Progyny (PGNY) — Earnings Review — February 29, 2024

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Progyny (PGNY) — Earnings Review — February 29, 2024


Progyny missed revenue estimates by 1.5% & missed its guidance by 0.9%. Seasonality was slightly less favorable than expected, which is why Progyny revenue was slightly underwhelming. Its 39.1% 3-year revenue CAGR compares to 41.6% Q/Q  & 62.9% 2 quarters ago.

“We are confident in sustaining our growth trajectory.” – CEO Peter Anevski

Source: Brad Freeman – SEC Filings, Company Presentations, and Company Press Releases


  • Met EBITDA estimates & met EBITDA guidance.
  • Beat $0.11 GAAP EPS estimates & beat $0.11 guidance by $0.02 each. It earned $0.13 per share vs. $0.03 Y/Y. This is despite paying out $2.8 million in taxes vs. just $730,000 Y/Y.
    • Please note that my Q4 2020 GAAP net income margin calculation excludes a large tax benefit.

For the full year, GPM expanded from 21.3% in 2022 to 21.9% in 2023. This was due to realizing “ongoing efficiencies” in the delivery of care. The expansion is despite intentional cost control efforts to maintain superior client affordability amid rampant inflation. Sales & marketing expenses as a percent of revenue were flat at 5.5% in 2023 as it invested in new go-to-market partnerships. G&A was 10.8% of 2023 sales vs. 12.5% Y/Y due to back office efficiencies. This led to a 17.2% 2023 EBITDA margin vs. 16.0% Y/Y. It generated $189 million in operating cash flow vs. $80 million Y/Y. This was helped by better income statement profitability, collection timing and the positive impact of new Rx receipt contracts as it gains bargaining leverage through scale.

Balance Sheet

  • $371M in cash & equivalents.
  • No debt.
  • Diluted shares +0.7% Y/Y.
  • Bad debt expense rose 44% Y/Y compared to 38% Y/Y revenue growth and 49% Y/Y EBITDA growth. This is quite reasonable considering the deteriorating macro backdrop during the period.
  • Accounts receivable was flat Y/Y in 2023.

Progyny announced its very first buyback. That’s the luxury of having a cash printing business with a growing liquidity pile and no debt. This investment is NOT coming at the expense of product innovation, as it’s gearing up to launch multiple new offerings in 2024. It can walk and chew gum at the same time here thanks to its pristine balance sheet.

Guidance & Valuation

Annual revenue guidance missed by 1.5%, EBITDA guidance met expectations and $0.68 GAAP EPS guidance missed estimates by $0.03. Finally, its operating cash flow guidance (assuming mid-70% EBITDA conversion means 75%) came in at $216 million vs. about $188 million expected. A lot of additional context is needed here.

For the first half of Q1, Progyny experienced a treatment mix-shift anomaly. Utilization rates are stable quarter-to-date, but a shift in type of IVF treatment led to a $15 million revenue headwind and about a $3 million EBITDA headwind for this period. This has happened a few times before in Progyny’s history, with the issue being very temporary and quickly normalizing. That normalization has already played out as we head into March with a mix-shift back to historical trends. Biology didn’t suddenly change… IVF needs didn’t suddenly change. Progyny expects this reversion to last through the year like it has previously. Treatment mix has been stable throughout Progyny’s history with a few short-lived anomalies. That’s what this is. This blip on the radar led to the revenue shortfall, with revenue in line with expectations excluding this headwind. EBITDA would have been slightly ahead of expectations. Furthermore, the EPS miss is based on Progyny excluding any expected tax benefits from the guidance. It also doesn’t include potential boosts from its share repurchase program.

Other notes on 2024 expectations:

  • It reiterated 460+ clients and 6.7 million lives for 2024. This includes 200,000 members that are expected to go live in Q2 and Q3.
  • It began disclosing non-GAAP EPS this quarter. Previously, it only disclosed GAAP, while most firms report both. This made Progyny look unfairly more expensive than it actually is. That issue is now resolved and will make apples-to-apples valuation comps easier. It expects to generate $1.56 in non-GAAP earnings per share in 2024.
  • 2024 guidance assumes flat Y/Y utilization vs. 6% Y/Y utilization growth in 2023.
  • Guidance assumes no material boost to growth from existing client headcount expansion.
  • Guidance assumes a 19.4% incremental EBITDA margin for 2024.
  • Guidance assumes 11.6% Y/Y growth in Q1 and then 22% Y/Y growth for the following 3 quarters combined.

Call & Release Highlights


The 2023 selling season was again successful for Progyny. As previously discussed, it set new records for clients and members added. It also added new channel partnerships, like with Blue Cross Blue Shield, to enhance go to market effectiveness.

2023 overall was another year in which Progyny delivered near 100% gross client retention and its 8th straight year of leading all clinical outcome data. It maintained a net promoter score in the 80s, which is unheard of within healthcare.


The Alabama news I covered earlier this month was addressed on the call. Just like the Dobbs decision 2 years ago, there’s strong bipartisan support in Alabama to protect the continued availability of IVF treatments. The state’s Attorney General also said it has no intention to prosecute families seeking treatment. That treatment support has been a consistent theme among the 12 states with abortion laws in question. Progyny is confident in its ability to ensure IVF access for all members “regardless of where they live.” It looks like the tiny potential revenue hit will be no revenue hit at all.

2024 Selling Season so Far:

It’s very early in Progyny’s 2024 selling season. Early activity thus far is “very positive” with healthy active pipeline growth. It has also enjoyed a few large wins in apparel, healthcare and media.

More Services:

Progyny is “exceptionally well-positioned” to expand into relevant product adjacencies. For the 2024 selling season, it will begin offering new preconception, maternity, postpartum and menopause services to clients. It also now has over 1,000 reproductive urologists in its network for male infertility.

A few years ago, Progyny was a two product company. It’s now looking to morph into more of an end-to-end reproductive health platform and has been investing in its product organization to “enable the quick addition of new features.” These heavy investments are why the pace of EBITDA margin expansion in 2024 is set to modestly slow. Still, investing heavily in future growth while maintaining leverage works for me. All of these new offerings will begin to boost revenue starting in 2025 as they were not part of the 2023 selling season product kit.

Progyny’s second product (ProgynyRx) will have a 93% client attach rate in 2024 vs. 85% in 2022. This shows how effectively the firm can up-sell new solutions beyond treatment cycles.


I can’t say that I’m thrilled with this quarter, but I’m not overly concerned about it either. The treatment mix anomaly should be just that… an anomaly. We have several years of data, previous instances and a normalization that has already occurred to point to for confidence. The company continues to be a steady compounder, a margin expander, a market share taker and a clear clinical outcome leader. While this was not a perfect report, it does nothing to change my bullish long term view. Thesis entirely intact.

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