Accolade’s share price is up 38% since its initial public offering on Thursday, marking a successful debut for the health benefits management company at a time of unprecedented uncertainty in the industry, the economy and the broader world.
“The environment today is clearly very unique,” said Accolade CEO Rajiv “Raj” Singh in an interview with GeekWire shortly after the company’s shares began trading on the Nasdaq. “We filed to go public in February of this year. The pandemic hit, and the market went straight through the floor in March, and yet somehow it’s rebounded. Even with its rebound, though, the world that we live in as a healthcare technology company has been disrupted in so many ways.”
From Concur to Accolade: It’s also very different from the last time Singh took a company public, back in 1998. That was travel and expense management company Concur Technologies, which he co-founded with his brother, investor and business leader Steve Singh; and their business partner, Mike Hilton, who still works with Raj Singh as Accolade’s chief product officer.
After reinventing Concur’s underlying business multiple times, they sold the company to SAP in 2014 for $8.3 billion.
“In business terms, I was a child, and it was the first thing I’d ever really worked on,” Singh said when we asked how the IPOs compared. “We were lucky enough that it became something we can all look back on and be proud of. But I don’t think I knew how special it was in 1998. … What you acknowledge in the next go ’round is how rare these moments are. And perhaps you cherish them a little bit more.”
Another big difference this time: Everything about the process was conducted remotely, from the roadshow to the ceremonial ringing of the NASDAQ bell.
The pandemic’s ‘second hit’: Accolade, which splits its headquarters between Seattle and Philadelphia, filed its initial IPO paperwork as the COVID-19 outbreak was beginning to spread globally, initially raising questions about whether it would proceed with the offering.
But the IPO market has proven resilient to the downturn, and Singh said the pandemic helped to illustrate the importance of the company’s core value proposition. Accolade offers a technology platform to assist employees at its client companies navigate their health benefits, with help from trained health assistants.
“Healthcare is more challenged in the United States today, in July, than it was in January, by a significant margin,” Singh said. “And so we think our moment has a more profound impact today than it would have had we gone public back in March. Because the world is starting to acknowledge, ‘Hey, we’d better really get serious about changing healthcare in this country.’ ”
In addition to helping companies and workers navigate COVID-19, Accolade is looking ahead to what Singh calls the “second hit of this pandemic,” as elective medical procedures and treatments for chronic disease come back around after being deferred by people impacted by the economic downturn, or concerned about potential exposure to the virus in healthcare facilities.
“Those people need help,” he said. “Chronic disease didn’t go away because the pandemic started. And so our solution is, in some ways, even more valuable to prospects and customers today.”
Business risk from large customers: One risk factor that stands out in Accolade’s regulatory filings is the large amount of business that comes from a handful of customers. Comcast Cable, American Airlines, Lowe’s, and State Farm made up a combined total of 59% of the company’s revenue of $132.5 million for its 2020 fiscal year, which ended in February.