Accolade (ACCD) Reports First Quarter as Public Company
Our latest addition, Accolade (ACCD), reported first quarter of fiscal 2021 results last night that beat on the top line. Revenue was up 24.7% to $35.9 million, beating by $1.76 million. Adjusted EPS loss was not given (probably will be when the 10Q is filed) so many data feeds are using the GAAP net loss of -$1.86, which implies a bigger loss versus expectations than the adjusted number would be.
Management issued full-year guidance of 20% revenue growth ($158 million to $161 million) that’s in line with expectations and which reflects the impact of unemployment, mostly in the airline sector, where Accolade has exposure (22% of fiscal 2020 revenue). This should be a temporary setback as the business is seen accelerating to 25% to 30% growth in the coming years. No surprise here – this was previously disclosed.
In the quarter Accolade landed six new clients, bringing the total count up to 60. Client wins were across the size and product spectrum (a good sign). The newer products, including COVID Response Care, Boost, and Trusted Supplier Program, have helped to bring in new customers, including Johnson Controls, which could create upsell opportunities. The new go-to-market sales strategy with Humana led to a win with the Hillsborough County Public School system, which is one of the top 10 in terms of size in the U.S.
Management had only good things to say about the early rollout of its platform to Tricare (Defense Health Agency). Recall this is a pilot program covering roughly 75,000 lives that could be expanded up to nearly nine million if all goes well. That would be meaningful.
Accolade ended the quarter with $236.1 million in cash, and no debt.
This quarter came in largely as expected with no surprises, either good or bad. There’s no change to the story, which is still all about a digital platform to make health care better for consumers. Shares are off modestly—not too surprising given a little run higher lately and a generally lackluster market today. We’re moving ahead. Keeping Accolade at buy a half and looking for opportunities in what could be a volatile stock (recent IPO, etc.) to add the second half position. BUY A HALF