Employee benefits platform Accolade plans to go public, according to paperwork the company filed on Friday. The San Jose-based company is looking to be listed on Nasdaq as ACCD, though it has not disclosed the pricing or the number of shares for its planned IPO.
Accolade is focused on helping people understand and engage more with their health benefits, through a combination of technology and access to health assistants. The company currently has 53 customers with 1.5 million members, primarily through employer health plans.
The company also has partnerships with several large insurers, including Humana and Blue Shield of California. Humana invested $20 million into the startup in October, bringing its total funding above $237 million, according to Crunchbase.
Accolade plans to use the funds raised by its IPO for operating expenses and capital expenditures. The company may also use the new funding to pay off its debt. According to Accolade’s prospectus, it brought in revenues of $94.8 million as of February 2019, a 23 percent increase from 2018. But the company is still operating in the red; Accolade reported a $56.5 million net loss last year, and had borrowed $22 million under its loan and security agreement.
Most of Accolade’s revenues come from a per-member, per-month fee that it charges for its services over a three-year contract. A significant portion of its earnings also come from its largest customers. For example, Comcast Cable accounted for 35% of its revenue in 2019.
The idea is that by helping employees schedule appointments, answering questions about their care, and helping them pay for their medications, platforms like Accolade can reduce a company’s health care spend in the long run. Employers seem to be buying into these services, despite mixed reviews about their effectiveness.
For Accolade, proving its platform can engage more employees will be key to succeeding where many of its competitors have fizzled. According to Accolade’s prospectus, the company saw 55% and 56% member engagement in 2018 and 2019.
The company plans to expand the number of employers it works with, which will become easier, thanks to a partnership it recently struck with Blue Shield of California. It also sees a big opportunity for growth with federal contracts, starting with the U.S. Department of Defense.
Goldman Sachs, Morgan Stanley, and BofA Securities will serve as lead bookrunning managers for Accolade’s proposed offering.
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