fiscal third quarter. Total revenue was $120.3 million, a 13% increase year over year. Adjusted EBITDA was $29.1 million, an increase of $19 million year over year and $7 million quarter over quarter. We achieved another major milestone this quarter, our adjusted EBITDA margin reaching an all-time high of 24%, representing an improvement of five percentage points quarter over quarter and 15 percentage points year over year. The fiscal third quarter G&A expense line included a one-time G&A tax benefit which increased adjusted EBITDA by $900,000. Third quarter average healthcare services clients or AHSCs came in at 4,520, an increase of 53 from the prior quarter. This performance was in line with our expectations, and we believe we are on track to reach 4,500 average healthcare services clients or AHSCs for the full fiscal year. Meeting this target implies adding approximately 70 clients in the fiscal fourth quarter. Excluding the impact from the AccessOne acquisition, total revenue per AHSC was $26,622, up 6% year over year. The steady year-over-year increase in total revenue per AHSC is consistent with our expectations and a key element of our growth strategy. We have been discussing for several quarters. We are pleased with the continued progress of this metric as it has returned to levels last seen in 2022 and reflects our focus on improving returns on investment and attach rates of our collective offerings across our three revenue streams. Net income remained positive at $4.3 million this quarter, representing our second consecutive quarter of delivering positive net income. Our fiscal third quarter results reflect the continued momentum in both our revenue growth and operating leverage. I'm incredibly proud of the team's disciplined execution and focus, which again enabled us to deliver…

Thank you. And we'll now begin the question and answer session. If you have dialed in and would like to ask a question, please press star 1 on your telephone keypad to raise your hand and join the queue. If you're called upon to ask your question and are listening via speakerphone on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. To be able to take as many questions as possible, we ask that you please limit yourself to one question. Again, it is star one if you would like to join the queue. And our first question comes from the line of Sean Dodge with BMO Capital Markets. Your line is open.

Yes. Thanks. Congratulations on the quarter and on closing the acquisition. Chaim, you mentioned the new emerging solution areas that will help to continue driving higher revenue per AHSC. On AccessOne, maybe just anything more you can share on the growth potential for that business specifically over the next couple of years and how you can accelerate it. Like, how much room is left to continue expanding within their existing base? And then maybe anything that you need to kind of change about that before you can start cross-selling it into the legacy Phreesia? When does that become an opportunity?

So we're really excited to be able to take this to some of our base clients. Right now, the product is really not suited for the vast majority of our clients, so it will need some work and investment before we can take it to the vast majority of our base just because of the facility, and could answer more questions about that. But look, we think that we plan on investing in go-to-market, and I think this is a really strong product offering that has, for years, been underinvested in go-to-market, and some of those had to do with the dynamics of the market and the company itself. And we expect over the next couple of quarters to start investing into its go-to-market motion, both for new clients and existing clients. And, you know, Sean, I'll just add that investment that I'm talking about, that's baked into our outlook for 2027. And a lot of that is just, you know, resources we have within the company, and, obviously, the ones that are coming over with the acquisition or have come over with the acquisition. And then just around growth, I mean, the question itself, I think this is the largest acquisition we've done. This is something we think over multi-years will contribute a lot. We acquired it with that thesis. We wouldn't read too much into what's implied in the '27 guidance in revenue. It's just, you know, if you do an acquisition, you close it in November. It's the responsible thing to do is just, you know, set the bar where we have, and we have very high expectations for it.

And our next question comes from the line of Scott Schoenhaus with KeyBanc Capital Markets. Your line is open.

Hey, guys. Thanks for taking my question. I guess one for Balaji really quickly and then one for the team. But first on the financing, Balaji, you know, you mentioned you're gonna refinance or take on a new loan. Can you maybe provide more color there on what you're seeing in the marketplace and what you expect? And then maybe for Chaim and Balaji, the mid-single-digit AHSC growth for next year, maybe talk about your go-to-market strategy in terms of what products, what your core products are you going to market to drive that growth? And then how do you think about that growth holistically with this new marketing opportunity? Thanks.

Okay. I'll start on the financing. So we are already pretty actively looking at replacing the bridge, and we just wanted to be positioned to move really quickly on the acquisition. But moving quickly to have something long-term in place, and you should be hearing about that in the next few months. You know, in terms of the out there, there's a lot of demand to do something with us. I think we were very intentional about doing an acquisition of this size and financing it this way for a long time based on our free cash flow and, you know, our EBITDA. So feel pretty good about all that.

And then from a go-to-market motion, look. The two very different go-to-market teams on the provider side. We're seeing still a lot of demand for intake, and a lot of our newer AI offerings are driving a lot of uptake and inbound, very specifically our voice AI workflows and applications. It's a new modality on the same platform, so we're seeing a lot of demand for it. And then on our network solution side, PatientConnect has been very successful, and we expect that to be continued growth. But some of the newer offerings such as post-script engagement, and now the interest we've been getting in our HCP offering has been really exciting.

And our next question comes from the line of Jailendra Singh with Truist Securities. Your line is open.

Thank you, and thanks for taking my questions, and thanks for the color on the fiscal 2027 outlook. If I got my math right, your fiscal '27 revenue guidance implies around 8% to 10% core organic growth number. I know you guys have talked about double-digit core growth, that could be at the high end of that guide. Can you share some color around how you are thinking of core growth in Phreesia's business at least directionally compared with your expectation of fiscal 2026? Was more focused on network solution because I yeah. You're still in the middle of selling season. How much visibility do you have? What level of cushion are you building in? Give us some flavor around that and what is built in that 8 to 10 number.

Sure. And so just philosophically, as you know, for several years, we provide an outlook for the next fiscal year before the current one's even over. I think we've gotten good feedback about that. And what that requires us to do is make a lot of assumptions around things like the selling season while they're still going on. So I think even outside of that, you know, still a couple of weeks left here, Jailendra, I think we could comfortably say that we're in a similar situation we were last year at this time. And if you think about the growth in the business outside of what we told you is coming from AccessOne, network solutions would be growing the fastest. And I think payment processing could expect to grow second and subscription third. And I think what you should take away from that is a lot of the commentary Chaim had about our HCP products. And earlier in the year, we talked about post-script engagement and appointment readiness. We expect to monetize a lot of the products for providers increasingly in network solutions. So that's what you should take away.

And our next question comes from the line of Brian Tanquilut with Jefferies. Your line is open.

Hey, good afternoon, congrats on the quarter. Maybe, Balaji, just as I think about margins, obviously, strong margin performance in the quarter. You've done a good job there. So as I look at the guidance for next year showing 450 bps of margin expansion. How should I think about the drivers of that and just the sustainability of maintaining, you know, kind of like squeezing margins here and there over the next few years?

Yeah. I mean, I think, you know, the team has done an outstanding job of being very good stewards of capital. It was something we really prioritized in the company for the last several years. I think you're comparing year over year. I mean, we've already hit a pretty good margin here in the third quarter we just released. I think what we want to balance is growth and margin. So your takeaway should be we want to, you know, always do better than we say in terms of growth, and always do better in terms of margin. So I think that outlook sort of reflects the opportunity both. I think G&A, we've always talked about G&A as generally, you know, an area we can get a lot of leverage on based on the investments we've made there. But I think we'll continue to invest in sales and marketing and R&D so long as there's growth to support it.

And our next question comes from the line of Ryan Daniels with William Blair. Your line is open.

Yes, guys. Thanks for taking the question. Wanted to dig a little bit more into the new HCP marketing initiative. And I'm curious, I guess, twofold. One, have you actively started to sell that for the 2026 season? And kind of what's been the reception from pharma clients? And then second, when you think about that, are you seeing or do you anticipate that it will be all incremental dollars? Or do you think any of your kind of DTC dollars the pharma companies could shift into HCP such that it's not 100% incremental? Thanks.

So, yes, we have started for select clients allowing them to start piloting the offering in the New Year. So we have been selling it for certain key clients. And there has been a lot of demand. And we expect to start treating those programs on in the new fiscal year. And then in terms of is it incremental dollars, we do think it is. Generally speaking, DTC budgets and HCP budgets are very different. So we believe this is a I think we've sort of we've been out there in the market explaining to some of our holders that this is new champ.

And our next question comes from the line of Ryan MacDonald with Needham and Company. Your line is open.

Thanks for taking my question. Balaji, maybe for you, just wanted to ask about the updated '26 guidance. I know you called out $7.5 million of in fourth quarter from AccessOne. Yet, we've only increased the guidance range at the midpoint by about $3 million. Is there sort of a $4.5 million hole that we're refilling here? Or anything we should be concerned about, I guess, within the core subscription or network solutions business? And how is that sort of impacting your outlook of either of those segments kind of heading into '27? Thanks.

I was trying to do the math, Ryan, that you just did. Are you maybe just repeat that. What I couldn't figure out the $4 million that you said.

Yeah. So where do you are? Prior guidance range was $472 million to $482 million. So we're taking a $477 million midpoint. Now the midpoint goes to $480 million in the updated guidance. And so up by $3 million at the midpoint but you've got a $7.5 million revenue contribution from AccessOne. That wasn't in the prior guidance. So just wondering sort of what's the I guess, the difference there on the adding 7 and a half million, but only increasing the guide by about 3 at the midpoint.

Correct. Okay. Got it. Thanks. That's helpful. So, yeah, that's you know, a lot of that is just being a bit more measured around network solutions. I don't think it's a surprise probably to anyone on this call. That, you know, there's a lot of decisions and a lot of fluidity out there, and we're in selling season. So just given where we are, I think we wanted to be a bit more measured on network solutions if you had to, you know, allocate that million bucks to somewhere, we'd say it's mostly there. And by the way, there's a lot of timing and visibility that we'll get. But I don't think it read it it's anything to read into about next year.

And our next question comes from the line of Richard Close with Canaccord Genuity. Your line is open.

Yeah. Thanks for the questions. Congratulations on the acquisition and the quarter. Just curious, if you guys could talk a little bit more about AccessOne, the funded and unfunded, how we think about like, the demand in various products or those offerings? And then just like, how you expect, any type of seasonality in that business in terms of selling new customers and etcetera?

So I'll give you I Richard, what you're bringing up is something we really liked about this platform. Is the flexibility they have in having a variety of different ways to service the needs of their client. We actually found it to be the most there's a couple of different offerings in the space, and when we looked at them, what we found about AccessOne is it was most advanced technology with, by far, the most scale and flexibility. So in all of our experience in working with healthcare clients is they want they want different things based on their needs. And with the AccessOne portfolio, whether it's funding or partial funding or full funding, the platform gives us the flexibility to meet them where they need. That help. And we feel like it's us the flexibility to have a multitude of offerings to help them increase their cash flow, specifically cut the days outstanding. We expect over the next couple of years to learn a lot about which offerings resonate with which types of clients and I'm sure we'll be back talking about that as we see it grow in the marketplace. And we're pretty excited about it. And as far as seasonality measured, I think go to market will probably be, you know, similar to how we, you know, position ourselves with providers. So from that motion, I don't think you should see anything different. However, learn this as we go, Richard, but I think you could see more chunkiness in terms of how this revenue drops in when we do expand or land a new client, and we'll obviously, you know, communicate that as that happens, which we expect it to.

And our next question comes from the line of Daniel Grosslight with Citi. Your line is open.

Hi, guys. Thanks for taking the question. Balaji, I wanted to go back to the commentary you made around the fluidity in the network solution selling season this year. Is any of that due to just unknowns around how DTC advertising large is going to develop given just some of the political issues around that? And what gives you confidence that this fluidity is just really going to happen in fiscal 2026 and what really impacts fiscal 2027? Thanks.

Yeah. Thanks, Daniel. So a couple of points there. First of all, yes. It is around the DTC topic. And I think that's why we're being a bit more measured. I think one earlier comment we made was as we sit here today on December 8, in a similar place, you know, we were last year at this time, but the numbers get bigger and the dollars are bigger. So that's one thing to consider. And then as far as just our positioning, and I think we've been, you know, talking about this in the past, when you think about our product how we lead with permission, and the value we bring to our life sciences clients. And the return, you know, and value they see from that, we think we're very well positioned long term with the commentary and regulatory information that's come out of the administration so far. In fact, we agree with a fair amount of that. So we think that's good, and we think we're on the right side of where they're trying to go. But that said, you know, we gotta get through the next several weeks to have a little bit more visibility, so that's why we made the comments we did.

And our next question comes from the line of Jeff Garro with Stephens. Your line is open.

Yes, afternoon. Thanks for taking the question. I want to go back to the HCP opportunity and maybe ask about MediPhine a little bit more specifically. We saw a recent partnership announcement between two provider directories that to some extent, compete with each other and, to some extent, compete with MediPhine. I was hoping you could update us on MediPhine's tractions and Phreesia and MediPhine's competitive advantages from offering an integrated platform connecting providers with scheduling and other patient engagement capabilities? Thanks.

Hey, Jeff. Curious what partnership you're talking about. Do you mind sharing it? Because we're not I don't think we're familiar with it.

It's Health Grades is going to be using ZocDoc's scheduling capabilities.

Got it. Got it. We weren't aware of that, and we don't see it as being very competitive in the marketplace. Like, what we've heard from a lot of specialists is that they're not in need of paying for leads. That's it's a in fact, a lot of them think that it's just unethical and wrong. And so what our view on that has been for some time, it's how do we help the right patients find the right doctors, not just the doctors that are willing to pay to get product placement in a directory. And so we've really focused our effort on driving and becoming the go-to source for the top specialist to be found by providers. And what we're pretty excited about is that, you know, by building it into the Phreesia platform, we're seeing just a phenomenal amount of uptick in volume usage, and we expect to keep investing heavily into this platform for some period of time.

And our next question comes from the line of John Ransom with Raymond James. Your line is open.

Hey there. Just looking at the Q3 EBITDA outperformance and the guide for 2027, what would you say? Because the jump in another seasonality in payroll taxes, the jumping off point seems a bit stronger than the implied guide. So any comments there other than the $900,000 you mentioned?

Yeah. So there's well, there's two items, John. There's the payroll taxes, that are bad guy in Q4, just seasonality. And then we had that $900,000 good guy in Q3. So I think, you know, if you sort of have to use both of those, I think it implies, you know, a little bit of improvement. But I think to the earlier comment, I think question we had, certainly trying to leave ourselves, you know, some room to continue to perform there, and we expect that margin to get better. That helpful?

And marketing spend was the big variance in our model. So maybe in your guide, what are you contemplating for year-over-year marketing spend growth?

I think you should expect marketing dollars to go up. I think, you know, we've got obviously a lot of growth initiatives that Chaim spoke about earlier. So with the dollar amount, I think you should expect marketing dollars to go up.

And our next question comes from the line of Jessica Tassan with Piper Sandler. Your line is open.

Hi, guys. Thanks for squeezing me in. So and congrats on the close of AccessOne. Can you all elaborate a little bit on how Phreesia on call allows you to enter the provider workflow and surface educational contents of the HCP, just kind of mechanicalist mechanic how does that work? And then can you just remind us how much of network solutions revenue typically booked ahead of the start of the calendar year versus upsold or cross-sold intra-year? And whether FY '26 tracking consistent with historical experience. Thank you.

So we are putting we are testing different types of ad formats, and, obviously, it's still early. Into Phreesia on Call. And so there will be ads in certain parts of the product. Where they're not creating any intrusive workflow for the provider. It's just in the natural act of using the products. So we're in the process of testing those with our customers now in pilot. So I think it's maybe early days are early, Jess, and but on the early tests that we have seen, we feel pretty confident they'll be very effective. And then

Yeah. And then, Jess, we typically enter a year because, remember, a lot of those clients in the network solutions revenue are operating in a calendar year. So we typically enter calendar year about 60 to 70% visibility.

And our next question comes from the line of Joe Vruwink with Baird. Your line is open.

Hey. Thanks. Maybe a super quick answer, but, going back to Jailendra's question earlier, he was asking about organic growth in FY '27 and Balaji, you mentioned network fastest, payment second, subscription third. I just wanted to clarify if that's the organic rank ordering because I guess it's not intuitive to me why payments would be growing faster than subs next year.

Correct. Jailendra's question was specifically excluding AccessOne, which is why we answered it that way. I haven't done the math, Joe, but I think it would either be neck and neck or payments would be faster with AccessOne. I can with you later, but that was specifically about organic.

Okay. Thanks.

And our next question comes from the line of Clark Wright with D. A. Davidson. Your line is open.

Awesome. Thank you. A lot of mine have been answered, but wanted to real quick touch on you could help us really understand the assumptions behind the fiscal 2027 top line outlook. And the mix that you're seeing right now between the growth and the count of AHSCs versus the total revenue per AHSC. And if that the assumptions you've made includes AccessOne with those figures.

Yes. It does. And I think, you know, again, shortcut math here is there's we use this average convention in the AHSC. So if it's approximately 80 and we're still, you know, just closing November for AccessOne. If it's about 80 for a year, we're saying about 15 of it will fall into our fiscal 2026. So, really, about 65 will fall into fiscal 2027. So that's about a point of growth. So when we, you know, put in our letter a mid-single-digit AHSC growth, you could say about a point contribution coming from AccessOne in there.

And as a reminder, to star one if you would like to ask a question. And our next comes from the line of Jailendra Singh with Truist Securities. Your line is open.

Thank you. Thanks for taking my follow-up. I'm curious, with shares trading at these valuation levels, what are your thoughts on returning shareholders some value via share buyback program? And if that would even be a consideration in light of all the investment opportunities you are focused on.

It would absolutely be a consideration. I think you know, we did get approval to pursue that last year or earlier this fiscal year, actually. I think, you know, now with this debt facility in place for AccessOne, we think the best use of free cash flow is to retire that debt. But and we also have other areas we want to invest in. But Jailendra, it's absolutely been part of our thinking for several years now to try to take advantage of market dislocation. Obviously, you know, right now, priority is the debt, but it's definitely one of our priorities.

And with no additional questions, I will now turn the conference back over to Chaim Indig for closing remarks.

I want to thank everyone for joining us for our earnings call. And I wish everyone happy holidays and a great New Year. And I'll see you all in the New Year.

Thank you very much.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.