View:
December 30, 2019
Rajeev Singh
Chief Executive Officer
Accolade, Inc.
1201 Third Avenue
Suite 1700
Seattle, WA 98101
Re: Accolade, Inc.
Draft Registration Statement on Form S-1
Submitted December 5, 2019
CIK No. 1481646
Dear Mr. Singh:
We have reviewed your draft registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so we may
better
understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments.
Draft Registration Statement on Form S-1
General
1. Please supplementally provide us with copies of all written
communications, as defined in
Rule 405 under the Securities Act, that you, or anyone authorized to do
so on your behalf,
present to potential investors in reliance on Section 5(d) of the
Securities Act, whether or
not they retain copies of the communications.
Prospectus Summary, page 1
2. On page 1 you state: "Our goal is to build trusted relationships with
our members that
ultimately position us to deliver personalized recommendations and
interventions." Please
Rajeev Singh
FirstName Inc.
Accolade, LastNameRajeev Singh
Comapany30, 2019
December NameAccolade, Inc.
December 30, 2019 Page 2
Page 2
FirstName LastName
clarify throughout the prospectus whether, through your employees, you
provide
healthcare services.
3. On page 2, where you refer to "spend bands" and "the engaged group,"
please clarify what
these terms mean and provide greater context for their use.
4. To balance the summary, please disclose the outstanding balance of
your debt.
5. Regarding your customer base, please disclose in the summary that your
largest customer
accounted for 35% of your revenue in fiscal 2019 and 45% in fiscal
2018. In addition,
please identify this customer by name or tell us why you believe this
information is not
material to investors.
Summary Consolidated Financial and Other Data
Certain Non-GAAP Financial Measures, page 17
6. Please present the most directly comparable GAAP measure to each of
the non-GAAP
measures presented here and elsewhere in the filing. Refer to Item
10(e)(1)(i)(A) of
Regulation S-K.
Risk Factors
We derive a significant portion of our revenue from our largest customers.,
page 18
7. Please disclose in this risk factor the name of your largest customer
and note that customer
accounted for 35% of your revenue in fiscal 2019 and 45% in fiscal
2018.
If our existing customers do not continue to renew their contracts...,, page 29
8. Please describe what your renewal rate has been for each of your past
two fiscal years.
Also include a discussion of what you consider to qualify as a
"renewal," particularly if a
customer renews at a lesser rate or for lesser services.
Security breaches, loss of data, and other disruptions could compromise...,,
page 32
9. Please indicate here if you have suffered any security breaches to
your technology
platform or of your sensitive data.
Our amended and restated bylaws will provide ...,, page 57
10. We note your disclosure that your exclusive forum provision in your to
be adopted and
filed amended bylaws "will not apply to any causes of action under the
Securities Act or
the Exchange Act or any other claim for which the federal courts have
exclusive
jurisdiction." Please ensure that your amended bylaws clearly make
that point.
Use of Proceeds, page 62
11. With respect to using proceeds to discharge indebtedness, please
provide the information
described in Instruction 4 to Item 504 of Regulation S-K.
Rajeev Singh
FirstName Inc.
Accolade, LastNameRajeev Singh
Comapany30, 2019
December NameAccolade, Inc.
December 30, 2019 Page 3
Page 3
FirstName LastName
Capitalization, page 64
12. Please tell us why you believe it is appropriate and meaningful to
exclude from the pro
forma and pro forma as adjusted information here and elsewhere in the
document share
and dollar amounts associated with the common shares arising after
February 28, 2019
noted in the last three bullets on page 66.
Our Business Model, page 72
13. Please provide us with more detail regarding the equity relationship
that you have with
Humana, the nature and amount of Humana's interest in your company. In
addition, please
tell us why you believe this information is not material to investors.
Business Overview, page 90
14. Please provide disclosure describing the steps you take to verify the
educational and
professional background of your Accolade Health Assistants and
Clinicians. Also
describe what level of disclosure these professionals provide to your
members about their
educational and professional background when such members are engaging
with them.
Our Market Opportunity, page 99
15. Please provide context for how much of the $24 billion market you
believe you are able to
address in the near term. In addition, for each of the Additional
Employer Sponsor and
Adjacent market opportunities that you identify, please clarify the
extent and the degree to
which you have been able to penetrate these markets, as well as the
current significance of
these markets to your business.
Certain Relationships and Related Party Transactions
Equity Financing, page 136
16. Please indicate the exercise price for the warrants to purchase common
stock you list in
the chart on this page.
Choice of Forum, page 146
17. Please clarify in this section, if true, that the choice of forum
provision does not apply
to any cause of action under the Securities Act.
Consolidated Balance Sheets, page F-3
18. Please tell us and disclose what "due to customers" represents.
Rajeev Singh
FirstName Inc.
Accolade, LastNameRajeev Singh
Comapany30, 2019
December NameAccolade, Inc.
December 30, 2019 Page 4
Page 4
FirstName LastName
Notes to Consolidated Financial Statements
(2) Summary of Significant Accounting Policies
(j) Revenue and Deferred Revenue, page F-10
19. You disclose you typically invoice the customer on a periodic basis
for the per-member-
per-month fee, including the fees related to the achievement of
performance metrics
and/or the realization of healthcare cost savings, in advance of the
services performed, and
these fees are classified as deferred revenue on the balance sheet
until such time that
revenue can be recognized. Please explain to us and disclose the
periodic basis upon
which invoices are rendered and when the revenue for such invoicing is
recognized.
Further, explain to us and disclose how the periodic invoicing basis
relates to your pricing
of services using a recurring per-member-per-month fee.
20. You disclose your technology-enable solutions include a distinct
performance obligation
related to reporting. Please clarify for us and in your disclosure
what the "reporting"
aspect represents, how revenue is determined for and allocated to it
and how the
performance obligation is satisfied.
21. It appears the disclosure that you satisfy performance obligations
over time and
recognize revenue related to the services as the services are provided
using a measure of
progress based upon the actual number of members eligible for the
service during the
respective period as a percentage of the estimated members expected to
be eligible for the
service over the term of the contract applies only to your
technology-enabled solutions.
Please clarify whether or not this is true. In any event, explain to
us and disclose why
using a measure of progress is appropriate relative to your disclosure
that you price your
services using a recurring per-member-per month fee. If pricing upon
which revenue is
recognized using a measure of progress is based on other than a
recurring per-member-
per-month fee, please explain to us and disclose the basis.
22. You state on page F-12 you typically invoice customers in advance of
services
performed. In light of this, please explain what your accounts
receivable represents.
(11) Net Loss Per Share, page F-29
23. Please tell us how you calculated the weighted-average number of
shares used to compute
net loss per common share for each period relative to the reported
number of common
shares outstanding at each respective year end.
(12) Commitments
(a) Leases, page F-31
24. In regard to the "Assignment and Assumption of Lease" for the
Pennsylvania office space,
please clarify for us and in your disclosure whether your obligations
of all future
minimum lease payments were released by the lessor. In this regard,
tell us and disclose
your obligations if your subtenant were not to fulfill its obligations
under the sublease
Rajeev Singh
Accolade, Inc.
December 30, 2019
Page 5
agreement. In addition, tell us how you determined the amount of loss
you recognized
from the subleasing transaction.
You may contact Keira Nakada at (202) 551-3659 or Doug Jones at (202)
551-3309 if
you have questions regarding comments on the financial statements and related
matters. Please
contact Eric Envall (202) 551-3234 at (202) 551-3234 or Dietrich King at (202)
551-8071 with
any other questions.
FirstName LastNameRajeev Singh Sincerely,
Comapany NameAccolade, Inc.
Division of
Corporation Finance
December 30, 2019 Page 5 Office of Trade &
Services
FirstName LastName