Good morning, ladies and gentlemen, and welcome to the Freesia Second Quarter Fiscal 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will provide instructions for the question and answer session to follow. First, I would like to introduce Balaji Gandhi, Freesia's Chief Financial Officer. Mr. Gandhi, you may begin.

Thank you, Operator. Good morning and welcome to Freesia's Earnings Conference Call for the second quarter of fiscal 2026, which ended on July 31st of 2025. Joining me on today's call is Haim Indig, our Chief Executive Officer. A more complete discussion of our results can be found in our earnings press release and in our related Form 8K submission to the SEC, including our quarterly stakeholder letter, both issued after the markets closed today. These documents are available on the investor relations section of our website at ir.freesia.com. As a reminder, today's call is being recorded and a replay will be available on our investor relations website at ir.freesia.com following the conclusion of the call. During today's call, we may make forward-looking statements, including statements regarding trends, our anticipated growth, our strategies, predictions about our industry, and the anticipated performance of our business, including our outlook regarding future financial results and acquisitions. Forward-looking statements are subject to various risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to differ materially from those described in our forward-looking statements. Such risks are described more fully in our earnings press release, our stakeholder letter, and our risk factors included in our SEC filings, including in our quarterly report on Form 10-Q that will be filed with the SEC tomorrow. The forward-looking statements made on this call will be based on our current views and expectations and speak only as of the date on which the statements are made. We undertake no obligation to update and expressly disclaim the obligation to update these forward-looking statements to reflect events or circumstances after the date of this call or to reflect new information or the occurrence of unanticipated events. We may also refer to certain financial measures not in accordance with generally accepted accounting principles, such as adjusted EBITDA and free cash flows, in order to provide additional information to investors. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release and stakeholder letter, which were furnished with our Form 8-K filed after the markets closed today with the SEC and may also be found on our investor relations website at ir.freesia.com. I will now turn the call over to our CEO, I'm Indyk.

Thank you, Balaji, and good evening, everyone. Thank you for joining our second quarter of fiscal year 2026 earnings call. I'd like to begin with some exciting news. Earlier today, Breesia announced a definitive agreement to acquire Access One for $160 million. Access One is a market leader in healthcare provider financing, serving many of the nation's largest health systems. We have followed Access One's progress over many years and admired its approach to addressing a critical gap in care that is consistent with our mission of making care easier every day. Access One will expand our addressable market by roughly $6 billion and strengthen our ability to help providers improve collections while preserving patient trust. We believe this acquisition is a natural extension of our payment strategy and will complement FESIA's existing products. Elagi will provide some details on the transaction. We look forward to welcoming the Access1 team to Freesia following the close of the transaction. I am also proud to share that Freesia achieved an important milestone in the second quarter. For the first time in our history, we were net income positive. As with all of our milestones, achieving positive net income does not represent a finish line. However, this milestone does give us all a great sense of pride and accomplishment in that it captures the power of our unique business and financial model and our team's ongoing commitment to being good stewards of capital. Before turning the call over to Balaji, I would like to congratulate my co-founder Evan Roberts and David Lineski on being named president of Provider Solutions and Network Solutions, respectively. These titles reflect their leadership of the provider and network solutions teams, meeting the needs of our clients, and executing on our mission, vision, and values. Evan and David are also invaluable thought partners to me, and I am pleased to share their titles with you. I'll now turn it over to Balaji to provide some additional details on the Access One transaction and provide a review of our results and updated outlook.

Thank you, Haim. First, I also want to congratulate Evan and David on their new titles. Now, for some details on the Access One transaction. As outlined in our press release and stakeholder letter, the purchase price for Access One is $160 million in cash. Frisia intends to finance the acquisition through a combination of cash from our balance sheet and a new, fully committed bridge loan facility. The transaction is expected to close during the third quarter or early fourth quarter of Freesia's 2026 fiscal year, subject to customary closing conditions and regulatory approvals. We currently expect Access One to contribute approximately $35 million in annualized revenue and approximately $11 million in annualized adjusted EBITDA. Once the acquisition is closed, we plan to update our fiscal 2026 outlook to reflect the expected contribution to our results. Overall, we believe this transaction will strengthen Frisier's financial profile, add profitable growth, and enhance our ability to support clients with innovative payment solutions. We look forward to closing the transaction and working with the AccessOne team. I would also like to touch on our updated total addressable market. The AccessOne acquisition is expected to expand our addressable market by about $6 billion by extending our reach in the payment solution space. We also increased our network solutions TAM by $6 billion, as we expect to be able to draw from a larger pool of life sciences marketing dollars as our products become more ubiquitous across our network. Combined, the expansion of our payments and network solutions addressable markets is expected to increase our TAM to approximately $24 billion from approximately $10 billion. Now, let me provide a few comments around our second quarter results. Total revenue was $117.3 million, an increase of 15% year-over-year. We are very pleased with our performance on the top line. We ended with average healthcare services clients of 4,467, an increase of 56 AHSCs from the prior quarter and 298 from the prior year. This result was in line with our expectation. Total revenue per average healthcare services clients was $26,249, up 7% year-over-year and flat quarter-over-quarter, also in line with our expectation. Moving on to profitability, as Haim mentioned, we achieved another major milestone this quarter with net income of $700,000, our first-ever positive net income quarter. Adjusted EBITDA was $22 million, an increase of $16 million year-over-year, with an adjusted EBITDA margin of 19%. Now turning to the balance sheet and cash flow. We ended the quarter with $98.3 million in cash and cash flow rates. This compares to $90.9 million in the prior quarter. Operating cash flow was $14.8 million, up $3.8 million year-over-year. Free cash flow was $9.6 million, up $6 million year-over-year. We have now achieved positive operating cash flow and free cash flow for four consecutive quarters. We expect that the magnitude of cash flow improvement on a quarter-to-quarter basis to vary based on specific timing of invoicing and payments, which you can see in working capital along with CapEx. Our second quarter results reflect the continued strength of our operating leverage and revenue I would like to thank the entire Frisia team for being able to balance the priorities associated with our mission and values and being good stewards of capital, which helped us to achieve positive net income for the first time in our history. Transitioning now to our financial outlook for fiscal 2026. We are maintaining our revenue outlook for fiscal year 2026 at a range of $472 to $482 million. We are updating our adjusted EBITDA outlook for fiscal year 2026 to a range of $87 million to $92 million from a previous range of $85 million to $90 million. That's a $2 million increase at the top and bottom ends of the previous range. We are reiterating our outlook on AHSC's reach approximately $4,500 in fiscal year 2026 and for total revenue per AHSC to increase in fiscal 2026 compared to fiscal 2025. As I mentioned earlier, we expect to update our fiscal 2026 financial outlook following the close of the Access 1 transaction. Operator, we can now begin the Q&A session.

We will now begin the question and answer session. If you'd like to ask a question at this time please press star followed by the number one on your telephone keypad if you would like to withdraw your question press star one again we will be limiting participants to one question to ensure we give everyone a chance to ask one and come back for follow-ups your first question comes from the line of jared haas with william blair please go ahead hey hey guys um Thanks for taking the questions, and congrats on the deal.

Maybe I'll just ask the first one on Access One. We'd love to hear a little bit more just how that deal developed over time, and I guess what gives you the comfort that this is the right asset and the right market for what seems like a fairly large-scale deal relative to what you've done in the past?

Yeah, so look, we've been looking at the space for years. We've known this company for many, many years, and a lot of the executives there. We felt a lot of comfort just having watched it. And look, it's a part of the market we haven't been able to play because of both product and regulatory requirements. And it's something our customers have said would really be beneficial to them. So we felt pretty good about that. We also, like, frankly, we think it aligns really well with our mission of making care easier every day. And so we, like, all the pieces sort of came together and when it became available, we moved pretty aggressively. But it's something we've been watching and paying attention on for years. And so it wasn't a last-minute decision. It was actually something we talked about as a team for years. And we thought it was something in our arsenal that, frankly, would just make a lot of sense to the patients that we serve and the providers we serve. All right. Next.

Your next question comes from the line of Jalendra Singh with True Securities. Please go ahead.

Thank you. Thanks for taking my questions. Congrats on AccessOneDeal, but I want to ask about the Felicia Voice AI product you guys launched during the quarter. Seems like a pretty exciting product for both patients and providers, but can you help us better understand how this product will drive opportunities in network solutions business because that's where you are increasing the time pretty substantially, just given all the incumbent players in SAP pharma marketing. Just explain to us, like, what gives you confidence in terms of getting some traction in that market?

Yeah, thanks, Jalindra. We did want to take the opportunity to talk about this product because we're very excited about it. It's off to a great start. I think, as we've talked about really over several years now, we think about the business holistically. these products that we introduce in the market when they benefit providers and benefit patients there are opportunities that you know creates more engagement opportunities for our network solutions revenue this is just one example we also want to take the opportunity to to explain that sizing that tam that that's been increased i don't i wouldn't read too much into the timing of the two being linked it's probably something we would have introduced earlier and we're choosing to do it now. We are very excited about this product, Dr. Linda.

It's growing rapidly. Our providers are getting phenomenal. The feedback we're getting from this product from the provider network is like nothing I've seen ever before. So we're really excited in that the investments we're making in it. A lot of these are investments we've been making for quite some time, and now we feel more comfortable talking about them as it's really, as this product's been proliferating across the network and we expect to hear more and more applications around voice in the coming course your next question comes from the line of jeff garrow with stevens incorporated please go ahead yeah thanks for taking the question maybe we'll stick with with voice ai and you know we want to ask where this product sits between a call center type answering service

and a nurse triage line, and relatedly, it sounds like it can handle some clinical questions, but do you think it can handle more clinical questions in time?

Thanks. So the answer is yes, we think it will, and we think it's really—it's not I think. I know today it is also already providing massive value to doctors. They're using it. The feedback is phenomenal from the providers that are using it. And, yes, it's also helping, you know, call center folks. It's helping prescription refills. It's helping with appointment booking. It is rapidly helping all of our clients in all different types of scenarios. And I'm so freaking excited about this product.

And it's something that's been rolling out into the network for quite some time. and we're now we're just excited that we get to talk about it your next question comes from the line of richard close with canaccord genuity please go ahead yeah thanks for the questions uh congratulations on the quarter and the acquisition just on the new products voice ai the ai referrals and the auto network tags I'm just curious are all three on this no risk no cost model right now here initially and then how long do you think that'll be until you know some of these new products new functionality can begin to be a positive driver to the revenue per AHSC? Just curious.

So we believe very strongly as a company that when you have good products, the products should lead with themselves. And so, yeah, we let all of our products at any time, anyone of our clients could use them at no cost. And we expect over time, all of these products will have material impact on our revenue, right? And frankly, They'll also just have material impact on the revenue and the productivity of our clients, which, you know, also flows through to, you know, our core value proposition. So I am not worried about them in the near future having an impact on our financials as they're already having an impact on the financials of our clients.

And Richard, I'm just in terms of the actual flow through, I don't think any of this is different than some of the products we introduced, you know, 2021, 2022, 2023. where it's contributing today and the total revenue for ahsc growth that you're seeing is sort of that waterfall effect and this will be no different and uh that's sort of you know that's you know it's a big strength of freezes business model your next question comes from the line of scott schoenhaus with key bank capital markets please go ahead uh congrats on the quarter and acquisition um so you reported a healthy 25 growth rate in network solutions access one

expands your team in life sciences it seems like just from a quick glance access one is already embedded in health systems with specialty network groups maybe you could just walk through the opportunities on the network solution side it seems like you have now more touch points with patients in the payment process multiple points of engagement um and maybe you can drive more incremental revenue opportunities in network solutions via this acquisition um so just help us walk through those opportunities please yeah so uh scott let me correct you on one thing uh and hopefully this is all clear the we we see uh the access one acquisition um aligned with the increase in the tam in our payment solutions category which is about six billion dollars and you know i read

the whole footnote and and back back up to the tab for you but i think you can go look it up yourself But really, that's how you should think about Access One in terms of the near-term opportunity for us. And they work, as I think we talked about in the press release and in the letter, they do have a great footprint and work closely with lots of great partners in the health system space, but also with other types of medical groups.

Your next question comes from the line of Jessica Tassan with Piper Sandler. Please go ahead.

Hi, guys. thanks so much for taking the question and congrats on the deal um on the access one just the the um payment extensions to patients can you help us understand who bears risk um for those dollars as you wait to collect thanks sure thanks jess um so this is really important you got to understand this um we are not the risk bearer in this relationship and so we're able to offer our the provider clients of AccessOne, or I should say, AccessOne is able to offer their clients a more robust payment offering and payment plan offering. The capital, there's an important partner in this relationship, and there are press releases that you could look up from 2023, and that partner is PNC Bank, obviously one of the largest banks in the country. So the risk is actually shared between PNC Bank and the provider itself.

And you should think about us is really you know helping drive a lot more um you know just better solutions to to patients um in a in a pretty you know technology first way your next question comes from the line of ryan mcdonald with needham and company please go ahead uh thanks for taking my questions maybe on excess one how should we think about the mix of revenue between sort of just pure interest being collected from payment plans relative to say fees charged for the zero percent interest rate plan they're offering and then as we think about the cross-sell opportunity once the acquisition's integrated here do you think there is a near-term opportunity to sort of cross-sell access one into

your core base or move more of your core subscription offerings core product offerings up into the health system base of that access one's already serving thanks yeah so first of all just we'll reiterate we're very excited about this and excited to talk about it today but transaction hasn't closed um so i think you know we're more than happy to talk a lot more about some of our plans but we have to get to the closest transaction first so hopefully everyone appreciates that your next question comes from the line of daniel close light with city please go ahead hi hi guys thanks for taking the question i want to go back to some of your new product

development and specifically your AI initiatives. If I look back a few quarters ago, most of your AI initiatives were internal in nature, improving operating leverage, et cetera. And now you're actually shipping monetizable external facing AI products. So as you make that shift from internal facing to external product shipping, how are you thinking about the balance between investing in AI for internal improvement versus, you know, external product development. What does a product roadmap look like in the future? It sounds like you're most excited about voice AI, but I'm sure there's many more products you guys are, you know, have in the pipeline. And then finally, how do you intend to price these new products similar to the non-AI products or will they be priced at a premium?

Sorry, there's a lot of questions. We've got to limit it to one question. And if you have more, we can come back to it. But why don't I start with, we've been investing in both internal and external facing AI tools. I don't think the answer is one or the other. I think now we just feel more comfortable talking about them publicly. These are things that we've been rolling out to our clients for some time. And, look, I think our general view is, like, lean in first and making sure that the product's really valuable. And when you provide a ton of value to clients, you know, and they're appreciative of it and they see it, it's like monetizing. It becomes an afterthought. And we generally focus first on building amazing products and making them very valuable to our clients. and then you know that after that the dollars generally have flown so we we expect to continue to invest both in internal use and external but i think we're we're now comfortable saying like we we have multiple sets of ai products that have been actively they're actually being used by our clients across the board and we are monetizing them today as a reminder we will be limiting participants to one question in order for everyone to have a chance to ask a

question and come back for follow-ups your next question comes from the line of Stephen Valliquet with Mizuho Securities please go ahead great thanks yeah thanks good afternoon thanks taking the question here so yeah another question here on the the pending access one acquisition I guess within the the class industry rankings which I know are not always critical looks like they ranked number three or number four in the patient financing services category over the past couple of years. So, really, my question is really just about their market share, you know, similar to other players. You know, the $35 million in revenue seems, you know, kind of low within a $6 billion TAM. I'm not sure that's the right way to think about market share or not, but just curious to get thoughts on just market share and positioning relative to the, you know, size of other players in that space. Thanks.

Yeah, Stephen, thanks for the question. And, again we're trying to be as helpful as we can because you know we're one we're excited about this but two it's also the largest uh acquisition we're you know we've done to date but also have to be kind of respectful of the process and get to the other side of things before we could talk uh more about it but you've got this sort of backup on the tam um in the tam slide and you've got the revenue so i think you can do some math there yourself and we expect to continue to invest in the platform in the product absolutely your next question comes from the line of brian tanquillit with jeffries please go ahead hey good afternoon guys and congrats um just maybe a question on sales and marketing uh obviously that continues to go down so just curious you know how much more runway do you think we can bring that down both on a dollar basis versus percentage of revenue thanks yeah i mean i think what we've what we've seen there and we've talked a lot about this just the the productivity we've gotten but also the type of you know the profile of clients um that we're trying to add on the on the provider side but also just you know continue to get a lot of deepening relationships and new ones on the network solution side so we're getting good productivity but you know i think i you know we both like to remind people that we are investing pretty significantly in sales and marketing as a dollar amount um and you should expect it to kind

of be in these levels but you know we're getting some good productivity there your next question comes from the line of Gene Manheimer with Freedom Capital Markets. Please go ahead.

Thank you, and congrats, guys, on the good numbers this quarter.

Just revisiting Access 1, I know you say you're somewhat limited in what you can talk about, but historically, can you talk about the growth rate of the company in the last couple of years and whether you think that you can accelerate it as part of the Freesia portfolio? of i think what we can say gene is like we we didn't acquire it to you know to kind of not grow it and and obviously i mentioned we're also going to invest in it um you know we're not going to be able to provide historical numbers on that the company has you know has a good reputation and as i said we followed it for a long time but we absolutely intend to you know invest in and grow that as a reminder if you'd like to ask a question please press start followed by the number one on

your telephone keypad your next question comes from the line of richard close with canaccord genuity please go ahead yeah yeah thanks for the follow-up belagi i i wanted to go back to jillendra's question on network solutions tam because you know i guess i just don't understand and why voice AI specifically drives, you know, such a large increase in TAM of like six billion. So is there any way you can provide some examples or maybe more thoughts on that TAM growth?

Yeah. So, Richard, first of all, I think, you know, you know, sort of how we operate. We want to be really thoughtful about what we share. There's competitive reasons, et cetera. But I think to the specific question on the TAM, the point I think we're trying to make with Jalindra was that that opportunity in the new TAM is big in and of itself. It's not exclusive to, you know, the Voice AI product. We think that could be one area that could help us penetrate it, but there will be others that you will hear about. So you're getting sort of the opportunity set first. And I think, you know, in our fashion, you'll hear more about other ones in the future. That's about all we can say.

Your next question comes from the line of Jeff Garo with Stevens Incorporated. Please go ahead.

Yeah, thanks for taking the follow-up question. I want to make sure we hit network solutions and an updated discussion on visibility the rest of the year and progress to date on the off-sell season for pharma advertising.

Yeah, I can start and Heim can fill anything in. And it's still early, Jeff, in that, you know, sort of in the calendar, but I think things are off to, you know, a good start, long way to go. I think we can say that as we sit here today, we're in a similar place we were last year at this time, the data that, you know, we look at. And, you know, we'll sort of, you know, give you updates along the way, and, you know, the next one will be in December.

Your next question comes from the line of Stephen Vallekit with Mizuho Securities. Please go ahead. Mr. Vallekit, your line is open. Please go ahead.

Oh, sorry. Yeah, my follow-up question was just sort of touched on a little bit, but I was just curious, again, with the network solutions, as far as the reacceleration and growth there, is there any color on whether you were going to be able to add more pharma brands or maybe just better revenue per pharma brand? Just curious if you could then provide any more color just from that direction as far as that reacceleration, or maybe with something else altogether, but just curious to hear about more of the drivers of the reacceleration and growth. Thanks.

Yeah, and so there's sort of two pieces to that, Stephen. So one is, yes, I mean, obviously, you know, our relationships have grown, but there's also just the campaigns that we've, you know, sold into the year that we're just, you know, pacing throughout the year. And I think that's something that came up in a lot of the follow-ups from last quarter that we expected to see the growth that we saw in the first quarter, and we expected to see the growth we saw in the second quarter. But, you know, we sort of look at these things over the course of the year and why we don't guide, you know, on a quarterly basis on that. But I don't think you should, you know, I don't know if we, you know, acceleration is really the way to think about it. But, you know, teams performing really well and feel good about where we are.

Your next question comes from the line of Gene Manheimer with Freedom Capital Markets. Please go ahead.

Thanks for the follow-up. I just wanted to ask if you can share what is the customer overlap, say, between Frigia's intake solutions and access one's customers?

So, yeah, so Gene, again, you know, got to be careful and wait until we close on more detail. But we thought about this topic and that it would be helpful to you. So obviously we shared one in the press release and that was, you know, intentional. And there's a client mentioned there, but there are others. And that was another, you know, reason, you know, we have some, you know, familiarity and history with the company from following it for many years is that we do have overlapping customers. I think when we close the transaction, And we will, you know, you know, we'll incorporate that into our AHS seek out.

Your next question comes from the line of Ryan McDonald with Needham and Company. Please go ahead.

Hi, I figured I'd take a second crack at one here, too, as well. Maybe just to talk about the AI competitive landscape. Haim, did you say in one of your earlier responses that you are monetizing AI solutions at the moment? And if so, I'd just be curious, you know, now that we're seeing larger platform vendors like Epic starting to release some of their AI functionality, you know, Doximity taking various AI functionality and sort of building it in and offering it for free. Can you just talk about sort of what the evolution here is within your customer base on willingness to pay for AI functionality and sort of what the runway is here for monetization of those features?

I think the market is massive. right um when we talk to customers it's not a solution it's they're looking this is game-changing and we see it ourselves right we're able to do things that people always frankly dreamed about or could never even imagine dreaming about um you know the idea of like being able to answer a phone call and help someone uh schedule a visit is pretty game-changing right so i we think the market is massive um and frankly we have yes to very clearly state we have and are monetizing

this product today and we expect to continue to monetize it and it is growing rapidly your next question comes from the line of richard close with canaccord genuity please go ahead yeah thanks for the follow-up on the r&d leverage number three don't say we don't give you chances oh we're excited um so you cited repurposing tools to revenue generating activities um can you go into any more detail what exactly that was and uh can that continue going forward no that was

that michael that was like very much like a one one off sort of thing that we wanted to call out And, again, similar to the earlier question about sales and marketing, I mean, we're getting lots of productivity. Sometimes, you know, you're getting productivity in different areas. But, again, we're investing a lot in R&D, and that's going to continue. But we just wanted to call out that, you know, nuance in the quarter.

Richard, here I thought you were going to ask about Sesame Street.

There are no further questions at this time. I will now turn the call back over to Hayam Indy for closing remarks. Please go ahead.

Thank you, everyone, for joining our earnings call. We look forward to talking to everyone again in 90 days, and I hope everyone has a great fall. Have a great day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining, and you may now disconnect.