Document and Entity Information
Document and Entity Information - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Apr. 30, 2022 | |
Cover [Abstract] | ||
Entity Central Index Key | 0001551306 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-39100 | |
Entity Registrant Name | Progyny, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-2220139 | |
Entity Address, Address Line One | 1359 Broadway | |
Entity Address, City or Town | New York | |
Entity Address, State or Province | NY | |
Entity Address, Postal Zip Code | 10018 | |
City Area Code | 212 | |
Local Phone Number | 888-3124 | |
Title of 12(b) Security | Common Stock, | |
Trading Symbol | PGNY | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 91,944,185 | |
Entity Listing, Par Value Per Share | $ 0.0001 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 38,821 | $ 91,413 |
Marketable securities | 66,855 | 28,005 |
Accounts receivable, net of $19,660 and $17,379 of allowance at March 31, 2022 and December 31, 2021, respectively | 198,120 | 134,557 |
Prepaid expenses and other current assets | 5,230 | 4,564 |
Total current assets | 309,026 | 258,539 |
Property and equipment, net | 5,827 | 5,027 |
Operating lease right-of-use assets | 7,583 | 7,805 |
Goodwill | 11,880 | 11,880 |
Intangible assets, net | 473 | 599 |
Deferred tax assets | 76,429 | 71,274 |
Other noncurrent assets | 4,307 | 2,941 |
Total assets | 415,525 | 358,065 |
Current liabilities: | ||
Accounts payable | 84,677 | 61,399 |
Accrued expenses and other current liabilities | 44,040 | 37,425 |
Total current liabilities | 128,717 | 98,824 |
Operating lease noncurrent liabilities | 7,189 | 7,419 |
Total liabilities | 135,906 | 106,243 |
Commitments and Contingencies (Note 7) | ||
STOCKHOLDERS' EQUITY | ||
Common stock, $0.0001 par value; 1,000,000,000 shares authorized at March 31, 2022 and December 31, 2021; 91,741,481 and 91,088,781 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively | 9 | 9 |
Additional paid-in capital | 278,083 | 255,339 |
Treasury stock, at cost, $0.0001 par value; 615,980 shares at March 31, 2022 and December 31, 2021 | (1,009) | (1,009) |
Accumulated earnings (deficit) | 2,547 | (2,424) |
Accumulated other comprehensive loss | (11) | (93) |
Total stockholders' equity | 279,619 | 251,822 |
Total liabilities and stockholders' equity | $ 415,525 | $ 358,065 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Allowances for accounts receivable | ||
Allowances for accounts receivable | $ 19,660 | $ 17,379 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 1,000,000,000 | 1,000,000,000 |
Common stock, shares issued (in shares) | 91,741,481 | 91,088,781 |
Common stock, shares outstanding (in shares) | 91,741,481 | 91,088,781 |
Treasury stock | ||
Treasury stock, shares outstanding (in shares) | 615,980 | 615,980 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Mar. 31, 2022 | Sep. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Statements of Operations | ||||||
Revenue | $ 172,217 | $ 122,133 | ||||
Revenue, type | Service | Service | Service | Service | ||
Cost of services | 139,268 | 93,226 | ||||
Cost of services, type | Service | Service | Service | Service | ||
Gross profit | 32,949 | 28,907 | ||||
Operating expenses: | ||||||
Sales and marketing | 10,015 | 4,014 | ||||
General and administrative | 22,992 | 13,086 | ||||
Total operating expenses | 33,007 | 17,100 | ||||
Income (loss) from operations | (58) | 11,807 | ||||
Other income (expense): | ||||||
Other income (expense), net | (96) | 7 | ||||
Interest income (expense), net | 12 | (18) | ||||
Total other expense, net | (84) | (11) | ||||
Income (loss) before income taxes | (142) | 11,796 | ||||
Benefit for income taxes | 5,113 | 3,370 | ||||
Net income | $ 4,971 | $ 15,166 | ||||
Net income per share: | ||||||
Basic (in dollars per share) | $ 0.05 | $ 0.17 | ||||
Diluted (in dollars per share) | $ 0.05 | $ 0.15 | ||||
Weighted-average shares used in computing net income per share: | ||||||
Basic (in shares) | 91,410,368 | 87,404,287 | ||||
Diluted (in shares) | 99,935,735 | 100,106,497 |
Consolidated Statement of Compr
Consolidated Statement of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income (Loss) | ||
Net income | $ 4,971 | $ 15,166 |
Other comprehensive income (loss): | ||
Unrealized gain (loss) on marketable securities | 82 | (51) |
Total other comprehensive income (loss) | 82 | (51) |
Total comprehensive income | $ 5,053 | $ 15,115 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Treasury Stock | Additional Paid in Capital | Accumulated Earnings (Deficit) | Other Comprehensive Income (Loss) | Total |
Balance at beginning of period at Dec. 31, 2020 | $ 9 | $ (1,009) | $ 236,139 | $ (68,193) | $ 1 | $ 166,947 |
Balance at beginning of period (in shares) at Dec. 31, 2020 | 87,054,329 | |||||
Increase (Decrease) in Stockholders' Equity (Loss) | ||||||
Issuance of employee equity awards, net of shares withheld | (2,478) | (2,478) | ||||
Issuance of employee equity awards, net of shares withheld (in shares) | 677,973 | |||||
Stock-based compensation | 5,034 | 5,034 | ||||
Other comprehensive income (loss) | (51) | (51) | ||||
Net income | 15,166 | 15,166 | ||||
Balance at end of period at Mar. 31, 2021 | $ 9 | (1,009) | 238,695 | (53,027) | (50) | 184,618 |
Balance at end of period (in shares) at Mar. 31, 2021 | 87,732,302 | |||||
Balance at beginning of period at Dec. 31, 2021 | $ 9 | (1,009) | 255,339 | (2,424) | (93) | $ 251,822 |
Balance at beginning of period (in shares) at Dec. 31, 2021 | 91,088,781 | 91,088,781 | ||||
Increase (Decrease) in Stockholders' Equity (Loss) | ||||||
Issuance of employee equity awards, net of shares withheld | (1,959) | $ (1,959) | ||||
Issuance of employee equity awards, net of shares withheld (in shares) | 652,700 | |||||
Stock-based compensation | 24,703 | 24,703 | ||||
Other comprehensive income (loss) | 82 | 82 | ||||
Net income | 4,971 | 4,971 | ||||
Balance at end of period at Mar. 31, 2022 | $ 9 | $ (1,009) | $ 278,083 | $ 2,547 | $ (11) | $ 279,619 |
Balance at end of period (in shares) at Mar. 31, 2022 | 91,741,481 | 91,741,481 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
OPERATING ACTIVITIES | ||
Net income | $ 4,971 | $ 15,166 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Deferred tax benefit | (5,155) | (3,370) |
Non-cash interest expense | 19 | |
Depreciation and amortization | 364 | 422 |
Stock-based compensation expense | 24,500 | 5,034 |
Bad debt expense | 2,281 | 2,518 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (65,845) | (43,520) |
Prepaid expenses and other current assets | (664) | 1,046 |
Accounts payable | 23,171 | 13,797 |
Accrued expenses and other current liabilities | 6,489 | 9,413 |
Other noncurrent assets and liabilities | (1,374) | 7 |
Net cash (used in) provided by operating activities | (11,262) | 532 |
INVESTING ACTIVITIES | ||
Purchase of property and equipment, net | (790) | (369) |
Purchases of marketable securities | (59,867) | (62,146) |
Sale of marketable securities | 21,099 | 23,995 |
Net cash used in investing activities | (39,558) | (38,520) |
FINANCING ACTIVITIES | ||
Proceeds from exercise of stock options | 830 | 539 |
Payment of employee taxes related to equity awards | (2,988) | (3,523) |
Proceeds from contributions to employee stock purchase plan | 386 | 487 |
Net cash used in financing activities | (1,772) | (2,497) |
Net decrease in cash and cash equivalents | (52,592) | (40,485) |
Cash and cash equivalents, beginning of period | 91,413 | 70,305 |
Cash and cash equivalents, end of period | 38,821 | 29,820 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for income taxes, net of refunds received | 5 | |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Additions of property and equipment, net included in accounts payable and accrued expenses | $ 251 | $ 20 |
Business and Basis of Presentat
Business and Basis of Presentation | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business and Basis of Presentation | 1. Business and Basis of Presentation Description of Business Progyny, Inc. (together with its subsidiaries referred to as “Progyny” or the “Company”) was incorporated in the state of Delaware on April 3, 2008, and maintains its corporate headquarters in New York, NY. Progyny is a provider of a fertility benefits solution and pharmacy benefits solution and operates and manages in one operating segment. The fertility benefits solution consists of a significant service that integrates: (1) the treatment services (“Smart Cycles”) that the Company has designed, (2) access to the Progyny network of high-quality fertility specialists that perform the Smart Cycle treatments and (3) active management of the selective network of high-quality provider clinics, real-time member eligibility and treatment authorization, member-facing digital tools and detailed quarterly reporting supported by the Company’s dedicated account management teams, and end to end comprehensive concierge member support provided by Progyny’s in-house staff of Patient Care Advocates (“PCAs”) (collectively, the “care management services”). The Company enhanced its fertility benefits solution with the launch of Progyny Rx, its pharmacy benefits solution, effective January 1, 2018. As part of this solution, the Company provides formulary plan design, simplified authorization, assistance with prescription fulfillment, and timely delivery of the medications by the Company’s network of specialty pharmacies, as well as medication administration training, pharmacy support services, and continuing PCA support. As a pharmacy benefits solution provider, Progyny manages the dispensing of pharmaceuticals through the Company’s specialty pharmacy contracts. The pharmacy benefits solution is only available as an add-on service to its fertility benefits solution. Basis of Presentation The accompanying interim unaudited consolidated financial statements include the accounts of Progyny, Inc. and its wholly owned subsidiaries. The interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial reporting. These interim consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all adjustments necessary to fairly state our financial position as of March 31, 2022, the results of our operations for the three months ended March 31, 2022 and 2021 and the results of our cash flows for the three months ended March 31, 2022 and 2021. Therefore, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 1, 2022 (the “Annual Report on Form 10-K”). The results for the three months ended March 31, 2022 are not necessarily indicative of the operating results expected for the year ending December 31, 2022 or any other future period. Additionally, there are many uncertainties regarding the ongoing coronavirus (“COVID-19”) pandemic, including variants, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it has impacted and may continue to impact its customers and members, its provider network, specialty pharmacy partners, employees, suppliers, vendors, and other business partners. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, future results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and variants, the actions taken to contain it or treat its impact, vaccine roll-out efforts and impact, including vaccine hesitancy, break-through cases and the economic impact on local, regional and national markets. The overall disruption of the healthcare and fertility markets and the other risks and uncertainties associated with the pandemic could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects. The Company will continue to assess the evolving impact of the COVID-19 pandemic and will make adjustments to its operations as necessary. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP generally requires management to make estimates and assumptions that affect the reported amount of certain assets, liabilities, revenue, and expenses, and the related disclosure of contingent assets and liabilities. Such estimates include, but are not limited to, the determination of accrued receivables related to revenue recognition, accrued claims payable, allowance for doubtful accounts, stock-based compensation expense, lease liabilities, and accounting for income taxes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Significant Accounting Policies There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in Note 2 of the Company’s Annual Report on Form 10-K. Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to clients in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company applies the following five-step model to recognize revenue from contracts with clients: ● Identification of the contract, or contracts, with a client; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, a performance obligation is satisfied. Progyny’s contracts typically have a stated term of three years and include contractual termination options after the first year, allowing the client to terminate the contract with 30 Fertility Benefits Solution Revenue Progyny primarily generates revenue through its fertility benefits solution, in which Progyny provides self-insured enterprise entities (“clients”) and their employees and partners (together, “members”) with fertility benefits. As part of the fertility benefits solution, Progyny provides access to effective and cost-efficient fertility treatments, referred to as Smart Cycles, as well as other related services. Smart Cycles are proprietary treatment bundles that include certain medical services available to members through Progyny’s proprietary, credentialed network of provider clinics. In addition to access to Progyny’s Smart Cycle treatment bundles and access to Progyny’s network of provider clinics, the fertility benefits solution includes other comprehensive services, which Progyny refers to as care management services, such as active management of the provider clinic network, real-time member eligibility and treatment authorization, member-facing digital tools throughout the Smart Cycle and detailed quarterly reporting all supported by client facing account management and end-to-end comprehensive member support provided by Progyny’s in house staff of PCAs. The promises within Progyny’s fertility benefits contract with a client represent a single performance obligation because Progyny provides a significant service of integrating the Progyny designed Smart Cycles and access to the fertility treatment services provided by provider clinics with the other comprehensive services into the combined fertility benefits solution that the client contracted to receive. Progyny’s fertility benefits solution is a stand-ready obligation that is satisfied over the contract term. Progyny’s contracts include the following sources of consideration, which are all variable: a per employee per month (“PEPM”) administration fee (in most, but not all contracts) and a fixed rate per Smart Cycle. The PEPM administration fee is allocated between the fertility benefits solution and the pharmacy benefits solution based on standalone selling price, estimated using an expected cost-plus margin method. The Company allocates the variable consideration related to the fixed rate per Smart Cycle to the distinct period during which the related services were performed as those fees relate specifically to the Company’s efforts to provide its fertility benefits solution to its clients in the period and represents the consideration the Company is entitled to for the fertility benefits services provided. As a result, the fixed rate per Smart Cycle is included in the transaction price and recognized in the period in which the Smart Cycle is provided to the member. Progyny’s contracts also include potential service level agreement refunds related to outcome-based service metrics. These service level refunds, which are determined based on results of a full plan year, if met, are based on a percentage of the PEPM fee paid by clients. The Company estimates the variable consideration related to the total PEPM administration fee, less estimated refunds related to service level agreements, and recognizes the amounts allocated to the fertility benefits solution ratably over the contract term. Progyny’s estimates of service level agreement refunds, have not historically resulted in significant adjustments to the transaction price. Clients are typically invoiced on a monthly basis for the PEPM administration fee. Progyny invoices its clients and members for their respective portions of the fixed rate per Smart Cycle bundle when all treatment services within a Smart Cycle are completed by the provider clinic. Once an invoice is issued, payment terms are typically between 30 to 60 days. The Company assesses whether it is the principal or the agent for each arrangement with a client, since fertility treatment services are provided by a third party—the provider clinics. The Company is the principal in its arrangements with clients and therefore presents revenue gross of the amounts paid to the provider clinics because Progyny controls the specified service (the fertility benefits solution) before it is transferred to the client. Progyny integrates the fertility treatment services provided by the provider clinics into the overall fertility benefits solution that the client contracted to receive. In addition, Progyny defines the scope of the potential services to be performed by the provider clinics and monitors the performance of the provider clinics. Furthermore, Progyny is primarily responsible for fulfilling the promise to the client and has discretion in setting the pricing, as Progyny separately negotiates agreements with the provider clinics, which establish pricing for each treatment service. Pricing of services from provider clinics is independent from the fees charged to clients. Pharmacy Benefits Solution Revenue For clients that have the fertility benefits solution, Progyny offers, as an add-on, its pharmacy benefits solution, which is a separate, fully integrated pharmacy benefit. As part of the pharmacy benefits solution, Progyny provides care management services, which include Progyny’s formulary plan design, prescription fulfillment, simplified authorization and timely delivery of the medications used during treatment through Progyny’s network of specialty pharmacies, and clinical services consisting of member assessments, UnPack It calls, telephone support, online education, medication administration training, pharmacy support services and continuing PCA support. The pharmacy-related promises represent a single performance obligation because Progyny provides a significant service of integrating the formulary plan design, prescription fulfillment, clinical services and PCA support into the combined pharmacy benefits solution that the client contracted to receive. The pharmacy benefits solution is a stand-ready obligation that is satisfied over the contract term. Progyny’s contracts include the following sources of consideration, all of which are variable: a PEPM administration fee (in most, but not all contracts) and a fixed fee per fertility drug. As described above, the PEPM administration fee, less estimated refunds related to service level agreements, is allocated to the pharmacy benefits solution and recognized ratably over the contract term. The Company allocates the variable consideration related to the fixed fee per fertility drug to the distinct period during which the related services were performed, as those fees relate specifically to the Company’s efforts to provide its pharmacy benefits solution to clients in the period and represents the consideration the Company is entitled to for the pharmacy benefit services provided. As a result, the fixed fee per fertility drug is included in the transaction price and recognized in the period in which the Company is entitled to consideration from a client, which is when a prescription is filled and delivered to the members. As stated above, clients are invoiced on a monthly basis for the PEPM administration fee. Progyny invoices the client and the member for their respective portions of the fixed fee per fertility drug, when the prescription services are completed by the specialty pharmacies. Once an invoice is issued, payment terms are typically between 30 to 60 days. The Company assesses whether it is the principal or the agent for each arrangement with a client, as prescription fulfillment and clinical services are provided by a third party—the specialty pharmacies. The Company is the principal in its arrangements with clients, and therefore presents revenue gross of the amounts paid to the specialty pharmacies. Progyny controls the specified service (the pharmacy benefits solution) before it is transferred to the client. Progyny integrates the prescription fulfillment and clinical services provided by the pharmacies and PCAs into the overall pharmacy benefits solution that the client contracted to receive. In addition, Progyny defines the scope of the potential services to be performed by the specialty pharmacies and monitors the performance of the specialty pharmacies. Furthermore, Progyny is primarily responsible for fulfilling the promise to the client and has discretion in setting the pricing, as Progyny separately negotiates agreements with pharmacies, which establish pricing for each drug. Pricing of fertility drugs is independent from the fees charged to clients. The Company does not disclose the transaction price allocated to remaining performance obligations because all of the transaction price is variable and is allocated to the distinct periods to which the services relate, as discussed above. The remaining contract term is typically less than one year, due to the client’s contractual termination options. There were no material contract asset or contract liability balances as of March 31, 2022 or December 31, 2021. Accrued Receivables and Accrued Claims Payable Accrued receivables are estimated based on historical experience for those fertility benefits services provided but for which a claim has not been received from the provider clinic at the end of the reporting period, which includes assumptions regarding the lag between authorization date and service date as well as estimates for changes and cancellations of services. At the same time, cost of services and accrued claims payables are estimated based on the amount to be paid to the provider clinic and expected gross margin on fertility benefits services. Estimates are adjusted to actual at the time of billing. Adjustments to original estimates have not been material. As of March 31, 2022 and December 31, 2021, accrued receivables were $54.0 million and $30.2 million, respectively. Accrued receivables are included within accounts receivable in the consolidated balance sheet. Accrued claims payable of $34.0 million and $20.0 million as of March 31, 2022 and December 31, 2021, respectively, are included within accrued expenses and other current liabilities in the consolidated balance sheet. Claims payable are generally paid within 30 days based on contractual terms. As of March 31, 2022 and December 31, 2021, unbilled receivables, which represent claims received and approved but unbilled at the end of the reporting period, were $31.3 million and $23.7 million, respectively. Unbilled receivables are typically billed to clients within 30 days of the approved claim based on the contractual billing schedule agreed upon with the client. Unbilled receivables are included in accounts receivable in the consolidated balance sheet. Accounts Receivable and Allowance for Doubtful Accounts The accounts receivable balance primarily includes amounts due from clients and members. The Company estimates the allowance for doubtful accounts based on the lifetime expected credit losses for the client and member receivable pools, respectively. Under this current expected credit losses model, the Company determines the allowance for doubtful accounts based on factors such as the age of the receivable balance, historical experience, current economic conditions, and reasonable and supportable forecasts of future economic conditions. An allowance for credit losses is applied at the time the asset is recognized. Expected credit losses are recorded as general and administrative expenses on the consolidated statements of operations . Three Months Ended March 31, 2022 Balance at Beginning of Period Charged to Costs and Expenses Write-offs Balance at End of Period Allowance for doubtful accounts $ 17,379 $ 2,281 $ — $ 19,660 Cost of Services Fertility Benefits Services Fertility benefits services costs include: (1) fees paid to provider clinics within the Company’s network, labs and anesthesiologists; (2) costs incurred (including salaries, bonuses, benefits, stock-based compensation expense, other related costs, and an allocation of our general overhead, depreciation and amortization) for those employees associated with care management service functions: Provider Account Management, PCA, Provider Relations and Claims Processing teams; and (3) related information technology support costs. Contracts with provider clinics are typically for a term of one Pharmacy Benefits Services Pharmacy benefits services costs include: (1) the fees for prescription drugs dispensed and clinical services provided during the reporting period by specialty pharmacy partners; (2) costs incurred (including salaries, bonuses, benefits, stock-based compensation expense, other related costs, and an allocation of our general overhead, depreciation and amortization) for those employees associated with care management service functions: PCA, Provider Relations and Claims Processing teams; and (3) related information technology support costs. Contracts with the specialty pharmacies are typically for a term of one year. In the specialty pharmacy contracts, the contractual fees of prescription drugs sold includes the cost of the prescription drugs purchased and shipped to members by the Company’s specialty mail service dispensing pharmacies, net of any volume-related or other discounts. Vendor rebates The Company receives a rebate on formulations purchased and dispensed by the Company’s specialty pharmacies. The Company’s contractual arrangements with pharmacy program partners provide for the Company to receive a discount (or rebate) from established list prices paid subsequent to dispensing when products are purchased indirectly from a pharmacy program partners (such as through a specialty pharmacy). These rebates are recognized as a reduction of cost of services when prescriptions are dispensed and are generally estimated and billed to manufacturers within 20 days after the end of each month. The effect of adjustments resulting from the reconciliation of rebates recognized to the amounts billed and collected has not been material to the Company’s results of operations. Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes 740 by clarifying and amending existing guidance. The Company adopted this standard as of January 1, 2021. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In May 2021, the FASB issued ASU No. 2021-04 (“ASU 2021-04”) “ Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation- Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815- 40) |
Revenue
Revenue | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | Disaggregated revenue The following table disaggregates revenue by service (in thousands): Three Months Ended March 31, 2022 2021 Fertility benefit services revenue $ 110,918 $ 88,854 Pharmacy benefit services revenue 61,299 33,279 Total revenue $ 172,217 $ 122,133 |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | 4. Fair Value of Financial Instruments The fair value of financial instruments is determined based on assumptions that market participants would use when pricing an asset or liability at the balance sheet date. Certain assets are categorized based on the following fair value hierarchy of market participant assumptions: Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities. Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly. Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value of the asset or liability and supported by little or no market activity. The Company uses observable market data when available, and minimizes the use of unobservable inputs when determining fair value. As of March 31, 2022 and December 31, 2021, the Company had $41.5 million and $93.7 million, respectively, in financial assets held in money market accounts and $66.9 million and $28.0 million, respectively, held in marketable securities, including U.S. treasury bills. All were classified as Level 1 in the fair value hierarchy. The Company measured these assets at fair value. The Company classified these assets as Level 1 because the values of these assets are determined using unadjusted quoted prices in active markets for identical assets. As of March 31, 2022 and December 31, 2021, the Company did not have any assets liabilities 2 3 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Leases | 5. Leases In September 2019, the Company’s lease agreement for its corporate headquarters commenced and is scheduled to expire in May 2029. Pursuant to the lease, the Company is obligated to pay the base rent of approximately $1.3 million per annum through the end of the fifth lease year and approximately $1.4 million per annum thereafter through the expiration date. The Company recognizes lease expense on a straight-line basis over the lease term. Lease expense for each of the three months ended March 31, 2022 and 2021 was $0.3 million. Cash outflows from operating activities attributable to the operating lease for each of the three months ended March 31, 2022 and 2021 was $0.3 million. Information related to our leases is as follows (in thousands): Balance Sheet Location March 31, 2022 December 31, 2021 Operating Leases Right-of-use asset Operating lease right-of-use assets $ 7,583 $ 7,805 Short-term lease liabilities Accrued expenses and other current liabilities $ 1,231 $ 1,231 Long-term lease liabilities Operating lease noncurrent liabilities $ 7,189 $ 7,419 Other information Weighted average remaining lease term, operating lease 7.2 years 7.4 years Weighted average discount rate, operating lease 4.29% 4.29% Future minimum facility lease payments as of March 31, 2022, were as follows: Year Ending December 31: Operating Lease Payments as of March 31, 2022 2022 $ 964 2023 1,286 2024 1,326 2025 1,407 2026 1,407 Thereafter 3,400 Total undiscounted lease payments $ 9,790 Less: imputed interest 1,370 Present value of lease liabilities $ 8,420 Less: current portion of operating lease liabilities 1,231 Operating lease noncurrent liabilities $ 7,189 February 2022 Lease Agreement premises will become available to the Company for use, is expected to be in the fourth quarter of 2024. The Company is obligated to pay the base rent of approximately $1.3 million starting in the first quarter of 2025 for five years and approximately $1.4 million per year thereafter through the first quarter of 2035, the expiration date. For the current 25,212 square foot office, the Company is obligated to pay the base rent of approximately $1.6 million per year beginning in June 2029, which is the lease commencement, through the first quarter of 2035, the expiration date. |
Debt
Debt | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt | 6. Debt In June 2018, the Company entered into a loan agreement with Silicon Valley Bank for a revolving line of credit up to $15.0 million based upon an advance rate of 80% on “eligible” accounts receivable to fund its working capital and other general corporate needs, which was amended in April 2019, January 2020, June 2020, and February 2021 (as amended, the “SVB Line of Credit”). Eligible accounts receivable was defined in the loan agreement as accounts billed with aging 90 days or less and excluded accounts receivable due for member copayments, coinsurance, and deductibles. The SVB Line of Credit matured in June 2021. The Company was required to pay a revolving line commitment fee of $225,000 in three equal annual installments of $75,000 starting on the one-year anniversary of the revolving line. The Company made the first installment payment of $75,000 in June 2019 and accrued this cost monthly. When the Company held unrestricted cash balances greater than $5.0 million, interest accrued at a floating rate per annum equal to the greater of prime rate The SVB Line of Credit contained customary affirmative covenants, financial covenants, as well as negative covenants that, among other things, restricted the Company’s ability to incur additional indebtedness (including guarantees of certain obligations); create liens; engage in mergers, consolidations, liquidations and dissolutions; sell assets; maintain collateral; pay dividends or make other payments in respect of capital stock; make acquisitions; make investments, loans and advances; enter into transactions with affiliates; make payments with respect to or modify subordinated debt instruments; and enter into agreements with negative pledge clauses or clauses restricting subsidiary distributions. The financial covenant required the Company to achieve a specified minimum quarterly revenue as defined by the SVB Line of Credit. During the three months ended March 31, 2021, the Company recorded interest expense on the SVB Line of Credit of $18,750. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies The Company records accruals for loss contingencies when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. If the Company determines that a loss is reasonably possible, the Company discloses the matter, and the amount or range of the possible loss, if estimable, in the notes to the consolidated financial statements. From time to time, the Company is involved in certain claims and litigation arising in the normal course of business. The Company is not aware of any legal proceedings or claims, that the Company believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position or results of operations. |
Stock-based Compensation Expens
Stock-based Compensation Expense | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Stock-based Compensation Expense | 8. Stock-based Compensation Expense The following table summarizes stock-based compensation expense, which was included in the statements of operations as follows (in thousands): Three Months Ended March 31, 2022 2021 Cost of services $ 6,165 $ 1,287 Sales and marketing 4,763 681 General and administrative 13,572 3,066 Total stock-based compensation expense $ 24,500 $ 5,034 January 2022 Executive Equity Grants On November 4, 2021, the Company announced that David Schlanger will transition to the role of Executive Chairman, effective as of January 1, 2022, and will continue to serve as a director. In connection with this transition, the Company entered into an amended and restated employment agreement with Mr. Schlanger, effective as of January 1, 2022. Pursuant to this agreement, Mr. Schlanger received an equity award for fiscal year 2022 comprised of 333,000 non-qualified stock options and 84,000 restricted stock units, in each case vesting as to 25% on the first Peter Anevski, who served as President and Chief Operating Officer, succeeded Mr. Schlanger as Chief Executive Officer, effective as of January 1, 2022. In connection with this transition, the Company entered into an amended and restated employment agreement with Mr. Anevski, effective as of January 1, 2022. Pursuant to this agreement, Mr. Anevski received an equity award for fiscal year 2022 comprised of 1,000,000 non-qualified stock options and 250,000 restricted stock units, in each case vesting as to 25% on the first |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 9. Income Taxes For the three months ended March 31, 2022 and 2021, the Company calculated its year-to-date provision for income taxes by applying the estimated annual effective tax rate to the year-to-date profit from operations before income taxes and adjusts the provision for income taxes for discrete tax items recorded in the period. The Company updates its estimate of its annual effective tax rate at the end of each quarterly period. The estimate takes into account annual forecasted income before income taxes and any significant permanent tax items. During the three months ended March 31, 2022 and 2021, the Company recorded a benefit for taxes of $5.1 million and $3.4 million, respectively, primarily due to equity compensation activity that occurred during the period. |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | 10. Net Income Per Share Basic net income per share is calculated by dividing the net income by the weighted-average number of shares of common stock outstanding for the period. Diluted net income per share is computed by dividing the diluted net income by the weighted average number of common shares outstanding for the period, including potential dilutive common shares assuming dilutive effect of outstanding common stock options, restricted stock units, and common stock warrants. In periods when the Company has incurred a net loss, diluted net loss per share is the same as basic net loss per share because dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. A reconciliation of net income and the number of shares in the calculation of basic and diluted net income per share is as follows (in thousands, except share and per share amounts): Three Months Ended March 31 2022 2021 Basic net income per common share: Numerator: Net income $ 4,971 $ 15,166 Denominator: Weighted-average shares used in computing basic net income per share 91,410,368 87,404,287 Basic net income per share $ 0.05 $ 0.17 Diluted net income per common share: Numerator: Net income $ 4,971 $ 15,166 Denominator: Weighted-average shares used in computing basic net income per share 91,410,368 87,404,287 Effect of dilutive securities 8,525,367 12,702,210 Weighted-average shares used in computing diluted net income per share 99,935,735 100,106,497 Diluted net income per share $ 0.05 $ 0.15 The following weighted-average outstanding shares of potentially dilutive securities were excluded from the computation of diluted income per share for the period presented because including them would have been antidilutive: Three Months Ended March 31, 2022 2021 Options to purchase common stock 6,844,585 389,514 Shares issuable under ESPP 683 2,055 Restricted stock units 1,814,719 4,100 Total 8,659,987 395,669 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying interim unaudited consolidated financial statements include the accounts of Progyny, Inc. and its wholly owned subsidiaries. The interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) applicable to interim financial reporting. These interim consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all adjustments necessary to fairly state our financial position as of March 31, 2022, the results of our operations for the three months ended March 31, 2022 and 2021 and the results of our cash flows for the three months ended March 31, 2022 and 2021. Therefore, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on March 1, 2022 (the “Annual Report on Form 10-K”). The results for the three months ended March 31, 2022 are not necessarily indicative of the operating results expected for the year ending December 31, 2022 or any other future period. Additionally, there are many uncertainties regarding the ongoing coronavirus (“COVID-19”) pandemic, including variants, and the Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it has impacted and may continue to impact its customers and members, its provider network, specialty pharmacy partners, employees, suppliers, vendors, and other business partners. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, future results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information that may emerge concerning COVID-19 and variants, the actions taken to contain it or treat its impact, vaccine roll-out efforts and impact, including vaccine hesitancy, break-through cases and the economic impact on local, regional and national markets. The overall disruption of the healthcare and fertility markets and the other risks and uncertainties associated with the pandemic could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects. The Company will continue to assess the evolving impact of the COVID-19 pandemic and will make adjustments to its operations as necessary. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP generally requires management to make estimates and assumptions that affect the reported amount of certain assets, liabilities, revenue, and expenses, and the related disclosure of contingent assets and liabilities. Such estimates include, but are not limited to, the determination of accrued receivables related to revenue recognition, accrued claims payable, allowance for doubtful accounts, stock-based compensation expense, lease liabilities, and accounting for income taxes. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. |
Revenue Recognition | Revenue Recognition Revenue is recognized when control of the promised goods or services is transferred to clients in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. The Company applies the following five-step model to recognize revenue from contracts with clients: ● Identification of the contract, or contracts, with a client; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, a performance obligation is satisfied. Progyny’s contracts typically have a stated term of three years and include contractual termination options after the first year, allowing the client to terminate the contract with 30 Fertility Benefits Solution Revenue Progyny primarily generates revenue through its fertility benefits solution, in which Progyny provides self-insured enterprise entities (“clients”) and their employees and partners (together, “members”) with fertility benefits. As part of the fertility benefits solution, Progyny provides access to effective and cost-efficient fertility treatments, referred to as Smart Cycles, as well as other related services. Smart Cycles are proprietary treatment bundles that include certain medical services available to members through Progyny’s proprietary, credentialed network of provider clinics. In addition to access to Progyny’s Smart Cycle treatment bundles and access to Progyny’s network of provider clinics, the fertility benefits solution includes other comprehensive services, which Progyny refers to as care management services, such as active management of the provider clinic network, real-time member eligibility and treatment authorization, member-facing digital tools throughout the Smart Cycle and detailed quarterly reporting all supported by client facing account management and end-to-end comprehensive member support provided by Progyny’s in house staff of PCAs. The promises within Progyny’s fertility benefits contract with a client represent a single performance obligation because Progyny provides a significant service of integrating the Progyny designed Smart Cycles and access to the fertility treatment services provided by provider clinics with the other comprehensive services into the combined fertility benefits solution that the client contracted to receive. Progyny’s fertility benefits solution is a stand-ready obligation that is satisfied over the contract term. Progyny’s contracts include the following sources of consideration, which are all variable: a per employee per month (“PEPM”) administration fee (in most, but not all contracts) and a fixed rate per Smart Cycle. The PEPM administration fee is allocated between the fertility benefits solution and the pharmacy benefits solution based on standalone selling price, estimated using an expected cost-plus margin method. The Company allocates the variable consideration related to the fixed rate per Smart Cycle to the distinct period during which the related services were performed as those fees relate specifically to the Company’s efforts to provide its fertility benefits solution to its clients in the period and represents the consideration the Company is entitled to for the fertility benefits services provided. As a result, the fixed rate per Smart Cycle is included in the transaction price and recognized in the period in which the Smart Cycle is provided to the member. Progyny’s contracts also include potential service level agreement refunds related to outcome-based service metrics. These service level refunds, which are determined based on results of a full plan year, if met, are based on a percentage of the PEPM fee paid by clients. The Company estimates the variable consideration related to the total PEPM administration fee, less estimated refunds related to service level agreements, and recognizes the amounts allocated to the fertility benefits solution ratably over the contract term. Progyny’s estimates of service level agreement refunds, have not historically resulted in significant adjustments to the transaction price. Clients are typically invoiced on a monthly basis for the PEPM administration fee. Progyny invoices its clients and members for their respective portions of the fixed rate per Smart Cycle bundle when all treatment services within a Smart Cycle are completed by the provider clinic. Once an invoice is issued, payment terms are typically between 30 to 60 days. The Company assesses whether it is the principal or the agent for each arrangement with a client, since fertility treatment services are provided by a third party—the provider clinics. The Company is the principal in its arrangements with clients and therefore presents revenue gross of the amounts paid to the provider clinics because Progyny controls the specified service (the fertility benefits solution) before it is transferred to the client. Progyny integrates the fertility treatment services provided by the provider clinics into the overall fertility benefits solution that the client contracted to receive. In addition, Progyny defines the scope of the potential services to be performed by the provider clinics and monitors the performance of the provider clinics. Furthermore, Progyny is primarily responsible for fulfilling the promise to the client and has discretion in setting the pricing, as Progyny separately negotiates agreements with the provider clinics, which establish pricing for each treatment service. Pricing of services from provider clinics is independent from the fees charged to clients. Pharmacy Benefits Solution Revenue For clients that have the fertility benefits solution, Progyny offers, as an add-on, its pharmacy benefits solution, which is a separate, fully integrated pharmacy benefit. As part of the pharmacy benefits solution, Progyny provides care management services, which include Progyny’s formulary plan design, prescription fulfillment, simplified authorization and timely delivery of the medications used during treatment through Progyny’s network of specialty pharmacies, and clinical services consisting of member assessments, UnPack It calls, telephone support, online education, medication administration training, pharmacy support services and continuing PCA support. The pharmacy-related promises represent a single performance obligation because Progyny provides a significant service of integrating the formulary plan design, prescription fulfillment, clinical services and PCA support into the combined pharmacy benefits solution that the client contracted to receive. The pharmacy benefits solution is a stand-ready obligation that is satisfied over the contract term. Progyny’s contracts include the following sources of consideration, all of which are variable: a PEPM administration fee (in most, but not all contracts) and a fixed fee per fertility drug. As described above, the PEPM administration fee, less estimated refunds related to service level agreements, is allocated to the pharmacy benefits solution and recognized ratably over the contract term. The Company allocates the variable consideration related to the fixed fee per fertility drug to the distinct period during which the related services were performed, as those fees relate specifically to the Company’s efforts to provide its pharmacy benefits solution to clients in the period and represents the consideration the Company is entitled to for the pharmacy benefit services provided. As a result, the fixed fee per fertility drug is included in the transaction price and recognized in the period in which the Company is entitled to consideration from a client, which is when a prescription is filled and delivered to the members. As stated above, clients are invoiced on a monthly basis for the PEPM administration fee. Progyny invoices the client and the member for their respective portions of the fixed fee per fertility drug, when the prescription services are completed by the specialty pharmacies. Once an invoice is issued, payment terms are typically between 30 to 60 days. The Company assesses whether it is the principal or the agent for each arrangement with a client, as prescription fulfillment and clinical services are provided by a third party—the specialty pharmacies. The Company is the principal in its arrangements with clients, and therefore presents revenue gross of the amounts paid to the specialty pharmacies. Progyny controls the specified service (the pharmacy benefits solution) before it is transferred to the client. Progyny integrates the prescription fulfillment and clinical services provided by the pharmacies and PCAs into the overall pharmacy benefits solution that the client contracted to receive. In addition, Progyny defines the scope of the potential services to be performed by the specialty pharmacies and monitors the performance of the specialty pharmacies. Furthermore, Progyny is primarily responsible for fulfilling the promise to the client and has discretion in setting the pricing, as Progyny separately negotiates agreements with pharmacies, which establish pricing for each drug. Pricing of fertility drugs is independent from the fees charged to clients. The Company does not disclose the transaction price allocated to remaining performance obligations because all of the transaction price is variable and is allocated to the distinct periods to which the services relate, as discussed above. The remaining contract term is typically less than one year, due to the client’s contractual termination options. There were no material contract asset or contract liability balances as of March 31, 2022 or December 31, 2021. |
Accrued Receivables and Accrued Claims Payable | Accrued Receivables and Accrued Claims Payable Accrued receivables are estimated based on historical experience for those fertility benefits services provided but for which a claim has not been received from the provider clinic at the end of the reporting period, which includes assumptions regarding the lag between authorization date and service date as well as estimates for changes and cancellations of services. At the same time, cost of services and accrued claims payables are estimated based on the amount to be paid to the provider clinic and expected gross margin on fertility benefits services. Estimates are adjusted to actual at the time of billing. Adjustments to original estimates have not been material. As of March 31, 2022 and December 31, 2021, accrued receivables were $54.0 million and $30.2 million, respectively. Accrued receivables are included within accounts receivable in the consolidated balance sheet. Accrued claims payable of $34.0 million and $20.0 million as of March 31, 2022 and December 31, 2021, respectively, are included within accrued expenses and other current liabilities in the consolidated balance sheet. Claims payable are generally paid within 30 days based on contractual terms. As of March 31, 2022 and December 31, 2021, unbilled receivables, which represent claims received and approved but unbilled at the end of the reporting period, were $31.3 million and $23.7 million, respectively. Unbilled receivables are typically billed to clients within 30 days of the approved claim based on the contractual billing schedule agreed upon with the client. Unbilled receivables are included in accounts receivable in the consolidated balance sheet. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts The accounts receivable balance primarily includes amounts due from clients and members. The Company estimates the allowance for doubtful accounts based on the lifetime expected credit losses for the client and member receivable pools, respectively. Under this current expected credit losses model, the Company determines the allowance for doubtful accounts based on factors such as the age of the receivable balance, historical experience, current economic conditions, and reasonable and supportable forecasts of future economic conditions. An allowance for credit losses is applied at the time the asset is recognized. Expected credit losses are recorded as general and administrative expenses on the consolidated statements of operations . Three Months Ended March 31, 2022 Balance at Beginning of Period Charged to Costs and Expenses Write-offs Balance at End of Period Allowance for doubtful accounts $ 17,379 $ 2,281 $ — $ 19,660 |
Cost of Services | Cost of Services Fertility Benefits Services Fertility benefits services costs include: (1) fees paid to provider clinics within the Company’s network, labs and anesthesiologists; (2) costs incurred (including salaries, bonuses, benefits, stock-based compensation expense, other related costs, and an allocation of our general overhead, depreciation and amortization) for those employees associated with care management service functions: Provider Account Management, PCA, Provider Relations and Claims Processing teams; and (3) related information technology support costs. Contracts with provider clinics are typically for a term of one Pharmacy Benefits Services Pharmacy benefits services costs include: (1) the fees for prescription drugs dispensed and clinical services provided during the reporting period by specialty pharmacy partners; (2) costs incurred (including salaries, bonuses, benefits, stock-based compensation expense, other related costs, and an allocation of our general overhead, depreciation and amortization) for those employees associated with care management service functions: PCA, Provider Relations and Claims Processing teams; and (3) related information technology support costs. Contracts with the specialty pharmacies are typically for a term of one year. In the specialty pharmacy contracts, the contractual fees of prescription drugs sold includes the cost of the prescription drugs purchased and shipped to members by the Company’s specialty mail service dispensing pharmacies, net of any volume-related or other discounts. Vendor rebates The Company receives a rebate on formulations purchased and dispensed by the Company’s specialty pharmacies. The Company’s contractual arrangements with pharmacy program partners provide for the Company to receive a discount (or rebate) from established list prices paid subsequent to dispensing when products are purchased indirectly from a pharmacy program partners (such as through a specialty pharmacy). These rebates are recognized as a reduction of cost of services when prescriptions are dispensed and are generally estimated and billed to manufacturers within 20 days after the end of each month. The effect of adjustments resulting from the reconciliation of rebates recognized to the amounts billed and collected has not been material to the Company’s results of operations. |
Recently Adopted Accounting Pronouncements and Accounting Pronouncements Issued but Not Yet Adopted | Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes 740 by clarifying and amending existing guidance. The Company adopted this standard as of January 1, 2021. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements. In May 2021, the FASB issued ASU No. 2021-04 (“ASU 2021-04”) “ Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation- Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815- 40) |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of accounts receivable and allowance for doubtful accounts | Three Months Ended March 31, 2022 Balance at Beginning of Period Charged to Costs and Expenses Write-offs Balance at End of Period Allowance for doubtful accounts $ 17,379 $ 2,281 $ — $ 19,660 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue | Three Months Ended March 31, 2022 2021 Fertility benefit services revenue $ 110,918 $ 88,854 Pharmacy benefit services revenue 61,299 33,279 Total revenue $ 172,217 $ 122,133 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Schedule of lease information | Balance Sheet Location March 31, 2022 December 31, 2021 Operating Leases Right-of-use asset Operating lease right-of-use assets $ 7,583 $ 7,805 Short-term lease liabilities Accrued expenses and other current liabilities $ 1,231 $ 1,231 Long-term lease liabilities Operating lease noncurrent liabilities $ 7,189 $ 7,419 Other information Weighted average remaining lease term, operating lease 7.2 years 7.4 years Weighted average discount rate, operating lease 4.29% 4.29% |
Schedule of future minimum facility lease payments | Year Ending December 31: Operating Lease Payments as of March 31, 2022 2022 $ 964 2023 1,286 2024 1,326 2025 1,407 2026 1,407 Thereafter 3,400 Total undiscounted lease payments $ 9,790 Less: imputed interest 1,370 Present value of lease liabilities $ 8,420 Less: current portion of operating lease liabilities 1,231 Operating lease noncurrent liabilities $ 7,189 |
Stock-based Compensation Expe_2
Stock-based Compensation Expense (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Summary of stock based compensation expense for employees | Three Months Ended March 31, 2022 2021 Cost of services $ 6,165 $ 1,287 Sales and marketing 4,763 681 General and administrative 13,572 3,066 Total stock-based compensation expense $ 24,500 $ 5,034 January 2022 Executive Equity Grants On November 4, 2021, the Company announced that David Schlanger will transition to the role of Executive Chairman, effective as of January 1, 2022, and will continue to serve as a director. In connection with this transition, the Company entered into an amended and restated employment agreement with Mr. Schlanger, effective as of January 1, 2022. Pursuant to this agreement, Mr. Schlanger received an equity award for fiscal year 2022 comprised of 333,000 non-qualified stock options and 84,000 restricted stock units, in each case vesting as to 25% on the first Peter Anevski, who served as President and Chief Operating Officer, succeeded Mr. Schlanger as Chief Executive Officer, effective as of January 1, 2022. In connection with this transition, the Company entered into an amended and restated employment agreement with Mr. Anevski, effective as of January 1, 2022. Pursuant to this agreement, Mr. Anevski received an equity award for fiscal year 2022 comprised of 1,000,000 non-qualified stock options and 250,000 restricted stock units, in each case vesting as to 25% on the first |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Reconciliation of net income loss available to common stockholders | Three Months Ended March 31 2022 2021 Basic net income per common share: Numerator: Net income $ 4,971 $ 15,166 Denominator: Weighted-average shares used in computing basic net income per share 91,410,368 87,404,287 Basic net income per share $ 0.05 $ 0.17 Diluted net income per common share: Numerator: Net income $ 4,971 $ 15,166 Denominator: Weighted-average shares used in computing basic net income per share 91,410,368 87,404,287 Effect of dilutive securities 8,525,367 12,702,210 Weighted-average shares used in computing diluted net income per share 99,935,735 100,106,497 Diluted net income per share $ 0.05 $ 0.15 |
Antidilutive securities excluded from computation of earnings per share | Three Months Ended March 31, 2022 2021 Options to purchase common stock 6,844,585 389,514 Shares issuable under ESPP 683 2,055 Restricted stock units 1,814,719 4,100 Total 8,659,987 395,669 |
Business and Basis of Present_2
Business and Basis of Presentation (Details) - segment | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract] | ||||
Number of operating segments | 1 | 1 | 1 | 1 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Revenue Recognition (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Contract term | 3 years |
Contract termination, notice period, low end of range | 30 days |
Contract termination, notice period, high end of range | 90 days |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Accrued Receivable and Accrued Claims Payable (Details) - USD ($) $ in Millions | Mar. 31, 2022 | Dec. 31, 2021 |
Accounting Policies [Abstract] | ||
Accrued receivables | $ 54 | $ 30.2 |
Accrued claims payable | 34 | 20 |
Unbilled receivables | $ 31.3 | $ 23.7 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | $ 17,379 | |
Costs charged to expenses | 2,281 | $ 2,518 |
Balance at end of period | $ 19,660 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Cost of Services (Details) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Contract Term, Clinics, Low End of Range | 1 year |
Contract Term, Clinics, High End of Range | 2 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Accounting Pronouncements (Details) | Mar. 31, 2022 |
Accounting Standards Update 2019-12 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 1, 2021 |
Accounting Standards Update 2021-04 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 1, 2022 |
Revenue (Details)
Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues [Abstract] | ||
Revenue | $ 172,217 | $ 122,133 |
Fertility benefit services revenue | ||
Revenues [Abstract] | ||
Revenue | 110,918 | 88,854 |
Pharmacy benefit services revenue | ||
Revenues [Abstract] | ||
Revenue | $ 61,299 | $ 33,279 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments - Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure | $ 0 | |
Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Assets, Fair Value Disclosure | $ 0 | |
Recurring | Level 1 | ||
Investments, Fair Value Disclosure [Abstract] | ||
Debt Securities, Available-for-sale | 66,900 | 28,000 |
Recurring | Level 1 | Money Market Funds | ||
Assets, Fair Value Disclosure [Abstract] | ||
Cash and Cash Equivalents, Fair Value Disclosure | $ 41,500 | $ 93,700 |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Level 2 | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | $ 0 | |
Level 3 | ||
Liabilities, Fair Value Disclosure [Abstract] | ||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | $ 0 |
Leases - Corporate Offices (Det
Leases - Corporate Offices (Details) $ in Millions | Mar. 31, 2022USD ($)ft² |
Corporate Headquarters Lease, New York, New York, September 2019 | |
Lessee, Operating Lease, Description [Abstract] | |
Leased area (in square feet) | ft² | 25,212 |
Operating lease, base rent per annum, through year five | $ 1.3 |
Operating lease, base rent per annum, after year five | 1.4 |
Operating lease, base rent per annum, after year ten | $ 1.6 |
Corporate Offices Lease One, New York, New York, February 2022 | |
Lessee, Operating Lease, Description [Abstract] | |
Leased area (in square feet) | ft² | 24,099 |
Operating lease, base rent per annum, through year five | $ 1.4 |
Operating lease, base rent per annum, after year five | $ 1.5 |
Corporate Offices Lease Two, New York, New York, February 2022 | |
Lessee, Operating Lease, Description [Abstract] | |
Leased area (in square feet) | ft² | 21,262 |
Operating lease, base rent per annum, through year five | $ 1.3 |
Operating lease, base rent per annum, after year five | $ 1.4 |
Leases - Lease Expense (Details
Leases - Lease Expense (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income and Expenses, Lessee [Abstract] | ||
Lease expense | $ 0.3 | $ 0.3 |
Leases - Cash Outflows (Details
Leases - Cash Outflows (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Cash Flow, Operating Activities, Lessee [Abstract] | |
Cash outflows from operating activities attributable to operating leases | $ 0.3 |
Leases - Assets and Liabilities
Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Assets and Liabilities, Lessee [Abstract] | ||
Right-of-use assets | $ 7,583 | $ 7,805 |
Operating Lease, Liability [Abstract] | ||
Operating lease current liabilities | $ 1,231 | $ 1,231 |
Operating Lease, Liability, Current, Statement of Financial Position | Accrued expenses and other current liabilities | Accrued expenses and other current liabilities |
Long-term lease liabilities | $ 7,189 | $ 7,419 |
Leases - Other Information (Det
Leases - Other Information (Details) | Mar. 31, 2022 | Dec. 31, 2021 |
Lessee Disclosure [Abstract] | ||
Weighted average remaining lease term, operating lease | 7 years 2 months 12 days | 7 years 4 months 24 days |
Weighted average discount rate, operating lease | 4.29% | 4.29% |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) $ in Thousands | Mar. 31, 2022USD ($) |
Lessee, Operating Lease, Liability, Payment, Due [Abstract] | |
2022 | $ 964 |
2023 | 1,286 |
2024 | 1,326 |
2025 | 1,407 |
2026 | 1,407 |
2027 | 3,400 |
Total undiscounted lease payments | $ 9,790 |
Leases - Gross Difference (Deta
Leases - Gross Difference (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Operating Lease Liabilities, Gross Difference, Amount [Abstract] | ||
Total undiscounted lease payments | $ 9,790 | |
Less: imputed interest | 1,370 | |
Present value of lease liabilities | 8,420 | |
Less: current portion of operating lease liabilities | 1,231 | $ 1,231 |
Operating lease noncurrent liabilities | $ 7,189 | $ 7,419 |
Debt (Details)
Debt (Details) - Line of Credit - Silicon Valley Bank Revolving Line of Credit | 1 Months Ended | 3 Months Ended |
Jun. 30, 2018USD ($)installment | Mar. 31, 2021USD ($) | |
Short-term Debt [Line Items] | ||
Maximum borrowing capacity | $ 15,000,000 | |
Advance rate upon which the borrowing capacity is based (as a percent) | 80.00% | |
Threshold period of accounts receivable aging | 90 days | |
Interest expense | $ 18,750 | |
Commitment fee | $ 225,000 | |
Frequency of commitment fee | annual | |
Commitment fee, number of installments | installment | 3 | |
Commitment fee, installment amount | $ 75,000 | |
Unrestricted cash balance greater than 5 million, interest accrues | ||
Short-term Debt [Line Items] | ||
Interest rate (as a percent) | 4.75% | |
Unrestricted cash balance less than 5 million, interest accrues | ||
Short-term Debt [Line Items] | ||
Interest rate (as a percent) | 4.75% | |
Prime Rate | Unrestricted cash balance greater than 5 million, interest accrues | ||
Short-term Debt [Line Items] | ||
Variable rate spread (as a percent) | 0.00% | |
Prime Rate | Unrestricted cash balance less than 5 million, interest accrues | ||
Short-term Debt [Line Items] | ||
Variable rate spread (as a percent) | 0.50% |
Stock-based Compensation Expe_3
Stock-based Compensation Expense - Tabular Disclosure (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Share-based Payment Arrangement, Additional Disclosure [Abstract] | ||
Stock-based compensation expense | $ 24,500 | $ 5,034 |
Cost of services | ||
Share-based Payment Arrangement, Additional Disclosure [Abstract] | ||
Stock-based compensation expense | 6,165 | 1,287 |
Sales and marketing | ||
Share-based Payment Arrangement, Additional Disclosure [Abstract] | ||
Stock-based compensation expense | 4,763 | 681 |
General and administrative | ||
Share-based Payment Arrangement, Additional Disclosure [Abstract] | ||
Stock-based compensation expense | $ 13,572 | $ 3,066 |
Stock-based Compensation Expe_4
Stock-based Compensation Expense - Executive Equity Grants (Details) | Jan. 01, 2022shares |
Share-based Payment Arrangement, Tranche One | Board of Directors Chairman | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage (as a percent) | 25.00% |
Vesting period | 1 year |
Share-based Payment Arrangement, Tranche One | Chief Executive Officer | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage (as a percent) | 25.00% |
Vesting period | 1 year |
Share-based Payment Arrangement, Tranche Two | Board of Directors Chairman | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage (as a percent) | 75.00% |
Vesting period | 3 years |
Share-based Payment Arrangement, Tranche Two | Chief Executive Officer | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Vesting percentage (as a percent) | 75.00% |
Vesting period | 3 years |
Stock Options | Board of Directors Chairman | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Equity award eligible to receive (in shares) | 333,000 |
Stock Options | Chief Executive Officer | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Equity award eligible to receive (in shares) | 1,000,000 |
Restricted Stock Units | Board of Directors Chairman | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Equity award eligible to receive (in shares) | 84,000 |
Restricted Stock Units | Chief Executive Officer | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Equity award eligible to receive (in shares) | 250,000 |
Performance Shares | Board of Directors Chairman | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Equity award eligible to receive (in shares) | 83,000 |
Performance Shares | Chief Executive Officer | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Equity award eligible to receive (in shares) | 250,000 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Tax Expense (Benefit), Continuing Operations [Abstract] | ||
(Benefit) provision for income taxes | $ (5,113) | $ (3,370) |
Net Income Per Share - Reconcil
Net Income Per Share - Reconciliation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Net Income (Loss) Available to Common Stockholders, Basic [Abstract] | ||
Net income | $ 4,971 | $ 15,166 |
Weighted Average Number of Shares Outstanding, Basic [Abstract] | ||
Weighted-average shares used in computing basic net income per share (in shares) | 91,410,368 | 87,404,287 |
Earnings Per Share, Basic [Abstract] | ||
Basic net income per share (in dollars per share) | $ 0.05 | $ 0.17 |
Net Income (Loss) Available to Common Stockholders, Diluted [Abstract] | ||
Net income - basic | $ 4,971 | $ 15,166 |
Net income - diluted | $ 4,971 | $ 15,166 |
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||
Weighted-average shares used in computing basic net income per share (in shares) | 91,410,368 | 87,404,287 |
Effect of dilutive securities (in shares) | 8,525,367 | 12,702,210 |
Weighted-average shares used in computing diluted net income per share (in shares) | 99,935,735 | 100,106,497 |
Earnings Per Share, Diluted [Abstract] | ||
Diluted net income per share (in dollars per share) | $ 0.05 | $ 0.15 |
Net Income Per Share - Potentia
Net Income Per Share - Potentially Dilutive Securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 8,659,987 | 395,669 |
Stock Options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 6,844,585 | 389,514 |
Employee stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 683 | 2,055 |
Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Total (in shares) | 1,814,719 | 4,100 |