Accolade Announces Results for Fiscal Second Quarter 2023

Accolade, Inc.
Accolade, Inc.
  • Fiscal second quarter 2023 revenue of $87.6 million, a 20% increase compared to fiscal second quarter 2022 revenue of $73.3 million 

SEATTLE, Oct. 06, 2022 (GLOBE NEWSWIRE) -- Accolade, Inc. (NASDAQ: ACCD) today announced financial results for the fiscal second quarter ended August 31, 2022.

“Accolade executed across all of our key initiatives in the second quarter, marked by our financial outperformance as well as a strong start to the traditional selling season. We remain excited by the opportunities we see ahead, with a competitive leadership position that is becoming clearer every day. During the second quarter, we experienced strong win rates that were most notable for the breadth of the customers across industries and offerings, as well as the increasing importance of offering a full range of solutions to both enterprise customers and health plan partners. Importantly, this is also our first full year selling our broader integrated services, and we are receiving strong validation from both new and current customers that our integrated portfolio is the right approach,” said Rajeev Singh, Accolade Chief Executive Officer.

Financial Highlights for Fiscal Second Quarter ended August 31, 2022

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended August 31,

 

%

 

 

    

2022

    

2021

    

Change(2)

 

 

 

(in millions, except percentages)

 

 

 

GAAP Financial Data:

 

 

 

 

 

 

 

 

 

Revenue

 

$

87.6

 

 

$

73.3

 

 

20

%

Net Loss

 

$

(46.5

)

 

$

(62.4

)

 

25

%

 

 

 

 

 

 

 

 

 

 

Non-GAAP Financial Data(1):

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

(13.7

)

 

$

(19.4

)

 

29

%

Adjusted Gross Profit

 

$

39.2

 

 

$

30.0

 

 

31

%

Adjusted Gross Margin

 

 

44.7

%

 

 

40.9

%

 

 

 

(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 outperformed expectations on the strength and diversification of our business, and our ability to deliver results against our performance guarantees. We also are benefiting from the continued momentum in PlushCare’s direct to consumer virtual primary care business. We are once again raising the midpoint of our revenue guidance for fiscal 2023 and reaffirming our commitment to consistently improve our Adjusted EBITDA loss, with an expectation for positive cash flow and Adjusted EBITDA in fiscal year 2025.”

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, 2022, we expect:

  • Revenue between $86 million and $88 million

  • Adjusted EBITDA between $(11) million and $(13) million

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

  • Revenue between $358 million and $365 million

  • Adjusted EBITDA between $(35) million and $(40) million, representing a range of (10)% to (11)% 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, October 6, 2022 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/BI3e5e3134283944ee9de48f54c3d5cb84). 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)

 

 

 

 

 

 

 

 

 

August 31, 

 

February 28, 

 

    

2022

    

2022

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

330,633

 

 

$

365,853

 

Accounts receivable, net

 

 

23,489

 

 

 

21,116

 

Unbilled revenue

 

 

7,119

 

 

 

9,685

 

Current portion of deferred contract acquisition costs

 

 

3,445

 

 

 

3,015

 

Prepaid and other current assets

 

 

10,101

 

 

 

9,468

 

Total current assets

 

 

374,787

 

 

 

409,137

 

Property and equipment, net

 

 

12,306

 

 

 

11,797

 

Operating lease right-of-use assets

 

 

32,300

 

 

 

33,126

 

Goodwill

 

 

278,191

 

 

 

577,896

 

Intangible assets, net

 

 

223,946

 

 

 

244,690

 

Deferred contract acquisition costs

 

 

8,792

 

 

 

7,205

 

Other assets

 

 

1,362

 

 

 

1,678

 

Total assets

 

$

931,684

 

 

$

1,285,529

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

11,094

 

 

$

7,837

 

Accrued expenses and other current liabilities

 

 

9,931

 

 

 

11,000

 

Accrued compensation

 

 

30,940

 

 

 

39,189

 

Due to customers

 

 

8,519

 

 

 

16,263

 

Current portion of deferred revenue

 

 

45,005

 

 

 

30,875

 

Current portion of operating lease liabilities

 

 

7,173

 

 

 

6,589

 

Total current liabilities

 

 

112,662

 

 

 

111,753

 

Loans payable, net of unamortized issuance costs

 

 

281,500

 

 

 

280,666

 

Operating lease liabilities

 

 

30,721

 

 

 

32,486

 

Other noncurrent liabilities

 

 

203

 

 

 

4,562

 

Deferred revenue

 

 

284

 

 

 

268

 

Total liabilities

 

 

425,370

 

 

 

429,735

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Common stock par value $0.0001; 500,000,000 shares authorized; 71,538,377 and 67,098,477 shares issued and outstanding at August 31, 2022 and February 28, 2022, respectively

 

 

7

 

 

 

7

 

Additional paid-in capital

 

 

1,390,296

 

 

 

1,350,431

 

Accumulated deficit

 

 

(883,989

)

 

 

(494,644

)

Total stockholders’ equity

 

 

506,314

 

 

 

855,794

 

Total liabilities and stockholders’ equity

 

$

931,684

 

 

$

1,285,529

 

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, 

 

    

2022

    

2021

    

2022

    

2021

Revenue

 

$

87,643

 

 

$

73,288

 

 

$

173,171

 

 

$

132,815

 

Cost of revenue, excluding depreciation and amortization

 

 

49,830

 

 

 

44,334

 

 

 

97,445

 

 

 

80,270

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Product and technology

 

 

26,194

 

 

 

22,512

 

 

 

53,011

 

 

 

38,451

 

Sales and marketing

 

 

24,936

 

 

 

24,009

 

 

 

50,550

 

 

 

38,518

 

General and administrative

 

 

21,020

 

 

 

26,170

 

 

 

41,258

 

 

 

48,172

 

Depreciation and amortization

 

 

11,571

 

 

 

11,021

 

 

 

23,147

 

 

 

19,717

 

Goodwill impairment

 

 

 

 

 

 

 

 

299,705

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

 

19,686

 

 

 

 

 

 

30,146

 

Total operating expenses

 

 

83,721

 

 

 

103,398

 

 

 

467,671

 

 

 

175,004

 

Loss from operations

 

 

(45,908

)

 

 

(74,444

)

 

 

(391,945

)

 

 

(122,459

)

Interest expense, net

 

 

(236

)

 

 

(776

)

 

 

(870

)

 

 

(1,394

)

Other income (expense)

 

 

(130

)

 

 

11

 

 

 

(180

)

 

 

(44

)

Loss before income taxes

 

 

(46,274

)

 

 

(75,209

)

 

 

(392,995

)

 

 

(123,897

)

Income tax benefit (expense)

 

 

(249

)

 

 

12,845

 

 

 

3,650

 

 

 

12,826

 

Net loss

 

$

(46,523

)

 

$

(62,364

)

 

$

(389,345

)

 

$

(111,071

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.66

)

 

$

(0.97

)

 

$

(5.54

)

 

$

(1.81

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common shares outstanding, basic and diluted

 

 

70,475,778

 

 

 

64,404,223

 

 

 

70,251,890

 

 

 

61,332,729

 

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 six months ended

 

 

August 31, 

 

August 31, 

 

 

2022

    

2021

    

2022

    

2021

 

 

(in thousands)

 

(in thousands)

Cost of revenue

 

$

1,270

 

$

1,054

 

$

2,398

 

$

1,382

Product and technology

 

 

5,625

 

 

6,366

 

 

13,115

 

 

8,188

Sales and marketing

 

 

4,270

 

 

4,054

 

 

8,259

 

 

5,427

General and administrative

 

 

6,349

 

 

8,301

 

 

13,131

 

 

12,453

Total stock‑based compensation

 

$

17,514

 

$

19,775

 

$

36,903

 

$

27,450

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

 

 

 

 

 

 

 

 

 

Six months ended August 31, 

 

    

2022

    

2021

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(389,345

)

 

$

(111,071

)

Adjustments to reconcile net loss to net cash used in

 

 

 

 

 

 

Operating activities:

 

 

 

 

 

 

Goodwill impairment

 

 

299,705

 

 

 

 

Depreciation and amortization expense

 

 

23,147

 

 

 

19,717

 

Amortization of deferred contract acquisition costs

 

 

1,713

 

 

 

1,246

 

Change in fair value of contingent consideration

 

 

 

 

 

30,146

 

Deferred income taxes

 

 

(3,859

)

 

 

(12,865

)

Noncash interest expense

 

 

838

 

 

 

823

 

Stock-based compensation expense

 

 

36,903

 

 

 

27,450

 

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

 

 

 

 

 

 

Accounts receivable and unbilled revenue

 

 

193

 

 

 

1,440

 

Accounts payable and accrued expenses

 

 

3,623

 

 

 

(267

)

Deferred contract acquisition costs

 

 

(3,730

)

 

 

(2,349

)

Deferred revenue and due to customers

 

 

6,403

 

 

 

16,735

 

Accrued compensation

 

 

(8,249

)

 

 

(5,782

)

Other liabilities

 

 

(474

)

 

 

(75

)

Other assets

 

 

(322

)

 

 

(3,792

)

Net cash used in operating activities

 

 

(33,454

)

 

 

(38,644

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchase of marketable securities

 

 

 

 

 

(99,998

)

Sale of marketable securities

 

 

 

 

 

99,998

 

Capitalized software development costs

 

 

(1,499

)

 

 

(356

)

Purchases of property and equipment

 

 

(1,405

)

 

 

(1,573

)

Cash paid for acquisition, net of cash acquired

 

 

 

 

 

(261,873

)

Net cash used in investing activities

 

 

(2,904

)

 

 

(263,802

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from stock option exercises

 

 

1,178

 

 

 

5,654

 

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

 

 

1,788

 

 

 

2,282

 

Proceeds from borrowings on debt

 

 

 

 

 

287,500

 

Payment of contingent consideration for acquisition

 

 

(1,828

)

 

 

 

Net cash provided by financing activities

 

 

1,138

 

 

 

252,565

 

Net decrease in cash and cash equivalents

 

 

(35,220

)

 

 

(49,881

)

Cash and cash equivalents, beginning of period

 

 

365,853

 

 

 

433,884

 

Cash and cash equivalents, end of period

 

$

330,633

 

 

$

384,003

 

Supplemental cash flow information:

 

 

 

 

 

 

Interest paid

 

$

820

 

 

$

102

 

Fixed assets included in accounts payable

 

$

429

 

 

$

166

 

Other receivable related to stock option exercises

 

$

4

 

 

$

75

 

Income taxes paid

 

$

22

 

 

$

60

 

Common stock issued in connection with acquisitions

 

$

 

 

$

446,525

 

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 loss adjusted to exclude interest expense (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, and severance costs. We consider severance costs to include severance payments related to the realignment of our resources. 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, 

 

 

2022

    

2021

 

2022

    

2021

 

 

(in thousands, except percentages)

 

(in thousands, except percentages)

Revenue

 

$

87,643

 

 

$

73,288

 

 

$

173,171

 

 

$

132,815

 

Less:

 

  

 

 

  

 

 

  

 

 

  

 

Cost of revenue, excluding depreciation and amortization

 

 

(49,830

)

 

 

(44,334

)

 

 

(97,445

)

 

 

(80,270

)

Gross profit, excluding depreciation and amortization

 

 

37,813

 

 

 

28,954

 

 

 

75,726

 

 

 

52,545

 

Add:

 

 

  

 

 

  

 

 

  

 

 

  

Stock‑based compensation, cost of revenue

 

 

1,270

 

 

 

1,054

 

 

 

2,398

 

 

 

1,382

 

Severance costs, cost of revenue

 

 

114

 

 

 

 

 

 

114

 

 

 

 

Adjusted Gross Profit

 

$

39,197

 

 

$

30,008

 

 

$

78,238

 

 

$

53,927

 

Gross margin, excluding depreciation and amortization

 

 

43.1

%

 

 

39.5

%

 

 

43.7

%

 

 

39.6

%

Adjusted Gross Margin

 

 

44.7

%

 

 

40.9

%

 

 

45.2

%

 

 

40.6

%

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 six months ended

 

 

August 31, 

 

August 31, 

 

 

2022

    

2021

    

2022

    

2021

 

 

(in thousands)

 

(in thousands)

Net loss

 

$

(46,523

)

 

$

(62,364

)

 

$

(389,345

)

 

$

(111,071

)

Adjusted for:

 

 

  

 

 

  

 

 

  

 

 

  

Interest expense, net

 

 

236

 

 

 

776

 

 

 

870

 

 

 

1,394

 

Income tax (benefit) expense

 

 

249

 

 

 

(12,845

)

 

 

(3,650

)

 

 

(12,826

)

Depreciation and amortization

 

 

11,571

 

 

 

11,021

 

 

 

23,147

 

 

 

19,717

 

Stock‑based compensation

 

 

17,514

 

 

 

19,775

 

 

 

36,903

 

 

 

27,450

 

Acquisition and integration‑related costs

 

 

 

 

 

4,517

 

 

 

 

 

 

12,897

 

Goodwill impairment

 

 

 

 

 

 

 

 

299,705

 

 

 

 

Change in fair value of contingent consideration

 

 

 

 

 

19,686

 

 

 

 

 

 

30,146

 

Severance costs

 

 

3,075

 

 

 

 

 

 

3,075

 

 

 

 

Other expense (income)

 

 

130

 

 

 

(11

)

 

 

180

 

 

 

44

 

Adjusted EBITDA

 

$

(13,748

)

 

$

(19,445

)

 

$

(29,115

)

 

$

(32,249

)