Phreesia's Q3 2026 Earnings Call: Contradictions Emerge on AccessOne Integration, VoiceAI's Impact, and Network Solutions Growth

Business Commentary:

* Revenue and Earnings Growth: - Phreesia reported total revenue of $120.3 million for Q3, a 13% increase year over year. - Adjusted EBITDA was $29.1 million, reflecting an improvement of 5 percentage points quarter over quarter and 15 percentage points year over year. - The growth was driven by strong performance in both revenue growth and operating leverage.

• Acquisition and Strategic Expansion:
• Phreesia completed the acquisition of AccessOne, a provider financing solution, which contributes approximately $7.5 million in Q4 revenue.
• This acquisition is expected to enhance stakeholder value and provide new growth opportunities by improving providers' cash flow management.

• HCP Marketing and Provider Engagement:
• Phreesia is expanding into healthcare provider (HCP) marketing, aiming to participate in a multi-billion dollar opportunity while leveraging existing provider networks.

• The integration of MediFind and ConnectOnCall, now Phreesia on Call, enables a premium endemic offering to reach a broad set of providers.

• Cash Flow and Financial Outlook:

• Operating cash flow was $15.5 million, up $9.7 million year over year, with free cash flow at $8.8 million, up $7.2 million year over year.
• For fiscal year 2027, Phreesia anticipates revenue in the range of $545 million - $559 million, with AccessOne contributing approximately 6.5% of total revenue.
  

Contradiction Point 1

AccessOne's Integration and Contribution

It involves expectations and strategies regarding the integration and potential growth contributions of the AccessOne acquisition, which could impact investor expectations and resource allocation.

What is the growth potential for AccessOne over the next few years and how can it be accelerated? - Sean Dodge (BMO Capital Markets)

2026Q3: We plan to invest in go-to-market strategy for new and existing clients. - Chaim Indig(CEO)

Can you discuss sales and marketing performance and highlight key areas to focus on for the remainder of the year? - Richard Close (Canaccord Genuity)

2026Q1: We made upfront investments years ago and are now benefiting from those with strong returns. - Balaji Gandhi(CFO)

Contradiction Point 2

VoiceAI's Impact on Network Solutions Revenue

It involves differing perspectives on the impact of VoiceAI on Network Solutions, which is a key growth area for Phreesia.

What are your organic growth expectations for fiscal 2027 and visibility into network solutions? - Jailendra Singh (Truist Securities)

2026Q3: We expect network solutions to grow the fastest, followed by payment processing and subscriptions. - Balaji Gandhi(CFO)

How will Phreesia VoiceAI drive opportunities in Network Solutions? - Jailendra Singh (Truist Securities, Inc.)

2026Q2: The VoiceAI product is off to a great start and is expected to create more engagement opportunities for our network solutions revenue. - Balaji Gandhi(CFO)

Contradiction Point 3

Network Solutions Visibility and Growth Expectations

It involves the visibility and growth expectations for network solutions, which are a significant part of the company's business and impact revenue forecasts.

Can you elaborate on organic growth expectations for fiscal 2027 and visibility into network solutions? - Jailendra Singh (Truist Securities)

2026Q3: We expect network solutions to grow the fastest, followed by payment processing and subscriptions. - Balaji Gandhi(CFO)

How is your network solutions growth performing, and are customers hesitant amid macroeconomic volatility? - Anne Samuel (JPMorgan)

2026Q1: Our network solutions growth is testament to our strong team and product-led approach. There's no significant new news on customer hesitancy due to macro volatility. - Balaji Gandhi(CFO)

Contradiction Point 4

Network Solutions Market Conditions

It involves differing views on the market conditions for network solutions, which are a significant revenue driver and crucial for financial forecasts.

Can you outline AccessOne's growth potential over the next two years and how it can be accelerated? - Sean Dodge (BMO Capital Markets)

2026Q3: We expect network solutions market conditions in 2026 to be similar to what we experienced in 2025. - Balaji Gandhi(CFO)

How much further can gross margin expand, and how will it contribute to overall leverage? - Anne McCormick (JPMorgan)

2025Q4: We expect network solutions market conditions in 2026 to be similar to what we experienced in 2025. - Balaji Gandhi(CFO)

Contradiction Point 5

Gross Margin Expansion

It involves differing expectations for gross margin expansion, which is a critical indicator for financial health and investor expectations.

What is the growth potential for AccessOne over the next few years and how can it be accelerated? - Sean Dodge (BMO Capital Markets)

2026Q3: The expansion in gross margin is largely driven by the mix, with lower margins associated with processing. We expect growth in other revenue lines to contribute to gross margin improvements. - Chaim Indig(CEO)

How much further can gross margin expand? How will this expansion contribute to overall leverage? - Anne McCormick (JPMorgan)

2025Q4: The expansion in gross margin is largely driven by the mix, with lower margins associated with processing. We expect growth in other revenue lines to contribute to gross margin improvements. - Chaim Indig(CEO)