Accolade Announces Results for Fiscal First Quarter 2023

June 30, 2022
  • Fiscal first quarter 2023 revenue of $85.5 million, a 44% increase compared to fiscal first quarter 2022 revenue of $59.5 million

SEATTLE, June 30, 2022 (GLOBE NEWSWIRE) -- Accolade, Inc. (NASDAQ: ACCD) today announced financial results for the fiscal first quarter ended May 31, 2022.

“The healthcare consumer has never been more in need of true Personalized Healthcare. Two years into the Covid-19 pandemic, the healthcare system remains as complex and difficult to navigate as ever. Our customers, their employees and direct consumers are increasingly turning to Accolade to solve a far more comprehensive set of healthcare challenges, while at the same time trying to manage the ever-rising cost of meeting those challenges. Our strong financial results in the first quarter demonstrate our success meeting those challenges, while our sales success this year with a number of marquee customers validates our vision and strategy. Despite the inherent uncertainties in the current macroeconomic environment, we remain firmly on track to deliver our revenue growth and positive cash flow objectives,” said Rajeev Singh, Accolade Chief Executive Officer.

Financial Highlights for Fiscal First Quarter ended May 31, 2022

 Three Months Ended May 31, % 
 2022    2021    Change(3) 
 (in millions, except percentages)   
GAAP Financial Data:        
Revenue$85.5  $59.5  44 %
Net Loss(1)$(342.8) $(48.7) (604)%
         
Non-GAAP Financial Data(2):        
Adjusted EBITDA$(15.4) $(12.8) (20)%
Adjusted Gross Profit$39.0  $23.9  63 %
Adjusted Gross Margin 45.6 % 40.2 %  

(1) A non-cash goodwill impairment charge of $299.7 million was recorded during the three months ended May 31, 2022.

(2) A reconciliation of GAAP to non-GAAP results has been provided in this press release in the accompanying Financial Tables. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

(3) Percentages are calculated from accompanying Financial Tables and may differ from percentage change of numbers in Financial Highlights table due to rounding.

Steve Barnes, Accolade Chief Financial Officer, commented, “The first quarter of fiscal year 2023 demonstrated the predictability of Accolade’s business and our ability to flex our model to meet changing market dynamics. We outperformed our guidance on both revenue and Adjusted EBITDA by focusing on the two key drivers in our financial model: customer satisfaction to drive revenue performance, and effective expense management to deliver against our bottom line goals. We are raising the midpoint of our revenue guidance for fiscal 2023 and reaffirming our commitment to consistently improve our Adjusted EBITDA loss, with an expectation for positive cash flow and Adjusted EBITDA in fiscal year 2025.”

Financial Outlook

Accolade provides forward-looking guidance on revenue and Adjusted EBITDA, a non-GAAP financial measure.

For the fiscal second quarter ending August 31, 2022, we expect:

  • Revenue between $82 million and $83.5 million
  • Adjusted EBITDA between $(18) million and $(20) million

For the fiscal year ending February 28, 2023, we expect:

  • Revenue between $355 million and $365 million
  • Adjusted EBITDA between $(35) million and $(40) million, representing a range of (10)% to (11)% of revenue

Accolade has not reconciled guidance for Adjusted EBITDA to net income (loss), the most directly comparable GAAP measure, and has not provided forward-looking guidance for net income (loss), because there are items that may impact net income (loss), including stock-based compensation, that are not within the company’s control or cannot be reasonably predicted.

Quarterly Conference Call Details 

The company will host a conference call today, June 30, 2022 at 4:30 p.m. E.T. to discuss its financial results. The conference call can be accessed by dialing 1-833-519-1281 for U.S. participants, or 1-914-800-3853 for international participants, referencing conference ID # 8384085; or via a live audio webcast that will be available online at http://ir.accolade.com. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

Forward-Looking Statements 

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and our financial outlook. Forward-looking statements are subject to risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “maintain,” “might,” “likely,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms.

Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the risks described under the heading “Risk Factors” in Accolade’s most recently filed Annual Report on Form 10-K and subsequent filings, which should be read in conjunction with any forward-looking statements. All forward-looking statements in this press release are based on information available to Accolade as of the date hereof, and it does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.

About Accolade, Inc. 

Accolade (Nasdaq: ACCD) provides millions of people and their families with an exceptional healthcare experience that is personal, data driven and value based to help every person live their healthiest life. Accolade solutions combine virtual primary care, mental health support and expert medical opinion services with intelligent technology and best-in-class care navigation. Accolade's Personalized Healthcare approach puts humanity back in healthcare by building relationships that connect people and their families to the right care at the right time to improve outcomes, lower costs and deliver consumer satisfaction. Accolade consistently receives consumer satisfaction ratings over 90%. For more information, visit accolade.com.

Investor Contact:

Todd Friedman, Investor Relations, IR@accolade.com

Media Contact:

Public Relations, Media@accolade.com

Source: Accolade

Financial Tables

Accolade, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(In thousands, except share and per share data)

 May 31,  February 28, 
 2022    2022
Assets     
Current assets:     
Cash and cash equivalents$335,628  $365,853 
Accounts receivable, net 21,739   21,116 
Unbilled revenue 6,739   9,685 
Current portion of deferred contract acquisition costs 3,179   3,015 
Prepaid and other current assets 10,282   9,468 
Total current assets 377,567   409,137 
Property and equipment, net 11,865   11,797 
Operating lease right-of-use assets 33,790   33,126 
Goodwill 278,191   577,896 
Intangible assets, net 234,318   244,690 
Deferred contract acquisition costs 7,148   7,205 
Other assets 1,575   1,678 
Total assets$944,454  $1,285,529 
Liabilities and stockholders’ equity     
Current liabilities:     
Accounts payable$7,777  $7,837 
Accrued expenses and other current liabilities 9,745   11,000 
Accrued compensation 22,954   39,189 
Due to customers 11,104   16,263 
Current portion of deferred revenue 36,883   30,875 
Current portion of operating lease liabilities 7,016   6,589 
Total current liabilities 95,479   111,753 
Loans payable, net of unamortized issuance costs 281,083   280,666 
Operating lease liabilities 32,542   32,486 
Other noncurrent liabilities 563   4,562 
Deferred revenue 280   268 
Total liabilities 409,947   429,735 
      
Commitments and Contingencies     
Stockholders’ equity     
Common stock par value $0.0001; 500,000,000 shares authorized; 69,610,341 and 67,098,477 shares issued and outstanding at May 31, 2022 and February 28, 2022, respectively 7   7 
Additional paid-in capital 1,371,966   1,350,431 
Accumulated deficit (837,466)  (494,644)
Total stockholders’ equity 534,507   855,794 
Total liabilities and stockholders’ equity$944,454  $1,285,529 

Accolade, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except share and per share data)

 Three months ended May 31, 
 2022    2021
Revenue$85,528  $59,527 
Cost of revenue, excluding depreciation and amortization 47,615   35,936 
Operating expenses:     
Product and technology 26,817   15,939 
Sales and marketing 25,614   14,509 
General and administrative 20,238   22,002 
Depreciation and amortization 11,576   8,696 
Goodwill impairment 299,705    
Change in fair value of contingent consideration    10,460 
Total operating expenses 383,950   71,606 
Loss from operations (346,037)  (48,015)
Interest expense, net (634)  (618)
Other expense (50)  (55)
Loss before income taxes (346,721)  (48,688)
Income tax benefit (expense) 3,899   (19)
Net loss$(342,822) $(48,707)
      
Net loss per share, basic and diluted$(4.92) $(0.84)
      
Weighted-average common shares outstanding, basic and diluted 69,738,638   58,261,233 

The following table summarizes the amount of stock-based compensation included in the condensed consolidated statements of operations:

 For the three months ended
 May 31, 
 2022    2021
 (in thousands)
Cost of revenue$1,128  $328 
Product and technology 7,490   1,822 
Sales and marketing 3,989   1,373 
General and administrative 6,782   4,152 
Total stock‑based compensation$19,389  $7,675 

Accolade, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)

 Three months ended May 31, 
 2022    2021
Cash flows from operating activities:     
Net loss$(342,822) $(48,707)
Adjustments to reconcile net loss to net cash used in     
Operating activities:     
Goodwill impairment 299,705    
Depreciation and amortization expense 11,576   8,696 
Amortization of deferred contract acquisition costs 817   602 
Change in fair value of contingent consideration    10,460 
Deferred income taxes (3,999)   
Noncash interest expense 419   379 
Stock-based compensation expense 19,389   7,675 
Changes in operating assets and liabilities, net of effect of acquisitions:     
Accounts receivable and unbilled revenue 2,323   (409)
Accounts payable and accrued expenses (1,258)  268 
Deferred contract acquisition costs (924)  (507)
Deferred revenue and due to customers 862   7,643 
Accrued compensation (15,598)  (13,247)
Other liabilities (240)  (82)
Other assets (711)  (385)
Net cash used in operating activities (30,461)  (27,614)
Cash flows from investing activities:     
Purchase of marketable securities    (99,998)
Capitalized software development costs (766)   
Purchases of property and equipment (506)  (701)
Cash paid for acquisition, net of cash acquired    (228,013)
Net cash used in investing activities (1,272)  (328,712)
Cash flows from financing activities:     
Proceeds from stock option exercises 358   1,991 
Payments of equity issuance costs    (23)
Payment of debt issuance costs    (8,101)
Payment for purchase of capped calls    (34,443)
Proceeds from employee stock purchase plan 1,150   1,026 
Proceeds from borrowings on debt    287,500 
Net cash provided by financing activities 1,508   247,950 
Net decrease in cash and cash equivalents (30,225)  (108,376)
Cash and cash equivalents, beginning of period 365,853   433,884 
Cash and cash equivalents, end of period$335,628  $325,508 
Supplemental cash flow information:     
Interest paid$769  $51 
Fixed assets included in accounts payable$228  $292 
Other receivable related to stock option exercises$5  $247 
Income taxes paid$22  $31 
Common stock issued in connection with acquisition$  $116,187 
Replacement awards issued in connection with acquisition$  $1,520 
Debt issuance and offering costs included in accounts payable and accrued expenses$  $304 

Non-GAAP Financial Measures

In addition to our financial results determined in accordance with GAAP, we use the following non-GAAP financial measures to help us evaluate trends, establish budgets, measure the effectiveness and efficiency of our operations, and determine employee incentives. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business. In evaluating these non-GAAP financial measures, you should be aware that in the future we expect to incur expenses similar to the adjustments in this presentation. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or nonrecurring items.

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted Gross Profit is a non-GAAP financial measure that we define as revenue less cost of revenue, excluding depreciation and amortization, and excluding stock-based compensation. We define Adjusted Gross Margin as our Adjusted Gross Profit divided by our revenue. We believe Adjusted Gross Profit and Adjusted Gross Margin are useful to investors, as they eliminate the impact of certain noncash expenses and allow a direct comparison of these measures between periods without the impact of noncash expenses and certain other nonrecurring operating expenses.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net loss adjusted to exclude interest expense (net), income tax expense (benefit), depreciation and amortization, stock-based compensation, acquisition and integration-related costs, goodwill impairment, and change in fair value of contingent consideration. We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance. We believe Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry, as this measure generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.

Adjusted Gross Profit, Adjusted Gross Margin and Adjusted EBITDA have certain limitations, including that they exclude the impact of certain non-cash charges, such as depreciation and amortization, whereas underlying assets may need to be replaced and result in cash capital expenditures, and stock-based compensation expense, which is a recurring charge.

The following table presents, for the periods indicated, a reconciliation of our revenue to Adjusted Gross Profit:

 For the three months ended  
 May 31,  
 2022    2021 
 (in thousands, except percentages) 
Revenue$85,528  $59,527  
Less:        
Cost of revenue, excluding depreciation and amortization (47,615)  (35,936) 
Gross profit, excluding depreciation and amortization 37,913   23,591  
Add:        
Stock‑based compensation, cost of revenue 1,128   328  
Adjusted Gross Profit$39,041  $23,919  
Gross margin, excluding depreciation and amortization 44.3 %   39.6 %
Adjusted Gross Margin 45.6 %   40.2 %

The following table presents, for the periods indicated, a reconciliation of our Adjusted EBITDA to our net income (loss):

 For the three months ended
 May 31, 
 2022    2021
 (in thousands)
Net loss$(342,822) $(48,707)
Adjusted for:       
Interest expense, net 634   618 
Income tax (benefit) expense (3,899)  19 
Depreciation and amortization 11,576   8,696 
Stock‑based compensation 19,389   7,675 
Acquisition and integration‑related costs    8,380 
Goodwill impairment 299,705    
Change in fair value of contingent consideration    10,460 
Other expense 50   55 
Adjusted EBITDA$(15,367) $(12,804)

 



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