Accolade Inc. expands into virtual primary care
The deal is a major move by the company with major operations in Plymouth Meeting into providing healthcare rather than just advising patients on it.
Accolade, a fast-growing firm that advises patients how to navigate the health-care maze, has made a big buy so it can begin to provide medical care itself.
The firm, a Seattle-based company with a major operation in Plymouth Meeting, has agreed to pay up to $40 million in cash and $340 million in stock for PlushCare Inc., a provider of online primary care in which patients see their doctors though a smart phone app or computer.
Accolade traditionally has assisted employees of large companies, such as Temple University Health System, in making sense of the medical marketplace, whether it’s helping determine if insurance covers a particular service, deciphering a bill, or keeping treatment on track for a chronic illness.
The service has helped Temple Health keep health-care costs for its employees flat to slightly negative since 2016, Temple officials say.
The PlushCare acquisition marks a major change for Accolade, from adviser to care provider.
Accolade’s chief executive Rajeev Singh told analysts Friday that primary care fits perfectly with Accolade. The long-term data Accolade maintains on individuals “give us the opportunity to super-charge” how doctors treat patients, he said.
It’s not entirely clear how Accolade will decide which individuals to refer to PlushCare. The firm has only signed up about 100 doctors, but has more than 1,000 waiting to join, Singh said.
Shantanu Nundy, Accolade’s chief medical officer, said the point is not to simply figure out whom among Accolade’s patients lack a primary care doctor or have gone months without seeing one.
He said the service would provide coordinated care essential to good health, such as by making sure people who go to an emergency room soon after get follow-up care from their primary doctor.
PlushCare charges customers a $99 annual membership fee and then patients with insurance pay their regular copay for a primary care visit. Patients without insurance pay $99 for the first visit and $59 for subsequent visits. It’s not clear how the pricing will work under the Accolade umbrella.
Accolade, which typically charges employers a per-member per-month fee, had close to $170 million in revenue for the year that ended Feb. 28, according to preliminary results. That was a 28% increase from $133 million during the year before. The firm lost more than $50 million in the most recent year, but says it is focused on growth, not profit.
The payment for PlushCare could rise to as much as $450 million if certain revenue targets are met, Accolade said Friday. PlushCare, based in San Francisco, had $35 million in revenues last year, a period that saw telehealth soar industry-wide because of the COVID-19 pandemic.
On Friday’s call, the companies declined to give specifics on PlushCare’s growth last year. The company’s CEO, Ryan McQuaid, told the Wall Street Journal last year that it had nearly a five-fold increase in patient sign-ups.
Shares in Accolade, which is headquartered in Seattle but was founded here, closed Friday at $48.67, up $2.83 (6.17%). The stock peaked last fall at more than $59 per share after going public at $22 per share last summer.
The purchase of PlushCare, which is expected to be completed in June, is Accolade’s second this year. Last month, Accolade completed buying 2nd.MD, a Houston company that extended Accolade’s health-care navigation services into second opinions by specialists online.
Accolade paid $230 million in cash and $130 million in Accolade stock for 2nd.MD, which, like PlushCare, had $35 million in revenue last year. If revenue targets are met, Accolade will pay up to an additional $100 million in stock for 2nd.MD.