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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 8, 2021

Accolade, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware

001-39348

01-0969591

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

1201 Third Avenue, Suite 1700
Seattle, WA 98101

(Address of Principal Executive Offices and Zip Code)

(206) 926-8100

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instructions A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

ACCD

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Item 2.02.           Results of Operations and Financial Condition.

On July 8, 2021, Accolade, Inc. (the “Company”) issued a press release reporting its financial results for the fiscal quarter ended May 31, 2021. A copy of such press release is furnished hereto as Exhibit 99.1 and incorporated by reference herein.

The information in this Form 8-K, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference under the Securities Act of 1933, as amended, or into any filing with the U.S. Securities and Exchange Commission made by the Company, whether made before or after the date hereof, except as expressly set forth by reference in such a filing.

Item 9.01           Financial Statements and Exhibits.

(d) Exhibits

Exhibit
Number

Exhibit Description

99.1

Press Release titled “Accolade Announces Results for Fiscal First Quarter 2022,” dated July 8, 2021 furnished herewith

104

Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Accolade, Inc.

 

Dated: July 8, 2021

 

By:

/s/ Stephen Barnes

Stephen Barnes

Chief Financial Officer

Exhibit 99.1

Graphic

Accolade Announces Results for Fiscal First Quarter 2022 

Fiscal first quarter 2022 revenue of $59.5 million, a 66% increase compared to fiscal first quarter 2021 revenue of $35.9 million 
Company raises guidance for fiscal year 2022 to $300 million - $305 million, a 78% increase at the midpoint compared to fiscal year 2021 revenue of $170.4 million, reflecting first quarter outperformance and inclusion of PlushCare in full year forecast.

SEATTLE, July 8, 2021 -- Accolade, Inc. (NASDAQ: ACCD), the company reinventing healthcare by helping people live their healthiest lives, today announced financial results for the fiscal first quarter ended May 31, 2021.

 

“This is an exciting time at Accolade, having spent the past year putting in place the building blocks to achieve our goal of truly disrupting the healthcare industry. Now, as our core business demonstrates continued momentum and with the acquisitions of 2nd.MD and PlushCare complete, the company that invented the navigation and advocacy market is ready to reinvent the market yet again,” said Rajeev Singh, Accolade CEO.

“Our new capabilities – primary care and expert medical opinion – strengthen our ability to deliver extraordinary results for the companies and members we serve. Primary care physicians, while ideally the quarterbacks of the healthcare journey, too often struggle with insufficient information about their patients and an insufficient capacity to assist beyond the visit. Expert specialists are likewise limited in their ability to stick with members beyond the consultation to ensure there is adequate support in place as the member pursues treatment. By integrating primary care and expert medical consultations with our foundational navigation and advocacy model, we can amplify the impact of the physician and ultimately deliver better clinical outcomes, dramatically improved well-being across entire employee populations, and continue to reduce medical trendline through more value-based models that further align us to our customers’ and members’ priorities,” concluded Mr. Singh.

Financial Highlights for Fiscal First Quarter ended May 31, 2021

Three Months Ended May 31,

%

 

    

2021

    

2020

    

Change(2)

 

(in millions, except percentages)

 

GAAP Financial Data:

Revenue

$

59.5

$

35.9

66

%

Net Loss

$

(48.7)

$

(14.0)

(249)

%

Non-GAAP Financial Data(1):

Adjusted EBITDA

$

(12.8)

$

(9.4)

(36)

%

Adjusted Gross Profit

$

23.9

$

13.8

74

%

Adjusted Gross Margin

40.2

%

38.3

%

(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 second quarter ending August 31, 2021, we expect:

Revenue between $69 million and $71 million
Adjusted EBITDA, a non-GAAP measure, between $(22) million and $(25) million

For the fiscal year ending February 28, 2022, we are raising our forecast to the following ranges:

Revenue between $300 million and $305 million, compared to the previous guidance range between $260 million and $265 million
Adjusted EBITDA, a non-GAAP measure, between $(49) million and $(54) million, compared to the previous guidance range between $(38) million and $(42) million

Commenting on the company’s revised fiscal year 2022 outlook, Accolade Chief Financial Officer Steve Barnes added, “Following the close of the PlushCare acquisition in early June, we are able to provide the first comprehensive look at guidance for the combined company. With the continued momentum in Accolade’s navigation and advocacy business and the accretive impact of 2nd.MD and PlushCare’s revenue growth, we are now forecasting a pro forma revenue growth rate in excess of 30% for fiscal year 2022. As we have consistently said in the past, we plan to invest in building out our enterprise primary care business and integrating Accolade, 2nd.MD and PlushCare, while continuing to grow PlushCare’s consumer business. We will continue to focus on driving top line growth, while demonstrating consistent progress toward our long-term operating model.”

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, July 8, 2021 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 # 5113559; 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,” “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 provides personalized health and benefits solutions designed to empower every person to live their healthiest life. Accolade helps millions of people and their employers navigate the complexities of the healthcare system with empathy, expertise and through exceptional service while supporting them in lowering the cost of care and improving health outcomes. Accolade blends technology-enabled health and benefits solutions, specialized support from Accolade Health Assistants® and Clinicians and access to expert medical opinion services for high-cost treatment decisions. Accolade consistently receives consumer satisfaction ratings over 90 percent. For more information, visit Accolade on LinkedIn, Twitter, Instagram and Facebook and at www.accolade.com.

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, 206-926-8180, 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)

May 31, 

February 28, 

    

2021

    

2021

Assets

Current assets:

Cash and cash equivalents

$

325,508

$

433,884

Marketable securities

99,998

Accounts receivable, net

 

15,311

9,112

Unbilled revenue

 

2,711

2,725

Current portion of deferred contract acquisition costs

 

2,471

2,210

Current portion of deferred financing fees

 

23

93

Prepaid and other current assets

 

7,435

5,957

Total current assets

 

453,457

453,981

Property and equipment, net

 

12,157

9,227

Goodwill

 

214,177

4,013

Intangible assets, net

 

203,498

604

Deferred contract acquisition costs

 

6,451

6,067

Other assets

 

1,752

1,618

Total assets

$

891,492

$

475,510

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

7,089

$

7,390

Accrued expenses

 

7,498

4,845

Accrued compensation

 

25,027

35,379

Deferred rent and other current liabilities

 

1,763

567

Due to customers

 

6,495

5,015

Current portion of deferred revenue

 

32,907

25,879

Contingent consideration liabilities

86,708

Total current liabilities

 

167,487

79,075

Convertible notes, net of unamortized issuance costs

 

279,434

Deferred rent and other noncurrent liabilities

 

7,014

5,192

Deferred revenue

 

448

395

Total liabilities

 

454,383

84,662

Commitments

Stockholders’ equity

Common stock par value $0.0001; 500,000,000 shares authorized; 58,808,792 and 55,699,052 shares issued and outstanding at May 31, 2021 and February 28, 2021, respectively

 

6

6

Additional paid-in capital

 

857,330

762,362

Accumulated deficit

 

(420,227)

(371,520)

Total stockholders’ equity

 

437,109

390,848

Total liabilities and stockholders’ equity

$

891,492

$

475,510


Accolade, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (unaudited)

(In thousands, except share and per share data)

Three months ended May 31, 

    

2021

    

2020

Revenue

$

59,527

$

35,894

Cost of revenue, excluding depreciation and amortization

 

35,936

 

22,239

Operating expenses:

Product and technology

 

15,939

 

11,370

Sales and marketing

 

14,509

 

7,315

General and administrative

 

22,002

 

5,667

Depreciation and amortization

 

8,696

 

1,928

Change in fair value of contingent consideration

10,460

Total operating expenses

 

71,606

 

26,280

Loss from operations

 

(48,015)

 

(12,625)

Interest expense, net

 

(618)

 

(1,282)

Other expense

 

(55)

 

(15)

Loss before income taxes

 

(48,688)

 

(13,922)

Income tax expense

 

(19)

 

(38)

Net loss

$

(48,707)

$

(13,960)

Net loss per share, basic and diluted

$

(0.84)

$

(1.86)

Weighted-average common shares outstanding, basic and diluted

 

58,261,233

 

7,524,016

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

Three months ended May 31, 

    

2021

    

2020

Cost of revenue, excluding depreciation and amortization

$

328

$

109

Product and technology

 

1,822

 

434

Sales and marketing

 

1,373

 

303

General and administrative

 

4,152

 

413

Total stock-based compensation

$

7,675

$

1,259


Accolade, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(In thousands)

Three months ended May 31, 

    

2021

    

2020

Cash flows from operating activities:

Net loss

$

(48,707)

$

(13,960)

Adjustments to reconcile net loss to net cash used in

Operating activities:

Depreciation and amortization expense

 

8,696

1,928

Amortization of deferred contract acquisition costs

 

602

393

Change in fair value of contingent consideration

10,460

Noncash interest expense

 

379

141

Stock-based compensation expense

 

7,675

1,259

Changes in operating assets and liabilities, net of effect of acquisition:

Accounts receivable and unbilled revenue

 

(409)

(2,016)

Accounts payable and accrued expenses

 

268

(1,683)

Deferred contract acquisition costs

 

(507)

(647)

Deferred revenue and due to customers

 

7,643

5,159

Accrued compensation

 

(13,247)

2,789

Deferred rent and other liabilities

 

(82)

146

Other assets

 

(385)

(1,826)

Net cash used in operating activities

 

(27,614)

(8,317)

Cash flows from investing activities:

Purchase of marketable securities

(99,998)

Capitalized software development costs

 

(289)

Purchases of property and equipment

 

(701)

(249)

Cash paid for acquisition, net of cash acquired

(228,013)

Net cash used in investing activities

 

(328,712)

(538)

Cash flows from financing activities:

Payments of initial public offering costs

(721)

Proceeds from stock option and warrant exercises

 

1,991

2,937

Payments of equity issuance costs

(23)

Payment of debt issuance costs

(8,101)

Payment for purchase of capped calls

(34,443)

Proceeds from stock purchases under employee stock purchase plan

1,026

Proceeds from borrowings on debt

 

287,500

51,166

Net cash provided by financing activities

 

247,950

53,382

Net increase (decrease) in cash and cash equivalents

 

(108,376)

44,527

Cash and cash equivalents, beginning of period

 

433,884

33,155

Cash and cash equivalents, end of period

$

325,508

$

77,682

Supplemental cash flow information:

Interest paid

$

51

$

586

Fixed assets included in accounts payable

$

292

$

42

Other receivable related to stock option exercises

$

247

$

234

Income taxes paid

$

31

$

13

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

$

2,474


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

May 31, 

2021

    

2020

 

(in thousands, except percentages)

 

Revenue

$

59,527

$

35,894

 

Less:

  

  

 

Cost of revenue, excluding depreciation and amortization

(35,936)

(22,239)

 

Gross profit, excluding depreciation and amortization

 

23,591

 

13,655

Add:

 

  

 

  

Stockbased compensation, cost of revenue

 

328

 

109

Adjusted Gross Profit

$

23,919

$

13,764

Gross margin, excluding depreciation and amortization

 

39.6

%  

 

38.0

%

Adjusted Gross Margin

 

40.2

%  

 

38.3

%


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

For the three months ended

May 31, 

2021

    

2020

(in thousands)

Net Loss

$

(48,707)

$

(13,960)

Adjusted for:

 

  

 

  

Interest expense, net

 

618

 

1,282

Income tax provision

 

19

 

38

Depreciation and amortization

 

8,696

 

1,928

Stockbased compensation

 

7,675

 

1,259

Acquisition and integrationrelated costs

 

8,380

 

Change in fair value of contingent consideration

10,460

Other expense

 

55

 

15

Adjusted EBITDA

$

(12,804)

$

(9,438)