Accolade Announces Results for Fiscal Third Quarter 2022 

January 10, 2022
  • Fiscal third quarter 2022 revenue of $83.5 million, a 117% increase compared to fiscal third quarter 2021 revenue of $38.4 million 
  • Company introduces preliminary guidance for fiscal year 2023, expecting 25% growth in revenue and a reduction in Adjusted EBITDA loss
  • Initial Accolade One and Accolade Care customers launched on January 1, 2022

SEATTLE, Jan. 10, 2022 (GLOBE NEWSWIRE) -- Accolade, Inc. (NASDAQ: ACCD) today announced financial results for the fiscal third quarter ended November 30, 2021.

“It is remarkable for me to look back at the last twelve months and consider Accolade’s transformation from a navigation and advocacy company to a personalized healthcare company. In January 2021, we were serving about 100 customers and 2 million members. Today, with the integration of primary care, mental health and expert medical opinion from our acquisitions of PlushCare and 2nd.MD, we now serve more than 600 customers and 10 million members, having added more than 200 customers since combining our companies,” said Rajeev Singh, Accolade Chief Executive Officer. “With the January 1 launch of our first customers on Accolade Care and Accolade One, we have completed the transition from a company that focused solely on providing navigation, guidance, and recommendations to our members, to a dramatically more impactful company that has all the capabilities to deliver an end-to-end care journey that can transform the healthcare experience. Through it all, we remain focused on our belief that no single company can fix healthcare in America, and we will continue to work across the industry with any company committed to helping people live their healthiest lives.”

Financial Highlights for Fiscal Third Quarter ended November 30, 2021

          
  Three Months Ended November 30, % 
     2021
    2020
    Change(2) 
  (in millions, except percentages)   
GAAP Financial Data:         
Revenue $83.5  $38.4  117%
Net Income (loss) $22.5  $(16.6) 236%
          
Non-GAAP Financial Data(1):         
Adjusted EBITDA $(11.9) $(11.4) (5)%
Adjusted Gross Profit $39.2  $16.1  144%
Adjusted Gross Margin  47.0%  41.8%   

(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.

Accolade Chief Financial Officer Steve Barnes commented on the company’s financial results, “The strong outperformance was largely driven by earlier than expected achievement of approximately $7 million of performance-based revenue, including $2.5 million that was previously included in our third quarter guidance. This revenue recognition is a direct result of Accolade’s continued success in delivering measurement-based outcomes for our customers. We believe that achieving our performance-related revenue throughout the year demonstrates the maturation and predictability of the business and provides greater visibility into our full year revenue goals."

Financial Outlook

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

For the fiscal fourth quarter ending February 28, 2022, we expect:

  • Revenue between $90 million and $93 million
  • Adjusted EBITDA between $(4) million and $(8) million

For the fiscal year ending February 28, 2022, we are updating our revenue and Adjusted EBITDA ranges as follows:

  • Revenue between $306 million and $309 million (previously $303 million and $307 million)
  • Adjusted EBITDA between $(48) million and $(52) million, representing a range of (16% to 17%) of revenue (previously $(49) million and $(54) million)

For the fiscal year ending February 28, 2023, we are introducing preliminary revenue and Adjusted EBITDA guidance as follows:

  • Revenue growth of 25% over fiscal year 2022
  • Adjusted EBITDA in a range of (11% to 12%) of revenue

Accolade Chief Financial Officer Steve Barnes added, “As we enter the fourth quarter with a more integrated suite of offerings and expanded go to market motion, we are beginning to see the positive impact of combining Accolade, 2nd.MD and PlushCare. Among our 200+ new customers, and expansions with existing customers, we are seeing more companies select multiple Accolade offerings, demonstrating the value of the extended portfolio and laying the foundation for Accolade One and Accolade Care. Our preliminary revenue guidance of 25% growth in fiscal year 2023 shows the consistency and stability of our business, and our Adjusted EBITDA guidance demonstrates our focus on improving our bottom line performance with a target of achieving breakeven Adjusted EBITDA in fiscal year 2025.”

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, January 10, 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 # 6077524; or via a live audio webcast that will be available online at http://ir.accolade.com. A presentation to accompany the conference call will be available via the webcast and will be posted to the investor relations site following the completion of the call. 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,” “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 Quarterly Report on Form 10-Q, 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

Asher Dewhurst, Investor Relations, Accolade@westwicke.com

Media Contact:

Megan Torres, 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)
       
  November 30,  February 28, 
  2021 2021
Assets      
Current assets:      
Cash and cash equivalents $365,982  $433,884 
Accounts receivable, net  21,641   9,112 
Unbilled revenue  4,262   2,725 
Current portion of deferred contract acquisition costs  2,957   2,210 
Current portion of deferred financing fees     93 
Prepaid and other current assets  12,714   5,957 
Total current assets  407,556   453,981 
Property and equipment, net  11,965   9,227 
Goodwill  579,581   4,013 
Intangible assets, net  255,129   604 
Deferred contract acquisition costs  7,425   6,067 
Other assets  1,696   1,618 
Total assets $1,263,352  $475,510 
Liabilities and stockholders’ equity      
Current liabilities:      
Accounts payable $5,744  $7,390 
Accrued expenses  7,875   4,845 
Accrued compensation  36,297   35,379 
Deferred rent and other current liabilities  2,666   567 
Due to customers  6,302   5,015 
Current portion of deferred revenue  43,134   25,879 
Contingent consideration liabilities  82,584    
Total current liabilities  184,602   79,075 
Convertible notes, net of unamortized issuance costs  280,259    
Deferred rent and other noncurrent liabilities  9,492   5,192 
Deferred revenue  299   395 
Total liabilities  474,652   84,662 
       
Commitments and Contingencies      
Stockholders’ equity      
Common stock par value $0.0001; 500,000,000 shares authorized; 66,906,311 and 55,699,052 shares issued and outstanding at November 30, 2021 and February 28, 2021, respectively  7   6 
Additional paid-in capital  1,248,781   762,362 
Accumulated deficit  (460,088)  (371,520)
Total stockholders’ equity  788,700   390,848 
Total liabilities and stockholders’ equity $1,263,352  $475,510 
         


 
Accolade, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except share and per share data)
             
  Three months ended November 30,  Nine months ended November 30, 
  2021    2020 2021    2020
Revenue $83,450  $38,444  $216,265  $111,126 
Cost of revenue, excluding depreciation and amortization  45,156   22,743   125,426   66,052 
Operating expenses:            
Product and technology  22,846   13,018   61,297   36,624 
Sales and marketing  24,616   8,644   63,134   23,841 
General and administrative  21,464   8,414   69,636   20,537 
Depreciation and amortization  11,250   2,114   30,967   6,090 
Change in fair value of contingent consideration  (68,428)     (38,282)   
Total operating expenses  11,748   32,190   186,752   87,092 
Income (loss) from operations  26,546   (16,489)  (95,913)  (42,018)
Interest expense, net  (743)  (35)  (2,137)  (3,663)
Other income (expense)  25   (42)  (19)  (160)
Income (loss) before income taxes  25,828   (16,566)  (98,069)  (45,841)
Income tax benefit (expense)  (3,325)  (29)  9,501   (85)
Net income (loss) $22,503  $(16,595) $(88,568) $(45,926)
             
Net income (loss) per share            
Basic $0.34  $(0.32) $(1.41) $(1.50)
Diluted $0.31  $(0.32) $(1.41) $(1.50)
Weighted-average common shares outstanding            
Basic  65,418,728   51,578,863   62,684,823   30,635,348 
Diluted  71,490,045   51,578,863   62,684,823   30,635,348 
                 

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

             
  Three months ended November 30,  Nine months ended November 30, 
  2021 2020 2021 2020
Cost of revenue, excluding depreciation and amortization $949 $352 $2,331 $679
Product and technology  5,303  1,060  13,491  2,212
Sales and marketing  3,608  702  9,035  1,494
General and administrative  8,517  832  20,970  1,925
Total stock-based compensation $18,377 $2,946 $45,827 $6,310
             


 
Accolade, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)
 
  Nine months ended November 30, 
  2021 2020
Cash flows from operating activities:      
Net loss $(88,568) $(45,926)
Adjustments to reconcile net loss to net cash used in      
Operating activities:      
Depreciation and amortization expense  30,967   6,090 
Amortization of deferred contract acquisition costs  1,938   1,187 
Change in fair value of contingent consideration  (38,282)   
Deferred income taxes  (9,658)   
Noncash interest expense  1,239   1,395 
Stock-based compensation expense  45,827   6,310 
Changes in operating assets and liabilities, net of effect of acquisitions:      
Accounts receivable and unbilled revenue  (5,743)  (15,577)
Accounts payable and accrued expenses  (1,881)  569 
Deferred contract acquisition costs  (3,304)  (4,187)
Deferred revenue and due to customers  16,316   4,281 
Accrued compensation  (4,494)  9,372 
Deferred rent and other liabilities  (1,047)  (324)
Other assets  (3,376)  1,182 
Net cash used in operating activities  (60,066)  (35,628)
Cash flows from investing activities:      
Purchase of marketable securities  (99,998)   
Sale of marketable securities  99,998    
Capitalized software development costs  (619)  (374)
Purchases of property and equipment  (2,297)  (1,500)
Earnout payments to MD Insider     (58)
Cash paid for acquisitions, net of cash acquired  (260,165)   
Net cash used in investing activities  (263,081)  (1,932)
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  7,042   5,176 
Payments of equity issuance costs  (60)   
Payment of debt issuance costs  (8,368)   
Payment for purchase of capped calls  (34,443)   
Proceeds from stock purchases under employee stock purchase plan  3,574   1,442 
Proceeds from borrowings on debt  287,500   51,166 
Repayments of debt principal     (73,166)
Payments related to debt retirement     (753)
Net cash provided by financing activities  255,245   423,343 
Net increase (decrease) in cash and cash equivalents  (67,902)  385,783 
Cash and cash equivalents, beginning of period  433,884   33,155 
Cash and cash equivalents, end of period $365,982  $418,938 
Supplemental cash flow information:      
Interest paid $880  $2,246 
Fixed assets included in accounts payable $123  $185 
Other receivable related to stock option exercises $521  $249 
Income taxes paid $103  $149 
Common stock issued in connection with acquisitions $455,586  $ 
Replacement awards issued in connection with acquisitions $6,729  $ 
Bonus settled in the form of stock options $  $5,735 
Debt issuance and offering costs included in accounts payable and accrued expenses $  $68 
         

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, 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   For the nine months ended
  November 30,   November 30, 
  2021    2020  2021    2020
  (in thousands, except percentages)  (in thousands, except percentages)
Revenue $83,450  $38,444   $216,265  $111,126 
Less:             
Cost of revenue, excluding depreciation and amortization  (45,156)  (22,743)   (125,426)  (66,052)
Gross profit, excluding depreciation and amortization  38,294   15,701    90,839   45,074 
Add:             
Stock‑based compensation, cost of revenue  949   352    2,331   679 
Adjusted Gross Profit $39,243  $16,053   $93,170  $45,753 
Gross margin, excluding depreciation and amortization  45.9%  40.8%   42.0%  40.6%
Adjusted Gross Margin  47.0%  41.8%   43.1%  41.2%
              

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

             
  For the three months ended  For the nine months ended
  November 30,  November 30, 
  2021    2020 2021    2020
  (in thousands) (in thousands)
Net income (loss) $22,503  $(16,595) $(88,568) $(45,926)
Adjusted for:            
Interest expense, net  743   35   2,137   3,663 
Income tax expense (benefit)  3,325   29   (9,501)  85 
Depreciation and amortization  11,250   2,114   30,967   6,090 
Stock‑based compensation  18,377   2,946   45,827   6,310 
Acquisition and integration‑related costs  311      13,208    
Change in fair value of contingent consideration  (68,428)     (38,282)   
Other expense (income)  (25)  42   19   160 
Adjusted EBITDA $(11,944) $(11,429) $(44,193) $(29,618)




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