Accolade Delivers Mixed Q2 Results; Shares Fall

Accolade, Inc. (ACCD), a provider of technology-driven benefits and health utilization software, delivered mixed second-quarter results with a wider-than-expected quarterly loss and revenue beating expectations. Shares were down 5% in the pre-market trading session at the time of writing.

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The company reported a quarterly loss of $0.97 per share, much wider than analysts’ estimated loss of $0.56 per share. In the prior-year quarter, Accolade posted a loss of $0.47 per share. (See Accolade stock charts on TipRanks)

On a positive note, revenue jumped 99% year-over-year to $73.29 million and beat the Street’s estimate of $70.41 million.

During the quarter, Accolade launched a new Personalized Healthcare category that requires all healthcare companies to provide personalized solutions generated through data-driven insights and align the financial model with demonstrated value.

ACCD also launched two new offerings, Accolade One and Accolade Care, which combine the company’s intelligent technology, advocacy services, and team-based healthcare delivery.

Also, ACCD completed the acquisition of all of the assets of HealthReveal, a clinical artificial intelligence company that offers personalized diagnostic and treatment recommendations.

Commenting on the results, Steve Barnes, CFO of Accolade, said, “We are beginning to see the positive impact of combining Accolade, 2nd.MD and PlushCare, with the teams operating as one across all areas, especially sales and product development. As we have consistently said previously, we plan to invest in the integration between the three offerings to maintain a superlative member and customer experience. We will continue to focus driving top-line growth while demonstrating consistent progress toward our long-term operating model.”

For the third quarter, ACCD forecasts revenue to fall in the range of $74.5 – $76.5 million, higher than the consensus estimate of $72.7 million.

Additionally, for the full year of Fiscal 2022, ACCD projects revenue in the range of $303 – $307 million, in line with consensus forecasts of $303.4 million.

In response to Accolade’s financial performance, Needham analyst Ryan Macdonald lowered the price target on the stock to $56 (40.2% upside potential) from $68 while maintaining a Buy rating.

The analyst is encouraged with the launches of Accolade Care and Accolade One and believes they will help the company deepen customer relationships in a margin accretive manner.

Macdonald said, “While investors may question the magnitude of the guidance increase given the uncertain macro environment, we remain confident that Accolade can deliver healthy upside in 2HF22, driven by performance fee achievement. Looking ahead to FY23, we expect strong new customer activity to translate to sustainable 30%+ growth and margin expansion.”

With 10 unanimous Buys, the stock commands a Strong Buy consensus rating. The average Accolade price target of $57.10 implies 43% upside potential to current levels. Shares have lost 3% over the past year.