Progyny(PGNY) - 2025 Q2 - Quarterly Report

Introduction Form 10-Q Filing Information Progyny, Inc. filed its Form 10-Q for Q2 2025 as a Delaware corporation and large accelerated filer, with common stock trading on Nasdaq - Progyny, Inc. filed a Quarterly Report on Form 10-Q for the period ended June 30, 2025[2] - The company is incorporated in Delaware with its principal executive offices in New York, New York[2] Commission File Number, Trading Symbol, Exchange, Filer Status, and Common Stock Outstanding | Indicator | Value | | :--- | :--- | | Commission File Number | 001-39100 | | Trading Symbol | PGNY | | Exchange | The Nasdaq Global Select Market | | Filer Status | Large accelerated filer | | Common Stock Outstanding (as of July 31, 2025) | 85,982,409 shares | Cautionary Note Regarding Forward-Looking Statements The report contains forward-looking statements subject to risks and uncertainties, which the company does not plan to update - The report contains forward-looking statements covered by safe harbor provisions, indicating future results of operations, financial position, business strategies, and market trends[8] - These statements involve known and unknown risks, uncertainties, and other important factors that may cause actual results to differ materially from expressed or implied achievements[8] - Investors are cautioned not to unduly rely on these statements, which speak only as of the report's date, and the company does not plan to publicly update or revise them[9][11] Summary of Risks Affecting Our Business This section outlines principal risks making Progyny's common stock speculative, including competition, economic conditions, and regulatory compliance - Key risks include failure to meet guidance, intense market competition, unfavorable global economic conditions, and dependence on retaining existing clients and increasing service adoption[13] - The company faces risks related to client concentration (especially in the technology industry), changes in fertility solution utilization, and challenges with acquisitions or strategic investments[13] - Operational risks involve maintaining the Center of Excellence network, efficient pharmacy distribution, and managing IT systems against cybersecurity breaches, alongside compliance with evolving legal and regulatory requirements[13][14] General Information This section clarifies terminology, confirms trademark ownership, and outlines channels for public disclosure of material information - References to 'Progyny,' 'the Company,' 'we,' 'our,' and 'us' refer to Progyny, Inc. and its wholly owned subsidiaries[16] - Progyny's registered and common law trade names, trademarks, and service marks are the property of Progyny, Inc[17] - Material information is disclosed through SEC filings, the investor relations website (investors.progyny.com), press releases, public conference calls, and webcasts[18] PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Presents Progyny's unaudited consolidated financial statements and notes for periods ended June 30, 2025 and 2024 Consolidated Balance Sheets Presents Progyny's unaudited consolidated balance sheets as of June 30, 2025, and December 31, 2024 Consolidated Balance Sheet Highlights (in thousands) | Item | June 30, 2025 | December 31, 2024 | Change (2025 vs 2024) | | :--- | :--- | :--- | :--- | | Cash and cash equivalents | $132,506 | $162,314 | $(29,808) | | Marketable securities | $172,586 | $65,640 | $106,946 | | Accounts receivable, net | $271,853 | $235,324 | $36,529 | | Total current assets | $594,402 | $472,721 | $121,681 | | Total assets | $760,950 | $607,102 | $153,848 | | Accounts payable | $140,517 | $95,097 | $45,420 | | Total current liabilities | $220,423 | $168,627 | $51,796 | | Total liabilities | $245,928 | $185,040 | $60,888 | | Total stockholders' equity | $515,022 | $422,062 | $92,960 | Consolidated Statements of Operations Details Progyny's unaudited consolidated statements of operations for periods ended June 30, 2025 and 2024 Consolidated Statements of Operations Highlights (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (YoY) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Revenue | $332,874 | $304,087 | +9.5% | $656,912 | $582,165 | +12.8% | | Cost of services | $253,901 | $235,806 | +7.7% | $502,144 | $451,478 | +11.2% | | Gross profit | $78,973 | $68,281 | +15.7% | $154,768 | $130,687 | +18.4% | | Income from operations | $24,358 | $20,687 | +17.7% | $48,528 | $39,210 | +23.8% | | Net income | $17,112 | $16,485 | +3.8% | $32,171 | $33,383 | -3.7% | | Basic EPS | $0.20 | $0.18 | +11.1% | $0.38 | $0.35 | +8.6% | | Diluted EPS | $0.19 | $0.17 | +11.8% | $0.36 | $0.34 | +5.9% | Consolidated Statements of Comprehensive Income Presents Progyny's unaudited consolidated statements of comprehensive income for periods ended June 30, 2025 and 2024 Consolidated Statements of Comprehensive Income Highlights (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $17,112 | $16,485 | $32,171 | $33,383 | | Total other comprehensive income (loss), net of tax | $108 | $(725) | $179 | $(794) | | Total comprehensive income | $17,220 | $15,760 | $32,350 | $32,589 | Consolidated Statements of Changes in Stockholders' Equity Details changes in Progyny's unaudited consolidated stockholders' equity for periods ended June 30, 2025 and 2024 Consolidated Statements of Changes in Stockholders' Equity Highlights (in thousands) | Item | Balance at Dec 31, 2024 | Issuance of employee equity awards, net | Stock-based compensation | Other comprehensive income, net of tax | Net income | Balance at June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Common Stock (Amount) | $9 | $0 | $0 | $0 | $0 | $9 | | Additional paid-in capital | $581,596 | $(5,475) | $66,085 | $0 | $0 | $642,206 | | Treasury stock | $(303,889) | $0 | $0 | $0 | $0 | $(303,889) | | Accumulated earnings | $144,307 | $0 | $0 | $0 | $32,171 | $176,478 | | Accumulated Other Comprehensive Income | $39 | $0 | $0 | $179 | $0 | $218 | | Total Stockholders' Equity | $422,062 | $(5,475) | $66,085 | $179 | $32,171 | $515,022 | - For the six months ended June 30, 2024, the company repurchased 6,316,705 shares of common stock for $187.9 million[30] Consolidated Statements of Cash Flows Presents Progyny's unaudited consolidated statements of cash flows for periods ended June 30, 2025 and 2024 Consolidated Statements of Cash Flows Highlights (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $105,318 | $82,426 | | Net cash (used in) provided by investing activities | $(124,525) | $105,440 | | Net cash used in financing activities | $(5,617) | $(190,200) | | Net decrease in cash, cash equivalents, and restricted cash | $(24,772) | $(2,336) | | Cash, cash equivalents, and restricted cash, end of period | $137,542 | $94,960 | Notes to Consolidated Financial Statements Provides detailed explanations of Progyny's business, accounting policies, and specific financial items 1. Business and Basis of Presentation Progyny, Inc. is a benefits management company specializing in fertility, family building, and women's health solutions - Progyny is a benefits management company focused on fertility, family building, and women's health solutions, operating as one segment[35] - The fertility benefits solution integrates proprietary 'Smart Cycles' treatments, access to a network of high-quality fertility specialists, and comprehensive care management services[35] - Progyny Rx, launched in 2018, is an add-on pharmacy benefits solution providing medication access, formulary design, and care management services through a network of specialty pharmacies[36] 2. Significant Accounting Policies Outlines Progyny's significant accounting policies, including revenue recognition, accrued receivables, and claims payable - Revenue is recognized when control of promised goods or services is transferred to clients, reflecting the expected consideration[41] - The company acts as the principal in its arrangements, presenting revenue gross of amounts paid to provider clinics and specialty pharmacies, as it controls the specified service before transfer to the client[50][55] - Accrued receivables for fertility benefits services were $61.0 million as of June 30, 2025, up from $45.6 million at December 31, 2024[58] Allowance for Doubtful Accounts Activity (in thousands) | Period | Balance at Beginning of Period | Charged to Costs and Expenses | Write-offs | Balance at End of Period | | :--- | :--- | :--- | :--- | :--- | | Six Months Ended June 30, 2025 | $56,355 | $11,017 | $(12,920) | $54,452 | - Progyny adopted ASU No. 2023-07 (Segment Reporting) in January 2024 with no material impact, and is evaluating ASU 2023-09 (Income Taxes) and ASU 2024-03 (Expense Disaggregation) for future periods[65][66][67] 3. Revenue Disaggregates Progyny's total revenue into fertility and pharmacy benefits services for periods ended June 30, 2025 and 2024 Disaggregated Revenue by Service (in thousands) | Service | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Change (YoY) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Fertility benefits services revenue | $213,943 | $193,563 | +10.5% | $420,348 | $363,332 | +15.7% | | Pharmacy benefits services revenue | $118,931 | $110,524 | +7.6% | $236,564 | $218,833 | +8.1% | | Total revenue | $332,874 | $304,087 | +9.5% | $656,912 | $582,165 | +12.8% | 4. Fair Value of Financial Instruments Details the fair value hierarchy of Progyny's financial instruments, primarily cash, cash equivalents, and marketable securities - All financial assets, including money market accounts and marketable securities (U.S. treasury bills), are classified as Level 1 in the fair value hierarchy[72] Financial Assets at Fair Value (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Money market accounts | $135,800 | $167,700 | | Marketable securities | $172,600 | $65,600 | Interest Income (in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $2,400 | $800 | | Six Months Ended June 30 | $4,700 | $1,400 | - The company did not maintain any assets or liabilities classified as Level 2 or Level 3 as of June 30, 2025, and December 31, 2024[73] 5. Leases Provides details on Progyny's operating lease agreements for its corporate offices in New York, NY - Progyny commenced a lease for an additional 21,262 square foot office in New York, NY in March 2025, recording a right-of-use asset of $10.1 million and a lease liability of $10.0 million[76] Operating Lease Information (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Right-of-use asset | $26,423 | $17,251 | | Short-term lease liabilities | $3,124 | $2,859 | | Long-term lease liabilities | $25,505 | $16,413 | | Weighted-average remaining lease term | 9.4 years | 8.9 years | | Weighted-average discount rate | 4.87% | 4.61% | Lease Expense (in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30 | $1,000 | $700 | | Six Months Ended June 30 | $1,800 | $1,300 | - Future minimum facility lease payments total $36.193 million as of June 30, 2025, with $1.526 million due in the remainder of 2025[78] 6. Commitments and Contingencies Progyny accrues for loss contingencies when probable and estimable, with no material adverse legal claims identified - Progyny records accruals for loss contingencies when a liability is probable and estimable[80] - The company is not aware of any legal proceedings or claims that are expected to have a material adverse effect on its financial position or results of operations[81] 7. Stockholders' Equity Details changes in stockholders' equity, including share repurchase programs and stock-based compensation - The 2024 Share Repurchase Programs, totaling $300 million authorized, were completed as of December 31, 2024, with no remaining amounts available[82][83] Stock-based Compensation Expense (in thousands) | Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Cost of services | $9,542 | $9,448 | $18,940 | $18,481 | | Sales and marketing | $8,184 | $7,911 | $16,059 | $15,414 | | General and administrative | $14,657 | $15,677 | $29,896 | $30,193 | | Total | $32,383 | $33,036 | $64,895 | $64,088 | Accumulated Other Comprehensive Income (in thousands) | Component | June 30, 2025 | June 30, 2024 | | :--- | :--- | :--- | | Unrealized gains on marketable securities | $(49) | $2,024 | | Foreign currency translation adjustments | $267 | $1 | | Total | $218 | $2,025 | 8. Income Taxes Details the provision for income taxes, which increased due to higher operating profit and decreased tax benefits Provision for Income Taxes (in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Six Months Ended June 30 | $21,443 | $14,199 | | Three Months Ended June 30 | $9,965 | $8,582 | - The increase in provision for income taxes for the six months ended June 30, 2025, was primarily due to higher operating profit and a decrease in tax benefits for equity compensation[87] - The company is evaluating the impact of the One Big Beautiful Bill Act (OBBBA), signed on July 4, 2025, which includes changes to U.S. federal income tax law[89] 9. Acquisitions Outlines Progyny's recent acquisitions of Benefit Bump LLC and Apryl GmbH to enhance benefits and global offerings - On January 8, 2025, Progyny acquired Benefit Bump LLC for $10.5 million to enhance parental leave benefits[90] - On June 17, 2024, Progyny acquired Apryl GmbH, a Berlin-based fertility benefits platform, for €5.1 million ($5.5 million) to expand its global offering[91] - Both acquisitions were accounted for using the acquisition method and did not have a material impact on the company's consolidated financial statements[90][91] 10. Net Income Per Share Provides reconciliation of net income and weighted-average shares for basic and diluted net income per share Net Income Per Share Reconciliation (in thousands, except share and per share amounts) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (Numerator) | $17,112 | $16,485 | $32,171 | $33,383 | | Basic weighted-average shares | 85,766,254 | 93,868,409 | 85,644,091 | 95,160,085 | | Basic net income per share | $0.20 | $0.18 | $0.38 | $0.35 | | Diluted weighted-average shares | 89,638,677 | 97,839,576 | 89,507,906 | 99,456,335 | | Diluted net income per share | $0.19 | $0.17 | $0.36 | $0.34 | - Potentially dilutive securities excluded from diluted EPS calculation due to being antidilutive totaled 16,959,812 shares for the three months ended June 30, 2025, and 17,018,821 shares for the six months ended June 30, 2025[94] 11. Segments Confirms Progyny operates as a single segment, with revenues and assets primarily in the United States - Progyny operates as a single operating segment and one reportable segment, with substantially all revenues and assets in the United States[95] - The Chief Executive Officer manages the business and evaluates performance at the consolidated level, using net income to allocate resources[96] 12. Subsequent Events Discloses a significant subsequent event: Progyny entered into a $200 million revolving credit facility on July 1, 2025 - On July 1, 2025, Progyny entered into a revolving credit facility for a maximum aggregate amount of $200 million, maturing on July 1, 2030[99] - Interest on borrowings accrues at a variable rate based on adjusted SOFR or the alternate base rate, plus an applicable margin[99] - As of the filing date, no amounts were drawn under the facility[101] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Progyny's financial condition and results of operations, discussing business overview, revenue model, key operational metrics, detailed financial comparisons for the three and six months ended June 30, 2025 and 2024, liquidity, and critical accounting estimates Overview Progyny is a leading U.S. benefits management company for fertility, family building, and women's health solutions - Progyny is a leading benefits management company for fertility, family building, and women's health in the United States[104] - The company serves over 540 clients with at least 1,000 covered lives, totaling approximately 6.8 million members[104] Key Performance Indicators (as of Dec 31, 2024) | Metric | Value | | :--- | :--- | | Fertility benefits solution NPS | +79 | | Progyny Rx NPS | +84 | Clinical Outcomes for Progyny Members (12-month period ended Dec 31, 2023) | Outcome | Progyny In-Network Provider Clinic Averages for Progyny Members Only | | :--- | :--- | | Live birth rate per attempted retrieval | 46.7% | | Single embryo transfer rate | 96.6% | | Pregnancy rate per IVF transfer | 60.8% | | Miscarriage rate | 14.4% | | Live birth rate per transfer | 52.1% | | IVF multiples rate | 2.1% | Revenue Model Progyny's revenue model is based on fertility benefits (Smart Cycles) and pharmacy benefits (Progyny Rx) solutions - The fertility benefits solution offers 20 different 'Smart Cycle' treatment bundles, including medical services and access to a network of high-quality fertility specialists[109] - Progyny Rx, an add-on, provides access to fertility medications, formulary design, and care management services through specialty pharmacies[111] - Revenue includes a utilization-based component (bundled case rates for Smart Cycles and fixed fees per fertility drug) and a population-based component (PEPM fees for care management services)[114] - PEPM fees represented 1% of total revenue for the six months ended June 30, 2025 and 2024[114] Key Operational and Business Metrics Progyny evaluates business using client and member growth, and Assisted Reproductive Treatment (ART) utilization rates - Progyny's addressable market includes approximately 8,000 large self-insured employers, Taft-Hartley labor populations, and federal government populations, representing about 106 million potential covered lives[116] Client and Member Base | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of clients | 542 | 473 | | Number of members | 6,754,000 | 6,472,000 | Assisted Reproductive Treatment (ART) Cycles and Utilization Rates | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | ART Cycles | 16,938 | 15,562 | 33,098 | 30,364 | | Utilization - All Members | 0.55% | 0.55% | 0.82% | 0.84% | | Utilization - Female Only | 0.48% | 0.47% | 0.69% | 0.71% | | Average Members | 6,743,000 | 6,409,000 | 6,723,000 | 6,347,000 | Components of Results of Operations Details Progyny's financial results components: revenue streams, cost of services, operating expenses, and taxes - Revenue includes fertility benefits solution revenue, pharmacy benefits solution revenue, and Per Employee Per Month (PEPM) fees[121] - Cost of services comprises fees paid to provider clinics, labs, anesthesiologists, prescription drug costs, clinical services, and personnel-related costs for care management functions[127][128] - Vendor rebates on certain medications are recognized as a reduction to cost of services when prescriptions are dispensed[129] - Operating expenses consist of sales and marketing (employee costs, consulting, advertising) and general and administrative (employee costs, consulting, facilities)[132][133] - Interest and other income, net, primarily includes interest and investment income/losses, while provision for income taxes accounts for current and deferred taxes[134][135] Results of Operations Analyzes Progyny's financial performance for the three and six months ended June 30, 2025 and 2024 Comparison of Three Months Ended June 30, 2025 and 2024 For Q2 2025, Progyny's revenue rose 9% to $332.9 million, with gross profit up 16% and net income up 4% Financial Performance (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $332,874 | $304,087 | 9% | | Cost of services | $253,901 | $235,806 | 8% | | Gross profit | $78,973 | $68,281 | 16% | | Gross margin | 23.7% | 22.5% | +120 bps | | Sales and marketing expense | $18,405 | $16,421 | 12% | | General and administrative expense | $36,210 | $31,173 | 16% | | Interest and other income, net | $2,719 | $4,380 | (38%) | | Provision for income taxes | $9,965 | $8,582 | 16% | | Net income | $17,112 | $16,485 | 4% | - Revenue growth was primarily due to a $20.4 million (11%) increase in fertility benefits solution revenue and an $8.4 million (8%) increase in Progyny Rx revenue, driven by more clients and covered lives[143] - The increase in cost of services was mainly due to higher medical treatment and pharmacy prescription costs, along with increased personnel-related costs[144] Comparison of Six Months Ended June 30, 2025 and 2024 For H1 2025, Progyny's revenue increased 13% to $656.9 million, gross profit grew 18%, but net income decreased 4% Financial Performance (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $656,912 | $582,165 | 13% | | Cost of services | $502,144 | $451,478 | 11% | | Gross profit | $154,768 | $130,687 | 18% | | Gross margin | 23.6% | 22.4% | +120 bps | | Sales and marketing expense | $36,191 | $31,875 | 14% | | General and administrative expense | $70,049 | $59,602 | 18% | | Interest and other income, net | $5,086 | $8,372 | (39%) | | Provision for income taxes | $21,443 | $14,199 | 51% | | Net income | $32,171 | $33,383 | (4%) | - Revenue growth was driven by a $57.0 million (16%) increase in fertility benefits solution revenue and a $17.7 million (8%) increase in Progyny Rx revenue, attributed to an expanded client base and covered lives[151] - The 51% increase in provision for income taxes was due to higher operating profit and a decrease in tax benefits for equity compensation[159] Non-GAAP Financial Measure – Adjusted EBITDA Defines Adjusted EBITDA as a non-GAAP measure used to assess operating performance, reconciled to net income - Adjusted EBITDA is a non-GAAP measure used to evaluate operating performance, excluding non-cash and non-operating items[139] Adjusted EBITDA Reconciliation (in thousands) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $17,112 | $16,485 | $32,171 | $33,383 | | Depreciation and amortization | $1,205 | $754 | $2,313 | $1,470 | | Stock-based compensation expense | $32,383 | $33,036 | $64,895 | $64,088 | | Interest and other income, net | $(2,719) | $(4,380) | $(5,086) | $(8,372) | | Provision for income taxes | $9,965 | $8,582 | $21,443 | $14,199 | | Adjusted EBITDA | $57,946 | $54,477 | $115,736 | $104,768 | - Adjusted EBITDA increased by 6% for the three months and 10% for the six months ended June 30, 2025, compared to the prior year periods[142] Liquidity and Capital Resources Progyny's liquidity is supported by cash, marketable securities, and a new $200 million revolving credit facility Liquidity Position (in thousands, as of June 30, 2025) | Item | Amount | | :--- | :--- | | Cash and cash equivalents | $132,506 | | Marketable securities | $172,586 | | Total cash and marketable securities | $305,092 | - On July 1, 2025, Progyny secured a $200 million revolving credit facility, which remains undrawn as of the filing date[160] - Management expects existing cash, marketable securities, operating cash flow, and the credit facility to be sufficient for working capital and capital expenditures for at least the next 12 months and long-term contractual obligations[161] Summary of Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Cash provided by operating activities | $105,318 | $82,426 | | Cash (used in) provided by investing activities | $(124,525) | $105,440 | | Cash used in financing activities | $(5,617) | $(190,200) | | Net decrease in cash, cash equivalents, and restricted cash | $(24,772) | $(2,336) | - Net cash used in investing activities for the six months ended June 30, 2025, was $124.5 million, primarily due to net investments in marketable securities ($107.1 million) and business acquisitions ($9.3 million)[166] - Net cash used in financing activities for the six months ended June 30, 2024, was $190.2 million, largely due to $183.7 million in common stock repurchases[168] Critical Accounting Estimates Identifies critical accounting estimates: accrued receivables, claims payable, stock-based compensation, and income taxes - Critical accounting estimates include accrued receivables for revenue recognition, accrued claims payable, stock-based compensation expense, and accounting for income taxes[173] - These estimates involve significant management judgment and are based on historical experience and reasonable assumptions[172] - No material changes to critical accounting policies and estimates have occurred since the Annual Report on Form 10-K[174] Recently Adopted Accounting Pronouncements Refers to Note 2 for a full discussion of recently adopted accounting pronouncements - Refer to Note 2 – Significant Accounting Policies for details on recently adopted accounting pronouncements[175] Item 3. Quantitative and Qualitative Disclosures About Market Risk Discusses Progyny's market risks, primarily from interest rate fluctuations, with no material inflation effect - Progyny's primary market risk exposure is due to fluctuations in interest rates[176][177] - As of June 30, 2025, the company held $132.5 million in cash and cash equivalents and $172.6 million in marketable securities[178] - A hypothetical 1% change in interest rates is not expected to have a material impact on consolidated financial statements[178] - Inflation has not had a material effect on the business, financial condition, or results of operations to date[179] Item 4. Controls and Procedures Management confirmed effective disclosure controls and procedures as of June 30, 2025, with no material changes - Disclosure controls and procedures are designed to provide reasonable assurance of achieving desired control objectives[180] - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[181] - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2025[182] PART II. OTHER INFORMATION Item 1. Legal Proceedings Refers to Note 6 for legal proceedings, where no material adverse legal claims are identified - Information on legal proceedings is cross-referenced to Note 6 – Commitments and Contingencies in Part I, Item 1 of this report[185] Item 1A. Risk Factors Details various risks that could materially affect Progyny's business, financial condition, and operations Risks Related to Our Business and Industry Outlines risks inherent to Progyny's business and industry, including competition, economic downturns, and client retention - Failure to meet publicly announced guidance or expectations could cause stock price decline[186] - The market is highly competitive, with alternative solutions from health insurance companies and venture-backed firms[187] - Unfavorable global economic conditions, including inflation and interest rate fluctuations, could limit business growth and negatively affect operations[191][192] - Dependence on retaining existing clients and increasing adoption of services within the client base is crucial for business success[194] - Loss of large clients or changes in the technology industry (where many clients are concentrated) could negatively impact revenue[197][198] - Acquisitions and strategic investments pose integration challenges and can divert management attention[202] - The company has a limited operating history with its current platform, making future results difficult to predict[203] - Cybersecurity breaches or IT system failures could lead to service disruptions or loss of confidential information[207][208] - Failure to enforce intellectual property rights could impair the ability to protect proprietary technology and brand[232] - Changes in effective tax rate, state nexus assertions, or accounting principles could adversely affect financial results[238][240][241] Risks Related to Our Relationships with Third Parties Highlights risks from reliance on external partners, including the Center of Excellence network and pharmacy distribution - The business depends on maintaining a selective Center of Excellence network of high-quality fertility specialists; failure to do so would limit growth[243] - Growth is partly dependent on successful strategic relationships with channel partners, vendors, and insurance carriers[247] - Disruptions to the pharmacy distribution network or supply chains could lead to delayed medication delivery and member dissatisfaction[249][250] - Loss of key pharmacy program partners or a decline in vendor rebates could adversely affect business and results of operations[251] - Marketing efforts rely on maintaining relationships with benefits consultants and receiving positive references from existing clients and partners[252][253] Risks Related to Legal and Regulatory Requirements Details extensive legal and regulatory risks in healthcare, including compliance, licensing, and data privacy - Operating in a highly regulated industry requires compliance with numerous evolving legal and regulatory requirements, which can impact business operations and client relationships[254][255] - Changes in state and federal laws related to reproductive rights and fertility benefits, including the impact of Dobbs v. Jackson Women's Health Organization, could decrease demand or availability of services[219][257] - Compliance with state licensing or registration requirements for third-party administrators (TPAs) and pharmacy benefit managers (PBMs) is critical; failure could result in penalties or loss of licenses[258][259] - HIPAA privacy and security requirements, along with other federal and state data privacy laws (e.g., CCPA), impose strict rules on handling personal information, with potential for enforcement actions, fines, or litigation for non-compliance[261][263] - PBM operations, including Progyny Rx, are subject to increasing scrutiny and regulation regarding pricing, transparency, and rebates, which could affect profitability and standardization of services[277][280] - Maintaining proper and effective internal control over financial reporting is crucial; any material weaknesses could adversely affect investor confidence and stock value[281][282] - Compliance with anti-corruption, anti-bribery, and anti-money laundering laws is necessary, with non-compliance potentially leading to criminal or civil liability[283][284] Risks Related to Ownership of Our Common Stock Addresses risks pertinent to investors in Progyny's common stock, including volatility, dilution, and anti-takeover provisions - The market price of common stock may be highly volatile due to factors like financial results, industry reports, economic conditions, and cybersecurity breaches[287][291] - An active trading market for common stock may not be sustained, impairing liquidity and the ability to raise capital[289] - Fluctuations in financial results, influenced by demand, pricing, client retention, and operating costs, make future projections difficult and could lead to stock price decline if expectations are not met[290][293] - Future sales of common stock, including for equity awards or acquisitions, will result in dilution to existing stockholders[295] - The company does not intend to pay cash dividends for the foreseeable future, meaning returns depend on stock price appreciation[299] - Anti-takeover provisions in charter documents and Delaware law could make an acquisition more difficult and limit stockholders' ability to replace management[300][301] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Reports on unregistered sales of equity securities and summarizes shares repurchased by the issuer - During the second quarter of 2025, shares were withheld through net settlements for vested restricted stock units[306] Shares Repurchased by the Issuer (in thousands, except per share amounts) | Period | Total Number of Shares Repurchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 1, 2025 through April 30, 2025 | 31,998 | $22.15 | | May 1, 2025 through May 31, 2025 | 27,116 | $22.52 | | June 1, 2025 through June 30, 2025 | 49,627 | $21.71 | | Total shares repurchased | 108,741 | N/A | - The repurchased shares include those withheld on net settlements of restricted stock units under equity incentive plans[308] Item 3. Defaults Upon Senior Securities States that there were no defaults upon senior securities - No defaults upon senior securities were reported[308] Item 4. Mine Safety Disclosures Indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to Progyny, Inc[309] Item 5. Other Information Discloses Rule 10b5-1 trading plans adopted by Allison Swartz and Cheryl Scott for common stock sales - Allison Swartz, General Counsel and Secretary, adopted a Rule 10b5-1 trading plan on May 13, 2025, to sell up to 28,126 shares of common stock[310] - Cheryl Scott, a director, adopted a Rule 10b5-1 trading plan on June 10, 2025, to sell up to 6,689 shares of common stock[311] Item 6. Exhibits Lists all exhibits filed with the Form 10-Q, including agreements, certifications, and XBRL documents - Exhibits include form of PSU award agreement, employment agreements, a Credit Agreement dated July 1, 2025, and certifications by the CEO and CFO[313] - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase Documents) are also filed[313] Signatures Contains official signatures of Progyny's CEO and CFO, certifying the report on August 8, 2025 - The report is signed by Peter Anevski, Chief Executive Officer, and Mark Livingston, Chief Financial Officer, on August 8, 2025[317]