Earnings Call Transcript
Phreesia, Inc. (PHR)
Earnings Call Transcript - PHR Q1 2024
Operator, Operator
Good evening, ladies and gentlemen, and welcome to the Phreesia Fiscal First Quarter 2024 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, Phreesia’s Chief Financial Officer. Mr. Gandhi, you may begin.
Balaji Gandhi, CFO
Thank you, operator. Good evening, and welcome to Phreesia’s earnings conference call for the fiscal first quarter of 2024, which ended on April 30, 2023. Joining me on today’s call is Chaim Indig, our Chief Executive Officer. A complete discussion of our results can be found in our earnings press release and in our related Form 8-K 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 website at ir.phreesia.com. As a reminder, today’s call is being recorded, and a replay will be available on our Investor Relations website at ir.phreesia.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. 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 the statements 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 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.phreesia.com. I will now turn the call over to our CEO, Chaim Indig.
Chaim Indig, CEO
Thank you, Balaji, and good evening, everyone. Thank you for participating in our first quarter earnings call. Our stakeholder letter and earnings release came out about an hour ago. But let me start the call by sharing a few key highlights of the materials we released. Revenue in the first quarter was $84 million, up 32% year-over-year. That’s our ninth consecutive quarter of over 30% year-over-year revenue growth. Another fantastic achievement by the Phreesia team. Congratulations to all of you who are listening. In the quarter, our average number of healthcare services clients was 3,309, up 31% year-over-year. We added 169 average healthcare services clients from the fourth quarter to the first quarter. Total revenue for average healthcare services clients was $25,338, up 1% year-over-year, 4% sequentially. Subscription and related services revenue grew 30% year-over-year. Payment processing revenue grew 25% year-over-year, and network solutions revenue was up 46% year-over-year. Now, let me hand it over to Balaji to talk about our fiscal '24 outlook.
Balaji Gandhi, CFO
Thanks, Chaim. Moving on to our outlook for fiscal 2024, which ends on January 31, 2024. We are maintaining our revenue outlook for fiscal 2024, which is in the range of $353 million to $356 million, implying growth of 26% to 27% over our fiscal 2023 revenue. We are raising our adjusted EBITDA outlook to a range of negative $60 to negative $55 million from a range of negative $65 to negative $60 million, showing continued improvement on our path to profitability. We are also maintaining our revenue and profitability targets for fiscal 2025. Those targets are $125 million of revenue in a quarter during fiscal 2025, which implies $500 million of annualized revenue and returning to adjusted EBITDA profitability during fiscal year 2025. We remain comfortable with our ability to finance our fiscal 2025 targets with our cash position. We believe our capital allocation strategy sets us up to deliver on our financial targets for fiscal 2025 and beyond. We continue to focus on driving shareholder value. Operator, I think we can now open it up to Q&A.
Operator, Operator
We’ll take our first question this afternoon from Anne Samuel of JPMorgan.
Anne Samuel, Analyst
Hi, guys. Thanks for taking the question. And congrats on the great results. In your letter, you spoke to higher patient volumes in the first quarter. I was just hoping maybe you could talk about what you attribute that to. And then, just how to think about cadence for the remainder of the year? Was this a pull-forward from 2Q, or do you think that that will be spread more evenly throughout the year?
Balaji Gandhi, CFO
Yes. Hi, Annie, Balaji here. The volumes in the first quarter were stronger than we anticipated. When we started the year, we expected some seasonality and seasonal strength, but it exceeded our expectations. This is something Chaim might elaborate on. Considering our long history in this business, we can sometimes be slightly off in any given quarter. While we have good visibility, factors like weather and varying mixes in different specialties can affect our results. Chaim, if you have anything to add on that, I can return to discussing the cadence.
Chaim Indig, CEO
No, you did a great job. You did a great job. Look, I think it’s still early in the innings. And I think we got a lot of months left to go.
Balaji Gandhi, CFO
Annie, regarding the pacing, we noted that the strong volume contributed to the timing of our programs and campaigns in the first quarter. As you know, that revenue is nonrecurring, and we continue to sell campaigns throughout the year. So, considering the pacing, some adjustments will need to occur in the second quarter to address that. While we don’t provide quarterly guidance, it's important to keep in mind that some of that revenue might be anticipated earlier.
Anne Samuel, Analyst
Okay. That’s really helpful. Thank you. And then maybe just one more. You saw really nice gross margins on the software side. And just curious if we should be assuming that you can kind of hold this cost of revenue level or if there was maybe something unique this quarter that helped keep it kind of flat?
Balaji Gandhi, CFO
First of all, I want to acknowledge the team for their ongoing hard work. We have made significant investments in our client services and support teams, which has resulted in a great job as we added 169 clients this quarter. As we've mentioned before, our path to adjusted EBITDA profitability will rely on increasing gross margins. The substantial improvement has already occurred, and we anticipate more moderate improvements moving forward. Overall, we feel optimistic about our progress.
Chaim Indig, CEO
It was pretty nice. Wasn’t it?
Anne Samuel, Analyst
It was very nice. Thanks for the color, guys. Congrats again.
Chaim Indig, CEO
Thank you.
Operator, Operator
Thank you. We go next now to Ryan Daniels at William Blair.
Ryan Daniels, Analyst
Balaji, maybe I’ll start with one for you. The sales and marketing line sees really great leverage there. It was off 10% year-over-year despite the 30% plus growth. How should we think about that line item going forward and maybe the cadence as we roll through the year?
Balaji Gandhi, CFO
Yes. I mean, once again, it’s worth calling out just the effort by the team. I mean, I think people use the term productivity a lot, but there are people behind all that. And so, we’ve also been pretty diligent about how we spend. I mean, there are non-people expenses, too, and there’s vendors. And so we’ve just tried to have an ownership sort of mentality and try to get the most we can out of a lot of the expenses that we’ve had in the P&L. And so I think, again, just like the previous question, that operating leverage on sales and marketing expense will be another source of how we get EBITDA positive. If you think about the negative 13.8% getting to 0, then we should see some improvement there as a percentage of revenue. Does that answer the question?
Ryan Daniels, Analyst
Yes. Yes, that’s perfect. And then, interesting case study on network solutions regarding the open enrollment period. I’m curious if that was done on behalf of a plan and thus, kind of signs of a novel revenue stream there with that product offering, or was that something you did as kind of an internal project for MA eligible members in order to market the capability to payers going forward? Thanks.
Chaim Indig, CEO
So, Ryan, that was a little of both. I think we approached it with a plan, but it was primarily meant to demonstrate our capabilities. It wasn’t a significant revenue generator, but it certainly excited many people about our ability to connect with their members and understand what matters to them. We strongly believe that while we all use the healthcare system, each of us has unique and different needs that often aren't addressed through standard coverage. This initiative provides greater visibility into our client base, and they have responded positively to the feedback we’re receiving even now.
Operator, Operator
We go next now to Jessica Tassan of Piper Sandler.
Jessica Tassan, Analyst
Thank you guys for taking the question. Nice first quarter with the new CFO. So, I would just kind of echo Ryan’s sentiment, I thought the MemberConnect detail was really helpful. Should we think about this product then as being kind of out of beta and priced and ready for full launch for 2024 AEP, so in your kind of fiscal 3Q, 4Q period?
Chaim Indig, CEO
I believe the team might not say it’s in beta, but it’s not entirely in general availability either. We have several customers using our various product offerings, and we are making significant investments in it. Overall, it’s performing well, and I’m very proud of what the team is accomplishing with it. However, I can’t comment on our status for open enrollment just yet.
Balaji Gandhi, CFO
And it’s still early.
Chaim Indig, CEO
But the response from the community, the client community has been phenomenal.
Jessica Tassan, Analyst
Okay. I think that’s very helpful. And then just maybe can you talk about how you’re monetizing PAM today? It seems like it might have been part of that MemberConnect survey, but just interested to know how that asset is being monetized today and whether the impacts are predominantly felt in subscriptions or in network solutions? And that’s it.
Balaji Gandhi, CFO
There are two components to address. MemberConnect is primarily about Medicare Advantage lead generation, which I discussed in our December letter. Additionally, there's the PAM offering, which is another aspect of MemberConnect. However, I wouldn't emphasize any specific monetization from it. When you consider MemberConnect, it's primarily a revenue generator based almost entirely on Medicare Advantage lead generation. There is some revenue from PAM, which results from the acquisition of Insignia, linked to subscription revenue that comes from our contract with CMS. This contract is multiyear and publicly available, and the subscription revenue is tied to that agreement.
Operator, Operator
We’ll take our next question now from Glen Santangelo at Jefferies.
Glen Santangelo, Analyst
Hey, everyone. We had another strong EBITDA performance this quarter. With revenue steadily in the low-30s, the EBITDA guidance for the year doesn't reflect any expected leverage for the remainder of the year. I'm curious if this indicates a certain level of conservatism, or if there are other planned investments that we should discuss or highlight. Additionally, I have a follow-up question regarding the balance sheet.
Balaji Gandhi, CFO
Sure. So first of all, just to be clear, when you say low-30s, you mean as a percentage growth?
Glen Santangelo, Analyst
Yes. I’m sorry. Yes, as a percentage growth.
Balaji Gandhi, CFO
Okay. I almost missed that because I thought you were referring to something else. First, Glen, I believe this ties into the earlier discussion about gross margins and sales and marketing, which directly impacts EBITDA. The team has performed exceptionally well, and we cannot emphasize that enough. This success has allowed us to continue investing in the business. The strong EBITDA performance over the past few quarters has positioned us to follow through on our commitment to ongoing investment, particularly in R&D. This is one area where we are not looking to make cuts for operational leverage because we are focusing on fiscal years '26, '27, and '28. Therefore, you should consider that we might invest more in R&D as we discuss the EBITDA guidance range. That said, we will provide an update in 90 days, and if the team maintains its strong performance, there may be potential for improvement. Does that clarify things?
Glen Santangelo, Analyst
Okay, that's helpful. I want to follow up on the balance sheet. The company has been using about $15 million of cash. I think this quarter might be slightly higher than last year. As we consider the path to profitability in fiscal '24 and '25, you mentioned having $150 million in cash on the balance sheet, and you're confident that it's sufficient. However, I'd like to clarify that in light of some comments regarding SVB in the press release. Could you quickly summarize where you currently have a lending facility, where your cash is located, and whether you plan to establish another lending facility outside of SVB?
Balaji Gandhi, CFO
Yes. Thanks for bringing up the...
Chaim Indig, CEO
Glen, those were like…
Glen Santangelo, Analyst
I promised some time.
Balaji Gandhi, CFO
Thank you for prompting me to review our extensive disclosures, which ensures our legal team is comfortable with our communications. Glen, there is considerable information in our previous filings, and you will notice some again in this quarter’s report. Ultimately, our current facility remains active, and we have received a waiver that permits us to retain more cash outside of SVB. For those listeners in the lending space, we invite you to reach out to us. In the longer term, we plan to explore additional financing options for growth beyond what we have stated we can support with cash through 2025. We remain confident in our ability to finance that growth, with approximately $150 million available in cash. We currently have no debt incurred on the existing facility. We will continue to look at other options and opportunities while the revolving credit line is available. Regarding cash flow and losses, please note that there can be timing differences. In the first half of the year, we acquired some additional treasury stock to handle tax withholdings for employees, which will not be reflected in the remaining quarters but will appear in the fourth quarter and first quarter.
Operator, Operator
We go next now to Scott Schoenhaus at KeyBanc.
Scott Schoenhaus, Analyst
Hey, Chaim and Balaji. Congrats on the quarter. I wanted to dig deeper into this update you provided in your letter about your partnership with Unlimited Systems. Was any of that that launched this quarter, was any of that shown up in results on the subscription side?
Chaim Indig, CEO
No. Not even slightly.
Scott Schoenhaus, Analyst
Okay. And so, is this something that you guys are…
Chaim Indig, CEO
I would put that in the R&D line. It’s still real early.
Scott Schoenhaus, Analyst
Okay. So, is this something that you guys are actively pursuing basically trying to partner with all these specialty other healthcare IT service offerings, do you really sell your solution? And what do you view that opportunity as? Is this a way to drive really much more incremental subscription growth for this year and next year? Thanks.
Chaim Indig, CEO
We sell our solution, but we've received numerous requests from their customer base for an integrated solution with Phreesia. We're closely monitoring market demands. Our team conducts market assessments to determine where to allocate resources, and they collaborate with our partners to make informed R&D investment decisions for that integration, ensuring that our product is exceptional. We are very excited about this opportunity. In the beginning, Unlimited appeared to be a promising partner.
Scott Schoenhaus, Analyst
I guess lastly, my second question is on the pharma digital advertising space. Just generally, what are you seeing there? Anything different from last quarter? It seems like you continue to outperform peers in this space. Thanks.
Chaim Indig, CEO
I believe it's definitely more challenging compared to when this was one of the few ways to reach consumers. However, we just had another excellent quarter, and I'd attribute our success primarily to the returns we're providing for our clients; they have been extremely satisfied with our approach, which prioritizes the patient experience. This strategy has proven to be very effective for both us and our clients. Additionally, our team's dedication has played a significant role in our achievements. I’ve been amazed by the level of engagement and enthusiasm our team shows when interacting with clients in the life sciences sector. I attended an off-site gathering with the team and felt a constant smile on my face; it was a truly uplifting experience. They are performing exceptionally well, and I couldn't be prouder of their efforts.
Operator, Operator
We go next now to Ryan MacDonald at Needham.
Ryan MacDonald, Analyst
Thanks for taking my questions. And congrats on the nice quarter. Chaim, maybe the first one for you. In the quarterly stakeholder letter, I thought it was interesting on the discussion of patient insights and being utilized to sort of gather information around clinical trials from patients. Can you talk about the potential application there for extending sort of network solutions into clinical trial enrollment and how you think about potentially monetizing that over time?
Chaim Indig, CEO
I believe that clinical trials and ensuring that patients who wish to participate in various trials can access innovative therapies is an excellent endeavor. We have been investing in this area, and it aligns well with our capabilities. You can expect to hear more from us in the coming years about our enthusiasm and the initiatives we plan to undertake in this field. While it may still be early, we are committed to this investment. We want everyone to understand that this is not solely a financial gain; it represents a significant advantage for both patients and scientific progress.
Ryan MacDonald, Analyst
As a follow-up, considering the benefits for patients over time, how do you prioritize what you present to patients during their intake experience with MemberConnect, life sciences marketing, and clinical trial enrollment to ensure that the experience doesn't become overwhelming? Thank you.
Chaim Indig, CEO
Look, we made huge investments over the years in data science and in just machine learning to be able to make the right type of decisions, right? And I think that there are tons of very smart people and a lot of data that gets tied into how and what we do with what patient. But I’d say that, first and foremost, is making sure that it’s consent-driven and we have permission to do it. And when you have permission, which is core to everything we do, it allows us to really lean into how we engage that patient in different content, which frankly should improve outcomes.
Operator, Operator
We go next now to John Ransom at Raymond James.
John Ransom, Analyst
I would like to hear your thoughts, Chaim, on the experiments you conducted to increase investments in sales, marketing, and R&D. Reflecting on those decisions, what would you highlight as a key takeaway? Additionally, what would you say is something we would not have discovered if we hadn’t pursued this?
Chaim Indig, CEO
I don’t think we have enough time on this call for me to cover everything. However, I want to emphasize that I wouldn’t feel comfortable doing this without my leadership team. Many of us have worked together for a long time, which helps us understand the business and our clients as well as how to analyze the data that informs our decisions. These decisions need to be made quickly, as funds can be wasted very rapidly. The strength and comfort in having such a team, spread across various levels, makes me confident. Furthermore, I believe our consistent success, as seen in our quarterly results, is due to this team and their ability to adapt to market changes. It's crucial to remember that when we gain a client, we must deliver on our promises and treat them well. If we continue to provide a high-quality product at a fair value, we will keep building our business and not only endure but significantly impact healthcare. Healthcare needs improvement for everyone's benefit, especially as I age and find myself relying on the system more.
John Ransom, Analyst
Yes, I was going to mention that. That’s a bad joke.
Chaim Indig, CEO
Did I answer your question?
John Ransom, Analyst
We’ll talk later.
Chaim Indig, CEO
I’m sure…
John Ransom, Analyst
Yes, I have a follow-up question. Regarding your sales productivity, as you enter the season for hiring sales development representatives, what factors are contributing to the productivity you're observing in your sales team? Additionally, what changes are you implementing as you onboard new employees? How much of this improvement can be attributed to technology, talent selection, and other factors I may not be considering?
Chaim Indig, CEO
I believe our capability to attract and keep team members, particularly in our SDR teams, is among the best. The leadership within that team plays a crucial role in this success. The average tenure of our sales leadership at Phreesia exceeds a decade, which highlights the outstanding performance of that team. Additionally, our upsell and cross-sell efforts have been impressive, and the team has been excelling in that area. I am truly impressed by their performance, which reflects our commitment to building an excellent product, serving our customers well, and following through on our promises.
Operator, Operator
We go next now to Sean Dodge at RBC Capital Markets.
Tom Kelliher, Analyst
This is Tom Keller on for Sean. Thanks for taking the questions. One for me. I guess, how big is the hospital business now? And has that been a meaningful contributor to growth? And I guess, maybe you expect it to be in fiscal ‘24 and ‘25?
Balaji Gandhi, CFO
I mean, we don’t think about it as a hospital business. And so, you think about healthcare providers and you think about health systems, and all hospitals in the country tend to be affiliated with some type of system and tend to have physician practices associated with them. So, that’s typically been our entry point. Historically, we’ve worked with the physician practice side of that organization and then enter the hospital piece. And so, we have lots of hospitals we work with. I think we announced publicly, we entered that market about 3.5 years ago. We’ve been working on the product for several years before that. And so, I think we’re pretty happy about where we are. Would you agree, Chaim?
Chaim Indig, CEO
Yes, I think everyone has been surprised, even beyond my own expectations.
Balaji Gandhi, CFO
So, when you think about just the universe of clients and patients and where patients receive care, it’s in the hospital, but it’s also plenty of other delivery settings.
Operator, Operator
We go next now to Stephanie Davis at SVB.
Stephanie Davis, Analyst
Hey, guys. Congrats on the quarter. I cannot tell you how much I can’t believe for SVB to stop being in press releases. It’s been a long few months.
Balaji Gandhi, CFO
Yes. We’re required to disclose some of that stuff, so.
Stephanie Davis, Analyst
I hear that. I hear that. I was hoping you could help us understand the revenue guidance a little bit because it implies 8 points of deceleration for the rest of the year. Is there any seasonality in the payer business or anything like that, just given we’ve never seen that level of step-down before in your revenue growth?
Balaji Gandhi, CFO
I think one of the things we mentioned earlier, which was also in the letter, is that volume strength was better than we had anticipated in the first quarter. When you mentioned 8 percentage points, I believe if you consider the low end of 26 and the 32 that we just reported, that totals to 6. Am I overlooking something?
Stephanie Davis, Analyst
Is that you had 32% growth and then it would imply that it goes down to 24% growth at midpoint?
Balaji Gandhi, CFO
I understand your point. Yes, there are definitely fluctuations. As mentioned in our letter, we've discussed some related services. We don't run the business with the expectation of consistent growth every quarter, but we aim to provide an outlook at the beginning of the year. The key takeaway here is the stronger-than-anticipated volume trends in the first quarter. This not only affected payment processing but also impacted network solutions due to the timing of our campaigns. Additionally, I think it's important to note that we achieved $1 billion in payment volume during the first quarter. We moved directly from $800 million to $1 billion, bypassing the $900 million mark. This highlights the robust volumes we experienced despite some seasonal fluctuations in the first quarter.
Stephanie Davis, Analyst
Okay. So that’s a perfect lead into my next question. You saw that huge volume quarter. How much of that was a function of just utilization improvements versus some of the discounting we called out in the prepared remarks? Is there a way to discount but still healthy beat in that segment in a more sustainable way, just given what we saw this quarter?
Balaji Gandhi, CFO
I think we've been clear over the past couple of quarters that we've experimented with different pricing over time, with the intention of continuing if we can achieve good profit and economic results from it. So yes, there is some correlation. I can’t specify an exact amount. Chaim, do you have anything to add?
Chaim Indig, CEO
No, you did great.
Operator, Operator
We’ll take our next question now from Jack Wallace at Guggenheim.
Unidentified Analyst, Analyst
Hi, team. Thanks for taking my question. I’m on for Jack. I was wondering if we could quickly touch on the SDR count?
Balaji Gandhi, CFO
You mean in the quarter?
Unidentified Analyst, Analyst
Yes.
Balaji Gandhi, CFO
Yes. Give me one second.
Chaim Indig, CEO
These are laminated pages.
Balaji Gandhi, CFO
If you have another question, go ahead, and I’ll get the number for you.
Unidentified Analyst, Analyst
Yes. How have changes in the labor market impacted end market demand?
Chaim Indig, CEO
I believe that after a considerable amount of time in the industry, labor conditions are still quite tight compared to pre-COVID levels, and wages remain elevated. It varies significantly depending on the organization and the region. Many healthcare systems are closely monitoring their expenses, as labor constitutes the largest portion of healthcare costs. I don't anticipate wages decreasing in the near future.
Balaji Gandhi, CFO
And John, that number is 169. That’s inclusive of our ISRs or inside sales representatives, too. So pretty much about the same number as last quarter.
Unidentified Analyst, Analyst
Got it. Okay. And if I can just squeeze one in. Apple announced Apple Pay Later in March, and I understand this application process to actually use the functionality. Do you envision that having any sort of impact on the payment side of business?
Chaim Indig, CEO
No, I don’t. I don’t know if they’ve enabled it in healthcare. But we do accept Apple Pay on our platform.
Operator, Operator
We go next now to Richard Close at Canaccord Genuity.
Richard Close, Analyst
Yes. Thanks. Congratulations. Sorry, I dropped off a couple of times. So if I repeat, just let me know. Did you talk at all about the Unlimited Systems relationship and maybe the market presence there?
Chaim Indig, CEO
Yes, we did. We spent like 20 minutes of the call on it. It was getting...
Balaji Gandhi, CFO
You should read the transcript.
Richard Close, Analyst
Okay. So we’ll move to the next one then. Just maybe following up on Ryan’s comments on sales and marketing or a question on sales and marketing. I know you called out for cost of services and sales and marketing, some lower headcount there and some growth in R&D, and maybe just fine-tuning a little bit in those areas. Maybe if you could just go into a little bit more detail on the headcount changes.
Balaji Gandhi, CFO
I think you've captured it, Richard. We are continuing to invest in research and development, and regarding the other areas, the numbers showed a decrease of 30 sequentially. So, on a net basis, we could allocate those to the other areas, but R&D continues to see growth.
Richard Close, Analyst
Okay. Any thoughts with respect to the referral management offering that you rolled out a couple of years ago? How that’s trending?
Chaim Indig, CEO
It's still growing well. I can say that the offering is gaining more traction continuously, which has been very beneficial to many of our practices during the rollout. I'm quite pleased with its success, and I know that more practices are being added continuously. Perhaps in the next few quarters, we can provide an update on how its value is developing.
Operator, Operator
We will take our next question now from Daniel Grosslight at Citi.
Daniel Grosslight, Analyst
I want to go back to the MemberConnect product here and just get your views on, in general, the Medicare Advantage market. There are some headwinds for the next calendar year, given the advanced rate notice, and given some of the star scores changes. So, how are you thinking about growth in the Medicare market in general? And how does that translate to how you’re thinking about the MemberConnect product for calendar year ‘24?
Chaim Indig, CEO
I believe it's still early to make definitive conclusions, but I can share that the feedback we're receiving from carriers and plans indicates that their main goal is to engage with their members and ensure they are extremely satisfied with their options. When feasible, they aim to align the plans with the providers within their networks. A key factor for individuals when selecting a plan is whether their doctor is covered. This is a significant market, and despite its long history and various changes over time, we are quite enthusiastic about the opportunity to serve more Americans in a different way.
Daniel Grosslight, Analyst
Yes, that makes sense. As I consider the product, it has potential beyond just the carriers. You could possibly sell this to the broker channel, especially the e-brokers. How are you viewing them, the e-brokers and brokers in general, as clients? And I assume right now carriers are... yes, go ahead.
Chaim Indig, CEO
I think it’s mostly plans, but I know that the team is engaged with some brokers, too.
Daniel Grosslight, Analyst
Okay. But going forward, we should expect this mostly to be a carrier product?
Chaim Indig, CEO
I think that’s the plan. Yes.
Operator, Operator
We’ll go next now to Jeff Garro at Stephens.
Jeff Garro, Analyst
Looked like another good quarter of healthcare service client adds. Want to see if there’s anything you could tell us about what worked in the quarter to drive those adds? And anything you’d call out in terms of the mix of the adds by practice size or specialty or geography?
Chaim Indig, CEO
No. They were very diverse, ranging from extraordinarily large to incredibly small across the country, with many in the middle as well. This included various types of practices, such as specialty, single-specialty, multi-specialty, and health systems. We performed well because our team excelled in sales and did an outstanding job in implementing our services and taking care of our clients, backed by a great product.
Jeff Garro, Analyst
That works. That’s a good way to do it. And follow up a little bit on the subject of client adds. The stakeholder letter set the expectation for the fiscal second quarter to have similar adds as last fourth quarter or this most recent quarter. So call it a range of 160 to 170. Curious to get your comments on the Company’s ability to potentially match the roughly 800 incremental adds you achieved in FY23 in the current fiscal year as we think about the next nine months?
Balaji Gandhi, CFO
Yes. What we're aiming for is not to provide guidance for the entire year, but we recognize that having some input for your models is beneficial. In regards to the next quarter, it was 158 in the fourth quarter and 169 in this quarter. We're indicating that it will likely remain in that general range. There are also factors that influence revenue per client. We’ll provide an update next quarter, but we’re not going to discuss the full year.
Chaim Indig, CEO
We can provide that visibility because we can see it clearly. We generally know where it’s headed at this point.
Balaji Gandhi, CFO
Yes, if you have any follow-up questions, please feel free to ask. What we're trying to do is establish some kind of reference point.
Jeff Garro, Analyst
No, that helps. Thanks again.
Operator, Operator
And we’ll go next now to Robert Simmons at D.A. Davidson.
Robert Simmons, Analyst
Hey. Thanks for taking the question.
Chaim Indig, CEO
Is that us, or is it? Hello?
Balaji Gandhi, CFO
Couldn’t hear you.
Operator, Operator
Mr. Simmons, we’re having a hard time hearing you, sir.
Chaim Indig, CEO
All right. Just checking. Everyone always complains that I have crappy phone service. So I just assumed it was us.
Robert Simmons, Analyst
Do you hear me now? My headset was switched off and then back on for some reason. I apologize, I was saying you mentioned this earlier, but what feedback are you receiving from the pharmaceutical companies regarding their spending intentions? Has the competitive environment improved, worsened, or remained stable over the last three to six months?
Chaim Indig, CEO
Life sciences organizations everywhere are very aware of scale, return on investment, and the importance of aligning with the right types of products, and I think they’ve been mostly satisfied. I can talk about our work, but not necessarily about the entire market. It has certainly been softer than in previous years. Our teams still have a lot of selling to do, and they are doing a good job of ensuring we continue to execute. We believe the market is still early in the year.
Operator, Operator
Thank you. And gentlemen, it appears we have no further questions this afternoon. Mr. Indig, I’d like to turn the conference back to you for any closing remarks.
Chaim Indig, CEO
Yes. I just want to thank everyone for joining the call. And I want to thank everyone at Phreesia for another great quarter. And we’ll talk to everyone in about 90ish days. And hopefully, everyone has a nice summer.
Operator, Operator
Thank you, Mr. Indig. Ladies and gentlemen, that will conclude the Phreesia fiscal first quarter 2024 earnings conference. I’d like to thank you all so much for joining us and wish you all a great remainder of your day. Goodbye.