Executive Summary

Phreesia delivered a solid Q1 FY2026: revenue grew 15% year-over-year to $115.9M, Adjusted EBITDA rose to $20.8M with margin commentary of 18% on the call; GAAP diluted EPS was $(0.07) .
Versus Street: revenue was modestly above consensus and normalized EPS significantly beat; the company raised FY26 Adjusted EBITDA guidance to $85–$90M while maintaining revenue at $472–$482M, a positive inflection in profitability expectations .
Operating leverage continued: sales & marketing and G&A declined year-over-year; AHSCs increased sequentially and YoY, revenue per AHSC climbed 4% sequentially, supported by product-led expansion and network solutions strength .
Payments momentum: patient payment volume rose to $1.314B; payment processing expense rose to 72% of processing revenue, reflecting volume mix dynamics and growth in processed payments .
Narrative catalysts: guidance raise for Adjusted EBITDA, AI integration across products, MediFind monetization progress, and continued resilience of network solutions; management reiterated flexibility on capital deployment and disclosed a share repurchase authorization for opportunistic use .

What Went Well and What Went Wrong

What Went Well

Product-led growth and AI integration: “AI is being integrated across all aspects of our organization… well-positioned to continue to grow our network through product-led growth” — CEO Chaim Indig .
Profitability and cash generation: Adjusted EBITDA increased to $20.8M; operating cash flow $14.9M and free cash flow $7.5M, fourth consecutive quarter of positive OCFO/FCF .
Network solutions resilience and ROI: Management highlighted strong execution and ability to titrate campaigns; platform’s privacy/consent differentiation supports durable demand .

What Went Wrong

Payment processing expense ratio rose to 72% (vs 69% in Q4 FY25 and 68% in Q1 FY25), pressuring processing margin as payment volumes scale .
Take rate modestly down year-over-year (2.8% vs 2.9% Q1 FY2025), indicating price/mix headwinds within payments .
Non-recurring revenue contributed ~2% to subscription growth, boosting the quarter but not recurring in nature; management called it out to avoid misinterpretation .

Financial Results

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue ($USD Millions)	$106.800	$109.681	$115.936
GAAP Diluted EPS ($)	$(0.25)	$(0.11)	$(0.07)
Adjusted EBITDA ($USD Millions)	$9.769	$16.373	$20.816
Adjusted EBITDA Margin (%)	—	15%	18%

Segment revenue breakdown

Revenue Stream ($USD Millions)	Q3 2025	Q4 2025	Q1 2026
Subscription & Related Services	$49.363	$51.793	$54.355
Payment Processing Fees	$24.704	$24.676	$29.925
Network Solutions	$32.733	$33.212	$31.656

Margins & Expense Ratios

Ratio	Q3 2025	Q4 2025	Q1 2026
Payment Processing Expense / Payment Processing Revenue (%)	68%	69%	72%

Key KPIs

KPI	Q3 2025	Q4 2025	Q1 2026
AHSCs (Avg Healthcare Services Clients)	4,237	4,341	4,411
Total Revenue per AHSC ($)	$25,207	$25,266	$26,283
Patient Payment Volume ($USD Millions)	$1,081	$1,080	$1,314
Payment Facilitator Volume (%)	81%	82%	82%
Take Rate (%)	2.82%	2.79%	2.80%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2026	$472–$482M	$472–$482M	Maintained
Adjusted EBITDA	FY2026	$78–$88M	$85–$90M	Raised
AHSCs	FY2026	~4,500	~4,500	Maintained
Total Revenue per AHSC	FY2026	Increase vs FY2025	Increase vs FY2025	Maintained

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 FY25, Q4 FY25)	Current Period (Q1 FY26)	Trend
AI/technology initiatives	Internal forecasting tool impact, AI discussed; competitive dynamic with AI entrants benefiting Phreesia’s close rates	AI integrated across organization and products; product-led growth emphasized	Strengthening, broader integration
Network Solutions ROI/visibility	Seasonality pacing, privacy/consent differentiation; ongoing campaign resell cadence	Strong growth and resilience; customers titrate up/down; scale favors Phreesia	Stable demand, continued execution
Payments seasonality and drivers	Q4 commentary on calendar/weather impacts, bill pay traction	Seasonal bump; conversion OCFO→FCF to resemble Q1 across year; bill pay traction noted	Typical seasonality; improving cash conversion
Capital allocation	Emphasis on profitable growth; acquisitions’ contribution; after-hours service restored	Share repurchase authorization for opportunistic use; buy/build/rent discipline	Optionality increased
Regulatory/macro	Social media targeting/regulatory landscape; payer mix broadly representative	“No Handouts” bill: wait-and-see; differentiation via privacy/consent	Monitoring; limited immediate impact
Product modules/performance	Post-Script Engagement and Patient Bill Pay early results; Appointment Readiness launched	Module ramp contributing to revenue/client expansion; non-recurring subscription revenue called out	Ongoing product-led expansion

Management Commentary

“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.” — CEO Chaim Indig .
“Adjusted EBITDA was $20.8 million… with an adjusted EBITDA margin of 18%. Operating cash flow remained positive at $14.9 million; Free cash flow… $7.5 million.” — CFO Balaji Gandhi .
“We are updating our Adjusted EBITDA outlook for fiscal 2026 to a range of $85 million to $90 million… We are maintaining our revenue outlook… $472 million to $482 million.” — Press release/Stakeholder Letter .
Payment processing: “Payment processing expense… 72% in the first quarter of fiscal 2026, compared to 69% and 68%… driven by increased payment processing fees revenue and patient payments processed” .
PCI modernization: “Completed migration to a new cardholder data environment in compliance with PCI DSS 4.0… reduce audit scope and overall security footprint” .

Q&A Highlights

Network solutions demand/ROI: Team execution and product-led initiatives driving results; campaigns flexible with MLR constraints; Phreesia often receives incremental dollars due to strong ROI .
Provider end-market competitiveness: Competitive environment persists; focus remains on delivering value with products, driving expansion within base and net-new clients .
Payments dynamics: Seasonal bump, calendar/weather effects; bill pay product gaining traction; not material in Q1 but expected to contribute .
Capital deployment: Share repurchase authorization for opportunism; buy/build/rent framework; acquisitions portfolio working, after-hours service restored .
Legislative risk: “No Handouts” bill monitored; platform differentiation via privacy and consent underpins value proposition .
Cash conversion: FY26 OCFO→FCF conversion similar to Q1; higher flow-through expected in FY27 .
MediFind: Early revenue contribution, long runway; synergy with provider scheduling for patients .

Estimates Context

Metric	Q3 2025	Q4 2025	Q1 2026
Revenue Consensus Mean ($USD)	$106,317,910*	$108,930,040*	$114,980,090*
Revenue Actual ($USD)	$106,800,000*	$109,681,000*	$115,936,000*
Primary EPS Consensus Mean ($)	$(0.2813)*	$(0.1779)*	$(0.1189)*
Primary EPS Actual ($)	$0.0367*	$0.1848*	$0.2259*

Values retrieved from S&P Global.*

Interpretation:

Q1 FY26 revenue: beat by ~$0.96M vs consensus; Primary EPS (normalized) materially beat (actual positive vs negative estimate), likely requiring upward revisions to profitability estimates.
Prior quarters also showed beats on revenue and normalized EPS; consistent estimate-beat pattern supports guidance confidence .

Note: Company-reported GAAP diluted EPS in Q1 FY26 was $(0.07) ; Primary EPS above reflects S&P normalized EPS.

Key Takeaways for Investors

Positive inflection in profitability: Adjusted EBITDA margin commentary at 18% and FY26 guidance raised to $85–$90M signal improving operating leverage; expect consensus to re-rate EBITDA and FCF trajectories .
Revenue quality: Modest top-line beat with sequential revenue per AHSC increase (+4%), underpinned by product-led expansion and resilient network solutions demand .
Payments scaling: Strong patient payment volume; watch the processing expense ratio (now 72%) and take rate drift (2.8%); mix and enterprise penetration can pressure gross processing margin near-term .
AI/product catalysts: Appointment Readiness, Post-Script Engagement, Enhanced Bill Pay and AI integration broaden monetization moments; monitor attachment rates and incremental revenue per client .
Capital allocation optionality: Share repurchase plan adds opportunistic flexibility amid cash generation; acquisitions remain disciplined (buy/build/rent) .
Street adjustments: Expect upward revisions to normalized EPS and EBITDA for FY26 given beats and guidance raise; valuation could respond to sustained margin evidence.
Risks to monitor: Payments take rate, processing expense ratio, regulatory proposals (e.g., pharmaceutical DTC tax deductibility), and seasonality/weather impacts on volumes .

Appendices (Reference Data)

Additional Q1 FY26 details

Revenue by stream: Subscription $54.355M; Payment Processing $29.925M; Network Solutions $31.656M .
AHSCs: 4,411 (+70 seq, +346 YoY); revenue per AHSC $26,283 (+4% seq, +6% YoY) .
Cash and cash equivalents: $90.9M; no borrowings under credit facility .
Non-recurring subscription revenue contributed ~2% to YoY subscription growth .

Prior quarter reference

Q4 FY25 total revenue $109.681M; Adjusted EBITDA $16.373M; GAAP diluted EPS $(0.11); payment processing expense ratio 69% .
Q3 FY25 total revenue $106.800M; Adjusted EBITDA $9.769M; GAAP diluted EPS $(0.25); payment processing expense ratio 68% .

Phreesia, Inc. (PHR)·Q1 2026 Earnings Summary