Progyny(PGNY) - 2025 Q2 - Quarterly Results

Credit Agreement Overview This section introduces the Credit Agreement, detailing the parties involved, the $200 million revolving credit facility, and its intended use for general corporate purposes Parties and Facility This Credit Agreement, dated July 1, 2025, is established for Progyny, Inc. as the Parent Borrower, outlining a $200 million revolving credit facility provided by a syndicate of lenders Credit Agreement Key Details | Role | Entity | | :--- | :--- | | Parent Borrower | Progyny, Inc. | | Administrative & Collateral Agent | JPMorgan Chase Bank, N.A. | | Swingline Lender | JPMorgan Chase Bank, N.A. | | Sole Lead Arranger & Bookrunner | JPMorgan Chase Bank, N.A. | | Co-Syndication Agents | Bank of America, N.A., Silicon Valley Bank, US Bank National Association, Wells Fargo Bank, National Association | | Facility Type | Revolving Credit Facility | | Total Commitment | $200,000,000 | - The proceeds of the revolving credit facility are designated for general corporate purposes as permitted under the agreement[13] Definitions and Accounting Principles This article defines key terms and establishes accounting principles, including financial calculations, interest rates, and the application of GAAP for financial reporting Key Defined Terms This section provides definitions for key terms used throughout the credit agreement, including financial calculations, interest rates, and trigger events Applicable Rate for Revolving Loans | Category | Total Leverage Ratio | Term SOFR Rate Spread | ABR Spread | | :--- | :--- | :--- | :--- | | 1 | ≤ 1.00 to 1.00 | 1.50% | 0.50% | | 2 | > 1.00 to 1.00 but < 2.00 to 1.00 | 1.75% | 0.75% | | 3 | > 2.00 to 1.00 | 2.00% | 1.00% | - The Applicable Rate for Revolving Loans is determined by the Total Leverage Ratio and adjusts quarterly[38][39] - Until the first adjustment, the rate is set at Category 1 levels[38] - If financial statements are not delivered on time, the highest rate (Category 3) will apply[39] Deemed Consolidated Adjusted EBITDA (per quarter) | Fiscal Quarter Ended | Deemed EBITDA | | :--- | :--- | | June 30, 2024 | $54,477,000 | | September 30, 2024 | $46,478,000 | | December 31, 2024 | $47,514,000 | | March 31, 2025 | $57,790,000 | - A "Change of Control" is triggered if any person or group acquires 50% or more of the Parent Borrower's voting and/or economic interest, or if an equivalent event occurs under other major indebtedness[85] Accounting Terms and Calculations This section establishes that all financial calculations will be based on U.S. GAAP, with provisions for pro forma adjustments and lease accounting elections - Financial ratios and tests for any period involving a Subject Transaction (e.g., acquisition, disposition) must be calculated on a Pro Forma Basis, as if the transaction occurred on the first day of the test period[398] - The Borrower can elect to continue accounting for leases as operating leases for covenant purposes, even if GAAP (per the ASU) requires them to be treated as finance leases on financial statements[400] - For determining compliance with financial conditions for acquisitions, investments, or restricted payments, the Borrower can choose to test compliance at the time of signing the definitive agreement or at the time of consummation[402] Credit Facilities This article details the various credit facilities available, including revolving loans, swingline loans, and letters of credit, along with their terms, fees, and interest calculations Commitments This section outlines the lenders' several, not joint, agreement to provide an Initial Revolving Credit Facility with a total commitment of $200 million until July 1, 2030 Initial Revolving Credit Facility | Feature | Detail | | :--- | :--- | | Total Commitment | $200,000,000 | | Loan Types | ABR Loans and/or Term SOFR Loans in Dollars | | Maturity Date | July 1, 2030 | Swingline Loans The Swingline Lender agrees to provide Swingline Loans in Dollars up to an aggregate amount of $20 million for short-term needs, subject to the overall revolving credit limit - A Swingline Loan sub-facility of up to $20,000,000 is available to the Parent Borrower[439] - Each Swingline Loan must be a minimum of $100,000, unless a lesser amount is agreed upon by the Swingline Lender[439] Letters of Credit This section permits the issuance of Letters of Credit (LCs) for the Borrower's account up to a sublimit of $30 million, subject to specific conditions and collateral requirements - A Letter of Credit sublimit is established at $30,000,000, with specific Issuing Banks and their individual commitments listed on Schedule 1.01(a)(ii)[244][444] - If an Event of Default occurs and loans are accelerated, the Borrower must deposit cash collateral equal to 103% of the LC Exposure into a designated LC Collateral Account[458] Prepayment of Loans The Borrower has the right to optionally prepay Revolving Loans or Swingline Loans without penalty, but mandatory prepayments are required if Revolving Credit Exposure exceeds commitments - The Borrower may optionally prepay Revolving Loans and Swingline Loans in whole or in part without premium or penalty[481] - A mandatory prepayment is triggered if the Revolving Credit Exposure of any Class exceeds the commitment for that Class, requiring the Borrower to cure the excess within five business days by prepaying loans or cash collateralizing the excess LC Exposure at 103%[484] Fees The agreement stipulates several fees payable by the Parent Borrower, including a Commitment Fee on unused revolving credit, LC participation fees, and fronting fees Key Fees | Fee Type | Rate | Basis | | :--- | :--- | :--- | | Commitment Fee | 0.25% per annum | Daily unused amount of the Revolving Credit Commitment. | | LC Participation Fee | Applicable Rate for Term SOFR Loans | Daily available balance of each Lender's LC Exposure. | | LC Fronting Fee | Up to 0.125% per annum (or as agreed) | Daily available balance of each Letter of Credit. | - All fees are payable quarterly in arrears, on the 15th day after the end of March, June, September, and December[486][488] Interest This section details the interest calculation for loans, specifying rates for ABR and Term SOFR Borrowings, and a default interest rate for overdue amounts - Upon a payment Event of Default, overdue amounts will accrue interest at a default rate of 2.00% plus the rate otherwise applicable to such loan or fee[492] - Interest is payable in arrears on each Interest Payment Date, which is generally the last day of each quarter for ABR Loans and the last day of the Interest Period for Term SOFR Loans[231][493] Incremental Credit Extensions The Borrower is permitted to increase existing facilities or add new facilities up to an Incremental Cap, determined by a fixed basket, voluntary prepayments, and pro forma leverage ratios - The Borrower can incur incremental debt up to the "Incremental Cap", which includes a "Shared Incremental Amount" defined as the greater of $103,000,000 and 50% of Consolidated Adjusted EBITDA[206][347][536] - The Incremental Cap also allows for an unlimited amount of new debt provided certain pro forma leverage ratios are met: 3.00:1.00 for the First Lien Leverage Ratio (for pari passu secured debt), 3.00:1.00 for the Secured Leverage Ratio (for junior secured debt), and 3.00:1.00 for the Total Leverage Ratio (for unsecured debt)[207] - Incremental Term Loans must not mature earlier than the Initial Revolving Credit Maturity Date, and their Weighted Average Life to Maturity must be no shorter than that of the Initial Revolving Facility[537] Extensions of Loans and Commitments The Borrower may offer to extend the maturity date and modify terms of loans and/or commitments to accepting Lenders, forming a new, separate class of extended commitments - The Borrower can make Extension Offers to Lenders of a specific class on a pro rata basis to extend the maturity date of their loans or commitments[550] - No Lender is obligated to accept an Extension Offer[550] - Extended loans or commitments will constitute a new class with potentially different terms (e.g., pricing, fees), but the maturity date cannot be earlier than the existing facility's maturity date[550][551] Representations and Warranties This article outlines the fundamental assurances provided by the Loan Parties regarding their legal standing, financial condition, and compliance with laws Summary of Representations and Warranties The Loan Parties provide a series of representations and warranties to the Lenders regarding their organization, authority, compliance, financial condition, and the validity of security interests - The Loan Parties represent that their execution of the Loan Documents does not violate their organizational documents, applicable laws, or material contracts in a way that would cause a Material Adverse Effect[561] - As of the Closing Date, the Loan Parties represent that, after giving effect to the Transactions, they are solvent, meaning their assets' fair value exceeds their debts, they are not left with unreasonably small capital, and they can pay their debts as they mature[580] - The Loan Parties represent that the Collateral Documents create legal, valid, and enforceable Liens on the Collateral, which become perfected upon satisfaction of the Perfection Requirements[582] - The Loan Parties affirm compliance with the USA PATRIOT Act, Sanctions, and Anti-Corruption Laws, and state that loan proceeds will not be used in violation of these laws[585][586][587] Conditions to Credit Extensions This article specifies the conditions that must be met for the initial closing and for all subsequent credit extensions, ensuring legal and financial compliance Conditions to Closing The effectiveness of the credit agreement and initial lender obligations are contingent upon the satisfaction or waiver of several conditions on the Closing Date, including executed documents and legal opinions - Key closing deliverables include: executed Loan Documents (Credit Agreement, Collateral Documents, Loan Guaranty), legal opinions, a solvency certificate, secretary's certificates, and a Perfection Certificate[590][591][592][593][596] - The Borrower must provide all necessary documentation for "know your customer" (KYC) and anti-money laundering regulations, including the USA PATRIOT Act and a Beneficial Ownership Certification, at least three business days prior to closing[598] - Certain obligations, listed on Schedule 5.17, are not conditions to closing and must be completed within specified post-closing timeframes[602] Conditions to Each Credit Extension For each credit extension after the Closing Date, the Loan Parties' representations and warranties must be true and correct, and no Default or Event of Default must be continuing - Prior to each credit extension, the Borrower must submit the appropriate request (e.g., Borrowing Request)[603] - The following conditions must be met for each credit extension: - Representations and warranties must be true and correct in all material respects[604] - No Default or Event of Default shall have occurred and be continuing[605] Affirmative Covenants This article details the ongoing obligations of the Loan Parties, including financial reporting, proper use of loan proceeds, and requirements for guarantees and security Financial Reporting The Parent Borrower is required to provide regular financial statements and other reports to the Administrative Agent, along with prompt notice of any Default or Material Adverse Effect Financial Reporting Deadlines | Report | Deadline | | :--- | :--- | | Quarterly Financials (Unaudited) | Within 60 days after end of each Fiscal Quarter (except Q4) | | Annual Financials (Audited) | Within 90 days after end of each Fiscal Year | | Compliance Certificate | Within 5 Business Days after delivery of financial statements | - The Parent Borrower must promptly notify the Administrative Agent upon a Responsible Officer obtaining knowledge of any Default, Event of Default, or Material Adverse Effect[609] Use of Proceeds The proceeds from the Revolving Loans and Swingline Loans are to be used for working capital and general corporate purposes, including capital expenditures, acquisitions, and investments - Loan proceeds can be used for a broad range of purposes, including: - Working capital needs - General corporate purposes - Capital expenditures - Acquisitions and other Investments - Restricted Payments and Restricted Debt Payments[630] Guarantees and Security This section requires newly formed or acquired U.S. Restricted Subsidiaries to become Loan Parties by providing guarantees and security interests, subject to certain exceptions and limitations - Upon the formation or acquisition of a new U.S. Restricted Subsidiary (that is not an Excluded Subsidiary), the Borrower must cause it to become a Guarantor and provide collateral[631] - The timeline for a new subsidiary to comply is tied to the next quarterly or annual financial statement delivery date[631] - The agreement contains numerous limitations on collateral requirements, excluding assets where the cost or burden of obtaining a perfected lien is excessive in relation to the benefit, and excludes assets like motor vehicles and certain contract rights[633][634][635] Negative Covenants This article imposes restrictions on the Loan Parties regarding indebtedness, liens, restricted payments, and mandates compliance with specific financial ratios Indebtedness The Borrower and its Restricted Subsidiaries are prohibited from incurring new indebtedness, subject to specific exceptions including intercompany debt, acquisition debt, and general-purpose baskets - Indebtedness of Restricted Subsidiaries that are not Loan Parties is capped at the greater of $51,500,000 and 25% of Consolidated Adjusted EBITDA[643] - A general purpose debt basket allows for Indebtedness up to the greater of $82,400,000 and 40% of Consolidated Adjusted EBITDA[645] - The company can incur Incremental Equivalent Debt, provided that after giving effect to it, no Specified Event of Default exists and leverage ratios are met[646] Liens The Borrower and its Restricted Subsidiaries are restricted from creating any liens on their property, except for permitted exceptions including those under Loan Documents, tax liens, and a general-purpose basket - Liens securing Incremental Equivalent Debt are permitted, provided they are subject to an Acceptable Intercreditor Agreement[653] - A general purpose lien basket allows for liens securing obligations in an aggregate amount not to exceed the greater of $82,400,000 and 40% of Consolidated Adjusted EBITDA[653] Restricted Payments and Debt Payments This section limits the ability of the Borrower and its Restricted Subsidiaries to make Restricted Payments and Restricted Debt Payments, with exceptions for available amounts and leverage ratio compliance - Restricted Payments are permitted using the Available Amount, provided the pro forma Total Leverage Ratio is no greater than 3.00:1.00 and no Event of Default exists[660] - A general basket permits additional Restricted Payments up to the greater of $61,800,000 and 30% of Consolidated Adjusted EBITDA, provided no Event of Default exists[661] - Unlimited Restricted Payments and Restricted Debt Payments are permitted if the pro forma Total Leverage Ratio does not exceed 2.75:1.00 and no Event of Default exists[661][664] Financial Covenants The Borrower must comply with two key financial covenants, Total Leverage Ratio and Interest Coverage Ratio, tested quarterly, with a provision for an equity-based Cure Right Financial Covenants (tested quarterly) | Covenant | Requirement | | :--- | :--- | | Total Leverage Ratio | ≤ 3.50 to 1.00 | | Interest Coverage Ratio | ≥ 3.00 to 1.00 | - The Borrower has a Cure Right, allowing it to issue equity to increase Consolidated Adjusted EBITDA for the purpose of meeting the financial covenants[697] - This right can be used a maximum of five times during the term of the agreement and no more than twice in any four-quarter period[697] - Once a Notice of Intent to Cure is given, Lenders cannot accelerate loans or terminate commitments based on the financial covenant breach for a period of fifteen business days, allowing time for the cure to be effected[697] Events of Default This article defines the circumstances that constitute a default, such as payment failures or covenant breaches, and outlines the remedies available to the Lenders Events of Default and Remedies This article defines various events that constitute an "Event of Default," including payment failures, covenant breaches, cross-defaults, insolvency, and Change of Control, triggering potential acceleration of loans - Key Events of Default include: - Failure to pay principal, interest, or fees within the specified grace periods[700] - Breach of negative covenants (Article 6) or key affirmative covenants[701] - Cross-default on other indebtedness exceeding the Threshold Amount (greater of $30,900,000 and 15% of Consolidated Adjusted EBITDA)[370][704] - Bankruptcy or insolvency events[704] - A Change of Control[704] - Upon most Events of Default, the Administrative Agent, at the request of the Required Lenders, can accelerate the loans[705] - In the case of bankruptcy, acceleration is automatic[705] - A breach of the financial covenants in Section 6.15 does not become an Event of Default until the 15-business-day cure period has expired without the breach being cured[701] The Agents This article defines the roles, responsibilities, and protections of the Administrative and Collateral Agents, including their authority and limitations Roles, Rights, and Protections of the Agents This article appoints JPMorgan Chase Bank, N.A. as the Administrative and Collateral Agent, outlining its mechanical role, liability protections, and authority to release collateral or guarantees - The Administrative and Collateral Agents act on behalf of the Lenders and are not required to take any action unless instructed by the Required Lenders[707][709][710] - They are not fiduciaries to the Lenders or Loan Parties[710] - The Agents are exculpated from liability except for actions determined by a final court judgment to constitute their own bad faith, gross negligence, or willful misconduct[716] - The Agents are authorized to automatically release any lien on property that is sold or transferred in a permitted disposition to a person that is not a Loan Party, or if the property ceases to be Collateral[752] - A Subsidiary Guarantor is automatically released from its guarantee if it ceases to be a Restricted Subsidiary or becomes an Excluded Subsidiary through a permitted transaction[752] Miscellaneous Provisions This article covers general legal provisions, including amendment procedures, assignment rules, governing law, jurisdiction, and other standard contractual clauses Waivers and Amendments This section specifies the requirements for amending the Loan Documents, generally requiring consent from Required Lenders, but with specific provisions for affected Lenders or unanimous consent for fundamental changes - Most amendments require the written consent of the Required Lenders and the Parent Borrower[769] - Consent of each directly and adversely affected Lender is required for actions such as increasing their commitment, reducing their principal, or extending their final maturity date[769] - Consent of all Lenders is required to release all or substantially all of the collateral or the value of the guarantees[771] Successors and Assigns This section governs the transfer of rights and obligations by Lenders, outlining conditions for assignment to Eligible Assignees and remedies for assignments to Disqualified Institutions - Lenders may assign their rights and obligations to an Eligible Assignee, subject to consent from the Parent Borrower and the Administrative Agent[789] - Borrower consent is not required during a Specified Event of Default[789] - Assignments to Disqualified Institutions are restricted[803] - If an assignment is made to a Disqualified Institution without the required consent, the Borrower can terminate the commitment and/or purchase the loans at the lesser of par or the price the Disqualified Institution paid[803][804] - The Administrative Agent maintains a Register of all Lenders and their assigned interests, acting as the agent of the Borrower for this purpose[792] - An assignment is not effective until recorded in the Register[792] Governing Law and Jurisdiction The credit agreement and other Loan Documents are governed by New York law, with exclusive jurisdiction granted to U.S. Federal or New York State courts in Manhattan - The governing law for the Loan Documents is the law of the State of New York[817][818] - Exclusive jurisdiction for any legal action is granted to the U.S. Federal or New York State courts in Manhattan, New York City[819] Other Miscellaneous Provisions This section contains various standard legal clauses, including a mutual waiver of jury trial, confidentiality obligations, a "Bail-In" clause, and an "Erroneous Payments" clause - All parties irrevocably waive their right to a trial by jury in any proceeding related to the Loan Documents[822] - The agreement includes an "Acknowledgement and Consent to Bail-In," where parties agree to be bound by the write-down and conversion powers of resolution authorities over any Affected Financial Institution[837] - A detailed "Erroneous Payments" section allows the Administrative Agent to demand the return of any funds mistakenly transmitted to a Lender or other recipient, with such recipient obligated to return the funds promptly with interest[843][844][845]