Phreesia (NYSE:PHR) faced a wave of downgrades from four major Wall Street brokerages on Monday after the healthcare software provider significantly reduced its fiscal 2027 revenue forecast, pointing to softer demand in its Network Solutions segment.
The revision sent the company’s shares sliding more than 26% in premarket trading on Tuesday.
Baird, Truist Securities, JPMorgan and Citi all lowered their ratings on the stock from Buy to Neutral-equivalent and cut their price targets sharply, now ranging between $10 and $16.
The downgrades followed Phreesia’s decision to reduce its fiscal 2027 revenue guidance by approximately $35–$39 million, bringing the new forecast to $510–$520 million, well below the consensus estimate of about $552 million.
Management said the downward revision reflects reduced spending commitments from certain pharmaceutical companies, particularly in areas such as vaccines, GLP-1 treatments and public health initiatives. The updated outlook implies low single-digit organic revenue growth, compared with the 8%–10% growth previously expected.
Despite the revenue downgrade, the company kept its adjusted EBITDA guidance at $125–$135 million, citing operating leverage and efficiency gains driven by artificial intelligence.
Phreesia also reported fourth-quarter revenue of $127 million, representing a 16% year-over-year increase, while adjusted EBITDA reached $29 million, both slightly above analysts’ forecasts. The quarter also marked the company’s first full year of positive GAAP net income and a record quarterly free cash flow of $28.5 million.
However, those positives were overshadowed by the weaker outlook.
Truist Securities analyst Jailendra Singh described the revision as a “surprising magnitude of change given that the company previously characterized their preliminary outlook as a “conservative” starting point.”
“With the narrative shifting from a ’Show Me’ story to one of ’No Growth Visibility,’ we are downgrading our rating to Hold,” Singh wrote.
In a separate note, JPMorgan highlighted potential execution risks tied to the company’s plan to offset lower revenue through cost reductions and AI-related efficiency initiatives.
“While we recognize that PHR is deliberately moderating subscription pricing to optimize retention/adoption and drive downstream monetization in payment solutions, timing of putting more weight on the less certain Network Solutions revenue line appears unfortunate,” analyst Alexei Gogolev said.
Citi analyst Daniel Grosslight said the shares are “likely to be range-bound in the near-term” until investors gain clearer visibility on pharmaceutical direct-to-consumer advertising spending, AI-related operating leverage, and the development of newer initiatives such as AccessOne and the HCP advertising business.
Meanwhile, Baird analyst Joe Vruwink said the scale of the guidance cut was “more than we expected, and this likely extends the overhang around the stock amidst other AI/SaaS debates.”