Health technology company Accolade filed Friday to raise as much as $100 million in an initial public offering.
Accolade intends to list its common stock on the Nasdaq Global Select Market under the ticker symbol "ACCD."
In its S-1 filing with the U.S. Securities and Exchange Commission, Accolade says the $100 million maximum aggregate offering price is solely for the purpose of calculating the registration fee. The number of shares to be offered and the price range for the offering have not yet been determined.
Founded in 2007, Accolade provides a health benefits platform for employers aimed at improving health outcomes and controlling costs by helping consumers make better, data-driven decisions, the company said.
The Seattle-based company uses machine learning, artificial intelligence, and mobile apps to help employees navigate their health benefits and access care.
Primary competitors include large health plans, traditional advocacy and navigation companies such as Quantum Health and Health Advocate. Its competitors are also companies that traditionally provided adjacent or exclusively digital services and are increasingly adding some version of navigation support, most notably Grand Rounds, Amino, Alight (Compass) and Castlight, the company said in its S-1 filing.
Accolade has raised $237 million to date, with investors including Andreessen Horowitz, McKesson Ventures, Carrick Capital Partners and Madrona Venture Group, among others. In October, the company scored a $20 million investment from insurance giant Humana as part of an ongoing partnership.
The company is led by Rajeev Singh, former president and co-founder of travel expense software company Concur.
Goldman Sachs, Morgan Stanley, and BofA Securities are acting as lead book-running managers for the proposed offering. Credit Suisse, Piper Sandler, and William Blair are acting as book-running managers. Baird and SVB Leerink are acting as co-managers, according to an Accolade press release.
It will join a growing list of health technology companies that are testing the public markets, including Livongo, Phreesia, Health Catalyst, Change Healthcare, and Progyny. Primary care company One Medical raised $245 million in its IPO when it started trading as a public company on Jan. 31.
Here are five things to know from the company's S-1 filing, which revealed key financial details publicly for the first time:
1. The company brought in $94.8 million in revenue in its latest fiscal year, ended Feb. 28, 2019. Accolade's revenue grew 23% year over year from February 2018. For the nine months ended November 2019, total revenue was $88.1 million, up 47% from the same time period in 2018.
2. But the company has sizable net losses—$56.5 million in fiscal year 2019. It was an improvement from losses of $61.3 million in 2018. For the nine months ended November 2019, the company has incurred net losses of $49.2 million.
3. Accolade has 53 corporate customers across many industries, including media, technology, financial services, transportation, energy, and retail, comprising more than 1.5 million members. It's largest customer is Comcast Cable, accounting for 45% of its revenue in fiscal year 2019.
4. Accolade estimates its total addressable market for its current solutions to be approximately $24 billion, with its core market currently comprised of self-insured employers, inclusive of state and local governments and unions. The company sees the self-insured employer market alone representing at least an $11.7 billion addressable market.
The company also sees opportunities in the fully insured market. Government-sponsored programs, including Medicare, Medicaid, TRICARE and Veterans Affairs health plans also represent a $10.7 billion market opportunity. A government agency is currently working with Accolade on a pilot program.
5. Accolade identified its history of net losses as a primary risk factor facing the business. The company anticipates increasing expenses in the future and may not be able to achieve or maintain profitability. The company also derives a significant portion of revenue from its largest customers. The loss of any of these customers, or renegotiation of any of its contracts with these customers, could negatively impact its results.
The company has borrowed $22 million under its loan and security agreement, with the ability to borrow up to an additional $50 million. To support the growth of the business, the company may need to borrow more or seek capital through new equity or debt financings, sources from which additional capital may not be available on acceptable terms or at all.