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 first
quarter ended May 31, 2020.
“Accolade is a mission-driven organization, and
in today's environment, our mission is more important than ever.
The COVID-19 pandemic has made an already siloed and opaque
healthcare system even more complex for people to navigate. During
our fiscal first quarter, we delivered positive financial results
in a strong demand environment driven in part by that increased
complexity,” said Rajeev Singh, Accolade CEO.
Mr. Singh continued, “Our commitment to
innovating for our customers was demonstrated again via the
delivery of a new offering - Accolade COVID Response Care - to help
our customers and their employees return to their workplace safely.
As we look ahead to the future we see employers increasingly
elevating healthcare and benefits and their utilization to a more a
strategic buying decision given its role in business
continuity.”
Financial Highlights for Fiscal
First Quarter 2021 ended May 31, 2020
|
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|
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|
Three months ended May 31, |
|
% |
|
|
2020 |
|
2019 |
|
change |
|
|
|
|
|
|
|
|
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|
|
|
(in millions, except percentages) |
|
|
|
GAAP Financial
Data: |
|
|
|
|
|
|
|
|
Revenue |
$ |
35.9 |
|
|
$ |
28.8 |
|
|
25 |
% |
Net loss |
$ |
(14.0 |
) |
|
$ |
(15.9 |
) |
|
12 |
% |
|
|
|
|
|
|
|
|
|
Non-GAAP
Financial
Data(1): |
|
|
|
|
|
|
|
|
Adjusted EBITDA |
$ |
(9.4 |
) |
|
$ |
(11.7 |
) |
|
19 |
% |
Adjusted Gross Profit |
$ |
13.8 |
|
|
$ |
11.4 |
|
|
21 |
% |
Adjusted Gross Margin |
|
38.3 |
% |
|
|
39.6 |
% |
|
|
|
(1) A
reconciliation of GAAP to non-GAAP results has been provided in
this press release in the accompanying tables. An explanation of
these measures is also included below under the heading "Non-GAAP
Financial Measures."
Financial
Outlook
Accolade provides forward-looking guidance on
Revenue and Adjusted EBITDA.
For the fiscal second quarter ending August 31,
2020, we expect:
- Revenue between $34.5 million and $35.5 million
- Adjusted EBITDA, a non-GAAP measure, between $(12.5) million
and $(14.5) million
For the full fiscal year ending February 28,
2021, we expect:
- Revenue between $158.0 million and $161.0 million
- Adjusted EBITDA, a non-GAAP measure, between $(32.0) million
and $(36.0) 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, August 13, 2020 at 5:00 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 #3276322; 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 prospectus filed with
the SEC on July 1, 2020 and the Quarterly Report on Form 10-Q for
the fiscal quarter ended May 31, 2020 expected to be filed with the
SEC on or about August 13, 2020. 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:
Asher Dewhurst, Investor Relations,
443-213-0500, Accolade@westwicke.com;
Media
Contact:
Megan Torres, Public Relations, 206-679-9630,
Megan.Torres@accolade.com
Financial
Tables
Accolade, Inc. and
SubsidiariesCondensed
Consolidated Balance Sheets (unaudited)(In
thousands, except share and per share data)
|
|
|
|
|
|
|
May 31, |
|
February 29, |
Assets |
2020 |
|
2020 |
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
77,682 |
|
|
$ |
33,155 |
|
Accounts receivable |
|
2,971 |
|
|
|
294 |
|
Unbilled revenue |
|
234 |
|
|
|
895 |
|
Current portion of deferred contract acquisition costs |
|
1,395 |
|
|
|
1,368 |
|
Current portion of deferred financing fees |
|
279 |
|
|
|
279 |
|
Prepaid and other current assets |
|
14,193 |
|
|
|
12,944 |
|
Total current assets |
|
96,754 |
|
|
|
48,935 |
|
Property and equipment,
net |
|
12,598 |
|
|
|
13,625 |
|
Goodwill |
|
4,013 |
|
|
|
4,013 |
|
Acquired technology, net |
|
1,692 |
|
|
|
2,054 |
|
Deferred contract acquisition
costs |
|
4,103 |
|
|
|
3,876 |
|
Other assets |
|
1,322 |
|
|
|
745 |
|
Total assets |
$ |
120,482 |
|
|
$ |
73,248 |
|
Liabilities, convertible preferred stock and
stockholders’ deficit |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
4,940 |
|
|
$ |
5,273 |
|
Accrued expenses |
|
4,375 |
|
|
|
6,580 |
|
Accrued compensation |
|
26,627 |
|
|
|
23,838 |
|
Deferred rent and other current liabilities |
|
729 |
|
|
|
674 |
|
Due to customers |
|
4,278 |
|
|
|
4,674 |
|
Current portion of deferred revenue |
|
34,444 |
|
|
|
28,919 |
|
Total current liabilities |
|
75,393 |
|
|
|
69,958 |
|
Loans payable, net of
unamortized issuance costs |
|
72,524 |
|
|
|
21,144 |
|
Deferred rent and other
noncurrent liabilities |
|
5,614 |
|
|
|
5,523 |
|
Deferred revenue |
|
426 |
|
|
|
396 |
|
Total liabilities |
|
153,957 |
|
|
|
97,021 |
|
|
|
|
|
|
|
Convertible preferred stock
: |
|
|
|
|
|
Preferred stock; 19,513,996 shares authorized; 19,513,939 issued
and outstanding at May 31, 2020 and February 29, 2020, respectively
(liquidation value of $239,244 at May 31, 2020) |
|
233,022 |
|
|
|
233,022 |
|
|
|
|
|
|
|
Stockholders’ deficit |
|
|
|
|
|
Common stock par value $0.0001; 65,000,000 shares authorized;
6,381,257 and 6,033,450 shares issued and outstanding at May 31,
2020 and February 29, 2020, respectively |
|
2 |
|
|
|
2 |
|
Additional paid-in capital |
|
68,329 |
|
|
|
64,071 |
|
Accumulated deficit |
|
(334,828 |
) |
|
|
(320,868 |
) |
Total stockholders’ deficit |
|
(266,497 |
) |
|
|
(256,795 |
) |
Total liabilities, convertible preferred stock and stockholders’
deficit |
$ |
120,482 |
|
|
$ |
73,248 |
|
Accolade, Inc. and
SubsidiariesCondensed
Consolidated Statements of Operation
(unaudited)(In thousands, except share and per
share data)
|
|
|
|
|
|
|
Three months ended
May 31, |
|
2020 |
|
|
2019 |
|
Revenue |
$ |
35,894 |
|
|
$ |
28,763 |
|
Cost of revenue, excluding
depreciation and amortization |
|
22,239 |
|
|
|
17,435 |
|
Operating expenses: |
|
|
|
|
|
Product and technology |
|
11,370 |
|
|
|
11,246 |
|
Sales and marketing |
|
7,315 |
|
|
|
7,662 |
|
General and administrative |
|
5,667 |
|
|
|
5,563 |
|
Depreciation and amortization |
|
1,928 |
|
|
|
2,160 |
|
Total operating expenses |
|
26,280 |
|
|
|
26,631 |
|
Loss from operations |
|
(12,625 |
) |
|
|
(15,303 |
) |
Interest expense, net |
|
(1,282 |
) |
|
|
(543 |
) |
Other expense |
|
(15 |
) |
|
|
(34 |
) |
Loss before income taxes |
|
(13,922 |
) |
|
|
(15,880 |
) |
Income tax expense |
|
(38 |
) |
|
|
(23 |
) |
Net loss |
$ |
(13,960 |
) |
|
$ |
(15,903 |
) |
|
|
|
|
|
|
Net loss per share, basic and
diluted |
$ |
(1.86 |
) |
|
$ |
(3.22 |
) |
|
|
|
|
|
|
Weighted-average common shares
outstanding, basic and diluted |
|
7,524,016 |
|
|
|
4,945,593 |
|
|
The following table summarizes the amount of
stock-based compensation included in the consolidated statements of
operations:
|
|
|
|
|
|
|
Three months ended
May 31, |
|
2020 |
|
2019 |
Cost of revenue |
$ |
109 |
|
$ |
72 |
Product and technology |
|
434 |
|
|
361 |
Sales and marketing |
|
303 |
|
|
347 |
General and
administrative |
|
413 |
|
|
656 |
Total stock-based
compensation |
$ |
1,259 |
|
$ |
1,436 |
Accolade, Inc. and
SubsidiariesCondensed
Consolidated Statements of Cash Flows
(unaudited)(In thousands)
|
|
|
|
|
|
|
Three months ended
May 31, |
|
2020 |
|
|
2019 |
|
Cash flows from operating
activities: |
|
|
|
|
|
Net loss |
$ |
(13,960 |
) |
|
$ |
(15,903 |
) |
Adjustments to reconcile net loss to net cash used in |
|
|
|
|
|
Operating activities: |
|
|
|
|
|
Depreciation and amortization expense |
|
1,928 |
|
|
|
2,160 |
|
Amortization of deferred contract acquisition costs |
|
393 |
|
|
|
228 |
|
Noncash interest expense |
|
141 |
|
|
|
90 |
|
Stock-based compensation expense |
|
1,259 |
|
|
|
1,436 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
Accounts receivable and unbilled revenue |
|
(2,016 |
) |
|
|
(43 |
) |
Accounts payable and accrued expenses |
|
(1,683 |
) |
|
|
(52 |
) |
Deferred contract acquisition costs |
|
(647 |
) |
|
|
(345 |
) |
Deferred revenue and due to customer |
|
5,159 |
|
|
|
2,521 |
|
Accrued compensation |
|
2,789 |
|
|
|
(5,572 |
) |
Deferred rent and other liabilities |
|
146 |
|
|
|
(134 |
) |
Other assets |
|
(1,826 |
) |
|
|
(1,266 |
) |
Net cash used in operating activities |
|
(8,317 |
) |
|
|
(16,880 |
) |
Cash flows from investing
activities: |
|
|
|
|
|
Capitalized software development costs |
|
(289 |
) |
|
|
— |
|
Purchases of property and equipment |
|
(249 |
) |
|
|
(109 |
) |
Net cash used in investing activities |
|
(538 |
) |
|
|
(109 |
) |
Cash flows from financing
activities: |
|
|
|
|
|
Proceeds from stock option and warrant exercises |
|
2,937 |
|
|
|
345 |
|
Proceeds from borrowings on debt |
|
51,166 |
|
|
|
— |
|
Payments of initial public offering costs |
|
(721 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
53,382 |
|
|
|
345 |
|
Net increase (decrease) in cash and cash equivalents |
|
44,527 |
|
|
|
(16,644 |
) |
Cash and cash equivalents,
beginning of period |
|
33,155 |
|
|
|
42,701 |
|
Cash and cash equivalents, end
of period |
$ |
77,682 |
|
|
$ |
26,057 |
|
Supplemental cash flow
information: |
|
|
|
|
|
Interest paid |
$ |
586 |
|
|
$ |
601 |
|
Fixed assets included in accounts payable |
$ |
42 |
|
|
$ |
16 |
|
Other receivable related to stock option exercises |
$ |
234 |
|
|
$ |
11 |
|
Income taxes paid |
$ |
13 |
|
|
$ |
— |
|
Offering costs included in prepaid and other current assets and
accounts payable and accrued expenses |
$ |
2,474 |
|
|
$ |
— |
|
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 |
|
|
May 31, |
|
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except percentages) |
|
Revenue |
$ |
35,894 |
|
|
$ |
28,763 |
|
|
Less: |
|
|
|
|
|
|
Cost of revenue, excluding depreciation and amortization |
|
(22,239 |
) |
|
|
(17,435 |
) |
|
Gross profit, excluding
depreciation and amortization |
|
13,655 |
|
|
|
11,328 |
|
|
Add: |
|
|
|
|
|
|
Stock‑based compensation, cost of revenue |
|
109 |
|
|
|
72 |
|
|
Adjusted Gross Profit |
$ |
13,764 |
|
|
$ |
11,400 |
|
|
Gross margin, excluding
depreciation and amortization |
|
38.0 |
% |
|
|
39.4 |
% |
|
Adjusted Gross Margin |
|
38.3 |
% |
|
|
39.6 |
% |
|
The following table presents, for the periods
indicated, a reconciliation of our Adjusted EBITDA to our net
loss:
|
|
|
|
|
|
|
For the three months ended |
|
May 31, |
|
2020 |
|
|
2019 |
|
|
|
|
|
|
|
|
|
|
(in thousands) |
Net Loss |
$ |
(13,960 |
) |
|
$ |
(15,903 |
) |
Adjusted for: |
|
|
|
|
|
Interest expense, net |
|
1,282 |
|
|
|
543 |
|
Income tax provision |
|
38 |
|
|
|
23 |
|
Depreciation and amortization |
|
1,928 |
|
|
|
2,160 |
|
Stock‑based compensation |
|
1,259 |
|
|
|
1,436 |
|
Other expense |
|
15 |
|
|
|
34 |
|
Adjusted EBITDA |
$ |
(9,438 |
) |
|
$ |
(11,707 |
) |
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