Accolade employees virtually celebrated its public debut in a video streamed in Times Square. The employee benefits platform will be listed on Nasdaq as “ACCD.”
Accolade executives virtually rang the opening bell on Thursday morning, when the employee benefits platform made its debut on the stock market. The company’s stock began trading on Nasdaq under “ACCD”, where it opened at $35 per share. Accolade had initially planned to price its stock between $19 and $21, but bumped up its target price to $22 for the IPO.
The company is offering just over 10 million shares of its common stock for a total of $220 million, valuing the company at $1.2 billion.
Accolade had filed its initial paperwork in late February, “which in hindsight, was tough timing,” CFO Steve Barnes said in a phone interview. “Obviously, the world changed a lot in March.”
As the Covid-19 pandemic continued, more employers began inquiring about its services.
“What we’ve found is our own customers and prospective customers are realizing this isn’t just a nice employee benefit to have,” Barnes said.
Accolade helps navigate employees through their health benefits using technology and health assistants. Its goal is to reduce costs by encouraging “good” utilization of the healthcare system, such as having a primary care physician or adhering to medications.
For example, a user could call in to ask whether a chiropractor visit is covered under their health plan. If they were considering back surgery, a health assistant might suggest that they consider their company’s covered physical therapy solution.
Even though Accolade has a handful of competitors in the space, including Castlight Health and Welltok, Barnes said he sees plenty of room for growth. The company, which splits its offices between Seattle and Plymouth Meeting, Pennsylvania, has netted some big name clients, including American Airlines, Comcast Cable, Lowe’s and State Farm.
The downside: Those big clients also make up a big share of its business, at 56% of its revenue. Accolade currently serves a total of 1.6 million members across more than 58 companies, charging at a per-member per-month rate.
Accolade plans to reinvest the proceeds of the IPO into growing its business and repaying its debt. The company saw its revenue grow 40% from last year, for a total of $132.5 million in February.
Although the Covid-19 pandemic has put a bigger spotlight on healthcare, the resulting economic downturn has also put many companies under financial pressure. Accolade currently has $73.2 million in debt on its books, a number that has increased since the pandemic started, and has operated at a net loss in recent years.
Barnes said the company would continue to take demonstrable steps toward profitability, while still investing in its technology.
“We’re on the path to getting there,” he said. “It’s important to do this in a way that continues to innovate.”
Accolade’s public offering is expected to close on July 7. Goldman Sachs & Co. LLC, Morgan Stanley, and BofA Securities served as joint book-running managers for the offering.
Photo credit: Screenshot from Nasdaq
