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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

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

Date of Report (Date of earliest event reported): October 4, 2023

Accolade, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware

001-39348

01-0969591

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

1201 Third Avenue, Suite 1700
Seattle, WA 98101

(Address of Principal Executive Offices and Zip Code)

(206) 926-8100

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

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

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

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

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

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

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

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

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

ACCD

The Nasdaq Stock Market LLC

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

Emerging growth company

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

Item 2.02.           Results of Operations and Financial Condition.

On October 4, 2023, Accolade, Inc. (the “Company”) issued a press release reporting its financial results for the fiscal second quarter ended August 31, 2023. A copy of such press release is furnished hereto as Exhibit 99.1 and incorporated by reference herein.

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

Item 9.01           Financial Statements and Exhibits.

(d) Exhibits

Exhibit
Number

Exhibit Description

99.1

Press Release titled “Accolade Announces Results for Fiscal Second Quarter 2024,” dated October 4, 2023 furnished herewith

104

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

SIGNATURES

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

Accolade, Inc.

 

Dated: October 4, 2023

 

By:

/s/ Stephen Barnes

Stephen Barnes

Chief Financial Officer

Exhibit 99.1

Graphic

Accolade Announces Results for Fiscal Second Quarter 2024

SEATTLE, October 4, 2023 -- Accolade, Inc. (NASDAQ: ACCD) today announced financial results for the fiscal second quarter ended August 31, 2023.

“We are halfway through the 2024 fiscal year and the demand environment for our solutions remains strong. Accolade continues to lay the foundation to build a lasting, scalable business that will improve people’s lives and fundamentally change the way healthcare is experienced in this country. Accolade's unique combination of advocacy and care solutions is changing the way employers deliver healthcare to their employees and their families, and the success of this strategy is evident in our growing customer base which now totals more than 1,000 customers. By providing the benefits advocacy and navigation services that members need to fully leverage their healthcare options, as well as operating a large and growing care delivery organization, we are closing the critical gaps in the care experience that impact health outcomes, costs of care, and the overall healthcare experience,” said Rajeev Singh, Accolade Chief Executive Officer.

Financial Highlights for Fiscal Second Quarter ended August 31, 2023

Three Months Ended August 31,

%

 

    

2023

    

2022

    

Change(2)

 

(in millions, except percentages)

 

GAAP Financial Data:

Revenue

$

96.9

$

87.6

11

%

Net loss

$

(32.8)

$

(46.5)

29

%

Non-GAAP Financial Data(1):

Adjusted EBITDA

$

(8.8)

$

(13.7)

36

%

Adjusted Gross Profit

$

42.8

$

39.2

9

%

Adjusted Gross Margin

44.2

%

44.7

%

(1) A reconciliation of GAAP to non-GAAP results has been provided in this press release in the accompanying Financial Tables. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

(2) Percentages are calculated from accompanying Financial Tables and may differ from percentage change of numbers in Financial Highlights table due to rounding.

Steve Barnes, Accolade Chief Financial Officer, commented, “Accolade continues to execute against our long term financial goals, exceeding both our top and bottom line guidance in the second fiscal quarter. We expect our cost reduction measures from earlier this year will be fully realized in the second half of the year, providing visibility and confidence in our path to achieving profitability.”

Financial Outlook

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

For the fiscal third quarter ending November 30, 2023, we expect:

Revenue between $95 million and $97 million
Adjusted EBITDA between $(5) million and $(8) million

For the fiscal year ending February 29, 2024, we reiterate our prior guidance of:

Revenue between $410 million and $414 million
Adjusted EBITDA between $(6) million and $(12) million

Accolade has not reconciled guidance for Adjusted EBITDA to net loss, the most directly comparable GAAP measure, and has not provided forward-looking guidance for net loss, because there are items that may impact net loss, including stock-based compensation, that are not within the company’s control or cannot be reasonably predicted.

Quarterly Conference Call Details 

The company will host a conference call today, October 4, 2023 at 4:30 p.m. E.T. to discuss its financial results.  

 

To Listen via Telephone: Pre-registration is required by the conference call operator. Please pre-register by clicking here (https://register.vevent.com/register/BI8e60ea64fd184d8d8660a125ccc80055). Upon registering, you will be emailed a dial-in number, direct passcode and unique PIN. 

  

To Listen via Internet: The conference call can be accessed via a live audio webcast that will be available online at http://ir.accolade.com

  

Replay: A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at http://ir.accolade.com.

Forward-Looking Statements 

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and our financial outlook. Forward-looking statements are subject to risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “maintain,” “might,” “likely,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or similar expressions and the negatives of those terms.

Important risks and uncertainties that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements include, among others, the risks described under the heading “Risk Factors” in Accolade’s most recently filed Annual Report on Form 10-K and subsequent filings, which should be read in conjunction with any forward-looking statements. All forward-looking statements in this press release are based on information available to Accolade as of the date hereof, and it does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist after the date on which they were made, except as required by law.

About Accolade, Inc. 

Accolade (Nasdaq: ACCD) is a Personalized Healthcare company that provides millions of people and their families with exceptional healthcare experiences so they can live their healthiest lives. Accolade’s employer, health plan, and consumer solutions combine virtual primary care and mental health, expert medical opinion, and best-in-class care navigation. These offerings are built on a platform that is engineered to care through predictive engagement of population health needs, proactive care that improves outcomes and cost savings, and by addressing barriers to access and continuity of care. Accolade consistently receives consumer satisfaction ratings of over 90%. For more information, visit accolade.com. Follow us on LinkedInTwitter, Instagram and Facebook.


Investor Contact:

Todd Friedman, Investor Relations, IR@accolade.com

Media Contact:

Public Relations, Media@accolade.com

Source: Accolade


Financial Tables

Accolade, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets (unaudited)

(In thousands, except share and per share data)

August 31, 

February 28, 

    

2023

    

2023

Assets

Current assets:

Cash and cash equivalents

$

292,187

$

321,083

Accounts receivable, net

 

22,114

23,435

Unbilled revenue

 

3,200

3,260

Current portion of deferred contract acquisition costs

 

4,474

4,022

Prepaid and other current assets

 

14,286

14,149

Total current assets

 

336,261

365,949

Property and equipment, net

 

17,823

14,763

Operating lease right-of-use assets

26,617

29,525

Goodwill

 

278,191

278,191

Intangible assets, net

 

183,689

203,202

Deferred contract acquisition costs

 

9,077

9,815

Other assets

 

2,662

1,624

Total assets

$

854,320

$

903,069

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$

7,098

$

10,155

Accrued expenses and other current liabilities

 

12,575

11,744

Accrued compensation

 

25,325

39,346

Due to customers

 

10,128

15,694

Current portion of deferred revenue

 

47,522

35,191

Current portion of operating lease liabilities

6,355

7,284

Total current liabilities

 

109,003

119,414

Loans payable, net of unamortized issuance costs

 

283,162

282,323

Operating lease liabilities

24,249

27,189

Other noncurrent liabilities

 

165

203

Deferred revenue

 

97

154

Total liabilities

 

416,676

429,283

Commitments and Contingencies

Stockholders’ equity

Common stock par value $0.0001; 500,000,000 shares authorized; 76,081,370 and 73,089,075 shares issued and outstanding at August 31, 2023 and February 28, 2023, respectively

 

8

7

Additional paid-in capital

 

1,463,164

1,428,073

Accumulated deficit

 

(1,025,528)

(954,294)

Total stockholders’ equity

 

437,644

473,786

Total liabilities and stockholders’ equity

$

854,320

$

903,069


Accolade, Inc. and Subsidiaries

Condensed Consolidated Statements of Operations (unaudited)

(In thousands, except share and per share data)

Three months ended August 31, 

Six months ended August 31, 

    

2023

    

2022

    

2023

    

2022

Revenue

$

96,864

$

87,643

$

190,090

$

173,171

Cost of revenue, excluding depreciation and amortization

 

55,317

 

49,830

 

109,520

 

97,445

Operating expenses:

Product and technology

 

25,602

 

26,194

 

51,501

 

53,011

Sales and marketing

 

24,076

 

24,936

 

49,109

 

50,550

General and administrative

 

16,259

 

21,020

 

32,339

 

41,258

Depreciation and amortization

 

10,818

 

11,571

 

22,458

 

23,147

Goodwill impairment

299,705

Total operating expenses

 

76,755

 

83,721

 

155,407

 

467,671

Loss from operations

 

(35,208)

 

(45,908)

 

(74,837)

 

(391,945)

Interest income (expense), net

 

1,714

 

(236)

 

2,635

 

(870)

Other income (expense)

 

753

 

(130)

 

1,143

 

(180)

Loss before income taxes

 

(32,741)

 

(46,274)

 

(71,059)

 

(392,995)

Income tax benefit (expense)

 

(84)

 

(249)

 

(175)

 

3,650

Net loss

$

(32,825)

$

(46,523)

$

(71,234)

$

(389,345)

Net loss per share, basic and diluted

$

(0.43)

$

(0.66)

$

(0.96)

$

(5.54)

Weighted-average common shares outstanding, basic and diluted

75,487,717

70,475,778

74,334,111

70,251,890

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

Three months ended August 31, 

 

Six months ended August 31, 

    

2023

    

2022

     

2023

    

2022

Cost of revenue, excluding depreciation and amortization

$

1,202

$

1,270

$

2,113

$

2,398

Product and technology

 

7,643

 

5,625

 

14,609

 

13,115

Sales and marketing

 

3,876

 

4,270

 

7,702

 

8,259

General and administrative

 

3,005

 

6,349

 

5,580

 

13,131

Total stock-based compensation

$

15,726

$

17,514

$

30,004

$

36,903


Accolade, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows (unaudited)

(In thousands)

Six months ended August 31, 

    

2023

    

2022

Cash flows from operating activities:

Net loss

$

(71,234)

$

(389,345)

Adjustments to reconcile net loss to net cash used in

Operating activities:

Goodwill impairment

299,705

Depreciation and amortization expense

 

22,458

23,147

Amortization of deferred contract acquisition costs

 

2,368

1,713

Deferred income taxes

(3,859)

Noncash interest expense

 

839

838

Stock-based compensation expense

 

30,004

36,903

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

Accounts receivable and unbilled revenue

 

1,381

193

Accounts payable and accrued expenses

 

(1,565)

3,623

Deferred contract acquisition costs

 

(2,082)

(3,730)

Deferred revenue and due to customers

 

6,707

6,403

Accrued compensation

 

(14,020)

(8,249)

Other liabilities

 

(1,000)

(474)

Other assets

 

(1,181)

(322)

Net cash used in operating activities

 

(27,325)

(33,454)

Cash flows from investing activities:

Capitalized software development costs

 

(4,698)

(1,499)

Purchases of property and equipment

 

(1,965)

(1,405)

Net cash used in investing activities

 

(6,663)

(2,904)

Cash flows from financing activities:

Proceeds from stock option exercises

 

3,100

1,178

Proceeds from employee stock purchase plan

1,992

1,788

Payment of contingent consideration for acquisition

(1,828)

Net cash provided by financing activities

 

5,092

1,138

Net decrease in cash and cash equivalents

 

(28,896)

(35,220)

Cash and cash equivalents, beginning of period

 

321,083

365,853

Cash and cash equivalents, end of period

$

292,187

$

330,633

Supplemental cash flow information:

Interest paid

$

820

$

820

Fixed assets and capitalized software included in accounts payable

$

99

$

429

Other receivable related to stock option exercises

$

4

$

4

Income taxes paid

$

303

$

22


Non-GAAP Financial Measures

In addition to our financial results determined in accordance with GAAP, we use the following non-GAAP financial measures to help us evaluate trends, establish budgets, measure the effectiveness and efficiency of our operations, and determine employee incentives. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance. However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance. A reconciliation is provided below for each non-GAAP financial measure to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures, and not to rely on any single financial measure to evaluate our business. In evaluating these non-GAAP financial measures, you should be aware that in the future we expect to incur expenses similar to the adjustments in this presentation. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or nonrecurring items.

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted Gross Profit is a non-GAAP financial measure that we define as revenue less cost of revenue, excluding depreciation and amortization, and excluding stock-based compensation and severance costs. We define Adjusted Gross Margin as our Adjusted Gross Profit divided by our revenue. We believe Adjusted Gross Profit and Adjusted Gross Margin are useful to investors, as they eliminate the impact of certain noncash expenses and allow a direct comparison of these measures between periods without the impact of noncash expenses and certain other nonrecurring operating expenses.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) adjusted to exclude interest expense (income), net, income tax expense (benefit), depreciation and amortization, stock-based compensation, acquisition and integration-related costs, goodwill impairment, change in fair value of contingent consideration, severance costs, and other expense (income). Severance costs include severance payments related to the realignment of our resources. Other expense (income) includes foreign exchange gain or loss. We believe Adjusted EBITDA provides investors with useful information on period-to-period performance as evaluated by management and comparison with our past financial performance. We believe Adjusted EBITDA is useful in evaluating our operating performance compared to that of other companies in our industry, as this measure generally eliminates the effects of certain items that may vary from company to company for reasons unrelated to overall operating performance.

Adjusted Gross Profit, Adjusted Gross Margin and Adjusted EBITDA have certain limitations, including that they exclude the impact of certain non-cash charges, such as depreciation and amortization, whereas underlying assets may need to be replaced and result in cash capital expenditures, and stock-based compensation expense, which is a recurring charge.

The following table presents, for the periods indicated, a reconciliation of our revenue to Adjusted Gross Profit:

For the three months ended

For the six months ended

August 31, 

August 31, 

2023

    

2022

 

    

2023

    

2022

 

(in thousands, except percentages)

 

(in thousands, except percentages)

 

Revenue

$

96,864

$

87,643

 

$

190,090

$

173,171

 

Less:

  

  

 

  

  

 

Cost of revenue, excluding depreciation and amortization

(55,317)

(49,830)

 

(109,520)

(97,445)

 

Gross profit, excluding depreciation and amortization

 

41,547

 

37,813

80,570

 

75,726

Add:

 

  

 

  

  

 

  

Stockbased compensation, cost of revenue

 

1,202

 

1,270

2,113

 

2,398

Severance costs, cost of revenue

92

114

726

114

Adjusted Gross Profit

$

42,841

$

39,197

$

83,409

$

78,238

Gross margin, excluding depreciation and amortization

 

42.9

%  

 

43.1

%

 

42.4

%  

 

43.7

%

Adjusted Gross Margin

 

44.2

%  

 

44.7

%

 

43.9

%  

 

45.2

%


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

For the three months ended

For the six months ended

August 31, 

August 31, 

2023

    

2022

    

2023

    

2022

(in thousands)

(in thousands)

Net loss

$

(32,825)

$

(46,523)

$

(71,234)

$

(389,345)

Adjusted for:

 

  

 

  

  

 

  

Interest expense (income), net

 

(1,714)

 

236

(2,635)

 

870

Income tax (benefit) expense

 

84

 

249

175

 

(3,650)

Depreciation and amortization

 

10,818

 

11,571

22,458

 

23,147

Stockbased compensation

 

15,726

 

17,514

30,004

 

36,903

Acquisition and integrationrelated costs(1)

 

(48)

 

(21)

 

Goodwill impairment

299,705

Severance costs(2)

(52)

3,075

1,050

3,075

Other expense (income)

 

(753)

 

130

(1,143)

 

180

Adjusted EBITDA

$

(8,764)

$

(13,748)

$

(21,346)

$

(29,115)

(1)For the three and six months ended August 31, 2023, acquisition and integration-related costs represent expenses associated with litigation inherited through the PlushCare acquisition. Refer to Note 10 in our condensed consolidated financial statements for further details.
(2)Severance costs represent expenses associated with workforce realignment actions taken by management.