Accolade Inc. and its CEO have asked a New York federal judge to toss a suit alleging they made false statements about the healthcare company's profitability to prop up share prices before announcing plans to go private, saying the amended complaint is investors' "second attempt to plead a 'fraud' case based on an obvious slip of the tongue."

Accolade and its former chief executive Rajeev Singh filed a dismissal motion on Friday, arguing that a comment Singh made at a November 2023 analyst conference about Accolade's future profitability was a mistaken "stray remark."

According to the suit filed by Accolade shareholder Madera Technology Master Fund Ltd., Singh told investors at the conference that Accolade would become profitable for the first time in "the very near term," and would not have any more unprofitable quarters despite analyst projections that it would not be profitable until at least 2028.

But Friday's dismissal motion claims Singh meant to say "years" instead of "quarters" when he made the statement.

"In context, no reasonable investor could have heard that statement as a promise that Accolade would never have another unprofitable quarter," the motion states. "Accolade had just forecast an unprofitable quarter (and never revised that projection); sell‑side models continued to project unprofitable quarters, and when, five months later, the company forecast another unprofitable quarter, no analyst raised an eyebrow."

Additionally, Accolade and Singh argue that the suit's reliance claims fail since most of Madera's stock purchases occurred before the November 2023 statement, and federal law does not recognize "'holder' claims — claims by persons who allege that they were misled into holding rather than buying or selling their securities."

Reliance on any post-statement purchases is also "implausible," the motion states, because a "sophisticated" hedge fund such as Madera would not reasonably rely on an "off‑the‑cuff remark that conflicted with the company's formal guidance and that not a single analyst appeared to credit."

According to the motion, Madera has acknowledged that "it knew the comment was a mistake, as the company told plaintiff it considered clarifying the remark but deemed it unnecessary because analyst models were in the right place."

The motion further argues that the suit fails to plead loss causation because, two months before the alleged corrective disclosure that caused the stock drop, Accolade told investors to expect an unprofitable quarter. Therefore, the stock decline that followed "could not have been caused by any 'corrective' disclosure revealing the 'truth,'" the motion said.

Finally, the motion argues that the amended complaint fails to allege any materially false statements or knowledge of wrongdoing by the defendants.

"The CEO's slip was, at most, an isolated and immaterial foot fault. Plaintiff pleads no facts showing a substantial likelihood that the remark significantly altered the total mix of information available to investors or giving rise to a strong inference of fraudulent intent," the motion states. "The remaining challenged statements were forward‑looking projections … simply put, there is no fraud here. Plaintiff is trying to turn a single, poorly phrased statement into a windfall."

The suit states that Accolade went public in 2020, but by late 2023, the company had not generated a profit and analysts were modeling negative earnings for Accolade for the next 18 quarters, through February 2028.

The suit alleges that Accolade and Singh were motivated to make positive statements about Accolade's potential profitability so that it could pursue an acquisition of an unnamed company referred to as "Strategic A," but the defendants were concerned that Accolade's stock price and performance would not be strong enough to get the purchase over the finish line.

The suit alleges Singh and Accolade used the November 2023 conference as an opportunity to paint an inaccurate picture of Accolade's financial health, telling investors that Accolade's revenue growth put it "in a unique class."

By Jan. 9, 2024, several weeks after the conference, Accolade's shares jumped nearly 77%, according to the suit.

Approximately six months later, however, the truth emerged, the suit alleges, when Accolade announced a $3.3 million loss in the first quarter of its 2025 fiscal year, resulting in a 44% decline in the company's share price over the next day.

In January, Accolade issued a proxy statement for its planned merger with healthcare company Transcarent Inc. As a result of the merger, Accolade went private and became a wholly owned indirect subsidiary of Transcarent in April.

The suit accuses the defendants of violating the Exchange Act. The investment fund seeks at least $4.8 million in damages, in addition to litigation fees.

Representatives for the parties did not immediately respond to requests for comment on Monday.

Madera is represented by Nathaniel P. T. Read of N. Read & Co. PLLC.

Accolade and Singh are represented by Peter Adams, Craig TenBroeck, Nicholas R. Orr, Brian M. French and Edward W. McLaughlin of Cooley LLP.

The case is Madera Technology Master Fund Ltd. v. Accolade Inc. et al., case number 1:25-cv-05863, in the U.S. District Court for the Southern District of New York.