Executive Summary

Revenue of $106.8M (+17% YoY), Adjusted EBITDA of $9.8M with a 9% margin, and free cash flow of $1.6M; net loss improved to $14.4M from $31.9M YoY .
Guidance: FY2025 revenue narrowed to $418–$420M and FY2025 Adjusted EBITDA raised to $34–$36M; FY2026 introduced at revenue $472–$482M and Adjusted EBITDA $78–$88M .
AHSCs reached 4,237 (+68 QoQ), total revenue per AHSC rose to $25,207 (+3% QoQ); Network Solutions grew 27% YoY, while payment processing growth was dampened by the clearinghouse wind‑down (-1% impact to total revenue YoY) .
Stock catalysts: step‑up profitability outlook for FY2026 driven by operating leverage, plus privacy/regulatory tailwinds (NAI membership; CMS expansions of PAM) that support Network Solutions monetization .

What Went Well and What Went Wrong

What Went Well

Consecutive positive operating cash flow ($5.8M) and second straight positive free cash flow ($1.6M) as margin improvement and collections discipline took hold; CFO emphasized “expense discipline… thinking like owners” .
Network Solutions revenue rose 27% YoY, with management noting slightly improved visibility for selling season versus last year .
Operating leverage across expense lines with Sales & Marketing down to 28% of revenue in Q3 and continued focus on efficiency; CEO: “Our network continues to grow… and we are beginning to see the promise of new solutions we are investing in” .

What Went Wrong

Clearinghouse client wind‑down reduced payment processing fee growth by ~7% YoY and total revenue growth by ~1% YoY in Q3 .
Payment processing take rate slipped to 2.82% and payment processing expense rose to 68% of payment processing fees, pressuring payments profitability .
Healthcare services revenue per AHSC declined 2% YoY; ConnectOnCall cyber incident still being restored (no material impact so far) .

Financial Results

Metric	Q3 FY2024	Q2 FY2025	Q3 FY2025
Revenue ($USD Millions)	$91.619	$102.115	$106.800
Net Loss ($USD Millions)	$(31.941)	$(18.012)	$(14.403)
EPS (Basic & Diluted, $)	$(0.58)	$(0.31)	$(0.25)
Adjusted EBITDA ($USD Millions)	$(6.619)	$6.529	$9.769
Operating Cash Flow ($USD Millions)	$(6.310)	$11.061	$5.785
Free Cash Flow ($USD Millions)	$(11.621)	$3.658	$1.603

Segment revenue breakdown:

Segment Revenue ($USD Millions)	Q3 FY2024	Q2 FY2025	Q3 FY2025
Subscription & Related Services	$42.595	$48.612	$49.363
Payment Processing Fees	$23.218	$25.300	$24.704
Network Solutions	$25.806	$28.203	$32.733

Key KPIs:

KPI	Q3 FY2024	Q2 FY2025	Q3 FY2025
AHSCs (average clients)	3,688	4,169	4,237
Total Revenue per AHSC ($)	$24,842	$24,494	$25,207
Healthcare Services Revenue per AHSC ($)	$17,845	$17,729	$17,481
Patient Payment Volume ($USD Millions)	$965	$1,093	$1,081
Payment Facilitator Volume (%)	82%	81%	81%

Estimates vs actuals: S&P Global consensus EPS and revenue for Q3 FY2025 were unavailable at the time of analysis due to data access limits; beat/miss vs consensus cannot be determined.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue	FY2025	$416–$426M	$418–$420M	Narrowed
Adjusted EBITDA	FY2025	$26–$31M	$34–$36M	Raised
AHSCs	FY2025	≈4,200	≈4,200	Maintained
Total Revenue per AHSC	FY2025	Increase vs $98,944 FY2024	Increase vs $98,944 FY2024	Maintained
Revenue	FY2026	N/A	$472–$482M	Introduced
Adjusted EBITDA	FY2026	N/A	$78–$88M	Introduced
AHSCs	FY2026	≈4,500	≈4,500	Maintained
Total Revenue per AHSC	FY2026	Increase vs FY2025	Increase vs FY2025	Maintained

Management noted the revenue range narrowing reflects improved visibility and alignment with expectations; EBITDA raise driven by operating leverage and expense discipline .

Earnings Call Themes & Trends

Topic	Q1 FY2025 (Apr 30, 2024)	Q2 FY2025 (Jul 31, 2024)	Q3 FY2025 (Oct 31, 2024)	Trend
Operating leverage & expense discipline	Returned to positive Adjusted EBITDA ($4.1M); prioritizing shorter payback investments	EBITDA $6.5M; S&M stable (~$30–$32M run rate) with leverage; expectation expenses can support higher revenue without material growth	EBITDA $9.8M, margin 9%; FY2026 EBITDA outlook step‑up driven by leverage below gross margin lines	Improving
Network Solutions growth & visibility	+26% YoY; MediFind campaign launch; strong ROI narratives	+23% YoY; vaccine awareness programs; AAP partnership; deal values ~20% larger YoY	+27% YoY; slightly better selling season visibility; privacy stance amid HHS discussion	Accelerating
Payment processing dynamics	Change Healthcare fallout accelerated clearinghouse wind‑down; take rate 2.87%; PF volume 81%	Payments +7% YoY; take rate 2.86%; payment expense 66% of fees	Payments +6% YoY; take rate 2.82%; payment expense 68% of fees	Slight headwind
Product innovation	Patient Bill Pay & MediFind appointment requests; ConnectOnCall incident under investigation	MEDITECH Alliance; Patient Bill Pay gains; PAM CMS renewal through 2029	Pharmacy preferences product; PAM added to more MIPS sets; KCC evaluation shows strong outcomes; platform security investments	Expanding
Regulatory/legal tailwinds	Change Healthcare impact; SASB report	CMS PAM contract renewal to 2029	NAI membership; PAM expanded in MIPS; KCC outcomes validate activation model	Supportive

Management Commentary

CEO Chaim Indig: “We are excited about the future here at Phreesia. Our network continues to grow, adoption of our current offerings is increasing, and we are beginning to see the promise of new solutions we are investing in.” “We are on track to finish the year strong… set up for continued growth and profitability in fiscal 2026.”
CFO Balaji Gandhi: “Expense discipline… thinking like owners and really being good stewards of capital… when you find opportunities for efficiency, a bunch of it drops to the bottom line, but some of it can be reinvested” . “Operating cash flow was positive at $5.8M… Free cash flow was positive at $1.6M… cash was $82M, no borrowings on our $50M credit facility” .

Q&A Highlights

Profitability vs reinvestment: Management emphasized sustained expense discipline and reallocation toward efficiency while reinvesting in growth, underpinning the FY2026 EBITDA step‑up .
Revenue per AHSC drivers: Continuous optimization of go‑to‑market and cross‑selling across providers and Life Sciences; deal values ~20% larger YoY, supporting growth in total revenue per client .
Acquisitions monetization: Not fully monetized yet, but progress underway; focus is on total revenue per client across all streams rather than subscription alone .
Network Solutions selling cadence: Heavy fall selling season; visibility slightly ahead of last year; variability drives wider revenue range intra‑year .
Retention & pipeline durability: Gross revenue retention ~94%–96% since IPO; pipeline size steady with larger transactions .

Estimates Context

S&P Global consensus for Q3 FY2025 revenue and EPS was unavailable at time of analysis due to data access limits, so a beat/miss assessment vs Street cannot be determined.
Given FY2026 EBITDA raised to $78–$88M and FY2025 EBITDA raised to $34–$36M, estimates are likely to adjust upward for profitability while revenue narrows to the mid‑$418–$420M range .

Key Takeaways for Investors

Profitability inflection continues: two consecutive positive operating and free cash flow quarters, with FY2026 EBITDA guidance implying a significant step‑up on operating leverage .
Network Solutions momentum (+27% YoY) and policy/privacy tailwinds (NAI, PAM expansion) support monetization and should drive total revenue per AHSC higher over time .
Deal values ~20% larger YoY with steady pipeline suggest sustained growth in revenue per client; watch selling season execution in Q4 .
Payments headwinds (take rate down to 2.82%; expense ratio 68%) and clearinghouse wind‑down are manageable but temper payments contribution near‑term .
Guidance quality improving: FY2025 revenue range narrowed and EBITDA raised; FY2026 introduced with clear targets, indicating higher confidence in margin trajectory .
Operational discipline: Sales & Marketing at 28% of revenue in Q3 with management reiterating expense discipline—supports continued EBITDA expansion even without significant opex growth .
Near‑term trading: Focus on Q4 Network Solutions bookings and any further updates to FY2026 outlook; medium‑term thesis centers on expanding provider network (AHSC ~4,200 for FY2025; ~4,500 FY2026) and increasing total revenue per AHSC .

Phreesia, Inc. (PHR)·Q3 2025 Earnings Summary