Progyny (PGNY) – Investor Conference – March 23, 2024
On 2024 Guidance:
Last week, Progyny told us that a treatment mix-shift anomaly it saw in the early part of Q1 fully normalized. It had been seeing a small skew away from fresh full cycles with IVF, which are higher-value treatments for the company. That small skew has since vanished. Another week passed with that same normalization trend continuing. Scheduling trends through the end of Q1 look very normal, with the statistical anomaly already a thing of the past. Considering biology & fertility needs don’t evolve on a whim and considering its overall utilization rates remain very strong, this is not surprising. Importantly, its treatment schedule backlog through the end of 2024 (not just the end of Q1) points to that normalization continuing. This was a new and important detail.
Its brand new client cohort is behaving very similarly to previous cohorts and it remains confident in utilization rate gains from 2023 being sustainable. This is also important considering the ~150,000 legacy tech layoffs from last year. This led some to think treatment demand was pulled forward for workers thinking they would soon be fired. If that did happen, it would have temporarily and artificially boosted utilization a little, which is the strongest indicator for Progyny’s revenue and profit generation. Importantly, that didn’t happen. Utilization gains for 2023 were consistent across all sectors, cohorts and geographies. This was not specific to tech.
Alabama & Red State Regulation:
I’ve covered this regulatory item in detail in previous issues. If you’d like to read about it, the information can be found here.
Since we last discussed the regulatory landscape, it has become even more favorable for Progyny. Alabama’s governor passed a law to guarantee fertility treatment protection. This is among the most socially conservative states in the union, and they just told you fertility treatment is here to stay. Republican leaders in the House of Representatives all support IVF protection and so do both presidential candidates. Protection for these services has rare bipartisan support. In Texas, where embryos were deemed to be property rather than a person to protect IVF, rulings have been appealed and already upheld.
This is a non-issue for Progyny. And even if it weren’t, all states with vulnerable fertility laws make up 3% of the nation’s total treatment volume. To make this even less concerning, that 3% could easily travel to other states for continued service. But again, non-issue.
New Products:
Progyny’s preconception, maternity and menopause products are in pilot testing. Like the Rx product early on, utilization is very light as Progyny looks to build needed marketing programs and a foundation to support future growth. That’s what it’s currently working on. It does not see these products impacting its 2024 results. The impact should begin in 2025.
Client Budgets:
Progyny sees no evidence of budget scrutiny from its client base’s demand. They continue to expand existing benefits at a healthy clip with none of them reducing coverage into 2024.
