0001558370-23-000143 | 10-Q | XBRL Viewer

Net Income (Loss) Per Share Attributable to Common Stockholders (Tables)

9 Months Ended

Nov. 30, 2022

Net Income (Loss) Per Share Attributable to Common Stockholders

Schedule of computation of basic and diluted net loss per share


	Three months ended				Nine months ended
	November 30,				November 30,
	2022		2021		2022		2021
Net income (loss)	$	(39,872)	$	22,503	$	(429,217)	$	(88,568)

Shares:
Weighted-average common shares outstanding, basic		71,228,351		65,418,728		70,755,157		62,684,823
Dilutive effect of stock options		—		5,792,987		—		—
Dilutive effect of unvested restricted stock units		—		128,331		—		—
Dilutive effect of shares issued to 2nd.MD employees and subject to vesting		—		102,042		—		—
Dilutive effect of shares to be issued to HealthReveal shareholders upon expiration of indemnification period		—		19,138		—		—
Dilutive effect of shares issued to PlushCare employees and subject to vesting		—		28,819		—		—
Weighted-average common shares outstanding, diluted		71,228,351		71,490,045		70,755,157		62,684,823

Net income (loss) per share attributable to common stockholders, basic	$	(0.56)	$	0.34	$	(6.07)	$	(1.41)
Net income (loss) per share attributable to common stockholders, diluted	$	(0.56)	$	0.31	$	(6.07)	$	(1.41)

Schedule of common stock were excluded from the computation of diluted net loss per share attributable to common stockholders


	Three months ended		Nine months ended
	November 30,		November 30,
	2022	2021	2022	2021
Stock options	8,393,611	534,377	8,393,611	8,468,806
Unvested restricted stock units	4,825,124	1,298,788	4,825,124	1,788,134
Shares issued to 2nd.MD employees and subject to vesting	274,224	281,531	274,224	281,531
Contingent shares in connection with 2nd.MD acquisition	—	1,889,441	—	1,889,441
Shares issued to PlushCare employees and subject to vesting	537,401	844,202	537,401	844,202
Contingent shares in connection with PlushCare acquisition	102,111	1,494,210	102,111	1,494,210
Indemnity shares held in escrow in connection with PlushCare acquisition	27,342	—	27,342	27,382
Shares to be issued to HealthReveal shareholders upon expiration of indemnification	28,089	—	28,089	28,089
Convertible Senior Notes	5,700,297	5,700,297	5,700,297	5,700,297
Total	19,888,199	12,042,846	19,888,199	20,522,092

Basis of Presentation and Summary of Significant Accounting Policies - Basis of Presentation and Principles of Consolidation (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Feb. 28, 2022
Basis of Presentation and Summary of Significant Accounting Policies
Assets	$ 913,791	$ 1,285,529
Cash	325,637	365,853
Accounts receivable	20,483	21,116
Liabilities	427,838	$ 429,735
PC
Basis of Presentation and Summary of Significant Accounting Policies
Assets	46,602
Cash	17,186
Accounts receivable	26,226
Liabilities	27,835
Due to affiliate	$ 22,581

- Definition

Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

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- Definition

Sum of the carrying amounts as of the balance sheet date of all liabilities that are recognized. Liabilities are probable future sacrifices of economic benefits arising from present obligations of an entity to transfer assets or provide services to other entities in the future.

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+ Details

Debt

9 Months Ended

Nov. 30, 2022

Debt

Debt

(8) Debt

(a) Convertible Senior Notes and Capped Call Options

Convertible Senior Notes

The Notes consisted of the following:


	November 30, 2022		February 28, 2022
Principal	$	287,500	$	287,500
Unamortized issuance costs		(5,586)		(6,834)
Net carrying amount	$	281,914	$	280,666

In March 2021, the Company completed a private convertible note offering, pursuant to an Indenture dated as of March 29, 2021 between the Company and U.S. Bank National Association, as trustee (the Indenture), and issued $287,500 of 0.50% Convertible Senior Notes due 2026 (the Notes) that mature in April 2026, unless earlier converted, redeemed or repurchased. The Notes bear interest at a rate of 0.50% per annum, payable semiannually in arrears on April 1 and October 1 of each year, beginning on October 1, 2021 and are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election. The Company incurred costs of $8,428 in connection with the Notes and the capped calls, of which $8,368 was allocated to the Notes and recorded as a debt discount and $60 was allocated to the capped call and recorded directly to additional paid-in capital. Net proceeds from the issuance of Notes were $279,132, and the Company used $34,443 of the net proceeds to pay the costs of the capped call transactions described below. For the three months ended November 30, 2022 and 2021, the Company recorded interest expense of $772 and $769, respectively, of which $413 and $411, respectively, was associated with the amortization of the debt discount. For the nine months ended November 30, 2022 and 2021, the Company recorded interest expense of $2,330 and $2,095, respectively, of which $1,247 and $1,127, respectively, was associated with the amortization of the debt discount.

Pursuant to the terms of the Notes, a holder may convert all or any portion of its Notes at its option at any time prior to October 1, 2025 and only under the following circumstances: (1) during any fiscal quarter commencing after the fiscal quarter ending on August 31, 2021, if the last reported sale price of the Company’s common stock for at least 20 trading days during a period of 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any ten consecutive trading day period (the “measurement period”) in which the trading price (as defined in the Indenture) per $1 principal amount of Notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; (3) if the Company calls such Notes for redemption, at any time prior to the close of business on the scheduled trading day immediately preceding the redemption date, but only with respect to the Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events. On or after October 1, 2025 until the close of business on the second scheduled trading day immediately preceding the maturity date, holders may convert all or any portion of their Notes at any time, regardless of the foregoing circumstances.

The initial conversion rate is 19.8088 shares of the Company’s common stock per $1 principal amount of Notes (equivalent to an initial conversion price of approximately $50.48 per share of the Company’s common stock). The conversion rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In addition, following certain corporate events that occur prior to the maturity date, or if the Company delivers a notice of redemption, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event or convert its Notes called (or deemed called) for redemption in connection with such notice of redemption, as the case may be.

The Company may not redeem the Notes prior to April 6, 2024. On or after April 6, 2024, the Company may redeem for cash all or any portion of the Notes (subject to the partial redemption limitation set forth in the Indenture), at

its option, if the last reported sale price of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days, including the trading day immediately preceding the date on which the Company provides notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption at a redemption price equal to 100% of the principal amount of the Notes to be redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. No sinking fund is provided for the Notes.

Upon a fundamental change (as defined in the Indenture), holders may, subject to certain exceptions, require the Company to purchase their Notes in whole or in part for cash at a price equal to the principal amount of the Notes to be purchased, plus accrued and unpaid interest, if any, to, but excluding, the fundamental change repurchase date (as defined in the Indenture). In addition, upon a Make-Whole Fundamental Change (as defined in the Indenture), the Company will, under certain circumstances, increase the applicable conversion rate for a holder that elects to convert its Notes in connection with such Make-Whole Fundamental Change.

Under the Indenture, the Notes may be accelerated upon the occurrence of certain customary events of default. If certain bankruptcy and insolvency-related events of default with respect to the Company occur, the principal of, and accrued and unpaid interest on, all of the then outstanding Notes shall automatically become due and payable. The Indenture provides that the sole remedy for an event of default relating to certain failures by the Company to comply with reporting covenants, including timely filings, consists exclusively of the right to receive additional interest on the Notes.

As of November 30, 2022, none of the conditions of the Notes to early convert have been met. The Notes are the Company’s senior, unsecured obligations that rank senior in right of payment to the Company’s future indebtedness that is expressly subordinated to the Notes, rank equally in right of payment with the Company’s future senior unsecured indebtedness that is not so subordinated, effectively subordinated to the Company’s existing and future secured indebtedness, to the extent of the value of the collateral securing such indebtedness, and structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables and preferred equity (to the extent the Company is not a holder thereof)) of the Company’s subsidiaries. The Notes contain both affirmative and negative covenants. As of November 30, 2022, the Company was in compliance with all covenants in the Notes.

The Company concluded the Notes are accounted for as debt, with no bifurcation of the embedded conversion feature. Transaction costs were recorded as a direct deduction from the related debt liability in the consolidated balance sheet and are amortized to interest expense using the effective interest method over the term of the Notes. The effective interest rate for the Notes is 1.1%.

Capped Call

Concurrent with the pricing of the Notes, the Company entered into privately negotiated capped call transactions with two of the initial purchasers and/or their respective affiliates and another financial institution (the Option Counterparties). The capped call transactions are expected to offset the potential dilution to Accolade’s common stock as a result of any conversion of Notes, with such offset subject to a cap initially equal to $76.20 (which represented a premium of 100% over the last reported sale price of the Company’s common stock on March 24, 2021). The capped call transactions are separate transactions, entered into by the Company with the Option Counterparties, and are not part of the terms of the Notes.

As the capped call options are both legally detachable and separately exercisable from the Notes, the Company accounts for the capped call options separately from the Notes. The capped call options are indexed to the Company’s own common stock and classified in stockholders’ equity. As such, the premiums paid for the capped call options were included as a net reduction to additional paid-in capital in the consolidated balance sheet.

(b) Revolving Credit Facility

During July 2019, the Company entered into a revolving credit facility (the 2019 Revolver) with a syndicate of two banks. Under the 2019 Revolver, the Company has the capacity to borrow up to $80,000 on a revolving facility. Availability of borrowings on the 2019 Revolver is calculated as a multiple of the Company’s eligible monthly recurring revenues (as defined in the 2019 Revolver). As of November 30, 2022, the Company had outstanding letters of credit to serve as office landlord security deposits in the amount of $1,208. These letters of credit are secured through the revolving credit facility, thus reducing the maximum capacity of the revolving credit facility to $78,792 as of November 30, 2022. No amounts are outstanding as of November 30, 2022.

The 2019 Revolver term ends on July 19, 2024. The interest rate on the outstanding borrowings are at the Bloomberg Short-Term Bank Yield Index (BSBY) rate plus 350 basis points or Base Rate (as defined) plus 250 basis points, with the BSBY rate and Base Rate subject to minimum levels. Interest payments are to be made in installments of one, two, or three months as chosen by the Company.

The Company incurred lender and third-party fees when entering into the 2019 Revolver, all of which were deferred at the onset of the facility and have been fully amortized. During the three months ended November 30, 2022 and 2021, the Company recorded interest expense of $51 and $51, respectively, related to the revolving credit facility. During the nine months ended November 30, 2022 and 2021, the Company recorded interest expense of $261 and $245, respectively, related to the revolving credit facility.

On August 21, 2020, the Company entered into an amendment to the 2019 Revolver which revised the terms of the revenue covenant and imposed minimum LIBOR and Base Rate levels. On September 11, 2020, the Company entered into a second amendment to the 2019 Revolver which modified the allocation requirements of the Company’s cash to be held at each of the two lenders participating in the 2019 Revolver. On November 6, 2020, the Company entered into a third amendment to the 2019 Revolver which increased the capacity from a maximum of $50,000 to a maximum of $80,000, based on the achievement of certain growth metrics as defined in the amendment. On March 2, 2021, the Company entered into a fourth amendment to the 2019 Revolver in association with the acquisition of 2nd.MD to be completed and amended certain revenue covenants. On March 23, 2021, the Company entered into a fifth amendment to the 2019 Revolver in association with the issuance of the Convertible Senior Notes. On May 26, 2021, the Company entered into a sixth amendment to the 2019 Revolver in association with the acquisition of PlushCare which modified certain reporting covenants. On July 19, 2022, the Company entered into a seventh amendment to the 2019 Revolver which extended the term until July 19, 2024, documented the transition from the LIBOR interest rate index to the BSBY rate, and established new minimum covenant revenue targets. The term will automatically be extended to July 19, 2025 if the Company has at least $200,000 in consolidated net cash as of May 31, 2024.

The 2019 Revolver is collateralized by substantially all of the assets of the Company.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-URI https://asc.fasb.org/topic&trid=2208564

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (h)
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 1C
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-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
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-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Stock-based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended			9 Months Ended
	Jun. 09, 2021	Nov. 30, 2022	Aug. 31, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Summary of activity
Compensation expense		$ 17,906		$ 18,377	$ 54,809	$ 45,827
Stock-based compensation expense, accelerated expense					$ 3,139
PlushCare
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Time-based restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period					4 years
Summary of activity
Beginning Balance					2,226,057
Granted					4,315,118
Vested					(1,109,344)
Forfeited					(606,707)
Ending Balance		4,825,124			4,825,124
Compensation expense		$ 8,914		6,281	$ 24,220	14,297
Remaining of total unrecognized compensation costs		$ 71,793			$ 71,793
Weighted average period					2 years 6 months
Weighted average grant date fair value					$ 8.75
Time-based restricted stock units \| PlushCare
Summary of activity
Number of shares issued in connection with the acquisition to the existing shareholders					64,694
Non option equity instruments			57,124
Time-based restricted stock units \| Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period					1 year
Vesting percentage					25.00%
Time-based restricted stock units \| Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period					3 years
Vesting percentage					75.00%
Individuals Agreements With Company \| Acquisition of 2nd.MD
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period					2 years
Summary of activity
Ending Balance		241,614			241,614
Compensation expense		$ 219		3,540	$ 3,796	10,621
Unamortized compensation expense					$ 219
Unamortized Compensation Expense, Weighted Average Remaining Period					3 months 18 days
Shares Eligible To Be Received By Individuals Of Company With Continued Employment					608,332
Additional Shares Eligible To Be Received By Individuals Of Company, Upon Achievement Of Contingent Consideration Milestones					281,531
Grant date fair value price per share		$ 46.56			$ 46.56
Shares eligible to receive subject to service requirements					256,418
Individuals Agreements With Company \| PlushCare
Summary of activity
Ending Balance		537,401			537,401
Compensation expense		$ 3,519		$ 3,519	$ 10,663	$ 6,728
Unamortized compensation expense					$ 21,498
Unamortized Compensation Expense, Weighted Average Remaining Period					1 year 7 months 6 days
Weighted average grant date fair value					$ 52.52
Shares Eligible To Be Received By Individuals Of Company With Continued Employment					806,161
Individuals Agreements With Company \| Tranche One \| Acquisition of 2nd.MD
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage					50.00%
Individuals Agreements With Company \| Tranche One \| PlushCare
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage					33.33%
Individuals Agreements With Company \| Tranche Two \| Acquisition of 2nd.MD
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage					50.00%
Individuals Agreements With Company \| Tranche Two \| PlushCare
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage					33.33%
Individuals Agreements With Company \| Tranche Three \| PlushCare
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage					33.33%
Restricted stock units 2023 Bonus plan payout
Summary of activity
Compensation expense		$ 1,162			$ 3,705

Leases

9 Months Ended

Nov. 30, 2022

Leases

Leases

(6) Leases

The Company adopted Topic 842 on February 28, 2022, with an effective date of adoption of March 1, 2021, using the modified retrospective approach. The Company has operating leases for offices and certain equipment under non-cancelable leases in the United States and Czech Republic. These leases have remaining terms of up to 8 years. The Company had no finance leases during the nine months ended November 30, 2022 and 2021.

The components of operating lease cost recorded in the consolidated statements of operations were as follows:


	Three Months Ended November 30,				Nine Months Ended November 30,
		2022		2021		2022		2021
Operating lease cost	$	1,890	$	1,805	$	5,728	$	5,374
Variable lease cost		642		435		1,609		1,216
Total lease cost	$	2,532	$	2,240	$	7,337	$	6,590

The following tables set forth the cash flows, weighted-average remaining term, and weighted-average discount rate for the Company’s leases:


	Nine Months Ended November 30,
Cash Flow Information	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,300	$	6,243
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	2,155	$	3,356


Supplemental Information	November 30, 2022
Weighted-average remaining lease term (years)	5.5
Weighted-average discount rate	4.9	%

As of November 30, 2022, the future minimum lease payments under non-cancelable operating leases were as follows:


Year Ending February 28(29),
Remainder of 2023	$	2,313
2024		8,845
2025		7,266
2026		7,232
2027		6,416
Thereafter		9,395
Total lease payments		41,467
Less: Imputed interest		(5,226)
Total lease liabilities	$	36,241

Stock-based Compensation

9 Months Ended

Nov. 30, 2022

Stock-based Compensation

Stock-based Compensation

(9) Stock-based Compensation

In July 2020, the Company adopted the 2020 Equity Incentive Plan (the Incentive Plan), which authorized the Company to grant up to 4,300,000 shares of common stock to eligible employees, directors, and consultants to the Company in the form of stock options, restricted stock units, and other various equity awards, including any shares subject to stock options or other awards granted under the Company’s prior stock option plan that expire or terminate for any reason (other than being exercised in full) or are cancelled in accordance with the terms of the prior stock option plan. The Incentive Plan also includes an annual evergreen increase, and the amount, terms of grants, and exercisability provisions are determined by the board of directors. The term of an award may be up to 10 years and options generally vest over four years, with one quarter of an award vesting one year after grant and the remainder vesting on a monthly basis over three years. As of November 30, 2022, there was a total of 9,211,901 shares of common stock authorized for issuance under the Incentive Plan, of which 1,344,021 were available for future grants.

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,
	2022		2021		2022		2021
Cost of revenue, excluding depreciation and amortization	$	1,247	$	949	$	3,645	$	2,331
Product and technology		5,930		5,303		19,045		13,491
Sales and marketing		4,513		3,608		12,772		9,035
General and administrative		6,216		8,517		19,347		20,970
Total stock-based compensation	$	17,906	$	18,377	$	54,809	$	45,827

(a) Stock Options

The following is a summary of stock option activity under the Incentive Plan:


		Weighted		Weighted
		average		remaining	Aggregate
		exercise		contractual life	intrinsic
	Stock Options	price		in years	value
Balance, February 28, 2022	8,045,792	$	11.24
Granted	915,081		8.06
Exercised	(295,361)		5.34
Forfeited	(461,096)		19.04
Balance, November 30, 2022	8,204,416	$		5.5	$	18,062

For the three months ended November 30, 2022 and 2021, the Company recognized $2,766 and $2,766 in compensation expense related to stock options, respectively. For the nine months ended November 30, 2022 and 2021, the Company recognized $7,989 and $7,679 in compensation expense related to stock options, respectively. As of November 30, 2022, approximately $17,679 of unrecognized compensation expense related to our stock options is expected to be recognized over a weighted average period of 1.9 years. The aggregate intrinsic value of stock options exercised was $453 and $5,407 for the three months ended November 30, 2022 and 2021, respectively, and $1,598 and $28,605 for the nine months ended November 30, 2022 and 2021, respectively.

(b)PlushCare Stock Options

In connection with the acquisition of PlushCare, the Company assumed all stock options that were awarded under the PlushCare Plan and that were outstanding as of the closing of the acquisition. These options were converted into options to purchase the Company’s common stock at a ratio determined in the purchase agreement. The Company has no intent to grant any further options under the PlushCare Plan beyond the options granted and outstanding as of the Company's acquisition of PlushCare. The following is a summary of stock option activity under the PlushCare Plan:


		Weighted		Weighted
		average		remaining	Aggregate
		exercise		contractual life	intrinsic
	Stock Options	price		in years	value
Balance, February 28, 2022	267,721
Exercised	(59,939)	$	1.07
Forfeited	(18,587)	$	2.79
Balance, November 30, 2022	189,195	$	1.81	7.0	$	1,443

For the three months ended November 30, 2022 and 2021, the Company recognized $1,072 and $1,323, respectively, in compensation expense related to PlushCare stock options. For the nine months ended November 30, 2022 and 2021, the Company recognized $3,528 and $2,778, respectively, in compensation expense related to PlushCare stock options. As of November 30, 2022, approximately $3,559 of unrecognized compensation expense related to PlushCare stock options is expected to be recognized over a weighted average period of 1.5 years. The aggregate intrinsic value of stock options exercised was $152 and $136 for the three months ended November 30, 2022 and 2021, respectively, and $635 and $811 for the nine months ended November 30, 2022 and 2021, respectively.

Time-based restricted stock units are generally subject to a four-year vesting period, with one quarter of an award vesting one year after the vesting commencement date and the remainder vesting ratably on a monthly basis over the subsequent three years. The following is a summary of activity for the nine months ended November 30, 2022:


		Restricted Stock Units
Balance, February 28, 2022		2,226,057
Granted		4,315,118
Vested		(1,109,344)
Forfeited		(606,707)
Balance, November 30, 2022		4,825,124

For the three months ended November 30, 2022 and 2021, the Company recognized $8,914 and $6,281, respectively, in restricted stock unit compensation expense. For the nine months ended November 30, 2022 and 2021, the Company recognized $24,220 and $14,297, respectively, in restricted stock unit compensation expense with $71,793 remaining total unrecognized compensation costs related to these awards as of November 30, 2022. The total unrecognized costs are expected to be recognized over a weighted-average term of 2.5 years. The weighted average grant date fair value of restricted stock units granted during the nine months ended November 30, 2022 was $8.75.

In connection with the PlushCare acquisition, the agreement provides for the issuance of time-based restricted stock units for 64,694 shares of common stock to existing PlushCare shareholders upon the achievement of the contingent consideration revenue milestones. During the second quarter of fiscal 2023, 57,124 of these restricted stock units were issued. These restricted stock units are included in the table above.

During the three and nine months ended November 30, 2022, the Company recorded $1,162 and $3,705 in stock-based compensation expense related to the approved issuance of restricted stock units in lieu of cash for a portion of the Company’s 2023 bonus plan payout.

(d) Employee Stock Purchase Plan

In July 2020, the Board of Directors adopted the Company’s 2020 Employee Stock Purchase Plan (the ESPP), which became effective immediately prior to the effectiveness of the registration statement for the Company’s initial public offering (IPO). The total shares of common stock initially reserved under the ESPP was limited to 1,100,000 shares. On March 1, 2022, there was an automatic annual increase, which increased the total available common shares to 2,327,976.

Under the ESPP, eligible employees can purchase the Company’s common stock through accumulated payroll deductions at such times as are established by the compensation committee. Eligible employees may purchase the Company’s common stock at 85% of the lower of the fair market value of the Company’s common stock on the first day of the offering period or on the last day of the offering period. Eligible employees may contribute up to 15% of their eligible compensation. Under the ESPP, a participant may not accrue rights to purchase more than $25,000 worth of the Company’s common stock for each calendar year in which such right is outstanding.

Employees who elect to participate in the ESPP commence payroll withholdings that accumulate through the end of the respective period. In accordance with the guidance in ASC 718-50 – Compensation – Stock Compensation, the ability to purchase shares of the Company’s common stock for 85% of the lower of the price on the first day of the offering period or the last day of the offering period (i.e. the purchase date) represents an option and, therefore, the ESPP is a compensatory plan under this guidance. Accordingly, share-based compensation expense is determined based on the option’s grant-date fair value as estimated by applying the Black Scholes option-pricing model and is recognized over the withholding period. The Company recognized share-based compensation expense of $253 and $480 during the three months ended November 30, 2022 and 2021, respectively, related to the ESPP and $938 and $1,341 during the nine months ended November 30, 2022 and 2021, respectively.

During the nine months ended November 30, 2022 and 2021, employees who elected to participate in the ESPP purchased a total of 560,345 and 140,838 shares of common stock, respectively, resulting in cash proceeds to the Company of $2,927 and $4,309, respectively. ESPP employee payroll contributions accrued as of November 30, 2022 and February 28, 2022 totaled $252 and $1,511, respectively, and are included within accrued compensation in the consolidated balance sheet. Cash withheld via employee payroll deductions is presented in financing activities as proceeds from stock purchases under employee stock purchase plan on the consolidated statement of cash flows.

(e) Other

In connection with the acquisition of 2nd.MD (Note 4), several 2nd.MD individuals entered into agreements with the Company whereby these individuals are eligible to receive an aggregate of 608,332 shares that required continued employment with the Company. These shares are excluded from the above restricted stock units table. Included in the 608,332 shares are 281,531 shares that were also contingent upon the achievement of the contingent consideration milestones. These shares are considered compensatory in the post business combination periods due to the additional service requirement for these individuals. These shares vested 50% on the first anniversary of the acquisition date and will vest 50% on the second anniversary of acquisition date. As a result of the achievement of certain revenue milestones (the contingent consideration milestones), a total of 256,418 of the eligible 281,531 shares will be issued to such shareholders, subject to the service requirements. As of November 30, 2022, there were 241,614 unvested shares outstanding with a grant date fair value of $46.56 per share, with vesting subject to future service periods. The Company recognized stock-based compensation expense of $219 and $3,540 during the three months ended November 30, 2022 and 2021, respectively, and $3,796 and $10,621 during the nine months ended November 30, 2022 and 2021. The stock-based compensation expense for the nine months ended November 30, 2022 includes $3,139 of accelerated expense related to certain separation and transition agreements entered into during fiscal 2022. The unamortized compensation expense of $219 will be recognized over a remaining period of 0.3 years.

In connection with the acquisition of PlushCare (Note 4), certain PlushCare individuals entered into agreements with the Company whereby these individuals are eligible to receive an aggregate of 806,161 shares that require continued employment with the Company. These shares are excluded from the above restricted stock units table. These shares are considered compensatory in the post business combination periods due to the additional service requirement for these individuals. One third of these shares vested on the first anniversary of the acquisition date, one third will vest on the second anniversary of acquisition date, and one third will vest on the third anniversary of the acquisition date. As of November 30, 2022, there were 537,401 unvested shares outstanding with a grant date fair value of $52.52 per share. The Company recognized stock-based compensation expense of $3,519 and $3,519 during the three months ended November 30, 2022 and 2021, respectively. The Company recognized stock-based compensation expense of $10,663 and $6,728 during the nine months ended November 30, 2022 and 2021, respectively. The unamortized compensation expense of $21,498 will be recognized over a weighted average remaining period of 1.6 years.

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Nov. 30, 2022	Feb. 28, 2022
Condensed Consolidated Balance Sheets
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	500,000,000	500,000,000
Common stock, shares issued	72,390,727	67,098,477
Common stock, shares outstanding	72,390,727	67,098,477

Revenue

9 Months Ended

Nov. 30, 2022

Revenue

Revenue

(3) Revenue

The following table presents the Company’s revenues disaggregated by revenue source:


	Three Months Ended November 30,				Nine Months Ended November 30,
	2022		2021		2022		2021
Access fees	$	69,965	$	69,063	$	205,968	$	185,968
Utilization-based fees		20,981		14,387		58,149		30,297
Total	$	90,946	$	83,450	$	264,117	$	216,265

As of November 30, 2022, $233,849 of revenue is expected to be recognized from remaining performance obligations and is expected to be recognized as follows:


Fiscal year ending February 28(29),
Remainder of 2023	$	53,759
2024		116,787
2025		51,465
2026		11,838
Total	$	233,849

The expected revenue includes variable fee estimates for the non-cancellable term of the Company’s contracts. The expected revenue does not include amounts of variable consideration that are constrained.

Significant changes to the contract liability balances during the nine months ended November 30, 2022 and 2021 were the result of revenue recognized as well as net cash received and liabilities assumed associated with the acquisitions of 2nd.MD and PlushCare (during the nine months ended November 30, 2021). Significant changes in the deferred revenue balances during the nine months ended November 30, 2022 and 2021 were the result of recognized revenue of $29,993 and $25,817, respectively, that were previously included in deferred revenue. In addition, significant changes to the contract asset balances during the three and nine months ended November 30, 2022 and 2021 were the result of revenue recognized as well as transfers to accounts receivable. Contract assets relating to unbilled revenue are transferred to accounts receivable when the right to consideration becomes unconditional.

Revenue related to performance obligations satisfied in prior periods that was recognized during the three months ended November 30, 2022 and 2021 was $664 and $1,330, respectively. Revenue related to performance obligations satisfied in prior periods that was recognized during the nine months ended November 30, 2022 and 2021 was $3,291 and $4,088, respectively. These amounts relate to the ratable recognition through the minimum contract term of performance obligations satisfied in prior periods related to the Company’s achievement of healthcare cost savings.

Cost to obtain and fulfill a contract

The Company capitalizes sales commissions paid to internal sales personnel that are both incremental to the acquisition of customer contracts and recoverable. These costs are recorded as deferred contract acquisition costs in the accompanying consolidated balance sheets. The Company capitalized commission costs of $2,117 and $916 for the three months ended November 30, 2022 and 2021, respectively. The Company capitalized commission costs of $5,617 and $2,949 for the nine months ended November 30, 2022 and 2021, respectively. During the three months ended November 30, 2021, the Company wrote off previously deferred commissions of $484 related to a revision of the Company’s commission plan, which offset the amounts capitalized in the three and nine months ended November 30, 2021. The Company defers costs based on its sales compensation plans only if the commissions are incremental and would not have occurred absent the customer contract. Payments to direct sales personnel are typically made upon signature of the contract. The Company does not pay commissions on contract renewals.

Deferred commissions paid on the initial acquisition of a contract are amortized ratably over an estimated period of benefit of five years, which is the estimated customer life. The Company determined the period of amortization for deferred commissions by taking into consideration current customer contract terms, historical customer retention, and other factors. Amortization is included in sales and marketing expenses in the accompanying consolidated statements of operations and totaled $620 and $489 for the three months ended November 30, 2022 and 2021, respectively, and $1,884 and $1,390 for the nine months ended November 30, 2022 and 2021, respectively. The Company periodically reviews deferred contract acquisition costs to determine whether events or changes in circumstances have occurred that could impact the estimated period of benefit. There were no impairment losses recorded during the periods presented.

For certain customer contracts, the Company may incur direct and incremental costs related to customer set-up and implementation. The Company recorded deferred implementation costs of $581 and $524 for the three months ended November 30, 2022 and 2021, respectively, and $811 and $839 for the nine months ended November 30, 2022 and 2021, respectively. These implementation costs are deferred and amortized over the expected useful life of the Company’s customers, which is five years. Amortization is included in cost of revenues in the Company’s consolidated statements of operations and totaled $259 and $205 for the three months ended November 30, 2022 and 2021, respectively, and $707 and $548 for the nine months ended November 30, 2022 and 2021, respectively.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI https://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Paragraph 12
-Subparagraph (e)
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

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-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

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-Publisher FASB
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-Topic 606
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-Publisher FASB
-Name Accounting Standards Codification
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+ Details

Revenue (Tables)

9 Months Ended

Nov. 30, 2022

Revenue

Disaggregation of revenue


	Three Months Ended November 30,				Nine Months Ended November 30,
	2022		2021		2022		2021
Access fees	$	69,965	$	69,063	$	205,968	$	185,968
Utilization-based fees		20,981		14,387		58,149		30,297
Total	$	90,946	$	83,450	$	264,117	$	216,265

Revenue expected to be recognized from remaining performance obligations


Fiscal year ending February 28(29),
Remainder of 2023	$	53,759
2024		116,787
2025		51,465
2026		11,838
Total	$	233,849

Basis of Presentation and Summary of Significant Accounting Policies - Property and Equipment and Capitalized Internal Use Software Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Property, Plant and Equipment [Line Items]
Amortization expenses			$ 34,749	$ 30,967
Computer software
Property, Plant and Equipment [Line Items]
Useful life			3 years
Capitalized cost	$ 1,941	$ 263	$ 3,440	619
Amortization expenses	$ 290	$ 290	$ 869	$ 2,096

Goodwill and Intangible Assets

9 Months Ended

Nov. 30, 2022

Goodwill and Intangible Assets

Goodwill and Intangible Assets

(5) Goodwill and Intangible Assets

The following table presents changes in the carrying amount of goodwill for the nine months ended November 30, 2022:


Balance, February 28, 2022	$	577,896
Impairment		(299,705)
Balance, November 30, 2022	$	278,191

Annually, and upon the identification of a triggering event, management is required to perform an evaluation of the recoverability of goodwill. Triggering events potentially warranting an interim goodwill impairment test include, among other factors, declines in historical or projected revenue, operating income or cash flows, and sustained declines in the Company’s stock price or market capitalization, considered both in absolute terms and relative to peers.

As a result of sustained decreases in the Company’s stock price and market capitalization, the Company conducted an impairment test of its goodwill and intangible assets as of May 31, 2022. As a result of this testing, the Company recorded a non-cash goodwill impairment charge of $299,705 (equivalent to $4.24 per basic and diluted share for the nine months ended November 30, 2022) during the first quarter of fiscal 2023. No impairments to goodwill were recorded during the three months ended November 30, 2022 and no impairments were recorded to intangible assets during the nine months ended November 30, 2022.

The Company’s May 31, 2022 goodwill impairment test reflected an allocation of 70% and 30% between income and market-based approaches, respectively. The Company believes the 70% weighting to the income-based approach is appropriate as it more directly reflects its future growth and profitability expectations. Significant inputs into the valuation models included the discount rate, revenue market multiples, and estimated future cash flows. Management used a discount rate of 11% and guideline peer group and public transaction revenue multiples between 1.1x and 1.8x current and forward-looking revenues in the goodwill impairment test. Subsequent to the impairment, there was no excess of reporting unit fair value over carrying value.

While management cannot predict if or when additional future goodwill impairments may occur, additional goodwill impairments could have material adverse effects on the Company’s operating income, net assets, and/or the Company’s cost of, or access to, capital.

Intangible assets consist of the following as of November 30, 2022:


		As of November 30, 2022
	Useful Life	Gross Value		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Useful Life (Years)
Customer relationships	2 to 20 years	$	124,050	$	(13,374)	$	110,676	18.1
Technology	2 to 5 years		111,526		(39,280)		72,246	3.2
Supplier-based network	5 years		25,000		(8,750)		16,250	3.3
Trade name	10 years		13,700		(2,140)		11,560	8.4
Non-compete agreement	2 to 3 years		9,300		(6,458)		2,842	0.8
		$	283,576	$	(70,002)	$	213,574

Amortization expense for intangible assets was $10,372 and $10,028 during the three months ended November 30, 2022 and 2021, respectively, and $31,116 and $26,166 during the nine months ended November 30, 2022 and 2021, respectively.

Net Income (Loss) Per Share Attributable to Common Stockholders - Antidilutive (Details) - shares	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	19,888,199	12,042,846	19,888,199	20,522,092
Stock Option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	8,393,611	534,377	8,393,611	8,468,806
Unvested restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	4,825,124	1,298,788	4,825,124	1,788,134
Shares issued to 2nd.MD employees and subject to vesting \| Acquisition of 2nd.MD
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	274,224	281,531	274,224	281,531
Contingent shares in connection with acquisition \| PlushCare
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	102,111	1,494,210	102,111	1,494,210
Contingent shares in connection with acquisition \| Acquisition of 2nd.MD
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share		1,889,441		1,889,441
Shares issued to PlushCare employees and subject to vesting \| PlushCare
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	537,401	844,202	537,401	844,202
Indemnity shares held in escrow in connection with PlushCare acquisition \| PlushCare
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	27,342		27,342	27,382
Shares to be issued to HealthReveal shareholders upon expiration of indemnification \| Health Reveal
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	28,089		28,089	28,089
Convertible Senior Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted net loss per share	5,700,297	5,700,297	5,700,297	5,700,297

Fair Value Measurements (Tables)

9 Months Ended

Nov. 30, 2022

Fair Value Measurements

Schedule of fair value of financial assets and liabilities


	November 30, 2022
	Level 1		Level 2		Level 3		Fair Value
Assets
Cash equivalents:
Money market funds	$	147,029	$	—	$	—	$	147,029


	February 28, 2022
	Level 1		Level 2		Level 3		Fair Value
Assets
Cash equivalents:
Money market funds	$	131,527	$	—	$	—	$	131,527
United States treasury bills	$	99,999	$	—	$	—	$	99,999

Acquisitions (Tables)

9 Months Ended

Nov. 30, 2022

Acquisition of 2nd.MD

Business Acquisition [Line Items]

Schedule of purchase consideration


Consideration
Cash consideration, net of cash acquired	$	226,135
Fair value of common stock issued		116,187
Fair value of replacement awards		1,520
Fair value of contingent consideration		76,248
Total consideration	$	420,090

Schedule of estimated fair values of the assets acquired and liabilities assumed


Assets acquired:
Accounts receivable	$	5,550
Unbilled revenue		226
Current portion of deferred contract acquisition costs		176
Prepaid and other current assets		1,052
Property and equipment		4,344
Deferred contract acquisition costs		564
Goodwill		208,286
Intangible assets⁽¹⁾
Customer relationships		120,000
Technology		58,000
Supplier-based network		25,000
Trade name		3,400
Non-compete agreement		3,100
Total assets acquired	$	429,698

Liabilities assumed:
Accounts payable	$	1,195
Accrued expenses		585
Accrued compensation		3,817
Deferred rent and other current liabilities		904
Due to customers		294
Current portion of deferred revenue		625
Deferred rent and other noncurrent liabilities		2,188
Total liabilities assumed	$	9,608

Net assets acquired	$	420,090

(1)	The weighted-average useful life of intangible assets acquired is approximately 14 years.

PlushCare

Business Acquisition [Line Items]

Schedule of purchase consideration


Consideration
Fair value of common stock issued	$	330,338
Fair value of contingent consideration		44,618
Cash consideration, net of cash acquired		33,860
Fair value of replacement awards		5,209
Total consideration	$	414,025

Schedule of estimated fair values of the assets acquired and liabilities assumed


Assets acquired:
Accounts receivable	$	1,359
Prepaid and other current assets		573
Property and equipment		298
Other noncurrent assets		932
Goodwill		365,597
Intangible assets⁽¹⁾
Customer relationships		4,050
Technology		40,650
Trade name		10,300
Non-compete agreements		6,200
Total assets acquired	$	429,959

Liabilities assumed:
Accounts payable	$	1,532
Accrued expenses		193
Accrued compensation		2,117
Current portion of deferred revenue		1,212
Deferred tax liability		9,992
Other liabilities		888
Total liabilities assumed	$	15,934

Net assets acquired	$	414,025

(1)	The weighted-average useful life of intangible assets acquired is approximately 5 years.

Commitments and Contingencies - Legal Proceedings (Details) $ in Thousands	9 Months Ended
	Nov. 30, 2022 USD ($)
Commitments and Contingencies.
Accruals related to legal matters	$ 3,700
Remaining amount recorded in general and administrative expenses	$ 439

Revenue - Cost to obtain and fulfill a contract (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Capitalized Contract Cost [Line Items]
Deferred amortization term	5 years		5 years
Deferred commissions, wrote off		$ 484
Impairment loss on deferred commission	$ 0	0	$ 0	$ 0
Selling And Marketing Expense [Member]
Capitalized Contract Cost [Line Items]
Amortization of contract cost	620	489	1,884	1,390
Sales commission
Capitalized Contract Cost [Line Items]
Amortization of contract cost	$ 2,117	916	$ 5,617	2,949
Customer set up cost
Capitalized Contract Cost [Line Items]
Deferred amortization term	5 years		5 years
Amortization of contract cost	$ 259	205	$ 707	548
Deferred implementation costs
Capitalized Contract Cost [Line Items]
Amortization of contract cost	$ 581	$ 524	$ 811	$ 839

Fair Value Measurements

9 Months Ended

Nov. 30, 2022

Fair Value Measurements

Fair Value Measurements

(7) Fair Value Measurements

The following table sets forth the fair value of the Company’s financial assets and liabilities within the fair value hierarchy:


	November 30, 2022
	Level 1		Level 2		Level 3		Fair Value
Assets
Cash equivalents:
Money market funds	$	147,029	$	—	$	—	$	147,029


	February 28, 2022
	Level 1		Level 2		Level 3		Fair Value
Assets
Cash equivalents:
Money market funds	$	131,527	$	—	$	—	$	131,527
United States treasury bills	$	99,999	$	—	$	—	$	99,999

The estimated fair value of the convertible senior notes (Note 8) was $206,368 as of November 30, 2022, based on quoted market prices of the Company’s instrument in markets that are not active and are classified as Level 2 within the fair value hierarchy. Considerable judgment is necessary to interpret the market data and develop an estimate of the fair value. Accordingly, the estimate is not necessarily indicative of the amount at which this instrument could be purchased, sold, or settled.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Stock-based Compensation (Tables)

9 Months Ended

Nov. 30, 2022

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of stock-based compensation


	Three months ended November 30,				Nine months ended November 30,
	2022		2021		2022		2021
Cost of revenue, excluding depreciation and amortization	$	1,247	$	949	$	3,645	$	2,331
Product and technology		5,930		5,303		19,045		13,491
Sales and marketing		4,513		3,608		12,772		9,035
General and administrative		6,216		8,517		19,347		20,970
Total stock-based compensation	$	17,906	$	18,377	$	54,809	$	45,827

Schedule of restricted stock units activity


		Restricted Stock Units
Balance, February 28, 2022		2,226,057
Granted		4,315,118
Vested		(1,109,344)
Forfeited		(606,707)
Balance, November 30, 2022		4,825,124

2020 Equity Incentive Plan

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of stock option activity

The following is a summary of stock option activity under the Incentive Plan:


		Weighted		Weighted
		average		remaining	Aggregate
		exercise		contractual life	intrinsic
	Stock Options	price		in years	value
Balance, February 28, 2022	8,045,792	$	11.24
Granted	915,081		8.06
Exercised	(295,361)		5.34
Forfeited	(461,096)		19.04
Balance, November 30, 2022	8,204,416	$		5.5	$	18,062

PlushCare, Inc. Stock Incentive Plan

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of stock option activity


		Weighted		Weighted
		average		remaining	Aggregate
		exercise		contractual life	intrinsic
	Stock Options	price		in years	value
Balance, February 28, 2022	267,721
Exercised	(59,939)	$	1.07
Forfeited	(18,587)	$	2.79
Balance, November 30, 2022	189,195	$	1.81	7.0	$	1,443

Debt (Details) $ / shares in Units, $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
Debt (Details) $ / shares in Units, $ in Thousands	Mar. 31, 2021 USD ($) D $ / shares	Nov. 30, 2022 USD ($) $ / shares	Nov. 30, 2021 USD ($) $ / derivative	Nov. 30, 2022 USD ($) $ / shares	Nov. 30, 2021 USD ($) $ / derivative	Feb. 28, 2022 USD ($)	Nov. 06, 2020 USD ($)	Jul. 31, 2019 USD ($)
Debt Instrument [Line Items]
Line of credit		$ 1,208		$ 1,208
Convertible Senior Notes
Debt Instrument [Line Items]
Debt instrument, face amount	$ 287,500
Interest rate	0.50%
Conversion rate \| $ / shares	$ 19.8088	$ 50.48		$ 50.48
Principal amount denomination	$ 1
Threshold percentage of stock price trigger	130.00%
Threshold trading days \| D	20
Threshold consecutive trading days \| D	30
Percentage of principal amount redeemed	100.00%
Cap price \| $ / derivative			76.20		76.20
Proceeds from notes payable	$ 279,132
Payment of costs of the capped call transactions	34,443
Cost which includes allocated pro-rata on capped call costs	8,428
Long-term debt		$ 287,500		$ 287,500		$ 287,500
Outstanding debt		281,914		281,914		280,666
Debt issuance cost		5,586		5,586		$ 6,834
Interest expenses		772	$ 769	2,330	$ 2,095
Amortization of debt discount		413	411	1,247	$ 1,127
Amount allocated to capped call	$ 60
Number of business day \| D	5
Number of consecutive trading day \| D	10
Percentage of average conversion value of note	98.00%
Effective interest rate over period					1.10%
Percentage of premium over last reported sale price					100.00%
Amount allocated to the Notes	$ 8,368
Revolving Credit Facility, 2019
Debt Instrument [Line Items]
Maximum borrowing capacity							$ 50,000	$ 80,000
Long-term debt		78,792		78,792
Outstanding debt		0		0
Interest expenses		51	$ 51	261	$ 245
Revolving Credit Facility, 2019 \| Minimum
Debt Instrument [Line Items]
Threshold net cash for extension of debt term		$ 200		$ 200
Revolving Credit Facility, 2019 \| Bloomberg Short-Term Bank Yield Index
Debt Instrument [Line Items]
Debt instrument variable rate				3.50%
Revolving Credit Facility, 2019 \| BSBY Rate and Base Rate
Debt Instrument [Line Items]
Debt instrument variable rate				2.50%

Stock-based Compensation - Stock-based compensation expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Compensation expense	$ 17,906	$ 18,377	$ 54,809	$ 45,827
Cost of revenue, excluding depreciation and amortization
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Compensation expense	1,247	949	3,645	2,331
Product and technology
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Compensation expense	5,930	5,303	19,045	13,491
Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Compensation expense	4,513	3,608	12,772	9,035
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Compensation expense	$ 6,216	$ 8,517	$ 19,347	$ 20,970

Revenue - Revenues disaggregated (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	$ 90,946	$ 83,450	$ 264,117	$ 216,265
Access fees
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	69,965	69,063	205,968	185,968
Utilization-based fees
Disaggregation of Revenue [Line Items]
Revenue from Contract with Customer, Including Assessed Tax	$ 20,981	$ 14,387	$ 58,149	$ 30,297

- Definition

Amount, including tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value-added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9038-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130545-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8906-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 22
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
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-Paragraph 4
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130543-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e9031-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI https://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Commitments and Contingencies - Purchase Obligations (Details) $ in Thousands	Nov. 30, 2022 USD ($)
Commitments and Contingencies.
Purchase Obligation	$ 40,323
Purchase obligation, remaining future purchase commitments	$ 34,114

Goodwill and Intangible Assets - Intangible assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Goodwill and Intangible Assets
Gross Value	$ 283,576		$ 283,576
Accumulated Amortization	(70,002)		(70,002)
Net Carrying Value	213,574		213,574
Amortization expense for intangible assets	10,372	$ 10,028	31,116	$ 26,166
Customer relationships
Goodwill and Intangible Assets
Gross Value	124,050		124,050
Accumulated Amortization	(13,374)		(13,374)
Net Carrying Value	110,676		$ 110,676
Weighted Average Remaining Useful Life			18 years 1 month 6 days
Customer relationships \| Minimum
Goodwill and Intangible Assets
Useful Life			2 years
Customer relationships \| Maximum
Goodwill and Intangible Assets
Useful Life			20 years
Technology
Goodwill and Intangible Assets
Gross Value	111,526		$ 111,526
Accumulated Amortization	(39,280)		(39,280)
Net Carrying Value	72,246		$ 72,246
Weighted Average Remaining Useful Life			3 years 2 months 12 days
Technology \| Minimum
Goodwill and Intangible Assets
Useful Life			2 years
Technology \| Maximum
Goodwill and Intangible Assets
Useful Life			5 years
Supplier-based network
Goodwill and Intangible Assets
Useful Life			5 years
Gross Value	25,000		$ 25,000
Accumulated Amortization	(8,750)		(8,750)
Net Carrying Value	16,250		$ 16,250
Weighted Average Remaining Useful Life			3 years 3 months 18 days
Trade name
Goodwill and Intangible Assets
Useful Life			10 years
Gross Value	13,700		$ 13,700
Accumulated Amortization	(2,140)		(2,140)
Net Carrying Value	11,560		$ 11,560
Weighted Average Remaining Useful Life			8 years 4 months 24 days
Non-compete agreement
Goodwill and Intangible Assets
Gross Value	9,300		$ 9,300
Accumulated Amortization	(6,458)		(6,458)
Net Carrying Value	$ 2,842		$ 2,842
Weighted Average Remaining Useful Life			9 months 18 days
Non-compete agreement \| Minimum
Goodwill and Intangible Assets
Useful Life			2 years
Non-compete agreement \| Maximum
Goodwill and Intangible Assets
Useful Life			3 years

Leases (Tables)

9 Months Ended

Nov. 30, 2022

Leases

Schedule of components of operating lease cost


	Three Months Ended November 30,				Nine Months Ended November 30,
		2022		2021		2022		2021
Operating lease cost	$	1,890	$	1,805	$	5,728	$	5,374
Variable lease cost		642		435		1,609		1,216
Total lease cost	$	2,532	$	2,240	$	7,337	$	6,590

Schedule of cash flow and supplemental information


	Nine Months Ended November 30,
Cash Flow Information	2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	6,300	$	6,243
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	2,155	$	3,356


Supplemental Information	November 30, 2022
Weighted-average remaining lease term (years)	5.5
Weighted-average discount rate	4.9	%

Summary of future aggregate minimum lease payments as of under all non-cancelable operating leases


Year Ending February 28(29),
Remainder of 2023	$	2,313
2024		8,845
2025		7,266
2026		7,232
2027		6,416
Thereafter		9,395
Total lease payments		41,467
Less: Imputed interest		(5,226)
Total lease liabilities	$	36,241

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Income Taxes (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Income Taxes
Income tax provision (benefit)	$ 77	$ 3,325	$ (3,573)	$ (9,501)
Effective income tax rate	0.20%	12.90%	0.80%	9.70%

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Condensed Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Common stock	Additional paid-in capital	Accumulated deficit	Total
Balance at Feb. 28, 2021	$ 6	$ 762,362	$ (371,520)	$ 390,848
Balance (shares) at Feb. 28, 2021	55,699,052
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with acquisition		116,187		116,187
Issuance of common stock in connection with acquisition (shares)	2,822,242
Issuance of replacement awards in connection with acquisition		1,520		1,520
Exercise of stock options and vesting of restricted stock units		2,141		2,141
Exercise of stock options and vesting of restricted stock units (shares)	236,982
Purchase of capped calls		(34,503)		(34,503)
Issuance of common stock in connection with the employee stock purchase plan		1,948		1,948
Issuance of common stock in connection with the employee stock purchase plan (shares)	50,516
Stock-based compensation expense		7,675		7,675
Net income (loss)			(48,707)	(48,707)
Balance at May. 31, 2021	$ 6	857,330	(420,227)	437,109
Balance (shares) at May. 31, 2021	58,808,792
Balance at Feb. 28, 2021	$ 6	762,362	(371,520)	390,848
Balance (shares) at Feb. 28, 2021	55,699,052
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)				(88,568)
Balance at Nov. 30, 2021	$ 7	1,248,781	(460,088)	788,700
Balance (shares) at Nov. 30, 2021	66,906,311
Balance at May. 31, 2021	$ 6	857,330	(420,227)	437,109
Balance (shares) at May. 31, 2021	58,808,792
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with acquisition	$ 1	330,337		330,338
Issuance of common stock in connection with acquisition (shares)	7,144,393
Issuance of replacement awards in connection with acquisition		5,209		5,209
Exercise of stock options and vesting of restricted stock units		3,491		3,491
Exercise of stock options and vesting of restricted stock units (shares)	394,815
Stock-based compensation expense		19,775		19,775
Net income (loss)			(62,364)	(62,364)
Balance at Aug. 31, 2021	$ 7	1,216,142	(482,591)	733,558
Balance (shares) at Aug. 31, 2021	66,348,000
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock in connection with acquisition		10,068		10,068
Issuance of common stock in connection with acquisition (shares)	252,808
Exercise of stock options and vesting of restricted stock units		1,833		1,833
Exercise of stock options and vesting of restricted stock units (shares)	215,181
Issuance of common stock in connection with the employee stock purchase plan		2,361		2,361
Issuance of common stock in connection with the employee stock purchase plan (shares)	90,322
Stock-based compensation expense		18,377		18,377
Net income (loss)			22,503	22,503
Balance at Nov. 30, 2021	$ 7	1,248,781	(460,088)	788,700
Balance (shares) at Nov. 30, 2021	66,906,311
Balance at Feb. 28, 2022	$ 7	1,350,431	(494,644)	855,794
Balance (shares) at Feb. 28, 2022	67,098,477
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Settlement of acquisition-related contingent consideration (shares)	1,939,853
Exercise of stock options and vesting of restricted stock units		358		358
Exercise of stock options and vesting of restricted stock units (shares)	228,701
Issuance of common stock in connection with the employee stock purchase plan		1,788		1,788
Issuance of common stock in connection with the employee stock purchase plan (shares)	343,310
Stock-based compensation expense		19,389		19,389
Net income (loss)			(342,822)	(342,822)
Balance at May. 31, 2022	$ 7	1,371,966	(837,466)	534,507
Balance (shares) at May. 31, 2022	69,610,341
Balance at Feb. 28, 2022	$ 7	1,350,431	(494,644)	855,794
Balance (shares) at Feb. 28, 2022	67,098,477
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)				(429,217)
Balance at Nov. 30, 2022	$ 7	1,409,807	(923,861)	485,953
Balance (shares) at Nov. 30, 2022	72,390,727
Balance at May. 31, 2022	$ 7	1,371,966	(837,466)	534,507
Balance (shares) at May. 31, 2022	69,610,341
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Settlement of acquisition-related contingent consideration (shares)	1,327,408
Exercise of stock options and vesting of restricted stock units		816		816
Exercise of stock options and vesting of restricted stock units (shares)	600,628
Stock-based compensation expense		17,514		17,514
Net income (loss)			(46,523)	(46,523)
Balance at Aug. 31, 2022	$ 7	1,390,296	(883,989)	506,314
Balance (shares) at Aug. 31, 2022	71,538,377
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options and vesting of restricted stock units		466		466
Exercise of stock options and vesting of restricted stock units (shares)	635,315
Issuance of common stock in connection with the employee stock purchase plan		1,139		1,139
Issuance of common stock in connection with the employee stock purchase plan (shares)	217,035
Stock-based compensation expense		17,906		17,906
Net income (loss)			(39,872)	(39,872)
Balance at Nov. 30, 2022	$ 7	$ 1,409,807	$ (923,861)	$ 485,953
Balance (shares) at Nov. 30, 2022	72,390,727

Debt - Notes (Details) - Convertible Senior Notes - USD ($) $ in Thousands	Nov. 30, 2022	Feb. 28, 2022
Debt Instrument [Line Items]
Principal	$ 287,500	$ 287,500
Unamortized issuance costs	(5,586)	(6,834)
Net carrying amount	$ 281,914	$ 280,666

- Definition

Amount, excluding unamortized premium (discount) and debt issuance cost, of long-term debt. Excludes lease obligation.

+ References + Details

Goodwill and Intangible Assets - Carrying amount of goodwill (Details) $ in Thousands	9 Months Ended
	Nov. 30, 2022 USD ($)
Changes in the carrying amount of goodwill
Balance, February 28, 2022	$ 577,896
Impairment	(299,705)
Balance, May 31, 2022	$ 278,191

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

Acquisitions - Summary of Estimated Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Sep. 30, 2021	Jun. 09, 2021	Mar. 03, 2021	Nov. 30, 2022	Feb. 28, 2022
Assets acquired:
Goodwill				$ 278,191	$ 577,896
PlushCare
Assets acquired:
Accounts receivable		$ 1,359
Prepaid and other current assets		573
Property and equipment		298
Other noncurrent assets		932
Goodwill		365,597
Total assets acquired		429,959
Liabilities assumed
Accounts payable		1,532
Accrued expenses		193
Accrued compensation		2,117
Current portion of deferred revenue		1,212
Deferred tax liability		9,992
Other liabilities		888
Total liabilities assumed		15,934
Net assets acquired		$ 414,025
Weighted-average useful life of intangible assets		5 years
Decrease in recognized goodwill		$ 1,685
PlushCare \| Customer relationships
Assets acquired:
Intangible assets		4,050
PlushCare \| Technology
Assets acquired:
Intangible assets		40,650
PlushCare \| Trade name
Assets acquired:
Intangible assets		10,300
PlushCare \| Non-compete agreement
Assets acquired:
Intangible assets		$ 6,200
Acquisition of 2nd.MD
Assets acquired:
Accounts receivable			$ 5,550
Unbilled revenue			226
Current portion of deferred contract acquisition costs			176
Prepaid and other current assets			1,052
Property and equipment			4,344
Deferred contract acquisition costs			564
Goodwill			208,286
Total assets acquired			429,698
Liabilities assumed
Accounts payable			1,195
Accrued expenses			585
Accrued compensation			3,817
Deferred rent and other current liabilities			904
Due to customers			294
Current portion of deferred revenue			625
Deferred rent and other noncurrent liabilities			2,188
Total liabilities assumed			9,608
Net assets acquired			$ 420,090
Weighted-average useful life of intangible assets			14 years
Decrease in recognized goodwill			$ 1,878
Acquisition of 2nd.MD \| Customer relationships
Assets acquired:
Intangible assets			120,000
Acquisition of 2nd.MD \| Technology
Assets acquired:
Intangible assets			58,000
Acquisition of 2nd.MD \| Supplier-based network
Assets acquired:
Intangible assets			25,000
Acquisition of 2nd.MD \| Trade name
Assets acquired:
Intangible assets			3,400
Acquisition of 2nd.MD \| Non-compete agreement
Assets acquired:
Intangible assets			$ 3,100
HealthReveal \| Technology
Assets acquired:
Intangible assets	$ 9,976
Liabilities assumed
Weighted-average useful life of intangible assets	3 years

Commitments and Contingencies

9 Months Ended

Nov. 30, 2022

Commitments and Contingencies.

Commitments and Contingencies

(12) Commitments and Contingencies

(a) Legal Proceedings

The Company is involved in various claims, inquiries and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters is not expected to have a material adverse effect on the Company’s financial position or liquidity. As of November 30, 2022, the Company had accruals of $3,700 related to legal matters.

On May 8, 2021, a purported class action complaint (Robbins v. PlushCare, Inc. et al.) was filed in the United States District Court for the Northern District of California against the Company’s wholly owned subsidiary, PlushCare, Inc. The complaint, as amended, alleges that certain of PlushCare’s subscription payment practices violate California and other state automatic renewal laws and the Federal Electronic Funds Transfer Act, among other claims, arising from allegations that PlushCare failed to provide adequate disclosures to members. The lawsuit seeks restitution of subscription fees, statutory damages for each violation, subject to trebling, reasonable attorneys’ fees, and injunctive relief. Under the terms of the agreement to purchase PlushCare, the selling shareholders will indemnify Accolade for losses related to this matter, subject to a cap. During the three months ended November 30, 2022, the parties tentatively agreed on a settlement and the Company has recorded a contingent liability. The majority of the Company’s liability is eligible to be paid through third-party insurance and the remaining indemnification from the selling shareholders of PlushCare. The remainder amounted to $439 at November 30, 2022 and was recorded in general and administrative expenses in the statement of operations.

(b) Employment Agreements

Certain officers of the Company have employment agreements providing for severance, continuation of benefits, and other specified rights in the event of termination without cause, including in the event of a change of control of the Company, as defined in the agreements.

The Company has minimum required purchase commitments of $40,323 pursuant to an agreement primarily related to cloud computing services. Portions of the total purchase commitment are required to be met prior to the end of

each contract year, September 30, in each of fiscal years 2023 through 2027. If total purchases in a contract year do not meet the portion of the commitment required for that year, the shortfall must be prepaid and can be used for future purchases through September 30, 2027. As of November 30, 2022, the Company has remaining future purchase commitments under this agreement of $34,114.

Stock-based Compensation - Stock Options (Narrative) (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 31, 2020	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense		$ 17,906	$ 18,377	$ 54,809	$ 45,827
2020 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock authorized to be issued		9,211,901		9,211,901
Common stock available for future grants		1,344,021		1,344,021
2020 Equity Incentive Plan \| Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of option	10 years
Vesting period	4 years
Compensation expense		$ 2,766	2,766	$ 7,989	7,679
Aggregate intrinsic value of stock options		453	5,407	1,598	28,605
Unrecognized compensation expense		17,679		$ 17,679
Weighted average period				1 year 10 months 24 days
2020 Equity Incentive Plan \| Stock Option \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock authorized to be issued	4,300,000
2020 Equity Incentive Plan \| Stock Option \| Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Vesting percentage	25.00%
2020 Equity Incentive Plan \| Stock Option \| Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Vesting percentage	75.00%
PlushCare, Inc. Stock Incentive Plan \| Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense		1,072	1,323	$ 3,528	2,778
Aggregate intrinsic value of stock options		152	$ 136	635	$ 811
Unrecognized compensation expense		$ 3,559		$ 3,559
Weighted average period				1 year 6 months

Stock-based Compensation - Stock Option Activity Under Option Plan and Incentive Plan (Details) $ / shares in Units, $ in Thousands	9 Months Ended
	Nov. 30, 2022 USD ($) $ / shares shares
2020 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Beginning Balance	8,045,792
Granted	915,081
Exercised	(295,361)
Forfeited	(461,096)
Ending Balance	8,204,416
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Beginning Balance (in USD per share) \| $ / shares	$ 11.24
Granted \| $ / shares	8.06
Exercised \| $ / shares	5.34
Forfeited \| $ / shares	$ 19.04
Weighted remaining contractual life in years	5 years 6 months
Ending Balance \| $	$ 18,062
PlushCare, Inc. Stock Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Beginning Balance	267,721
Exercised	(59,939)
Forfeited	(18,587)
Ending Balance	189,195
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Exercised \| $ / shares	$ 1.07
Forfeited \| $ / shares	2.79
Ending Balance (in USD per share) \| $ / shares	$ 1.81
Weighted remaining contractual life in years	7 years
Ending Balance \| $	$ 1,443

Net Income (Loss) Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Nov. 30, 2022	Aug. 31, 2022	May 31, 2022	Nov. 30, 2021	Aug. 31, 2021	May 31, 2021	Nov. 30, 2022	Nov. 30, 2021
Net income (loss)	$ (39,872)	$ (46,523)	$ (342,822)	$ 22,503	$ (62,364)	$ (48,707)	$ (429,217)	$ (88,568)
Weighted-average common shares outstanding, basic	71,228,351			65,418,728			70,755,157	62,684,823
Dilutive effect of stock options				5,792,987
Dilutive effect of unvested restricted stock units				128,331
Weighted-average common shares outstanding, diluted	71,228,351			71,490,045			70,755,157	62,684,823
Net income (loss) per share attributable to common stockholders, basic	$ (0.56)			$ 0.34			$ (6.07)	$ (1.41)
Net income (loss) per share attributable to common stockholders, diluted	$ (0.56)			$ 0.31			$ (6.07)	$ (1.41)
Acquisition of 2nd.MD
Dilutive effect of shares issued to employees and subject to vesting				102,042
Health Reveal
Dilutive effect of shares to be issued to HealthReveal shareholders upon expiration of indemnification period				19,138
PlushCare
Dilutive effect of shares issued to employees and subject to vesting				28,819

Revenue - Revenue and Deferred Revenue Narratives (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Revenue
Contract with customer liability revenue recognized			$ 29,993	$ 25,817
Revenue related to performance obligations satisfied in prior periods	$ 664	$ 1,330	$ 3,291	$ 4,088

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Nov. 30, 2022	Feb. 28, 2022
Current assets:
Cash and cash equivalents	$ 325,637	$ 365,853
Accounts receivable, net	20,483	21,116
Unbilled revenue	3,702	9,685
Current portion of deferred contract acquisition costs	4,075	3,015
Prepaid and other current assets	12,334	9,468
Total current assets	366,231	409,137
Property and equipment, net	13,561	11,797
Operating lease right-of-use assets	30,936	33,126
Goodwill	278,191	577,896
Intangible assets, net	213,574	244,690
Deferred contract acquisition costs	9,981	7,205
Other assets	1,317	1,678
Total assets	913,791	1,285,529
Current liabilities:
Accounts payable	9,987	7,837
Accrued expenses and other current liabilities	11,026	11,000
Accrued compensation	35,467	39,189
Due to customers	9,244	16,263
Current portion of deferred revenue	43,500	30,875
Current portion of operating lease liabilities	7,392	6,589
Total current liabilities	116,616	111,753
Loans payable, net of unamortized issuance costs	281,914	280,666
Operating lease liabilities	28,849	32,486
Other noncurrent liabilities	203	4,562
Deferred revenue	256	268
Total liabilities	427,838	429,735
Commitments and Contingencies (note 12)
Stockholders' equity
Common stock par value $0.0001; 500,000,000 shares authorized; 72,390,727 and 67,098,477 shares issued and outstanding at November 30, 2022 and February 28, 2022, respectively	7	7
Additional paid-in capital	1,409,807	1,350,431
Accumulated deficit	(923,861)	(494,644)
Total stockholders' equity	485,953	855,794
Total liabilities and stockholders' equity	$ 913,791	$ 1,285,529

Leases - Components of operating lease cost (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Operating lease cost	$ 1,890	$ 1,805	$ 5,728	$ 5,374
Variable lease cost	642	435	1,609	1,216
Total lease cost	$ 2,532	$ 2,240	$ 7,337	$ 6,590
Maximum
Remaining lease term	8 years		8 years

Goodwill and Intangible Assets (Details) $ / shares in Units, $ in Thousands	3 Months Ended	9 Months Ended
	Nov. 30, 2022 USD ($)	Nov. 30, 2022 USD ($) $ / shares
Finite-Lived Intangible Assets [Line Items]
Goodwill impairment		$ 299,705
Goodwill impairment charge, basic (in dollars per share) \| $ / shares		$ 4.24
Goodwill impairment charge, diluted (in dollars per share) \| $ / shares		$ 4.24
Impairment charges on intangible assets	$ 0	$ 0
Discount rate for goodwill impairment test	11.00%	11.00%
Goodwill impairment test for current revenue	1.1	1.1
Goodwill impairment test for deferred revenue	1.8	1.8
Excess of reporting unit fair value over carrying value		$ 0
Income-based approach
Finite-Lived Intangible Assets [Line Items]
Goodwill impairment test, percentage	70.00%	70.00%
Market-based approach
Finite-Lived Intangible Assets [Line Items]
Goodwill impairment test, percentage	30.00%	30.00%

Acquisitions - Shares Issued (Details) $ in Thousands					1 Months Ended	3 Months Ended		9 Months Ended
Acquisitions - Shares Issued (Details) $ in Thousands	Jun. 01, 2022 shares	Sep. 30, 2021 shares	Jun. 09, 2021 USD ($) shares	Mar. 03, 2021 USD ($) item shares	May 31, 2022 shares	Nov. 30, 2022 USD ($)	Nov. 30, 2021 USD ($)	Nov. 30, 2022 USD ($) shares	Nov. 30, 2021 USD ($)	Jan. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)
Business Acquisition [Line Items]
Acquisition and integration-related costs						$ 439	$ 311	$ 439	$ 13,208
Change in fair value of contingent consideration							(68,428)		$ (38,282)
Employees
Business Acquisition [Line Items]
Estimated fair value of replacement awards attributable to pre-acquisition services				$ 5,434
Acquisition of 2nd.MD
Business Acquisition [Line Items]
Aggregate purchase price consideration				420,090
Cash consideration				226,135
Cash acquired				$ 205
Shares issued during acquisition period \| shares				2,822,242
Settlement of acquisition-related contingent consideration (shares) \| shares					1,939,853
Shares fully vested upon acquisition \| shares				2,495,441
Shares fully unvested upon acquisition \| shares				326,801
Number of earnout scenarios \| item				2
Estimated fair value of replacement awards attributable to pre-acquisition services				$ 1,520
Units issued \| shares				120,760
Estimated fair value of replacement awards				$ 3,914
Fair value of contingent consideration										$ 37,767
Repayment of debt				$ 13,026
Acquisition of 2nd.MD \| Measurement Input Attrition Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input								8.0
Acquisition of 2nd.MD \| Measurement Input Tax Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input								24
Acquisition of 2nd.MD \| Measurement Input, Discount Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input								13
Acquisition of 2nd.MD \| Measurement Input Royalty Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input								1.5
Acquisition of 2nd.MD \| Measurement Input Probability of Completion Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input								33
Acquisition of 2nd.MD \| Individuals Agreements With Company
Business Acquisition [Line Items]
Shares fully unvested upon acquisition \| shares								326,801
Additional shares eligible to be received \| shares								281,531
Vesting period								2 years
Acquisition of 2nd.MD \| Minimum
Business Acquisition [Line Items]
Amortization period								3 years
Acquisition of 2nd.MD \| Maximum
Business Acquisition [Line Items]
Shares issued during acquisition period \| shares				4,384,882				1,977,343
Additional shares issued \| shares				2,170,972
Amortization period								20 years
PlushCare
Business Acquisition [Line Items]
Aggregate purchase price consideration			$ 414,025
Cash consideration						1,828
Cash acquired			$ 17,837
Shares issued during acquisition period \| shares			7,144,393
Estimated fair value of replacement awards attributable to pre-acquisition services			$ 5,209
Units issued \| shares			325,992
Estimated fair value of replacement awards			$ 11,454
Fair value of contingent consideration											$ 37,683
Repayment of debt			$ 1,463
Shares forfeited excluded from purchase price \| shares			806,161
Change in fair value of contingent consideration							$ 3,292
Vesting period			3 years
Shares issued subject to future vesting \| shares			854,717
Cash issued upon achievement of defined revenue milestones			$ 2,000
Additional shares issued \| shares	1,327,408		1,429,556
Additional Shares Issuable Withheld \| shares	102,111		102,111
PlushCare \| Adjustment
Business Acquisition [Line Items]
Fair value of contingent consideration						3,292		$ 3,292
Increase in goodwill						$ 5,799
PlushCare \| Measurement Input, Discount Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input			12.5
PlushCare \| Measurement Input Royalty Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input			3
PlushCare \| Employees
Business Acquisition [Line Items]
Estimated fair value of replacement awards attributable to pre-acquisition services			$ 16,663
PlushCare \| Minimum
Business Acquisition [Line Items]
Amortization period			2 years
PlushCare \| Minimum \| Measurement Input Attrition Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input			25
PlushCare \| Minimum \| Measurement Input Tax Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input			25
PlushCare \| Minimum \| Measurement Input Probability of Completion Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input			70
PlushCare \| Maximum
Business Acquisition [Line Items]
Amortization period			10 years
PlushCare \| Maximum \| Measurement Input Attrition Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input			50
PlushCare \| Maximum \| Measurement Input Probability of Completion Rate
Business Acquisition [Line Items]
Fair value of intangible assets, measurement input			90
HealthReveal
Business Acquisition [Line Items]
Shares issued subject to future vesting \| shares		28,089
Additional shares issued \| shares		252,808

Acquisitions - Summary of Purchase Consideration (Details) - USD ($) $ in Thousands			9 Months Ended
	Jun. 09, 2021	Mar. 03, 2021	Nov. 30, 2021
Consideration Paid
Cash consideration, net of cash acquired			$ 260,165
Acquisition of 2nd.MD
Consideration Paid
Cash consideration, net of cash acquired		$ 226,135
Fair value of common stock issued		116,187
Fair value of replacement awards		1,520
Fair value of contingent consideration		76,248
Total consideration paid		$ 420,090
PlushCare
Consideration Paid
Cash consideration, net of cash acquired	$ 33,860
Fair value of common stock issued	330,338
Fair value of replacement awards	5,209
Fair value of contingent consideration	44,618
Total consideration paid	$ 414,025

Basis of Presentation and Summary of Significant Accounting Policies

9 Months Ended

Nov. 30, 2022

Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Summary of Significant Accounting Policies

(2) Basis of Presentation and Summary of Significant Accounting Policies

The Company’s significant accounting policies are disclosed in the audited financial statements for the year ended February 28, 2022 appearing in the Company’s Annual Report on Form 10-K and filed with the Securities and Exchange Commission (the SEC) on May 2, 2022.

(a) Basis of Presentation and Principles of Consolidation

Accolade’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and include the Company’s accounts and those of the Company’s wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation.

Through the acquisition of PlushCare, Inc. (PlushCare), the Company has various administrative service agreements (ASA) with professional medical corporations established in California, Illinois, Wyoming, and New Jersey (PC). The PCs employ or contract with medical providers who provide services via the Company’s technology platform. The ASAs are evergreen and are terminable by the parties for breach or bankruptcy. Through the ASAs, the Company provides non-clinical administrative services to the PCs and manages the economic activities that most significantly affect PCs. The PCs retain control over the provision of medical services and the PC’s clinical personnel.

The PCs are variable interest entities (VIE) to the Company. Under Accounting Standards Codification Subtopic 810 – Consolidation, the Company is considered the PC’s primary beneficiary because the Company has the power to direct the activities that most significantly impact the VIE’s economic performance and absorbs the residual benefits and losses from the VIE’s operations. Consequently, the Company consolidates the operations of the PCs. PC assets were $46,602 as of November 30, 2022. These assets consisted primarily of receivables from PlushCare, Inc. of $26,226 and cash of $17,186, which may only be used to settle the obligations of the PCs. PC liabilities were $27,835 as of November 30, 2022 and consisted primarily of amounts due to Accolade, Inc. of $22,581.

The PCs and the Company are independent entities, and as such creditors of the PCs do not have recourse against the Company in the event of default by the PCs. Additionally, the PCs’ non-cash assets are available to the Company to satisfy obligations or for other corporate purposes.

(b) Unaudited Interim Financial Statements

The accompanying consolidated financial statements and the related footnote disclosures are unaudited. The unaudited consolidated interim financial statements have been prepared on the same basis as the annual audited consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary for the fair statement of the Company’s interim consolidated financial position as of

November 30, 2022, the results of its operations for the three and nine months ended November 30, 2022 and 2021, and its cash flows for the nine months ended November 30, 2022 and 2021. The results for the three and nine months ended November 30, 2022 are not necessarily indicative of results to be expected for the year ending February 28, 2023, any other interim periods, or any future year or period. The Company’s management believes that the disclosures are adequate to make the information presented not misleading when read in conjunction with the audited consolidated financial statements and accompanying notes for the year ended February 28, 2022.

Costs related to software acquired, developed, or modified solely to meet the Company’s internal requirements, including tools that enable the Company’s employees to interact with members and their providers, with no substantive plans to market such software at the time of development, are capitalized. Costs incurred during the preliminary planning and evaluation stage of the project and during the post-implementation operational stage are expensed as incurred. Costs related to minor upgrades, minor enhancements, and maintenance activities are expensed as incurred. Costs incurred during the application development stage of the project are capitalized. Internal-use software is included in property and equipment and is amortized on a straight-line basis over 3 years.

For the three months ended November 30, 2022 and 2021, the Company capitalized $1,941 and $263, respectively, for internal-use software. For the nine months ended November 30, 2022 and 2021, the Company capitalized $3,440 and $619, respectively, for internal-use software. Amortization expense related to capitalized internal-use software during the three months ended November 30, 2022 and 2021 was $290 and $290, respectively. Amortization expense related to capitalized internal-use software during the nine months ended November 30, 2022 and 2021 was $869 and $2,096, respectively.

(d) Impairment of Long-Lived Assets

The Company reviews long-lived assets, such as property and equipment and finite-lived intangibles, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated undiscounted future cash flows, then an impairment charge is recognized for the amount by which the carrying value of the asset exceeds the fair value of the asset. There were no long-lived asset impairment charges recorded during the three and nine months ended November 30, 2022 and 2021.

(e) Intangible Assets

The Company has acquired intangible assets in the form of developed technology, customer relationships, trade names, supplier-based network, and non-compete agreements through various acquisitions. Intangible assets are recorded at fair value on the date of acquisition and are subject to amortization over the estimated useful lives of each asset. Estimates of fair value and useful lives are based on historical factors, current circumstances, and the experience and judgment of management. Estimates and assumptions used to value intangible assets are evaluated by management on an ongoing basis.

(f) Goodwill

Goodwill is the excess of the cost of an acquired entity over the net amounts assigned to tangible and intangible assets acquired and liabilities assumed. Goodwill is not amortized, but is subject to an annual impairment test. The Company has a single reporting unit and all goodwill relates to that reporting unit.

The Company performs an impairment analysis of goodwill on an annual basis in the fourth quarter of each fiscal year or more frequently if changes in circumstances or the occurrence of events suggest that an impairment exists.

If the fair value of the reporting unit is less than its carrying value, an impairment loss is recorded. A goodwill impairment loss was recorded during the first quarter of fiscal 2023. See Note 5 for further information.

(g) Revenue and Deferred Revenue

Revenue Recognition

The Company generates revenue by providing customers access to its advocacy, expert medical opinion, and virtual primary care and mental health support services, as well as through utilization of its expert medical opinion and virtual primary care and mental health support services that were acquired through the acquisitions of Innovation Specialists LLC d/b/a 2nd.MD (2nd.MD) and PlushCare. Contracts with customers that include expert medical opinion or virtual primary care and mental health support services may contain either an access fee, a utilization-based fee, or both.

In accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, the Company recognizes revenue when control of the promised services is transferred to its customers, in an amount that reflects the consideration to which it expects to be entitled in exchange for those services. Accordingly, the Company determines revenue recognition through the following steps:

●

identification of the contract, or contracts, with a customer;

●

identification of the performance obligations in the contract;

●

determination of the transaction price;

●

allocation of the transaction price to the performance obligations in the contracts; and

●

recognition of revenue when, or as, the Company satisfies a performance obligation.

At contract inception, the Company assesses the type of services being provided and assesses the performance obligations in the contract. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis. The Company determines the standalone selling prices based on overall pricing objectives, taking into consideration market conditions and other factors, using an expected cost plus margin approach. The Company considered the variable consideration allocation exception in ASC 606 for its advocacy contracts and concluded that such exception for allocating variable consideration to distinct performance obligations or distinct time periods within a series was not met primarily due to variability in its per-member-per-month (PMPM) pricing.

The majority of fees earned by the Company are considered to be variable consideration due to both the uncertainty regarding the total number of members, consultations or visits for which the Company will invoice the customer, as well as the variable PMPM fees that are dependent upon the achievement of performance metrics and/or healthcare cost savings. Performance metrics are measured monthly, quarterly, or annually, and with respect to the achievement of healthcare cost savings targets, annually (typically measured on a calendar year basis). Accordingly, at contract inception and on an ongoing basis, as part of the Company’s estimate of the transaction price, the Company determines whether any such fees should be constrained, and the Company includes the estimated consideration for those fees to the extent that it is probable that a significant reversal of cumulative revenue recognized will not occur (and is therefore considered to be unconstrained). Consideration related to the Company’s achievement of healthcare cost savings is typically constrained until the end of the applicable calendar year due to uncertainty related to factors outside of the Company’s control. Consideration related to other performance metrics is typically not constrained based on the Company’s prior success of achieving such metrics. On an ongoing basis, the Company reassesses its estimates for variable consideration, which can change based upon its assessment of the achievement of performance metrics and healthcare cost savings, as well as the number of members, consultations, or visits.

Access Fees

The Company generates revenue primarily from contracts with customers to access the Company’s advocacy, expert medical opinion, and virtual primary care and mental health support services. The Company prices access fees primarily using a recurring PMPM fee, typically with a portion of the fee calculated as the product of a fixed rate times the number of members (fixed PMPM fee), plus a variable PMPM fee calculated as the product of a variable rate times the number of members (variable PMPM fee). The fees associated with the variable PMPM fee can be earned through the achievement of performance metrics and/or the realization of healthcare cost savings resulting from use of the Company’s services. Collectively, the fixed PMPM fee and variable PMPM fee are referred to as the total PMPM fee. The Company’s PMPM pricing varies by contract. In certain contracts, the maximum total PMPM fee varies during the contract term (total PMPM rate increases or decreases annually), while in other contracts, the total PMPM maximum fee is consistent over the term, yet the fixed and variable portions vary. For example, in certain contracts the fixed PMPM fee increases on an annual basis while the variable PMPM fee decreases on an annual basis, resulting in the same total PMPM fee throughout the term of the contract. The PMPM fees for expert medical opinion and virtual primary care and mental health support services may be tiered based upon the customer’s utilization.

Access to the Company’s services represent a single stand-ready performance obligation. The Company’s contracts include stand-ready services to provide eligible participants with access to the Company’s services and to perform an unspecified quantity of interactions with members during the contract period. Accordingly, the Company’s services are generally viewed as stand-ready performance obligations comprised of a series of distinct daily services that are substantially the same and have the same pattern of transfer. For advocacy services, the Company satisfies these performance obligations over time and recognizes revenue related to its 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. The Company believes a measure of progress based on the number of members is the most appropriate measurement of control of the services being transferred to the customer as the amount of internal resources necessary to stand-ready is directly correlated to the number of members who can use the services.

For the majority of expert medical opinion services, the Company satisfies these performance obligations over time and recognizes revenue in the amount of consideration for which it has the right to invoice using the as-invoiced practical expedient. Access fees also include access to the Company’s virtual primary care and mental health support services sold directly to consumers on a monthly or yearly fixed fee subscription basis. For these services, the Company satisfies these stand-ready performance obligations over time and recognizes revenue ratably over the subscription period.

Utilization-based fees

The Company also generates revenue when members utilize the expert medical opinion and virtual primary care and mental health support services that are billed based on utilization. Many, but not all, contracts with customers contain utilization-based fees. For any utilization-based fees, the Company satisfies these performance obligations over time and recognizes revenue in the amount of consideration for which it has the right to invoice using the as-invoiced practical expedient for any consultations or visits sold to enterprise customers as well as any non-insured consultations or visits related to virtual primary care and mental health support services sold directly to consumers. For any consultations or visits that are paid through insurance claims, the Company recognizes revenue as the consultations and visits occur in an amount that reflects the consideration that is expected based upon then-current prices and historical experience from insurance payors.

Deferred Revenue

The Company typically invoices its customers in advance of the services performed on a monthly or quarterly basis, and the amount invoiced typically represents the maximum total PMPM fee for the estimated number of eligible members over the applicable invoice period. The total PMPM fee covers the stand-ready services in the Company’s typical

contracts (i.e., the performance obligations are not separately priced or invoiced). The maximum total PMPM fee that is invoiced includes both the fixed PMPM fee and the variable PMPM fee related to the performance metrics and/or the realization of healthcare cost savings that can be achieved during the period. These fees are classified as deferred revenue on the Company’s consolidated balance sheet until such time that revenue can be recognized. In the event the Company fails to satisfy any of the performance metrics and/or realization of healthcare cost savings that are billed in advance, the Company will refund the applicable portion of the fee or offset the amount against a future invoice. These amounts are included in due to customers on the Company’s consolidated balance sheet. The Company’s accounts receivable represent rights to consideration that are unconditional.

(h) Concentration of Credit Risk

Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents, and marketable securities. The Company maintains its cash primarily with domestic financial institutions of high credit quality, which may exceed federal deposit insurance corporation limits. The Company invests its cash equivalents in highly rated money market funds. Marketable securities are comprised of United States treasury bills with original maturities greater than three months. The Company has not experienced any losses in such accounts. The Company believes it is not exposed to any significant credit risk on cash, cash equivalents, and marketable securities and performs periodic evaluations of the credit standing of such institutions. Additionally, no customer represented 10% or more of our revenue for the three and nine months ended November 30, 2022 and 2021.

(i) Marketable Securities

The Company classifies its marketable securities as available-for-sale, which include U.S. treasury bills with original maturities of greater than three months. These securities are carried at fair market value.

(j) Leases

In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-02, Leases (Topic 842). The new guidance requires lessees to recognize lease liabilities and corresponding right-of-use assets for all leases with terms of more than 12 months.

The Company adopted Topic 842 on February 28, 2022, with an effective date of adoption of March 1, 2021, using the modified retrospective approach. Topic 842 requires the Company to recognize a lease liability, which represents the discounted obligation to make future minimum lease payments, and a corresponding right-of-use (ROU) asset on its consolidated balance sheet for most leases and disclose key information about leasing arrangements. The Company elected to utilize the package of practical expedients available under Topic 842, which allowed it to not reassess: (i) whether any expired or existing contracts contain leases, (ii) the lease classification for any expired or existing leases, and (iii) the initial direct costs for existing leases. As a result of the adoption, the Company recorded operating lease right-of-use assets and operating lease liabilities of $34,739 and $38,740, respectively, on the consolidated balance sheet as of March 1, 2021.

Whenever the Company enters into a new arrangement, it determines, at the inception date, whether the arrangement is or contains a lease. This determination generally depends on whether the arrangement conveys to the Company the right to control the use of an explicitly or implicitly identified asset for a period of time in exchange for consideration. Control of an underlying asset is conveyed to the Company if the Company obtains the right to direct the use of, and obtain substantially all the economic benefits from, the use of the underlying asset.

If a lease exists, the Company then determines the separate lease and non-lease components of the arrangement. Each right to use an underlying asset conveyed by a lease arrangement should generally be considered a separate lease component if it both: (i) can benefit the Company without depending on other resources not readily available to the Company and (ii) does not significantly affect, and is not significantly affected by, other rights of use conveyed by the

lease. Aspects of a lease arrangement that transfer other goods or services to the Company but do not meet the definition of lease components are considered non-lease components. The consideration owed by the Company pursuant to a lease arrangement is generally allocated to each lease and non-lease component for accounting purposes. However, the Company has elected, for all of its leases, to not separate lease and non-lease components.

For each lease, the Company then determines the lease term, the present value of lease payments, and the classification of the lease as either an operating or finance lease. The lease term is the period of the lease not cancellable by the Company, together with periods covered by: (i) renewal options the Company is reasonably certain to exercise, (ii) termination options the Company is reasonably certain not to exercise, and (iii) renewal or termination options that are controlled by the lessor.

The present value of lease payments is calculated based on:

(1)

Lease payments – Lease payments included in the measurement of the lease asset or liability comprise the following: fixed payments (including in-substance fixed payments), and the exercise price of a lessee option to purchase the underlying asset if the lessee is reasonably certain to exercise.

(2)

Discount rate – the discount rate is determined based on information available to the Company upon the commencement of the lease. Lessees are required to use the rate implicit in the lease whenever such rate is readily available; however, as the implicit rate in the Company’s leases is generally not readily determinable, the Company generally uses the incremental borrowing rate it would have to pay to borrow an amount equal to the lease payments, on a collateralized basis, over a timeframe similar to the lease term.

In making the determination of whether a lease is an operating lease or a finance lease, the Company considers the lease term in relation to the economic life of the leased asset, the present value of lease payments in relation to the fair value of the leased asset and certain other factors, including the lessee’s and lessor’s rights, obligations, and economic incentives over the term of the lease.

The Company does not recognize leases with an initial term of 12 months or less on its consolidated balance sheets and recognizes these payments in the consolidated statements of operations on a straight-line basis over the lease term. Certain leases contain variable payments which are based on usage or operating costs, such as utilities and maintenance. These payments are not included in the measurement of the lease liability or corresponding right-of-use asset due to the uncertainty of the payment amount and are recorded as lease expense in the period incurred.

Prior to the adoption of Topic 842, the Company accounted for leases under FASB ASC Topic 840, Leases (Topic 840).

(k) Recently Issued Accounting Standards

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. This ASU clarifies the guidance when measuring the fair value of an equity security subject to contractual sale restrictions that prohibit the sale of an equity security and requires certain disclosures for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with Topic 820. This guidance is effective for annual reporting periods, including interim periods, beginning after December 15, 2023, with early adoption permitted. The provisions of ASU 2022-03 are to be applied prospectively with any adjustments made to earnings on the date of adoption. The Company is currently evaluating the impact, if any, of this guidance on its financial statements.

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Condensed Consolidated Statements of Operations
Revenue	$ 90,946	$ 83,450	$ 264,117	$ 216,265
Cost of revenue, excluding depreciation and amortization	50,412	45,156	147,857	125,426
Operating expenses:
Product and technology	24,254	22,846	77,265	61,297
Sales and marketing	25,023	24,616	75,573	63,134
General and administrative	20,037	21,464	61,295	69,636
Depreciation and amortization	11,602	11,250	34,749	30,967
Goodwill impairment			299,705
Change in fair value of contingent consideration		(68,428)		(38,282)
Total operating expenses	80,916	11,748	548,587	186,752
Income (loss) from operations	(40,382)	26,546	(432,327)	(95,913)
Interest income (expense), net	386	(743)	(484)	(2,137)
Other income (expense)	201	25	21	(19)
Income (loss) before income taxes	(39,795)	25,828	(432,790)	(98,069)
Income tax benefit (expense)	(77)	(3,325)	3,573	9,501
Net income (loss)	$ (39,872)	$ 22,503	$ (429,217)	$ (88,568)
Net income (loss) per share, Basic	$ (0.56)	$ 0.34	$ (6.07)	$ (1.41)
Net income (loss) per share, Diluted	$ (0.56)	$ 0.31	$ (6.07)	$ (1.41)
Weighted-average common shares outstanding, Basic	71,228,351	65,418,728	70,755,157	62,684,823
Weighted-average common shares outstanding, Diluted	71,228,351	71,490,045	70,755,157	62,684,823

Acquisitions

9 Months Ended

Nov. 30, 2022

Acquisitions

Acquisitions

(4) Acquisitions

Acquisition of 2nd.MD

On March 3, 2021, the Company acquired all the outstanding equity interests of 2nd.MD. Based in Houston, Texas, 2nd.MD is a leading expert medical opinion and medical decision support company. The results of operations and financial position of 2nd.MD are included in the Company’s consolidated financial statements from the date of acquisition.

The consideration paid was comprised of cash, common stock, and contingent consideration as follows:


Consideration
Cash consideration, net of cash acquired	$	226,135
Fair value of common stock issued		116,187
Fair value of replacement awards		1,520
Fair value of contingent consideration		76,248
Total consideration	$	420,090

The aggregate purchase consideration of $420,090 was provided through cash of $226,135 (net of $205 cash acquired) and the issuance of up to 4,384,882 shares of the Company’s common stock, of which 2,822,242 were issued upon closing of the acquisition, of which 2,495,441 were fully vested at the time of issuance with the remaining 326,801 vesting over future service periods. The cash consideration in the above table includes the repayment of 2nd.MD debt of $13,026. The contingent consideration represented potential obligations for the Company to issue up to 2,170,972 additional shares of its common stock to the selling shareholders of 2nd.MD and is comprised of two earnout scenarios associated with (1) a contract renewal and (2) the achievement of certain future revenue milestones. As a result of the contract renewal and achievement of certain revenue milestones, the Company will issue a total of 1,977,343 shares of its common stock, of which 1,939,853 shares of common stock were issued in May 2022. The estimated fair value of the replacement awards issued in the above table is comprised of 120,760 restricted stock units issued to 2nd.MD employees with an estimated fair value of $5,434 of which $1,520 was attributable to pre-acquisition services. The remaining estimated value of $3,914 associated with the replacement awards is attributable to post-acquisition services and is being expensed over the requisite service periods of the awards.

Several key 2nd.MD employees entered into agreements with the Company whereby their pro rata portion of shares issued at closing and upon achievement of the contingent consideration milestones are also subject to continuous employment with the Company and vest annually over a period of two years following the acquisition date. Upon

voluntary termination of employment, any unvested shares will be forfeited. Due to the risk of forfeiture upon termination of employment, the aggregate 326,801 shares issued at closing and the aggregate shares eligible to be issued upon achievement of the contingent consideration milestones of 281,531 shares were excluded from the purchase price and contingent consideration. These shares are accounted for as stock-based compensation expense in the post business combination periods.

The estimated fair value of the contingent consideration associated with future revenue milestones was determined using a Monte Carlo simulation. The Monte Carlo simulation performs numerous simulations utilizing certain assumptions such as (i) projected eligible revenues, (ii) expected term, (iii) risk-free rate, (iv) risk-adjusted discount rate, (v) share volatility and (vi) operational leverage ratio between revenues and earnings before interest, taxes, depreciation and amortization (EBITDA). The fair value measurements for contingent consideration are based on significant inputs not observable in the market and thus represents a Level 3 measurement within the fair value hierarchy. Changes in the assumptions used could materially change the estimated fair value of the contingent consideration. The estimated fair value of the contingent consideration was $37,767 as of January 31, 2022, at which time the contingency was resolved. The estimated fair value of contingent consideration decreased from the acquisition date to January 31, 2022 primarily due to a decrease in the Company’s stock price. The Company recorded the change in fair value of its contingent consideration liability in the consolidated statements of operations until January 31, 2022. Upon resolution of the contingency and determination of the number of common stock shares to be issued, the Company reclassified the value of the contingent consideration from a liability into stockholders’ equity in the consolidated balance sheet.

The Company accounted for the acquisition of 2nd.MD under the U.S. GAAP business combinations guidance. This accounting requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The allocation of the purchase price to the assets acquired and liabilities assumed was subject to further adjustment within the measurement period (up to one year from the acquisition date). Measurement period adjustments since initial preliminary estimates reported in the first quarter of fiscal 2022 were primarily related to an updated working capital calculation. The cumulative effect of all measurement period adjustments resulted in a decrease to recognized goodwill of $1,878. As of February 28, 2022, the purchase price allocation was considered complete.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.


Assets acquired:
Accounts receivable	$	5,550
Unbilled revenue		226
Current portion of deferred contract acquisition costs		176
Prepaid and other current assets		1,052
Property and equipment		4,344
Deferred contract acquisition costs		564
Goodwill		208,286
Intangible assets⁽¹⁾
Customer relationships		120,000
Technology		58,000
Supplier-based network		25,000
Trade name		3,400
Non-compete agreement		3,100
Total assets acquired	$	429,698

Liabilities assumed:
Accounts payable	$	1,195
Accrued expenses		585
Accrued compensation		3,817
Deferred rent and other current liabilities		904
Due to customers		294
Current portion of deferred revenue		625
Deferred rent and other noncurrent liabilities		2,188
Total liabilities assumed	$	9,608

Net assets acquired	$	420,090

(1)	The weighted-average useful life of intangible assets acquired is approximately 14 years.

The purchase price was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The identifiable intangible assets included technology, customer relationships, trade name, supplier based network, and non-compete agreements and are being amortized on a straight-line basis ranging from 3 years to 20 years. Customer relationships and trade names were valued using a multiple period excess earnings method (MPEEM) and the relief from royalty method (RFR), respectively. The supplier-based network and non-compete agreement intangible assets were valued using the “With and Without Method.” These valuation methods are specific forms of the Income Approach, which is a valuation technique that derives value by estimating the fair value of after-tax cash flows attributable to the acquired intangibles. The valuation methods require several judgments and assumptions to determine the fair value of intangible assets, including growth rates, discount rates, customer attrition rates, expected levels of cash flows, and tax rate. Key assumptions used included revenue projections for fiscal 2022 through 2032, an attrition rate of 8.0%, a tax rate of 24%, a discount rate of 13%, a royalty rate of 1.5% and probability of competition of 33%.

The technology intangible asset was valued using the estimated replacement cost method. This method requires several judgments and assumptions to determine the fair value, including expected profits and opportunity cost. Goodwill is attributable to the workforce of 2nd.MD as well as expected future growth into new and existing markets and is deductible for income tax purposes.

Acquisition of PlushCare

On June 9, 2021, the Company acquired all the outstanding equity interests of PlushCare. Based in San Francisco, California, PlushCare is a provider of various technology and administrative services to the medical practice PCs, which in turn provide virtual primary care and mental health support to patients. The results of operations and financial position of PlushCare are included in the Company’s consolidated financial statements from the date of acquisition.

The consideration paid was comprised of cash, common stock, and contingent consideration as follows:


Consideration
Fair value of common stock issued	$	330,338
Fair value of contingent consideration		44,618
Cash consideration, net of cash acquired		33,860
Fair value of replacement awards		5,209
Total consideration	$	414,025

The aggregate purchase consideration of $414,025 was provided through cash of $33,860 (net of $17,837 cash acquired and $1,463 of debt repaid) and the issuance of 7,144,393 shares of the Company’s common stock, of which 854,717 are subject to future vesting and excluded from consideration paid. The contingent consideration represented a potential obligation for the Company to issue up to an additional 1,429,556 shares of its common stock and up to approximately $2,000 in cash upon the achievement of defined revenue milestones following the closing, of which $1,828 was paid during the three months ended August 31, 2022. Up to 102,111 shares of this contingent consideration will be withheld from being issued to the selling shareholders of PlushCare until the resolution of a pending litigation matter. The revenue milestone contingency was resolved at December 31, 2021, and as a result the Company issued 1,327,408 shares of its common stock during the three months ended August 31, 2022, excluding the 102,111 shares that are withheld pending the resolution of the litigation matter.

The estimated fair value of the replacement awards issued in the above table is comprised of 325,992 options to purchase Accolade common stock issued to PlushCare employees as of the acquisition date with an estimated fair value of $16,663, of which $5,209 was attributable to pre-acquisition services. The remaining estimated value of $11,454 associated with the replacement awards is attributable to post-acquisition services and is being expensed over the requisite service periods of the awards.

Certain key PlushCare employees entered into agreements with the Company whereby a portion of their shares issued at closing are subject to continuous employment with the Company and vest annually over a three-year period following the acquisition date. Upon voluntary termination of employment, any unvested shares will be forfeited. Due to the risk of forfeiture upon termination of employment, the 806,161 shares subject to forfeiture have been excluded from the purchase price and are accounted for as stock-based compensation expense in the post-business combination periods.

The estimated fair value of the contingent consideration associated with future revenue milestones was determined using a Monte Carlo simulation. The Monte Carlo simulation performs numerous simulations utilizing certain assumptions such as (i) projected eligible revenues, (ii) expected term, (iii) risk-free rate, (iv) risk-adjusted discount rate, (v) share volatility, and (vi) operational leverage ratio between revenues and earnings before interest, taxes, depreciation, and amortization (EBITDA). The fair value measurements for contingent consideration are based on significant inputs not observable in the market and thus represent a Level 3 measurement within the fair value hierarchy. The estimated fair value of the contingent consideration was $37,683 as of December 31, 2021, at which time the contingent consideration was resolved. The estimated fair value of contingent consideration decreased since the acquisition date primarily due to a decrease in the Company’s stock price. The Company recorded the change in fair value of its contingent consideration liability in the consolidated statements of operations through December 31, 2021. Upon resolution of the contingency and determination of the number of common stock shares to be issued, the Company

reclassified the value of the contingent consideration from a liability into stockholders’ equity as of February 28, 2022 in the consolidated balance sheet.

The Company accounted for the acquisition of PlushCare under the U.S. GAAP business combinations guidance. This accounting requires that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The allocation of the purchase price to the assets acquired and liabilities assumed was subject to further adjustment within the measurement period (up to one year from the acquisition date).

During the three months ended November 30, 2021, the Company included a correction to the fair value of contingent consideration from the preliminary value recorded in the second fiscal quarter of 2022 in the amount of $3,292. This correction resulted in an increase to recognized goodwill of $5,799 and would have resulted in less change in fair value of contingent consideration expense and net loss on the statement of operations of $3,292 during the three months ended August 31, 2021. The Company has concluded that this error was not material to the financial statements taken as a whole.

Measurement period adjustments since initial preliminary estimates reported in the second quarter of fiscal 2022 were primarily related to updated assessments of acquired deferred tax liability and accounts receivable. The cumulative effect of all measurement period adjustments resulted in a decrease to recognized goodwill of $1,685. As of May 31, 2022, the purchase price allocation was considered complete.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.


Assets acquired:
Accounts receivable	$	1,359
Prepaid and other current assets		573
Property and equipment		298
Other noncurrent assets		932
Goodwill		365,597
Intangible assets⁽¹⁾
Customer relationships		4,050
Technology		40,650
Trade name		10,300
Non-compete agreements		6,200
Total assets acquired	$	429,959

Liabilities assumed:
Accounts payable	$	1,532
Accrued expenses		193
Accrued compensation		2,117
Current portion of deferred revenue		1,212
Deferred tax liability		9,992
Other liabilities		888
Total liabilities assumed	$	15,934

Net assets acquired	$	414,025

(1)	The weighted-average useful life of intangible assets acquired is approximately 5 years.

The technology intangible asset was valued using the estimated replacement cost method. This method requires several judgments and assumptions to determine the fair value, including expected profits and opportunity cost. Goodwill is attributable to the workforce of PlushCare as well as expected future growth into new and existing markets and is not deductible for income tax purposes.

Acquisition of HealthReveal

On September 30, 2021, the Company acquired substantially all the assets of HealthReveal, Inc. (HealthReveal). HealthReveal is a clinical artificial intelligence company focused on ensuring patients receive optimal, personalized chronic care to preempt adverse outcomes. Under the terms of the agreement, the Company issued 252,808 shares of common stock as consideration at closing. The Company will issue up to 28,089 additional shares of common stock that are subject to an indemnity holdback, and these shares will be released 18 months following the closing.

The Company accounted for this transaction as an asset acquisition based on an evaluation of the U.S. GAAP guidance for business combinations. The Company concluded that the developed technology acquired from HealthReveal comprised substantially all of the fair value of the gross assets acquired and that the assets acquired did not meet the definition of a business under the guidance for business combinations. The developed technology intangible asset was recorded at $9,976 on the acquisition date and is being amortized on a straight-line basis over 3 years.

Acquisition and Integration-Related Costs

For the three and nine months ended November 30, 2022, the Company incurred $439 in acquisition and integration-related costs related to litigation inherited through the PlushCare acquisition. Refer to Note 12 for further details. These costs were recorded in general and administrative expenses in the Company’s consolidated statements of operations. For the three and nine months ended November 30, 2021, the Company incurred $311 and $13,208, respectively, in acquisition and integration-related costs that were expensed immediately and recorded in general and administrative expenses in the Company’s consolidated statements of operations. These costs include banking, legal, accounting, and consulting fees related to acquisitions.

Goodwill and Intangible Assets (Tables)

9 Months Ended

Nov. 30, 2022

Goodwill and Intangible Assets

Schedule of changes in the carrying amount of goodwill


Balance, February 28, 2022	$	577,896
Impairment		(299,705)
Balance, November 30, 2022	$	278,191

Schedule of Intangible assets


		As of November 30, 2022
	Useful Life	Gross Value		Accumulated Amortization		Net Carrying Value		Weighted Average Remaining Useful Life (Years)
Customer relationships	2 to 20 years	$	124,050	$	(13,374)	$	110,676	18.1
Technology	2 to 5 years		111,526		(39,280)		72,246	3.2
Supplier-based network	5 years		25,000		(8,750)		16,250	3.3
Trade name	10 years		13,700		(2,140)		11,560	8.4
Non-compete agreement	2 to 3 years		9,300		(6,458)		2,842	0.8
		$	283,576	$	(70,002)	$	213,574

- Definition

Tabular disclosure of goodwill by reportable segment and in total which includes a rollforward schedule.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
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-Name Accounting Standards Codification
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+ Details

Stock-based Compensation - Employee Stock Purchase Plan - (Details) - USD ($) $ in Thousands		1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 01, 2022	Jul. 31, 2020	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021	Feb. 28, 2022
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expense			$ 17,906	$ 18,377	$ 54,809	$ 45,827
2020 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock initially reserved		1,100,000
Number of automatic annual increase in common share	2,327,976
Percentage of lower in fair market value		85.00%
Compensation expense			253	$ 480	$ 938	$ 1,341
Issuance of common stock in connection with the employee stock purchase plan (shares)					560,345	140,838
Proceeds from Stock Plans					$ 2,927	$ 4,309
Employee Payroll Contributions Accrued			$ 252		$ 252		$ 1,511
Maximum \| 2020 Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Percentage of employee contribution on compensation		15.00%
Participant accrued purchase rights		$ 25,000

Document and Entity Information - shares	9 Months Ended
Document and Entity Information - shares	Nov. 30, 2022	Dec. 31, 2022
Document and Entity Information [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Nov. 30, 2022
Document Transition Report	false
Entity File Number	001-39348
Entity Registrant Name	ACCOLADE, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	01-0969591
Entity Address, Address Line One	1201 Third Avenue
Entity Address, Address Line Two	Suite 1700
Entity Address, City or Town	Seattle
Entity Address State Or Province	WA
Entity Address, Postal Zip Code	98101
City Area Code	206
Local Phone Number	926-8100
Title of 12(b) Security	Common Stock, $0.0001 par value per share
Trading Symbol	ACCD
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		72,786,747
Entity Central Index Key	0001481646
Current Fiscal Year End Date	--02-28
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

Income Taxes

9 Months Ended

Nov. 30, 2022

Income Taxes

Income Taxes

(10) Income Taxes

The provision (benefit) for income taxes consists of provisions for federal, state and foreign income taxes for separate U.S. tax filers and for entities in separate tax jurisdictions. As a result of the Company’s history of net operating

losses (NOL), the Company has historically provided for a full valuation allowance against its U.S. deferred tax assets that are not more-likely-than-not to be realized. For the three months ended November 30, 2022 and 2021, the Company recorded income tax provision (benefit) of $77 and $3,325, respectively, which resulted in effective tax rates of 0.2% and 12.9%, respectively. For the nine months ended November 30, 2022 and 2021, the Company recorded income tax provision (benefit) of $(3,573) and $(9,501), respectively, which resulted in effective tax rates of 0.8% and 9.7%, respectively. The tax benefit for the nine months ended November 30, 2022 is primarily related to the reversal of the deferred tax liability associated with the basis difference in goodwill from the 2nd.MD acquisition. The goodwill impairment recorded in the first quarter of fiscal 2023 required the Company to reverse that deferred tax liability during the nine months ended November 30, 2022. The tax benefit for the three and nine months ended November 30, 2021 is related to the partial release of the U.S. valuation allowance due to the acquired intangibles of PlushCare. The decrease in the valuation allowance was due to the acquisition of PlushCare’s stock, whereby the acquired intangible assets had no tax basis. This required the Company to record a deferred tax liability which served as a source of taxable income to realize the existing deferred tax assets of the Company.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

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Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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+ Details

Debt (Tables)

9 Months Ended

Nov. 30, 2022

Debt

Schedule Of Debt


	November 30, 2022		February 28, 2022
Principal	$	287,500	$	287,500
Unamortized issuance costs		(5,586)		(6,834)
Net carrying amount	$	281,914	$	280,666

Revenue - Revenue and Deferred Revenue (Details) $ in Thousands	Nov. 30, 2022 USD ($)
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue	$ 233,849
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-12-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue	$ 53,759
Revenue remaining performance obligation satisfaction period	3 months
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue	$ 116,787
Revenue remaining performance obligation satisfaction period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue	$ 51,465
Revenue remaining performance obligation satisfaction period	1 year
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-03-01
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items]
Revenue	$ 11,838
Revenue remaining performance obligation satisfaction period	1 year

Background

9 Months Ended

Nov. 30, 2022

Background

Background

(1) Background

Accolade, Inc. (Accolade or together with its subsidiaries, the Company) provides personalized, technology-enabled solutions that help people better understand, navigate, and utilize the healthcare system and their workplace benefits. The Company’s customers are primarily employers that contract with Accolade to provide their employees and their employees’ families (the members) a single place to turn for their health, healthcare, and benefits needs. The Company also offers expert medical opinion services to employer customers and virtual primary care and mental health support, both directly to consumers and to employer customers. These services are designed to drive better healthcare outcomes and increased satisfaction for the participants while lowering costs for the payor. The Company provides its services to customers throughout the United States. Accolade is co-headquartered in Seattle, Washington and Plymouth Meeting, Pennsylvania.

Basis of Presentation and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Nov. 30, 2022

Basis of Presentation and Summary of Significant Accounting Policies.

Basis of Presentation and Principles of Consolidation

(a) Basis of Presentation and Principles of Consolidation

Unaudited Interim Financial Statements

(b) Unaudited Interim Financial Statements

Capitalized Internal-Use Software Costs

Impairment of Long Lived Assets

(d) Impairment of Long-Lived Assets

Intangible Assets

(e) Intangible Assets

Goodwill

(f) Goodwill

Revenue and Deferred Revenue

(g) Revenue and Deferred Revenue

Revenue Recognition

●

identification of the contract, or contracts, with a customer;

●

identification of the performance obligations in the contract;

●

determination of the transaction price;

●

allocation of the transaction price to the performance obligations in the contracts; and

●

recognition of revenue when, or as, the Company satisfies a performance obligation.

Access Fees

Utilization-based fees

Deferred Revenue

Concentration of Credit Risk

(h) Concentration of Credit Risk

Marketable Securities

(i) Marketable Securities

Leases

(j) Leases

The present value of lease payments is calculated based on:

(1)

(2)

Prior to the adoption of Topic 842, the Company accounted for leases under FASB ASC Topic 840, Leases (Topic 840).

Recently Issued Accounting Standards

(k) Recently Issued Accounting Standards

Leases - Future minimum lease payments (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Mar. 01, 2021
Leases
Remainder of 2023	$ 2,313
2024	8,845
2025	7,266
2026	7,232
2027	6,416
Thereafter	9,395
Total lease payments	41,467
Less: Imputed interest	(5,226)
Operating lease liabilities	$ 36,241	$ 38,740

Net Income (Loss) Per Share Attributable to Common Stockholders

9 Months Ended

Nov. 30, 2022

Net Income (Loss) Per Share Attributable to Common Stockholders

Net Income (Loss) Per Share Attributable to Common Stockholders

(11) Net Income (Loss) Per Share Attributable to Common Stockholders

The following table sets forth the computation of basic and diluted net income (loss) per share attributable to Accolade’s common stockholders:


	Three months ended				Nine months ended
	November 30,				November 30,
	2022		2021		2022		2021
Net income (loss)	$	(39,872)	$	22,503	$	(429,217)	$	(88,568)

Shares:
Weighted-average common shares outstanding, basic		71,228,351		65,418,728		70,755,157		62,684,823
Dilutive effect of stock options		—		5,792,987		—		—
Dilutive effect of unvested restricted stock units		—		128,331		—		—
Dilutive effect of shares issued to 2nd.MD employees and subject to vesting		—		102,042		—		—
Dilutive effect of shares to be issued to HealthReveal shareholders upon expiration of indemnification period		—		19,138		—		—
Dilutive effect of shares issued to PlushCare employees and subject to vesting		—		28,819		—		—
Weighted-average common shares outstanding, diluted		71,228,351		71,490,045		70,755,157		62,684,823

Net income (loss) per share attributable to common stockholders, basic	$	(0.56)	$	0.34	$	(6.07)	$	(1.41)
Net income (loss) per share attributable to common stockholders, diluted	$	(0.56)	$	0.31	$	(6.07)	$	(1.41)

Contingently issuable securities are excluded from diluted net loss per share attributable to common stockholders until the contingency has been resolved. In the periods in which the Company has reported a net loss, the potentially dilutive securities are antidilutive. The following potential outstanding shares of common stock were excluded from the

computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been antidilutive:


	Three months ended		Nine months ended
	November 30,		November 30,
	2022	2021	2022	2021
Stock options	8,393,611	534,377	8,393,611	8,468,806
Unvested restricted stock units	4,825,124	1,298,788	4,825,124	1,788,134
Shares issued to 2nd.MD employees and subject to vesting	274,224	281,531	274,224	281,531
Contingent shares in connection with 2nd.MD acquisition	—	1,889,441	—	1,889,441
Shares issued to PlushCare employees and subject to vesting	537,401	844,202	537,401	844,202
Contingent shares in connection with PlushCare acquisition	102,111	1,494,210	102,111	1,494,210
Indemnity shares held in escrow in connection with PlushCare acquisition	27,342	—	27,342	27,382
Shares to be issued to HealthReveal shareholders upon expiration of indemnification	28,089	—	28,089	28,089
Convertible Senior Notes	5,700,297	5,700,297	5,700,297	5,700,297
Total	19,888,199	12,042,846	19,888,199	20,522,092

Leases - Cash Flow and Supplemental Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Leases
Operating cash flows from operating leases	$ 6,300	$ 6,243
Right-of-use assets obtained in exchange for lease obligations	$ 2,155	$ 3,356
Weighted-average remaining lease term (years)	5 years 6 months
Weighted-average discount rate	4.90%

Basis of Presentation and Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021	Feb. 28, 2022	Mar. 01, 2021
Impairment of Long Lived Assets
Impairment charges	$ 0	$ 0	$ 0	$ 0
Operating lease right-of-use assets	30,936		30,936		$ 33,126	$ 34,739
Operating lease liabilities	$ 36,241		$ 36,241			$ 38,740

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
Cash flows from operating activities:
Net loss	$ (429,217)	$ (88,568)
Adjustments to reconcile net loss to net cash used in Operating activities:
Goodwill impairment	299,705
Depreciation and amortization expense	34,749	30,967
Amortization of deferred contract acquisition costs	2,592	1,938
Change in fair value of contingent consideration		(38,282)
Deferred income taxes	(3,859)	(9,658)
Noncash interest expense	1,251	1,239
Stock-based compensation expense	54,809	45,827
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable and unbilled revenue	6,616	(5,743)
Accounts payable and accrued expenses	244	(1,881)
Deferred contract acquisition costs	(6,428)	(3,304)
Deferred revenue and due to customers	5,596	16,316
Accrued compensation	(3,722)	(4,494)
Other liabilities	2,030	(1,047)
Other assets	(2,512)	(3,376)
Net cash used in operating activities	(38,146)	(60,066)
Cash flows from investing activities:
Purchase of marketable securities		(99,998)
Sale of marketable securities		99,998
Capitalized software development costs	(2,914)	(619)
Purchases of property and equipment	(1,901)	(2,297)
Cash paid for acquisition, net of cash acquired		(260,165)
Net cash used in investing activities	(4,815)	(263,081)
Cash flows from financing activities:
Proceeds from stock option exercises	1,646	7,042
Payments of equity issuance costs		(60)
Payment of debt issuance costs		(8,368)
Payment for purchase of capped calls		(34,443)
Proceeds from employee stock purchase plan	2,927	3,574
Proceeds from borrowings on debt		287,500
Payment of contingent consideration for acquisition	(1,828)
Net cash provided by financing activities	2,745	255,245
Net decrease in cash and cash equivalents	(40,216)	(67,902)
Cash and cash equivalents, beginning of period	365,853	433,884
Cash and cash equivalents, end of period	325,637	365,982
Supplemental cash flow information:
Interest paid	1,539	880
Fixed assets included in accounts payable	736	123
Other receivable related to stock option exercises		521
Income taxes paid	$ 103	103
Common stock issued in connection with acquisitions		455,586
Replacement awards issued in connection with acquisitions		$ 6,729

Fair Value Measurements (Details) - USD ($) $ in Thousands	Nov. 30, 2022	Feb. 28, 2022
Marketable Securities [Abstract]
Convertible senior notes	$ 206,368
Money Market Funds
Cash equivalents:
Fair value	147,029	$ 131,527
Money Market Funds \| Level 1
Cash equivalents:
Fair value	$ 147,029	131,527
United States treasury bills
Marketable Securities [Abstract]
Fair value		99,999
United States treasury bills \| Level 1
Marketable Securities [Abstract]
Fair value		$ 99,999