Accolade (ACCD) Reports
Accolade (ACCD) reported Q1 fiscal 2022 results after the bell yesterday that beat on the top line and missed on the bottom line. Revenue was up 66% to $59.5 million (beating by $3.7 million) while adjusted EPS of -$0.87 missed by $0.47. Management raised full-year guidance to $300 million - $305 million (from $260 million - $265 million) due to positive momentum and benefits from acquisitions.
The revenue beat was driven by higher-than-expected contribution from 2nd MD and better performance in the core business. Both are significant. Management indicated that the selling season is off to a very strong start and that cross-selling with 2nd MD is going well. This should help alleviate some concerns that the company had benefited during the pandemic but that companies would pull back on benefit offerings. In reality, there were some headwinds during the pandemic and those are now abating. Acquisitions helped land/expand relationships with McKesson, Pepsi and both a Fortune 100 and a Fortune 50 financial services company. More customers were signed with the Ginger mental health solution (another past acquisition) than in any other prior quarter.
Not surprisingly, costs are going up as Accolade integrates products and builds out the platform. These are good investments. In summary, it was a great quarter and, most importantly, revenue growth is solid and the acquired companies appear to be outperforming. The stock is up modestly today, but in my view this quarter could help ACCD move up to 60, and beyond, in the coming months. Keeping at buy. BUY