Company: PHR
Filing Date: 2025-03-13
Form Type: 10-K
Source: 0001412408-25-000010
Chunk: 185

Company: Phreesia, Inc.
Filing Date: 2025-03-13
Form: 10-K
Item: Item 7
Chunk 185
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 the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to our consolidated statements of operations.

67

In connection with the ConnectOnCall acquisition, we recorded deferred consideration liabilities within other current liabilities and other long-term liabilities for amounts payable to the selling shareholders in seven quarterly installments through June 2025. The fair value of our deferred consideration liabilities was determined based on a discount cash flow approach, using the pre-tax cost of debt of 9.3%. In connection with the acquisition of ConnectOnCall, we recorded deferred consideration liabilities with an acquisition-date fair value of $10.0 million. On January 31, 2025, we and the former equity holders of ConnectOnCall entered into a settlement agreement which resulted in a reduced payment of $5.0 million in full settlement of the deferred consideration liabilities. As of January 31, 2025, the outstanding balance of the deferred consideration liabilities was $0. The settlement agreement was a result of indemnification claims made by us against the former equity holders of ConnectOnCall stemming from our October 2023 agreement to acquire the outstanding equity of ConnectOnCall. The principal portion of payments of the deferred consideration liabilities are financing payments of acquisition-related liabilities in our accompanying consolidated statements of cash flows.

Capitalized internal-use software

We capitalize certain costs incurred for the development of computer software for internal use. These costs relate to the development of our solutions. We capitalize the costs during the development of the project, when it is determined that it is probable that the project will be completed, and the software will be used as intended. Costs related to preliminary project activities, post-implementation activities, training and maintenance are expensed as incurred. Internal-use software is amortized on a straight-line basis over its estimated useful life, which is generally three to five years. We evaluate the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. We exercise judgment in determining the point at which various projects may be capitalized, in assessing the ongoing value of the capitalized costs and in determining the estimated useful lives over which the costs are amortized. To the extent that we change the manner in which we develop and test new features and functionalities related to our solutions, assess the ongoing value of capitalized assets or determine the estimated useful lives over which the costs are amortized, the amount of internal-use software development costs