Accolade Announces Results for Fiscal Second Quarter 2023
- 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, [email protected]
Media Contact:
Public Relations, [email protected]
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 | ) | ||||
