Accolade, an employee benefits company that went public last year, on Friday said it plans to buy direct-to-consumer virtual primary care startup PlushCare for up to $450 million.
Accolade, which sells healthcare navigation and engagement tools to employers, will pay $40 million in cash and $340 million in Accolade common stock to acquire privately held PlushCare, according to the terms of the agreement. The company may pay up to an additional $70 million based on revenue milestones following the acquisition's closing.
After the acquisition closes, Seattle-based Accolade will begin offering virtual primary care and mental health services to members through San Francisco-based PlushCare's network of clinicians. The company's primary-care and internist physicians consult with patients via text messaging and video telehealth and can order prescriptions and laboratory tests.
"Up until today, our clinical interventions have been designed to provide personalized guidance to members to support their healthcare decision-making as they access care," said Accolade CEO Rajeev Singh in a statement. "With the addition of PlushCare, we will begin delivering care directly to our members."
Offering virtual primary care and mental health is an "essential step" for the company's vision of improving health outcomes and reducing costs, according to Singh. He said Accolade sees virtual primary care as being a piece of healthcare, not as something that will fully replace in-person primary care.
Accolade said the acquisition will expand its total addressable market nearly five-fold to an estimated $200 billion.
PlushCare will continue to offer its services—as well as engagement, navigation and expert medical opinion services from Accolade—to its consumer members.
PlushCare earned roughly $35 million in revenue for full-year 2020. Accolade, which went public in July at a $1.2 billion valuation, will release its full-year fiscal 2021 earnings in May. It posted preliminary, unaudited financial results in March, in which the company said it expects to report fiscal 2021 revenue in the range of $168 million to $169 million.
Accolade expects to report a net loss for fiscal 2021 in the range of $53 million to $51.5 million.
Accolade's stock was $48.73 at noon Eastern Daylight Time following the news Friday, up from $45.84 at market close Thursday.
Accolade's PlushCare purchase is just the latest example of mergers and acquisitions activity in the telehealth space.
Cigna Corp. on Monday acquired MDLive. Doctor On Demand and Grand Rounds last month unveiled plans to merge. Teladoc Health last year merged with Livongo, a digital health company that helps users manage chronic conditions, and acquired InTouch Health, a telehealth company that serves the provider market.
In March, Accolade acquired 2nd.MD for up to $460 million, through which members seek second medical opinions from specialists before high-cost treatment decisions.
Accolade expects the PlushCare acquisition to close in early June.