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 it has signed a definitive agreement to
acquire Innovation Specialists, LLC (d/b/a 2nd.MD), a leading
Expert Medical Opinion and medical decision support company based
in Houston, TX. With healthcare utilization expected to rise
significantly in 2021, on the heels of the COVID-19 pandemic, the
integration of 2nd.MD with Accolade’s health and benefits solutions
and clinical service offerings will simplify the healthcare
experience for employees and increase return on investment for
employers by ensuring their employee populations are receiving
appropriate care and reducing unnecessary treatment in high-cost
scenarios. Accolade will continue to offer 2nd.MD’s service on a
stand-alone basis as well.
“We share a common vision to help every person
live their healthiest life by dramatically improving quality and
accessibility of care through a people-focused, clinically-driven
support model. Bringing 2nd.MD’s world-class Care Team and digital
approach with expert medical consultation into Accolade, and
continuing to offer it on a stand-alone basis, will have an
immediate and measurable impact for our customers, their employees,
and the health plans we work with,” said Rajeev Singh, chief
executive officer, Accolade. “Both companies have built deep
relationships with employers and health plans by helping employees
navigate the increasingly complex and inconsistent healthcare
system. With the addition of 2nd.MD, we’ll nearly double our total
addressable market while providing the most comprehensive,
integrated healthcare navigation experience available.”
The 2nd.MD solution: Personalized
medical expertise from elite specialists in 3 to 5
days
When employees access Expert Medical Opinion
healthcare benefits, it is generally during a critical point in
their lives following a diagnosis that requires a significant and
high-cost care decision such as whether to have surgery. 2nd.MD
connects employees with board-certified national experts across the
country for a valuable medical consultation in a real-time video
call or by phone within three to five days. This rapid turnaround
compares to the industry average of several weeks, which is time
that causes delay in treatment and adds to the patient’s stress. On
average, 2nd.MD employer-customers save over $5,000 per
consultation and $27,000 per consultation when a surgery is
involved.
The 2nd.MD Care Team is comprised of highly
specialized nurses and medical record retrieval specialists who
coordinate all the details to eliminate friction in the process and
ensure the employee can remain focused on their health. 2nd.MD’s
service covers conditions across all adult and pediatric
specialties and subspecialties, serving over 300 employer-customers
and more than seven million employee-members. The company
consistently delivers outstanding value as evidenced by Net
Promoter Scores (NPS) in the nineties.
“When it is you or a loved one facing a serious
health decision, waiting for weeks to receive a second opinion from
an expert isn’t acceptable. We’ve built a scalable Expert Medical
Opinion offering that treats every member like family,” said Jason
Melton, chief executive officer, 2nd.MD. “Combining our Care Teams
and technology with Accolade will enhance the reach and quality of
support to members from the moment of crisis to the other side of
treatment on the path to wellness. We share a common business
vision, our cultures are highly aligned around employee purpose and
we share a common mission to change healthcare for the benefit of
all consumers.”
Transaction Summary
The transaction is expected to close by the end
of February 2021, subject to customary closing conditions. Under
the terms of the agreement, the purchase price of up to $460
million will consist of $230 million in cash, $130 million in
Accolade common stock, and up to $100 million of Accolade common
stock payable upon the achievement of defined revenue milestones
following the closing. Goldman Sachs & Co. LLC acted as the
exclusive financial advisor and Cooley LLP acted as legal advisor
to Accolade in the transaction. Balch & Bingham LLP acted as
legal advisor to 2nd.MD.
Financial Reporting and Business
Outlook
Steve Barnes, chief financial officer, Accolade,
commented, “We are enthusiastic about the business benefits that
2nd.MD will bring to Accolade. In addition to the expanded services
and clinical capabilities we will be able to offer our customers,
2nd.MD brings new industry distribution relationships to help grow
our business and expands our addressable market by an estimated $22
billion. We expect 2nd.MD to be accretive to our revenue growth
rate in fiscal 2022 at a similar gross margin profile, and plan to
invest in integration between our companies to maximize the value
of our combined offerings. We intend to provide more financial
details after the acquisition is completed.” For the calendar year
ended December 31, 2020, 2nd.MD reported unaudited revenues of
approximately $35 million, and is currently serving more than 300
customers covering more than seven million members.
Conference Call to discuss the
acquisition
The company will host a conference call today,
Thursday, January 14, 2021, at 5:30 p.m. E.T. to discuss today’s
announcement. The call can be accessed by dialing (833) 519-1281
for U.S. participants, or (914) 800-3853 for international
participants, referencing conference ID #7240298; or via a live
audio webcast that will be available online at
http://ir.accolade.com. A presentation to accompany the call can be
downloaded on the Company’s investor relations page. 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.
About Accolade
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. For more information, visit Accolade on Twitter,
Facebook, LinkedIn and at www.accolade.com.
About 2nd.MD
2nd.MD is the leader in expert medical opinion. A preferred
partner to over 300 employers and the country's top health plans,
2nd.MD connects more than 7 million people to over 900 nationally
recognized, board-certified medical specialists covering all adult
and pediatric specialty conditions. Providing a world-class member
experience and consistently achieving a +91 Net Promoter Score,
2nd.MD combines advanced technology, data, and clinical expertise
to save and improve lives every day. For more information, please
visit 2nd.MD at https://www.2nd.md/ or follow @2nd.MD on
LinkedIn.
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,” “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 following: (i) risks associated with (a) the possibility that
the closing conditions to the transaction with 2nd.MD may not be
satisfied or waived in a timely manner or at all, including that a
governmental entity may prohibit, delay or refuse to grant a
regulatory approval, (b) the failure to complete or receive the
anticipated benefits from the transaction, including due to
Accolade’s inability to successfully integrate 2nd.MD into its
business, (c) diverting management attention from ongoing business
operations, (d) the commencement or outcome of any legal
proceedings that may be instituted against us or 2nd.MD in
connection with the proposed transaction and (f) the effects of the
transaction on the combined business, including on operating costs,
customer loss and business disruption; (ii) changes in laws and
regulations applicable to our or 2nd.MD’s business model; (iii)
changes in market or industry conditions, regulatory environment
and receptivity to our or 2nd.MD’s technology and services; (iv)
results of litigation or a security incident; (v) the loss of one
or more of our or 2nd.MD’s key customers or partners; (vi) the
impact of COVID-19 on our or 2nd.MD’s business and results of
operation; (vii) changes to our or 2nd.MD’s abilities to recruit
and retain qualified team members; and the risks described in the
other filings Accolade makes with the Securities and Exchange
Commission from time to time, including the risks described under
the heading “Risk Factors” in Accolade’s Final Prospectus for its
public offering dated October 21, 2020 and its quarterly reports
filed on Form 10-Q, which should be read in conjunction with its
financial results and forward-looking statements. All
forward-looking statements in this Current Report on Form 8-K or
any exhibit hereto 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.
Investor Contact:
Todd Friedman, Investor Relations, 484-532-5200,
Todd.Friedman@accolade.com
Asher Dewhurst, Investor Relations, 443-213-0503,
accolade@westwicke.com
Media Contact:
Megan Torres, Public Relations, 206-926-8180,
Megan.Torres@accolade.com
A photo accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/9d0b8e1a-b962-4055-b0bd-ca96ba16e20c
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