Phreesia, Inc (PHR) Q1 2022 Earnings Call Transcript

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Phreesia, Inc (PHR 4.15%)
Q1 2022 Earnings Call
Jun 4, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen. And welcome to the Phreesia Fiscal First Quarter 2022 Earnings Report. [Operator Instructions] We will provide instructions for the question-and-answer session to follow.

First, I would like to introduce Balaji Gandhi, Senior Vice President, Investor Relations for Phreesia. Mr. Gandhi, you may begin.

Balaji Gandhi -- Senior Vice President of Investor Relations

Thank you, operator. Good morning, and welcome to Phreesia's earnings conference call for the fiscal first quarter of 2022, which ended on April 30, 2021. Joining me on today's call are Phreesia's Chief Executive Officer and Co-Founder, Chaim Indig; and Chief Financial Officer, Randy Rasmussen.

Complete disclosure of our results can be found in our earnings press release issued yesterday evening as well as in our related Form 8-K submission to the SEC. Our 8-K filing includes the first instalment of our quarterly stakeholder letter, which we are implementing to provide additional information about Phreesia during the quarter in advance of our earnings call to provide greater efficiency to our earnings reporting process for the benefit of our stakeholders. All these documents are available on the Investor Relations section of our website at ir.phreesia.com.

As a reminder, today's call is being recorded and a replay will be available following the conclusion of the call. During today's call, we will make forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act. Although we believe that the expectations reflected in these forward-looking statements are reasonable, these statements relate to future events or our future operational or financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements.

Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control, including without limitation, statements about our future financial performance, including our revenue, cash flows, cost of revenue and operating expenses, our anticipated growth, our predictions about our industry, the impact of the COVID-19 pandemic on our business, and our ability to attract, retain and cross-sell to healthcare provider clients. Statements are also subject to other risks and uncertainties, including those more fully described in our filings with the SEC, including in our quarterly report on Form 10-Q that will be filed with the SEC later today. The forward-looking statements made on this call speak only as of the date on which the statements are made. We undertake no obligation to update and expressly disclaim the obligation to update any forward-looking statements to reflect events or circumstances after the date of this call or to reflect new information, or the occurrence of unanticipated events, except as required by law.

We will also refer to certain financial measures not in accordance with generally accepted accounting principles in order to provide additional information to investors. Non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings press release and supplemental materials, which were furnished with our Form 8-K filed after the markets closed on June 3 with the SEC and may also be found on our Investor Relations website at ir.phreesia.com. As a reminder, we are participating on today's call from three different locations, so we appreciate your patience with us.

I will now turn the call over to our CEO, Chaim Indig.

Chaim Indig -- Chief Executive Officer

Thank you, Balaji. All of us at Phreesia are looking forward to entering the summer, with the hope that the biggest hardships of the pandemic are behind us. We carried the momentum from our strong finish in fiscal 2021 into the first quarter of fiscal year 2022. Hope everyone has had a chance to review our earnings press release and quarterly letter.

Operator, can we open the call up for Q&A, please?

Questions and Answers:

Operator

[Operator Instructions] First question comes from Anne Samuel from J.P. Morgan. Your line is open.

Anne Samuel -- J.P. Morgan -- Analyst

Hi, guys. Congrats on a great quarter and thanks for the new format. It's great. I was hoping you could maybe talk a little bit about balancing investment and growth, because you've been investing a lot in your growth this year. It's really starting to show up nicely in the results, but how should we be thinking about moving forward leverage in the P&L on a faster growth rate?

Randy Rasmussen -- Chief Financial Officer

Yes. Thanks. I'll take that question. I guess, before I start it, Chaim, do you want to say anything?

Chaim Indig -- Chief Executive Officer

No, no, go ahead, Randy.

Randy Rasmussen -- Chief Financial Officer

Yeah, I think as we look long term, we really -- it's important that we invest in our business as we bring on new clients. So, we support the current growth we have and we look forward to the growth that we have in the coming year and the next year that follows. And we really look at these investments from a capital allocation perspective and say, does it make sense for our business and will it grow the top line. I think in the longer term, we still have a goal of 20% EBITDA margins, but we look out farther to reach that goal. That makes a lot of sense. And then, maybe just one on the move into the acute market. Just wondering if maybe you could give us a little bit of color on how intake looks different there, maybe relative to some of the ambulatory clients you have today and how we should be thinking about how that will impact your PPPM. I would imagine it's a little bit more complex.

Chaim Indig -- Chief Executive Officer

The workflow and the use cases, Anne, and the acute hospital market are very, very different than the ambulatory workflows. You have a high number of unscheduled patients, which makes a ton of sense. You need to have tools to be able to identify, which patients are coming into which records. You have to be able to triage emergency issues, so that you instantly stop any type of intake, if there is any type of critical health condition and how and when you ask for dollars is very, very different. And frankly, some of the flows are different, right. You get massive peaks early in the morning as people come in for surgery. So we've really been investing heavily and been able to manage all the variability in these hospital workflows.

One of the other things we've seen in the hospital too is people often and it's a huge customer experience issue, right. You might go into a hospital for multiple appointments, right. You might have to go and get your -- if you broke your leg, you might go into see the doctor and then, they'll send you to get an X-ray and the experience of having to checking each time and fill out the same people every time is also something we've solved for. So it's a -- there is -- it's a multifaceted complex visit or visits that you go to, and we've really been investing heavily in this. And yes, it has changed the profile of our customers.

Anne Samuel -- J.P. Morgan -- Analyst

Great. Very helpful. Congrats on a great quarter, guys.

Chaim Indig -- Chief Executive Officer

Thanks, Anne.

Operator

And your next question will come from Ryan Daniels from William Blair. Your line is open.

Ryan Daniels -- William Blair -- Analyst

Yeah, guys. Thanks for taking the questions and agree with the new format. I really appreciate that. Chaim, one for you. If you think about the market reopening on the ambulatory side, I'm curious what that's doing to your pipeline. I think consumers post-COVID definitely have different expectations for digital health and convenience and touchless check-ins. Are you starting to see that manifest aggressively in the pipeline?

Chaim Indig -- Chief Executive Officer

I think we have seen the interest in what we've been doing every year for the past 15 years grow, Ryan. And I'm -- I sort of look at this as something that I believe most consumers have been expecting and now they demand. And so, we have seen consumer interest rapidly change, but also, I think there is another dynamic happening in healthcare right now that I think is really important, which is those conversations that everyone are having is having around wages going up a buck or two, or it's happening at the front desk too, or when we talk to our clients, they're having a hard time filling those seats that they need to fill and the salaries are going up. So they are also being forced to look for technology and productivity tools to give them the operating leverage because unlike Chipotle, you can't raise your prices, right. It's just not possible. So we're also seeing just a ton of demand for practices and healthier organizations, health systems trying to figure out how to get operating leverage. And so, it's been very -- we've seen it sort of come from all sides, and that's one of the reasons why we're investing so heavily.

Ryan Daniels -- William Blair -- Analyst

Yeah. I appreciate that and that leads to my next question. As they do change their focus and really need to drive engagement, drive satisfaction, increase operating margins, clearly a huge amount of challenges in that end market, are there any specific products of yours that are resonating more than others outside of the core module or any areas that you think you can invest into further drive those efficiencies for providers? Thanks guys.

Chaim Indig -- Chief Executive Officer

I got to say, Ryan, I'm a little biased. I think all of the things we do drive massive value to some very -- like some part of the market. And if we didn't think they were valuable, we wouldn't be investing in them. And across the board, we're trying to move work to the patients. And whether that's appointments or whether that's putting someone on a payment plan or whether that's automating consent forms or taking your picture like, these are all things, which is frankly -- it's about time that it happened. And we're pretty excited that we could help make the difference.

And to clarify, I don't think they are trying to improve margins. I think they're trying to maintain them, right. I think running a healthcare organization in America is a tough business. We're just trying to do whatever we can to help them. Next question?

Operator

And your next some question will come from Ryan MacDonald from Needham. Your line is open.

Ryan MacDonald -- Needham & Company -- Analyst

Hi, thanks for taking my question and congrats on a great quarter. Chaim, it would be curious to hear how our QueueDr is starting to resonate in -- with your customers and in conversations you're having for expansion opportunities.

Chaim Indig -- Chief Executive Officer

So QueueDr was an acquisition we made this end of last fiscal year. We've since integrated the product offering to a bunch of our different offerings. One of their core pieces, it's now called Accelerator and -- as part of our offering, it's been very, very well accepted by our client base and by net new clients and that team has just been a wonderful addition to Phreesia. I -- like as I see, what we're doing, I can't tell where their product is in Phreesia anymore, just because a lot of the things that they were doing and are doing are now just becoming part of the core offering. So we're really excited, we couldn't have asked for a better team to join us and it's -- we are very happy with the early days in this.

Ryan MacDonald -- Needham & Company -- Analyst

Thanks. And as a follow-up, you saw some really greater growth in new clients in the quarter. You've obviously made a lot of investments in this area with addition of SDRs. Can you talk about what's driving that improved productivity? Is it sort of just those SDRs getting up to speed more quickly than you expected or perhaps sales tactics that are more effective in the marketplace than say, they were 12 months ago? Thanks.

Chaim Indig -- Chief Executive Officer

We continue to invest in our go-to-market initiatives, whether it's SDRs and sales folks and implementation, our customer success team. And I think it's -- the reason we had the quarter we had is, all of those teams across the board really leaned into our go-to-market, and they are just incredible individuals that work really, really well together that -- our SDR team is we think one of the best around, at least in healthcare. And as a SaaS organization, we're going to keep investing in it. We're over 140 SDRs now. And the only sad thing is I haven't met most of them in person, and I look forward to meeting them, but they're doing a great job. Our sales org is doing a great job. Implementation team is doing a great job, and our CSM org just keeps growing to and we keep investing and making sure that we do right by our clients.

Ryan MacDonald -- Needham & Company -- Analyst

Excellent. Congrats again.

Chaim Indig -- Chief Executive Officer

Thanks, Ryan.

Operator

Your next question will come from Scott Schoenhaus from Stephens. Your line is open.

Scott Schoenhaus -- Stephens -- Analyst

Hey, thanks. Chaim, Randy and Balaji, congrats on the excellent results. I guess, my first question is on the revenue guidance. If you could provide any color on the kind of breakdown in growth between provider clients versus revenue per provider client that's baked into the guide for the year, that would be helpful, particularly given both stats really accelerated this quarter.

Randy Rasmussen -- Chief Financial Officer

Yes, Scott. Thanks for the question. I think when you look at our revenue outlook, we're guiding on the top line. We don't provide guidance on the average number per provider clients or the average revenue per provider client. I think one thing to keep in mind. We raised the low end of the guidance from $178 million to $191 million, which is approximately $13 million on the low end of the guidance. And on the high end, we raised the guidance from $186 million to $194 million, which is approximately $8 million. And if you look at the high end of the revenue guidance [Phonetic], we're really talking about 30% year-over-year growth.

And I think -- there's a couple of things to keep in mind as we look at the guidance. First on payments, payment revenue is subject to seasonality as this revenue is driven by the volume that patients pay and you also have to keep in mind that there is an annual rollover, insurance deductibles, so patient spending is higher earlier in the calendar year. And when we look at payments, remember last year was the big COVID impact where -- this quarter, it's higher due to increased level of payments compared to last quarter. And as we look at the remainder of this year, there's still -- there's less predictability in patient volumes due to the disruption that we've experienced from COVID over the past 15 months.

Scott Schoenhaus -- Stephens -- Analyst

Thanks, Randy. That's helpful. My next question is for Chaim. You have $450 million of cash on the balance sheet, Chaim. What are your plans for capital allocation? What are you seeing on the M&A front? Are you targeting more bolt-on software modules similar to your acquisition of QueueDr? Thank you.

Chaim Indig -- Chief Executive Officer

I think what we've done is we have a fairly rigid and thoughtful capital allocation thesis. And we've explained it entirely to all of our operators at a senior level. And we've said here is the things that matter to us and here is how we're thinking about growing and here is how it matters to all of our stakeholders. And please keep your eye out the things that help us do that organically or inorganically.

And if we really continue to leverage the experience and knowledge of all of our leaders at Phreesia, we have a better -- our opportunities for executing, which is better and integrating are better and making anything [Phonetic] really have a shot of clear success. So our view is not do we have a lot of cash on the balance sheet. It's -- whether it was $200 million or $300 million of $450 million, we still have the same views on how we use the capital. And it's really to be used thoughtfully.

Scott Schoenhaus -- Stephens -- Analyst

Thank you, guys. Congrats on the results again.

Chaim Indig -- Chief Executive Officer

Cheers.

Operator

[Operator Instructions] Your next question comes from Donald Hooker from KeyBanc. Your line is open.

Donald Hooker -- KeyBanc Capital Markets -- Analyst

Hey, great. Good morning. Again congrats on the numbers in the quarter. So you guys have a -- clearly have a land-and-expand strategy. So when I -- can you help us think about your current provider client base, maybe qualitatively or quantitatively, you have a little over 1,900 [Phonetic] provider clients now. I think that compares to 1,600 or so last year. Any kind of difference in terms of the whitespace there now versus before. I know you're adding new types of clients, but just help us think about kind of the whitespace opportunity in the new wave of provider clients. Thanks.

Chaim Indig -- Chief Executive Officer

I'll try to give some color to that. We've been adding clients small, medium, large health systems. We've been lending health systems and large clients. We've been expanding in them aggressively, but we wouldn't have been able to have the quarter we had, if it wasn't the entire like we -- I'd just say the organization fired on all cylinders this quarter and being able to take practices of and health systems and organizations of all sizes live and support them and also check across our upsell. Sorry, I can't -- Don, I can't express that like it's just the fact that we would not have been able to have the quarter we had, if we hadn't seen the full gamut. It's mostly been ambulatory, but we won't see in a fair number of hospitals live. So, I don't know how else to describe that. It's just been -- it was just really, really intense quarter and I'm really proud of this organization.

Donald Hooker -- KeyBanc Capital Markets -- Analyst

Thank you.

Chaim Indig -- Chief Executive Officer

Cheers.

Operator

Your next question will come from Joe Vruwink from Baird. Your line is open.

Joe Vruwink -- Robert W. Baird -- Analyst

Okay, great. Hi, everyone. Chaim, there was a comment in the shareholder letter about being impressed with new products coming from the R&D or get Phreesia and then separately, David Linetsky was on a podcast recently just discussing all the way Phreesia has been able to engage patients in a more personalized way. I guess, my question, do you think the company's platform has achieved a certain scale and network where the feedback loop is now accelerating and this drives faster innovation?

Chaim Indig -- Chief Executive Officer

All right. So that was like you're stacking like four questions there. It's pretty -- it's actually very impressive. So I'll try to answer a couple of them without getting too many angry emojis from Balaji to give everyone their turn. So I think that David Linetsky, he is articulating something that we have seen, which is our ability to deliver very targeted healthcare messages that are relevant to people and be able to understand and communicate with them. It's starting to really pay off. And those are investments we've been making for years. We've been fairly open about them like, whether it's to a chat or our investments in data science, for [Phonetic] investments and be able to engage them in data collection or appointments or enrolling in programs, like it's what we've been saying is, it's working and we're going to keep investing in it because both -- it makes the product better, it makes the healthcare experience better, it provides a phenomenal ROI to all of our stakeholders.

And I really think the organization has just embraced the idea that we are moving toward a scale capacity where we can do things that you couldn't do before as a smaller business. And in terms of investing in new product, we're good, the R&D investment that we're making is really because we believe and then, if you build great product and put it in the hands of people, you drive great return, they become happy clients and you get to monetize that. And the more times we do that, the more times that thesis has proved correct. And we have to monetize it with our subscription and payments in our life sciences clients. And it's been really -- it's been very wonderful to see the net effect of just a great product organization tied to our go-to-market team, and we're pretty excited about that.

Joe Vruwink -- Robert W. Baird -- Analyst

Great. Thank you very much.

Chaim Indig -- Chief Executive Officer

Cheers.

Operator

And your next question will come from John Ransom from Raymond James. Your line is open.

John Ransom -- Raymond James -- Analyst

Hey, good morning. So if we think about the guidance raise, ex the beat, it's about $5 million at the midpoint. Is that -- just talk about -- I know you don't breakout revenue, but I'm just curious the seasonality -- is the seasonality all pretty much on the payment side? Does that really the amount of spending in the payment revenue the big upside to our model? So should we infer from that there is some pull-through and you're expecting a little bit of moderation because of some of the things that were mentioned?

Randy Rasmussen -- Chief Financial Officer

Yeah, John. I mean, the seasonality is primarily in the payment space. And as I mentioned, it's really driven on the way that patients pay, which is always higher at the beginning of the year. And as I said before, we did increase the low end of the range by $13 million.

John Ransom -- Raymond James -- Analyst

Okay. Thank you.

Operator

And your next question will come from Hannah Baade from D.A. Davidson. Your line is open.

Hannah Baade -- D.A. Davidson -- Analyst

Hi, guys. Thanks for taking the question. It's great to see such success with both land and expand on the provider client side. What hiring plans you have inside the sales organization to continue to report those new client wins as well as cross-sell and upsell?

Chaim Indig -- Chief Executive Officer

I think we're going to -- and we've communicated that we're going to hire more SDRs as SDRs are going to transition in sales org and expect that to be fairly aggressive. We're going to continue to hire and invest in our implementation and our CSM organizations, and we're going to continue to invest aggressively in our life sciences organization. So at the same time, out marketing team has also done a great job of driving demand. So I'd say that look for investment. We're going to aggressively invest as fast as we can over the next handful of quarters to be able to continue to give ourselves increased market share.

Hannah Baade -- D.A. Davidson -- Analyst

Great. Thanks.

Operator

Your next question will come from Richard Close from Canaccord Genuity. Your line is open.

Richard Close -- Canaccord Genuity -- Analyst

Great. Thanks for the questions. Congratulations on the quarter and the new format as well. So I guess, my first question here is on the payment facilitator volume percentage. You talk about that moderating. Can you just provide any context in terms of where you see that as maybe a normalized rate over time?

Randy Rasmussen -- Chief Financial Officer

Yeah. Thank you Richard for the question. I think when you look at our payment facilitator, we have clients that use in different ways. Some of us -- some of the clients use us to process the full payment, which goes through the payment facilitator model and then, others will just use this as a gateway. And we're picking up the revenue share based on payments that go through the payment facilitator model. It really depends on the size of the practice and the health system on how they use us. And generally, larger clients are using gateway. So as we move to larger clients, we will see that percentage drop.

Richard Close -- Canaccord Genuity -- Analyst

Okay. And then, maybe on the new products that you discussed in the letter, I'm just curious with respect to vaccine management, I know you provided some data in there, but I was curious if there is any other qualitative, I guess, information with respect that how that offering drove engagement by clients, customers, those that use that versus those that didn't. And are you able to use that type of information to go back to other clients and really illustrate the impact of something like that?

Chaim Indig -- Chief Executive Officer

I think the way we think about it is -- yes, we do measure engagement. We measure usage. We measure value, but like at the end of the day, if you build really good products and they make it them to patients and providers, we're doing the right thing, right. It's not always about taking one thing and like most of these providers are looking for us specifically to help them, doing what they do as pretty hard. I'd probably reference in the letters, what HealthLinc said, like they -- we just wanted to help them. Especially around COVID, we just wanted to help people first test, then -- first screen, then test, then we wanted to make sure that we give them the tools to get people in for vaccination. Now, we really care about hesitancy, right. We want to make sure most of this population -- we wanted to help them do everything they can to help this population of ours, get vaccinated as fast as possible, because it's just the right thing. I would like to go back to a pre-world where we're not all wearing masks unnecessarily.

Richard Close -- Canaccord Genuity -- Analyst

Great. Thank you. Congratulations

Chaim Indig -- Chief Executive Officer

Cheers. Thanks, Richard.

Operator

Your next question will come from Jessica Tassan from Piper Sandler. Your line is open.

Jessica Tassan -- Piper Sandler -- Analyst

Hi, thank you for taking the question. Just maybe if you could give an update in terms of where the opportunity lies in the acute care market, so is there an opportunity on the payment processing or life sciences revenue side or is the acute care market primarily an opportunity on the subscription and related services [Indecipherable] side? Thanks.

Chaim Indig -- Chief Executive Officer

We mostly view the acute care opportunity as a -- today as a subscription opportunity at around $2 billion in available TAM just from our own calculation. Does that mean we haven't or won't win some payments and won't do some work on life sciences? No. But the vast majority is subscription for us today. And if that changes, we will communicate to our stakeholders why and how that's changed.

Jessica Tassan -- Piper Sandler -- Analyst

Awesome. If I could just sneak in maybe, if you guys could provide any color on the acute care market assumptions underlying revised guidance for their contribution to revise guidance.

Balaji Gandhi -- Senior Vice President of Investor Relations

Hey, Jess, this is Balaji. Are you talking about the TAM that Chaim referenced?

Jessica Tassan -- Piper Sandler -- Analyst

Just the win rate in the acute care market, the assumptions underlying that change to guidance.

Balaji Gandhi -- Senior Vice President of Investor Relations

Yeah, that's not something we've talked about. I think we've just said, I think Chaim on an earlier question just talked about the breadth that we saw in the quarter across all different areas and certainly, had some major progress in the acute care space as well, but I think that's really all greater share at this point.

Jessica Tassan -- Piper Sandler -- Analyst

Got it. Thank you.

Operator

And your next question will come from Sean Dodge from RBC Capital Markets. Your line is open.

Thomas Keller -- RBC Capital Markets -- Analyst

Hey, good morning is Thomas Keller on for Sean. Thanks for taking the question. Just following up on the life sciences business, can you give us a sense of the mix driving the strength now and how you expect to see it trending going forward, the lean more toward effective targeting, new clients or new campaigns from existing clients? Any more clarity there would be helpful.

Chaim Indig -- Chief Executive Officer

So I think first and foremost, I think the strength continues to be delivered by just a phenomenal team, right. So it's all through it to life sciences or whether it's our sales, our client team, our data scientists, we've really -- that's just been -- that's wonderful to how they work together and how they work for their clients and our clients has been [Indecipherable]. And then, as we think about product investments, that's had a -- just a meaningful payoff and we expect that to continue as we invest more in those products. And when we say investment, we think -- I sort of think about it out years. That's not so much months, but we do expect there to be continued growth in our life sciences org.

Thomas Keller -- RBC Capital Markets -- Analyst

All right. Thanks a lot. Appreciate it.

Chaim Indig -- Chief Executive Officer

Cheers.

Operator

Your next question comes from Daniel Grosslight from Citi. Your line is open.

Daniel Grosslight -- Citigroup -- Analyst

Hi guys. Thanks for taking the question, and I'll add my congrats on a strong start to the year. I'd like to go back to the acceleration in payment volume you saw this quarter, particularly the warehousing effect we might have seen as patients that delayed care last year seem to be coming back stronger than expected. In your guidance, are you assuming -- this is kind of a one-time blip of a warehousing effect, or do you expect to see these sustained levels of high volume throughout the year? And I guess, tangentially to that, are you seeing any benefit from vaccinations? I know you're giving away the modules -- vaccination modules for free and patients don't bear responsibility for their vaccination, but is there any secondary impact you might be seeing from vaccination? Thanks.

Chaim Indig -- Chief Executive Officer

So I'll start with the last, then I'll let Randy answer all the other stuff. So I will keep stressing that the single biggest benefit we get is by doing the right thing. And look, we had the DDA resources from other projects to help the vaccination effort, but I'd say the biggest benefit has been that we've helped our practitioners help their patients. And when you do the right thing -- and I think it's very important, when we do the right thing, I believe more often, you get outsized benefits both from your team and from your clients, and we'll continue to try to do that. And we've been able to do that. I feel pretty lucky that we are in a position with stakeholders that have empowered us to be able to help everyone in the general sense. And yes, we do believe long term. We will get benefits because this is a type of partnership that our clients want to work with, right, people enter healthcare because they want to make a difference.

Randy, would you --?

Randy Rasmussen -- Chief Financial Officer

Yeah, Dan. I think your question was about seasonality, the year-over-year impact of payments. And I think when we look at it, I don't think we really know why the patient is coming back this particular quarter, if it's regular seasonality pattern that we see, which is a major part of it, right, where there is higher payments of the patient responsibility in the earlier part of the year. There could be a delayed visit to the doctor, but we really don't know. So I think when we look forward to the rest of the year, there's some unpredictability based on the pandemic that we've seen that's really disrupted patient visits over the past 15 months.

Daniel Grosslight -- Citigroup -- Analyst

Got it. Okay. So on that unknown piece for the rest of the year, the assumption in your guidance is that we're not going to see the same amount of volume that you saw in 1Q in terms of growth acceleration [Speech Overlap]?

Randy Rasmussen -- Chief Financial Officer

I don't know the specifics in a revenue line, but there is a seasonality factor where the payment revenue is higher in the first quarter.

Daniel Grosslight -- Citigroup -- Analyst

Yeah. Got it. All right. Thanks, guys.

Operator

And your next question will come from Stephanie Davis from SVB Leerink. Your line is open.

Stephanie Davis -- SVB Leerink -- Analyst

Hey, guys. Congrats on the quarter. And thank you for taking my question. Since merchant acquiring tends to be viewed as more of a commodity with a relatively low level of stickiness, are you looking at any strategies to capture the merchant acquiring processing relationship with your acute clients, especially maybe taking advantage of the vendor consolidation trends are going on the hospital? And beyond that, could you look at -- could you tell us through any of these expansions you're looking at for your solution suite to capture a larger share of the acute wallet? I snuck in two, so sorry Balaji.

Chaim Indig -- Chief Executive Officer

So I'll answer them sort of combined, which is -- I don't think we make a point of articulating what our go-to-market strategies are, are they during, before or after other than to say that I think we feel pretty comfortable that we've articulated. I think pretty clearly that we think in the acute market, we won't be aggressively going after payments not in the near term. And if anything changes, I promise we will communicate it. But look, I think that those relationships right or wrong are often tied up with very different folks in treasury and are often tied to lending arrangements with banks. And I think that's very different than what you often see in sort of the other verticalization opinions, right, where things are still using their -- the large banks are still using their treasury relationships to try to capture the vast majority of the payment revenue. So I think one of the things we think is very important is to also knowledge where we want to spend resources to win share, right. And we think this is a huge market and where we allocate resources and spend capital is an area where we think we could win share -- market share aggressively with the great returns.

Stephanie Davis -- SVB Leerink -- Analyst

And a quick follow-up on that, there has been a lot of M&A in the payment side of the space, especially touching on the acute inventory system. Is there any impact to your strategy or are you possibly further market demand, that's the line of the deals?

Chaim Indig -- Chief Executive Officer

I don't think our strategy has changed whatsoever, but we know most of these companies for a decade. So, no, I don't think our strategy has changed with M&A or the top of M&A. We just keep doing out there. And it looks like I think it's working. So I'm going to have us keep doing anything.

Operator

And your next question will come from David Larsen from BTIG. Your line is open.

David Larsen -- BTIG -- Analyst

Hey, congratulations on a good quarter. Can you maybe just give a little more color around COVID-related impact to volumes, like are your physician office client volumes back up where they were pre-pandemic, or are they even slightly higher? And then, with the sales force, I know that there was like some hesitancy during the pandemic to call on the physician practices because they were busy dealing with COVID. Are all of your salespeople now still selling and are they visiting the practices or is it still sort of remote? Thanks very much.

Chaim Indig -- Chief Executive Officer

I think -- let me clarify, like our salespeople has been out selling aggressively for quarters and they have not been on planes at all. So they're out on the phones doing webcast and really reaching out to practices, health systems and I don't think we would have had the quarters we had. We have our salespeople and our SDRs, and our implementation team hasn't been aggressively working with practices to get them on Phreesia. And so, look, I just -- I don't know like congrats to our HR team and all the managers that help on board all these folks as we've ramped up, but I don't think we communicated that our sales team hasn't been selling. Balaji, shall we?

Balaji Gandhi -- Senior Vice President of Investor Relations

No, we haven't.

Chaim Indig -- Chief Executive Officer

Okay. Just checking. I just want to -- but thank you for clarifying. That was misconception.

David Larsen -- BTIG -- Analyst

Okay. And then, are volumes back up where they were pre-pandemic?

Chaim Indig -- Chief Executive Officer

I don't think we communicate to volumes, other than I think we put out a report with The Commonwealth Fund, it said it was within 5% and it was like -- I want to say it was sometime in January. Is that fair, Balaji?

Balaji Gandhi -- Senior Vice President of Investor Relations

Yeah. Everything we went through early February and then obviously, David, you have our results to look at as well and there is some correlation with payment volumes.

David Larsen -- BTIG -- Analyst

Okay. And then, just one last quick one, the cost came in a little bit higher than -- I was expecting quite frankly like sales and marketing, R&D and then also G&A, just any thoughts around what your expected trend is for those line items going forward through the rest of the year? Thanks.

Randy Rasmussen -- Chief Financial Officer

Yeah. I mean, I think as we articulated before, we continue to invest in the growth. We invest robustly in product and sales and marketing. And it's also important as we got clients to make sure that we have implementation and support resources. So we expect to continue to make those investments.

David Larsen -- BTIG -- Analyst

Okay. Great. Thanks very much.

Operator

This brings us to the end of today's Q&A session. I will now turn the call back over to the presenters for closing remarks.

Chaim Indig -- Chief Executive Officer

I just want to take this opportunity to thank everyone at Phreesia, thank all of our clients and thank all of our shareholders for everyone's support, and we're really proud of what we just did this past quarter. And we look forward to working with everyone through the next couple of months of the year. And I hope everyone gets vaccinated, if you haven't already. And I look forward to seeing everyone soon enough. Cheers.

Operator

[Operator Closing Remarks]

Duration: 42 minutes

Call participants:

Balaji Gandhi -- Senior Vice President of Investor Relations

Chaim Indig -- Chief Executive Officer

Randy Rasmussen -- Chief Financial Officer

Anne Samuel -- J.P. Morgan -- Analyst

Ryan Daniels -- William Blair -- Analyst

Ryan MacDonald -- Needham & Company -- Analyst

Scott Schoenhaus -- Stephens -- Analyst

Donald Hooker -- KeyBanc Capital Markets -- Analyst

Joe Vruwink -- Robert W. Baird -- Analyst

John Ransom -- Raymond James -- Analyst

Hannah Baade -- D.A. Davidson -- Analyst

Richard Close -- Canaccord Genuity -- Analyst

Jessica Tassan -- Piper Sandler -- Analyst

Thomas Keller -- RBC Capital Markets -- Analyst

Daniel Grosslight -- Citigroup -- Analyst

Stephanie Davis -- SVB Leerink -- Analyst

David Larsen -- BTIG -- Analyst

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