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 LinkedIn, Twitter, 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 SubsidiariesCondensed
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 SubsidiariesCondensed
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 SubsidiariesCondensed
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: |
|
|
|
|
|
|
|
|
|
|
|
|
Stock‑based 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 |
|
Stock‑based compensation |
|
|
15,726 |
|
|
|
17,514 |
|
|
|
30,004 |
|
|
|
36,903 |
|
Acquisition and integration‑related 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.
Grafico Azioni Accolade (NASDAQ:ACCD)
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Grafico Azioni Accolade (NASDAQ:ACCD)
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