The Company leases office premises in North Carolina and Ottawa, and data center space in Virginia under operating leases which expire on various dates through March 2024. Certain of these arrangements have escalating rent payment provisions or optional renewal clauses. The table below only considers lease obligations through the renewal date as the Company is not reasonably certain to elect the option to extend its leases beyond the option date. No arrangements contain residual value guarantees or restrictions imposed on the leases. We are also committed to pay a portion of the actual operating expenses under certain of these lease agreements. These operating expenses are not included in the table below.

The operating lease right-of-use assets were calculated as the present value of operating lease liabilities, less the amount of unamortized tenant improvement allowance and deferred rent. The discount rate used was the Company’s incremental borrowing rate given that the implicit rate to each lease was not readily determinable.


	January 31, 2021
Operating leases:
Lease right-of-use assets	$	2,654
Lease liabilities, current	1,087
Lease liabilities, noncurrent	1,899
Total operating lease liabilities	$	2,986

Finance leases:
Property and equipment, at cost	$	19,933
Accumulated depreciation	(10,389)
Property and equipment, net	$	9,544
Lease liabilities (included in Current portion of debt and finance leases)	3,820
Lease liabilities, noncurrent (included in Long-term debt and finance leases)	5,882
Total finance lease liabilities	$	9,702

For office leases and leased equipment, the Company has elected the practical expedient to not separate lease and non-lease components, and as such, the variable lease cost primarily represents variable payments such as common area maintenance, utilities and equipment maintenance.

As of January 31, 2021, for operating leases, the weighted-average remaining lease term is 2.6 years and the weighted-average discount rate is 3.5%. As of January 31, 2021, for finance leases, the weighted-average remaining lease term is 2.7 years, and the weighted-average discount rate is 4.4%.


	January 31, 2021
Operating leases:
Operating lease cost	$	1,766
Variable lease cost	257
Total operating lease cost	$	2,023
Finance leases:
Amortization of right-of-use assets	$	2,876
Interest on lease liabilities	326
Total finance lease cost	$	3,202


	January 31, 2021
	Operating		Finance
Maturity of lease liabilities
Fiscal year ending January 31,
2022	1,171		4,142
2023	1,142		3,356
2024	760		2,294
2025	52		316
2026	—		158
Total future minimum lease payments	$	3,125	$	10,266
Less: interest	(139)		(564)
Present value of lease liabilities	$	2,986	$	9,702


	January 31, 2021
Supplemental cash flow information
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash used for operating leases	$	1,629
Operating cash used for finance leases	326
Financing cash used for finance leases	2,630
Total	$	4,585

Right-of-use assets obtained in exchange for lease liabilities:
Operating	$	4,359
Finance	8,885
Total	$	13,244

An initial right-of-use asset of $2,741 for operating leases was recognized as a non-cash asset addition in connection with the adoption of ASC 842. Cash paid for amounts included in the present value of operating lease liabilities was $1,629 during the year ended January 31, 2021 and is included in cash (used in) provided by operating activities.

In connection with the patient intake and registration process, Phreesia offers its customers the ability to lease PhreesiaPads and Arrivals Kiosks along with their monthly subscription. These rentals fall under the guidance of ASC 842. The Company elected the practical expedient to not separate lease and non-lease components. More specifically, all contractual hardware maintenance is included with the hardware lease components. The leases contain no variable lease payments, no options to extend the lease that are reasonably certain to be exercised, and do not give the lessee an option to purchase the hardware at the end of the lease term. Additionally, the lease term does not represent a major part of the remaining economic life of the assets, and the present value of the lease payments does not equal or exceed substantially all of the fair value of the assets. As a result, all leased hardware in the SaaS arrangements are classified as operating leases.