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Item 7. Management’s discussion and analysis of financial condition and results of operations

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes and other financial information appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report on Form 10-K, including information with respect to our plans and strategy for our business, includes forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report on Form 10-K, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our fiscal year ends January 31. References to fiscal 2024 and 2023 refer to the fiscal years ended January 31, 2024 and 2023, respectively.

Basis of Presentation

This management's discussion and analysis discusses our financial condition and results of operations for the years ended January 31, 2024 and 2023. Please refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended January 31, 2023 for a comparison of the year ended January 31, 2023 to the year ended January 31, 2022.

Financial Highlights

Fiscal 2024

•Total revenue increased 27% to $356.3 million in fiscal 2024 compared with $280.9 million in fiscal 2023.

•Net loss was $136.9 million in fiscal 2024 compared with $176.1 million in fiscal 2023.

•Adjusted EBITDA was negative $35.4 million in fiscal 2024 compared with negative $92.5 million in fiscal 2023.

•Cash used in operating activities was $32.4 million in fiscal 2024 compared with cash used in operating activities of $90.1 million in fiscal 2023.

•Free cash flow was negative $57.5 million in fiscal 2024 compared with negative $116.3 million in fiscal 2023.

•Cash and cash equivalents was $87.5 million as of January 31, 2024 compared with $176.7 million as of January 31, 2023.

For a reconciliation of Adjusted EBITDA to net loss and a reconciliation of free cash flow to net cash used in operating activities, and for more information as to how we define and calculate such measures, see the section below titled “Non-GAAP financial measures.”

Overview

We are a leading provider of comprehensive software solutions that improve the operational and financial performance of healthcare organizations and improve health outcomes by helping patients take a more active role in their care. Our solutions include SaaS-based integrated tools that manage patient access, registration and payments. We have tools to communicate with patients about their health and have demonstrated increased rates of preventive care and vaccinations.Additionally, our solutions include clinical assessments to screen patients for a variety of physical, behavioral and mental health conditions, helping providers to better understand their patients and connect them to needed services, resulting in improved health outcomes. We also provide life sciences companies, health plans and other payer organizations (payers), patient advocacy, public interest and other not-for-profit organizations with a channel for direct communication with patients. Our solutions also include additional products and services such as the MediFind provider directory, which helps patients find care based on providers' specific clinical expertise.

We serve an array of healthcare services clients of all sizes across over 25 specialties, ranging from single-specialty practices, including internal and family medicine, urology, dermatology, and orthopedics, to large, multi-specialty groups, and health systems as well as regional and national payers and other organizations that provide other types

of healthcare-related services. Our Network solutions revenue (as described below) is generated from clients in the pharmaceutical, biotechnology and medical device industries, as well as payers, patient advocacy, public interest and other not-for-profit organizations seeking to activate, engage and educate patients about topics critical to their health.

We derive revenue from (i) subscription fees from healthcare services clients for access to our solutions and related professional services fees, (ii) payment processing fees based on levels of patient payment volume processed through our solutions and (iii) fees from life sciences and payer clients for delivering direct communications to help activate, engage and educate patients about topics critical to their health using our solutions. We also generate revenue through our additional products and services such as the MediFind provider directory, which helps patients find care based on providers' specific clinical expertise. We have strong visibility into our business as the majority of our revenue is derived from recurring subscription fees and re-occurring payment processing fees.

We market and sell our products and services to healthcare services prospects throughout the U.S. using a direct sales organization. Our database team is responsible for the hygiene and health of our data and is tasked with validating information by using various tools to enrich it. This data powers our sales development organization. Our marketing team identifies customer profiles, develops content and deploys one-to-many communications to soften the market. This helps prepare our sales development team to outbound to prospects. The sales development team creates opportunities and works with the direct sales team to qualify those opportunities. Our sales force executes on these qualified sales leads, partnering with sales enablement and client services to ensure prospects are educated on the breadth of our capabilities and demonstrable value proposition, with the goal of attracting and retaining clients and expanding their use of our solutions over time. Most of our healthcare services customer contracts are structured as annual, auto-renewing agreements. Our sales typically involve competitive processes, and sales cycles have, on average, varied in duration from three months to six months, depending on the size of the potential client. In addition, through Phreesia University (Phreesia’s in-house training program), events, client conferences and webinars, we help our healthcare services clients optimize their businesses and, as a result, support client retention.

We also sell products and services to life sciences and payer organizations, healthcare advertising agencies and advocacy groups as well as advertising agencies through our direct sales and marketing teams. Unlike healthcare services programs, most of the life science campaigns need to be measured and resold each year. Like healthcare services, the marketing team supports net new business and client retention for life sciences by educating ideal customer profiles about the value of Phreesia and the positive impact on health outcomes Phreesia campaigns have on patients.

Since our inception, we have focused substantially all of our sales efforts within the United States. Accordingly, substantially all of our revenue from historical periods has come from the United States, and our current strategy is to continue to focus substantially all of our sales efforts within the United States.

Our revenue growth has been primarily organic and reflects our significant addition of new healthcare services clients. New healthcare services clients are defined as clients that go live in the applicable period and existing healthcare services clients are defined as clients that go live in any period before the applicable period.

Recent developments and current economic conditions

Acquisitions

On June 30, 2023, we acquired MediFind for total cash and equity consideration of $8.9 million. MediFind is a consumer-facing healthcare product that helps patients - especially those with serious, chronic and rare diseases - find better care faster. We acquired MediFind to reinforce our commitment to patient-centered care and expand our offerings to consumers.

On August 11, 2023, we acquired Access for total cash and equity consideration of $37.4 million. Access is an innovative electronic forms management and automation provider that helps hospitals across the country streamline workflows, improve compliance and deliver a better patient experience. We acquired Access to enhance and build on our existing functionality in the acute care space and to expand our network of clients and partners.

On October 3, 2023, we acquired ConnectOnCall for total consideration of $13.9 million. ConnectOnCall is a founder-owned company with an automated medical answering solution that routes and triages after-hours calls and manages high daytime call volumes. We acquired ConnectOnCall to expand our offerings to provider organizations, helping them make the call-triaging process more efficient and less expensive.

See Note 16 - Acquisitions within Part II - Item 8 of this Annual Report on Form 10-K for additional information regarding our acquisitions.

Termination of Third SVB Facility

On December 4, 2023, we terminated the Third SVB Facility with SVB. We recorded a loss on extinguishment of debt of $1.1 million in connection with the termination of the Third SVB Facility, including lender fees of $0.6 million.

Capital One Facility

On December 4, 2023, we entered into a new 5-year $50.0 million senior secured asset-based revolving credit facility ("Capital One Credit Facility") maturing in December 2028, which includes a swingline sub-limit of at least $5.0 million and a letter of credit sub-limit of at least $5.0 million. The new Capital One Credit Facility was entered into with Capital One, N.A., acting as administrative agent and replaces our previous senior secured revolving credit facility with SVB. The new Capital One Credit Facility will give us additional financial flexibility through fiscal year 2028. The facility is available to us for working capital and general corporate purposes. The Capital One Credit Facility bears interest at a rate per annum based on the Secured Overnight Financing Rate (“SOFR”) or a Base Rate as specified in the Credit Agreement. In addition to principal and interest due under the Capital One Credit Facility, we are required to pay an annual fee equal to 0.25% of the unused balance of the facility.

Macroeconomic environment and geopolitical conditions

Our business is directly and indirectly affected by macroeconomic conditions, geopolitical conditions and the state of global financial markets. Recent geopolitical uncertainty resulting, in part, from military conflict between Russia and Ukraine and the conflict in the Middle East, as well as other macro-economic conditions, such as the impact of pandemics, increased interest rates, inflation in the cost of goods, services and labor, or a recession or an economic slowdown in the U.S. or internationally have contributed to significant volatility and declines in global financial markets. The uncertainty over the extent and duration of the ongoing conflict and these macroeconomic conditions continues to cause disruptions to businesses and markets worldwide. While none of these factors individually has had a material impact on our business to date, it is difficult to predict the potential impact these factors may have on our future business results, and each could adversely impact our business operations, financial performance and results of operations.

Key Metrics

We regularly review the following key metrics to measure our performance, identify trends affecting our business, formulate financial projections, make strategic business decisions and assess working capital needs.

For the fiscal years ended January 31, Change

Key Metrics:

Average number of healthcare services clients ("AHSCs") 3,601 2,856 745 26 %

•AHSCs. We define AHSCs as the average number of clients that generate subscription and related services or payment processing revenue each month during the applicable period. In cases where we act as a subcontractor providing white-label services to our partner's clients, we treat the contractual relationship as a single healthcare services client. We believe growth in AHSCs is a key indicator of the performance of our business and depends, in part, on our ability to successfully develop and market our solutions to healthcare services organizations that are not yet clients. While growth in AHSCs is an important indicator of expected revenue growth, it also informs our management of the areas of our business that will require further investment to support expected future AHSC growth. For example, as AHSCs increase, we may need to add to our customer support team and invest to maintain effectiveness and performance of our solutions for our healthcare services clients and their patients.

•Healthcare services revenue per AHSC. We define Healthcare services revenue as the sum of subscription and related services revenue and payment processing revenue. We define Healthcare services revenue per AHSC as healthcare services revenue in a given period divided by AHSCs during that same period. We are focused on

continually delivering value to our healthcare services clients and believe that our ability to increase healthcare services revenue per AHSC is an indicator of the long-term value of our solutions. Healthcare services revenue per AHSC was $72,215 for the year ended January 31, 2024 compared to $72,599 for the year ended January 31, 2023, a decrease of $384. The decline was primarily driven by AHSC growth significantly outpacing growth in payment processing volume and payment processing revenue.

•Total Revenue per AHSC. We define Total revenue per AHSC as Total revenue in a given period divided by AHSCs during that same period. Our healthcare services clients directly generate subscription and related services and payment processing revenue. Additionally, our relationships with healthcare services clients who subscribe to our technology give us the opportunity to engage with life sciences companies, health plans and other payer organizations, patient advocacy, public interest and other not-for-profit organizations who deliver direct communication to patients through our solutions. As a result, we believe that our ability to increase Total revenue per AHSC is an indicator of the long-term value of our solutions. Total revenue per AHSC was $98,944 for the year ended January 31, 2024 compared to $98,358 for the year ended January 31, 2023, an increase of $586. The increase was primarily driven by Network solutions revenue growth outpacing healthcare services client growth.

Additional Information

For the fiscal years ended January 31, Change

Payment facilitator volume percentage 82 % 80 % 2 % 3 %

•Patient payment volume. We believe that patient payment volume is an indicator of both the underlying health of our healthcare services clients’ businesses and the continuing shift of healthcare costs to patients. We measure patient payment volume as the total dollar volume of transactions between our healthcare services clients and their patients utilizing our payment platform, including via credit and debit cards that we process as a payment facilitator as well as cash and check payments and credit and debit transactions for which we act as a gateway to other payment processors.

•Payment facilitator volume percentage. We define payment facilitator volume percentage as the volume of credit and debit card patient payment volume that we process as a payment facilitator as a percentage of total patient payment volume. Payment facilitator volume is a major driver of our payment processing revenue.

Results of operations

The following tables set forth our results of operations for the periods presented and as a percentage of revenue for those periods:

For the fiscal years ended January 31, For the fiscal years ended January 31,

Revenue

Expenses

Other income (expense), net 44 (175) — % — %

Loss on extinguishment of debt (1,118) — — % — %

Total other income, net 1,137 889 — % — %

Provision for income taxes (1,543) (483) — % — %

Components of statements of operations

Revenue

We generate revenue primarily from providing an integrated SaaS-based software and payment platform for the healthcare industry. We derive revenue from subscription fees and related services generated from our healthcare services clients for access to our solutions, payment processing fees based on the levels of patient payment volume we process, and from fees from life sciences and payer clients for delivering direct communications to help activate, engage and educate patients about topics critical to their health.

Our total revenues consist of the following:

•Subscription and related services. We primarily generate subscription fees from our healthcare services clients based on the number of healthcare services clients that subscribe to and utilize our solutions. Our healthcare services clients are typically billed monthly in arrears, though in some instances, healthcare services clients may opt to be billed quarterly or annually in advance. Subscription fees are typically auto-debited from healthcare services clients’ accounts every month. As we target and add larger enterprise healthcare services clients, these clients may choose to contract differently than our typical per healthcare services client subscription model. To the extent we charge in an alternative manner with larger enterprise healthcare services clients, we expect that such a pricing model will recur and, combined with our per healthcare services client subscription fees, will increase as a percentage of our total revenue.

In addition, we receive certain fees from healthcare services clients for professional services associated with our implementation services as well as travel and expense reimbursements, shipping and handling fees, sales of hardware (PhreesiaPads and Arrivals Kiosks), on-site support and training.

•Payment processing fees. We generate revenue from payment processing fees based on the number of transactions and the levels of patient payment volume processed through our solutions. Payment processing fees are generally calculated as a percentage of the total transaction dollar value processed and/or a fee per transaction. Credit and debit patient payment volume processed through our payment facilitator model represented 82% and 80% of our patient payment volume in fiscal 2024 and 2023, respectively. The remainder of our patient payment volume is composed of credit and debit transactions for which Phreesia acts as a gateway to another payment processor, and cash and check transactions. Patient payment responsibility typically declines as a share of total spending as the calendar year progresses due to benefit design. Consistent with that trend, payment volume on a per client basis has historically been lower in the second half of our fiscal year as compared to the first half of our fiscal year.

•Network solutions. We generate revenue from life sciences and payer clients for delivering direct communications to patients. As we expand our healthcare services client base, we increase the number of new patients we can reach to deliver our direct communications that help activate, engage and educate patients about topics critical to their health on behalf of life sciences and payer clients.

Cost of revenue (excluding depreciation and amortization)

Our cost of revenue (excluding depreciation and amortization) primarily consists of personnel costs, including salaries, stock-based compensation, benefits and bonuses for implementation and technical support, and infrastructure costs to operate our solutions such as hosting fees and fees paid to various third-party providers for access to their technology, as well as costs to verify insurance eligibility and benefits.

Payment processing expense

Payment processing expense consists primarily of interchange fees set by payment card networks that are ultimately paid to the card-issuing financial institution, assessment fees paid to payment card networks, and fees paid to third-party payment processors and gateways. Payment processing expense may increase as a percentage of payment processing revenue if card networks raise pricing for interchange and assessment fees or if we reduce pricing to our clients.

Sales and marketing

Sales and marketing expense consists primarily of personnel costs, including salaries, stock-based compensation, benefits, bonuses and commission costs for our sales and marketing personnel. Sales and marketing expense also includes costs for advertising, promotional and other marketing activities, as well as certain fees paid to various third-party partners for sales and lead generation. Advertising is expensed as incurred.

Research and development

Research and development expense consists of costs to develop our products and services that do not meet the criteria for capitalization as internal-use software. These costs consist primarily of personnel costs, including salaries, stock-based compensation and benefits for our development personnel. Research and development expense also includes third-party partner fees and third-party consulting fees.

General and administrative

General and administrative expense consists primarily of personnel costs, including salaries, stock-based compensation and benefits for our executive, finance, legal, security, human resources, information technology and other administrative personnel. General and administrative expense also includes software costs to support our finance, legal and human resources operations, insurance costs as well as fees to third-party providers for accounting, legal and consulting services, costs for various non income-based taxes and software costs.

Depreciation

Depreciation represents depreciation expense for PhreesiaPads and Arrivals Kiosks, data center and other computer hardware, purchased computer software, furniture and fixtures and leasehold improvements.

Amortization

Amortization primarily represents amortization of our capitalized internal-use software related to our solutions as well as amortization of acquired intangible assets.

Other income (expense), net

Our other income and expense line items consist of the following:

•Other income (expense), net. Other income (expense), net consists of foreign currency-related gains and losses and other miscellaneous income (expense).

•Loss on extinguishment of debt. Loss on extinguishment of debt represents the difference between the amount paid on extinguishment of debt (including any directly related fees) and the net carrying amount of debt being extinguished.

•Interest income. Interest income consists of interest earned on our cash and cash equivalent balances.

•Interest expense. Interest expense consists primarily of the interest incurred on our financing obligations as well as amortization of discounts and deferred financing costs.

Provision for income taxes

Based upon our cumulative pre-tax losses in recent years and available evidence, we have determined that it is more likely than not that substantially all of our deferred tax assets as of January 31, 2024 will not be realized in the near term. Consequently, we have established a valuation allowance against our deferred tax assets that are not more likely than not to be realized. In future periods, if we conclude we have future taxable income sufficient to realize the deferred tax assets, we may reduce or eliminate the valuation allowance. Provision for income taxes also includes U.S. state and local income taxes and foreign income taxes. We record unrecognized tax benefits as liabilities or as reductions to deferred tax assets and adjust these balances when our judgement changes as a result of the evaluation of new information previously not available.

Comparison of fiscal 2024 versus fiscal 2023

Revenue

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

•Subscription and related services. Our subscription and related services revenue from healthcare services organizations increased $36.5 million to $165.4 million for fiscal 2024, as compared to $129.0 million for fiscal 2023, primarily due to new healthcare services clients added in fiscal 2024 as well as expansion of and cross-selling to existing healthcare services clients.

•Payment processing fees. Our revenue from patient payments processed through our solutions increased $16.2 million to $94.6 million for fiscal 2024, as compared to $78.4 million for fiscal 2023, due to the addition of new healthcare services clients, which drove increases in patient visits and patient payments processed through our platform.

•Network solutions. Our revenue from life science and payer clients increased $22.7 million to $96.3 million for fiscal 2024, as compared to $73.6 million for fiscal 2023 due to an increase in engagement, education programs and deeper patient outreach among the existing programs.

Cost of revenue (excluding depreciation and amortization)

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

Cost of revenue (excluding depreciation and amortization) increased $2.1 million to $61.0 million for fiscal 2024, as compared to $58.9 million for fiscal 2023. The increase resulted primarily from a $6.1 million increase in outside services and other third-party costs driven by growth in revenue and a $0.9 million increase in employee stock compensation costs, partially offset by a $4.7 million decrease in employee salary and benefits costs driven by lower headcount.

Stock compensation incurred related to cost of revenue was $4.6 million and $3.7 million for fiscal 2024 and fiscal 2023, respectively.

Payment processing expense

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

Payment processing expense increased $12.7 million to $63.0 million for fiscal 2024, as compared to $50.3 million for fiscal 2023. The increase resulted primarily from the increase in payment processing fees revenue and patient payments processed through our solutions, each driven by an increase in patient visits over the prior year.

Sales and marketing

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

Sales and marketing expense decreased $4.3 million to $147.0 million for fiscal 2024, as compared to $151.3 million for fiscal 2023. The decrease was primarily attributable to a $13.6 million decrease in employee salary and benefits costs driven by lower average headcount, partially offset by a $3.8 million increase in employee stock compensation, a $3.0 million increase in travel and other internal sales and marketing costs as well as a $2.6 million increase in outside services and other third-party sales and marketing costs.

Stock compensation incurred related to sales and marketing expense was $26.0 million and $22.2 million for fiscal 2024 and fiscal 2023, respectively.

Research and development

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

Research and development expense increased $21.1 million to $112.3 million for fiscal 2024, as compared to $91.2 million for fiscal 2023. The increase resulted primarily from a $9.2 million increase in employee salary and benefit costs and a $5.7 million increase in employee stock compensation costs, each driven by increased research and development headcount, a $2.1 million increase in software costs, a $1.1 million increase in outside services costs, as well as a $0.8 million increase in hardware and hosting costs.

Stock compensation incurred related to research and development expense was $17.4 million and $11.8 million in fiscal 2024 and fiscal 2023, respectively.

General and administrative

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

General and administrative expense decreased $0.5 million to $79.9 million for fiscal 2024, as compared to $80.4 million for fiscal 2023. The $0.5 million decrease resulted primarily from a $1.7 million decrease in employee salary and benefit costs as well as lower rent, travel and insurance costs, partially offset by a $2.5 million increase in employee stock compensation costs as well as higher outside services costs associated with fiscal year 2024 acquisitions.

Stock compensation incurred related to general and administrative expense was $23.7 million and $21.2 million in fiscal 2024 and fiscal 2023, respectively.

Depreciation

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

Depreciation expense decreased $0.4 million to $17.6 million for fiscal 2024, as compared to $18.0 million for fiscal 2023. The decrease was primarily attributable to lower computer equipment depreciation.

Amortization

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

Amortization expense increased $4.6 million to $11.9 million for fiscal 2024, as compared to $7.3 million for fiscal 2023. The increase was primarily driven by higher amortization of capitalized internal-use software development costs as well as amortization of intangible assets acquired during the current year.

Other income (expense), net

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

Other income (expense), net was income of less than $0.1 million for fiscal 2024 as compared to expense of $0.2 million for fiscal 2023. Other income (expense) is comprised primarily of foreign exchange gains and losses.

Loss on extinguishment of debt

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

Loss on extinguishment of debt $ (1,118) $ — $ (1,118) (100 %)

During fiscal 2024, we recorded a $1.1 million loss on extinguishment of debt in connection with the termination of the Third SVB Facility.

Interest income, net

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

Interest income, net increased by $1.1 million to $2.2 million for fiscal 2024, as compared to $1.1 million for fiscal 2023. The increase is primarily attributable to higher interest income earned from our cash and cash equivalent balances.

Provision for income taxes

Fiscal years ended January 31,

(in thousands) 2024 2023 $ Change % Change

Provision for income taxes increased by $1.1 million to $1.5 million for fiscal 2024, as compared to $0.5 million for fiscal 2023. The increase in provision for income taxes relates primarily to an increase in Canadian income tax expense.

Non-GAAP financial measures

Adjusted EBITDA is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. Adjusted EBITDA is not a measurement of our financial performance under GAAP and should not be considered as an alternative to net income or loss or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of our liquidity. We define Adjusted EBITDA as net income or loss before interest income (expense), net, provision for income taxes, depreciation and amortization, and before stock-based compensation expense, loss on extinguishment of debt and other income (expense) net.

We have provided below a reconciliation of Adjusted EBITDA to net loss, the most directly comparable GAAP financial measure. We have presented Adjusted EBITDA in this Annual Report on Form 10-K because it is a key measure used by our management and board of directors to understand and evaluate our core operating performance and trends, to prepare and approve our annual budget, and to develop short and long-term operational plans. In particular, we believe that the exclusion of the amounts eliminated in calculating Adjusted EBITDA can provide a useful measure for period-to-period comparisons of our core business. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Our use of Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our financial results as reported under GAAP. Some of these limitations are as follows:

•Although depreciation and amortization expense are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;

•Adjusted EBITDA does not reflect: (1) changes in, or cash requirements for, our working capital needs; (2) the potentially dilutive impact of non-cash stock-based compensation; (3) tax payments that may represent a reduction in cash available to us; or (4) interest (income) expense, net; and

•Other companies, including companies in our industry, may calculate Adjusted EBITDA or similarly titled measures differently, which reduces its usefulness as a comparative measure.

Because of these and other limitations, you should consider Adjusted EBITDA along with other GAAP-based financial performance measures, including various cash flow metrics, net loss, and our GAAP financial results. The following table presents a reconciliation of Adjusted EBITDA to net loss for each of the periods indicated:

For the fiscal years ended January 31,

Provision for income taxes 1,543 483

Loss on extinguishment of debt 1,118 —

Other (income) expense, net (44) 175

We calculate free cash flow as net cash used in operating activities less capitalized internal-use software development costs and purchases of property and equipment.

Additionally, free cash flow is a supplemental measure of our performance that is not required by, or presented in accordance with, GAAP. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic opportunities, including investing in our business, making strategic investments, partnerships and acquisitions and strengthening our financial position.

The following table presents a reconciliation of free cash flow from net cash used in operating activities, the most directly comparable GAAP financial measure, for each of the periods indicated:

For the fiscal years ended January 31,

Net cash used in operating activities $ (32,378) $ (90,123)

Less:

Capitalized internal-use software (19,291) (21,471)

Purchases of property and equipment (5,806) (4,732)

Liquidity and capital resources

As of January 31, 2024 and 2023, we had cash and cash equivalents of $87.5 million and $176.7 million, respectively. Cash and cash equivalents consist of money market funds and cash on deposit.

We believe that our existing cash and cash equivalents, along with cash generated in the normal course of business, will be sufficient to meet our needs for at least the next 12 months.

In addition, we also have potential borrowing capacity under our credit agreement subject to certain restrictive covenants.

Our future capital requirements and the adequacy of available funds will depend on many factors, including those set forth under “Risk Factors.”

In the event that additional financing is required from outside sources, we may be unable to raise the funds on acceptable terms, if at all. If we are unable to raise additional capital when desired, our business, operating results and financial condition could be adversely affected.

Silicon Valley Bank facility

Termination of the Third SVB Facility

On December 4, 2023, we terminated the Third SVB Facility and we recorded a $1.1 million loss on extinguishment of debt, including $0.6 million of lender and third-party fees and $0.5 million to write-off unamortized deferred financing costs. Lender fees included a termination fee of 1.0% of borrowing capacity.

Capital One facility

On December 4, 2023, we entered into a new 5-year $50 million senior secured asset-based revolving credit facility ("Capital One Credit Facility") maturing in December 2028, which includes a swingline sub-limit of at least $5.0 million and a letter of credit sub-limit of at least $5.0 million. The new Capital One Credit Facility was entered into with Capital One, N.A., acting as administrative agent and replaces our previous senior secured revolving credit facility with Silicon Valley Bank, which we terminated the same date. We believe the new Capital One Credit Facility will give us additional financial flexibility through fiscal 2028. The facility is available to us for working capital and general corporate purposes.

The obligations under the Capital One Credit Facility are secured by a first priority security interest in substantially all of our tangible and intangible assets, and by pledges of the equity of certain of our U.S. subsidiaries, in each case subject to customary exclusions.

The Capital One Credit Facility includes financial covenants including, but not limited to requiring us to maintain minimum Consolidated EBITDA, minimum Liquidity, a minimum Consolidated Fixed Charge Coverage Ratio and limiting the amount of cash and cash equivalents we hold outside Capital One, each as defined in the Credit Agreement. We were in compliance with all covenants related to the Capital One Credit Facility as of January 31, 2024.

We believe that our cash and cash equivalents along with cash generated in the normal course of business, are sufficient to fund our operations for at least the next 12 months.

Financing agreements

On June 8, 2023, we entered into a financing agreement to obtain financing for internal-use software and related software support. As of January 31, 2024, there was $3.1 million in outstanding principal and interest due under the agreement. The financing agreement requires us to pay $0.1 million per month for 36 months beginning August 2023. The effective interest rate on the agreement is 10.5% per annum.

Shares issued as consideration for acquisition

On June 30, 2023, we entered into an agreement to acquire 100% of the outstanding equity of MediFind for total consideration of $8.9 million, which included the issuance of 150,786 shares of our common stock to certain MediFind stockholders.

On August 11, 2023, we entered into an agreement to acquire 100% of the outstanding equity of Access for total consideration of $37.4 million, which included the issuance of 1,096,436 shares of our common stock to certain members of Access.

Liabilities issued as consideration for acquisition

On October 3, 2023, we entered into an agreement to acquire 100% of the outstanding equity of ConnectOnCall for total consideration of $13.9 million, including liabilities with an acquisition-date fair value of $10.0 million. The liabilities include undiscounted payments of $10.9 million payable in seven quarterly installments through June 2025. See Note 16 - Acquisitions of this Annual Report on Form 10-K for additional information regarding the acquisition of ConnectOnCall.

The following table summarizes our sources and uses of cash for each of the periods presented:

Fiscal years ended January 31,

Net cash used in operating activities $ (32,378) $ (90,123)

Net cash used in investing activities (39,670) (26,203)

Net cash used in financing activities (17,115) (20,803)

Net decrease in cash and cash equivalents $ (89,163) $ (137,129)

Operating activities

The primary sources of cash from operating activities are cash received from our customers and interest earned on our money market mutual funds. The primary uses of cash for operating activities are for payroll, payments to suppliers, payments for operating leases, as well as cash paid for interest on our finance leases and other financings and cash paid for various taxes.

During the fiscal year ended January 31, 2024, net cash used in operating activities was $32.4 million, as our cash paid to employees and suppliers exceeded our cash received from customers in connection with our normal operations. During the fiscal year ended January 31, 2023, net cash used in operating activities was $90.1 million, as our cash paid to employees and suppliers exceeded our cash received from customers in connection with our normal operations.

The change in net cash used in operating activities was driven primarily by an increase in cash received from customers driven by higher revenues, higher interest income on money market mutual funds we held during the year ended January 31, 2024 and lower employee compensation costs, primarily due to lower average employee headcount, partially offset by higher outside services costs and acquisition-related costs.

Investing activities

During the fiscal year ended January 31, 2024, net cash used in investing activities was $39.7 million, including $19.3 million of cash paid for capitalized internal-use software, $14.6 million of cash paid for acquisitions, net of cash acquired, as well as well as $5.8 million of purchases of property and equipment.

During the fiscal year ended January 31, 2023, net cash used in investing activities was $26.2 million, principally resulting from capital expenditures, the majority of which consisted of $21.5 million of cash paid for capitalized internal-use software, as well as $4.7 million of purchases of property and equipment, including hardware used by clients and data center equipment.

Financing activities

During the fiscal year ended January 31, 2024, net cash used in financing activities was $17.1 million, primarily consisting of $12.2 million used for treasury stock to satisfy tax withholdings on stock compensation awards, $7.4 million used for principal payments on finance leases and financing arrangements, $2.1 million used for debt issuance costs, facility fees and debt extinguishment costs, and $1.3 million used for principal payments of acquisition-related liabilities, partially offset by $4.2 million in proceeds from our equity compensation plans and $1.7 million constructive financing related to our software financing arrangement.

During the fiscal year ended January 31, 2023, cash provided by financing activities was $20.8 million, primarily consisting of $19.4 million used for treasury stock to satisfy tax withholdings on stock compensation awards and $5.9 million used for principal payments on finance leases and financing arrangements, partially offset by $4.9 million in proceeds from our equity compensation plans.

Material Cash Requirements

Our material cash requirements relate to human capital, contractual purchase commitments, payments on deferred consideration liabilities, leases and financing arrangements. Refer to Note 4 - Composition of certain financial statement accounts in Part II - Item 8 of this Annual Report on Form 10-K for additional information on accrued payroll related liabilities and deferred consideration liabilities. Refer to Note 6 - Finance leases and other debt, Note 10 - Leases and Note 11 - Commitments and contingencies in Part II - Item 8 of this Annual Report on Form 10-K for additional information on cash requirements for leases, financing arrangements and contractual purchase commitments.

Critical accounting policies and estimates

The preparation of the consolidated financial statements in conformity with GAAP requires us to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenue and expenses during the reporting period. Our most significant estimates and judgments involve revenue recognition, the fair value of assets acquired in business combinations, capitalized internal-use software, income taxes, and valuation of our stock-based compensation. Actual results may differ from these estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected.

We believe that the accounting policies described below involve a greater degree of judgment and complexity. Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations.

Revenue recognition

We account for revenue from contracts with clients by applying the requirements of Topic 606, which includes the following steps:

•Identification of the contract, or contracts, with a client

•Identification of the performance obligations in a contract

•Determination of the transaction price

•Allocation of the transaction price to the performance obligations in the contract

•Recognition of revenue when, or as, performance obligations are satisfied

Revenues are recognized when control of these services is transferred to our clients, in an amount that reflects the consideration we expect to be entitled to in exchange for those services.

We believe the areas in which we apply significant judgements when determining revenue recognition relate to the identification of distinct performance obligations, the assessment of the standalone selling price (“SSP”) for each performance obligation identified, the determination of the amount of variable consideration to include in the transaction price of our contracts with customers and the determination of whether we are the principal or the agent for certain performance obligations.

Determination of Performance Obligations

A performance obligation is a promise in a contract with a customer to transfer products or services that are distinct. Our contracts with customers may include multiple promises to transfer services to a customer. Determining whether products and services are distinct performance obligations that should be accounted for separately or combined as a single performance obligation may require significant judgment that requires us to assess the nature of the promise and the value delivered to the customer.

Our subscription and related services revenue includes certain fees from clients for professional services associated with implementation services.

In determining whether professional services for implementation are distinct, we consider the following factors for each professional services agreement: availability of the services from other vendors, the nature of the professional services and the complexity of interfaces created between systems.

We determined that the majority of implementation services were not distinct from the related subscription service because they are proprietary such that they cannot be performed by another entity, because we generally do not sell professional services on a stand-alone basis, and because they are integral to the customer’s ability to derive the intended benefit of the subscription service, indicating that the implementation services and related subscription are inputs to a combined output.

Determination of Standalone Selling Prices

We allocate the transaction price of our customer contracts to the performance obligations within those contracts based on the relative SSP of the performance obligations.

The SSP is the price that we would sell a product separately to a customer. The best evidence of this is an observable price from stand-alone sales of that product to similarly situated customers. However, as we do not typically transfer our performance obligations on a standalone basis, but rather we transfer bundles of performance

obligations, we use an adjusted market assessment approach to estimate the price a customer would be willing to pay for our performance obligations using historical price information as priced in previous bundled contracts.

In determining SSPs, we stratify the population of customer transactions by product, type, size of customer and geographic area. We typically establish a range of SSPs for each of our performance obligations.

The prices we charge for digital messaging solutions provided to life sciences companies have historically been highly variable. We consider pricing to be highly variable if we have a history of selling the services at a wide range of prices to similar customers in similar geographic areas within the same time periods. As the pricing of our digital messaging solutions has historically been highly variable, we use the residual method to estimate the SSP of performance obligations for digital messaging solutions. We estimate the residual SSP of our digital messaging solutions as the total transaction price of the customer contract less the SSPs of the remaining performance obligations pursuant to the contract.

Variable Consideration

We estimate the transaction price at contract inception, including any variable consideration, and we update the estimate each reporting period for any changes in circumstances. When determining the transaction price, we assume the products will be transferred to the customer based on the terms of the existing contract and our assumption does not take into consideration the possibility of a contract being canceled, renewed, or modified.

We occasionally provide credits to customers representing adjustments to the transaction price. Known and estimable credits and adjustments represent a form of variable consideration, which are estimated at contract inception and generally result in reductions to revenues recognized for a particular contract. These estimates are updated at the end of each reporting period as additional information becomes available. We estimate the amount of variable consideration based on its expected probability-weighted value or its most likely amount. We include variable consideration in the transaction price to the extent it is probable there will not be a significant reversal of revenue when the uncertainty with respect to the variable consideration is resolved. We believe that there will not be significant changes to our estimates of variable consideration as of January 31, 2024.

Principal vs Agent Considerations

As part of our revenue recognition process, we evaluate whether we are the principal or agent for the performance obligations in our contracts with customers. When we determine that we are the principal for a performance obligation, we recognize revenue for that performance obligation on a gross basis. When we determine that we are an agent for a performance obligation, we recognize revenue for that performance obligation net of the related costs. In determining whether we are the principal or the agent, we evaluate whether we have control of the services before we transfer the services to the customer by considering whether we are primarily obligated for transferring the services to the customer, whether we have inventory risk for the services before the services are transferred to the customer, and whether we have latitude in establishing prices. We recognize payment processing fees collected from customers as revenue on a gross basis because, as the merchant of record, we control the services before delivery to the customer, we are primarily responsible for the delivery of the services to our customers, we have latitude in establishing pricing with respect to the customer and other terms of service, we have sole discretion in selecting the third-party to perform the settlement, and we assume the credit risk for the transaction processed. We also have the unilateral ability to accept or reject a transaction based on our established criteria.

Business combinations

We use our best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. With the assistance of third-party appraisers, we assess the fair value of the assets acquired in business combinations. The fair value of the acquired licenses and technology was estimated using the relief from royalty method. The fair value of customer relationships was estimated using a multi period excess earnings method. To calculate fair value, we used cash flows discounted at a rate considered appropriate given the inherent risks associated with each client grouping. Our estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. We continue to collect information and reevaluate these estimates and assumptions quarterly and record any adjustments to our estimates to goodwill provided that we are within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.

In connection with the ConnectOnCall acquisition, we recorded deferred consideration liabilities within other current liabilities and other long-term liabilities for amounts payable to the selling shareholders in seven quarterly installments from December 2023 through June 2025. The fair value of our deferred consideration liabilities was determined based on a discount cash flow approach, using the pre-tax cost of debt of 9.3%. In connection with the acquisition of ConnectOnCall, we recorded deferred consideration liabilities with an acquisition-date fair value of $10.0 million. During the fiscal year ended January 31, 2024, we paid $1.6 million against the deferred consideration liabilities. Payments of the deferred consideration liabilities are included in general and administrative expense in our accompanying consolidated statements of operations.

Capitalized internal-use software

We capitalize certain costs incurred for the development of computer software for internal use pursuant to ASC Topic 350-40, Intangibles—Goodwill and Other—Internal use software. These costs relate to the development of our solutions. We capitalize the costs during the development of the project, when it is determined that it is probable that the project will be completed, and the software will be used as intended. Costs related to preliminary project activities, post-implementation activities, training and maintenance are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally three to five years. We evaluate the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. We exercise judgment in determining the point at which various projects may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized. To the extent that we change the manner in which we develop and test new features and functionalities related to our solutions, assess the ongoing value of capitalized assets or determine the estimated useful lives over which the costs are amortized, the amount of internal-use software development costs we capitalize and amortize could change in future periods.

Stock-based compensation for market-based performance stock units ("PSUs")

We granted market-based PSUs during fiscal 2022, 2023 and 2024.

PSUs vest in between 0% and 220% of the number of PSUs originally granted based on our total stockholder return ("TSR"), relative to a peer group of companies on the Russell 3000 stock index. PSUs granted during fiscal 2024, 2023 and 2022 vest in a maximum of 220%, 200% and 200% of the number of PSUs originally granted, respectively. We estimate the fair value of the PSUs using a Monte Carlo Simulation model which projects TSR for Phreesia and each member of the peer group over a performance period of approximately three years. The most critical and judgmental assumptions used in the Monte Carlo Simulation to estimate the fair value of the PSUs are set forth below:

•Correlation coefficient: The correlation coefficient measures the correlation of our stock to the stock of the companies in the peer group. This coefficient is used to project the performance of our stock against our peers to estimate projected performance under the plan.

•Expected volatility: For PSUs granted during the year ended January 31, 2024 and January 31, 2023, the expected volatility is based on the historical volatility of our stock price over a term commensurate with the simulation term assumption. For PSUs granted during the fiscal year ended January 31, 2022, the expected volatility was based on historical volatilities of peer companies within our industry which were commensurate with the simulation term assumption.

We recognize the grant-date fair value of stock-based awards issued as compensation expense on a straight-line basis over the requisite service period, which is generally the vesting period of the award.

Recent accounting pronouncements

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting. The new standard will require us to provide all disclosures required by ASC 280 - Segment Reporting all segment reporting, including a measure of segment profit or loss. The new standard will also require us to disclose the title and position of our Chief Operating Decision Maker. ASU 2023-07 will be effective for our fiscal year ended January 31, 2025 and interim periods within our fiscal year ended January 31, 2026. Early adoption is permitted. We will be required to apply ASU 2023-07 retrospectively to all periods presented.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. ASU 2023-09 will require us to add additional disclosures to our income tax footnote. The new

standard will require us to provide an income tax rate reconciliation in dollars and percent. Additionally, the new standard will require us to disclose any significant impacts of individual jurisdictions on our income tax rate reconciliation and our disclosure of and income taxes paid. The provisions of ASU 2023-09 are effective for annual periods beginning after December 15, 2024; early adoption is permitted.

See Note 3 - Summary of significant accounting policies in Part II - Item 8 of this Annual Report on Form 10-K for a discussion of recent accounting pronouncements.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

We have operations both within the United States and in Canada, and we are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate and foreign exchange risks.

Interest rate risk

As of January 31, 2024, our cash and cash equivalents consisted primarily of money market funds and cash on deposit. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. Because our cash equivalents have a short maturity, our portfolio’s fair value is relatively insensitive to interest rate changes. We do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our financial condition. Changes in interest rates impact the amount of interest income we record on our cash equivalents. In future periods, we will continue to evaluate our investment policy in order to ensure that we continue to meet our overall objectives.

Although we had no debt outstanding under the Capital One Credit Facility as of January 31, 2024, changes in interest rates would affect interest expense if we borrow against the Capital One Credit Facility in the future. Additionally, changes in interest rates will impact the discount rate and resulting interest expense for any new finance leases or financing arrangements.

Foreign currency exchange risk

We have foreign currency risks related to our expenses denominated in Canadian dollars, which are subject to fluctuations due to changes in foreign currency exchange rates. Fluctuations in foreign currency exchange rates may cause us to recognize transaction gains and losses in our statements of operations. To date, foreign currency transaction gains and losses have not been material to our consolidated financial statements.

Item 8. Consolidated Financial Statements and Supplementary Data

PHREESIA, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Balance Sheets as of January 31, 2024 and 2023 77

Notes to Consolidated Financial Statements 82

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

Phreesia, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Phreesia, Inc. and subsidiaries (the Company) as of January 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended January 31, 2024, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended January 31, 2024, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 15, 2024 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Fair value of acquired customer relationships intangible asset

As discussed in Note 16 to the consolidated financial statements, the Company consummated the acquisition of Access eForms, LLC (Access eForms) for $37,411 thousand during the year ended January 31, 2024. The acquisition-date fair value of Access eForms’ customer relationships intangible asset was $10,700 thousand. The fair value of these intangibles was estimated using a multi-period excess earnings method.

We identified the evaluation of the fair value of customer relationships intangible asset acquired through the Access eForms business combination as a critical audit matter. A high degree of subjective auditor judgment was required

to evaluate the attrition rate assumption used to value the customer relationships intangible asset. Specifically, the fair value of the acquired intangible asset was sensitive to possible changes in the attrition rate assumption, requiring the assistance of valuation professionals with specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the attrition rate assumption used in the Company’s valuation. We involved valuation professionals with specialized skills and knowledge, who assisted in (1) evaluating the attrition rate by comparing it against historical attrition rates using historical customer sales data that we assessed for completeness and accuracy, and (2) independently developing a range of attrition rates using the historical customer sales data and comparing it to the Company’s estimate.

/s/ KPMG LLP

We have served as the Company’s auditor since 2019.

Pittsburgh, Pennsylvania

March 15, 2024

Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors

Phreesia, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Phreesia, Inc. and subsidiaries' (the Company) internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of January 31, 2024 and 2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years in the three-year period ended January 31, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated March 15, 2024 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may

become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Pittsburgh, Pennsylvania

March 15, 2024

Phreesia, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

January 31,

Assets

Current:

Deferred contract acquisition costs 768 1,056

Prepaid expenses and other current assets 14,461 10,709

Operating lease right-of-use assets 266 569

Deferred contract acquisition costs 986 1,754

Deferred tax asset — 81

Liabilities and Stockholders’ Equity

Current:

Current portion of finance lease liabilities and other debt 6,056 5,172

Current portion of operating lease liabilities 393 934

Other current liabilities 5,875 —

Long-term finance lease liabilities and other debt 5,400 2,725

Operating lease liabilities, non-current 134 349

Long-term deferred revenue 97 125

Long-term deferred tax liabilities 270 —

Other long-term liabilities 2,857 —

Commitments and contingencies (Note 11)

Stockholders’ Equity:

Total Liabilities and Stockholders’ Equity $ 370,326 $ 370,057

See notes to consolidated financial statements.

Phreesia, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

For the fiscal years ended January 31,

Revenue:

Expenses:

Cost of revenue (excluding depreciation and amortization) 61,025 58,944 42,669

Other income (expense), net 44 (175) (78)

Loss on extinguishment of debt (1,118) — —

See notes to consolidated financial statements.

Phreesia, Inc.

Consolidated Statements of Stockholders’ Equity

(in thousands, except share data)

Stockholders’ Equity

Common stock

Shares Amount Additionalpaid-incapital Accumulateddeficit Treasury stock Total

Stock-based compensation expense — — 29,668 — — 29,668

Stock-based compensation expense — — 52,506 — — 52,506

Stock-based compensation expense — — 63,981 — — 63,981

See notes to consolidated financial statements.

Phreesia, Inc.

Consolidated Statements of Cash Flows

(in thousands)

For the fiscal years ended January 31,

Operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization of deferred financing costs and debt discount 321 310 288

Loss on extinguishment of debt 1,118 — —

Cost of Phreesia hardware purchased by customers 1,619 1,598 672

Deferred contract acquisition costs amortization 1,056 1,696 2,211

Change in fair value of contingent consideration liabilities — — 258

Changes in operating assets and liabilities:

Deferred contract acquisition costs — (427) (3,349)

Investing activities:

Acquisitions, net of cash acquired (14,573) — (34,423)

Financing activities:

Constructive financing 1,688 — —

Principal payments on financing agreements (600) (216) (1,039)

Debt issuance costs and loan facility fee payments (1,321) (397) (125)

Financing payments of acquisition-related liabilities (1,333) — (3,286)

Debt extinguishment costs (758) — —

Supplemental information of non-cash investing and financing activities:

Property and equipment acquisitions through finance leases $ 7,438 $ 526 $ 7,394

Receivables for cash in-transit on stock option exercises $ — $ 97 $ 169

Capitalized stock based compensation $ 1,415 $ 1,372 $ 489

Issuance of stock as consideration in business combination $ 35,321 $ — $ —

Capitalized software acquired through vendor financing $ 2,047 $ — $ —

Cash paid for:

See notes to consolidated financial statements.

Phreesia, Inc.

Notes to Consolidated Financial Statements

(in thousands, except share and per share data)

1. Background and liquidity

(a) Background

Phreesia, Inc. (the "Company") is a leading provider of comprehensive software solutions that improve the operational and financial performance of healthcare organizations and improve health outcomes by helping patients take a more active role in their care. The Company's solutions include SaaS-based integrated tools that manage patient access, registration and payments. Additionally, the Company has tools to communicate with patients about their health that have demonstrated increased rates of preventive care and vaccinations. Additionally, Phreesia's solutions include clinical assessments to screen patients for a variety of physical, behavioral and mental health conditions, helping providers to better understand their patients and connect them to needed services, resulting in improved health outcomes. The Company also provides life sciences companies, health plans and other payer organizations (payers), patient advocacy, public interest and other not-for-profit organizations with a channel for direct communication with patients. Phreesia's solutions also include additional products and services such as the MediFind provider directory, which helps patients find care based on providers' specific clinical expertise. Phreesia offers its healthcare services clients the ability to lease tablets ("PhreesiaPads") and on-site kiosks ("Arrivals Kiosks") along with their monthly subscription. The Company was formed in May 2005.

b) Liquidity

Since the Company commenced operations, it has not generated sufficient revenue to meet its operating expenses and has continued to incur significant net losses. To date, the Company has primarily relied upon the proceeds from issuances of common stock, debt and preferred stock to fund its operations as well as sales of Company products and services in the normal course of business. Management believes that net losses and negative cash flows will continue for at least the next year.

On December 4, 2023, the Company entered into a credit agreement with Capital One N.A. containing a senior secured asset-based revolving credit facility with an available borrowing capacity of up to $50.0 million (the “Capital One Credit Facility”). On December 4, 2023, the Company also terminated the Third SVB Facility. See Note 6 - Finance Leases and other debt for additional information regarding the Capital One Credit Facility and the termination of the Third SVB Facility.

Management believes that the Company’s cash and cash equivalents at January 31, 2024, along with cash generated in the normal course of business and available borrowing capacity under the Capital One Credit Facility, are sufficient to fund its operations for at least the next 12 months.

The Company may seek to obtain additional financing, if needed, to successfully implement its long-term strategy.

2. Basis of presentation

(a) Consolidated financial statements

The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States ("GAAP") and regulations of the Securities and Exchange Commission ("SEC") regarding annual financial reporting and include the accounts of Phreesia, Inc; its branch operation in Canada and its consolidated subsidiaries (or collectively, the "Company").

(b)Fiscal year

The Company’s fiscal year ends on January 31. References to fiscal 2024, 2023 and 2022 refer to the fiscal years ending on January 31, 2024, 2023 and 2022, respectively.

3. Summary of significant accounting policies

(a) Use of estimates

The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and

expenses during the reporting period. Actual results could differ from those estimates. The most significant assumptions and estimates relate to the allowance for doubtful accounts, capitalized internal-use software, the determination of the useful lives of property and equipment, the fair value of securities underlying stock-based compensation, the fair value of identifiable assets and liabilities and deferred consideration in business acquisitions.

(b) Revenue recognition

The Company evaluates its contractual arrangements to determine the performance obligations and transaction prices. Revenue is allocated to each performance obligation and recognized when the related performance obligations are satisfied. See Note 5 for additional information regarding ASC 606, Revenue from Contracts with Customers, as well as for additional details about the Company's products and service lines.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and settlement assets. The Company’s cash and cash equivalents are held by established financial institutions. The Company does not require collateral from its customers and generally requires payment within 30 to 60 days of billing. Settlement assets are amounts due from well-established payment processing companies and normally take one or two business days to settle which mitigates the associated risk of concentration. The Company uses one third-party payment processor.

The Company’s customers are primarily healthcare services organizations located in the United States as well as pharmaceutical companies. The Company did not have any individual customers that represented more than 10% of total revenues for the years ended January 31, 2024, 2023 and 2022. As of both January 31, 2024 and January 31, 2023, the Company had receivables from at least one entity that accounted for at least 10% of total accounts receivable.

(d) Risks and uncertainties

The Company is subject to a variety of risk factors, including the economy, data privacy and security laws and government regulations. Additionally, the Company is subject to other risks associated with the markets in which it operates including reliance on third-party vendors, partners, and service providers. The Company supplements its workforce with contractors and consultants, including a substantial number of contractors and consultants in international locations. Certain of the Company's service providers, including certain third-party software developers, are located in international locations subject to warfare and/or political and economic instability, such as Ukraine and India. As with any business, operation of the Company involves risk, including the risk of service interruption impacting the operations of the Company's business and the Company's customer’s facilities below expected levels of operation, shut downs due to the breakdown or failure of information technology and communications systems, changes in laws or regulations, political and economic instability, or catastrophic events such as fires, earthquakes, floods, explosions, global health concerns such as pandemics or other similar occurrences affecting the delivery of our productions and services. The occurrence of any of these events could significantly reduce or eliminate revenues generated, or significantly increase the expenses of the Company's operations, adversely impacting the Company’s operating results and the Company's ability to meet the Company's obligations and commitments. See Note 6 - Finance leases and other debt and Note 11 - Commitments and contingencies, for a summary of our contractual commitments as of January 31, 2024.

(e) Cost of revenue (excluding depreciation and amortization)

Cost of revenue (excluding depreciation and amortization) primarily consists of personnel expenses for implementation and technical support, infrastructure costs for operation of our solutions such as hosting fees, and certain fees paid to various third-party providers for the use of their technology, as well as costs to verify insurance eligibility and benefits. Personnel expenses consist of salaries, stock-based compensation and benefits.

(f) Payment processing expense

Payment processing expense consists primarily of interchange fees set by payment card networks that are ultimately paid to the card-issuing financial institution, and assessment fees paid to payment card networks, and fees paid to third-party payment processors and gateways.

(g) Sales and marketing

third-party partners for sales lead generation. Advertising is expensed as incurred. Advertising expense was $1,900, $2,634 and $4,007 for the fiscal years ended January 31, 2024, 2023 and 2022, respectively.

(h) Research and development

Research and development expense consists of costs for the design, development, testing and enhancement of the Company’s products and services that do not meet the criteria for capitalization as internal-use software. These costs consist primarily of personnel costs, including salaries, stock-based compensation and benefits for our development personnel. Research and development expense also includes third-party partner fees and third-party consulting fees.

(i) General and administrative

General and administrative expense consists primarily of personnel costs, including salaries, stock-based compensation and benefits for our executive, finance, legal, human resources, information technology, and other administrative personnel. General and administrative expense also includes consulting, legal, security, accounting services and allocated overhead.

(j)Depreciation

Depreciation represents depreciation expense for PhreesiaPads and Arrivals Kiosks (collectively, Phreesia hardware), data center and other computer hardware, purchased computer software, furniture and fixtures and leasehold improvements.

(k) Amortization

Amortization primarily represents amortization of our capitalized internal-use software related to the Company's solutions as well as amortization of acquired intangible assets.

(l) Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. The Company's money market accounts meet the definition of cash equivalents.

(m) Settlement assets

Settlement assets represent amounts due from the Company’s payment processor for customer electronic processing transactions. Settlement assets are typically settled within one to two business days of the transaction date.

(n) Settlement obligations

Settlement obligations represent amounts due to customers for electronic processing transactions that have not been funded by the Company due to timing of settlement from the Company’s payment processor.

(o) Accounts receivable

Accounts receivable represent trade receivables, net of allowances for doubtful accounts. The Company estimates the allowance for doubtful accounts as its current estimate of expected credit loss over the life of the instrument. The Company determines the allowance based on historical trends of accounts receivable balances that have been written off and specific account analysis of at-risk customers, the length of time accounts are past due, a customer's current ability to pay its obligations to the Company, the condition of the industry as a whole, as well as expected future changes in credit losses. Accounts receivable are written off at the point that internal collections efforts have been exhausted. As of January 31, 2024 and 2023, the Company has reserved $1,392 and $1,053, respectively, for the allowance for doubtful accounts.

Accounts receivable also includes unbilled accounts receivable (see Contract balances in Note 5(f)).

(p) Property and equipment

Property and equipment, including PhreesiaPads and Arrivals Kiosks, are stated at cost less accumulated depreciation. Depreciation of property and equipment is computed using the straight-line method over the estimated useful lives of the related assets. The estimated useful lives of the Company’s property and equipment have been estimated to be between three and seven years. Maintenance and repair costs are charged to operations as incurred while expenditures for major improvements are capitalized.

Upon sale or disposition of property and equipment, the cost and related accumulated depreciation are removed from their respective accounts and any gain or loss is reflected in the consolidated statements of operations.

(q) Capitalized internal-use software

The Company capitalizes certain costs incurred for the development of computer software for internal use pursuant to ASC 350-40, Intangibles—Goodwill and Other—Internal use software. These costs relate to the development of its solutions. The Company capitalizes the costs during the development of the project, when it is determined that it is probable that the project will be completed, and the software will be used as intended. Costs related to preliminary project activities, post-implementation activities, training and maintenance are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally three to five years. Management evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. The Company exercises judgment in determining the point at which various projects may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized. To the extent that the Company changes the manner in which it develops and tests new features and functionalities related to its solutions, assesses the ongoing value of capitalized assets or determines the estimated useful lives over which the costs are amortized, the amount of internal-use software development costs the Company capitalizes and amortizes could change in future periods. Refer to Note 4(d) for further detail on internal-use software costs capitalized during the period.

(r) Business combinations

The Company uses its best estimates and assumptions to accurately assign fair value to the tangible and intangible assets acquired and liabilities assumed at the acquisition date. The Company’s estimates are inherently uncertain and subject to refinement. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the fair value of these tangible and intangible assets acquired and liabilities assumed, with the corresponding offset to goodwill. The Company continues to collect information and reevaluate these estimates and assumptions quarterly and records any adjustments to its estimates to goodwill provided that the Company is within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statement of operations.

When applicable, the consideration transferred for business combinations includes the acquisition-date fair value of deferred consideration liabilities. The Company recognizes interest expense to accrete deferred consideration liabilities to their settlement amount.

(s) Goodwill and intangible assets

Goodwill represents the excess of the consideration transferred over the fair value of the underlying net tangible and intangible assets acquired and liabilities assumed in connection with business combinations accounted for using the acquisition method of accounting. Goodwill is not amortized, but instead goodwill is required to be tested for impairment annually and under certain circumstances. We perform such testing of goodwill in the fourth quarter of each fiscal year, or as events occur or circumstances change that would more likely than not reduce the fair value below its carrying amount.

The testing of goodwill is performed at the reporting unit level. The Company’s reporting unit is the same as its operating segment. The test begins with a qualitative assessment to determine whether it is “more likely than not” that the fair value of the reporting unit is less than its carrying amount. If it is concluded that it is “more likely than not” that the fair value of a reporting unit is less than its carrying amount, the Company performs a quantitative goodwill impairment test by calculating the fair value of the reporting unit and comparing that fair value to the carrying value of the reporting unit. If the estimated fair value of the reporting unit is less than its carrying amount, the Company records a goodwill impairment to reduce the carrying amount of goodwill by the amount by which the fair value of the reporting unit is less than its carrying amount.

All other intangible assets associated with purchased intangibles, consisting of customer relationships, acquired technology, acquired trademarks and acquired licenses, are recorded at acquisition-date fair value less accumulated amortization and are amortized on a straight-line basis over their estimated remaining economic lives.

(t) Long-lived assets

Long-lived assets, such as property and equipment, intangible assets, capitalized internal-use software and operating lease right-of-use assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares the undiscounted cash flows expected to be generated by that asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that

the carrying value exceeds its fair value. There were no impairment charges recognized in the consolidated statements of operations during any of the periods presented.

(u) Income taxes

An asset and liability approach is used for financial accounting and reporting of current and deferred income taxes. Deferred income tax assets and liabilities are computed for temporary differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future. Such deferred income tax asset and liability computations are based on enacted tax laws and rates applicable to periods in which the differences are expected to affect taxable income or loss. Valuation allowances are established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company follows the guidance in ASC 740, Accounting for Uncertainty in Income Taxes. ASC 740 clarifies the accounting for uncertainty in income taxes recognized in a Company’s financial statements and prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in the interim periods, and disclosure.

The Company reviews and evaluates tax positions in its major jurisdictions and determines whether or not there are uncertain tax positions that require financial statement recognition and the recording of a tax liability or the reduction of a tax asset. The Company would recognize tax related interest and penalties, if applicable, as a component of its provision for income taxes.

(v) Segment information

Operating segments are defined as components of an enterprise about which separate financial information is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company defines the term “chief operating decision maker” to be its Chief Executive Officer. The Company’s Chief Executive Officer reviews the financial information presented on an entire company basis for purposes of allocating resources and evaluating our financial performance. Accordingly, we have determined that we operate in a single reportable operating segment. Additionally, substantially all of the Company's revenues and long-lived assets are located in the U.S. Since the Company operates in one operating segment and substantially all of the Company's revenues and long-lived assets are located in the U.S., all required financial segment information can be found in the accompanying consolidated financial statements.

(w) Stock-based compensation

The Company has stock-based compensation plans under which various types of equity-based awards are granted, including stock options, restricted stock units ("RSUs"), performance-based RSUs, and market-based performance stock units ("PSUs"). The compensation for the stock-based awards is recognized in accordance with ASC 718, Compensation — Stock Compensation, which requires that compensation cost be recognized for awards based on the grant-date fair value of the award. That cost is recognized on a straight-line basis over the requisite service period, which is generally the vesting period of the award. For performance-based RSUs, the number of shares expected to vest is estimated at each reporting date based on management's expectations regarding the relevant performance criteria. The Company adjusts stock compensation expense for forfeitures of stock-based compensation awards in the periods the forfeitures occur.

The fair value of stock options is estimated at the time of grant using the Black-Scholes option pricing model, which requires the use of inputs and assumptions such as the exercise price of the option, expected term, risk-free interest rate, expected volatility and dividend yield, and the value of the Company's common stock (which is estimated for awards granted prior to our IPO). The Company does not estimate forfeitures in recognizing stock-based compensation expense. The fair value of the RSUs is equal to the fair value of the Company's common stock on the grant date of the award. The fair value of market-based PSUs is estimated at the time of grant using a Monte Carlo simulation which compares Phreesia's projected total shareholder return ("TSR") to the projected TSR of the Russell 3000 Index (the "Peer Group") and estimates the value of shares to be issued based on the vesting conditions of the PSUs. The Monte Carlo simulation requires the use of inputs and assumptions such as the grant-date closing stock price, simulation, expected volatility, correlation coefficient to the Russell 3000 Index, risk-free interest rate and dividend yield.

During fiscal 2022, the Company adopted the Phreesia, Inc. 2019 Employee Stock Purchase Plan ("ESPP" or "the Plan"). The Company will record compensation expense based on the grant date fair value per award granted multiplied by the number of awards granted to the employee for the purchase period. The number of awards granted to the employee for the purchase period is equal to the expected employee contributions divided by 85% of the closing stock price on the offering date.

For liability-classified performance based stock bonus awards, at the beginning of the year, the Company offers eligible employees the option to elect to receive their year-end performance bonus in stock. Bonuses settled in stock are accounted for as stock-based compensation awards vesting based on a performance condition and are classified as liabilities because they represent a liability settled in a variable number of shares.

During fiscal 2023, the Company adopted the 2023 Inducement Award Plan (the "Inducement Plan"). The Inducement Plan allows the Company to grant equity-based incentive awards including stock options, RSUs and PSUs to employees of acquired companies to induce them to join the Company.

See Note 8 - Equity-based compensation, for additional information on stock-based compensation.

(x) Fair value of financial instruments

Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the exchange price that would be received for the sale of an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are required to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable:

Level 1—Quoted prices in active markets for identical assets or liabilities.

Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market.

Level 3—Unobservable inputs which are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

(y) Equity offering costs

The Company capitalizes certain legal, accounting and other third-party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs will be recorded in stockholders’ equity as a reduction of additional paid-in capital generated as a result of the offering, to the extent there are sufficient proceeds. Should the equity financing no longer be considered probable of being consummated, all deferred offering costs would be charged to operating expenses in the accompanying consolidated statement of operations.

(z) Foreign currency

The Company has a branch office in Canada that provides operational support. The functional currency of the Company’s foreign branch is the U.S. dollar. Accordingly, assets and liabilities of the Company’s foreign branch are re-measured into U.S. dollars at the exchange rates in effect at the reporting date with differences recorded as transaction gains and losses within other income (expense), net.

(aa) New accounting pronouncements

Impact of recently adopted accounting pronouncements

During the year endedJanuary 31, 2024, the Company did not adopt any accounting pronouncements that materially impacted the Company's financial statements.

Recent accounting pronouncements not yet adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2023-07, Segment Reporting. The new standard requires enhanced disclosures about significant segment expenses and other segment items and requires companies to disclose all annual disclosures about segments in interim periods. The new standard also permits companies to disclose more than one measure of segment profit or loss, requires disclosure of the title and position of the Chief Operating Decision Maker, and requires companies with a single reportable segment to provide all disclosures required by Topic 280 – Segment Reporting. The new standard is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Companies are required to apply ASU 2023-07

retrospectively to all periods presented. The Company is currently evaluating the impact that ASU 2023-07 will have on its financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The provisions of ASU 2023-09 are effective for annual periods beginning after December 15, 2024; early adoption is permitted. The Company is currently evaluating the impact that ASU 2023-09 will have on its financial statements and related disclosures.

4. Composition of certain financial statement captions

(a) Accrued expenses

Accrued expenses at January 31, 2024 and 2023 are as follows:

January 31,

Payroll-related expenses and taxes $ 8,981 $ 4,461

Stock-based compensation liability 5,890 5,884

Payment processing fees liability 6,008 4,796

Acquisition-related liabilities 1,888 96

Income and other tax liabilities 3,042 1,491

Information technology services 5,927 2,249

(b) Other current liabilities and other long-term liabilities

Other current liabilities and other long-term liabilities as of January 31, 2024 were $5,875 and $2,857, respectively. There were no other current liabilities and other long-term liabilities recorded as of January 31, 2023.

Other current liabilities and other long-term liabilities represent deferred consideration liabilities payable to the former equity holders of ConnectOnCall. See Note 16 - Acquisitions for additional information regarding the acquisition of ConnectOnCall.

Property and equipment at January 31, 2024 and 2023 are as follows:

Useful life(years) January 31,

Depreciation expense related to property and equipment amounted to $17,584, $17,988 and $14,985 for the fiscal years ended January 31, 2024, 2023 and 2022, respectively.

Assets acquired under finance leases included in computer equipment were $35,250 and $27,813 at January 31, 2024 and 2023, respectively. Accumulated amortization of assets under finance leases was $27,399 and $20,657 at January 31, 2024 and 2023, respectively. See Note 10 - Leases for additional information regarding finance leases.

(d) Capitalized internal-use software

For the fiscal years ended January 31, 2024, 2023 and 2022, the Company capitalized $19,521, $23,604 and $12,830 of costs related to the Company's solutions, respectively.

During the fiscal years ended January 31, 2024, 2023 and 2022 amortization expense related to capitalized internal-use software was $9,527, $5,945 and $5,664, respectively.

(e) Intangible assets and goodwill

On June 30, 2023, the Company entered into an agreement to acquire Comsort, Inc. d/b/a MediFind ("MediFind") (the "MediFind Acquisition"). The Company acquired certain intangible assets and goodwill in connection with the MediFind Acquisition. See Note 16 - Acquisitions for additional information regarding the MediFind Acquisition.

On August 11, 2023, the Company entered into an agreement to acquire Access eForms, LLC ("Access") (the "Access Acquisition"). The Company acquired certain intangible assets and goodwill in connection with the Access Acquisition. See Note 16 - Acquisitions for additional information regarding the Access Acquisition.

On October 3, 2023, the Company entered into an agreement to acquire ConnectOnCall.com, LLC ("ConnectOnCall") (the "ConnectOnCall Acquisition"). The Company acquired certain intangible assets and goodwill in connection with the ConnectOnCall Acquisition. See Note 16 - Acquisitions for additional information regarding the ConnectOnCall Acquisition.

The tables set forth below include intangible assets and goodwill acquired in all of the Company's acquisitions.

The following presents the details of intangible assets as of January 31, 2024 and 2023.

Useful Life January 31,

Total intangible assets, gross carrying value $ 36,550 $ 13,950

Less: accumulated amortization (4,925) (2,549)

The weighted average remaining useful life for acquired technology in years was 6.0 and 2.7 as of January 31, 2024 and 2023, respectively. The remaining useful life for customer relationships in years was 12.4 and 8.3 as of January 31, 2024 and 2023, respectively. The remaining useful life for the license to the Patient Activation Measure ("PAM"®) in years was 12.8 and 13.8 as of January 31, 2024 and 2023, respectively. The remaining useful life for the trademarks in years was 14.5 as of January 31, 2024.

Amortization expense associated with intangible assets for the fiscal years ended January 31, 2024, 2023 and 2022 was $2,376, $1,371 and $653, respectively.

The estimated amortization expense for intangible assets for the next five years and thereafter is as follows as of January 31, 2024:

The following table presents a roll-forward of goodwill for the years ended January 31, 2023 and 2024:

Goodwill acquired during the year ended January 31, 2024 42,109

During the quarter ended October 31, 2023, the Company completed its quarterly triggering event assessments and determined that the decline in the market value of its publicly-traded stock, which resulted in a corresponding decline in its market capitalization, constituted a triggering event. Due to the decline in the Company’s market capitalization during the quarter ended October 31, 2023 the Company evaluated whether changes in the Company’s market capitalization indicated that the carrying value of goodwill in the Company’s single reporting unit was impaired. As of October 31, 2023, the Company’s market capitalization exceeded the carrying value of the Company’s equity by over 100%. As a result, the Company did not believe that changes in the Company’s market capitalization during the quarter ended October 31, 2023 indicated that that the carrying amount of the Company’s goodwill was impaired as of October 31, 2023.

As of January 31, 2024, the Company's market capitalization also exceeded the carrying amount of the Company's equity by over 100%. As a result, the Company does not believe that the Company’s goodwill is impaired as of January 31, 2024. No other triggering events occurred during fiscal 2024.

The Company did not record any impairments of goodwill during the years ended January 31, 2024, 2023 or 2022.

Additions to goodwill during the year ended January 31, 2023 represent measurement period adjustments for the acquisition of Insignia Health, LLC (the "Insignia Acquisition"). Substantially all of the Company's goodwill is amortizable for tax purposes.

(f) Accounts receivable

Accounts Receivable as of January 31, 2024 and 2023 are as follows:

January 31,

Less: accounts receivable allowances (1,392) (1,053)

Activity in the Company's allowance for doubtful accounts was as follows for the years ended January 31, 2024 and 2023:

Bad debt expense 587

Write-offs and adjustments (397)

Bad debt expense 377

Increases due to acquisitions 681

Write-offs and adjustments (719)

The Company’s allowance for doubtful accounts represents the current estimate of expected future losses based on prior bad debt experience as well as considerations for specific customers as applicable. The Company's accounts receivable are considered past due when they are outstanding past the due date listed on the invoice to the customer. The Company writes off accounts receivable and removes the associated allowance for doubtful accounts when the Company deems the receivables to be uncollectible.

(g) Prepaid and other current assets

Prepaid and other current assets as of January 31, 2024 and 2023 are as follows:

January 31,

Prepaid software and business systems $ 4,922 $ 3,426

Other prepaid expenses and other current assets 4,410 3,342

Total prepaid and other current assets $ 14,461 $ 10,709

(h) Cloud computing implementation costs

The Company enters into cloud computing service contracts to support its sales and marketing, product development and administrative activities. The Company capitalizes certain implementation costs for cloud computing arrangements that meet the definition of a service contract. The Company includes these capitalized implementation costs within prepaid expenses and other current assets and within other assets on its consolidated balance sheets. Once placed in service, the Company amortizes these costs over the remaining subscription term to the same caption in the consolidated statements of operations as the related cloud subscription. Capitalized implementation costs for cloud computing arrangements accounted for as service contracts were $1,532 as of January 31, 2024 and 2023. Accumulated amortization of capitalized implementation costs for these arrangements was $1,021 and $610 as of January 31, 2024 and 2023, respectively.

5. Revenue and contract costs

The Company generates revenue primarily from providing integrated SaaS-based software and payment solutions for the healthcare industry. The Company derives revenue from subscription fees and related services generated from the Company’s healthcare services clients for access to the Company's solutions, payment processing fees based on patient payment volume, and fees from life sciences and payer clients for delivering qualified direct communications to patients who voluntarily opt in to receive this type of engagement using the Company's solutions.

The Company accounts for revenue from contracts with customers by applying the requirements of ASC 606. Accordingly, the Company determines revenue recognition through the following steps:

•identification of the contract, or contracts, with a customer;

•identification of the performance obligations in the contract;

•determination of the transaction price;

•allocation of the transaction price to the performance obligations in the contract; and

•recognition of revenue when, or as, the Company satisfies a performance obligation.

Revenues are recognized when control of these services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those services.

The majority of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately when they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines the standalone selling prices based on our overall pricing objectives, taking into consideration market conditions, historical pricing information as priced in previous bundled contracts, as well as other factors such as product, customer type and geographic area. We typically establish a range of SSPs for each of our performance obligations. We use the residual method to the estimate the SSP for certain performance obligations with highly variable pricing.

(a) Subscription and related services

In most cases, the Company generates subscription fees from clients based on the number of healthcare services clients that utilize the Company's solutions and subscription fees for the Company’s self-service intake tablets (PhreesiaPads), on-site kiosks (Arrivals Kiosks) and any other solutions. The Company’s healthcare services clients are typically billed monthly in arrears, though in some instances healthcare services clients may opt to be billed monthly, quarterly or annually in advance. Subscription fees are typically auto-debited from client’s accounts every month. Revenue for healthcare services client subscriptions is recognized over the term of the respective healthcare services client contract. Substantially all of the Company’s subscription arrangements are considered service

contracts, and the customer does not have the right to take possession of the software. Revenue for related services is recognized as it is delivered if the services are distinct from the subscription service and is recognized over the remaining non-cancelable subscription term if it is not distinct from the subscription service. In certain arrangements, the Company leases its PhreesiaPads and Arrivals Kiosks through operating leases to its customers. Accordingly, these revenue transactions are accounted for using ASC 842, Leases.

The amount of subscription and related services revenues recorded pursuant to ASC 842 for the leasing of the Company’s PhreesiaPads and Arrivals Kiosks was $10,307, $10,197 and $6,489 for the years ended January 31, 2024, 2023 and 2022, respectively.

In addition, subscription and related services includes certain fees from clients for professional services associated with implementation services as well as travel and expense reimbursements, shipping and handling fees, sales of Phreesia hardware (PhreesiaPads and Arrivals Kiosks), on-site support and training. Certain professional services for implementation are not distinct from the Company's solutions and are therefore recognized over the term of the contract. Revenue from sales of distinct professional services, Phreesia hardware and training are recognized in the period they are delivered to clients.

(b) Payment processing fees

The Company generates revenue from payment processing fees based on the levels of patient payment volume resulting from credit and debit card transactions (dollar value and number of card transactions) processed through Phreesia’s payment facilitator model. Payment processing fees are generally calculated as a percentage of the total transaction dollar value processed and/or a fee per transaction. The remainder of patient payment volume is composed of credit and debit card transactions for which Phreesia acts as a gateway to payment processors, and cash and check transactions.

The Company recognizes the payment processing fees when the transaction occurs (i.e., when the processing services are completed). The transaction amount is collected from the cardholder’s bank via the Company’s third-party payment processing partner and the card networks. The transaction amount is then remitted to its customers approximately two business days after the transaction occurs. At the end of each month, the Company bills its customers for any payment processing fees owed per its customer contractual agreements. Similarly, at the end of each month, the Company remits payments to third-party payment processors and financial institutions for interchange and assessment fees, processing fees, and bank settlement fees.

The Company acts as the merchant of record for its customers and works with payment card networks and banks so that its customers do not need to manage the complex systems, rules, and requirements of the payment industry. The Company satisfies its performance obligations and therefore recognizes the transaction fees as revenue upon completion of a transaction. Revenue is recognized net of refunds, which arise from reversals of transactions initiated by the Company’s customers.

The payment processing fees collected from customers are recognized as revenue on a gross basis as the Company is the principal in the delivery of the managed payment solutions to the customer. The Company has concluded it is the principal because as the merchant of record, it controls the services before delivery to the customer, it is primarily responsible for the delivery of the services to its customers, it has latitude in establishing pricing with respect to the customer and other terms of service, it has sole discretion in selecting the third-party to perform the settlement, and it assumes the credit risk for the transaction processed. The Company also has the unilateral ability to accept or reject a transaction based on criteria established by the Company.

As the merchant of record, the Company is liable for settlement of the transactions processed and, accordingly, such costs are included in payment processing fees expense on the accompanying statements of operations.

The Company's Network solutions revenue includes fees from life sciences companies and payers for qualified direct communications to activate, engage and educate patients who voluntarily opt in to receive this type of engagement about topics critical to their health using the solutions.

The Company generates revenue from sales of digital marketing solutions to life sciences companies which is based largely on the delivery of messages at a contracted price per message to patients. Messaging campaigns are sold for a specified number of messages delivered to qualified patients over an expected time frame. Revenue is recognized as the messages are delivered.

The Company generates revenue from sales of qualified leads to health plans and other payer organizations which is based largely on the delivery of qualified leads to health plans and other payer organizations at a contracted price

per lead. The Company identifies the qualified leads based on direct communications delivered to patients. Revenue for leads is recognized based on our estimate of leads accepted by health plans and other payer organizations.

(d) Disaggregation of revenue

Revenue from the Company’s contracts with its customers are disaggregated by service offering on the accompanying consolidated statements of operations. The Company’s core service offerings are subscription and related services, payment processing fees, digital marketing solutions sold to life sciences companies and qualified leads sold to health plans and other payer organizations. In addition, substantially all of the Company’s revenue is derived from customers in the United States.

(e) Remaining performance obligations

The Company does not disclose the value of unsatisfied performance obligations as the majority of its contracts relate to either contracts with an original term of one year or less or contracts with variable consideration (i.e., the Company’s payment processing fees revenue).

(f) Contract balances

Unbilled accounts receivable is a contract asset related to the delivery of the Company’s subscription and related services and for its life sciences revenue for which the related billings will occur in a future period. Contract assets and contract liabilities are reported on a net basis for each customer contract. Deferred revenue is a contract liability primarily related to billings in advance of revenue recognition from the Company's subscription and life sciences services and, to a lesser extent, professional services and other revenues described above. Deferred revenue is recognized as the Company satisfies its performance obligations. The Company generally invoices its customers in monthly or quarterly installments for subscription services. Accordingly, the deferred revenue balance does not generally represent the total contract value of a subscription arrangement. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue on the accompanying consolidated balance sheets. Deferred revenue that will be recognized subsequent to the succeeding 12-month period is recorded as long-term deferred revenue on the accompanying consolidated balance sheets.

The following table represents a roll-forward of contract assets:

January 31,

Contract asset additions, net of reclassification to receivables 3,375 989

The following table represents a roll-forward of deferred revenue:

January 31,

Deferred revenue added from acquisitions 5,665 —

Other current year activity in deferred revenue 18,120 17,260

(g) Cost to obtain a contract

PHR US Equity

PHR · 10-K · period ended 2024-01-31

Item 7. Management’s discussion and analysis of financial condition and results of operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Consolidated Financial Statements and Supplementary Data

PHR US Equity☆

PHR · 10-K · period ended 2024-01-31

Item 7. Management’s discussion and analysis of financial condition and results of operations

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Item 8. Consolidated Financial Statements and Supplementary Data

PHR US Equity