Leases

3 Months Ended

Apr. 30, 2020

Leases [Abstract]

Leases

Leases

(a) Phreesia as Lessee

The Company leases office premises in New York, North Carolina, and Ottawa, and datacenter space in Virginia under operating leases which expire on various dates through June 2023. 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 right-of-use assets was calculated as the operating lease liabilities discounted at the present value, 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.

For office leases, 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 and utilities which are determined by the leased square footage in proportion to the overall office building in Ottawa.

The Company also entered into various finance lease arrangements of 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, 2020 was as follows:

	April 30, 2020
Operating leases:
Lease right-of-use assets	$	2,795
Lease liabilities	$	1,414
Lease liabilities, noncurrent	1,578
Total operating lease liabilities	$	2,992
Finance leases:
Property and equipment, at cost	$	13,110
Accumulated depreciation	(8,449)
Property and equipment, net	$	4,661
Lease liabilities	$	2,366
Lease liabilities, noncurrent	2,234
Total finance lease liabilities	$	4,600

As of April 30, 2020, for operating leases, the weighted-average remaining lease term is 2.6 years, and the weighted-average discount rate is 3.5%. As of April 30, 2020, for finance leases, the weighted-average remaining lease term is 2.1 years, and the weighted-average discount rate is 8.7%.

The components of lease expense for the three months ended April 30, 2020 were as follows:

	April 30, 2020
Operating leases:
Operating lease cost	$	412
Variable lease cost	63
Total operating lease cost	$	475
Finance leases:
Amortization of right-of-use assets	$	725
Interest on lease liabilities	101
Total finance lease cost	$	826

The following represents a schedule of maturing lease commitments for operating and finance leases as of April 30, 2020:

	April 30, 2020
	Operating		Finance
Maturity of lease liabilities
2021 (remaining nine months)	$	1,284	$	2,145
Year ending January 31,
2022	793		1,907
2023	684		861
2024	365		73
Total future minimum lease payments	$	3,126	$	4,986
Less: interest	(134)		(386)
Present value of lease liabilities	$	2,992	$	4,600

Future minimum lease payments under non-cancelable operating leases as of January 31, 2020 under ASC 840 were as follows:

	January 31, 2020
	Operating
Year ending January 31,
2021	$	1,824
2022	819
2023	464
2024	277
	$	3,384

Other supplemental cash flow information for the three months ended April 30, 2020 was as follows:

	April 30, 2020
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	392
Operating cash flows from finance leases	101
Financing cash flows from finance leases	525
Total	$	1,018
Right-of-use assets obtained in exchange of lease liabilities:
Operating	$	3,185
Finance	827
Total	$	4,012

An initial right-of-use asset of $2,741 for operating leases was recognized as a non-cash asset addition with the new lease accounting standard. Cash paid for amounts included in the present value of operating lease liabilities was $392 during the three months ended April 30, 2020 and is included in operating cash flows.

(b) Phreesia as Lessor

In connection with the patient intake and registration process, Phreesia offers its customers the ability to lease PhreesiaPads and Arrival Stations 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. All leased hardware in the SaaS arrangements are classified as operating leases.

During the three months ended April 30, 2020, the Company recognized $1,554 in subscription and related services revenue related to the leasing of PhreesiaPads and Arrival Stations.

Future lease payments receivable under operating leases were immaterial as of April 30, 2020, except for those with terms less than one year.

Leases

Leases

(a) Phreesia as Lessee

The Company leases office premises in New York, North Carolina, and Ottawa, and datacenter space in Virginia under operating leases which expire on various dates through June 2023. 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 right-of-use assets was calculated as the operating lease liabilities discounted at the present value, 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.

For office leases, 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 and utilities which are determined by the leased square footage in proportion to the overall office building in Ottawa.

The Company also entered into various finance lease arrangements of 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, 2020 was as follows:

	April 30, 2020
Operating leases:
Lease right-of-use assets	$	2,795
Lease liabilities	$	1,414
Lease liabilities, noncurrent	1,578
Total operating lease liabilities	$	2,992
Finance leases:
Property and equipment, at cost	$	13,110
Accumulated depreciation	(8,449)
Property and equipment, net	$	4,661
Lease liabilities	$	2,366
Lease liabilities, noncurrent	2,234
Total finance lease liabilities	$	4,600

As of April 30, 2020, for operating leases, the weighted-average remaining lease term is 2.6 years, and the weighted-average discount rate is 3.5%. As of April 30, 2020, for finance leases, the weighted-average remaining lease term is 2.1 years, and the weighted-average discount rate is 8.7%.

The components of lease expense for the three months ended April 30, 2020 were as follows:

	April 30, 2020
Operating leases:
Operating lease cost	$	412
Variable lease cost	63
Total operating lease cost	$	475
Finance leases:
Amortization of right-of-use assets	$	725
Interest on lease liabilities	101
Total finance lease cost	$	826

The following represents a schedule of maturing lease commitments for operating and finance leases as of April 30, 2020:

	April 30, 2020
	Operating		Finance
Maturity of lease liabilities
2021 (remaining nine months)	$	1,284	$	2,145
Year ending January 31,
2022	793		1,907
2023	684		861
2024	365		73
Total future minimum lease payments	$	3,126	$	4,986
Less: interest	(134)		(386)
Present value of lease liabilities	$	2,992	$	4,600

Future minimum lease payments under non-cancelable operating leases as of January 31, 2020 under ASC 840 were as follows:

	January 31, 2020
	Operating
Year ending January 31,
2021	$	1,824
2022	819
2023	464
2024	277
	$	3,384

Other supplemental cash flow information for the three months ended April 30, 2020 was as follows:

	April 30, 2020
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	392
Operating cash flows from finance leases	101
Financing cash flows from finance leases	525
Total	$	1,018
Right-of-use assets obtained in exchange of lease liabilities:
Operating	$	3,185
Finance	827
Total	$	4,012

An initial right-of-use asset of $2,741 for operating leases was recognized as a non-cash asset addition with the new lease accounting standard. Cash paid for amounts included in the present value of operating lease liabilities was $392 during the three months ended April 30, 2020 and is included in operating cash flows.

(b) Phreesia as Lessor

In connection with the patient intake and registration process, Phreesia offers its customers the ability to lease PhreesiaPads and Arrival Stations 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. All leased hardware in the SaaS arrangements are classified as operating leases.

During the three months ended April 30, 2020, the Company recognized $1,554 in subscription and related services revenue related to the leasing of PhreesiaPads and Arrival Stations.

Future lease payments receivable under operating leases were immaterial as of April 30, 2020, except for those with terms less than one year.

Leases

Leases

(a) Phreesia as Lessee

The Company leases office premises in New York, North Carolina, and Ottawa, and datacenter space in Virginia under operating leases which expire on various dates through June 2023. 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 right-of-use assets was calculated as the operating lease liabilities discounted at the present value, 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.

For office leases, 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 and utilities which are determined by the leased square footage in proportion to the overall office building in Ottawa.

The Company also entered into various finance lease arrangements of 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, 2020 was as follows:

	April 30, 2020
Operating leases:
Lease right-of-use assets	$	2,795
Lease liabilities	$	1,414
Lease liabilities, noncurrent	1,578
Total operating lease liabilities	$	2,992
Finance leases:
Property and equipment, at cost	$	13,110
Accumulated depreciation	(8,449)
Property and equipment, net	$	4,661
Lease liabilities	$	2,366
Lease liabilities, noncurrent	2,234
Total finance lease liabilities	$	4,600

As of April 30, 2020, for operating leases, the weighted-average remaining lease term is 2.6 years, and the weighted-average discount rate is 3.5%. As of April 30, 2020, for finance leases, the weighted-average remaining lease term is 2.1 years, and the weighted-average discount rate is 8.7%.

The components of lease expense for the three months ended April 30, 2020 were as follows:

	April 30, 2020
Operating leases:
Operating lease cost	$	412
Variable lease cost	63
Total operating lease cost	$	475
Finance leases:
Amortization of right-of-use assets	$	725
Interest on lease liabilities	101
Total finance lease cost	$	826

The following represents a schedule of maturing lease commitments for operating and finance leases as of April 30, 2020:

	April 30, 2020
	Operating		Finance
Maturity of lease liabilities
2021 (remaining nine months)	$	1,284	$	2,145
Year ending January 31,
2022	793		1,907
2023	684		861
2024	365		73
Total future minimum lease payments	$	3,126	$	4,986
Less: interest	(134)		(386)
Present value of lease liabilities	$	2,992	$	4,600

Future minimum lease payments under non-cancelable operating leases as of January 31, 2020 under ASC 840 were as follows:

	January 31, 2020
	Operating
Year ending January 31,
2021	$	1,824
2022	819
2023	464
2024	277
	$	3,384

Other supplemental cash flow information for the three months ended April 30, 2020 was as follows:

	April 30, 2020
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	392
Operating cash flows from finance leases	101
Financing cash flows from finance leases	525
Total	$	1,018
Right-of-use assets obtained in exchange of lease liabilities:
Operating	$	3,185
Finance	827
Total	$	4,012

An initial right-of-use asset of $2,741 for operating leases was recognized as a non-cash asset addition with the new lease accounting standard. Cash paid for amounts included in the present value of operating lease liabilities was $392 during the three months ended April 30, 2020 and is included in operating cash flows.

(b) Phreesia as Lessor

In connection with the patient intake and registration process, Phreesia offers its customers the ability to lease PhreesiaPads and Arrival Stations 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. All leased hardware in the SaaS arrangements are classified as operating leases.

During the three months ended April 30, 2020, the Company recognized $1,554 in subscription and related services revenue related to the leasing of PhreesiaPads and Arrival Stations.

Future lease payments receivable under operating leases were immaterial as of April 30, 2020, except for those with terms less than one year.