Progyny, Inc. Q3 FY2024 earnings call

Member Activity

• Utilization rate in Q3 was 0.47%, consistent with historical patterns, but consumption differed with slower progression to treatment and fewer average simulation-related ART cycles, especially for freeze all and egg freezing. Q4 showed improved pacing but guidance remains cautious.

Selling Season

• Added 1.1 million new lives from over 80 new client commitments, fourth straight year of over 1 million lives. New clients span nearly two dozen industries. Channel partner relationships expanded, including first national health plan and additional TPAs.

Renewals and Upsells

• 99% of clients remain, 30% of existing clients increasing programs in 2025, including new services in maturity postpartum and menopause.

Third quarter revenue was $286.6 million, up 2% year-over-year. Gross profit was $59.2 million, with a 20.7% gross margin. Covered lives averaged 6.4 million over the quarter, up from 5.4 million the previous year. Medical revenue was $179 million and pharmacy revenue was $108 million, both showing growth.

Full Year 2024

• Revenue expected $1.135 billion to $1.150 billion.
• Fourth quarter revenue $266.2 million to $281.2 million.
• Adjusted EBITDA for Q4 $37.8 million to $42.8 million, full year $189 million to $194 million. Guidance accounts for potential variance from Q3 trends.

Risks

• Variability in member activity and consumption patterns affecting forecast accuracy.
• Dependence on client retention and upsell success, including potential impact of workforce reductions at some clients.
• Uncertainty around sales pipeline, including jumbo opportunities and timing of decisions from prospects.

Q: How does Progyny get visibility into utilization and consumption?

A: Looks at contextualized data, PCAs focus on member needs, not timing.

Q: Any commonality in account losses?

A: No commonalities, about 5 losses overall, not related to dissatisfaction with benefit.

Q: Are there differences in utilization between health plan partnerships and employers?

A: No structural difference, utilization functions similarly whether direct or through partner.

Q: Thoughts on conservative guidance for 2025?

A: Incorporating greater emphasis on variability seen in 2024, less reliance on current data point for guidance setting.