Phreesia Posts Solid Earnings But Shares Drop Anyway

• Phreesia reported its archetypal meaningful nett astatine $4.3M with EPS of $0.31 versus $0.00 expected.

• Operating income remained antagonistic astatine $23.9M contempt affirmative nett income.

• Shares fell contempt the net beat. The guardant P/E of 385 suggests valuation concerns.

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Yesterday we were watching whether Phreesia's way to profitability would accelerate aft 2 consecutive near-breakeven quarters. They delivered coagulated net aft the doorbell connected December 8, reporting EPS of $0.31.

The healthcare SaaS supplier posted nett income of $4.3 cardinal for the 4th ending October 31, marking its archetypal meaningful nett aft years of losses. Revenue climbed to $120.3 million, continuing a five-quarter acceleration from $106.8 cardinal a twelvemonth ago. More importantly, operating currency travel reached $15.5 million, exceeding nett income by $11.2 cardinal and validating net quality. Free currency travel turned affirmative astatine $12.2 cardinal aft subtracting $3.3 cardinal successful superior expenditures.

The turnaround trajectory is dramatic. Just 1 twelvemonth ago, Phreesia reported a $14.4 cardinal quarterly loss. The institution chopped operating expenses by $15 cardinal twelvemonth implicit twelvemonth portion maintaining sequential gross growth, demonstrating genuine operational subject alternatively than accounting adjustments.

The market's tepid effect apt reflects guardant valuation concerns. Despite unanimous expert enactment (17 bargain ratings, zero sells, with a $33.69 mean terms target), Phreesia trades astatine a guardant P/E of 385. That utmost aggregate suggests investors stay skeptical astir net sustainability, adjacent arsenic the institution has present beaten estimates for 4 consecutive quarters.

The operating borderline tells portion of the story. While nett income turned positive, operating income remained antagonistic astatine $23.9 million, indicating the institution inactive relies connected non-operating items to scope profitability. The 46.7% antagonistic operating borderline connected a trailing ground shows important enactment remains.

Three directors acquired shares connected October 31, the aforesaid time the 4th closed, signaling insider confidence. Analyst people prices connote 67% upside from existent levels, yet the guardant aggregate suggests the marketplace needs much impervious of sustainable profitability.

Watch whether absorption provides guidance that justifies the valuation premium. The company's adjacent trial volition beryllium maintaining affirmative currency procreation portion continuing to trim operating losses. We'll update if expert revisions displacement meaningfully aft this morning's open.