Accolade Announces Results for Fiscal Fourth Quarter and Full Year 2024

Accolade, Inc.

SEATTLE, April 25, 2024 (GLOBE NEWSWIRE) -- Accolade, Inc. (NASDAQ: ACCD) today announced financial results for the fiscal fourth quarter and full year ended February 29, 2024.

"Accolade has built a rare healthcare services business at scale with consistently strong growth rates. Whether serving consumers, employers, health plans, or government entities, the core of our value proposition is making healthcare easier to access, navigate, and consume for our members. We provide a unique blend of healthcare services and next generation technology that will further differentiate us in FY 2025 as we approach $500 million in revenues and forecast full year positive Adjusted EBITDA,” said Rajeev Singh, Accolade Chair of the Board and Chief Executive Officer.

Financial Highlights for Fiscal Fourth Quarter and Fiscal Year ended February 29, 2024

	Three months ended February 28(29),								% Change(3)			Twelve months ended February 28(29),								% Change(3)
		2024				2023							2024				2023
	(in millions, except percentages)											(in millions, except percentages)
GAAP Financial Data:
Revenue	$	124.8			$	99.0			26	%		$	414.3			$	363.1			14	%
Net loss(1)	$	(7.5	)		$	(30.4	)		75	%		$	(99.8	)		$	(459.7	)		78	%
GAAP gross profit	$	58.1			$	40.0			45	%		$	158.8			$	132.5			20	%
GAAP gross margin		46.5	%			40.4	%						38.3	%			36.5	%
Non-GAAP Financial Data(2):
Adjusted EBITDA	$	18.5			$	2.8			553	%		$	(7.5	)		$	(36.5	)		79	%
Adjusted Gross Profit	$	67.7			$	50.0			35	%		$	197.1			$	170.1			16	%
Adjusted Gross Margin		54.2	%			50.5	%						47.6	%			46.8	%

(1)	A non-cash goodwill impairment charge of $299.7 million was recorded during the year ended February 28, 2023.
(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's Personalized Healthcare platform, multi-channel sales motion, and diversified customer base are the foundation of our revenue growth and margin expansion. This year, we plan to deliver full year profitability on an Adjusted EBITDA basis, marking a significant step toward achieving our long-term target of 15-20% Adjusted EBITDA margins.”

Financial Outlook

Accolade provides forward-looking guidance on revenue and Adjusted EBITDA, a non-GAAP financial measure.

For the fiscal first quarter ending May 31, 2024, we expect:

• Revenue between $103 million and $106 million

• Adjusted EBITDA between $(9) million and $(12) million

For the fiscal year ending February 28, 2025, we expect:

• Revenue between $480 million and $500 million

• Adjusted EBITDA between 3% and 4% 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, April 25, 2024 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/BI5dc020b8e7534a2ab2036759667cf1a2). 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 Subsidiaries
Condensed Consolidated Balance Sheets (unaudited)
(In thousands, except share and per share data)

	February 28(29),
		2024				2023
Assets
Current assets:
Cash and cash equivalents	$	185,718			$	321,083
Marketable securities		51,315				—
Accounts receivable, net		21,800				23,435
Unbilled revenue		5,902				3,260
Current portion of deferred contract acquisition costs		4,369				4,022
Prepaid and other current assets		15,808				14,149
Total current assets		284,912				365,949
Property and equipment, net		19,140				14,763
Operating lease right-of-use assets		28,340				29,525
Goodwill		278,191				278,191
Intangible assets, net		165,407				203,202
Deferred contract acquisition costs		9,608				9,815
Other assets		2,553				1,624
Total assets	$	788,151			$	903,069
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	13,749			$	10,155
Accrued expenses and other current liabilities		10,736				11,744
Accrued compensation		23,392				39,346
Due to customers		18,552				15,694
Current portion of deferred revenue		34,770				35,191
Current portion of operating lease liabilities		6,651				7,284
Total current liabilities		107,850				119,414
Loans payable, net of unamortized issuance costs		208,482				282,323
Operating lease liabilities		26,077				27,189
Other noncurrent liabilities		156				203
Deferred revenue		121				154
Total liabilities		342,686				429,283
Commitments and contingencies
Stockholders’ equity
Common stock par value $0.0001; 500,000,000 shares authorized; 78,070,781 and 73,089,075 shares issued and outstanding at February 28(29), 2024 and 2023, respectively		8				7
Additional paid‑in capital		1,499,603				1,428,073
Accumulated other comprehensive loss		(47	)			—
Accumulated deficit		(1,054,099	)			(954,294	)
Total stockholders’ equity		445,465				473,786
Total liabilities and stockholders’ equity	$	788,151			$	903,069

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

	Three months ended February 28(29),								Twelve months ended February 28(29),
		2024				2023				2024				2023
Revenue	$	124,831			$	99,025			$	414,292			$	363,142
Cost of revenue, excluding depreciation and amortization		58,194				51,048				222,232				198,905
Operating expenses:
Product and technology		24,190				24,082				99,159				101,347
Sales and marketing		24,727				23,540				100,066				99,113
General and administrative		14,311				19,914				62,124				81,209
Depreciation and amortization		11,306				11,628				45,164				46,377
Goodwill impairment		—				—				—				299,705
Total operating expenses		74,534				79,164				306,513				627,751
Loss from operations		(7,897	)			(31,187	)			(114,453	)			(463,514	)
Interest income (expense), net		1,612				739				5,952				255
Other income (expense)		(493	)			(36	)			9,931				(15	)
Loss before income taxes		(6,778	)			(30,484	)			(98,570	)			(463,274	)
Income tax benefit (expense)		(729	)			51				(1,235	)			3,624
Net loss	$	(7,507	)		$	(30,433	)		$	(99,805	)		$	(459,650	)
Net loss per share, basic and diluted	$	(0.10	)		$	(0.42	)		$	(1.33	)		$	(6.45	)
Weighted‑average common shares outstanding, basic and diluted		77,352,584				72,075,136				74,906,938				71,279,831
Other comprehensive loss:
Unrealized loss on marketable securities, net	$	(47	)		$	—			$	(47	)		$	—
Comprehensive loss	$	(7,554	)		$	(30,433	)		$	(99,852	)		$	(459,650	)

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

	Three months ended February 28(29),						Twelve months ended February 28(29),
	2024			2023			2024			2023
Cost of revenue, excluding depreciation and amortization	$	1,033		$	1,149		$	4,309		$	4,794
Product and technology		7,575			5,950			29,991			24,995
Sales and marketing		3,220			4,503			14,243			17,275
General and administrative		3,465			6,233			12,398			25,580
Total stock‑based compensation	$	15,293		$	17,835		$	60,941		$	72,644

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

	Fiscal Year Ended February 28(29),
		2024				2023				2022
Cash flows from operating activities:
Net loss	$	(99,805	)		$	(459,650	)		$	(123,124	)
Adjustments to reconcile net loss to net cash used in operating activities:
Goodwill impairment		—				299,705				—
Depreciation and amortization expense		45,164				46,377				42,608
Amortization of deferred contract acquisition costs		5,437				3,698				2,945
Change in fair value of contingent consideration		—				—				(45,416	)
Deferred income taxes		—				(3,997	)			(6,132	)
Noncash interest expense (income)		1,540				1,660				1,673
Accretion of discounts/premiums on marketable securities, net		(215	)			—				—
Stock‑based compensation expense		60,941				72,644				72,939
Gain on repurchase of convertible notes		(9,268	)			—				—
Changes in operating assets and liabilities:
Accounts receivable and unbilled revenue		(1,007	)			4,106				(11,829	)
Accounts payable and accrued expenses		3,380				1,131				(1,899	)
Deferred contract acquisition costs		(5,575	)			(7,314	)			(4,148	)
Deferred revenue and due to customers		2,404				3,634				13,986
Accrued compensation		(15,953	)			157				(2,519	)
Other liabilities		(607	)			1,627				(106	)
Other assets		(2,605	)			(4,483	)			(1,328	)
Net cash used in operating activities		(16,169	)			(40,705	)			(62,350	)
Cash flows from investing activities:
Capitalized software development costs		(7,547	)			(5,123	)			(1,096	)
Purchases of property and equipment		(4,935	)			(2,105	)			(2,521	)
Purchase of marketable securities		(51,147	)			—				(99,998	)
Sale of marketable securities		—				—				99,998
Cash paid for acquisitions, net of cash acquired		—				—				(259,996	)
Net cash used in investing activities		(63,629	)			(7,228	)			(263,613	)
Cash flows from financing activities:
Payments for repurchase of convertible notes		(65,808	)			—				—
Payments for debt extinguishment costs		(355	)			—				—
Proceeds from employee stock purchase plan		3,579				2,927				4,703
Proceeds from stock option exercises		7,017				2,064				8,600
Payment of contingent consideration for acquisition		—				(1,828	)			—
Payments of equity issuance costs		—				—				(60	)
Payment of debt issuance costs		—				—				(8,368	)
Payment for purchase of capped calls		—				—				(34,443	)
Proceeds from borrowings on debt		—				—				287,500
Net cash provided (used) by financing activities		(55,567	)			3,163				257,932
Net decrease in cash and cash equivalents		(135,365	)			(44,770	)			(68,031	)
Cash and cash equivalents, beginning of period		321,083				365,853				433,884
Cash and cash equivalents, end of period	$	185,718			$	321,083			$	365,853
Supplemental cash flow information:
Interest paid	$	1,640			$	1,640			$	930
Fixed assets included in accounts payable	$	28			$	771			$	161
Other receivable related to stock option exercises	$	6			$	13			$	4
Income taxes paid	$	402			$	157			$	122
Common stock issued in connection with acquisitions	$	—			$	—			$	455,586
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 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 debt extinguishment gain or loss and 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:

	Three months ended February 28(29),								Twelve months ended February 28(29),
		2024				2023				2024				2023
	(in thousands,except percentages)								(in thousands,except percentages)
Revenue	$	124,831			$	99,025			$	414,292			$	363,142
Cost of revenue, excluding depreciation and amortization		(58,194	)			(51,048	)			(222,232	)			(198,905	)
Amortization of acquired intangible assets, cost of revenue		(7,018	)			(7,016	)			(28,048	)			(28,075	)
Depreciation of property and equipment, cost of revenue		(1,556	)			(931	)			(5,213	)			(3,677	)
GAAP gross profit	$	58,063			$	40,030			$	158,799			$	132,485
GAAP gross margin		46.5	%			40.4	%			38.3	%			36.5	%
GAAP gross profit	$	58,063			$	40,030			$	158,799			$	132,485
Amortization of acquired intangible assets, cost of revenue		7,018				7,016				28,048				28,075
Depreciation of property and equipment, cost of revenue		1,556				931				5,213				3,677
Stock‑based compensation, cost of revenue		1,033				1,149				4,309				4,794
Severance costs, cost of revenue		(2	)			911				686				1,025
Adjusted Gross Profit	$	67,668			$	50,037			$	197,055			$	170,056
Adjusted Gross Margin		54.2	%			50.5	%			47.6	%			46.8	%

The following table presents, for the periods indicated, a reconciliation of our Adjusted EBITDA to our net loss:

	Three months ended February 28(29),								Twelve months ended February 28(29),
		2024				2023				2024				2023
	(in thousands)								(in thousands)
Net loss	$	(7,507	)		$	(30,433	)		$	(99,805	)		$	(459,650	)
Adjusted for:
Interest expense (income), net		(1,612	)			(739	)			(5,952	)			(255	)
Income tax (benefit) expense		729				(51	)			1,235				(3,624	)
Depreciation and amortization		11,306				11,628				45,164				46,377
Stock‑based compensation		15,293				17,835				60,941				72,644
Acquisition and integration‑related costs(1)		(194	)			779				(7	)			1,218
Goodwill impairment		—				—				—				299,705
Severance costs(2)		(27	)			3,777				864				7,065
Other expense (income)(3)		493				36				(9,931	)			15
Adjusted EBITDA	$	18,481			$	2,832			$	(7,491	)		$	(36,505	)

(1)	For the three and twelve months ended February 28(29), 2024 and 2023, acquisition and integration-related costs represent expenses associated with litigation inherited through the PlushCare acquisition. Refer to Note 14 in our condensed consolidated financial statements for further details.
(2)	Severance costs represent expenses associated with workforce realignment actions taken by management.
(3)	For the twelve months ended February 29, 2024, other expense (income) includes a gain on extinguishment of debt.