Phreesia, Inc. (NYSE:PHR) Q4 2024 Earnings Call Transcript

Jailendra Singh: Okay. And then I want to go back to Change Healthcare issues. I think — thanks for all the color about that you were — you guys were able to switch to other clearing houses pretty quickly without much disruption for providers. But have you seen, just in general, any impact on utilization trends at your providers, basically because your payment processing and your Network Solutions business is exposed to utilization trends. So any impact on that? And related to that, a lot of providers across the country are kind of disrupted by this kind of — is that impacting in any way the sales cycle in terms of your — their willingness to work with you to roll out new solutions as they are dealing with this Change Healthcare issues. Just curious like — maybe if you can go beyond just clearing house switch impact from Change Healthcare.

Chaim Indig: So from what we can say, we haven’t seen providers not seeing any significantly utilization changes at our provider groups. And I think I say this all the time. Most of our providers, first and foremost, want to treat their patients. So we haven’t seen any change in utilization patterns that I know of, and I would probably hear about it if we did. From a — what’s the other…

Balaji Gandhi: Selling environment, I think?

Chaim Indig: Selling environment? No, I don’t think you’ve seen a material change to the selling environment. But obviously, if this goes on for months and months and months, it’s just going to be pretty shitty.

Jailendra Singh: Yes. That’s fair. And then last one, I know, maybe Balaji, maybe you might not want to give any color there. But just in terms of like as we think about 3 segments for modeling purpose, any directional guidance you want to provide in terms of how should we think about the growth for each segment in fiscal ’25 compared to your overall for fiscal ’25 on for your compared to your overall revenue guidance for the year, any individual segment guidance?

Balaji Gandhi: Yes. So and I want to be clear about the terminology here, Jailendra, these are not segments, they’re revenue lines, but I think that’s the spirit of your question is more around where the revenue lines, right?

Jailendra Singh: Yes.

Balaji Gandhi : Yes. So obviously, there’s costs that are spread across all different areas of the company, and we’re able to have 3 different revenue lines. And I think we’ve been consistent about the past, in fiscal 2025 is no different, is payment processing lags, so that will be the slowest growth rate of the 3, with an outlook range of 20% to 22%. I think it’s safe to say that the subscription and related services and Network Solutions revenue lines would outpace payment processing.

Operator: Our next question comes from the line of Stephanie Davis with Barclays.

Stephanie Davis: Hello from Miami. I had more questions on the profitable client growth. So when looking at the 100 ads for 1Q, is that a question of you being choosier with the pipeline this quarter certainly pursuing a subset of the opportunity historically cultivated? Then as you kind of refocus on this and rebuild the pipeline, your client growth can pick up to closer to prior levels? Or is this something where we should think — or it takes more time to ramp up an AHSC that’s more profitable, maybe there’s more cross-sell?

Chaim Indig : So first of all, I mean, I think one thing that’s important to note is many of these clients, this is months in the making, right? And if you think about our go-to-market strategy. So this was something that we went about over the past couple of years. And really starting to look at the returns, and obviously, the environment changed last year and look at the returns we’re getting. So this is sort of now you’re seeing the output of that shift. And I think we’re constantly looking at that and looking at obviously, cost of capital is different. I think to Jailendra’s question, we’ll keep you updated as things go, but I don’t think they’re going to dramatically change. We feel pretty good about the [indiscernible] we made last year that led to the clients we added this past quarter and then the 100 plus that we expect to get in 1Q.

But I think this relates to, I think, Joe’s question earlier, too, think about it as we’re trying to drive lots of good client retention. We’re trying to drive revenue per client. We’re trying to drive profitability. And so that’s — for the next quarter, that’s 100 plus. If it’s higher or if it’s lower, it will be through the lens of those metrics that I just talked about.

Stephanie Davis: Helpful. And for the SDR count, just to clarify — I forgot my question, did you say 107?

Balaji Gandhi : Correct.

Chaim Indig : On the [indiscernible] provider…

Balaji Gandhi : Yes.

Chaim Indig : That’s just on our provider organization.

Balaji Gandhi : That’s right.

Stephanie Davis: Does that comp to the 175 last quarter, so a 40% decline?

Chaim Indig : He’s locating his notes.

Balaji Gandhi : Yes, hold on. It comes to 139 last quarter.

Chaim Indig : A lot of those which is the [indiscernible] number, right?

Stephanie Davis: So is there — did this spur a layoff as you had this new focus on kind of a certain subset of your clients? Or is there any opportunity to remap your SDRs that maybe historically had a less profitable channel assignment down market?

Balaji Gandhi : Were they — are those SDRs have graduated to other roles in the organization.

Chaim Indig : And there’s general attrition in that role as well.

Operator: Our next question comes from the line of Scott Schoenhaus with KeyBanc.

Scott Schoenhaus: So Chaim, you seem pretty happy and you’re executing on your go-to-market strategy. Your team is rapidly building out solutions, helping the needs of clients. Just want to follow up on the Change Healthcare. Over the last 3 weeks, have you guys been able to deploy new solutions for your clients to help mitigate the Change Healthcare issue? And then also on the payment side, wondering if you’re seeing any unusual activity over the last 3 weeks?