Phreesia, Inc.PHR
Phreesia, Inc. Leases Disclosure
Leases
(a) Phreesia as Lessee
The Company leases third-party data center space and office space in the U.S under operating leases that expire on various dates through July 2027. Certain of these arrangements have escalating rent payment provisions or optional renewal clauses. The table below only considers lease obligations through the renewal date as the Company is not reasonably certain to elect the option to extend its leases beyond the option date. No arrangements contain residual value guarantees or restrictions imposed on the leases. The Company is also committed to pay a portion of the actual operating expenses under certain of these lease agreements. These operating expenses are not included in the table below.
The Company has also entered into various finance lease arrangements for computer equipment. These agreements are typically for to five years and are secured by the underlying equipment.
Supplemental balance sheet information related to operating and finance leases as of January 31, 2025 and 2024 was as follows:
| January 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Operating leases: | |||||||||||
| Lease right-of-use assets | $ | 1,477 | $ | 266 | |||||||
| Lease liabilities, current | $ | 964 | $ | 393 | |||||||
| Lease liabilities, non-current | 646 | 134 | |||||||||
| Total operating lease liabilities | $ | 1,610 | $ | 527 | |||||||
| Finance leases: | |||||||||||
| Property and equipment, at cost | $ | 49,009 | $ | 35,250 | |||||||
| Accumulated depreciation | (34,815) | (27,399) | |||||||||
| $ | 14,194 | $ | 7,851 | ||||||||
| $ | 6,825 | $ | 4,958 | ||||||||
| 7,431 | 3,351 | ||||||||||
| Total finance lease liabilities | $ | 14,256 | $ | 8,309 | |||||||
For office leases and leased equipment, the Company has elected the practical expedient to not separate lease and non-lease components, and as such, the variable lease cost primarily represents variable payments such as common area maintenance, utilities and equipment maintenance.
As of January 31, 2025, for operating leases, the weighted-average remaining lease term is 1.8 years and the weighted-average discount rate is 8.0%. As of January 31, 2025, for finance leases, the weighted-average remaining lease term is 1.6 years and the weighted-average discount rate is 7.5%.
The components of lease expense for the years ended January 31, 2025, 2024 and 2023 were as follows:
| Fiscal years ended January 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Operating leases: | |||||||||||||||||
| Operating lease cost | $ | 983 | $ | 740 | $ | 1,835 | |||||||||||
| Variable lease cost | — | 47 | 62 | ||||||||||||||
| Total operating lease cost | $ | 983 | $ | 787 | $ | 1,897 | |||||||||||
| Finance leases: | |||||||||||||||||
| Amortization of right-of-use assets | $ | 7,416 | $ | 6,742 | $ | 5,632 | |||||||||||
| Interest on lease liabilities | 980 | 580 | 368 | ||||||||||||||
| Total finance lease cost | $ | 8,396 | $ | 7,322 | $ | 6,000 | |||||||||||
Amortization of right-of-use assets for finance leases is included within depreciation expense on the Company's consolidated statements of operations.
The following represents a schedule of maturing lease commitments for operating and finance leases as of January 31, 2025:
| January 31, 2025 | |||||||||||
| Operating | Finance | ||||||||||
| Maturity of lease liabilities | |||||||||||
| Fiscal year ending January 31, | |||||||||||
| 2026 | $ | 1,053 | $ | 7,705 | |||||||
| 2027 | 583 | 5,688 | |||||||||
| 2028 | 85 | 2,169 | |||||||||
| Total future minimum lease payments | $ | 1,721 | $ | 15,562 | |||||||
| Less: interest | (111) | (1,306) | |||||||||
| Present value of lease liabilities | $ | 1,610 | $ | 14,256 | |||||||
Other supplemental cash flow information for the years ended January 31, 2025, 2024 and 2023 was as follows:
| Fiscal years ended January 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Supplemental cash flow information | |||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||
| Operating cash used for operating leases | $ | 1,023 | $ | 1,238 | $ | 1,347 | |||||||||||
| Operating cash used for finance leases | $ | 980 | $ | 535 | $ | 396 | |||||||||||
| Financing cash used for finance leases | $ | 7,811 | $ | 6,779 | $ | 5,731 | |||||||||||
(b) Phreesia as Lessor
In connection with the patient intake and registration process, Phreesia offers its customers the ability to lease PhreesiaPads and Arrivals Kiosks along with their monthly subscription. The Company accounts for these rentals as leases. The Company elected the practical expedient to not separate lease and non-lease components. More specifically, all contractual hardware maintenance is included with the hardware lease components. The leases contain no variable lease payments, no options to extend the lease that are reasonably certain to be exercised, and do not give the lessee an option to purchase the hardware at the end of the lease term. Additionally, the lease term does not represent a major part of the remaining economic life of the assets, and the present value of the lease payments does not equal or exceed substantially all of the fair value of the assets. As a result, all leased hardware in the SaaS arrangements is classified as operating leases.
During the years ended January 31, 2025, 2024 and 2023, the Company recognized $9,329, $10,307 and $10,197, respectively in subscription and related services revenue related to the leasing of PhreesiaPads and Arrivals Kiosks.
Future lease payments receivable under operating leases were immaterial as of January 31, 2025 and 2024, except for those with terms of one year or less.Free Sentinel
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About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.