Accolade surged 25% this morning: what’s fuelling the stock?

Shares of Accolade Inc (NASDAQ: ACCD) opened about 25% up on Tuesday after the software and technology company reported better-than-expected financial results for its third quarter last night.

Q3 results

Accolade said its net income printed at $22.5 million in Q3 that translates to 31 cents per share. In the same quarter last year, the Pennsylvania-headquartered firm had posted a loss. On an adjusted basis, it remained in 39 cents of per-share loss in the recent quarter.

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Accolade generated $83.5 million in revenue that represents an annualised growth of 117%. In comparison, analysts had called for 48 cents of adjusted per-share loss on $76 million in revenue.

Piper Sandler slashed its price target on ACCD on Friday to $35 that still represents another 50% upside from here.

Future outlook

For the current quarter, Accolade expects up to $93 million in revenue and $4.0 million to $8.0 million in adjusted EBITDA. Its full-year forecast now stands at up to $309 million in revenue and $48 million to $52 million in adjusted EBITDA.

The Nasdaq-listed company also said it sees a 25% growth in revenue next year and a further contraction in adjusted EBITDA loss.

CEO’s remarks

In the earnings press release, CEO Rajeev Singh admired Accolade’s journey from an advocacy company to a personalised healthcare firm. He said:

In January 2021, we were serving about 100 customers and 2 million members. Today, with the integration of primary care, mental health, and expert medical opinion from our acquisitions of PlushCare and 2^nd.MD, we now serve more than 600 customers and 10 million members.

The U.S. company also launched its first customers on Accolade Care and Accolade One at the start of this year.