Transcription of the T2 2026 results call of Gate PHR

SourceMotley_fool

Sept 4, 2025 10:03 PM

Source of the image: The Motley Fool.

Date

Thursday, September 4, 2025 at 5:00 PM ET

Participants in the call

Chief Executive Officer — Chaim Indig

Financial Director — Balaji Gandhi

Need a quote from a Motley Fool analyst? Email pr@fool.com

Key Points

Acquisition of AccessOne – Gate has announced a definitive agreement to acquire AccessOne for $160 million in cash, which is expected to close in the third or early fourth quarter, funded by balance sheet cash and a committed bridge loan facility.

Revenue – 117.3 million dollars, an increase of 15% compared to the previous year.

Net Income – 700,000 dollars of GAAP net income for the fiscal second quarter of 2026 (period ended July 31, 2025), marking the company's first profitable quarter based on net income.

Adjusted EBITDA – 22 million dollars, up from 16 million dollars compared to the previous year, corresponding to a margin of 19%.

Operating cash flow – $14.8 million, up $3.8 million from the previous year.

Free cash flow – $9.6 million, an increase of $6 million compared to the previous year, marking the fourth consecutive quarter of positive free cash flow (non-GAAP).

Average number of healthcare service clients (AHSC) – 4,467, a sequential increase of 56 and a year-on-year increase of 298.

Revenue by AHSC – 26,249 dollars, up 7% compared to the previous year and stable compared to the previous quarter.

Cash Position – $98.3 million in cash and cash equivalents at the end of the quarter, compared to $90.9 million in the previous quarter.

Revenue outlook for the fiscal year 2026 – Maintained in a range of 472 to 482 million dollars.

Adjusted EBITDA Outlook for Fiscal Year 2026 – Adjusted EBITDA outlook raised to $87-92 million from $85-90 million previously.

Expansion of Total Addressable Market (TAM) – The acquisition of AccessOne expands the total addressable market (TAM) for payment solutions by $6 billion. The TAM for network solutions also increases by $6 billion, bringing the company's TAM to approximately $24 billion, up from $10 billion previously.

AccessOne Finances – Should contribute approximately $35 million in annualized revenue and $11 million in annualized adjusted EBITDA at closing.

Risk Taking in AccessOne – Chaim Indig, CEO, stated: “We are not the risk bearer in this relationship,” clarifying that the risk associated with the payment plans is borne by PNC Bank and the providers, not by Gate.

Monetization of AI Products – CEO Chaim Indig stated, “we have monetized and are monetizing this product today” in reference to outward-facing AI offerings, including voice AI.

Growth of Network Solutions – Management cited a 25% growth in network solutions, with a higher volume of campaigns and expanded customer relationships as contributing factors.

Summary

The quarter marked a turning point for Gate (NYSE:PHR), highlighted by the first positive net income result (GAAP) and the ongoing acquisition of AccessOne for 160 million dollars, aimed at expanding the addressable payment market and generating additional revenue and profitability. Management emphasized that updates to the post-acquisition financial outlook will incorporate the expected contributions from AccessOne of 35 million dollars in annualized revenue and 11 million dollars in adjusted EBITDA (non-GAAP).

Chaim Indig, CEO, confirmed the company's role as a non-risk bearer in AccessOne's financing agreements, specifically attributing the risk to PNC Bank and healthcare providers.

The company reaffirmed its AHSC outlook for the full year of approximately 4,500, with management expecting the number of customers and revenue per customer to increase compared to the fiscal year 2025.

Network solutions have benefited from both a higher number of campaigns and expanding customer relationships, although management has refrained from providing detailed acceleration metrics for specific pharmaceutical brands.

Leadership changes have been announced, with Evan Roberts appointed as President of Supplier Solutions and David Lanesky appointed as President of Network Solutions.

Industry Glossary

AHSC (Average Healthcare Services Client): The average number of healthcare service client organizations served during the reporting period, used by Gate as the primary operational metric.

TAM (Total Addressable Market): The total potential revenue opportunity available for a company's products and solutions, specifically referenced here for the payment and network solutions markets.

Where to invest $1,000 now

When our team of analysts has a buy recommendation, it may be worth listening. After all, the average total return of Stock Advisor is 1,047%* — a crushing outperformance compared to the 184% of the S&P 500.

They have just revealed what they believe are the 10 best stocks to buy now for investors, available when you join Stock Advisor.

See actions »

*Stock Advisor Returns as of August 25, 2025

This article is a transcript of this conference call produced for The Motley Fool. While we strive to reach our best Foolish level, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using large language models (LLM) based on The Motley Fool's investment perspectives and approach. It has been reviewed by our AI quality control systems. As LLMs cannot (currently) hold shares, they have no position in the mentioned stocks. As with all our articles, The Motley Fool assumes no responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the documents filed by the company with the SEC. Please refer to our Terms of Use for more details, including our mandatory capitalized Disclaimers.

The Motley Fool has no position in the mentioned stocks. The Motley Fool has a disclosure policy.

Disclaimer: For informational purposes only. Past performance does not guarantee future results.