Good morning, ladies and gentlemen. And welcome to the Phreesia's fiscal fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. I would now like to introduce Balaji Gandhi [indiscernible]..

Thank you operator. Good morning. And welcome to Phreesia's earnings conference call for the fiscal fourth quarter of 2021, which ended on January 31, 2021.

Participating on today's call from Phreesia are Chief Executive Officer and Co-Founder, Chaim Indig, Chief Financial Officer, Tom Altier and Senior Vice President of Marketing and Business Development, Michael Davidoff. Following prepared remarks from Chaim, Michael and Tom, we will conduct a Q&A session.

A complete disclosure of our results can be found in our earnings press release issued yesterday evening, as well as in our related Form 8-K submission to the SEC, both of which 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 following the conclusion of the call. During today's call, we will make forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act.

Although we believe that the expectations reflected in any forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements.

Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation, statements about our future financial performance, including our revenue, cash flows, costs of revenue and operating expenses, our anticipated growth, our predictions about our industry, the impact of the COVID-19 pandemic on our business and our ability to attract, retain and cross-sell to healthcare provider clients.

These statements are also subject to other risks and uncertainties, including those more fully described in our filings with the SEC, including in our Annual Report on Form 10-K that will be filed with the SEC later today. The forward-looking statements made on this call, speak only as of the date on which these statements are made.

We undertake no obligation to update and expressly disclaim the obligation to update any forward-looking statements to reflect events or circumstances or to reflect new information or the occurrence of unanticipated events, except as required by law.

We will 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 press release and supplemental materials, which were furnished with our Form 8-K filed after the market closed on March 30 with the SEC and may also be found on our Investor Relations website at ir.phreesia.com.

As a reminder, we are participating on today's call from four different locations so we appreciate your patience with us. I will now turn the call over to our CEO, Chaim Indig..

Thank you Balaji. Good morning and thank you for your interest in Phreesia. Our fourth quarter reflects continued solid performance. Total revenue was $41.8 million, up 27% year-over-year. The average number of provider clients was 1,808, up 13% year-over-year. Average revenue per provider client was $17,858, up 7% year-over-year.

Life sciences revenue was $9.5 million, up 58% year-over-year. Adjusted EBITDA was negative $85,000, a decline of $1.4 million year-over-year, reflecting our continued investment in long term growth. Our performance over the past year was truly a team effort.

There are two unique aspects of the past fiscal year that I would like to highlight and acknowledge. First, the transition to remote work. From the earliest days of the pandemic, everyone at Phreesia tried to adopt full-time remote work, often in the same living spaces as their roommates or families who were working and learning remotely as well.

This has allowed us to continue to grow our team to over 800 folks who worked tirelessly for our clients and their communities. Our team grew 55% in fiscal 2021. This growth was spread across all areas of our organization, service and support, sales and marketing, research and development and G&A.

The recruitments and onboarding of hundreds of new team members in the pandemic environment was particularly challenging. There is no playbook to draw from.

Our human resources team and managers across the organization adapted to the new environment by testing new approaches to recruitment and onboarding that we believe will strengthen our processes going forward. We will continue to invest and learn together as we adapt our company to permanently remote-first environment.

Second, the development of new solutions, such as our COVID-19 screener, Intake for Telehealth and vaccine delivery management, all of which were not part of our near term product roadmap when we entered fiscal 2021. These modules are helping our clients operate safely and efficiently through the pandemic.

We saw significant client growth with our average provider client count in the fourth quarter, increasing by over 200 clients year-over-year. These client were interim small ambulatory practices who were onboard quickly to large health systems that engaged us and will likely look to expand their relationship with us over time.

We will continue to invest across the organization to support our work with all the new and existing clients. Finally, we grew through acquisition. In October 2020, we integrated two web-based workflow applications codeveloped by Geisinger and Merck that focus on patient communication and medication adherence perspective.

In January 2021, we acquired QueueDr, an innovative company in our space we have known for six years. Both of these additions to Phreesia were led by our operating executive. I have asked Michael Davidoff, our SVP of Marketing and Business Development, to join us today to provide an overview of the QueueDr acquisition.

Michael?.

Thank you Chaim and good morning everyone. QueueDr was founded in 2013 by Patrick Randolph. Patrick and his team set out to address the need for providers to reduce patient appointment cancellation and no-shows and ultimately accelerate patient access to care.

According to industry data, cancellation, reschedule and no-shows can reduce a provider's revenue by over 20%. What attracted us to QueueDr was its set of high-value SaaS features that will expand the value of our appointment space offering.

QueueDr software was designed to identify patient appointment cancellation and no-shows and automatically fill those gaps in the schedule by pulling forward future patient appointments. We tracked QueueDr's progress in this space for many years and determined that it would take too long to replicate it through internal development.

In addition to QueueDr's strong product offering and cultural fit, roughly one-third of QueueDr's client are existing Phreesia clients which, we believe, speaks to the complementary nature of our product.

As we indicated in our earnings press release, the total consideration for the acquisition consists of $5.8 million in cash paid on the acquisition date, $2.1 million of liabilities incurred and $2.2 million in performance-related contingent payments.

Over time, we believe the underlying QueueDr technology will enhance our employment space solution and the overall value of the Phreesia platform to healthcare providers and patients. I will now turn the call back behind to Chaim..

Thank you Michael. Before handing over to Tom for his final quarterly review of the financials, I would like to acknowledge Tom's contributions to Phreesia. Tom joined us in 2012 and brought with him half a century of experience in public accounting in growing technology businesses.

He played an important role in our successful transition from a small venture-backed company to the Phreesia that was introduced to all of you through our IPO in 2019.

I speak for the entire Phreesia team, including our Board of Directors, in thanking Tom for his contributions and wish him and his family all the best as he begins his next chapter in semi retirement at the end of April. Going forward, we will also benefit from his experience in a new advisory role and I will continue to enjoy his friendship.

Tom?.

Thank you Chaim and good morning everyone. I will review the income statement, balance sheet and cash flows for the fiscal fourth quarter and update our outlook for fiscal 2022. First, total revenue was $41.8 million, up 27% year-over-year. Subscription and related services revenue was $18.8 million in the quarter, up 25% year-over-year.

Payment processing revenue was $13.4 million in the quarter, up 15% year-over-year, reflecting our continued recovery in patient visit trends but still slightly below pre-pandemic levels.

Provider revenue, which combines revenue from subscription and related services with payment processing fees, was $32.3 million in the quarter, up 21% year-over-year. The two drivers of the 21% provider revenue growth in the quarter were average provider client growth up 13% year-over-year and average revenue per provider client up 7% year-over-year.

As we indicated last quarter, provider client growth has been trending higher reflecting increased demand for our offerings. That being said, our land and expand go-to-market strategy tends to result in quarter-to-quarter variability between the contribution of client growth and revenue per client.

This has been the case for many years as our historical results show. Life sciences revenue was $9.5 million in the quarter, up 58% year-over-year. Our team continues to execute on closing your business and delivering messages to very targeted patients. Now, let's move on to expenses.

I will review several expense line items on an adjusted non-GAAP basis which excludes stock-based compensation expense from each line item. Please note that a full reconciliation of GAAP to non-GAAP measures, including adjusted EBITDA is included in our earnings press release and our Form 10-K to be filed with the SEC.

Cost of revenue was $6.8 million or 16.2% of total revenue, up 320 basis points year-over-year. The year-over-year trend reflects the ramp up we discussed last quarter in our client services organization to support our growth. On a sequential quarter basis, cost of revenue as a percentage of revenue was down 10 basis points.

Sales and marketing expense was $12 million or 28.7% of total revenue, up 530 basis points year-over-year. The increase reflects the accelerated investments we previewed earlier in the fiscal year to support our current and future anticipated growth.

Research and development expense was $5.9 million or 14% of total revenue, up 10 basis points year-over-year as a percentage of revenue. Note that we expect the pace and level of investment in R&D to accelerate over the next several quarters and dollars will be allocated across the existing platform as well as into new products and solutions.

General and administrative expense was $9.5 million or 22.8% of total revenue, down 180 basis points year-over-year, as a percentage of revenue. We continue to ramp up public company expenses, particularly in finance and legal and we expect to begin to see operating leverage in the fourth quarter of fiscal 2022.

Payment processing expense was $7.8 million, up 12% year-over-year. Payment processing margin was 42%, up 120 basis points year-over-year due to the mix of transaction type and lower cost routing of payments.

Longer term, we expect payments margins to return to the 40% range with a quarter-to-quarter variability due to transaction type mix and interchange fees. Adjusted EBITDA was a loss of $85,000, a decline of $1.4 million year-over-year.

The decline is largely due to the acceleration in investment across the company, but most notably in sales and marketing the fourth quarter as we capture the growth opportunities we are seeing in the market. Shares outstanding as of March 26 was 44.9 million.

Cash on the balance sheet at January 31 was $218.8 million, down $35.3 million from October 31. However, we paid down our $21 million revolver in the fourth quarter. Cash flow from operations for the quarter was $4.1 million compared to $1.3 million in the prior year quarter.

Capital expenditures for the quarter were $7.5 million, up $4.3 million year-over-year, a significant increase reflects our ramp up in data center equipment purchases and capitalized software to support our growth. Our outlook for revenue growth in fiscal 2022 remains 20% to 25% which translates into a revenue range of $178 million to $186 million.

We expect our overall cash outflow to increase in fiscal 2022, compared to fiscal 2021, as we continue to ramp up hiring and infrastructure across the organization to support our anticipated growth.

In closing, the past eight years with Phreesia have been an incredible journey and I would like to think Chaim and the entire Phreesia team for their partnership and support and I wish the best to Randy and the finance team members who have been so dedicated to our mission and growth over the years. We are ready to take your questions.

Operator?.

[Operator Instructions]. Your first question comes from the line of Ryan Daniels with William Blair. Ryan, your line is open..

Yes. Good morning guys. This is Jared Haase, in for Ryan. Thanks for taking the question. I just wanted to ask you a quick one to start on the life sciences revenues. So obviously, that was strong again, both on a year-over-year basis as well as sequentially versus last quarter.

And I think last quarter you talked about you continuing to make some investments to maybe feeling a little bit better about the team and where that product line is positioned in the marketplace.

So just curious if the strength here this quarter has more to do with any sort of seasonality factors, thinking maybe year-end budget flush with pharma clients? Or is it really just continued execution with the sales team and just a really strong demand environment?.

Good morning. And so I love talking about life sciences. What I would say is that, it's just execution.

I want to, as much as I would love to be able to point to a one-time seasonal thing, but at the end of the day the team has just been doing a really good job of really focusing on clients and making sure that we deliver phenomenal value and strong ROIs and are clearly articulating our value..

Got it. Yes. Thanks for that. That's good color. And then I guess just maybe a bigger picture question kind of thinking more longer term.

Given all the things that have kind of changed from a demand perspective over the last year or so and the product line that you have developed as well as the pace of hiring and the way in which you have kind of transformed the cost structure a little bit, is there any reason to think about any sort of meaningful difference in your longer term margin targets for the business? Or do you still feel like eventually getting to maybe 20% adjusted EBITDA margin is the right longer term target?.

That's sort of the right target for us. I think the only thing we have done is increased our investment levels to support what we see as our ability to grab our fair share of market. We are very enthused. This is my excited voice.

We are very enthused about the reaction and feedback we are getting from our client base and we are going to keep leaning in and investing to capture that share..

Okay. Great. Thanks for that..

Cheers..

Your next question comes from the line of Stephanie Davis with SVB Leerink. Stephanie, your line is open..

Hi guys. Thank you for taking my questions and congrats on the quarter. So looking at your three revenue lines, as we look forward to next year, you saw likely acceleration in your subscription growth because you just had a huge sales force investment, likely acceleration in payment processing because of these COVID comp.

So that leaves life sciences as the plug to make 20% to 25% growth. But all market signals and recent performance there suggest that that shouldn't be decelerating dramatically.

So could you help me reconcile that?.

I can't reconcile your numbers and I depend not to run the business by plugging. But I will say that we feel that the investments we have made across the board are really paying off. And all of our early indicators that we see are very, very positive. And I think our life sciences team is capturing also an unfair share of market gains too.

So we feel good across the board. But that being said, I have no idea what the recovery is going to look like. And we just know that we are going to keep supporting our clients any which way possible..

Maybe asked another way, is there anything that would cause deceleration in that life sciences revenue?.

I am sure if you like thought enough ways, there is ways you could decelerate it. But we are really focus on continue to growing it. I don't know if that's -- I don't really wake up and think about how I could decelerate the business..

Okay. Fair..

I am sorry. Like we are pretty pumped about all, like just everyone's still running hard here. So we are really excited..

So how do you get to only, I guess, at mid-point, three points of revenue growth acceleration?.

The numbers get bigger..

No. I guess that the point is, it is only three points.

It's not that [indiscernible]?.

Yes. This is Balaji. Definitely, I would just say, that acceleration in and of itself is a move up from our growth rate historically. Maybe start to think about it that way..

Sounds good. Fair. And a quick follow-up on the QueueDr biz. It sounds like there is only a third overlap in your client base. Are you going to use this as a capabilities expansion? Or is there a cross-sell opportunity for incremental revenues there? You have got two-thirds that doesn't have it..

We are we both think this is capabilities and it will allow us to cross-sell other application. It will fit into applications that we are cross-selling to our client base. It's already integrated. We have had early success to-date already. So it's been good..

All right. Thank you..

Cheers..

Your next question comes from the line of Scott Schoenhaus with Stephens. Scott, your line is open..

Thank you. Hi Chaim and team. I wanted to ask you a balance sheet related question I thought was interesting. Property, plant and equipment nearly doubled from last quarter.

I wondered if you could provide more color on what investments you are making there and what that means for your business?.

We are making because of the big ramp in volume, we are also making fairly significant investments in data centers. So a lot of that is just to add significantly more capacity..

And is that also a sign that you are continuing to succeed upmarket into larger hospital system as you need larger data centers or more data centers?.

Look, to be clear, I think we are succeeding not just in large health systems, in the mid-tier and large ambulatory groups, in surgery centers. And frankly, I think the team is doing a phenomenal job across the board. I think we have had some really nice swings in all of the markets that we have been tackling. And I am just very pleased.

And so we want to make sure that we continue to invest to continue to support the market share gains that we are winning..

Great. Just a follow-up there. You have obviously seen success in selling across the board of client base and taking share.

How does the dynamic change between provider client growth and average revenue per client, given these larger land and expand opportunities with larger hospital systems, just to be specific here, the cross-selling and up-selling opportunities once you expand into the system? Is there a way to think about the average revenue per provider growth kind of accelerating in the back half of the year into fiscal 2023? in Just trying to get more color there..

Yes. I think when you think about one of the things that we pointed out even in our TAM, we didn't think that we are going to be able to grab as much payment volume in the large hospital systems. So you are seeing some of that shift happen. But look, we are all review those metrics as tightly tied together, both average revenue and revenue per client.

Those are metrics that internally the entire leadership team is strongly tied to..

Got it. Thanks Tom..

Cheers..

Your next question comes from the line of Sean Wieland with Piper Sandler. Sean, your line is open..

Hi. Thank you. Good morning. I would like to better understand, payment is up 15%, life science revenue up 58%. I would suspect that both of those have at least some correlation to visit volume.

Can you discuss what the separation there is?.

There is some correlation to visit volume. You are correct. But the life sciences revenue has other drivers to it as does the payment volume, since we you did see a slight drop in where the paper was the pay pack was tied to Phreesia.

But we have also done a great job of cross-selling more visits to different life sciences customers using our significant investment in data science..

Okay.

Can you just, as a follow-up, what was the overall trend in visit volume for the year across the platform? And how is pricing holding out in the payments business?.

Hi Sean. This is Balaji. The Commonwealth data which we have been putting out, I mean we want to be clear we don't disclose visit data as a KPI or anything like that. But you can see the data from Commonwealth which spans pretty much the entire fiscal year that it basically got within low single digits of pre-COVID levels by the end of the year.

But overall it was clearly down year-over-year. So hope that helps you and its more tied to payments processing than it's to life sciences. There some nuances to life sciences payments there's much more of a direct impact..

Okay.

And how about the pricing in the payments business?.

Maybe you can get more specific on that?.

Can you characterize the pricing environment in the payments business?.

Sean, I think you are talking about our take rate.

Is that correct?.

Yes..

Yes. It's been pretty flat sequentially. It sounds like a hair but not much sequentially..

Okay. Thank you very much..

Your next question comes from the line of Hannah Baade with D.A. Davidson. Hannah, your line is open..

Hi. Thanks for taking my question.

As Phreesia moved upmarket with larger health system clients coming online, putting pressure on the process of patient volumes processed through Phreesia, can you ballpark where we should expect this percent to moderate?.

Can you repeat that, Hannah?.

Yes. On the 79% this quarter patient volume processed through Phreesia, obviously as you move more upmarket, those larger health system clients coming online, that's going to put some downward pressure on that statistic.

Can you ballpark where we should expect this to moderate as we move more upmarket?.

Yes. I mean I think I would later in time follow-up on this one. But it's a function of just the type of clients we add quarter-to-quarter and the type of growth we get. So there's definitely mix in there. So it's hard for us to, I think, tell you what the paycheck rates going to be. It's a little bit of chicken and egg there.

But I think I am comfortable in here but that changed the delta and that percentage is a reflection of moving upmarket with the clients we serve.

Anything you want to add, Chaim or Tom?.

No..

As we add health systems and if they don't take payments, you will see that decline..

Okay. Thank you. That's very helpful. And just one follow-up.

With the recent and likely episodic shift to vaccines, mass vaccination sites, pharmacies and grocery stores as opposed to traditional ambulatory care centers, are you seeing any customers impacted in regards to the visit uplift that they might have been expecting specifically for COVID vaccines?.

I am not sure I understand the question.

Can you try to --?.

Yes, absolutely.

As vaccines kind of may shift away from a traditional doctor's office and outpatient care center to say, a CVS, have you seen any customers be impacted in regards to a customer revenue they are expecting to get in office because vaccines have shifted to kind of these external care centers like a pharmacy?.

I don't think our clients and this is conversations we have had with them are waking up thinking that vaccines are a revenue driver. I think that what we are seeing is, our clients and provider groups and health systems are mostly looking at this as how do they vaccinate their communities as fast and effective as possible.

And I know a bunch that are partnering with the pharmacies locally and other organizations. Like I think the goal is to try to vaccinate the population as effectively as possible, not to think about this is as a profit driver. And we don’t monetize it in any meaningful way..

Got it. Thanks guys..

Thanks..

The next question comes from the line of Ryan MacDonald with Needham. Ryan, your line is open..

Yes. Good morning. Tom, best of luck in semi retirement. Great working with you..

Thank you..

My first question is, I guess, for Chaim. You are obviously seeing some continued strength in new logo growth. Curious to see here how the newest group of SCRs that you added in throughout 2020 are impacting that new customer logo growth.

How are they ramping in terms of productivity versus your internal expectations?.

I have been very pleased would be an understatement. I sat through one of the weekly demand gen calls last week. And I know Tom sat through a couple of them too. And they are just doing a good job. They are really able to reach out to people effectively. They are doing their calls effectively. We are seeing good demand gen.

I don’t want to say I am very pleasantly surprised because I am not surprised because we have a phenomenal organization. But they are doing as expected. And we are very excited for the new group, seven-odd folks that we have on the team..

Great.

And as a follow-up to that, as you sit on those types of calls and listen to the dynamics of the market, is there anything that you are seeing in terms of incrementals change and whether it's heightened in demand or as your reps are out talking to prospective customers, is there noise of other vendors sort of that are in the same markets right now? We have certainly heard a lot of noise from financing of other vendors in this space.

But I am curious to hear how early stage is the market opportunity feel here?.

All right. We have always heard noise for 16 years. Everyone's thought that this space is easy to be in and delivering solutions, all it requires is a website or a press release. our general view is raising money and putting out websites and press releases doesn't create product to drive the phenomenal amount of value.

So I think what we are doing is making sure that our customers get products that drive a phenomenal amount of value at great value and then rolling out and trusting us even more for more products. And that thesis has proved phenomenally well for years and we are not seeing any change in that.

I think when we use usage as our north star, we want to make sure not that we just get our products sold but that patients use it. When we transfer the work to the patient get this amazing ROI. Like I don’t think now is any different. I just think that the numbers get bigger and the press releases get louder..

Great. Thanks for the color and congrats again on a good quarter..

Cheers..

Your next question comes from the line of Sean Dodge with RBC Capital Markets. Sean, your line is open..

Yes. Thanks and good morning. Maybe on the [indiscernible] opportunities. When we think about trying in a potential ramp for that, is there anything you can share with us to help better frame that out? And obviously hospital workflows are a lot more complicated.

So is there just a lot of de novo development work you are having to do? Is there a lot more integration work? How far along you think you are on that? And then I would imagine sales cycles, sales processes are different too.

Anything to just kind of better frame out the timing?.

Look, I think we are going to keep investing. I don't think this is the fifth inning. It's probably closer to second inning. And we are seeing real value propositions and wins. And yes, we are going to keep investing heavily in the product, in the workflow, in the integrations, in the people, in the process and in the value that we provide our clients.

And if we just keep rinsing and repeating with the same formula and we keep doing it at scale, I think we are going to keep having the success that we have had previously and hopefully at even greater degrees..

Okay..

And just to clarify, we don't have any data to say that the sales cycle is longer..

Okay. May be on social determinants. It was about a year ago now you guys began to highlight the work you are doing there. I think it was initially in North Carolina, building on the ability to screen for those, integrating that with the intake process.

is there any interesting development updates you can share there?.

Yes. I think we just did a -- we have been doing a bunch of work and Michael could talk to this also, around our vaccine hesitancy in different communities and understanding vaccine hesitancy and understanding the impact of the virus on different communities, often tied to their social determinants.

But this is an area which we have not slowed down our investment. We think it makes material difference to healthcare delivery in patients in America.

Michael, you want to add to that?.

Yes, Chaim. Thanks for the question.

I think I would just add that we are continuing to invest in our clinical team and expanding that group and they are doing some incredible work with measuring hesitancy and working with our clients to really understand how they can improve the ability of the delivery of the vaccine to groups that just might not be comfortable getting the vaccine right now.

So it makes us extremely proud and really speaks to the mission of the company..

Okay. Great. Thanks again..

Your next question comes from the line of Daniel Grosslight with Citi. Daniel, your line is open..

Hi guys. Thanks for taking the question. Congrats to a strong quarter. I just have a quick question on the patient payment volume. If I divide patient payment volume by the average provider client in the quarter, I get a sequential increase versus 3Q of about 1% versus an 8% sequential increase from 2Q to 3Q.

So I am just curious of any trends you have seen recently on the patient payment volume per provider growth? Was the large sequential increase in 3Q due to a bolus of larger clients coming aboard et cetera? And how should we think about the growth in patient payment volume per provider for fiscal year 2022..

Tom you want to get that?.

Yes, There is a lot in that question. So maybe just break it down, Daniel.

So maybe the first part is, it was sequentially, Daniel, you are trying to understand payment volume trend from, was it 2Q to 3Q versus 3Q to 4Q?.

Exact. So I am trying to understand the patient payment volume per provider client sequential growth trend. Because it grew pretty rapidly in 3Q, about an 8% sequential increase per provider and then slowed to around 1% sequential increase, still very good relative to historical but a sequential slowdown.

So I am just trying to understand the trends underlying the sequential growth in payments per provider and how to think about that in fiscal year 2022?.

Dan, I think there's probably some most seasonal impacts in there and some impacts from our land and expand strategy that make it somewhat difficult to answer that question crisply. The decline in per provider patient payment volume has a lot of factors that go into it, size of the customers, et cetera.

So it's tough for me to give you a forecast as to what that's going to be in the future..

Okay. Understood. All right. And then I guess another question I have is, on the vaccine rollout, there's been some good press reports on how you have been helping some of your clients with the intake process there. I know you are giving those capabilities away free of charge, similar to what you did with telehealth modules.

But I am curious how you may leverage some of the goodwill or the learning that you learned during the vaccine rollout into a growth exploration in fiscal year 2022, i.e., will this accelerate some of the sales prospects that you had in the pipeline?.

I think it helps us, I think all these things, when you do right by clients and you build really amazing products that help massive amounts of people, the general view that I have and everyone here has is, the positive outcomes usually follow.

And that's something we have seen traditionally and untraditionally through our entire existence in 16 years. So it's not a halo. I think we have built some really amazing products that have helped us win clients because of it. We have won clients because of it. And our clients feel really good about us being able to support them through tough times.

And that's part of relationship that we build. But also it's just the right thing to do. And I want everyone to understand that, we will always endeavor to try to always do the right thing. It's important..

I understand. All right guys. Thanks..

Your final question comes from the line of John Ransom with Raymond James. John, your line is open..

Good morning. Chaim, I think you need to practice that excited voice a little bit. That was not that excited. But the question, recently Visa and MasterCard talked about maybe dropping up the interchange fee. They pulled back after some political pressure.

But just help us size, if that does go up, what does that mean for your payment business?.

Hi John, do you want me to take this?.

I do. But do it in your excited voice first, given you are pretty excited about that..

Thanks John. I think they announced about a 10 bip increase in their list prices in January or February and that's what they backed off on, I assume. Now all that’s a rumor. I don’t know the exact number but that's what I read in the press as to what their price increases would have been on a list price basis in April.

So that could get some size at of that time..

So can you translate to Phreesia revenue? Because our calculator down here is broken, if it does get through?.

It means that we don't have to pass on an increased cost to our providers. So it means that Visa and MasterCard unfairly taxing health care providers in America just got put on hold for a little bit. It's was a good thing. I think it's really, it's great that they have that pressure..

Okay. God you.

The other question and I would probably be the only guy that doesn't understand this, but could you say again why as we transition to larger clients, that 795 ratio that you referred that put some pressure on that number? Why is that ratio lower than it is what you are doing mostly with smaller doctors?.

In the sales cycle, what we have often found is in very large health systems, the treasury group of the large health systems have tight relationships with large banks and often they give them their credit card processing as part of those relationships.

And so it often takes some bit of maneuvering to be able to pry that away from the banks who are unfairly charging and taxing them for it. That's generally what we have seen and it's often tied to lending relationships..

I got you. Okay..

Okay..

And you know --.

Go ahead.

John, you are there?.

[Operator Instructions]. John Ryan is now open..

I though you cut me off.

The delta in marketing, is that mostly just a headcount issue in SDR? Just me fill in on this?.

Yes it is. The cross investing in that future team for sales..

Right. Thank you..

Thank you..

This concludes the question-and-answer session. I will now turn the call back over to Chaim Indig for closing remarks..

Thank you everyone and thank you again, Tom, for your last earnings call and we appreciate everyone's support and we will talk to you in a couple of months. Cheers..

Ladies and gentlemen, this concludes today's conference call. On behalf of Phreesia, thank you for participating. You may now disconnect..