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Chaim Indig

Thank you, Balaji, and good evening, everyone. Thank you for joining Phreesia's fourth quarter earnings call. I want to take a moment to acknowledge that 20 years ago, Evan and I have founded Phreesia. Our mission is making care easier every day. Our vision is for every person to be an active participant in their (inaudible) we've accomplished over these years and excited about where we are heading. I want to spend my appreciates, our clients, partners and stakeholders who continue to contribute to our success.
I am excited about the new products we've introduced over the past several quarters and improved medication in the overall patient and provider experience. We look forward to making these products more widely available to our existing network and new clients.
In fiscal 2025, we achieved another milestone. The Phreesia platform was used in approximately 14% of patient visits across United States or approximately 170 million people. I would like to congratulate and thank the Phreesia team for a strong finish to the fiscal year, which is reflected in our earnings press release and stakeholder letter. Let me hand it over to Balaji to review some of the highlights of the fourth quarter results, and review our outlook for fiscal 2026.

Balaji Gandhi

Thank you, Chaim. Let me start with a couple of the highlights in our earnings materials regarding the fourth quarter. Q4 revenue was $109.7 million, up 15% year-over-year. Q4 adjusted EBITDA was $16.4 million, up $19.9 million year-over-year with an adjusted EBITDA of 15%. Our Q4 average health care services clients reached 4,341, an increase of [104] from the prior quarter and 379 from the prior year. In Q4 total revenue per AHSC was $25,266, up 5% year-over-year.
Our cash flow and cash position continue to improve. In Q4, we remain positive operating cash flow and free cash flow for the [third] consecutive quarter. Q4 operating cash flow was positive $16.3 million, up $19.3 million year-over-year. Q4 free cash flow was positive at $9.2 million, up $20.1 million year-over-year.
These (inaudible) reflect strong revenue performance over the period as well as disciplined expense and cash collections management. We expect the magnitude of improvement in free cash flow and operating cash flow on a quarter-to-quarter basis to vary based on specific timing of invoicing and payments, which you can see in working capital, along with CapEx.
Cash was at $84.2 million on January 31, up $2.5 million from October 31, 2024. Our fourth quarter reflects continued operating leverage across the company. We are well positioned to continue generating positive free cash flow while investing in long-term profitable revenue growth.
Transitioning to our financial outlook for fiscal 2026. We are (inaudible) outlook for fiscal year '26 at a range of [$400] million to $482 million. The revenue range provided fiscal 2026 assumes no additional revenue or potential future acquisition completed between now and January 31, 2026. We are maintaining our EBITDA outlook for fiscal year 2026 at a range of $78 million to $88 million. We are reiterating our outlook on AHSC, (inaudible) in fiscal '26 and for revenue per AHSC to increase in fiscal 2026 compared to fiscal 2025.
Operator, I think we can now open the lines for the Q&A session.

Question and Answer Session

Operator

(Operator Instructions)
Anne Samuel with JP Morgan.

Anne McCormick

Great. Congratulations on 20 years, what an accomplishment. So your gross margin once again saw some really nice expansion. And I know gross margin was kind of the first leg of the leverage story, but you're already seeing this really nice leverage on your other expense line. As we think about gross margin moving forward, how much more room is there for expansion? And then just how should we be thinking about the contribution it should have to overall leverage?

Chaim Indig

Yes. Anne, thanks. The -- on gross margin, I think we've talked about this in the past. -- mix at this point is one of the biggest drivers of that. And as you know, processing is associated with lower margins and (inaudible) is slower. So I think just the growth expectations are higher and the other 2 revenue lines would contribute to some gross margin. I don't think there's anything really else to call out in terms of that being a driver of operating leverage might be better in some quarters than others.

Anne McCormick

Great. And then maybe just one more. You once again saw really strong growth in Network Solutions. Just wondering, should we be thinking about the underlying market conditions for 2026 is similar to 2025? Or are the market factors we should be thinking about in that line?

Balaji Gandhi

No. I would say very similar as we head into the year.

Operator

Jessica Tassan with Piper Sandler.
Jessica Tassan Piper Sandler & Co.

Jessica Tassan

I was hoping that maybe you could talk to us a little bit about postscript engagement. How does the product work, what data informs the product maybe what does the patience? And is payment kind of contingency based? Or is it based on whether the patient picks up the prescription or is it impression-based.

Balaji Gandhi

Yes. Okay. There's a lot in there. I think to answer the last part of that question, you should think about it as impression-based. It's similar to the other campaigns that we run, Jess? And so if you think about it, we're leveraging a lot of the data that we have in our platform to be able to remind you about a prescription that was filled. And so that's very valuable to our clients. And that's sort of -- that's what really drives the product and the value of the customers. But it's both to the life sciences clients, but also to the providers and the patients as well.

Operator

Jailendra Singh with Triust Securities.

Jailendra Singh

This is Jailendra Singh from Triust Securities. So I want to ask about the total revenue per AHSC metric, nice growth of 5% year-over-year, 7% if you exclude the clearinghouse impact, but it was flat sequentially. How meaningful was the impact of Q4 from the way calendar paid out in terms of business days in terms of how holidays plays out in terms of year-over-year trends in Q4. And as we think about '26, clearly, we have one less day in fiscal Q1, but anything else we should keep in mind in terms of that quarterly progression of that metric?

Balaji Gandhi

No. Great questions there, Jailendra. As I think you picked up on the fact that the way the calendar falls and weather really wind up being pretty big factors in our business. And so one thing about the fourth quarter that we point out is Christmas fell earlier in the week, right on top of a weekend last year in the comp period, whereas in the middle of the week, this season. So there were sort of a harder comp tougher comp for us.
We also had the L.A. fires and that was obviously very unfortunate and have some clients in that region. And then even just on a comp basis, the year-over-year and the weather in the Northeast and in the Southeast was also pretty challenging in January. And I think as we've talked about, these are things we're used to. And when we think about modeling internally and sharing our views externally, we try to build those in and shout out to our FP&A team who does a very good job of staying on top of that. So that was largely baked into our expectations for the year, Jailendra, and I think you brought up a good point, which is, yes, it was a leap year in '24, a leap year in '25.
I think you could probably spend some time looking at how the calendar falls and Mondays and Fridays are interesting things to look at year-over-year. But in the fourth quarter, there was a little bit of a tougher comp for us than last year.

Jailendra Singh

Okay. And then my quick follow-up on kind of just update on progress on leveraging AI and automation. You guys have talked about one usage being replacing manual workflows and improving productivity internally. But you guys have also talked about leveraging AI and network solutions business in various ways. Just curious any interesting results to share? And are you seeing more operating internally? Or are you more about kind of driving more business in network solutions from AI side?

Chaim Indig

Jailendra, this is Chaim. I'll answer that. Balaji and I were earlier today, we actually got a demonstration of one of our AI. The application is used internally by our Network Solutions team. They've been wanting to show us what this tool they're using for forecasting. And it was -- like by all accounts, I saw Balaji's jaw drop, when he realized what the team has been using it for and how valuable it is.
So no, we're seeing its impact in real time in our business, and we expect to continue to very thoughtfully implement AI throughout our organization where it not only drives real financial impact, but really improve the outcomes for our -- all of our stakeholders and pretty -- it would be an understatement for me to say the impact that has happened has been great. We're very -- we are very excited.

Operator

Ryan Daniels with William Blair.

Ryan Daniels

I'm curious about solutions like appointment readiness. You mentioned that also creates a new opportunity to engage users and then leverage that for Network solution sales. So my question is, does the newer product like that need to reach some element of critical mass before you can sell it into the pharma customer base? Or is that something that you could just add to existing programs right away. Is it different than another touch point for Network Solutions.

Chaim Indig

We -- Ryan, we think very early on, our product organization thinks a lot about scale and deployment. And when -- usually when we're talking about something, (inaudible) it's because it's already reached scale where we're able to leverage in our cross network solutions. And often, these things have been in development for sometimes years. So we -- from the early stages, a key requirement of all of our product briefs is scale.
And we're able to achieve that on a very regular basis with a lot of our products in a very good clip. And I think that's something as a result of the investments we've been making in R&D.

Ryan Daniels

Okay. Perfect. And then if I call, we've seen a lot more announcements. It seems like lately of different NVs inside and even outside of health are names like Salesforce rolling out AI agents to do appointment scheduling and matching patients to admissions and insurance verification. Are you seeing any changes when you talk to your go-to-market team about the competitive dynamics? Or is your installed base and comprehensive offering still kind of winning more of the market relative to some of those solutions?

Chaim Indig

I would say our close rates to think has gotten a little bit better as of late. I think a lot of those larger entrants have actually helped us in a lot of ways because as people start spending more time looking at it, we end up winning more of those. So I think it's been a rising tide where as the market leader, we've been a beneficiary of it, Ryan.

Operator

Richard Close with Canaccord Genuity.

Richard Close

First, great results on that breast cancer screening, that's pretty neat. Just maybe digging in a little bit more on Ryan's question on appointment readiness. Is that something that you charge provider clients to turn on or maybe let them use it like you have done in the past?
And since you're talking about Life Science -- having another opportunity to engage. Can you talk a little bit about like what would be an example of how they are engaging with that offering if it's just their eligibility and deductible and stuff like that, just to better understand.

Chaim Indig

So to answer your question, Richard, we do not currently charge for this product above and beyond what we already charge. It is something of significant value to providers because it just gets their patients ready. And it's something that where we're able to add more value to patients and providers and the scale and investments that we're making to make our offering significantly more valuable.
And from a network solution standpoint, there's broad examples of that I'm not going to go into on this call, where there's a lot of prep that needs to go into getting ready for your visit, and this allows that education and prep before that patient comes into the office. So we've seen -- and we have seen an uptick on that with Network Solutions.

Richard Close

Okay. That's helpful. And then maybe on patient bill pay an update there. Obviously, the results from the ortho group really impressive. Can you talk a little bit more about the rollout of that, maybe interest from existing clients to add that on or what the attachment rate is with new clients?

Balaji Gandhi

Yes. Richard, something we're very excited about. I don't think we're going to share an attachment rate, but I think what we could say is it's very similar to what Jim talked about with appointment readiness and post-price engagement, which is this has taken years of development and something we've pushed out into the market. Our thesis has been it adds a lot of value from the status quo, and we can generate revenue through additional payment volume to that product, which is, we think, a very differentiated go-to-market and it's something we're pushing out to our -- to all of our base clients. And as you saw in the letter, seeing some pretty good results.

Operator

Ryan MacDonald with Needham & Company.

Ryan MacDonald

Congratz on a nice quarter. Maybe within Network Solutions, we're seeing a continued evolution, you see change in the advertising landscape for pharma marketing life sciences market in particularly in social media channels as we're seeing sort of more regulations come in, limiting the ability to target effectively on some of the major social media programs. Are you, from a go-to-market perspective on that networking solutions team doing anything to better position yourself to maybe capture more share of spend in the midst of these changes?

Balaji Gandhi

Well, maybe just talking about our positioning there, Ryan. Our Phreesia platform of personalized health content, it's built on very important principles of both privacy and (inaudible) cost. And so we're trying to, with our platform, meet the patients where they are with relevant personalized information at those very key moments of their health care journey. So for us, that's what differentiates us and leading on privacy and consent. And we think we have a very unique platform to do that. But obviously, yes, there's lots of competition for those dollars, lots of dollars.

Ryan MacDonald

Okay. And then maybe as you think about the reiterated sort of guidance on sort of magnitude of AHSC and the additions that you're expecting for this year. Can you just talk about sort of what you're seeing early days in the year, that gives you sort of confidence in the trajectory of that count? And then what to the extent that you can do to either meet or up or down investments to make sure you're sort of hitting to those targets as we progress through a year in what is likely again a volatile macro.

Balaji Gandhi

Yes, sure. I mean I think we've talked about this for a couple of years now. We did put a lot of capital into the business. We are still spending a fair amount of capital in that area in sales and marketing, which is inclusive of our Sciences network solution area. And so right, when we put those projections out there for fiscal '26. The numbers might move around quarter-to-quarter.
We wanted to put something out there that was capture that we thought we'd be for the end of the year and feel pretty comfortable with that today and with our go-to-market solutions and the resources we have.

Operator

Jeff Garro with Stephens.

Jeffrey Garro

A couple more for me on Network Solutions. First, just want to check in and see if you could help us understand how far along are you in penetrating all of the 170 million visits on the network with Network Solutions content? And then I also want to ask, how are you getting better at generating those monetization moments and maybe even further finding the best and most personalized match for your inventory of network solutions content to engage with those individual patient moments?

Balaji Gandhi

Yes. So Jeff, I think we did share the 170 million visit milestone. But I think the very unique part about Phreesia's business model is that those visits, there's lots of different ways we're bringing value to our clients in those visits.
And as Chaim talked about, there's certain products that are driving value in some ways to providers can generate subscription revenue or payment processing revenue others, we are able to also generate Network Solutions revenue. So I don't think you should come away thinking that all 170 million of those will generate revenue from all 3 lines. It's actually a pretty, I think, unique part of our business model.
That said, I think you can do some very shortcut math on looking at our Network Solutions revenue divided by visits, which we've provided, I think, for (inaudible) now since we've been public. And that the dollars on a per visit basis continue to tick up, and we think that will continue to tick up. And is incorporated into our financial outlook for fiscal '26. And the new products we've introduced in the last couple of quarters will help drive that.

Jeffrey Garro

Excellent. I appreciate that. And one more on Network Solutions. Back in mid-December, you spoke pretty positively on progress for Network Solutions on the kind of key selling season for pharma advertising. So I want to see if that remains the case here several months later. And maybe just generally how you feel about visibility there?

Balaji Gandhi

Yes. No change, exactly in the same spot. And I think maintaining our financial outlook. So we reflect the same comments we made back in December.

Operator

Daniel Grosslight with Citi Group.

Daniel Grosslight

Congrats on another strong quarter here. There's been lots of macro noise out there right now, whether it's around consumer confidence or what's going to happen with Medicaid, enhanced subsidies on the exchanges or physician payment rates in Medicare. I'm curious if you're seeing any of these macro factors impact your business this year impact the sales cycle this year. And then I don't know if you have this data readily available, but if you could perhaps size what percent of your visit volume is coming from folks on Medicaid or the exchanges.

Balaji Gandhi

So Daniel, I think the first thing we'd say is, obviously, we're monitoring all of these trends and activities pretty closely. Nothing to really call out, but let's just test as of today and what we know, and we'll keep monitoring and let you know if anything changes. But these are all things we're tracking pretty closely.
I think in terms of mix, there's nothing about our -- the mix of our network. If you thought about it on a payer basis, that would be different than just the broader population. And I apologize, I don't know offhand exactly what percentage the population is Medicaid, but I don't think you'd see it be very different and that we apply to Medicare or employer-sponsored coverage.

Daniel Grosslight

Yes. Makes sense. Okay. And then just on your capital deployment priorities for fiscal '26, you have really solid cash balance now, you're consistently free cash flow positive. So I'm just curious how you're thinking about the buy-versus-build dynamic in '26? And if there's any changes in capital deployment priorities?

Chaim Indig

No change. I mean I think we talk a lot about capital allocation. And for the last almost 6 years now, we've been public, our philosophy has been to allocate capital where we can get good solid, durable growth that's profitable. And sometimes that comes organic, sometimes it comes inorganic. Obviously, it's been heavily organic over our history, and there's a pretty rigorous process for us to look at things inorganic. And I think it's nice to have the balance sheet that we have and the cash flow we have to be able to continue to look at both organic and inorganic and that durable profitable growth.

Operator

Scott Schoenhaus with KeyBanc Capital Markets.

Scott Schoenhaus

So on the investment letter, you said your after-hours service was back online, that's good to hear. But it reminds me that you had 2 other acquisitions last year. Are you fully charging for those platforms now? And how should we think about those tailwinds of all 3 for fiscal '26.

Balaji Gandhi

Yes. And actually, Scott, it's amazing how time flies, but those -- all 3 of those acquisitions were actually in calendar '23 so fiscal '24. So we actually did not do any acquisitions in fiscal '25. And the other 2 that you're referring to from fiscal '24 have contributed to growth. I think we've called out MediFind and Access driving revenue and contributing to growth. And that's something when we made those acquisitions, we expected it to contribute. But I don't think there's anything particularly to call out there. And yes, we're excited to have the call product back out in the market.

Operator

Your totally right. Time does fly. Follow-up on the last question about capital allocation. Would you think about deploying it through other means when you think about share repurchases, if you see valuations depressed. You're generating cash now and that's expected to probably accelerate as margins continue to expand here. So just kind of thinking about capital allocation flexibility and optionality here.

Balaji Gandhi

Yes. I think what you should take away is we're always trying to position ourselves to be able to be flexible. But look, we're a very growth-minded company and try to drive again that profitable durable growth. And that's where you should think about us prioritizing capital deployment and certainly in the next couple of years.

Operator

Jessica Tassan with Piper Sandler.

Jessica Tassan

I just wanted to check in on the Network Solutions side, can you just remind us when are you able to upsell or maybe resell these contracts throughout the year? Are contracts usually time bound or impression bound? Just wondering about the per AHSC Network Solutions revenue over the course of the fiscal year.

Balaji Gandhi

Yes, it's throughout the year. And we sell campaigns for a fixed number of messages that are delivered and then when we complete those campaigns, we resell them. I don't know if that answers your question, Jess, but that's -- it's sort of ongoing.

Chaim Indig

What we do forecasting and PC.

Balaji Gandhi

Yes. And I think Chaim talked about AI being an interesting application there and helping us do that.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to Chaim Indig.

Chaim Indig

Thank you, everyone. The last 20 years has been wonderful. We look forward to the years forward, and we've just begun this amazing journey. So thanks, everyone, for joining us in this quarter, and we'll talk to you in a couple of months.

Operator

This concludes today's conference call. You may now disconnect