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PROGYNY BOOSTS PROFIT PROJECTIONS FOR 2022 AS MORE EMPLOYERS EYE FERTILITY
BENEFITS IN COMPETITIVE LABOR MARKET

By Heather LandiMay 6, 2022 08:10pm
ProgynyEarningsInsurance BenefitsWomen's health
Progyny has grown its client base to more than 265 large self-insured employers,
up from 179 clients a year ago. (NataliaDeriabina/Gettyimages)

More companies are adding fertility benefits to attract top talent and remain
competitive in a tight labor market.



That's good news for Progyny, a seven-year-old company that provides fertility
benefits for employees at large firms and has doubled its client base in just
the past year. The company announced earlier this year it was expanding its
geographic footprint into the Canadian market.

Progyny, which went public back in 2019, continues to chart strong growth and
brought in record quarterly revenue in the first three months of 2022. The
company's first-quarter revenue jumped 41% over the first quarter of last year
to $172 million.




“We had a strong start to the year, achieving our highest-ever quarterly
revenue, gross profit and adjusted EBITDA, in addition to successfully launching
with the largest number of new clients and covered lives in our history," Pete
Anevski, CEO of Progyny, said during the company's first-quarter earnings call
Thursday.

Progyny's fertility benefit services revenue was $111 million, a 25% increase
from the $89 million reported in the first quarter of 2021. Pharmacy benefit
services revenue was $61 million, an 84% increase as compared to the $33 million
reported a year ago.

The company's gross profit was $33 million, an increase of 14% from the $29
million reported in the first quarter of 2021, primarily due to the higher
revenue.



However, the company's quarterly profit fell to 67% compared to a year ago. Net
income was $5 million, or 5 cents of income per diluted share, compared to $15
million, or 15 cents of income per diluted share, reported in the first quarter
of 2021.

The lower net income was due primarily to higher noncash stock-based
compensation expense, company executives said.


RELATED

Progyny brings in $15M in profits in Q1 as more employers add workplace
fertility benefits

The company's earnings surpassed Wall Street expectations. The average estimate
of four analysts surveyed by Zacks Investment Research was for earnings of 2
cents per share. Revenue also beat Street forecasts. Three analysts surveyed by
Zacks expected revenue of $167 million.

Adjusted EBITDA was $24.8 million, an increase of 44%, or $7.5 million, from the
$17.3 million reported in the first quarter of 2021. Adjusted EBITDA margin was
14.4%, an increase of 30 basis points from the 14.1% adjusted EBITDA margin in
the first quarter of 2021.



As of March 31, Progyny had total working capital of approximately $180 million,
reflecting $105.7 million of cash, cash equivalents and marketable
securities and no debt.

Progyny shares have lost about 20.3% since the beginning of the year versus the
S&P 500's decline of -9.8%.

As of 2020, more than two-fifths (42%) of large U.S. employers—those with over
20,000 staff—offered coverage for IVF treatment, while almost one-fifth (19%)
offered egg freezing. Among smaller companies with over 500 employees, about a
quarter (27%) offer coverage for IVF treatment.

The first fertility benefits management company to ever go public, Progyny has
grown its client base to more than 265 large self-insured employers, up from 179
clients a year ago. Those clients represent about 3.9 million covered lives.

The company brought on 85 new self-insured employers in the first quarter,
representing 1.2 million covered lives, Anevski told Fierce Healthcare.

More employers are realizing that support for fertility treatments and family
building are a real medical need, not just an offering that's nice to
have, Anevski said.

"It's now a necessary part of their benefit offerings. We now serve 30-plus
industries, so it's pretty ubiquitous. And, with a tight labor market, you need
to offer an attractive benefits package," he said.

There is now an urgency and an emphasis around family building and fertility as
a priority for employers, particularly with the millennial workforce where
family building and fertility benefits are close to the top of their priority
lists, Anevski told investors during the earnings call.

Societal trends such as women and couples waiting longer to have children as
well as growing awareness of fertility issues are driving demand for Progyny's
services and solutions, according to executives.


RELATED

Progyny brings in $4M in profits in Q1, beats Wall Street expectations

The company says it offers a "purpose-built, data-driven and disruptive
platform" that delivers "superior clinical outcomes in a cost-efficient manner."
Progyny's benefits solution empowers patients with education and guidance from a
dedicated Patient Care Advocate and provides access to a premier network of
fertility specialists using the latest science and technologies.

Company executives tout Progyny's industry-leading clinical outcomes, noting
that for the sixth straight year, the company significantly outperformed as
compared to the national averages for fertility outcomes released by the Centers
for Disease Prevention and Control and Prevention. 

Progyny's pregnancy rate improved to 17% better than the national average, while
its live birth rate, which had been 25% better than the national average a year
ago, is now 27% better, Anevski said.

"To give you a sense for just how impactful this is, our higher live birth rate
means that Progyny clients need to fund on average significantly fewer rounds of
treatment than they otherwise would, had they be using either a carrier program
or one of the venture capital-backed startups," he said. "This once again
reveals that Progyny’s uniquely helping people to get pregnant faster, have
healthier pregnancies and deliver healthy babies."

These outcomes translate into significant downstream, medical cost savings in
the form of lower maternity and NICU costs as well as a reduction in chronic
care costs associated with low birth weight babies, he noted.

Along with medical carriers, there are a growing number of specialty vendors
offering solutions in the fertility benefits space including ARC Fertility,
Carrot, Kindbody and WIN Fertility. 

Anevski said the company has significant runway in what is still a largely
untapped market. "The percent of the market that’s still underserved, the
percent of the market that we’ve penetrated versus what’s out there, 265 clients
and 8,000 large self-insured employers, not including the labor market, there is
still significant opportunity and we are very early on that curve," he told
investors.

Founded in 2016, Progyny has a "head start" in the market, he noted, and has
worked to refine and improve its solutions. 

"You're not catching up on us anytime soon," Anevski said of the company's
competitors in the market. "And by the time you think you’ve caught up, I'll be
six years ahead of you."

Progyny offers treatment bundles that cover diagnostic testing and connect
members with a patient care advocate. Progyny also offers members access to a
network of fertility specialists and an integrated pharmacy benefits solution,
Progyny Rx.

"The competitors that are out there are point solutions that are trying to sort
of jump on the wave of fertility and they really are reimbursement models for
the most part," Anevski told Fierce Healthcare. "The difference between us and
them is we have the single largest direct contracted provider network, which
means that puts us in a position to work collaboratively with our provider
partners to share data back and forth to get data from the electronic medical
records. And all that is done to ensure best practices, which ultimately
translate into the favorable outcomes that we generate for our members." 

Progyny also is looking to increase the level of support that it provides for
male fertility issues and broader women's health issues by expanding its service
and adding new capabilities.

Based on the strong start to the year, Progyny raised its financial projections
for the year. The company expects 2022 revenue to be between $735 million and
$775 million, reflecting growth of between 47% and 55% or approximately 51%
growth at the midpoint.

And, the company now expects adjusted EBITDA of between $111 million and $122
million, while for net income is projected to come in between $7.3 million to
$14.2 million or between 7 cents and 14 cents earnings per share on the basis of
approximately $105 million fully diluted shares.

For the second quarter of 2022, the company is projecting revenue between $188
million and $193 million, reflecting growth of between 46% and 50%.

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