Accolade Inc., a health-care services firm with dual headquarters in Plymouth Meeting and Seattle, had a successful initial public offering Thursday, raising $220 million by selling shares at $22 each — above the anticipated range of $19 to $21.
Even though the 13-year-old firm lost $51 million in its last fiscal year, IPO investors plainly thought highly of its prospects, paying more than the expected price and buying 10 million shares, 1.25 million more than the target.
Accolade helps big companies navigate the health-care maze; the firm’s top four customers are American Airlines, Comcast Cable, Lowe’s, and State Farm. It is now trading on the Nasdaq Global Select Market under the ticker symbol ACCD. The stock surged to a high of $34.27 on its first day of trading before closing at $29.70, a 35% increase over the IPO price.
“The COVID environment, as tragic as it is, it’s really cast a spotlight on the fact that employers struggle with the complexity of the health system in terms of expense,” Accolade’s chief financial officer, Steve Barnes, said in an interview. The pandemic “has illuminated the need for our services.”
Accolade has grown quickly in recent years but has lots of room for more growth. “Employers pay for health care for about 170 million Americans, and we serve 1.5 million, so we believe we’re at the beginning of a long journey,” Barnes said.
In the year ended Feb. 28, Accolade’s revenue increased 40%, to $132.5 million from $94.8 million the year before. The company’s net loss declined $5.1 million from $56.5 million over the same period, according to a Securities and Exchange Commission filing. Barnes said the company’s focus is on continuing to grow.
Accolade, which was founded in the Philadelphia area in 2007, has 60 corporate customers, up from 11 three years ago, it declared.
Accolade said its competition includes large health plans that offer member services; rival advocacy and navigation companies, such as Health Advocate Inc., also based in Plymouth Meeting; and new firms that provide employees health-care navigation on the internet.
Before going public, Accolade had raised $240 million of equity from investors, including Comcast Ventures, Andreessen Horowitz, and Carrick Capital. Those investors did not sell shares in the IPO, and along with executives still own about half the company.
Accolade employs more than 500 in Plymouth Meeting and more than 200 in Seattle, where its chief executive, Rajeev Singh, and its technology group are based. Singh cofounded Concur, which designed and sold software to help companies manage employees’ expenses, and is now owned by SAP.
The company has additional offices in Scottsdale, Ariz.; Santa Monica, Calif.; and Prague. It employs 1,250 overall.