Leases

3 Months Ended

Apr. 30, 2021

Leases [Abstract]

Leases

Leases

(a) Phreesia as Lessee

The Company leases office premises in North Carolina and Ottawa, and data center space in Virginia under operating leases which expire on various dates through March 2024. 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. We are 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 operating lease right-of-use assets were calculated as the present value of operating lease liabilities, less the amount of unamortized tenant improvement allowance and deferred rent. The discount rate used was the Company’s incremental borrowing rate given that the implicit rate to each lease was not readily determinable.

The Company also entered into various finance lease arrangements for computer equipment. These agreements are typically for two to three years and are secured by the underlying equipment.

Supplemental balance sheet information related to operating and finance leases as of April 30, 2021 was as follows:

	April 30, 2021
Operating leases:
Lease right-of-use assets	$	2,497
Lease liabilities, current	$	1,153
Lease liabilities, noncurrent	1,701
Total operating lease liabilities	$	2,854
Finance leases:
Property and equipment, at cost	$	20,139
Accumulated depreciation	(11,444)
Property and equipment, net	$	8,695
Lease liabilities (included in Current portion of debt and finance leases)	$	3,713
Lease liabilities, noncurrent (included in Long-term debt and finance leases)	5,141
Total finance lease liabilities	$	8,854

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 April 30, 2021, for operating leases, the weighted-average remaining lease term is 2.5 years and the weighted-average discount rate is 3.5%. As of April 30, 2021, for finance leases, the weighted-average remaining lease term is 2.5 years, and the weighted-average discount rate is 4.1%.

The components of lease expense for the three months ended April 30, 2021 were as follows:

	April 30, 2021
Operating leases:
Operating lease cost	$	256
Variable lease cost	67
Total operating lease cost	$	323
Finance leases:
Amortization of right-of-use assets	$	1,055
Interest on lease liabilities	102
Total finance lease cost	$	1,157

The following represents a schedule of maturing lease commitments for operating and finance leases as of April 30, 2021:

	April 30, 2021
	Operating		Finance
Maturity of lease liabilities
2022 (remaining nine months)	$	940	$	3,050
Fiscal year ending January 31,
2023	1,187		3,427
2024	794		2,365
2025	52		328
Thereafter	—		158
Total future minimum lease payments	$	2,973	$	9,328
Less: interest	(119)		(474)
Present value of lease liabilities	$	2,854	$	8,854

Other supplemental cash flow information for the three months ended April 30, 2021 was as follows:

	April 30, 2021
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used for operating leases	$	233
Operating cash used for finance leases	102
Financing cash used for finance leases	1,050
Total	$	1,385
Right-of-use assets obtained in exchange for lease liabilities:
Operating	$	81
Finance	203
Total	$	284

Cash paid for amounts included in the present value of operating lease liabilities was $233 during the three months ended April 30, 2021 and is included in cash (used in) provided by operating activities.

(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. These rentals fall under the guidance of ASC 842. 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 are classified as operating leases.

During the three months ended April 30, 2021, the Company recognized $1,644 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 April 30, 2021, except for those with terms less than one year.

Leases

Leases

(a) Phreesia as Lessee

The Company leases office premises in North Carolina and Ottawa, and data center space in Virginia under operating leases which expire on various dates through March 2024. 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. We are 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 operating lease right-of-use assets were calculated as the present value of operating lease liabilities, less the amount of unamortized tenant improvement allowance and deferred rent. The discount rate used was the Company’s incremental borrowing rate given that the implicit rate to each lease was not readily determinable.

The Company also entered into various finance lease arrangements for computer equipment. These agreements are typically for two to three years and are secured by the underlying equipment.

Supplemental balance sheet information related to operating and finance leases as of April 30, 2021 was as follows:

	April 30, 2021
Operating leases:
Lease right-of-use assets	$	2,497
Lease liabilities, current	$	1,153
Lease liabilities, noncurrent	1,701
Total operating lease liabilities	$	2,854
Finance leases:
Property and equipment, at cost	$	20,139
Accumulated depreciation	(11,444)
Property and equipment, net	$	8,695
Lease liabilities (included in Current portion of debt and finance leases)	$	3,713
Lease liabilities, noncurrent (included in Long-term debt and finance leases)	5,141
Total finance lease liabilities	$	8,854

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 April 30, 2021, for operating leases, the weighted-average remaining lease term is 2.5 years and the weighted-average discount rate is 3.5%. As of April 30, 2021, for finance leases, the weighted-average remaining lease term is 2.5 years, and the weighted-average discount rate is 4.1%.

The components of lease expense for the three months ended April 30, 2021 were as follows:

	April 30, 2021
Operating leases:
Operating lease cost	$	256
Variable lease cost	67
Total operating lease cost	$	323
Finance leases:
Amortization of right-of-use assets	$	1,055
Interest on lease liabilities	102
Total finance lease cost	$	1,157

The following represents a schedule of maturing lease commitments for operating and finance leases as of April 30, 2021:

	April 30, 2021
	Operating		Finance
Maturity of lease liabilities
2022 (remaining nine months)	$	940	$	3,050
Fiscal year ending January 31,
2023	1,187		3,427
2024	794		2,365
2025	52		328
Thereafter	—		158
Total future minimum lease payments	$	2,973	$	9,328
Less: interest	(119)		(474)
Present value of lease liabilities	$	2,854	$	8,854

Other supplemental cash flow information for the three months ended April 30, 2021 was as follows:

	April 30, 2021
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used for operating leases	$	233
Operating cash used for finance leases	102
Financing cash used for finance leases	1,050
Total	$	1,385
Right-of-use assets obtained in exchange for lease liabilities:
Operating	$	81
Finance	203
Total	$	284

Cash paid for amounts included in the present value of operating lease liabilities was $233 during the three months ended April 30, 2021 and is included in cash (used in) provided by operating activities.

(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. These rentals fall under the guidance of ASC 842. 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 are classified as operating leases.

During the three months ended April 30, 2021, the Company recognized $1,644 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 April 30, 2021, except for those with terms less than one year.

Leases

Leases

(a) Phreesia as Lessee

The Company leases office premises in North Carolina and Ottawa, and data center space in Virginia under operating leases which expire on various dates through March 2024. 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. We are 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 operating lease right-of-use assets were calculated as the present value of operating lease liabilities, less the amount of unamortized tenant improvement allowance and deferred rent. The discount rate used was the Company’s incremental borrowing rate given that the implicit rate to each lease was not readily determinable.

The Company also entered into various finance lease arrangements for computer equipment. These agreements are typically for two to three years and are secured by the underlying equipment.

Supplemental balance sheet information related to operating and finance leases as of April 30, 2021 was as follows:

	April 30, 2021
Operating leases:
Lease right-of-use assets	$	2,497
Lease liabilities, current	$	1,153
Lease liabilities, noncurrent	1,701
Total operating lease liabilities	$	2,854
Finance leases:
Property and equipment, at cost	$	20,139
Accumulated depreciation	(11,444)
Property and equipment, net	$	8,695
Lease liabilities (included in Current portion of debt and finance leases)	$	3,713
Lease liabilities, noncurrent (included in Long-term debt and finance leases)	5,141
Total finance lease liabilities	$	8,854

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 April 30, 2021, for operating leases, the weighted-average remaining lease term is 2.5 years and the weighted-average discount rate is 3.5%. As of April 30, 2021, for finance leases, the weighted-average remaining lease term is 2.5 years, and the weighted-average discount rate is 4.1%.

The components of lease expense for the three months ended April 30, 2021 were as follows:

	April 30, 2021
Operating leases:
Operating lease cost	$	256
Variable lease cost	67
Total operating lease cost	$	323
Finance leases:
Amortization of right-of-use assets	$	1,055
Interest on lease liabilities	102
Total finance lease cost	$	1,157

The following represents a schedule of maturing lease commitments for operating and finance leases as of April 30, 2021:

	April 30, 2021
	Operating		Finance
Maturity of lease liabilities
2022 (remaining nine months)	$	940	$	3,050
Fiscal year ending January 31,
2023	1,187		3,427
2024	794		2,365
2025	52		328
Thereafter	—		158
Total future minimum lease payments	$	2,973	$	9,328
Less: interest	(119)		(474)
Present value of lease liabilities	$	2,854	$	8,854

Other supplemental cash flow information for the three months ended April 30, 2021 was as follows:

	April 30, 2021
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used for operating leases	$	233
Operating cash used for finance leases	102
Financing cash used for finance leases	1,050
Total	$	1,385
Right-of-use assets obtained in exchange for lease liabilities:
Operating	$	81
Finance	203
Total	$	284

Cash paid for amounts included in the present value of operating lease liabilities was $233 during the three months ended April 30, 2021 and is included in cash (used in) provided by operating activities.

(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. These rentals fall under the guidance of ASC 842. 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 are classified as operating leases.

During the three months ended April 30, 2021, the Company recognized $1,644 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 April 30, 2021, except for those with terms less than one year.