Accolade Announces Results for Fiscal First Quarter 2024
Press Releases

Accolade Announces Results for Fiscal First Quarter 2024

  • Accolade exceeds guidance for fiscal first quarter and raises guidance for fiscal year 2024

SEATTLE, June 29, 2023 (GLOBE NEWSWIRE) — Accolade, Inc. (NASDAQ: ACCD) today announced financial results for the fiscal first quarter ended May 31, 2023.

“Our consistently strong financial results reinforce our belief that an advocacy-led care delivery strategy is the key to transforming the U.S. healthcare system. We are seeing the proof points in our growing customer base and sales momentum, and also through our customers’ outcomes, engagement and measurable ROI. We are especially excited by the growth we are witnessing in virtual primary care, which is the key to people living their healthiest lives. For too long, healthcare has been a series of siloed episodes. An advocacy-led care delivery strategy facilitates a coordinated patient journey and tighter collaboration across the healthcare ecosystem, while delivering better health outcomes and tremendous customer satisfaction,” said Rajeev Singh, Accolade Chief Executive Officer.

Financial Highlights for Fiscal First Quarter ended May 31, 2023

    Three Months Ended May 31,   %  
       2023      2022      Change(3)  
    (in millions, except percentages)      
GAAP Financial Data:                  
Revenue   $ 93.2     $ 85.5     9 %
Net loss(1)   $ (38.4 )   $ (342.8 )   89 %
Non-GAAP Financial Data(2):                  
Adjusted EBITDA   $ (12.6 )   $ (15.4 )   18 %
Adjusted Gross Profit   $ 40.6     $ 39.0     4 %
Adjusted Gross Margin     43.5 %     45.6 %      

(1)   A non-cash goodwill impairment charge of $299.7 million was recorded during the three months ended May 31, 2022.
(2)   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."
(3)   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 exceeded both our top and bottom line guidance in the first fiscal quarter. Our One Accolade initiative is creating a more streamlined organization, benefiting overall costs, decision making and strategic planning. We are raising our guidance for both revenue and Adjusted EBITDA for the fiscal year and remain confident 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 second quarter ending August 31, 2023, we expect:

  • Revenue between $93 million and $95 million
  • Adjusted EBITDA between $(11) million and $(14) million

For the fiscal year ending February 29, 2024, we expect:

  • 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, June 29, 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/BI923dbf9312d54b2da4cc7883c77e68c9). 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 LinkedInTwitter, 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 Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(In thousands, except share and per share data)

    May 31,    February 28, 
       2023      2023
Current assets:            
Cash and cash equivalents   $ 302,870     $ 321,083  
Accounts receivable, net     22,539       23,435  
Unbilled revenue     3,760       3,260  
Current portion of deferred contract acquisition costs     3,933       4,022  
Prepaid and other current assets     15,372       14,149  
Total current assets     348,474       365,949  
Property and equipment, net     16,608       14,763  
Operating lease right-of-use assets     28,080       29,525  
Goodwill     278,191       278,191  
Intangible assets, net     192,829       203,202  
Deferred contract acquisition costs     9,679       9,815  
Other assets     1,846       1,624  
Total assets   $ 875,707     $ 903,069  
Liabilities and stockholders’ equity            
Current liabilities:            
Accounts payable   $ 5,461     $ 10,155  
Accrued expenses and other current liabilities     13,782       11,744  
Accrued compensation     27,628       39,346  
Due to customers     14,761       15,694  
Current portion of deferred revenue     44,189       35,191  
Current portion of operating lease liabilities     6,915       7,284  
Total current liabilities     112,736       119,414  
Loans payable, net of unamortized issuance costs     282,742       282,323  
Operating lease liabilities     25,741       27,189  
Other noncurrent liabilities     168       203  
Deferred revenue     142       154  
Total liabilities     421,529       429,283  
Commitments and Contingencies            
Stockholders’ equity            
Common stock par value $0.0001; 500,000,000 shares authorized; 75,264,400 and 73,089,075 shares issued and outstanding at May 31, 2023 and February 28, 2023, respectively     8       7  
Additional paid-in capital     1,446,873       1,428,073  
Accumulated deficit     (992,703 )     (954,294 )
Total stockholders’ equity     454,178       473,786  
Total liabilities and stockholders’ equity   $ 875,707     $ 903,069  

Accolade, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations (unaudited)
(In thousands, except share and per share data)

    Three months ended May 31, 
       2023      2022
Revenue   $ 93,226     $ 85,528  
Cost of revenue, excluding depreciation and amortization     54,203       47,615  
Operating expenses:            
Product and technology     25,899       26,817  
Sales and marketing     25,033       25,614  
General and administrative     16,080       20,238  
Depreciation and amortization     11,640       11,576  
Goodwill impairment           299,705  
Total operating expenses     78,652       383,950  
Loss from operations     (39,629 )     (346,037 )
Interest income (expense), net     921       (634 )
Other income (expense)     390       (50 )
Loss before income taxes     (38,318 )     (346,721 )
Income tax benefit (expense)     (91 )     3,899  
Net loss   $ (38,409 )   $ (342,822 )
Net loss per share, basic and diluted   $ (0.52 )   $ (4.92 )
Weighted-average common shares outstanding, basic and diluted     73,179,994       69,738,638  

The following table summarizes the amount of stock-based compensation included in the condensed consolidated statements of operations:

    Three months ended May 31, 
       2023      2022
Cost of revenue, excluding depreciation and amortization   $ 911   $ 1,128
Product and technology     6,966     7,490
Sales and marketing     3,826     3,989
General and administrative     2,575     6,782
Total stock-based compensation   $ 14,278   $ 19,389

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

    Three months ended May 31, 
       2023      2022
Cash flows from operating activities:            
Net loss   $ (38,409 )   $ (342,822 )
Adjustments to reconcile net loss to net cash used in            
Operating activities:            
Goodwill impairment           299,705  
Depreciation and amortization expense     11,640       11,576  
Amortization of deferred contract acquisition costs     1,116       817  
Deferred income taxes           (3,999 )
Noncash interest expense     440       419  
Stock-based compensation expense     14,278       19,389  
Changes in operating assets and liabilities, net of effect of acquisitions:            
Accounts receivable and unbilled revenue     396       2,323  
Accounts payable and accrued expenses     (1,690 )     (1,258 )
Deferred contract acquisition costs     (891 )     (924 )
Deferred revenue and due to customers     8,052       862  
Accrued compensation     (11,718 )     (15,598 )
Other liabilities     (1,131 )     (240 )
Other assets     (1,370 )     (711 )
Net cash used in operating activities     (19,287 )     (30,461 )
Cash flows from investing activities:            
Capitalized software development costs     (2,500 )     (766 )
Purchases of property and equipment     (877 )     (506 )
Net cash used in investing activities     (3,377 )     (1,272 )
Cash flows from financing activities:            
Proceeds from stock option exercises     2,459       358  
Proceeds from employee stock purchase plan     1,992       1,150  
Net cash provided by financing activities     4,451       1,508  
Net decrease in cash and cash equivalents     (18,213 )     (30,225 )
Cash and cash equivalents, beginning of period     321,083       365,853  
Cash and cash equivalents, end of period   $ 302,870     $ 335,628  
Supplemental cash flow information:            
Interest paid   $ 769     $ 769  
Fixed assets included in accounts payable   $ 506     $ 228  
Other receivable related to stock option exercises   $ 84     $ 5  
Income taxes paid   $ 53     $ 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
    May 31, 
    2023      2022
    (in thousands, except percentages)
Revenue   $ 93,226     $ 85,528  
Cost of revenue, excluding depreciation and amortization     (54,203 )     (47,615 )
Gross profit, excluding depreciation and amortization     39,023       37,913  
Stock‑based compensation, cost of revenue     911       1,128  
Severance costs, cost of revenue     634        
Adjusted Gross Profit   $ 40,568     $ 39,041  
Gross margin, excluding depreciation and amortization     41.9     44.3
Adjusted Gross Margin     43.5     45.6

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, 
    2023      2022
    (in thousands)
Net loss   $ (38,409 )   $ (342,822 )
Adjusted for:              
Interest expense (income), net     (921 )     634  
Income tax (benefit) expense     91       (3,899 )
Depreciation and amortization     11,640       11,576  
Stock‑based compensation     14,278       19,389  
Acquisition and integration‑related costs(1)     27        
Goodwill impairment           299,705  
Severance costs(2)     1,102        
Other expense (income)     (390 )     50  
Adjusted EBITDA   $ (12,582 )   $ (15,367 )

(1)   For the three months ended May 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.

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