How will the $160 million cash acquisition affect Phreesia’s capital structure and earnings per share?

Capital‑structure impact

The $160 million cash‑only purchase will be taken out of Phreesia’s liquid‑asset pool and recorded as goodwill (and any net‑identifiable assets) on the balance sheet. Because the deal is cash‑funded—no new debt is announced—the headline change is a reduction in cash and total assets. The cash outflow will modestly thin Phreesia’s equity cushion; if the company draws down a material portion of its treasury‑level cash, the debt‑to‑equity ratio will rise a little (or the equity‑to‑assets ratio will fall), nudging the capital‑structure mix a fraction toward higher leverage. The shift is not dramatic, but analysts will now benchmark the firm against a slightly leaner balance sheet and monitor whether any revolving‑line borrowing is subsequently tapped to fund integration working‑capital needs.

Earnings‑per‑share considerations

On the earnings side, the acquisition will introduce a new line‑item— AccessOne’s operating profit (or loss) – into Phreesia’s consolidated net income. In the near term, the one‑time cash expense and the ensuing goodwill amortization (if any) will depress net income, leading to a modest dip in earnings per share versus the pre‑announcement trajectory. However, analysts will focus on the “run‑rate” earnings that AccessOne brings: if the platform generates steady, incremental recurring margin that offsets the goodwill‑related charge, Phreesia’s FY‑2025 EPS could level off or even improve after the integration window. The key driver will be the management’s guidance on incremental net income versus the cost of acquisition; a positive EPS uplift will be priced in once the deal is closed, while a weaker-than‑expected contribution will create pressure on the stock.

Actionable take‑away

Expect a short‑run EPS‑compression signal as the cash outlay and goodwill amortization hit the income statement. Keep an eye on the upcoming earnings release for any updated AccessOne contribution guidance. If management projects a clear, incremental margin boost, the stock may find buying opportunities on the dip; if the EPS outlook looks flat or negative, the market will likely penalize the share, and a more defensive stance is prudent until the integration narrative is clarified.