Phreesia (PHR) is at the focal point towards the transition to improved healthcare outcomes via patient-driven digital solutions, having partnered with the American Academy of Pediatrics to raise awareness around MMR vaccination. The company recently beat top-and-bottom-line expectations for Q2 and is optimistic about its further growth. Moreover, PHR expects the average number of clients producing monthly subscription revenue (AHSCs) to reach approximately 4,200 for fiscal 2025 and 4,500 for fiscal 2026.
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Phreesia’s shift towards profitable growth positions it well to drive significant margin expansion in the coming years, making it an intriguing growth-oriented investment opportunity in healthcare services.
Phreesia Achieves Important Landmark
Phreesia is a SaaS-based company that offers a comprehensive software and payment platform to the healthcare industry in the U.S. and Canada. The company’s suite of access solutions includes an appointment scheduling system and a patient self-registration system. Clientele includes single-specialty practices, health systems, pharmaceutical, medical device, and biotechnology companies.
The company achieved a significant landmark by attaining positive free cash flow in the second quarter of fiscal 2025. The company states that this achievement marks the start of a new era for Phreesia, enabling it to utilize internally generated cash to augment stakeholder value. While nominal, the transition to positive free cash flow serves to confirm Phreesia’s operational efficiency and ongoing growth.
In another significant development, Phreesia recently partnered with the American Academy of Pediatrics in the second quarter of fiscal 2025, launching a public health campaign to increase awareness about the importance of measles, mumps, and rubella (MMR) vaccination.
Phreesia’s Recent Financial Results & Outlook
The company recently reported results for Q2 FY2025. Revenue was $102.1 million, beating analysts’ expectations by $0.46 million while marking a 19% year-over-year increase. The primary contributors to growth were Subscription and related services, with a 24% increase, followed by Network solutions at 23%, with Payment processing fees seeing a modest growth of 7% year-over-year. Net cash provided by operating activities came in at $11.1 million, a significant $20.4 million improvement from the same quarter the previous year.
These results helped to deliver earnings per share (EPS) of -$0.31, exceeding consensus expectations by $0.04.
As of the quarter’s end, the company reported cash and cash equivalents of $81.8 million. Management indicated that the current cash and cash equivalents balance, along with cash generated in the normal course of business, gives the company sufficient flexibility to hit its targets for fiscal 2025 and to continue with growth in fiscal 2026.
Following these promising results, PHR’s management has issued guidance for fiscal 2025, projecting revenue of $416 million to $426 million, indicating year-over-year growth of 17% to 20%. The Adjusted EBITDA outlook has been updated from $26 million to $31 million, reflecting the strong performance in the fiscal second quarter and an ongoing emphasis on margin improvement. The number of AHSCs is expected to reach approximately 4,200 in 2025 and 4,500 in fiscal 2026, with a projected increase in total revenue per AHSC for both years compared to previous fiscal years.
What Is the Price Target for PHR Stock?
The stock has been volatile, with a beta of 2.24, as it climbed 26% over the past year. It trades in the upper third of its 52-week price range of $12.05 – $29.16 and shows positive price momentum, trading above its 20-day (24.22) and 50-day (23.60) moving averages. The company’s growth prospects are reflected in the share price, as the P/S ratio of 3.5x is a premium to the Health Information Services industry average of 2.3x.
Analysts covering the company have been bullish on PHR stock. Based on the recommendations and price targets assigned by 11 analysts, Phreesia is rated a Strong Buy. The average price target for PHR stock is $29.30, representing a potential upside of 18.67% from current levels.
PHR in a Nutshell
With solid financials and robust strategic partnerships, Phreesia’s innovative efforts in SaaS-based health solutions point to a promising future. The company has set new benchmarks for success, proving operational efficiency and making notable strides toward crucial health initiatives. Phreesia is a compelling choice, bringing together the best healthcare services and technological innovation, making PHR an intriguing option for investors seeking profitable growth in the sector.
