Accolade Announces Results for Fiscal Third Quarter 2021

January 7, 2021
  • Fiscal third quarter 2021 revenue of $38.4 million, a 30% increase compared to fiscal third quarter 2020 revenue of $29.7 million, driven primarily by strength in new customer additions across market segments and offerings 
  • Company raises revenue outlook for fiscal year 2021 to a range of $162 million to $165 million, representing growth of 22% to 25% over fiscal year 2020 

SEATTLE, Jan. 07, 2021 (GLOBE NEWSWIRE) -- Accolade, Inc. (NASDAQ: ACCD), which provides personalized, technology-enabled solutions that help people better understand, navigate, and utilize the healthcare system and their workplace benefits, today announced financial results for the fiscal third quarter ended November 30, 2020. 

“Accolade’s momentum in the third quarter continued what has been a transformative year for the company. Across the business, we have expanded in all aspects – growing our customer base across all segments, engaging with a member population that now exceeds two million people, and extending our platform into new offerings and with new ecosystem partners. We are raising our outlook for the full year based on our continued success and our belief that Accolade has never been better positioned to compete in the market,” said Rajeev Singh, Accolade CEO. 

Mr. Singh continued, “The healthcare system continues to be too complex and too costly, and consumers have never had a greater need for high touch, empathetic benefit navigation and advocacy services to help them negotiate this increasingly complicated marketplace. We believe the future of healthcare must be integrated, collaborative, and driven by an obsession for the member experience, and that the best way to bend the cost curve is by focusing on total population health to ensure everyone gets the right care and realizes the best health outcomes. Our strategy, built on these fundamental principles, ultimately delivers better outcomes and lower healthcare costs. We are excited about the future of healthcare, and our 1,200+ employees are motivated every day to help our members live their healthiest lives.” 

Financial Highlights for Fiscal Third Quarter 2021 ended November 30, 2020

            
  Three months ended November 30,   % 
     2020
     2019
     change(2) 
              
  (in millions, except percentages)    
            
GAAP Financial Data:           
Revenue $38.4   $29.7   30%
Net loss $(16.6)  $(18.3)  9%
            
Non-GAAP Financial Data(1):           
Adjusted EBITDA $(11.4)  $(13.8)  17%
Adjusted Gross Profit $16.1   $12.2   32%
Adjusted Gross Margin  41.8 %  41.1 %   

(1)  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."

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

Financial Outlook

Accolade provides forward-looking guidance on Revenue and Adjusted EBITDA.

For the fiscal fourth quarter ending February 28, 2021, we expect: 

  • Revenue between $51.0 million and $54.0 million 

  • Adjusted EBITDA, a non-GAAP measure, between $(2.4) million and $(5.4) million. 

For the full fiscal year ending February 28, 2021, we are revising our guidance and now expect: 

  • Revenue between $162.0 million and $165.0 million, up from the previous range of $159.0 to $162.0 million 

  • Adjusted EBITDA, a non-GAAP measure, between $(32.0) million and $(35.0) million

We have not reconciled guidance for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and have not provided forward-looking guidance for net loss, because there are items that may impact net loss, including stock-based compensation, that are not within our control or cannot be reasonably predicted. 

Quarterly Conference Call Details 

The company will host a conference call today, Thursday, January 7, 2021 at 4:30 p.m. E.T. to discuss its financial results. The 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 #3964843; 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. 

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 following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market or industry conditions, regulatory environment and receptivity to our technology and services; (iii) results of litigation or a security incident; (iv) the loss of one or more key customers or partners; (v) the impact of COVID-19 on our business and results of operation; and (vi) changes to our abilities to recruit and retain qualified team members. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to our prospectuses filed with the SEC on July 1, 2020 and October 19, 2020, respectively, and the Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2020 expected to be filed with the SEC on or about January 7, 2021.  All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law. 

About Accolade, Inc. 

Accolade provides personalized health and benefits solutions designed to empower every person to live their healthiest life. Using a blend of cloud-based technologies, specialized support from Accolade Health Assistants® and Clinicians, and integrated data and programs across mobile, online and phone, Accolade navigates people through the healthcare system with trust, empathy and ease. Employers offer Accolade to employees and their families as the single place to turn for all health, healthcare, and benefits questions or concerns, increasing their engagement in benefits and connecting them to high-quality providers and care. By empowering members to make better decisions about their health, Accolade can support members in lowering the cost and complexity of healthcare while achieving consumer satisfaction ratings over 90 percent and an NPS of 60. 

Investor Contact:

Todd Friedman, Investor Relations, 484-532-5200, Todd.Friedman@accolade.com

Asher Dewhurst, Investor Relations, 443-213-0500, Accolade@westwicke.com

Media Contact:

Megan Torres, Public Relations, 206-679-9630, Megan.Torres@accolade.com

Source: Accolade

 
 
Financial Tables
Accolade, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(In thousands, except share and per share data)
 
  November 30,  February 29, 
Assets 2020
 2020
Current assets:      
Cash and cash equivalents $418,938  $33,155 
Accounts receivable, net  15,432   294 
Unbilled revenue  1,334   895 
Current portion of deferred contract acquisition costs  2,048   1,368 
Current portion of deferred financing fees  163   279 
Prepaid and other current assets  6,598   12,944 
Total current assets  444,513   48,935 
Property and equipment, net  10,496   13,625 
Goodwill  4,013   4,013 
Acquired technology, net  967   2,054 
Deferred contract acquisition costs  6,195   3,876 
Other assets  1,311   745 
Total assets $467,495  $73,248 
Liabilities, convertible preferred stock and stockholders’ equity (deficit)      
Current liabilities:      
Accounts payable $4,136  $5,273 
Accrued expenses  3,437   6,580 
Accrued compensation  27,459   23,838 
Deferred rent and other current liabilities  531   674 
Due to customers  3,449   4,674 
Current portion of deferred revenue  34,427   28,919 
Total current liabilities  73,439   69,958 
Loans payable, net of unamortized issuance costs     21,144 
Deferred rent and other noncurrent liabilities  5,375   5,523 
Deferred revenue  394   396 
Total liabilities  79,208   97,021 
       
Convertible preferred stock:      
Preferred stock par value $0.0001; 25,000,000 shares authorized; 0 and 19,513,939 issued and outstanding at
November 30, 2020 and February 29, 2020, respectively
     233,022 
       
Commitments (note 11)      
Stockholders’ equity (deficit)      
Common stock par value $0.0001; 500,000,000 shares authorized; 55,171,467 and 6,033,450 shares issued
and outstanding at November 30, 2020 and February 29, 2020, respectively
  5   2 
Additional paid-in capital  755,076   64,071 
Accumulated deficit  (366,794)  (320,868)
Total stockholders’ equity (deficit)  388,287   (256,795)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit) $467,495  $73,248 
         


Accolade, Inc. and Subsidiaries
Condensed Consolidated Statements of Operation (unaudited)
(In thousands, except share and per share data)
            
 Three months ended November 30,  Nine months ended November 30, 
 2020
    2019
 2020
    2019
Revenue$38,444  $29,652  $111,126  $88,066 
Cost of revenue, excluding depreciation and amortization 22,743   17,538   66,052   51,737 
Operating expenses:           
Product and technology 13,018   11,046   36,624   33,595 
Sales and marketing 8,644   7,924   23,841   23,202 
General and administrative 8,414   8,551   20,537   20,125 
Depreciation and amortization 2,114   2,033   6,090   6,415 
Total operating expenses 32,190   29,554   87,092   83,337 
Loss from operations (16,489)  (17,440)  (42,018)  (47,008)
Interest expense, net (35)  (827)  (3,663)  (2,071)
Other expense (42)  (18)  (160)  (98)
Loss before income taxes (16,566)  (18,285)  (45,841)  (49,177)
Income tax expense (29)  (12)  (85)  (49)
Net loss$(16,595) $(18,297) $(45,926) $(49,226)
            
Net loss per share, basic and diluted$(0.32) $(3.17) $(1.50) $(9.20)
            
Weighted-average common shares outstanding, basic and diluted 51,578,863   5,776,478   30,635,348   5,351,313 
                

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

 Three months ended November 30,  Nine months ended November 30, 
 2020 2019 2020 2019
Cost of revenue$352 $75 $679 $250
Product and technology 1,060  460  2,212  1,312
Sales and marketing 702  340  1,494  1,162
General and administrative 832  689  1,925  2,171
Total stock-based compensation$2,946 $1,564 $6,310 $4,895
            


Accolade, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
 
  Nine months ended November 30, 
     2020     2019 
Cash flows from operating activities:      
Net loss $(45,926) $(49,226)
Adjustments to reconcile net loss to net cash used in      
 Operating activities:      
  Depreciation and amortization expense  6,090   6,415 
  Amortization of deferred contract acquisition costs  1,187   695 
  Noncash interest expense  1,395   533 
  Stock-based compensation expense  6,310   4,895 
  Changes in operating assets and liabilities:      
Accounts receivable and unbilled revenue  (15,577)  123 
Accounts payable and accrued expenses  569   4,408 
Deferred contract acquisition costs  (4,187)  (1,551)
Deferred revenue and due to customers  4,281   10,832 
Accrued compensation  9,372   187 
Deferred rent and other liabilities  (324)  106 
Other assets  1,182   (1,400)
   Net cash used in operating activities  (35,628)  (23,983)
Cash flows from investing activities:      
Capitalized software development costs  (374)   
Purchases of property and equipment  (1,500)  (2,469)
Net cash acquired in acquisition of MD Insider  -   (206)
Earnout payments to MD Insider  (58)   
   Net cash used in investing activities  (1,932)  (2,675)
Cash flows from financing activities:      
Proceeds from public offerings, net of underwriters' discounts and commissions and offering costs  439,478    
Proceeds from stock option and warrant exercises  5,176   2,008 
Proceeds from sale of Series F Preferred Stock, net.  -   19,943 
Proceeds from stock purchases under employee stock purchase plan  1,442    
Proceeds from borrowings on debt  51,166   1,660 
Repayments of debt principal  (73,166)   
Payments related to debt retirement  (753)   
Net cash provided by financing activities  423,343   23,611 
Net increase (decrease) in cash and cash equivalents  385,783   (3,047)
Cash and cash equivalents, beginning of period  33,155   42,701 
Cash and cash equivalents, end of period $418,938  $39,654 
Supplemental cash flow information:      
Interest paid $2,246  $1,790 
Income taxes paid $149  $55 
Fixed assets included in accounts payable $185  $126 
Other receivable related to stock option exercises $249  $504 
Offering costs included in accounts payable and accrued expenses $68  $ 
Bonus settled in the form of stock options $5,735  $ 
Common stock issued in connection with acquisition $  $6,164 
Common stock warrants issued in connection with debt $  $779 
         

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.

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, and acquisition and integration-related costs. 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. These non-GAAP financial measures may also not be comparable to similarly titled measures of other companies because they may not calculate such measures in the same manner, limiting their usefulness as comparative measures. 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. When evaluating our performance, you should consider these non-GAAP financial measures alongside other financial performance measures, including the most directly comparable GAAP measures set forth in the reconciliation tables below and our other GAAP results. The following table presents, for the periods indicated, a reconciliation of our revenue to Adjusted Gross Profit:

  For the three months ended   For the nine months ended  
  November 30,   November 30,  
  2020
     2019
  2020
     2019
 
                     
  (in thousands, except percentages)  (in thousands, except percentages) 
Revenue $38,444   $29,652   $111,126   $88,066  
Less:                
Cost of revenue, excluding depreciation and amortization  (22,743)   (17,538)   (66,052)   (51,737) 
Gross profit, excluding depreciation and amortization  15,701    12,114    45,074    36,329  
Add:                
Stock‑based compensation, cost of revenue  352    75    679    250  
Adjusted Gross Profit $16,053   $12,189   $45,753   $36,579  
Gross margin, excluding depreciation and amortization  40.8 %  40.9 %  40.6 %  41.3 %
Adjusted Gross Margin  41.8 %  41.1 %  41.2 %  41.5 %
                 

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

  For the three months ended  For the nine months ended
  November 30,  November 30, 
  2020    2019 2020    2019
                 
  (in thousands) (in thousands)
Net Loss $(16,595) $(18,297) $(45,926) $(49,226)
Adjusted for:            
Interest expense, net  35   827   3,663   2,071 
Income tax provision  29   12   85   49 
Depreciation and amortization  2,114   2,033   6,090   6,415 
Stock‑based compensation  2,946   1,564   6,310   4,895 
Acquisition and integration‑related costs     15      567 
Other expense  42   18   160   98 
Adjusted EBITDA $(11,429) $(13,828) $(29,618) $(35,131)

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