Questions from Accolade S-1

Tom Paine

See my previous post on Accolade’s IPO filing here.

Accolade, based in Plymouth Meeting and Seattle, submitted an S-1 to the SEC Friday (February 28) outlining plans for an IPO.

Conclusion: Some analysts probably have better information, but from info available to the general public it’s difficult to come up with an intelligent set of metrics for assessing its valuation. Not that it’s a unique case.

Accolade has raised at least $230 million in venture financing according to CrunchBase, and its last known valuation was $620 million according to Pitchbook.

It’s difficult to build a meaningful projected financial model for Accolade. Not enough history, and the economics are skewed by very large customers and high upfront development costs.

Its largest customers, Comcast Cable, Lowe’s and United Airlines, together accounted for 60% of its revenue for its 2019 fiscal year. Comcast alone represented 35% of its revenue for the year.

Customer concentration is a risk factor.

Accolade is not truly a tech company, but a technology-enabled health services company. No matter how much engineering it does, the variable people cost will still be there.

Some other health information companies that originally were full fledge tech firms are now adding more of the human factor in.

Hard to project future gross margins.

Adjusted gross margins were 30.9% in FY 2018 versus 36.4% in FY 2019; These will have to continue to improve..

Financial results for FY 2020 were left empty for now; looks like they might be filled in later (fiscal year ended 2/29)

Comparison: Perhaps the closest “twin” to Accolade is its Plymouth Meeting neighbor Health Advocate. It was snapped up by Omaha-based West Corporation for $265 million in 2014. Then buyout firm Apollo Global Management bought West Corporation (now Intrado Corporation) in 2017. Health Advocate has almost the same number of employees as Accolade, but I haven’t found any breakout of its financials.

Accolade relies on using AWS and Google Cloud for IT processing.

Philly EnterpriseTech Highlights 2/28 to 3/1

Trump threatens Comcast: “I’ll do everything possible to destroy their image”

Tom Paine

Last week Philly EnterpriseTech reported on President Trump’s lengthy Las Vegas diatribe directed at Comcast.

Yesterday he doubled down on it.

“NBC I think is worse than CNN,” Trump said speaking Friday night in South Carolina. “And Comcast, a company that spends millions and millions of dollars on their image – I’ll do everything possible to destroy their image because they are terrible.”

He also reportedly accused Comcast of being racist in a Thursday White House meeting.

What’s going on? We know he felt betrayed by someone at Comcast NBCU leaking his raunchy discussion with Billy Bush during the 2016 campaign.

Trump often tells a.story of how an NBCU exec begged him to sign a new contract for Apprentice, but its not clear whether it was true or if so, when it occurred.

And NBCU said it would cut all ties with Trump after he referred to Mexican immigrants as drug dealers and rapists in announcing his candidacy in 2015.

And also, somewhat understandably, he resents the way both MSNBC and NBC News covers him. I’ve always been willing to defend Trump from unwarranted criticism, and there’s been plenty of it.

But the bitterness of his more recent comments reflect something deeper. I’m curious if anything else is going on behind the scenes.

Comcast has refused comment on Trump’s attacks. I doubt Comcast wants to get into a political war with Trump; it might come out the loser. But I do think it has grounds to fight back, based on the attempted damage to its brand and Trump’s stated threat of further damage in the future..

Its gone too far.