Progyny (NasdaqGS:PGNY) Q4 2025 Earnings call February 26, 2026 04:45 PM ET Company Participants James Hart - VP of Investor Relations Mark Livingston - CFO Pete Anevski - CEO Sarah James - Managing Director Conference Call Participants Brian Tanquilut - Equity Research Analyst Constantine Davides - Healthcare Services Analyst Jailendra Singh - Managing Director and Equity Research Analyst Michael Cherny - Senior Managing Director and Senior Research Analyst Peter Warendorf - Equity Research Analyst Scott S ...

Financial Data and Key Metrics Changes - Progyny reported record highs in revenue and adjusted EBITDA for 2025, with revenue reaching $1.29 billion and adjusted EBITDA at $222 million, representing increases of nearly $90 million and $28 million respectively over the midpoint of original guidance [6][19] - Operating cash flow for 2025 was a record $210 million, an increase of 17% compared to 2024 [6][21] - The company achieved a nearly 200 basis point expansion in full-year gross margin versus 2024, reflecting efficiencies in care management and service delivery [19] Business Line Data and Key Metrics Changes - Member engagement remained healthy, with utilization and consumption of ART cycles per unique utilizer pacing favorably against guidance [18] - 30% of the client base expanded their benefits with Progyny for 2026 through upsells and service enhancements, providing access to new services for over 2.7 million members [10] Market Data and Key Metrics Changes - The self-insured market is expected to continue comprising the majority of new lives added, with opportunities to broaden the target market to smaller employers [12] - The healthcare industry, as the largest sector for Progyny, has shown resilience against macro uncertainties over the past five years [11] Company Strategy and Development Direction - Progyny is focusing on member and client satisfaction, which has led to nearly 100% client retention, including all largest employers [7] - The company is launching Progyny Select to address the needs of smaller employers, providing a fixed premium product that minimizes financial risk [13][14] - Investments in technology, including AI, are aimed at enhancing member experience and driving efficiencies [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in entering 2026 with considerable momentum, driven by strong demand for family building and women's health services [11] - The guidance for 2026 anticipates 7.2 million covered lives, reflecting a net reduction due to administrative updates rather than workforce reductions [23] - The company expects revenue growth of 5.1% to 9% for 2026, with adjusted EBITDA projected between $224 million and $239 million [29][30] Other Important Information - The departure of the President at the end of 2025 resulted in an incremental $7.7 million in stock-based compensation expense [25] - The company repurchased over 3.3 million shares for nearly $84 million under its share repurchase program [22] Q&A Session Summary Question: Clarification on membership outlook for 2026 - Management clarified that the changes in membership figures relate to existing clients and are due to administrative updates rather than new client issues [33][34] Question: Discussion on Progyny Rx model and economics - Management noted no pushback from employers regarding the Progyny Rx model and emphasized the value delivered through integrated programs [36][37] Question: Strategy and pricing for Progyny Select - Management explained that pricing for Progyny Select is based on experience data from smaller clients, with guardrails in place to manage risk [41][44] Question: Contribution from maternal health services - Management indicated that while maternal health services are growing, they are not yet material but serve as a value add [55] Question: Expectations for CapEx and cash flow conversion - Management anticipates a step-up in CapEx for 2026 but not a doubling, with a cash flow conversion rate of approximately 75% from adjusted EBITDA [82][84]

Financial Data and Key Metrics Changes - The company reported a revenue growth of 16.5% to $324 million in the first quarter, driven by an increase in the number of clients and covered lives compared to the previous year [17] - Adjusted EBITDA grew 15% to $58 million, with an adjusted EBITDA margin of 17.8%, slightly down from the previous year [24][25] - Net income was $15.1 million or $0.17 per diluted share, compared to $16.9 million or $0.17 per share in the prior year [25] Business Line Data and Key Metrics Changes - Fertility revenue increased by 22% to $206 million, while pharmacy revenue grew by 9% to $118 million [22] - ART cycles reached a record high of 16,160, reflecting a 9% growth year-over-year [21] Market Data and Key Metrics Changes - The CDC reported record low birth rates for women aged 25 and younger, while rates for women aged 30 to 44 increased, indicating a shift in family planning trends [8][9] - More than 51% of all births in the U.S. now come from women aged 30 or older, highlighting the increasing need for fertility and maternity services [10] Company Strategy and Development Direction - The company is focused on expanding its product portfolio and enhancing member experience, particularly in women's health and family building [6][11] - The company aims to deepen relationships with existing clients, with 20% to 25% of the base typically taking additional services [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the current engagement levels and the pipeline for new clients, despite some macroeconomic uncertainties [12][13] - The company raised its full-year revenue guidance to between $1.185 billion and $1.235 billion, reflecting growth of 1.5% to 5.8% [29] Other Important Information - The company generated nearly $50 million in operating cash flow, nearly double the prior year period [25] - Total working capital as of March 31 was $331 million, with $256 million in cash and no debt [27] Q&A Session Summary Question: Inquiry about historical seasonality of cycles per utilizer - Management indicated that the guidance reflects uncertainty rather than a change in normal seasonality [32] Question: Drivers of gross margin expansion - Management noted that last year's revenue shortfall affected margins, and they expect gross margin expansion for the full year compared to 2024 [33][35] Question: Comments on the 2026 selling season and RFP processes - Management confirmed that they are not seeing a slowdown in RFP activities and are targeting to add at least 1 million new lives each year [40][43] Question: Impact of tariffs on costs - Management stated that existing tariffs have not significantly impacted costs, and they have flexibility in arrangements with clients to mitigate potential increases [54] Question: Pricing benefits in ART cycles - Management clarified that growth is primarily driven by engagement and consumption rather than pricing [69]

Financial Data and Key Metrics Changes - First quarter revenue grew 16.5% to $324 million, primarily due to an increase in the number of clients and covered lives compared to the previous year [15] - Adjusted EBITDA increased by 15% to $58 million, with an adjusted EBITDA margin of 17.8%, slightly down from the previous year [22][28] - Net income was $15.1 million or $0.17 per diluted share, compared to $16.9 million or $0.17 per share in the prior year [22] Business Line Data and Key Metrics Changes - Fertility revenue increased 22% to $206 million, while pharmacy revenue grew 9% to $118 million [20] - ART cycles reached a record high of 16,160, reflecting a 9% growth year-over-year [19] Market Data and Key Metrics Changes - The CDC reported record low birth rates for women aged 25 and younger, while rates for women aged 30 to 44 continue to rise, indicating a shift in family planning trends [6][7] - Over 51% of all births in the U.S. now come from women aged 30 or older, highlighting the increasing need for fertility and maternity solutions [8] Company Strategy and Development Direction - The company is focusing on expanding its product portfolio and enhancing member experience, particularly in women's health and family building [5][9] - New services in maternity, postpartum, and menopause are expected to contribute up to 10% of revenue by 2028, although significant contributions are not anticipated in the near term [13][14] Management's Comments on Operating Environment and Future Outlook - Management raised full-year guidance, projecting revenue between $1.185 billion and $1.235 billion, reflecting growth of 1.5% to 5.8% [27] - The company expects continued member engagement at historical levels, despite potential variability in activity and treatments [25] Other Important Information - The company generated nearly $50 million in operating cash flow in the first quarter, nearly double the prior year period [23] - Total working capital as of March 31 was $331 million, with $256 million in cash and no debt [24] Q&A Session Summary Question: Historical seasonality of cycles per utilizer - Management indicated that guidance reflects uncertainty rather than a change in normal seasonality [30] Question: Drivers of gross margin expansion - Management noted that last year's revenue shortfall affected margins, and while they expect gross margin expansion for the full year, investments may impact margins [31][33] Question: 2026 selling season and RFP process - Management confirmed that they are not seeing a slowdown in RFP activities and are targeting to add at least 1 million new lives each year [38][43] Question: Incremental adjusted EBITDA margin - Management explained that the lower margin is due to investments in platform and product expansion, which are expected to impact the P&L this year [44] Question: Interest in new modules - The menopause product is seeing higher engagement due to a larger addressable audience compared to maternity products [47] Question: Impact of tariffs on costs - Management stated that existing tariffs have not significantly impacted costs, and potential tariffs on pharmaceuticals are not expected to affect their operations [53] Question: Pricing benefits in ART cycles - Management clarified that growth is driven by engagement and activity rather than pricing [68]