Why Healthcare Technology Company Accolade Shares Are Surging Today

Accolade Inc ACCD shares are trading higher after the company announced Q3 FY24 results yesterday.

The company reported a revenue increase of 9% to $99.4 million, beating the consensus of $96.2 million.

Adjusted gross profit rose 10% Y/Y to $46.0 million. Adjusted EBITDA loss narrowed to $(4.6) million from $(10.2) million a year ago.

EPS loss of $(0.28) beat the consensus of loss of $(0.44).

As of November 2023, ACCD's cash and cash equivalents stood at $230.0 million. 

Outlook: The company expects Q4 revenues of $121.5 million-$125.5 million (vs. $126.33 million estimate) and adjusted EBITDA of $16 million-$20 million.

ACCD raised FY24 revenues to $411 million-$415 million vs. consensus of $412.67 million (from $410 million- $414 million earlier) and now expects adjusted EBITDA of $(6) million-$(10) million vs. $(6) million-$(12) million earlier.

Steve Barnes, Accolade Chief Financial Officer, said, "Accolade exceeded both top and bottom line guidance this quarter as we continue to execute consistently across the business. On the strength of our new bookings and the utilization trends we are experiencing, we are raising our guidance for fiscal year 2024 and affirming our expectation for approximately 20% revenue growth and Adjusted EBITDA between 2% - 4% in fiscal year 2025."

Wedbush analyst Ryan Daniels reiterated the Outperform rating and views ACCD shares as a top healthcare technology pick for 2024, given both the positive growth momentum and inflection to profitability.

The analyst says that the company's strong year-to-date sales momentum in FY24, a favorable demand backdrop, and its three-year average contract length support strong visibility into FY25.

The analyst estimates revenue of $413.5 million in FY24 and $493.2 million in FY25.

Price Action: ACCD shares are up 15.5% at $13.43 on the last check Tuesday. 

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