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.