Since health software company Phreesia (NYSE: PHR) went public six years ago, it has almost tripled the number of customers using its platform.
Digitizing medical records has been challenging. That’s because some doctor’s offices, facilities and hospitals do not invest in software that could speed up the process of receiving basic personal and health information from patients before they see physicians and other healthcare workers. Several companies in the industry are attempting to capture this market share.
Phreesia’s software solves the issue of patients filling out several pages of paperwork and instead provides a digital platform for doctors’ offices to conduct registration online.
For the past four consecutive quarters, the company, which began in 2005 and went public in 2019, has generated positive cash flow and continues to increase the number of clients.
The company boasts 4,400 clients, ranging from specialty practices to hospital groups. That translates into 170 million visits by patients or about 1 in 7 people seeing healthcare professionals in the U.S.
The software expands past the initial intake information and links both patients and doctors to provide clinical support, such as making referrals to other specialists. The software also allows for managing medical payments.
The power of subscriptions
Phreesia’s business model relies heavily on subscriptions from medical practices and hospitals, especially specialty ones, ranging from radiology to pediatrics. Almost half of its revenue comes from its subscriptions. The rest is produced by payment processing fees for accepting co-pays from patients or out-of-pocket expenses, and network solutions.
Phreesia’s network solutions group takes its anonymized data from patients and provides it as a resource for medical device, pharmaceutical and biotech companies.
During the first quarter, revenue increased by 15% year over year to $116 million. Adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, was $54 million for the trailing 12 months, compared to a loss of $18 million from the same period last year. The profit resulted from declining operating expenses as the company becomes more efficient.
Companies who offer subscription models can often generate more revenue and produce more efficiencies easily by adding on more software capabilities.
Small-cap stocks have faced their own challenges so far in 2025, despite a recent rebound. Investors in Phreesia, which has a $1.6 billion market cap, will likely have to be patient. While the stock rose by 27% during the past year, it has declined by 7.4% over the past six months. To be sure, shares have increased by 2.36% during the past five days.
AI, software capabilities
Meanwhile, Phreesia is working on adding artificial intelligence features to its current offerings. Its latest offering allows doctors’ offices to receive calls from patients after hours and document medical information. The AI feature will accept calls and route them, depending on the level of treatment needed and can respond in several languages.
Phreesia’s software can also track the interaction and keep an audit trail so that medical providers have time-stamped documentation from phone calls, the company said. The feature is currently being offered to its clients for free.
Wall Street analysts believe that the company’s financials could improve and see revenue growth in the double digits. Jeff Garro, a Stephens analyst, said the “stage is set for more operating leverage.”
The digital platform market for the healthcare industry has several competitors. This includes Epic Systems, a large privately-held electronic health records company; the Oracle (NYSE: ORCL) division called Oracle Health; and a smaller privately-held company, Luma Health.
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