Earnings Call Transcript
Phreesia, Inc. (PHR)
Earnings Call Transcript - PHR Q2 2025
Operator, Operator
Good evening, ladies and gentlemen, and welcome to the Phreesia Second Quarter Fiscal 2025 Earnings Conference Call. At this time all participants are in a listen-only mode. We will provide instructions for the question-and-answer session. 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 Second Quarter of Fiscal 2025, which ended on July 31, 2024. Joining me on today's call is Chaim 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 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 of our 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 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 flow 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 press release and stakeholder letter, which were furnished with our Form 8-K filed after the market 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 joining our fiscal second quarter earnings call. We achieved another important milestone in the fiscal second quarter by reaching positive cash flow for the first time as a public company. We believe this milestone marks the start of a new era for Phreesia, in which we will be able to utilize internally generated cash to drive stakeholder value. Our fiscal second quarter results were solid across all of our key financial and operating metrics. We believe we are set up well to execute on our full year financial plans and plan for continued revenue and profitable growth this year, next year and beyond. I feel very good about where we are as an organization and appreciate my teammates for their commitment to our mission of making care easier every day and also to our vision to make every person an active participant in their care. I’ll now hand it over to Balaji to provide some financial highlights.
Balaji Gandhi, CFO
Thank you, Chaim, and good evening, everyone. Let me start with a couple of the highlights in our letter regarding the fiscal second quarter. Q2 revenue was $102.1 million, up 19% and $16 million year-over-year. Adjusted EBITDA was $6.5 million, up $18 million year-over-year. Our average health care services clients or AHSCs increased by 104 from the prior quarter. And total revenue per AHSC was $24,494, down 2% year-over-year. Q2 fiscal 2025 total revenue per AHSC was flat year-over-year when compared to Q2 fiscal 2024 total revenue per AHSC, excluding the revenue from the clearinghouse client relationship that we wound down earlier this year. Turning to our cash flow and balance sheet. We achieved two important milestones in the fiscal second quarter. First, we returned to positive operating cash flow; and second, as Chaim mentioned, we achieved positive free cash flow for the first time as a publicly traded company. Operating cash flow was positive at $11.1 million, up $20.4 million year-over-year. Free cash flow was positive at $3.7 million, up $19 million year-over-year. Cash was at $82 million on July 31, up $2.3 million from the end of our fiscal first quarter on April 30. We expect to continue to generate positive free cash flow while investing in long-term revenue and profit growth. Now moving on to our financial outlook for fiscal 2025. We are maintaining our revenue outlook for fiscal year 2025 at a range of $416 million to $426 million. We are updating our adjusted EBITDA outlook for fiscal year 2025 to a range of $26 million to $31 million from a previous range of $21 million to $26 million. That's a $5 million increase at the top and bottom end of our range. We have also provided an outlook for two metrics: AHSC's and total revenue per AHSC. We expect AHSCs to reach approximately 4,200 for the full fiscal 2025 compared to 3,601 we reported in fiscal 2024. We expect total revenue per AHSC to increase in fiscal 2025 compared to the $98,944 we achieved in fiscal 2024. In order to help you model beyond fiscal 2025, we are also sharing our expectations for AHSCs and total revenue per AHSC in fiscal 2026. We expect AHSCs to reach approximately 4,500 in fiscal 2026. Additionally, we expect total revenue per AHSC to increase in fiscal 2026 compared to fiscal 2025. Finally, I would like to reiterate Chaim's comment that I feel very good about where we are as an organization and would like to thank and congratulate all my Phreesia teammates for their contribution to our results. Operator, I think we can now open the lines up for Q&A session.
Operator, Operator
Your first question comes from the line of Anne Samuel with JPMorgan. Your line is open.
Anne Samuel, Analyst
Hi, congrats on the strong results, and thanks so much for providing the really helpful modeling color for 2026. I was hoping maybe you could just spend a little bit of time discussing how to think about the drivers of that ramp of the revenue growth per provider client just kind of keeping in mind your longer-term revenue target of 20% growth beyond 2025. And with the new clients growing, call it, high single digits next year, it does imply a pretty significant inflection. So I was hoping you could talk about what the key drivers of that inflection are. Thanks.
Balaji Gandhi, CFO
Sure. Thanks, Anne, for your question. This is Balaji. In response to your inquiry, I appreciate your perspective on the growth drivers, especially considering your long-term follow-up with us. Reflecting on our public launch, we exhibited a specific growth pattern in the first year or so. We are indeed capable of generating significant revenue both from our existing base and by increasing the overall value of our deals. To provide additional insight, our pipeline in the first half of fiscal '25 is on par with what we had in the first half of '24. Our win rates have remained stable year-over-year, and the average value of the transactions we’re undertaking is approximately 20% larger in the first half of this year compared to last year. This trend is consistent with what we observed in fiscal '19 and fiscal '20, suggesting a similar trajectory over the coming years.
Anne Samuel, Analyst
That's great. And happening, I think sooner maybe than I anticipated. Maybe just a follow-up. I was hoping you could provide some more color on the patient bill pay product and maybe how that differs from how your patients are currently transacting with you? Is there any kind of leveraging of card on file for any of that?
Chaim Indig, CEO
Yes, there is a patient bill pay product that we are leveraging card on file for. You may have already noticed it at some of your doctors' offices. We have made significant investments in this product, which enhances the experience for patients by enabling them to pay their bills easily without much effort, eliminating the need to write checks or manage statements. The investment has paid off, as the initial response from our clients has greatly exceeded our expectations. I'm proud of the team that has been working on this rollout. Although it took a bit longer than we anticipated, it turned out to be more challenging than we expected. It's been rewarding, and please let me know when you see it at your doctors' offices.
Anne Samuel, Analyst
I hope to. Congrats guys.
Operator, Operator
Your next question comes from the line of Ryan Daniels with William Blair. Your line is open.
Ryan Daniels, Analyst
Yeah, guys. I'll have my congratulations on the move to free cash flow positive. That's a great milestone. Maybe two questions. I will start with one for you, Balaji. Really impressive, downward trend in your sales and marketing spend, I think trended down from a peak of $40 million to $30 million now. Is that more of a sustainable level going forward? Or should we start to see that maybe modestly trend up a bit as we continue to drive the growth outlook going forward?
Balaji Gandhi, CFO
Yes. Thanks, Ryan. I think you should expect it to be in that level, call it, plus or minus $31 million, $32 million for 11 quarters or so now. I think you should expect us to continue to get nice leverage out of that number. One thing, I will point out, Ryan, is that just 1Q to 2Q sequentially. Recall we talked about the clearinghouse client unwinding, there were actually some sales and marketing costs that were built into that, which is frankly what made it not very profitable for us. So that came out from 1Q to 2Q. So I think sort of being in the range we've been in for a while, we can continue to get nice leverage. We have a large organization of about 500 people in the sales and marketing organization, and we are spending $120 million. So we think that can support a much bigger organization revenue-wise.
Ryan Daniels, Analyst
Okay. Very helpful. And then just a question on the MEDITECH alliance that you announced in the shareholder letter tonight, maybe twofold. One, will they actually be a reseller of the Phreesia product? And number two, when will the full product integration be available for the client base? I know that a pretty sizable client base, especially in the acute care market. Thanks guys.
Chaim Indig, CEO
Yes, they are a reseller of one of our smaller technologies for some of their clients. However, the alliance primarily facilitates MEDITECH clients in purchasing directly from Phreesia, which includes a variety of our other products.
Ryan Daniels, Analyst
Great. And then any comments on the full integration that you mentioned when that will occur? Thank you.
Chaim Indig, CEO
I'd say I expect that to continuously roll out over the coming years. And we do already have integration with it, and we'll keep investing in MEDITECH as a platform because – and the customer base has been very, very supportive of what we've been rolling out. So it's been very fruitful. And we agree, it's a huge potential market.
Ryan Daniels, Analyst
Yeah, big up. Okay, thanks again guys. Cheers.
Operator, Operator
Your next question comes from the line of Scott Schoenhaus with KeyBanc. Your line is open.
Scott Schoenhaus, Analyst
Hi, everyone. I appreciate you taking my question. I wanted to explore the additional insights we received regarding the fiscal '26 target. My understanding has always been that the network solutions would grow annually by perhaps mid-to-high teens percentage. Is this still the correct perspective for next year? Also, could you elaborate on what this means for the subscription business? I would appreciate any further details you can provide.
Balaji Gandhi, CFO
Yes, Scott, I think what we can do to try to be helpful is we don't want to get into a revenue line item forecasting. But I think we talk about total revenue. And I think we have said that Network Solutions will continue to be a bigger part of our revenue. So as a percentage, it will grow over time. And so I think I talked about size and value of transactions being bigger, that is inclusive of Network Solutions. So I think you should just expect that to grow as a percentage of revenue, and it's been growing at or faster than subscription of late, but it will fluctuate quarter-to-quarter. And that's really one of the nice things about our business is that we have these three different ways to grow.
Scott Schoenhaus, Analyst
Yes. That's very helpful, Balaji. And just as a follow-up there. I guess you mentioned about the inorganic opportunities provided by the new cash generation. Anything to call out there in terms of which part of the business you think that there is more attractive in currently market opportunities for M&A? Thanks.
Balaji Gandhi, CFO
Yes. Maybe Chaim and I are looking at each other a little confused. I don't think we mentioned anything about specifically about inorganic opportunities.
Scott Schoenhaus, Analyst
Oh, it just mentioned that your free cash generation would assist you in meeting these targets. So I apologize for interpreting that as.
Balaji Gandhi, CFO
I think generally, you should expect that comment around free cash flow to be generating more cash flow. We think that's good, just makes us a stronger company and creates a ton of value. And it allows us to keep investing in products and doing the things we're doing. I don't think I'd take anything more away from that.
Operator, Operator
Your next question comes from the line of Jessica Tassan with Piper Sandler. Your line is open.
Jessica Tassan, Analyst
Hi, guys. Thanks for taking the question. So I wanted to understand kind of what changed in your visibility on the average revenue per AHSC. We appreciate the guidance, but just are you guys seeing kind of the size of the pipeline or the magnitude of the opportunities grow? I think you referenced that. Is it new products? Or just what's giving you kind of sufficient confidence to be able to guide to growth in revenue-term?
Balaji Gandhi, CFO
Yes. Thanks, Jess. So I think what you are seeing today with the new information we shared is more the output of something we put in place a couple of years ago in terms of how we wanted to think about the business over the next several years. And so we just got a much broader suite of solutions both for providers and also for our clients in Life Sciences which falls into that network solutions area. So when we are talking about and total value getting bigger, that's a very intentional thing that we started to put in place almost two years ago. And so we've been expecting it and seeing it. And I think we are reacting a little bit to conversations we've had with a lot of analysts and shareholders about, hey, where is this going quantitatively? And that's why we shared what we did today. So hopefully, that’s helpful.
Jessica Tassan, Analyst
Yes, that's really helpful. Congratulations on the PAM renewal. Could you remind us why patient activation is so important and what the opportunity is to leverage PAM within your existing AHSC install base, if at all? Thanks.
Balaji Gandhi, CFO
Yes. I mean, look first of all, one of the reasons we were very interested in acquiring the patient activation measure was that some of our clients were already utilizing it. I think the easiest application you can think about is in the nephrology space, where as part of the Kidney Care Choices program that the centers for Medicare and Medicaid innovation have launched, PAM is required to be measured. So if you think about a nephrology client of Phreesia, that's participated in the KCC program, they have to measure PAM. It makes our products stickier. It allows us to do a lot of things around both all the things that Phreesia does, and over time, integrate that with PAM. But now I think you think about that renewal, and I think it is all public information out there, it gives us an opportunity over a longer period of time to get that included in new models within CMMI. And those new models could be in various specialties or provider settings that Phreesia works with.
Jessica Tassan, Analyst
Great. Thank you.
Operator, Operator
Your next question comes from the line of Jailendra Singh with Truist Securities. Your line is open.
Jailendra Singh, Analyst
Thank you and thanks for taking my questions. I actually want to go back to fiscal '26 metrics color guidance you're giving. A quick clarification. I know it looks like that modeling data is helpful. It looks like Street might be slightly higher on this AHSC count, but you are not trying to talk down the top-line growth expectation. You're essentially saying that maybe we are underestimating revenue per AHSC for fiscal '26, might be slightly higher on the total AHSC count. I just want to make sure that the message is clear, it's not a top-line talking but just the mix of the two metrics, something you want to give some guidance on, right?
Chaim Indig, CEO
Yes. I think that's right. I think what we would say is we haven't formally said anything about fiscal '26 in terms of revenue for the year. But I think that's the right takeaway that what we're trying to do is say you will see more contribution from total revenue per AHSC in 2026 than you have in the last couple of years.
Jailendra Singh, Analyst
Okay. And then my main question around EBITDA performance and guidance raise this fiscal year. Would you attribute this outperformance to you guys able to find incremental cost efficiencies and leverage faster than you previously thought? Or are these incremental cost efficiencies, which you did not expect at all? Just trying to understand if there is any change to your long-term margin profile in this business, you think about?
Balaji Gandhi, CFO
Yes. Regarding the earlier question about revenue, this applies across the entire company. There has been significant effort and focus from many individuals within the company on defining our identity and planning how we will fund our growth. It's important to recognize that many different people at Phreesia contributed to this process. When you initiate several changes like that, it’s difficult to predict the exact timing for any specific quarter. While we believe we have performed well, we are always seeking ways to be more efficient. We still invest a considerable amount of capital, and as mentioned in Chaim's section of the letter, this is not a point of completion.
Jailendra Singh, Analyst
What was the SDR count at the end of the quarter and can you provide any guidance on that metric for the end of the fiscal year?
Balaji Gandhi, CFO
Yes. This is another topic we've discussed internally quite a bit over the past few quarters. In response to Anne's question about the organization, it currently consists of 500 people, including everyone involved in Network Solutions. We are investing over $120 million. There may have been some confusion in the investment community regarding the role of SDRs in this context. The 500-person organization includes many individuals focused on driving new growth for the company, and SDRs are just one of several strategies we are using. To summarize how we're approaching sales and marketing, think of it as 500 people, consistent with last year, and $120 million in spending. However, I don’t have further details to share on this topic.
Jailendra Singh, Analyst
Great. Thanks a lot.
Operator, Operator
Your next question comes from the line of Glen Santangelo with Jefferies. Your line is open.
Glen Santangelo, Analyst
Thanks for taking my questions. I have two quick ones. Regarding the fiscal '26 outlook on provider additions, I'm curious about how much visibility you have at this point, with five months remaining in fiscal '25. I understand you're working on deals for next year, but how confident are you in providing that forward guidance right now?
Balaji Gandhi, CFO
Yes. I'll answer the question this way, Glen. We have entering a year when we think out the provider space, and we think about subscription revenue and payment processing. We have lots of visibility. I'm going to say, 90% visibility. So that's the part of our business we have the most. And I think in Network Solutions, we've been pretty consistent. That's where most of the variability is. So even this late in the year, that $10 million revenue range, we have most of the variability there is in Network Solutions. So we do have a lot, which is why when we're sitting here in September, we've given a target for the full fiscal year for next year. So a lot but not 90% today, but entering a year, say maybe.
Glen Santangelo, Analyst
Okay. Perfect. Chaim, I wanted to follow up with you. I'm curious about your thoughts on the industry penetration rates for automated solutions like what you offer. It's clear we had a strong quarter, but there may be some concern about the slower addition of providers next year. People often wonder, and I know you've mentioned that this is a challenging business. Are you noticing any changes in the competitive landscape among EHR companies? Are we starting to reach higher penetration rates? What do you think is happening?
Chaim Indig, CEO
I believe the team is performing exceptionally well. We have made significant investments in numerous new products, which are beginning to show results. Our efforts to diversify beyond just being recognized for intake are proving beneficial, as they have helped us win deals consistently on a weekly, monthly, and yearly basis. Additionally, we are noticing more venture-backed and private equity-backed businesses struggling due to their inability to invest at previous levels. Our perspective is that as long as we keep investing in product development, it matters more what we are currently doing rather than what we've done in the past. We believe we deserve the opportunity to continue growing the business, and so far, this belief has been validated.
Balaji Gandhi, CFO
And Glen, I would add that we have various methods of growing. Client growth is certainly a significant aspect of this, but the revenue generated from clients is equally important.
Chaim Indig, CEO
I don't think anyone – I don’t hear people often saying, 'Well, my experience in health care has been amazing. It's so seamless.'
Operator, Operator
Your next question comes from the line of Stephanie Davis with Barclays. Your line is open.
Stephanie Davis, Analyst
Hi guys. Congrats on the quarter. We had really seen you push on the gas pedal and that revenue per metric when at its scale before, so I was hoping you can give us some insight into the balance of how much of it is from new deals of scale that you talked about, which might have a bit longer to flow through? How much of it is that cross-sales of the broader solution suite? And when we think about your client base and the recent off-boarding you had in one, is there any further off-boarding that might make sense if some clients aren't at the sale or sophistication it this next Phreesia platform?
Balaji Gandhi, CFO
What was the last part of that? Is there further what?
Stephanie Davis, Analyst
Any further off-boarding and client relationships that might not be able to scale in the same way that you folks are looking to do?
Balaji Gandhi, CFO
Yes, I understand. There are a couple of points I want to make regarding your question. First, in fiscal '25, we've shared that removing $8 million from a very unusual clearinghouse client distorts our trends. The second point, which I mentioned earlier, is that while our pipeline looks similar to a year ago, the value of the deals is significantly larger, about 20% more than this time last year. This increase contributes to revenue growth per client.
Stephanie Davis, Analyst
And you guys have seen a lot of leverage on the sales and marketing front. Should we think about a change in your go-to-market of maybe a more narrow focus or a bit more upmarket focus?
Balaji Gandhi, CFO
No, I think it’s been pretty consistent. There’s a lot of analysis that can be done now with over five years of data on visits and clients and the revenue associated with them. The size and composition have pretty much remained the same. It fluctuates from quarter to quarter, but overall it’s been consistent throughout that entire period.
Operator, Operator
Your next question comes from the line of Joe Vruwink with Baird. Your line is open.
Joe Vruwink, Analyst
Great. Thank you. On the expectation for customer accounts, obviously, those are net numbers. I'm wondering if you could speak to the gross experience retention on maybe even a logo basis or dollar basis over that stretch of time. And I guess I'm wondering, you talked about the progress you've had on kind of new deals and new transactions and shorter paybacks in those cohorts. I'm wondering if the economics have changed for the better within the established installed base, and that's driving some of the good updates we are now seeing.
Balaji Gandhi, CFO
Yes, I would say yes is the short answer to your second question. As for the first part, we have consistently maintained a gross revenue retention rate between 94% and 96% since our initial public offering, and we continue to stay within that range.
Operator, Operator
Your next question comes from the line of John Ransom with Raymond James. Your line is open.
John Ransom, Analyst
Hi, good evening. A couple for me. If we think about your overall expenses outside of payment, which is variable, what kind of revenue do you think you could support with that level of expense compared to what you have today?
Balaji Gandhi, CFO
Is this your way of trying to get to a revenue number for next year, John?
John Ransom, Analyst
No. It's a way to try to understand how much expenses will grow independent of revenue.
Balaji Gandhi, CFO
I think we have said you shouldn't expect that expense number that you talked about, which is around $79 million in a quarter going up much over the next couple of years as we continue to grow at a pretty healthy clip.
John Ransom, Analyst
Okay. And then secondly, just kind of trying to read between the lines a little bit, and this is a state school reading between the lines, which is always in question. So for you to drive a higher revenue per client, not only do you have to tackle bigger clients, but I'm assuming that you are also targeting clients that have a bigger willingness to write prescriptions so that the data flow through to pharma would be more valuable. So are you looking at groups that might be more high prescribers than maybe what you were in the past?
Chaim Indig, CEO
Hi, John. We believe it's important to focus on delivering our complete range of solutions during the initial sale. Instead of starting with a lower-tier product, we aim to introduce our full suite from the beginning to create more value right away. Additionally, our investments in research and development and product enhancements are beginning to show results, allowing us to offer a wider array of services to our clients at the start and throughout their journey. We are grateful for our investors' support in enabling us to invest in these product developments.
John Ransom, Analyst
Right. So regarding your sales and marketing, what measures have been implemented to enhance productivity? It's clear that productivity has increased, especially after the experiment where you hired several new team members, followed by your growth experiment and now the productivity initiative. I'm interested in the specific actions you've taken to boost the productivity of your sales and marketing team, as the improvement is evident in the numbers.
Balaji Gandhi, CFO
I don't see them as two separate experiments, although I understand your perspective. We invested capital that we believed was appropriate, aiming for faster growth to create operating leverage. Achieving this involves concentrating on various operating metrics and obtaining solid results and returns. We've acknowledged that we don't always get everything right. When that happens, it's important to evaluate the situation, measure it, and address any issues. That’s likely what you are noticing in the numbers. Chaim, do you have anything to add?
Chaim Indig, CEO
No. You do a great job. You're the only completely virtual company I follow, and you've achieved a strong return on R&D. How do you manage to keep people in the same locations while developing products at such a rapid pace? Look, I think we are very purposeful, John, in how we think about communication, documentation, and ideating, but the team does pull together on a fairly regular basis. But it also allows us to attract and retain top talent from all over. And I think we recognize that it is not the same as in person, but we try to play to our strengths being fully virtual, but also recognizing that we have to get together, and we have to have a really focused time on that collaboration as we do on a regular basis.
John Ransom, Analyst
Thank you.
Operator, Operator
Your next question comes from the line of Richard Close with Canaccord Genuity. Your line is open.
Richard Close, Analyst
Great. Thank you for all the information in the letter. On product updates, Ryan took the MEDITECH. So I guess I'll hit medication adherence. Can you remind us what the revenue model is associated with that offering, is that being paid for by pharma, this part of network solutions? And if that is the process, is it like a drug by drug that the clients sign up for or do you go to each pharma company and say, hey, we'll show you all the prescriptions? Just curious how that all works.
Chaim Indig, CEO
Yes. I'll provide some detail, perhaps not as much as you'd like. To be clear, we do not disclose any information back to a pharmaceutical company regarding patient identities or reasons for medication use. No patient identifiable information is shared with them. Most of the revenue is likely realized through our Network Solutions line and usually forms part of a broader offering related to the patient's journey. We collaborate with our network solution clients to give them access to that network, but it is one of several components they might choose, rather than focusing solely on growing and selling that specific service.
Richard Close, Analyst
Okay. That's helpful. And then maybe, Balaji, on the pipeline being the same year-over-year, you obviously focused or stated last quarter, you're focusing in on the shorter paybacks. So I assume some stuff probably fell out of the pipeline just because they were maybe not as broad from a product offering or interested in the broader product offering. Is that fair to say?
Balaji Gandhi, CFO
No, I don't think that would be fair to say. I talked about size earlier, and if you just consider the value, that's what we've been driving. A lot of this is the result of things we implemented a couple of years ago. So our comment is simply that the pipeline remains strong. It is about the same size, but the deals are bigger, which will help us reach our goals for next year and beyond.
Richard Close, Analyst
Okay. And okay, that's helpful. And then final question here is I appreciate the retention comments, a couple of questions earlier, can you just talk to us a little bit about let's say, a client decides to switch from one vendor to let’s say Epic. What's your history in terms of keeping that client on the patient access side? And just curious there.
Balaji Gandhi, CFO
Yes, I don’t think we should mention any specific EMR vendor, Richard. However, we have discussed our retention rates and the range of clients we are targeting. We are focusing on engaging these clients more comprehensively. There's nothing in particular to highlight. We don’t win every deal, and when that occurs, there isn't a specific pattern to point out. Clearly, we are a significant player in this field.
Richard Close, Analyst
Okay, thank you. Congratulations.
Balaji Gandhi, CFO
Yeah, thanks.
Operator, Operator
Your next question comes from the line of Daniel Grosslight with Citi. Your line is open.
Daniel Grosslight, Analyst
Hi, guys. Thanks for taking the question. I wanted to go back to the components of REV for AHSC growth in '26 and beyond. First, I just wanted to confirm that you are still committed to that 20% top-line growth of your medium-term targets. And then if I look at your growth algorithm back in the 2018, 2019 time frame, obviously much of that growth was driven by subscription revenue per provider given the Life Sciences segment at that time was relatively nascent. Fast forward to today, the Networks business is your fastest-growing segment. So as we think about rev per AHSC growth in the future, is networks really going to drive the majority of that now? And how does that impact the visibility that you have in achieving those longer-term targets?
Balaji Gandhi, CFO
Sure. So first point, Daniel, the Network Solutions revenue is actually the first revenue line both in the history of the company, going back to 2005. So I just want to make sure, when you said nascent, it’s the earliest revenue we had and the first product we had. I think what you have to appreciate is how much smaller the network was then. And we had done 54 million visits the year we went public. And so one of the reasons the Network Solutions has grown so much, we’re now working with over 100 brands. And I think that’s because the size of the network has grown so much that it gives us a nice tailwind to be able to have a lot of these conversations with a lot more people, frankly, that we won't a few years ago. So I think that is a very different sort of thing. And I think as you talked about next year, I want to also clarify, we’ve never talked about 20% growth as any kind of target. I think we’ll talk to you, we’ll keep giving you updates about the things we’ll talk about ‘26 in December. But that’s really – I mean, that’s – I think you’ll get updates from us. But this year, you obviously have the growth the revenue that we’re targeting.
Operator, Operator
Your next question comes from the line of Sean Dodge with RBC Capital Markets. Your line is open.
Sean Dodge, Analyst
Thank you. Good afternoon. Regarding the guidance, you mentioned that the variability in that range is linked to network solution selling activity. Is there a significant seasonal aspect or pattern in that business, or is the third and fourth quarter still the peak for that segment? Additionally, can you provide any insights on your visibility into that revenue as we move into the second half of this year? Thank you.
Balaji Gandhi, CFO
Yes. So you're right, Sean. Absolutely. That's been the case every year. We were pretty intentional about having a wider revenue guidance range for this year because of that. And so there will be a lot of balls up in the air in the fall, and we'll keep you apprised to that as we get through it. But that is the time of the year where we're doing a lot of sales.
Operator, Operator
Your next question comes from the line of Jeff Garro with Stephens. Your line is open.
Jeff Garro, Analyst
Yeah, good afternoon. Thanks for taking the questions. Maybe follow up a little bit on that last one. If you could just give any comments specifically about any impact you've anticipated from it being an election year? I would imagine maybe you guys are an attractive non-media channel for Life Sciences given the increased spend this fall. But I'm curious to get your comments there.
Balaji Gandhi, CFO
Yes. No, I'm looking at Chaim too. And I don't think there's anything we'd call out about election season. We went through this in 2020 and 2022 as well. And frankly, well before we were public.
Jeff Garro, Analyst
Fair enough. One more for me. Just want to see if we could get an update on MediFind. Curious what's working there in terms of customer adoption within the Phreesia base? And any early insights on the value realized by clients that are using that service?
Balaji Gandhi, CFO
Yes. No, look, it is just across the one-year anniversary in July. I think talking to our Life Sciences team, it's helped spark a lot of good conversations around how we can bring value just beyond what we've done historically with this asset. And I think it is going to be a driver of our growth in the future. So when you think about the conversations like total revenue per client and Network Solutions growth, absolutely MediFind is going to be part of that.
Jeff Garro, Analyst
Great. Thanks for taking the questions.
Operator, Operator
Your next question comes from the line of Ryan MacDonald with Needham. Your line is open.
Matthew Shea, Analyst
Yeah, thanks. This is Matt Shea on for Ryan. Thanks for taking the questions. And congrats on the quarter here guys. I wanted to follow up on the new provider adds to the back half of '25 kind of below that 100-plus per quarter rate. Should we view this as maybe new selling seasonality going forward that new deals might be more first half of the year or first half of the fiscal year weighted going forward? Or is this more of a signal of the shift towards fewer but bigger new clients? I guess just trying to understand if we should expect new provider ads to be linear in FY '26 or more front half weighted?
Balaji Gandhi, CFO
Yes. No, Matt, actually, you should take away, and this is some feedback and conversations we've had with a lot of folks. This is a very intentional effort on our part to get out of the quarterly cadence of AHSCs and give you a bigger runway. And so what we're saying is we're giving you a sense for where we think we'll be for the full year on average and where we'll be next year. But I do think I'll confirm that this is not anything about seasonality or anything like that. It's just a point in time where we're choosing to set expectations and longer-term.
Matthew Shea, Analyst
Okay. Fair enough. Yes, that makes sense. And then just to follow up on the PAM renewal. Just curious, were you guys hit against any other vendors in that process. And then as we think about the expansionary opportunity, those for potential additional models. Does that create a revenue uplift as CMS add you do additional models? Or is that just included in your renewal contract kind of passed as no revenue uplift?
Balaji Gandhi, CFO
Yes, we are very excited about that measure because it is quite unique. There is public information available regarding why PAM was chosen and what sets it apart, which you could look into further. As for the programs, there is potential for growth. This information is also publicly accessible, and if we are able to implement more models, it could lead to revenue opportunities that we are looking forward to.
Matthew Shea, Analyst
Okay, great. Thank you.
Operator, Operator
Your next question comes from the line of Jack Wallace with Guggenheim. Your line is open.
Jack Wallace, Analyst
Hi, thanks for taking my questions. And congrats on getting to cash flow positive. I wanted to send another question your way about the growth algorithm for next year. I wanted to maybe ask about the same-store sales growth. It sounds like you're adding some bigger deals, maybe moving up market a little bit. But thinking about the clients you do have, how much additional upselling is contemplated within the algo for next year? Is there any price that we should be considering? And then just kind of the general impact or lack thereof, maybe the sunsetting of the initial demo periods? Thank you.
Balaji Gandhi, CFO
No, there is nothing to take away from that regarding changes to our go-to-market strategy. I wouldn't describe it as moving up-market or down-market; we are simply discussing value. As I mentioned, the total value we can generate in the business has increased this half compared to the last half. That is why we feel comfortable sharing our outlook for next year.
Jack Wallace, Analyst
Thank you. To rephrase my question, regarding the subscription line, you've been slightly above one-third of the total addressable market per provider. Should we anticipate an increase in that penetration next year, or is it primarily dependent on securing larger and higher-value deals?
Balaji Gandhi, CFO
Yes. And again, I think what we're going to emphasize, when we say value is total revenue. Some of them will be larger on subscription, some of them could be larger on payments and some could be larger network solutions. But really, when we say total value, we mean all three.
Operator, Operator
Your next question comes from the line of Aaron Kimson with Citizens JMP. Your line is open.
Aaron Kimson, Analyst
Thank you. Do you announce the availability of Phreesia on the Oracle health care marketplace at the end of July and an integration with Oracle EHR? You talk about what you've seen from the partnership and integration in the first month and the potential you see for it to help Phreesia land customers going forward?
Balaji Gandhi, CFO
Yes, Aaron, it's early, and we just announced that. So I don't think there's anything particular to highlight. We're happy to formalize that, but I don't believe there's anything specific to mention.
Operator, Operator
This concludes the question-and-answer session. I will turn the call to Chaim for closing remarks.
Chaim Indig, CEO
Thanks a lot everyone for joining us. I hope everyone's gotten back into the full swing and everyone is happy that their kids are back in school, and I look forward to seeing everyone over the next 90 days, and we'll talk to you all in December. Great way.
Operator, Operator
This concludes today's conference call. We thank you for joining. You may now disconnect your lines.