Credit Suisse https://www.credit-suisse.com conducted a post quarterly conference call with Accolade Health’s (ACCD) management to review FY1Q21 results, business wins, and trends.
ACCD’s https://acolade.com business model centers on engaging the entire member population and navigating the healthcare continuum in order to achieve a positive and sustainable impact on health outcomes.
To directly address COVID-19, the company has developed Accolade COVID Response Care, a solution that enables employers of all sizes to leverage Accolade’s platform to support employee education, testing, care plans, contact tracing, plus provide return to work clearances.
Johnson Controls have signed up for both ACCD’s COVID Response Care and Total Health and Benefits which is expected to be effective early 2021, ACCD has some additional customers who have only signed up for COVID Response Care at this time. Management believes that these customers present future opportunities for conversion to one of the company’s core offerings.
The COVID Response Care program pricing ranges from Low Single Digit (LSD) per employee per month (PEPM) to MSD-HSD PEPM. As for Johnson Control’s Total Health and Benefits Contract, the PEPM is in ACCD’s traditional pricing for the offering which is in the low $20s range.
ACCD’s net membership base has been flat to slightly up. Since companies like Lowes, Facebook & some of the financial services companies have grown, this has offset some of the losses ACCD has seen in other parts of their books.
Management notes that their outlook reflects future headcount reductions especially for their airline customers. However, some airlines have publicly stated that they expect to have furloughs in the fall. The company serves employees who are furloughed and are on COBRA which has resulted in an offsetting effect. However, the company after analyzing the rest of their customer base, has put a general reserve aside.
Accolade has achieved their first opportunity in the federal sector to serve 80K members under the pilot which is about 1% of 8-9 million at Defense Health Agency or TRICARE member opportunity). On pricing, it is a variation of the Total Care offering in the HSD PEPM range, but deeper engaging from a clinical standpoint because of the type of population and complexities associated with the population being served.
Credit Suisse https://www.credit-suisse.com analysts have updated their model for FY1Q21 earnings and FY 21 outlook. They have lowered the fiscal 2021 EBITA by $1.3 million to a loss of $34.3 million.
The analysts are raising their EV/rev TP multiple to 10x (from 9x previously) to reflect ACCD’s recent new business wins and the fact that estimates now reflect potential job losses at some of the airline customers. This multiple on the calendar year 21 revenue estimates a yield for a new TP of $40 from $38.
For more information and to provide feedback, email Jailendra Singh at jailendra.singh@credit-suisse.com or call 212-325-8121.A