Name: Accolade, Inc. Q3 2025 Earnings Call
Start: 2025-01-08T14:11:33.000Z

Executive Summary

Accolade reported fiscal Q3 2025 revenue of approximately $105.1M and diluted EPS of -$0.30; EPS missed consensus (-$0.16) while revenue was roughly in line with the $106M consensus .
The company withdrew full‑year guidance and canceled its previously scheduled earnings call amid a definitive agreement to be acquired by Transcarent for $7.03 per share in cash; Q3 results were communicated via the Form 10‑Q and 8‑K filings rather than a traditional earnings press release or call .
Sequentially, revenue declined versus Q2 ($106.4M) and Q1 ($110.5M), consistent with management’s prior commentary that certain performance guarantee revenues were pulled forward into Q2, pressuring Q3 .
Near‑term stock reaction was driven by the take‑private catalyst; merger closed April 8, 2025, with ACCD becoming an indirect wholly owned subsidiary of Transcarent .

What Went Well and What Went Wrong

Q3 revenue landed within the previously guided range ($104M–$107M), reflecting continued utilization of services despite timing headwinds from Q2 pull‑forward .
Prior quarter operating execution remained strong: Q2 revenue above the high end of guidance ($106.4M), adjusted gross margin expanded to 47.3%, and adjusted EBITDA significantly ahead of guidance given PG timing and expense control .
Management reiterated confidence in the scalability and profitability of the model into FY25: “We are well positioned to deliver our first full year of Adjusted EBITDA profitability and positive cash flow” — Rajeev Singh (Q2 press release) .

EPS of -$0.30 missed consensus (-$0.16), reflecting the absence of an earnings call to frame non‑GAAP adjustments and timing impacts; consensus had implied a narrower loss .
The company withdrew full‑year guidance and canceled the Q3 call due to the merger, reducing near‑term visibility for investors on run‑rate profitability and cash trajectory .
Q3 10‑Q disclosed elevated operating expenses largely driven by a goodwill impairment, weighing on GAAP results and masking underlying operational trends .

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Millions)	$110.5M	$106.4M	$105.1M
Diluted EPS ($)	-$0.35	-$0.30	-$0.30
Adjusted Gross Margin (%)	47.8%	47.3%	N/A (not disclosed)

KPIs (reported or reiterated):

KPI	Q1 2025	Q2 2025	Q3 2025
Cash & Cash Equivalents ($M)	~$231	>$234	$185.9
Marketable Securities ($M)	N/A	N/A	$39.6
Usage‑based revenue mix (% of total)	N/A	~32%	N/A

Estimate comparison (Wall Street consensus vs actual):

Metric	Consensus	Actual	Surprise
Revenue ($USD Millions)	$106.0M	$105.1M	-$0.9M (miss)
EPS ($)	-$0.16	-$0.30	-$0.14 (miss)

Note: Consensus values above are from public sources; S&P Global estimates were unavailable due to a mapping issue.

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($M)	Q3 2025	$104–$107	“Expect to report within guidance range”; call canceled	Maintained (communication via 10‑Q/8‑K)
Adj. EBITDA ($M)	Q3 2025	-$3 to -$5	Not reiterated in Q3 filings	Withdrawn (practical)
Revenue ($M)	FY 2025	$460–$475	Withdrawn following merger announcement	Lowered/withdrawn
Adj. EBITDA ($M)	FY 2025	+$15 to +$20	Withdrawn following merger announcement	Lowered/withdrawn

Topic	Previous Mentions (Q1 2025)	Previous Mentions (Q2 2025)	Current Period (Q3 2025)	Trend
Profitability focus	Reiterated plan for positive FY25 Adj. EBITDA	“Well ahead of guidance,” de‑risked FY outlook	Guidance withdrawn due to merger	Paused (transaction)
Revenue timing/PG	N/A	PG revenue pulled into Q2, impacting Q3	Reflected in Q3 print	Normalizing
Bundled offerings	Advocacy + primary care + EMO momentum	Majority of new wins bundled	Not discussed (no call)	Positive prior trend
GLP‑1 demand	Tailwind to navigation & primary care	Reinforced need for care coordination	Not discussed (no call)	Positive prior trend
Customer retention	~90%+ B2B renewal expectations	Reiterated retention strength	Not discussed (no call)	Stable prior trend
Regulatory/transaction	N/A	N/A	Definitive agreement to be acquired at $7.03/share	New catalyst

“We are well positioned to deliver our first full year of Adjusted EBITDA profitability and positive cash flow.” — Rajeev Singh, CEO (Q2 press release) .
“Accolade continues to execute against our primary objective of delivering profitable growth and positive Adjusted EBITDA this year... net cash position improved by more than $20 million.” — Steve Barnes, CFO (Q2 press release) .
“Accolade…expects to report financial results for the three months ended November 30, 2024 within the guidance range previously provided… will not host its previously scheduled conference call.” — Joint press release with Transcarent (Q3 period) .

PG timing: Management noted early performance guarantee recognition primarily came out of Q3, impacting both revenue and adjusted EBITDA, while not affecting full‑year forecasts .
Bundling and demand drivers: Most new wins are now bundled (advocacy, primary care, EMO), with GLP‑1 utilization driving higher demand for coordinated navigation and clinical oversight .
Usage‑based revenue: Usage‑based revenue accounted for ~32% of total in Q2, consistent with prior quarters as contracts shift from PMPM to usage‑based structures .
Retention and pipeline: B2B retention expected to be ~90%+, with robust pipeline across enterprise, health plans, and government segments .

Q3 2025 results vs consensus: Revenue ~$105.1M vs $106.0M consensus (miss), EPS -$0.30 vs -$0.16 consensus (miss) .
S&P Global estimates: Unavailable via SPGI tool due to a CIQ mapping issue; public sources used as proxy pending SPGI access .

Near‑term narrative is dominated by the take‑private transaction; with guidance withdrawn and the call canceled, the merger became the primary stock catalyst, culminating in deal close on April 8, 2025 .
Q3 prints showed timing normalization after Q2 PG pull‑forward; underlying utilization remained resilient, with revenue inside the prior guided range .
EPS miss vs consensus underscores the importance of non‑GAAP framing and the absence of a Q3 call; goodwill impairment increased GAAP operating expenses in the quarter .
Prior quarter execution (Q2) highlighted progress toward profitable growth: revenue beat, adjusted gross margin expansion, and disciplined OpEx .
Strategic positioning: Bundled offerings and GLP‑1 complexity continue to drive demand for advocacy, primary care, and expert medical opinions; retention metrics remained strong heading into year‑end .
With the company now private post‑merger, medium‑term thesis considerations revolve around integration with Transcarent’s AI WayFinding platform and combined client base of ~1,400 employers/payers, potentially enhancing scale and data‑driven care navigation .
Trading implications concluded with the go‑private close; future performance will be evaluated within Transcarent’s private operating framework rather than public markets .