PGNY - Earnings call transcript Q1 2021

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Operator

Good afternoon, ladies and gentlemen and welcome to the Progyny Incorporated First Quarter 2021 Earnings Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, James Hart. Sir, the floor is yours.

James Hart

Thank you, Catherine. everyone. afternoon, good And first call. our quarter to conference Welcome With Anevski, Livingston, President are; David CFO. Progyny; Pete Schlanger, CEO, and me today COO; and Mark

the We before some with call open will questions. for prepared your begin we remarks

and of begin, expectation future clients, related clients, general further and forward-looking our to press including, of assumptions, operations, performance, our strategy, full clients investment, XXXX. contains business plans industry this plans, financial release year that we and today's including and statements both conditions. described member those for in was other and growth, economic our opportunities impact limited statements, These I'd you and retain of but remind subject long-term and Progyny's Before as to that our are forward COVID-XX to issued ability forward-looking the business, objectives call opportunity, acquire outlook statements to, governance, statements certain activity outlook, size not industry and outlook, market afternoon. uncertainties on our about market financial like and to our second business risks, The growth, non-historical quarter new existing

these projections affect financial forward-looking on We have condition operations. events, business, expectations trends and and largely based financial current about that our our we statements may and future believe results of

entitled most SEC, and including these Risk are section periodic in with Descriptions after statements discussed the cause forward-looking call. no revise could any reports results materially the to this our we these statement risks current obligation believe recent changes we undertake in Factors from are to reflect that expectations Although differ occur XX-K. reasonable, these and actual our to in filed that of other

the margin. call turn non-GAAP with in we call, refer over are also release, Dave. EBITDA @investors.progyny.com. I like most adjusted as the to which the During now EBITDA will also available the comparable and available adjusted press measures is financial measures GAAP Reconciliations to such to will

David Schlanger

Jamie. you, And for thank joining everyone us you, today. Thank

the the in the and year, are pleased in of expand continued expansion We are highlights. walk here to year. to ART to XX% of year. on strong of quarter. have revenue, managed quarterly EBITDA in families, of first $XXX.X ticked be workforce report treatment quarter quarter increased growth most their demonstrating start up pandemic. But the to and who X.X million. to in backdrop few cycles members the X,XXX, their over to year than our those $XX.X you the Revenue ago continued XX% Mark the the we've to grew grew in XXXX to we've to last build more the quarter through of ever record of is utilization doubled the utilization quarter in as the grew newest ongoing our And Average reflecting last base, to first which continues moments. Female lastly, the need few priority margins. million, even sequential a margins nearly the order quarter basis a million last the first fourth that Cycles the fertility over only year quarter reflecting clients, clients the X.XX%, a organic first existing a will for against adjusted our the XX% from in seen our over also start of but to solid the not our details period results addition nearly a the within

majority substantial new grow that important will because be year, the the Progyny us XX went ratably Xst. always new to us, operations In ensured From perspective, businesses the their live addition onboarding results, unlike seamlessly. these to progress successfully clients their went our who the quarter with during that throughout of the January quarter, on an begin strong with critically we benefit first also clients for the

a our the we the processes place As to volumes, result, step that launch a in business smooth overnight need in have necessary each we demands and which personnel prepare for to client. function increase in ensure of advance

But and we successfully a the managing is past. to levels of done focus of for clients have activity, ensure year this This our service increased and the volumes strategic and on us. believe existing. for of strong we As not of had then since also only been each the come their focus have all we clients to our our maintain our inception. of year, levels one expect ways that that to year. because both in we've of implementations, very employees maintaining member clients, newest that have we completed is been priorities that new levels maintain industry-leading Each identify able while from experience improving retention our client our the service both We

client detailing have ways the the and and outcomes proposition provide is of reviews, with experiences extensive hundreds level Progyny. containing clients the value data at strong relationships of our our foster points, we reports through One we quarterly reinforce comprehensive members

each of one clients Progyny we've or even solution of report to themes first far we extensive annual health reinforce the the this ever to result scores, with for itself starting review of NPS negative achieving. of Score where XX of of of that them benefits and provider, the in the our quarter, reviews typically one work heard outcomes conduct an experiences indicates with increased which the being understanding and highest is to only distinguished outbreak or quarter. as is a our hearing discussing from are at this our environment. also services, These each near reflects specific well the the I'll of has so is that this feedback year possible the during both we are issues deepen been. Progyny our also addition, result quality these unique the we aren't The we the as quality employees during recurring which few which the to members happened exceptional are highest raid spend client remote fertility In service to solution. the by clients that, believe continue This And service. both important moments further demonstrated few the it's COVID providing,

now, of ways of our our we are the less are the we complexities of and members is the but of One navigate familiar fertility that may level service, core to of through supporting with journey. be you members. our the the service support help you in PCAs unprecedented components patient other the education have providing By with role many their familiar provide

infertility the events need of routinely maternal the with with to For importance hold members them. held to examining information fertility instance, Recently, topical we provide community, black relevant preservation issues in fertility respect to cancer know of on webinars to for patients COVID-XX patients, what health and issues vaccine. and we

our We mindful are are and also diverse very different that perspectives. members have many

by we same journey, mental geared As the just the issues content in health to enhanced available that explaining illustration, for partner sex family on address in-depth We've to journey the fertility parenthood male during one parents the and choice. pathways of content on managing building to or created infertility. single our couples are similarly male

Society outcomes. To takeaways. significantly outcomes reaffirms outperform to a data, which Technology The continue national that averages. now highlight Reproductive Assisted to the their few fertility CDC and the recently our of Progyny's Turning just for latest released the

Our than average is our rate lower national national pregnancy average. and XX% is now than rate better miscarriage the the XX%

XX% order national birth family would since This remained rate year then average has building which live financial other better As in rate, a birth national Progyny a client have otherwise employees than to An to have they practical the that benefit because Progyny's while In goals. been fund higher better. XX% their point treatment has significantly their that, fewer result, to XXXX, otherwise while been rounds IVF meaningful the rate not. we've our ago terms, improving to flat. live managers translates note had help live now savings average shows XX% of the birth would is important is with achieve needs our improved

our XX% exceeds high-risk than national our of cause pre-term at largest average, transfer birth which and close pregnancies or natural gestations to multiple rate multiples the XX%. now better births. Lastly, X.X% is the the twinning now is embryo single And rate, rate

to NICU costs, So and significant substantial savings cost low the as translates birthweight result downstream, triplet medical problem this outcome avoid care well pregnancies. maternity those for costs babies often as from chronic associated clients, and they with because twin that are that

through over Mark to call you walk quarter. to turn Mark? me the Let now the

Mark Livingston

last quarter revenue period $XX.X line, year top higher previously quarter, walking was XX% increased Thank the the million. everyone. clients and second $XXX.X $XX.X when afternoon, expectations quarter full primarily of This medical first the last you, increased we in year. components over down million. to reported, though I'll the you provide utilization to year of quarter by XX% pandemic. the lives, In the and impacted temporarily and revenue a through the over to first And onset David. number at grew fertility begin revenue the closed as quarter COVID-XX for the in our due XX% clinics results lower the first good year the was million. prior revenue quarter then by of growth Breaking negatively Pharmacy to our covered

remains Since very the be the of we While adoption. in than service more of pleased a opportunity There to client progress future a of upsell we base. - continue the quarter a with more to XXXX. launched pharmacy

who of lives lives. following the account lives XXX XXX X.X of of launched quarter an with to each average the benefit lives past covered in million we first now have had This the covered end approximately XX% last covered the during at As clients and of the an representing covered clients, least X.X the year. XXXX quarter, quarter. Taking reflecting average we of growth over into clients, close of compared XXX million their clients the quarter, in the year,

quarter, utilization ever last quarter our during metrics, caused The of this female pandemic. onset X.XX%. affected Turning disruption first the a really ART the which quarterly utilization by highest compared to X,XXX our the negatively increase cycles compared Care This the represents and prior there is reflects temporary was the was rate ago. from This financial Again, now of what of period in to year. utilization to Fertility total Cycles results our quarter. utilization as XX% the by in were drives a performed first year X.XXX%

our recovered, nature believe time effectively However, we current continue well as Progyny's utilization volumes fertility that essential its that demonstrates reflecting as sensitivity. the treatment both have to of

clients of mix the reminder, a the vary number new newest factors, from the time will as when of utilization demographic rates a due such live, clients. As and go year quarter-to-quarter to of

yielding million, now increases XX.X% Turning our a due pharmacy contract points an management Gross $XX.X to basis deficiencies with continued regular profit impact quarter with year terms from XX% The services. the year as our increased well the to last program as providers, favorable our partners, the our the care XXX of from ago have new we across margins. gross first period. margin, to realized increase net of renewals

the our the care management negatively reminder, our a XXXX of onset As at pandemic. to due keep to by in treatments the decision all in staff, first impacted of despite were and quarter including our our pause employees that of time, the margins place,

marketing first a point ago to expenses. and revenue now basis was Turning in expense the year operating XX of period. X.X% from Sales improvement reflecting quarter, our

from this our as and this top margins of improving With rate. million ago $X.X reflecting inherent revenue costs from strong XX.X% ago in across see business, benefit as client grow improvements as EBITDA to XX.X% operating we performance we of sales the continue the a marketing $XX.X functions expanding this in scale near G&A period, the retention than and to million to doubled compared G&A on We adjusted our and year line our were year quarter, our nature more margin quarter, revenues. leverage the quarter. XXX%

of affected Net favorable year Adjusted treatments. the or $XX.X temporary and expansion in revenue adjusted year $X.X or pause in million on ago comparison ago was the This share EBITDA were the to ago margins margin $X.XX XX.X%, quarter when was EBITDA per period. incremental the Our income the from period. per million of quarter by negatively $X.XX net basis point XXX share. reflected the year compared XX.X% income to this margin a quarter, this period, reflecting

just I Our as and current compensation on income net EPS described, results due reflects tax the million in to than period improved higher benefit favorable estimated a well as deductions activity. the $X.X equity

million was cash note previously quarter $X.X during impact Turning timing Operating disclosed, sequential of of see items. that in to in now periods in negative balance a which, also which to It's as $XX.X you cash compares the flow the important would growth, year sheet. to significant $X.X period, favorable cash million ordinarily included our revenue million, flow ago flow. operating

the of this was pronounced as this in However, the effects dynamic. the ago given shutdown period, usual early March in not year that offset

Excluding impact to in change the those associated our attributable growth. to primarily a our items, flow quarter. ordinary the change with associated year-over-year partner with for of second The difference our working in to the payment pharmacy is arrangements is timing the arrangements expected cash timing and pharmacy capital operating new result use also the in

of the expect cash by We operating this normal third to quarter year. return flows to

cash, marketable of cash equivalents million and As March $XXX.X we securities. XXst, of add

second full quarter now our for XXXX. to the Turning the - for year and expectations first

the are activity level seeing. member based As of currently on always, guidance we our that is

second $XXX million of million, the XXX%. revenue growth XXXX, quarter and we between of between to are projecting For reflecting XX% $XXX of

$XX.X to per million between fully million For adjusted income $XX on and approximately shares. the $X.XX million, $X.X of share, with and EBITDA basis diluted we between expect million six earnings net million along $XXX or of $X.X

XX%. For revenue million, $XXX to and the to of million continue reflecting a between of year, $XXX we growth expect full XX%

our we Given strong XXXX. for are to our raising guidance start the year, profitability

incremental this estimate diluted net $XX income the $XXX adjusted $XX.X In - EBITDA XX.X%. the reflect tax any we're income to share, income expecting our income in EBITDA, of million not of of adjusted for $X.XX per fully guidance, including equity year, approximately expect million million the million to quarter earnings continued now and related earnings between net $X.XX both $XX between discrete cent and million, do compensation activity. tax on shares. for ranges the between XXXX, of of with items, For see or to our the on impact margin At expansion margins revenue we per basis $XX.X to midpoint and

call Let to turn the me now Pete. over

Pete Anevski

season able at has revealed preliminary prospects so it begun, Thanks, make a this begun Mark to early year afternoon, their everybody. like yet about it selling qualitative spoke discussions COVID normal It are increasingly of to with consultants had be that you our pleased what I'll to new about last post-COVID. good their commentary report normal. we even though of appears world very many are and more evaluate though we've as were benefit generating relates season the more the and health in and as companies quarter the season plans. and plans. hadn't they these ability through hopes to although companies changes Storm year mitigation distracted new with their far, would A terms ago, point, to them now as and remains that think begin things are feeling their work for looks employees' their some business. We to XXXX benefits selling

a At new ease, the seasons. well As were both their last about in to benefits actively in these reengaging accounts, we're us this decisions differed than season, at the response companies better year. prospects time this selling distractions have now the should as make not they with who the be selling given previous business pitching position to point as in

in line so early far internal expectations prior and And at commitments additions by made our early directly fielding The pipeline, favorable with this these sales our responding been Our seen year, is building we've sales to RFP channels year. accounts positive. has potential combined customers. the introductions engaging pipeline point and with the are to behalf very on consultants through sales opportunities, team to in benefit in activity

how go-to each season the number sales the prospects As to - an the absolute cover and grow new season year Obviously, year's reminder, is each pipeline. of of a our affect anomaly clients became sales lives year. last COVID in because

new we're to believe at And been on baseline that we we're have to we're we XXXX historic growth. on benchmarking perspective track COVID. return looking from the So which the a sales trajectory to as on been our from prior sales

earnings insight with as second fall be or prior in But XXXX. majority at decisions for to our usual, we will that summer look the of quarter in more on you to made continue client expect the end of early forward As we sharing the call. implementations years

important of selling potentially is Another launch the our the season development for channel. newest

During to solutions building the quarter, Progyny CVS's selected was fertility family be offering and within the point benefits program. management health

helps secure the CVS it's the from ongoing plan a that including for If to full aren't a with contracting, and familiar simplify word point program, sponsors, healthcare. the and Health monitor performance target lowest variety in offering this of self-insured you our price employers solutions market, service

other has superiority to of service choose quality be mental Some this and recognizes offset We're and of the both and and David in short, management health, provider Health weight then validation to to conditions. business clients it of the Progyny this valuation been process, proud meet health, standards for and important the has solutions clinical benefit this is ensure the and add selected as heart the earlier. in who the program undergo family quality member our to Any one our program facility and an our outcomes, oversight of safety, that performance. and a CVS monitoring discussed that thorough stress the building In to join musculoskeletal of available security subject high - which benefit address experience. offering incredibly management, security solution of ongoing program, - from solutions

for these relationship. commercial Progyny the program simplifies this And available for been and accounts. CVS potential Caremark's we self-funded about pursuing to We're clients, the enthusiastic process whom solution clients. Health bring already of Our already we It CVS the had some XX to note to inclusion in benefits begun. the with season significantly that launch their sales had Management took is partnering our leading XXXX our Point Solutions to place after important forward fertility - selling to makes look

we seasons it's can of that we initiatives. an execute this against whether demonstrate all begin see too which the incremental to of selling we'll with one. while So future continued benefit more our of this we're sales see strategic have our our season, quarter, impact soon To pleased results to XXXX to know conclude, very and to

we addition, remains, remain its up In we'd unpenetrated the is all contributed operator, call in our to market that growth continue have ever believe that, With that our competitive to questions. Progyny are and position intact. we like that to strongest macro factors for the opportunity open

Operator

gentlemen, and questions. Ladies SVB Certainly. question first Instructions] is Leerink. Stephanie Davis the is [Operator open for floor now with coming Your from

line Your is live.

Stephanie Davis

for my on guys, you quarter. questions. taking Hey, thank the Congrats

David Schlanger

Stephanie. Thanks,

Mark Livingston

you. Thank

Pete Anevski

Thank you.

Stephanie Davis

think I that to would education messaging So process mind, at least be DNI this this say maybe at anyone in the selling season? haven't salesforce firm. upcoming on their to pressed call initiative invited for they With impact how a hard your does the and been

David Schlanger

it's question, good Stephanie. So a

work the equity. relates understood to our we you as been the fertility at it kind to that And since and benefits. designed customers utilization very have Progyny of there employee of that focused all was just So our benefit that sure making know, beginnings on benefits equity company, of to the employee the respect for make is across sure populations, with and also, have but equity populations, not

did continued help from inclusion and they that their same - dramatically having by kind of debt, pricing benefit, how by we've make build benefit to number we we chances everybody diversity, their perspective. companies where country, equity But we've a versus sure region. cases really the evolve, gets family, regardless or so how the you the that So in complex vary know, live cycle-based dollar-based of to given can of

come really been as differences, And know, of people you is and year applies One also relates ratios, healthcare - outcomes. that, that are that, had historically the past that's out there very significant talking in are about fertility. to the to know you things it and healthcare that race

higher in also, they treatment infertility, infertility. of infertility, a but So lower community incidence the incidence have black the know for people of incidence have significantly with fertility, higher we that a of seeking

to that everyone, that to when competent in and we're that our a we've we're benefit supporting addition things available in support making members make populations, sure making we're sure that is done, and structural the that sensitive members, employee culturally way. spans So sure to we

relates and training outcomes. we're address those to as and our, to trained So care staff healthcare access help we've health, working racial you health we're to on know, our ways disparities, it

that evolve important and and, D&I their obviously, to is initiatives. continue we're help I just requirements So this And know prospective know, have conversation evolve with again, to to we customers and a continuing And with you them. we us. - as to with we're said, and customers, we're are and, trying for our the initiatives them as these

focus some of to know, trend into. Corporate you very and relates an America, is on important, like of content, again, some we're to So know, doing beyond benefits help as issues you that kind one some our have and issues, with they know, trained address and, these that that live we deal so how and of educated and it webinars, you the these know, can know, comfortably staff, of members creating how And fit tailwind actually the the, clearly, events so about themselves existed, we've can DEI the the but podcasts, you things that be business. also disparities understand you

Stephanie Davis

just follow-up on And a that one.

Have it's a explored D&I on could to For Or to any of street the that's then than you be that process. talk a model. channels? channels imagine bit you of also kind and probably the opportunity? sales different inclusion different just little something initiatives. sort a these feet There's of I is future about going

David Schlanger

it's certainly, company. we and part been DNA again, No, of you know, of the the no,

and our clients that. instance, having Chief Officers, You know, corporate we're comfortable Diversity with conversations do for

making further DI their adopting can that initiatives. So like certainly, benefit Progyny clients a them understand how the benefit, own our sure we're help

issues to you very where sure So you know, the to we've also. surface, those other it's and we're as awareness of make issues part But, continues as been evolve addressing we from really been beginning. know, around continue

Stephanie Davis

Thank helpful. Super guys. you,

David Schlanger

Thank you.

Operator

is coming JP Anne question from of Samuel Morgan. next Your

Anne Samuel

hoping. bit the thank that provide What was quarter. really was your could Great, on there high-teens detail target, now? as you. upside little incremental think I And this hoping I nice more terms? then longer-term a about the margin pharmacy we Thanks. you improvement, margins to is Hi. changed with

Pete Anevski

Nice By to hear you way, again. the welcome back.

Anne Samuel

Thank you.

Pete Anevski

No problem.

whaddon in we versus around in March, a RFPs the And were early out pharmacy put So process entire the chain we that had guidance around supply there. our we out original program.

And end of so that being that of you into - the of long, the know it didn't quarter, of to is, the short process of earlier is really culminate until of the up had end And - at part part fourth the beginning what ended quarter. beginning the the third insight that favorable we quarter,

Mark Livingston

quarter. quarter, First second

Pete Anevski

apologies. favorable guidance. And Yes, quarter, into had we when we sorry, first our quarter second put visibility out to what was

continue to just public, do able point focus what could to case. the as overall in indication is to margins gone you continue our certainly rather of to and of to but came able And raise sort that to the where continue business we achieve, the might it's but yeah, of the and improvement as So were, leverage long-term ultimately, that opposed that on sort we haven't targets, we'd we're view, roadshow, you to know, where on be setting that the of we're get that view when expansion really long-term what could improvement, for from. out, know, do, that we then that's type and we the you extent of updated sort except know, it could

Anne Samuel

COVID? know, is think that come cycles then, And you those But what happened you know, just lost any back utilization, know, those to during potential about great. we maybe to really now. how You baseline for happen cycles on That's back? there didn't maybe to do you're

Pete Anevski

right. many always potential how that How know back talked were? there How the many and been cetera? to, to we is don't them own of difficulty coming them cycles calling and the so folks has many come have lost of don't challenge members The there talk the because on do us, those know, we know always are question we only et us. already that are is not how slowly, is, that for quantify we know, know, exactly, You the you And pausing we not you their back?

And how much a come that be, it's many into, may difficult and to sitting still out, et will, more you of as are need the how may know, really back, members if you there for that visibility sidelines, vaccines so the add you know, either roll get on moment, cetera. they

I wish could, So we bake the into could quantify certainly I quantify I how don't I But that numbers. want just that. exactly if I to it possible. know would

Pete Anevski

That makes guys. Thanks, sense.

Operator

is Citi. from question Ralph next from coming Your Giacobbe

Your line is live.

Ralph Giacobbe

afternoon. Good thanks. Hey,

you to unchanged, I seem sort line the quarter So guidance you case. top like the could that top to guess, pause keep to obviously this out be call keep But XQ looks it's second due strong guidance for also hesitancy open vaccinations. have number doesn't of anything know, of the in if first on reconcile, the as will, line I did you quarter, think, would quarter been ahead. to But sort

sort that So bit? little anything else a things in the of second back half hold

Pete Anevski

it and we full results. our utilization patterns year not We're other that, utilize the QX members to at Well, guidance, you when on QX to back. Nothing But holding all guidance our versus we're wouldn't really relative the relative Nothing. based to existing I visibility. our that that into as turns clients, best guidance normal read projecting know how sort and see half new benefit. how, we and could would we give is, of than call you year. to the back you that know, of call to I they second expect, have we put holding Historically, this indication and us out it is back half the half seasonality, there first know, the what might there the we in best for you if really, nothing. new plain how visibility will, both relative year

Ralph Giacobbe

to your contracts, annual could And then last with is what Is remind everything the is that just rate customers your like, doesn't anything just the portion greater there renewals on whether that know, maybe any Is they're your And sort pass essentially that mentioned also that markup? me of discussions how pass happened this economics flow through in Is maybe pharmacy Was on does you contract seem on on benefit. is be you is seem the just And given keep? Thanks there, then, pressure through what certainly you RX year? like for? there there just or versus update? there the more a looking providers. or approval, but it

Pete Anevski

pass favorable prices. how we share do been economically, you have we're for back will, we years. this don't also majority clients, that our with economic doing much don't And what to When of clients. we do, we've we year. if what it's we get, sort we arrangements. adjust doing of quantify and Well, we The our But

And growing at know, do we do by have opportunity incrementally so clients, sort sort that. of thing have business - you time. But focus a margin right do our on we time, the the to an overall, was What whenever and growing the same we over of

Ralph Giacobbe

recurring just side provider Provider negotiation.

Pete Anevski

normal different. two-year we call start agreements. periods. that The recurring and end providers all of have sort all providers have negotiations. that's contractual The why different generally And They're

doing, that rate in cetera, for the any gets the discussion them thing bigger generally the have know, there you period, quarter renegotiated every know, within any a in our know, et in recurring, you therefore And our discussions, but terms of have normal of overall is to volume years. you the with impact changes part most the of get in and and we've over going The contract you what cycle a is that you and and providers may know, they negotiated and been quarter, sort members can period network. so, data-driven set higher all can know, of, providers that a one volume impact

Ralph Giacobbe

That's Thank it. got helpful. Okay, you.

Pete Anevski

the turn Thanks, Ralph. to That for over I'd concludes James now Q&A today's call. floor Hart. portion to like the back

James Hart

forward me. you, to for follow-up again. everyone again joining Please, Thank And us call, the Thanks speaking any you following to we out have next don't if Catherine. reach And quarter. thank to questions hesitate look this to you, afternoon. you

Operator

and ladies does conclude conference Thank call. This you, today's gentlemen.

your for day. participation. and You wonderful have may at disconnect phone time your you a lines this Thank

Progyny (PGNY) 10 May 212021 Q1 Earnings call transcript