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Accolade Announces Results for Fiscal Third Quarter 2023

Accolade, Inc.
Accolade, Inc.
  • Fiscal third quarter 2023 revenue of $90.9 million, a 9% increase compared to fiscal third quarter 2022 revenue of $83.5 million 

SEATTLE, Jan. 09, 2023 (GLOBE NEWSWIRE) -- Accolade, Inc. (NASDAQ: ACCD) today announced financial results for the fiscal third quarter ended November 30, 2022.

“Accolade enters the new year having just concluded one of the strongest selling performances in our company’s history. Notably, the strength in our business is driven by the increasing diversity in our platform across solutions, customer types, distribution channels, and industry sectors. Accolade is leading the conversation with customers because of our proven track record of delivering measurable improvements in health and cost outcomes, and because our solutions are Engineered to Care,” said Rajeev Singh, Accolade Chief Executive Officer.

“Innovations in digital health have created tremendous opportunities to advance the way healthcare is experienced in this country, but digital solutions alone are not enough to reinvent the healthcare journey. Accolade has spent more than 15 years engineering a better healthcare experience, one that predictively engages members to understand their care needs, proactively navigates them to quality care and informed decisions, and addresses barriers including Social Determinants of Health. There is a personal element of the care journey that we can’t fully replace with technology, but that we can make better through engineering. Our customers recognize the vision we share, and have responded by helping us create the foundation for years of growth and innovation.”

Financial Highlights for Fiscal Third Quarter ended November 30, 2022

 

Three Months Ended November 30,

 

% 

 

2022

    

2021

    

Change(2) 

 

(in millions, except percentages)

 

 

 

 

GAAP Financial Data:

 

 

 

 

 

 

 

 

 

Revenue

$

90.9

 

 

$

83.5

 

 

9

 

%

Net Income (loss)

$

(39.9

)

 

$

22.5

 

 

(277

)

%

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Data(1):

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

(10.2

)

 

$

(11.9

)

 

14

 

%

Adjusted Gross Profit

$

41.8

 

 

$

39.2

 

 

6

 

%

Adjusted Gross Margin

 

45.9

%

 

 

47.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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 again delivered against our financial promises on the strength of our diversified business and track record of delivering success for our customers. On the strength of our bookings performance throughout last year, we are pleased to introduce preliminary fiscal year 2024 guidance that reaffirms both our revenue growth and Adjusted EBITDA targets. We are firmly on track and remain committed to delivering positive Adjusted EBITDA and cash flow in fiscal year 2025.”

Financial Outlook

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

For the fiscal fourth quarter ending February 28, 2023, we expect:

  • Revenue between $97 million and $101 million

  • Adjusted EBITDA between $(1) million and $3 million

For the fiscal year ending February 28, 2023, we expect:

  • Revenue between $361 million and $365 million

  • Adjusted EBITDA between $(36) million and $(40) million

For the fiscal year ending February 29, 2024, we are introducing preliminary revenue and Adjusted EBITDA guidance as follows:

  • Revenue of approximately $410 million

  • Adjusted EBITDA between (5)% to (7)% of revenue

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, January 9, 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/BIae7d2bb974dc4198bb9154f71b0b1945). 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) provides millions of people and their families with an exceptional healthcare experience that is personal, data driven and value based to help every person live their healthiest life. Accolade solutions combine virtual primary care, mental health support and expert medical opinion services with intelligent technology and best-in-class care navigation. Accolade's Personalized Healthcare approach puts humanity back in healthcare by building relationships that connect people and their families to the right care at the right time to improve outcomes, lower costs and deliver consumer satisfaction. Accolade consistently receives consumer satisfaction ratings over 90%. For more information, visit accolade.com.

Investor Contact:

Todd Friedman, Investor Relations, IR@accolade.com

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)

 

November 30, 

 

February 28, 

 

2022

 

2022

Assets

 

 

 

 

 

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

 

Liabilities and stockholders’ equity

 

 

 

 

 

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

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

Accolade, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except share and per share data)

 

Three months ended November 30, 

 

Nine months ended November 30, 

 

2022

    

2021

    

2022

    

2021

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

)

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

 

Diluted

 

71,228,351

 

 

 

71,490,045

 

 

 

70,755,157

 

 

 

62,684,823

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

For the three months ended

 

For the nine months ended

 

November 30, 

 

November 30, 

 

2022

    

2021

 

2022

    

2021

 

(in thousands)

 

(in thousands)

Cost of revenue

$

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accolade, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows (unaudited)
(In thousands)

 

Nine months ended November 30, 

 

2022

 

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

 

 

 

 

 

 

 

 

 

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). We consider severance costs to 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 nine months ended

 

November 30, 

 

November 30, 

 

2022

    

2021

 

2022

    

2021

 

(in thousands, except percentages)

 

(in thousands, except percentages)

Revenue

$

90,946

 

 

$

83,450

 

 

$

264,117

 

 

$

216,265

 

Less:

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue, excluding depreciation and amortization

 

(50,412

)

 

 

(45,156

)

 

 

(147,857

)

 

 

(125,426

)

Gross profit, excluding depreciation and amortization

 

40,534

 

 

 

38,294

 

 

 

116,260

 

 

 

90,839

 

Add:

 

 

 

 

 

 

 

 

 

 

 

Stock‑based compensation, cost of revenue

 

1,247

 

 

 

949

 

 

 

3,645

 

 

 

2,331

 

Severance costs, cost of revenue

 

 

 

 

 

 

 

114

 

 

 

 

Adjusted Gross Profit

$

41,781

 

 

$

39,243

 

 

$

120,019

 

 

$

93,170

 

Gross margin, excluding depreciation and amortization

 

44.6

%

 

 

45.9

%

 

 

44.0

%

 

 

42.0

%

Adjusted Gross Margin

 

45.9

%

 

 

47.0

%

 

 

45.4

%

 

 

43.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

For the three months ended

 

For the nine months ended

 

November 30, 

 

November 30, 

 

2022

    

2021

 

2022

    

2021

 

(in thousands)

 

(in thousands)

Net income (loss)

$

(39,872

)

 

$

22,503

 

 

$

(429,217

)

 

$

(88,568

)

Adjusted for:

 

 

 

 

 

 

 

 

 

 

 

Interest expense (income), net

 

(386

)

 

 

743

 

 

 

484

 

 

 

2,137

 

Income tax (benefit) expense

 

77

 

 

 

3,325

 

 

 

(3,573

)

 

 

(9,501

)

Depreciation and amortization

 

11,602

 

 

 

11,250

 

 

 

34,749

 

 

 

30,967

 

Stock‑based compensation

 

17,906

 

 

 

18,377

 

 

 

54,809

 

 

 

45,827

 

Acquisition and integration‑related costs(1)

 

439

 

 

 

311

 

 

 

439

 

 

 

13,208

 

Goodwill impairment

 

 

 

 

 

 

 

299,705

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

(68,428

)

 

 

 

 

 

(38,282

)

Severance costs(2)

 

213

 

 

 

 

 

 

3,288

 

 

 

 

Other expense (income)

 

(201

)

 

 

(25

)

 

 

(21

)

 

 

19

 

Adjusted EBITDA

$

(10,222

)

 

$

(11,944

)

 

$

(39,337

)

 

$

(44,193

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) For the three and nine months ended November 30, 2022, acquisition and integration-related costs represent expenses associated with litigation inherited through the PlushCare acquisition. Refer to Note 12 in our consolidated financial statements for further details. For the three and nine months ended November 30, 2021, acquisition and integration-related costs represent banking, legal, accounting, and consulting fees related to acquisitions.
(2) Severance costs represent expenses associated with workforce realignment actions taken by management.


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