Accolade Announces Results for Fiscal Third Quarter 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 | ) | ||||
