Categories Earnings Call Transcripts, Health Care

Phreesia, Inc. (PHR) Q2 2021 Earnings Call Transcript

PHR Earnings Call - Final Transcript

Phreesia, Inc. (NYSE: PHR) Q2 2021 earnings call dated Sep. 09, 2020

Corporate Participants:

Balaji Gandhi — Investor Relations

Chaim Indig — Chief Executive Officer

Tom Altier — Chief Financial Officer

Analysts:

Anne Samuel — JP Morgan — Analyst

Ryan Daniels — William Blair — Analyst

Stephanie Davis — SVB Leerink — Analyst

John Ransom — Raymond James — Analyst

Donald Hooker — KeyBanc Capital Markets — Analyst

Sean Wieland — Piper Sandler — Analyst

Glen Santangelo — Guggenheim Securities — Analyst

Daniel Grosslight — Citi — Analyst

Sean Dodge — RBC Capital Markets — Analyst

David Larsen — Verity Research — Analyst

Presentation:

Operator

Good morning, ladies and gentlemen, and welcome to the Phreesia Second Quarter 2021 Earnings Conference Call. [Operator Instructions]

I would now like to introduce Balaji Gandhi, Vice President, Investor Relations for Phreesia. Mr. Gandhi, you may begin.

Balaji Gandhi — Investor Relations

Thank you, operator. Good morning and welcome to Phreesia’s earnings conference call for the second quarter of fiscal year 2021, which ended on July 31, 2020. Participating on today’s call from Phreesia are Chief Executive Officer and Co-Founder, Chaim Indig and Chief Financial Officer, Tom Altier. Following prepared remarks from Chaim and Tom, we will conduct a Q&A session.

Complete disclosure of our results can be found in our earnings press release issued yesterday evening as well as in our 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 pursuant to the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act and Section 21E of the Securities Exchange Act, including statements relating to the expected performance of our business, future financial results, our strategy, our partnerships, expected launches of products and services, long-term growth, overall future prospects and the impact of the COVID-19 pandemic on our business. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call, in particular, those described in our risk factors included in our Form 10-Q, which will be filed with the SEC later today. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today and we undertake no obligation to update them except as required by applicable 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 release and supplemental materials, which were furnished with our Form 8-K filed after the market closed on September 8 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 — Chief Executive Officer

Thank you, Balaji. Good morning, everyone. As fall approaches, we hope that everyone’s families are safe and healthy. Once again, we are participating on today’s call from three different locations. So we appreciate your patience with us.

Our second quarter results demonstrate the agility, depth and overall commitment of our entire organization in a very challenging environment. I’m proud of Phreesia’s ability to serve our clients, take care of our team and further our mission of creating a better more engaging healthcare experience as our communities grapple with the current pandemic.

For the fiscal second quarter, total revenue was $35 million, up 14% year-over-year. The average number of provider clients was 1,668, up 7% year-over-year. Average revenue per provider client was $17,360, up 5% year-over-year. Adjusted EBITDA was $1.2 million, up approximately $400,000 year-over-year. The pandemic has forced healthcare providers across the country to rethink every aspect of their day-to-day operations. Phreesia’s network gives providers tools they need to keep their patients and staff safe while operating reliably and efficiently.

I would like to highlight two new Phreesia clients, AdventHealth and Health First. AdventHealth became a client in mid-March. We work closely with the Advent team to accelerate the rollout in order to help Advent scale and reduce exposure between patients and staff during in-person visits. In order to move rapidly, we supplemented the rollout team with our sales development representatives, also known as SDRs. Our teams took nearly 1,000 of Advent’s ambulatory practices live. We also took 44 Advent acute care hospitals live over the first 90 days. All of this work was done remotely by both teams. This is a very complex and well coordinated rollout. Phreesia’s network and APIs are now embedded into Advent’s consumer facing ecosystem.

Next, I would like to talk about Health First. A fully integrated delivery network in Central Florida. Phreesia went live with Health First during the second quarter. Similar to Advent, our teams work collaboratively and move quickly. Most of Health First’s ambulatory locations went live in less than a month. Health First is currently expanding its deployment on the Phreesia network to it’s four acute care hospitals.

At Phreesia, we believe that if we continue to invest in our people and product and take care of our clients, our clients will drive a phenomenal amount of value from being part of our network. KLAS Research recognized our team as an outperformer in its recent review of vendors response to the pandemic. Specifically, citing our team for being upfront, strategic and flexible. I would like to congratulate my teammates on this very nice recognition.

In July, Phreesia welcomed Lainie Goldberg [Phonetic] to our Board of Directors. Lainie has been the CFO of Take-Two Interactive for 17 years and brings more than 30 years of financial and business experience in the software, entertainment, retail and apparel industries. In August, Allison Hoffman joined us as General Counsel, bringing 25 years of legal and people management experience to Phreesia, including leadership roles at public and private companies in various industries, in various stages of growth.

I’ll now turn the call over to Tom.

Tom Altier — Chief Financial Officer

Thank you, Chaim, and good morning everyone. I’ll review the income statement, balance sheet and cash flows for the fiscal second quarter, including some considerations for the rest of the fiscal year.

First, revenue. Total revenue was $35 million, up 14% year-over-year. Subscription and related service revenue was $17.1 million in the quarter, up 22% year-over-year, primarily due to new provider clients added during the quarter, expansion and cross-selling of existing provider clients and higher related services revenue. Payment processing fee revenue was $11.8 million in the quarter, up 1% year-over-year. While many healthcare providers have reopened and trends are improving, patient visits for the quarter continued to be below their pre-COVID-19 levels. Payment processing volume across the Phreesia network was only slightly higher in the fiscal second quarter compared to the first quarter. This is because visits were significantly higher in the first half of the fiscal first quarter, which took place prior to March 13 when the United States declared a national emergency with respect to COVID-19.

Life Science revenue was $6.1 million in the quarter, up 18% year-over-year. Provider revenue which combines revenue from subscription and related services and payment processing fees was $29 million, up 13% year-over-year. The two drivers of the 13% provider revenue growth were average provider client growth, up 7% year-over-year and average revenue per provider client up 5% year-over-year. Life Science revenue was $6.1 million, up 18% year-over-year. Our Life Sciences revenue is based largely on the delivery of messages at a contracted price per message to targeted patients and our team was successful in delivering more messages than in the prior year period.

Moving on to expenses. I will review several expense line items on an adjusted non-GAAP basis which excludes stock-based compensation expense for 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-Q filed with the SEC. Cost of revenue was $5.1 million or 14.7% of total revenue, up 110 basis points year-over-year, and reflects a ramp-up in client services and support during the period. Sales and marketing expense was $9.3 million or 26.6% of total revenue, up 110 basis points year-over-year as we continue to invest in future growth. Research and development expense grew 10% year-over-year to $5 million and down 50 basis points year-over-year as a percentage of revenue. General and administrative expense was $7.7 million or 22% of total revenue, up 110 basis points year-over-year. As we have previously indicated, this figure has been increasing as a result of continued ramping of public company expenses. From a modeling perspective, we expect to begin to see operating leverage in the back half of fiscal 2022.

In general, the increases in cost of revenue, sales and marketing and G&A expenses as a percentage of revenue are consistent with our comments in June, that we began hiring and would expect to see that hiring reflected in our expenses through the remaining three quarters of the year in support of anticipated growth. Payment processing expense was $6.7 million, a decline of 5% year-over-year. Our payment processing revenue was up 1% year-over-year, expenses were down 5% year-over-year. These trends are due to the mix of transaction type and lower cost routing in payments, mirroring trends we saw in the fiscal first quarter. Adjusted EBITDA was $1.2 million, up from $741,000 in the prior year. This increase reflects the combination of higher total revenue and lower payment processing expense.

Shares outstanding as of July 31 were 37.9 million. Cash on the balance sheet on July 31 was $84.2 million, down $6.1 million from April 30. Cash flow from operations for the quarter was an outflow of $2.4 million versus an inflow of $600,000 in the prior year quarter. And capital expenditure for the quarter was $4.3 million, up $1.4 million year-over-year and that $4.3 million includes $1.6 million of capitalized software development. We will invest more cash into the business in fiscal ’21 compared to fiscal ’20 as we ramp-up hiring across the organization to support our anticipated growth.

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To reiterate Chaim’s comments, I am very proud of our team’s ability to stay focused during the pandemic, positioning us to grow with our clients. And we are encouraged by the trend towards more providers getting back to delivering care to those who need it. Now we are ready to take your questions. Operator?

Questions and Answers:

Operator

Thank you. At this time we will be conducting our question-and-answer session. [Operator Instructions] Your first question comes from the line of Anne Samuel with JP Morgan. Anne, your line is open.

Anne Samuel — JP Morgan — Analyst

Hi guys, congrats on a nice quarter. As we think about provider client growth, how should we be thinking about the length of your sales cycle. And is there still any lingering carryover from COVID disruption that happened in March and April that might kind of still be impacting that number as we look forward?

Chaim Indig — Chief Executive Officer

Good morning, Anne. Thanks for that question. I think one of the things to think about is, in this — in our Q2 quarter, one of the — one of our pressing strategic imperatives was getting as many people live as fast as possible. So we really pulled forward as many of our clients, go-lives as we could. And the reason we did that is, we and our clients felt very strongly that Phreesia was helping keep their patients and staff safe, using zero contact. So, and I think we reiterated a little bit earlier that we actually moved a lot of our SDRs into implementation, so that we can accelerate as many of the go-lives as possible.

Anne Samuel — JP Morgan — Analyst

Okay. That makes sense. And then I guess on Life Sciences, that was obviously once again really strong growth. Were there any shifts or unusual items in that. And then looking out at the next quarter you’re up against a really difficult compare because you had such a great quarter last year. How should we think about lapping that?

Chaim Indig — Chief Executive Officer

I think our Life Sciences team has done just a phenomenal job. What we’re seeing now is the investment we’ve been making over the last 12 to 18 months in building up that team and investing in data science and new product offerings. And so, but I do think it is a pretty hard comp last year and we’re doing it in a very challenging environment, but I know that team is working as many hours as are possible end of the day to make sure that we’re able to deliver very relevant messages to the right patients so that they can get the care they need from their providers.

Anne Samuel — JP Morgan — Analyst

Great. Thanks guys.

Chaim Indig — Chief Executive Officer

Thanks Anne.

Operator

Next question comes from the line of Ryan Daniels with William Blair. Ryan, your line is open.

Ryan Daniels — William Blair — Analyst

Yes, guys. Good morning. Thanks for taking the question. It sounds like a very positive data point when you speak to the hiring in the outlook for growth. Can you give a little bit more detail on, number one, key focus areas for hiring and number two, the SDR routes. Are they moving back into the sales position at this point or are they still somewhat deployed in other areas? Thanks.

Chaim Indig — Chief Executive Officer

Good morning Ryan. Thanks for those questions. I will try to get all of them. So, we’re hiring across the Board. We have — whether it’s engineering and finance or whether it’s our early career program which supports implementation, our SDRs, our client success and our tech support teams. So across the organization we’re hiring and we’ve seen a ramp-up and we’re doing it in a remote world. From an SDR standpoint, we did start moving them a lot of them back to the tail end of last quarter. So, we should hopefully over the next two quarters see the output of that ramp happen. I think we ended the last quarter at 59 SDRs and this morning, I think we have a little over 70 — I’m on say 71 SDRs as of this morning. So that sales motion is ramping up. And those people have moved back from implementation and the other roles they had in the organization back to being SDRs if they wanted to.

Ryan Daniels — William Blair — Analyst

Okay, perfect. Very helpful. And then as a follow-up just on the in-patient space. Seems like a lot of systems are really starting to make more active investments in things like virtual waiting rooms and digital check-ins and patient navigation through the system. Are you seeing that in your book of business too? I know you’ve announced some large partnerships where it’s both their in-patient and out-patient units, but are you starting to see a little bit of a uptick in the in-patient market as well? Thanks guys.

Chaim Indig — Chief Executive Officer

So I can’t comment as the broader market, but what I can say is that in the — for us the acute in-patient space is an area that we’ve been meaningfully investing for the last couple of years, and I still think it’s very early to articulate what that market looks like. But what I do know is that hospitals want to have a common front door with their ambulatory groups. They also want to streamline how they intake patients and provide a better more — more thoughtful patient and consumer experience. And especially during this time period they’d also like to make a zero contact. And so we have seen with a lot of our current clients a fair bit of interest.

Ryan Daniels — William Blair — Analyst

Great. Thanks for the color and stay safe guys. Thank you.

Chaim Indig — Chief Executive Officer

Cheers. You too.

Operator

Question comes from the line of Stephanie Davis with SVB Leerink. Stephanie, your line is open.

Stephanie Davis — SVB Leerink — Analyst

Thank you and thank you for taking my question guys. Good quarter. Given the growth in telemedicine access that you guys have participated in which likely captures some appointments that would have been skip pre-pandemic. Is it possible that a return in volume could actually be more than 100% of your prior volume as you’re still only 9% off right now from prior levels in telemedicine business has happened?

Chaim Indig — Chief Executive Officer

Stephanie, I don’t have a crystal ball and I don’t know what the future holds, but I…

Stephanie Davis — SVB Leerink — Analyst

That’s how you got it.

Chaim Indig — Chief Executive Officer

We’re actually, we are not guiding. But what I would say is that look telemedicine is a new way for patients to be able to have access to care. And if it allows people especially with social determined to help that aren’t able to access care, either from a specialist or primary care provider where they would have not been had access then that’s a great thing. I don’t know what’s going to happen in ‘ 12 to 24 months in terms of care and access. But I do know that providers want to provide care to patients that need it. And I do think that telemedicine allows them the ability to reach patients in a way that they wouldn’t have otherwise. That being said, there is only so many hours in a day, and when we talk to providers they’re working for long days today. And they were pre-pandemic and they are as much as they can now. And so, I think there is what I do caution is that there is only so many hours in that day for them to be seeing patients.

Stephanie Davis — SVB Leerink — Analyst

Understood. Some upper levels and that sort of region. So, one more follow-up on volume. I know you’ve talked about this before during the IPO, but what sort of impact do you normally see from flu season and how would we think about the puts and takes of a cold weak flu season or a non-existent flu season?

Chaim Indig — Chief Executive Officer

If we — because of the mix of our network, I think flu has less of an impact than it probably would have, if we were overly weighted to primary care or urgent care. I think it’s bad when people get sick. Generally speaking, and so I hope that flu season is low, especially considering we’re also grappling with a pandemic. And I think that, generally, you see like when we talk to our pediatric groups because they see a little bit more sick visits than most, just because they see kids. They are seeing slightly lower sick volume. But on the grand scheme of sort of volume for us, it’s in the low single-digits. And I don’t think it — I wouldn’t say it materially moves the needle one way or the other.

Stephanie Davis — SVB Leerink — Analyst

All right. That’s helpful. Thank you, guys.

Chaim Indig — Chief Executive Officer

Thanks Stephanie.

Operator

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

John Ransom — Raymond James — Analyst

Hey, good morning. Just wanted to provide a little bit on this hospital opportunity. I think we all know what it is you do for physician offices on the intake side. What’s exactly different about what you do at the hospital level and how long did it take you to build up the capabilities? And what additional capabilities, if any, do you need to continue to kind of roll forward in that new TAM?

Chaim Indig — Chief Executive Officer

So that’s a great question John. I don’t want to go into very long specifics on what we’re doing. But if you think about it, it is the value proposition there is people waiting in line, when they go to the hospital to check into — either for the service or for the urgent care that they need and in emergency room or for their surgeries or to give birth and they still have lots of paperwork to fill out, they still have to give all their information and right now the constraint is the register, and so a lot of that initial experience that they have at a hospital is still sitting in the waiting room. And/or telling a patient where and when they need to go somewhere, and we’re building and deploying those capabilities. So if you think about our hospital, it may be multiple entrances with different access points, streamlining those access points so that patients are able to intake faster into the facility and be directed on where to go providing a significantly better experience, with often better economics, because you need less staffing. And frankly in a COVID environment it’s safer, because it’s done with no contact.

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John Ransom — Raymond James — Analyst

Okay. And how many people do you have? I know you’ve got the deal with R1, but do you have dedicated marketing people for the hospital sector yet or you just — are you kind of taken these referrals out from R1?

Chaim Indig — Chief Executive Officer

No, we — so, like Advent is not with R1, neither was Memorial. We do have dedicated people working on the — in the acute market for us.

John Ransom — Raymond James — Analyst

Okay. All right. Thanks so much.

Chaim Indig — Chief Executive Officer

Thanks.

John Ransom — Raymond James — Analyst

I’m sorry.

Operator

[Operator Instructions] Your next question comes from the line of Donald Hooker with KeyBanc. Donald, your line is open.

Donald Hooker — KeyBanc Capital Markets — Analyst

Great. Good morning. Good morning, everyone. I would just maybe for Haim, just, maybe high-level perspective on sort of the operating environment. If we look ahead and there is hypothetically a big second wave of COVID-19, what would you have learned from this first wave that would make the second wave perhaps a little different?

Chaim Indig — Chief Executive Officer

That’s a interesting question. Our number one priority is keeping our staff — as everyone say, its staff, if it’s our providers, it’s patients and whether its first wave, second wave, third wave, I just think COVID-19 is here with us today and we don’t have the vaccine. So we’re treating it as if we’re in — we’re still in the main wave. We’re not — most of our people are not traveling. The vast majority of our implementations are remote and it’s only being done in absolutely necessary condition. So what — the way we’re treating the environment right now is that we’re still in that first wave. And we’re being very cautious. And we’ve kept all of our offices closed, and we intend to remain virtual going forward.

Donald Hooker — KeyBanc Capital Markets — Analyst

Okay. And maybe just my follow up would be in terms of the new provider ads, client adds in the quarter, which looked great. Any comment on that briefly, you may not have an answer to this, but were there any sort of pockets of demand that’s such an unusual environment were there any sort of areas that drove that year-over-year growth or if not, or is it more just broad based?

Chaim Indig — Chief Executive Officer

I think what we really did is we just really looked at everyone that was in acute to go-live and we just did everything possible to get them live as fast as possible, because it just made a meaningful impact to their organizations and to their patients, and we heard it, and we heard it in the KLAS analysis, we heard it from our practices. I’ve gotten just a ton of e-mails and just what we’ve been able to do to help these practices just open back up. So I’m just really proud of the organization for mobilizing and prioritizing keeping people safe and it’s something that I think it aligns with our mission and it’s something I’m really proud of firstly.

Donald Hooker — KeyBanc Capital Markets — Analyst

Great. Thank you for that comment. Thank you.

Operator

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

Sean Wieland — Piper Sandler — Analyst

Thank you very much. Good morning. Maybe could you call out what the acute care revenue was in the quarter or maybe number of clients that you’ve got live on that now?

Chaim Indig — Chief Executive Officer

We don’t disclose that today and we’ll let you know when we do, how many clients live or revenue number, but it’s still pretty early and it’s still pretty small.

Sean Wieland — Piper Sandler — Analyst

Okay. Some 10%, safe to say.

Chaim Indig — Chief Executive Officer

Tom?

Tom Altier — Chief Financial Officer

Yes. That’s correct, Sean.

Sean Wieland — Piper Sandler — Analyst

Okay. How about — on the — same-store sales growth is up with obviously volumes being down. Wanted to get a little bit more insight as the primary drivers of the same-store sales growth, for example, zero client intake, what percent of clients have that today? And maybe what are some of the other key drivers of that same-store sales growth?

Chaim Indig — Chief Executive Officer

I don’t have the numbers handy, I can get back to you on what percentage are running some version of zero contact. But I think what we’ve seen from a same-store sales is that it’s a mixture of expands. It’s a mixture of cross-sell and up-sell and it’s also a mixture of making sure that we’re providing all the necessary workflows to these practices to make sure that they are able to do what they need to do see patients. But I’d say it’s mostly driven by expansion.

Sean Wieland — Piper Sandler — Analyst

Expansion in number of providers at the client that’s using it.

Chaim Indig — Chief Executive Officer

Correct.

Sean Wieland — Piper Sandler — Analyst

Okay.

Chaim Indig — Chief Executive Officer

So that’s the number one driver.

Sean Wieland — Piper Sandler — Analyst

Okay. That’s helpful. Thanks. [Speech Overlap]

Tom Altier — Chief Financial Officer

Yes. That again that’s correct Sean. Expansion is the longest driver.

Sean Wieland — Piper Sandler — Analyst

All right. And Tom, what’s the hiring ramp that you’re talking about. Can you maybe quantify that on the impact to opex?

Tom Altier — Chief Financial Officer

Well, we’re — as we said in the first quarter, we are — we’ve started hiring again and expect to ramp-up pretty aggressively in the second half year. As Haim mentioned before in all areas of the business, particularly in the early career program.

Sean Wieland — Piper Sandler — Analyst

Okay. Thanks so much.

Operator

Your next question comes from the line of Glen Santangelo with Guggenheim. Glen, your line is open.

Glen Santangelo — Guggenheim Securities — Analyst

Thanks for taking the question. Hey, Haim, I also want to follow-up on the in-patient side. I get it that the revenues are small today, but I was really trying to understand maybe have economic arrangements work with these customers and how that may be different from physicians to help us think about how the impact of AdventHealth or First Health for example might change or augment your growth algorithm. How should we think about those financial relationships?

Chaim Indig — Chief Executive Officer

That’s a great question. Well, I don’t want to share our pricing model for competitive reasons. But I’m — I assume you understand that. Eventually, I am sure Balaji will have a slide that explains all that.

Glen Santangelo — Guggenheim Securities — Analyst

Okay. Maybe if I just had a follow-up on an earlier question about the sales side. I think in the past you said it takes about 90 days to bring a physician on our mind after you sell them and if we sort of think about maybe April, May and June, being sort of the height of the pandemic, is it reasonable to think that as we look out to this next quarter, that we may see the impact of maybe slower results in the height of the pandemic play out in this next fiscal quarter. I understand you don’t want to give guidance, but I’m just trying to think about how the sales cycle may have impacted 2Q versus what we should be expecting in 3Q?

Chaim Indig — Chief Executive Officer

I think that’s fair to say and I think that’s a good call out. I think the — this next quarter, we’re going to see a lot of those practices that we probably would have taken live already live. And our priority is making sure that we’re servicing and setting up the next couple of quarters beyond that.

Glen Santangelo — Guggenheim Securities — Analyst

Okay. Thank you.

Chaim Indig — Chief Executive Officer

Therefore we have some of the growth in this quarter.

Glen Santangelo — Guggenheim Securities — Analyst

Okay. Thank you.

Chaim Indig — Chief Executive Officer

Thanks Glen.

Operator

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

Daniel Grosslight — Citi — Analyst

Hi guys. Thanks for taking the question. I want to kind of follow-up on Glen’s question there on the sales cycle, because you have that 90-day implementation on getting a provider aboard and then 90 days from that to really kind of generating revenue here. So I guess, as we look at the providers that you signed during the most difficult time period, which will show up in the next couple of quarters, how does the entry point in terms of pricing compare to that of those who you sold pre-pandemic?

Chaim Indig — Chief Executive Officer

That’s a great question. We’re not obviously for competitive reasons going to talk about the pricing, but our core priority is always making sure that we align with the needs of our providers and/or life sciences companies to make sure that they could treat and care for patients the way they need to, and want to. But at this time and probably in the future we will talk about sort of promotions and pricing. But it’s good question.

Daniel Grosslight — Citi — Analyst

Okay. Okay. And then maybe just at a little bit of a higher level, it seems like the data that you put out with Commonwealth as utilization kind of plateauing at around 9% below the pre-COVID baseline. How does this compare to what you were expecting, heading into the quarter. And what — I understand you’re not giving guidance here, but at a high level, what are your expectations for healthcare utilization for the rest of the year and what sign post do you think you’ll need to be able to really provide fiscal year guidance?

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Chaim Indig — Chief Executive Officer

This is — I think what’s really important is I don’t know what to expect. Right. And we sort of we do multiple scenarios all throughout our planning process to think through the highs and the lows. We didn’t know going into Q2 that we would see the growth that we did, right, to come back. So, and I would argue that neither do a lot of our providers. So I think from a monthly basis or even a weekly basis, as we look at this utilization levels, I think we’re continuously finding different movement throughout the United States. And I would also argue that it’s not — I don’t — necessarily just think about it as 9%, I think different specialties are coming back in different ways at different parts of the country. And as we see spikes in different communities, it impacts patients and it impacts providers. So I don’t want to look into that crystal ball and sort of hope that I can tell you what it would look like. I have no idea.

Daniel Grosslight — Citi — Analyst

Got it. Thanks guys.

Operator

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

Sean Dodge — RBC Capital Markets — Analyst

Thanks. Good morning. Haim maybe on the value proposition, going back to your comments around the strengthening Phreesia has seen in that post-pandemic here, if we take a step back and assume volumes in payments at some point return to normal, does or I guess how does the enhancements you’ve made you’ve seen change your view on the potential long-term growth trajectory for the company. Do you come out of the pandemic better than you went in and how much better?

Chaim Indig — Chief Executive Officer

We — I feel like we went into the pandemic like in great shape. And I think we will come out of this pandemic in great shape, relatively speaking. I think the real change is going to be the healthcare system and to patients and how — and the strength of the provider and health system community. Because they had a lot of pain and a lot of people lost lives and got really sick. So my — and still our — so I would think about look our — I don’t think going into this, we would have thought as Phressia is one of our propositions is helping keep patients and provider safe, and I think that is a value proposition that will remain. And it’s one that we sell on today that people get Phreesia for today. It doesn’t replace our really significant ROI on labor and cash flow efficiency and the ability to collect data where they wouldn’t have otherwise or the ability to have a better patient experience and staff experience. So I think it just supplements that. And I think it accelerated a lot of products that we had already been working on and it changes the nature of intake. So I think all of those — just I can’t imagine — I don’t want to specificate us to what the world would have looked like, or what it will look like, I know that — what I do know today is that we are in good shape moving forward. And I’m very optimistic about our opportunity moving forward.

Sean Dodge — RBC Capital Markets — Analyst

Okay. That’s great. Thanks. And then, maybe one on the cash collections. It looks like DSOs were down a little sequentially but up still a fair amount year-on-year. Is there something changing revenue mix is driving that or is that related to the deferral program you all had mentioned offering to some of your clients earlier on in the year?

Tom Altier — Chief Financial Officer

Yes. That’s correct Sean. The deferral program had some impact on cash collections.

Sean Dodge — RBC Capital Markets — Analyst

Okay. Is there any bookings you can put around the — maybe the proportion of clients or number of clients that are taking part in that?

Tom Altier — Chief Financial Officer

Between a quarter and a third, I think took advantage of it.

Sean Dodge — RBC Capital Markets — Analyst

Got it. Thank you.

Operator

Your next question comes from the line of David Larsen with Verity. David, your line is open.

David Larsen — Verity Research — Analyst

Hey. Can you talk a little bit about the growth rate in the revenue per provider. It looks like the number of providers that you have on the platform grew nicely 7% year-over-year, that’s sort of in line with last year. Why would the revenue per provider growth rate slow to like 5% from 23%? Are you — is there something about the pandemic that is making it harder to sell like the whole portfolio of modules or is that a steady — is that a good number to use going forward 5%.

Chaim Indig — Chief Executive Officer

I’ll let Tom give more info, but on a high level, I think what you’re also seeing is the pressure on payments.

David Larsen — Verity Research — Analyst

Okay.

Chaim Indig — Chief Executive Officer

Right. There is — that’s part of the revenue mix and the different provider clients. Tom you want to…

Tom Altier — Chief Financial Officer

You got to think about that 1% growth in payment volume and payment revenue and the impact on that.

David Larsen — Verity Research — Analyst

Okay. That explains it obviously. And then with Advent and Health First, did I hear that you deploy the acute care solution to all four of the Health First hospitals. And I think Advent has 50 hospitals, if we think that like each hospital has a lobby and registrars within each of their facilities. I mean, has the in-patient solution been or is it the plan to deploy it across the networks of those IDNs?

Chaim Indig — Chief Executive Officer

So at Advent, I think we’ve been public that we’re live in 44 of those hospital facilities. So that’s the in-patient. And I think we’re in the process, Tom correct me if I’m wrong. We’re in the process of going live with the Health First acute facilities and I think there’s four of them in Florida.

Tom Altier — Chief Financial Officer

That’s correct, yes.

David Larsen — Verity Research — Analyst

Okay. And then without getting too granular, hospitals are typically larger business entities than or physician practices substantially. We’re talking about like $500 million in net revenue per facility compared to a couple million for physician practice. Just any thoughts around that would be very helpful. I mean, why wouldn’t the hospital revenue be significantly higher than your typical physician office?

Chaim Indig — Chief Executive Officer

I don’t think we are commenting on where the hospital revenue would be, but I will say that yes, the revenue tends to be higher, but they do on average less intakes, right. So thankfully, less — more people go to ambulatory visits than they do to acute visits, right. So a lot of it’s not just based on the absolute revenue of the organization. It’s based on what is it that we’re doing for them and what is that volume look like. I mean, you’re not checking when you go to an ICU, you’re not checking in every day.

David Larsen — Verity Research — Analyst

One-third of denials happen because of inaccurate patient registration. So I imagine that there’s going to be a significant improvement in bad debt after they deploy Phreesia. Are you doing any sort of analytics around that to show the value that you’re bringing to these facilities?

Chaim Indig — Chief Executive Officer

We — it’s safe to say that we think generally, as an organization that when we in the early days and moving forward, when we deploy out a solution we are continuously looking to be able to validate and articulate our return on investment for our clients. We try to do this quickly as possible. So what I can say is that it’s something that we’ve looked at and as we further talk about our acute solution, I’m sure — to the marketplace, I’m sure we will be articulating where we think the ROI lies.

David Larsen — Verity Research — Analyst

Thank you.

Chaim Indig — Chief Executive Officer

Thanks, Dave.

Operator

And we do have time for one more question. Our final question comes from the line of John Ransom with Raymond James. John, your line is open.

John Ransom — Raymond James — Analyst

All right. Just going back to payments revenue, how is that trending toward the end of the quarter versus the beginning of the quarter and maybe you could give us a peek at how it’s trending this quarter, just for modeling purposes, how to think about that? Thanks.

Tom Altier — Chief Financial Officer

The — it improved during the quarter John.

Balaji Gandhi — Investor Relations

And John this is Balaji. I think the Commonwealth data is a valuable tool without us really having a — you could sort of look at the volume data there and obviously can’t really talk beyond that, but I think the Commonwealth data goes through early mid-August. So that’s pretty instructive.

John Ransom — Raymond James — Analyst

Okay. Thank you.

Operator

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

Chaim Indig — Chief Executive Officer

I want to thank everyone for joining us today and I hope that your families, yourself and your organization are all staying safe and hopefully we don’t see a spike in COVID-19 in the second half of this year, because I’d like everyone to be healthy and safe. Cheers everyone. Hope to see you again soon.

Operator

[Operator Closing Remarks]

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