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Accolade Announces Results for Fiscal Third Quarter 2021

Accolade, Inc.
·15 min read
  • Fiscal third quarter 2021 revenue of $38.4 million, a 30% increase compared to fiscal third quarter 2020 revenue of $29.7 million, driven primarily by strength in new customer additions across market segments and offerings

  • Company raises revenue outlook for fiscal year 2021 to a range of $162 million to $165 million, representing growth of 22% to 25% over fiscal year 2020

SEATTLE, Jan. 07, 2021 (GLOBE NEWSWIRE) -- Accolade, Inc. (NASDAQ: ACCD), which provides personalized, technology-enabled solutions that help people better understand, navigate, and utilize the healthcare system and their workplace benefits, today announced financial results for the fiscal third quarter ended November 30, 2020.

“Accolade’s momentum in the third quarter continued what has been a transformative year for the company. Across the business, we have expanded in all aspects – growing our customer base across all segments, engaging with a member population that now exceeds two million people, and extending our platform into new offerings and with new ecosystem partners. We are raising our outlook for the full year based on our continued success and our belief that Accolade has never been better positioned to compete in the market,” said Rajeev Singh, Accolade CEO.

Mr. Singh continued, “The healthcare system continues to be too complex and too costly, and consumers have never had a greater need for high touch, empathetic benefit navigation and advocacy services to help them negotiate this increasingly complicated marketplace. We believe the future of healthcare must be integrated, collaborative, and driven by an obsession for the member experience, and that the best way to bend the cost curve is by focusing on total population health to ensure everyone gets the right care and realizes the best health outcomes. Our strategy, built on these fundamental principles, ultimately delivers better outcomes and lower healthcare costs. We are excited about the future of healthcare, and our 1,200+ employees are motivated every day to help our members live their healthiest lives.”

Financial Highlights for Fiscal Third Quarter 2021 ended November 30, 2020

Three months ended November 30,

%

2020

2019

change(2)

(in millions, except percentages)

GAAP Financial Data:

Revenue

$

38.4

$

29.7

30

%

Net loss

$

(16.6

)

$

(18.3

)

9

%

Non-GAAP Financial Data(1):

Adjusted EBITDA

$

(11.4

)

$

(13.8

)

17

%

Adjusted Gross Profit

$

16.1

$

12.2

32

%

Adjusted Gross Margin

41.8

%

41.1

%

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

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

Financial Outlook

Accolade provides forward-looking guidance on Revenue and Adjusted EBITDA.

For the fiscal fourth quarter ending February 28, 2021, we expect:

  • Revenue between $51.0 million and $54.0 million

  • Adjusted EBITDA, a non-GAAP measure, between $(2.4) million and $(5.4) million.

For the full fiscal year ending February 28, 2021, we are revising our guidance and now expect:

  • Revenue between $162.0 million and $165.0 million, up from the previous range of $159.0 to $162.0 million

  • Adjusted EBITDA, a non-GAAP measure, between $(32.0) million and $(35.0) million

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

Quarterly Conference Call Details

The company will host a conference call today, Thursday, January 7, 2021 at 4:30 p.m. E.T. to discuss its financial results. The call can be accessed by dialing 1-833-519-1281 for U.S. participants, or 1-914-800-3853 for international participants, referencing conference ID #3964843; or via a live audio webcast that will be available online at http://ir.accolade.com. A replay of the call will be available via webcast for on-demand listening shortly after the completion of the call, at the same web link, and will remain available for approximately 90 days.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements include statements regarding our future growth and our financial outlook. Forward-looking statements are subject to risks and uncertainties and are based on potentially inaccurate assumptions that could cause actual results to differ materially from those expected or implied by the forward-looking statements. Actual results may differ materially from the results predicted, and reported results should not be considered as an indication of future performance.

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 following: (i) changes in laws and regulations applicable to our business model; (ii) changes in market or industry conditions, regulatory environment and receptivity to our technology and services; (iii) results of litigation or a security incident; (iv) the loss of one or more key customers or partners; (v) the impact of COVID-19 on our business and results of operation; and (vi) changes to our abilities to recruit and retain qualified team members. For a detailed discussion of the risk factors that could affect our actual results, please refer to the risk factors identified in our SEC reports, including, but not limited to our prospectuses filed with the SEC on July 1, 2020 and October 19, 2020, respectively, and the Quarterly Report on Form 10-Q for the fiscal quarter ended November 30, 2020 expected to be filed with the SEC on or about January 7, 2021. All information provided in this release and in the attachments is as of the date hereof, and we undertake no duty to update or revise this information unless required by law.

About Accolade, Inc.

Accolade provides personalized health and benefits solutions designed to empower every person to live their healthiest life. Using a blend of cloud-based technologies, specialized support from Accolade Health Assistants® and Clinicians, and integrated data and programs across mobile, online and phone, Accolade navigates people through the healthcare system with trust, empathy and ease. Employers offer Accolade to employees and their families as the single place to turn for all health, healthcare, and benefits questions or concerns, increasing their engagement in benefits and connecting them to high-quality providers and care. By empowering members to make better decisions about their health, Accolade can support members in lowering the cost and complexity of healthcare while achieving consumer satisfaction ratings over 90 percent and an NPS of 60.

Investor Contact:

Todd Friedman, Investor Relations, 484-532-5200, Todd.Friedman@accolade.com

Asher Dewhurst, Investor Relations, 443-213-0500, Accolade@westwicke.com

Media Contact:

Megan Torres, Public Relations, 206-679-9630, Megan.Torres@accolade.com

Source: Accolade

Financial Tables

Accolade, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(In thousands, except share and per share data)

November 30,

February 29,

Assets

2020

2020

Current assets:

Cash and cash equivalents

$

418,938

$

33,155

Accounts receivable, net

15,432

294

Unbilled revenue

1,334

895

Current portion of deferred contract acquisition costs

2,048

1,368

Current portion of deferred financing fees

163

279

Prepaid and other current assets

6,598

12,944

Total current assets

444,513

48,935

Property and equipment, net

10,496

13,625

Goodwill

4,013

4,013

Acquired technology, net

967

2,054

Deferred contract acquisition costs

6,195

3,876

Other assets

1,311

745

Total assets

$

467,495

$

73,248

Liabilities, convertible preferred stock and stockholders’ equity (deficit)

Current liabilities:

Accounts payable

$

4,136

$

5,273

Accrued expenses

3,437

6,580

Accrued compensation

27,459

23,838

Deferred rent and other current liabilities

531

674

Due to customers

3,449

4,674

Current portion of deferred revenue

34,427

28,919

Total current liabilities

73,439

69,958

Loans payable, net of unamortized issuance costs

21,144

Deferred rent and other noncurrent liabilities

5,375

5,523

Deferred revenue

394

396

Total liabilities

79,208

97,021

Convertible preferred stock:

Preferred stock par value $0.0001; 25,000,000 shares authorized; 0 and 19,513,939 issued and outstanding at
November 30, 2020 and February 29, 2020, respectively

233,022

Commitments (note 11)

Stockholders’ equity (deficit)

Common stock par value $0.0001; 500,000,000 shares authorized; 55,171,467 and 6,033,450 shares issued
and outstanding at November 30, 2020 and February 29, 2020, respectively

5

2

Additional paid-in capital

755,076

64,071

Accumulated deficit

(366,794

)

(320,868

)

Total stockholders’ equity (deficit)

388,287

(256,795

)

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

$

467,495

$

73,248


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

Three months ended November 30,

Nine months ended November 30,

2020

2019

2020

2019

Revenue

$

38,444

$

29,652

$

111,126

$

88,066

Cost of revenue, excluding depreciation and amortization

22,743

17,538

66,052

51,737

Operating expenses:

Product and technology

13,018

11,046

36,624

33,595

Sales and marketing

8,644

7,924

23,841

23,202

General and administrative

8,414

8,551

20,537

20,125

Depreciation and amortization

2,114

2,033

6,090

6,415

Total operating expenses

32,190

29,554

87,092

83,337

Loss from operations

(16,489

)

(17,440

)

(42,018

)

(47,008

)

Interest expense, net

(35

)

(827

)

(3,663

)

(2,071

)

Other expense

(42

)

(18

)

(160

)

(98

)

Loss before income taxes

(16,566

)

(18,285

)

(45,841

)

(49,177

)

Income tax expense

(29

)

(12

)

(85

)

(49

)

Net loss

$

(16,595

)

$

(18,297

)

$

(45,926

)

$

(49,226

)

Net loss per share, basic and diluted

$

(0.32

)

$

(3.17

)

$

(1.50

)

$

(9.20

)

Weighted-average common shares outstanding, basic and diluted

51,578,863

5,776,478

30,635,348

5,351,313

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,

2020

2019

2020

2019

Cost of revenue

$

352

$

75

$

679

$

250

Product and technology

1,060

460

2,212

1,312

Sales and marketing

702

340

1,494

1,162

General and administrative

832

689

1,925

2,171

Total stock-based compensation

$

2,946

$

1,564

$

6,310

$

4,895


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

Nine months ended November 30,

2020

2019

Cash flows from operating activities:

Net loss

$

(45,926

)

$

(49,226

)

Adjustments to reconcile net loss to net cash used in

Operating activities:

Depreciation and amortization expense

6,090

6,415

Amortization of deferred contract acquisition costs

1,187

695

Noncash interest expense

1,395

533

Stock-based compensation expense

6,310

4,895

Changes in operating assets and liabilities:

Accounts receivable and unbilled revenue

(15,577

)

123

Accounts payable and accrued expenses

569

4,408

Deferred contract acquisition costs

(4,187

)

(1,551

)

Deferred revenue and due to customers

4,281

10,832

Accrued compensation

9,372

187

Deferred rent and other liabilities

(324

)

106

Other assets

1,182

(1,400

)

Net cash used in operating activities

(35,628

)

(23,983

)

Cash flows from investing activities:

Capitalized software development costs

(374

)

Purchases of property and equipment

(1,500

)

(2,469

)

Net cash acquired in acquisition of MD Insider

-

(206

)

Earnout payments to MD Insider

(58

)

Net cash used in investing activities

(1,932

)

(2,675

)

Cash flows from financing activities:

Proceeds from public offerings, net of underwriters' discounts and commissions and offering costs

439,478

Proceeds from stock option and warrant exercises

5,176

2,008

Proceeds from sale of Series F Preferred Stock, net.

-

19,943

Proceeds from stock purchases under employee stock purchase plan

1,442

Proceeds from borrowings on debt

51,166

1,660

Repayments of debt principal

(73,166

)

Payments related to debt retirement

(753

)

Net cash provided by financing activities

423,343

23,611

Net increase (decrease) in cash and cash equivalents

385,783

(3,047

)

Cash and cash equivalents, beginning of period

33,155

42,701

Cash and cash equivalents, end of period

$

418,938

$

39,654

Supplemental cash flow information:

Interest paid

$

2,246

$

1,790

Income taxes paid

$

149

$

55

Fixed assets included in accounts payable

$

185

$

126

Other receivable related to stock option exercises

$

249

$

504

Offering costs included in accounts payable and accrued expenses

$

68

$

Bonus settled in the form of stock options

$

5,735

$

Common stock issued in connection with acquisition

$

$

6,164

Common stock warrants issued in connection with debt

$

$

779

Non-GAAP Financial Measures

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

Adjusted Gross Profit and Adjusted Gross Margin

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

Adjusted EBITDA

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

Adjusted Gross Profit, Adjusted Gross Margin and Adjusted EBITDA have certain limitations, including that they exclude the impact of certain non-cash charges, such as depreciation and amortization, whereas underlying assets may need to be replaced and result in cash capital expenditures, and stock-based compensation expense, which is a recurring charge. These non-GAAP financial measures may also not be comparable to similarly titled measures of other companies because they may not calculate such measures in the same manner, limiting their usefulness as comparative measures. In evaluating these non-GAAP financial measures, you should be aware that in the future we expect to incur expenses similar to the adjustments in this presentation. Our presentation of non-GAAP financial measures should not be construed as an inference that our future results will be unaffected by these expenses or any unusual or nonrecurring items. When evaluating our performance, you should consider these non-GAAP financial measures alongside other financial performance measures, including the most directly comparable GAAP measures set forth in the reconciliation tables below and our other GAAP results. The following table presents, for the periods indicated, a reconciliation of our revenue to Adjusted Gross Profit:

For the three months ended

For the nine months ended

November 30,

November 30,

2020

2019

2020

2019

(in thousands, except percentages)

(in thousands, except percentages)

Revenue

$

38,444

$

29,652

$

111,126

$

88,066

Less:

Cost of revenue, excluding depreciation and amortization

(22,743

)

(17,538

)

(66,052

)

(51,737

)

Gross profit, excluding depreciation and amortization

15,701

12,114

45,074

36,329

Add:

Stock‑based compensation, cost of revenue

352

75

679

250

Adjusted Gross Profit

$

16,053

$

12,189

$

45,753

$

36,579

Gross margin, excluding depreciation and amortization

40.8

%

40.9

%

40.6

%

41.3

%

Adjusted Gross Margin

41.8

%

41.1

%

41.2

%

41.5

%

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 nine months ended

November 30,

November 30,

2020

2019

2020

2019

(in thousands)

(in thousands)

Net Loss

$

(16,595

)

$

(18,297

)

$

(45,926

)

$

(49,226

)

Adjusted for:

Interest expense, net

35

827

3,663

2,071

Income tax provision

29

12

85

49

Depreciation and amortization

2,114

2,033

6,090

6,415

Stock‑based compensation

2,946

1,564

6,310

4,895

Acquisition and integration‑related costs

15

567

Other expense

42

18

160

98

Adjusted EBITDA

$

(11,429

)

$

(13,828

)

$

(29,618

)

$

(35,131

)