Imagine you're running a business that helps pharmaceutical companies spend their marketing dollars. Now imagine your biggest clients suddenly start whispering about "reduced visibility" and "weaker commitments." That's the uncomfortable spot Phreesia Inc. (PHR) finds itself in, and its stock price is paying the price—plunging over 26% in premarket trading.
The culprit? A sobering earnings report where Phreesia essentially told investors: forget what we said about future growth. The company slashed its fiscal 2027 revenue outlook to a range of $510–$520 million. That's down quite a bit from the previous sunny forecast of $545–$559 million.
So, what's spooking the pharma clients? Management points to a cocktail of brand-specific factors, including regulatory impacts. Some clients are simply allocating fewer dollars. The company's leadership is trying to frame this as a temporary blip, not a permanent change in the landscape. They called it "increased variability" in revenue, particularly for the back half of the year. The new forecast already includes about $37 million from the AccessOne deal and assumes no new acquisitions.
Here's the interesting part: despite the top-line gloom, Phreesia is holding firm on its bottom-line promise. The company maintained its Adjusted EBITDA guidance of $125–$135 million. The message seems to be: "We'll make less money, but we'll keep more of it." They plan to absorb the revenue hit through operating leverage and cost-cutting, including using more AI to automate manual work.
The growth story, however, has undeniably changed. For fiscal 2027, Phreesia still expects mid-single-digit growth in its average healthcare service clients (AHSCs). But the money it makes from each client? That's now expected to grow only in the low-single digits, a far cry from the prior expectation of low double-digit growth.
Analysts aren't surprised. A note from William Blair highlighted that management has been signaling a soft pharma market for a while. The timing of regulatory developments and pricing discussions late last year apparently caused clients to hit pause on deploying their marketing budgets. Analyst Ryan Daniels added that this caution has spilled into 2026, with clients committing to lower spending levels for the second half of the year as well.
The quarterly results themselves were a mixed bag. Phreesia reported fourth-quarter earnings of 2 cents per share, missing the consensus estimate of 7 cents. Sales, however, came in at $127.07 million, up 16% year-over-year and slightly beating expectations. The company's client base grew 7% to 4,658 AHSCs, and revenue per client grew 8% to $27,279. Adjusted EBITDA was a bright spot, nearly doubling to $29.4 million from $16.4 million a year ago.
None of that was enough to offset the grim future forecast. As of premarket trading Tuesday, Phreesia shares were down 26.82% at $8.35. When a company tells the market its growth engine is sputtering, investors tend to listen—and sell.
.jpeg)
