Employee benefits software company Accolade will seek up to $211 million in its market debut, according to documents filed with the Securities and Exchange Commission on Wednesday.
The startup had filed preliminary paperwork indicating its plans for an IPO in March. Now, it has shared the terms: It will offer just over 10 million shares priced between $19 and $21.
Accolade, which splits its headquarters between Seattle and Philadelphia, provides users information about their available benefits and can help them pick the most cost-effective providers in their network. The company has a total of 58 customers, which it charges on a per-member per-month basis.
Some of its biggest customers include American Airlines, Comcast Cable, Lowe’s and State Farm. But these four companies also make up a significant portion of its business, accounting for more than 56% of its revenue, with Comcast alone accounting for 24%. (Comcast is also an investor in the company).
Accolade plans to use the funds from the IPO for general purposes and for the repayment of debt. The latter has increased, in part due to the Covid-19 pandemic and resulting downturn. In February, Accolade had an outstanding debt of $22 million, but that number increased to $73.2 million as of May 31.
Though the company expects its revenue to increase this year due to several new customer launches, it has been operating at a net loss in recent years. As of February, the company reported $132.5 million in revenue and a net loss of $51.36 from the past year. During the same period last in 2019, it reported $94.81 million in revenue and a net loss of $56.5 million.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Though it happened during very different market conditions, competitor Castlight Health’s IPO may still be fresh in some investors’ minds. The company, which went public in 2014, also offers employee benefit navigation and care guidance. At debut, the startup’s stock soared 149% to nearly $40 per share, giving it a valuation of over $3 billion, despite having no profits and only $13 million in revenue.
Accolade declined to comment on its plans. Eight banks will underwrite Accolade’s IPO, with Goldman Sachs, Morgan Stanley and Bank of America Securities leading the deal. The company will be listed on Nasdaq as ACCD.
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