Accolade surges after a beat-and-raise EPS report

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Accolade reported a loss per share of $0.52 on revenue of $93.2 million, beating the analyst consensus that was calling for a loss per share of $0.62 on sales of $90.27M. The adjusted gross margin came in at 43.5%, missing the consensus by 50 basis points.

“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,” said Rajeev Singh, Accolade’s chief executive officer.

For this quarter, the company sees revenue of $94M, ahead of the consensus at $93M. Adjusted loss is expected at $12.5M, again better than the analyst consensus for a loss of $14.4M.

For FY24, the company guided to an adjusted EBITDA loss of $9M, an upgrade to the prior forecast for a loss of $12M. Revenue is seen at $412M, ahead of the consensus at $410M.

“We are raising our guidance for both revenue and Adjusted EBITDA for the fiscal year and remain confident in our path to achieving profitability,” Steve Barnes, Accolade’s chief financial officer, commented.

BofA analysts said the focus remains on multi-year growth after a beat-and-raise quarter. The analysts rate ACCD stock with a Buy rating and a $16.50 per share price target.

“We note that the updated guidance midpoints are ahead of both our estimates and consensus. While gross margin in the quarter came in softer than expected, margins should improve throughout the year,” they said in a note.

Wells Fargo analysts highlighted improving momentum. However, the lack of upside led to the analysts reiterating an Equal Weight rating.

“Raised guidance reflects cost savings/sales momentum, with GLP-1’s credited as driving incremental interest in Virtual Primary Care. Though we’re warming to the story, upside prospects seem limited with valuation multiples at a premium to peers,” they wrote.