Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Progyny Inc (NASDAQ:PGNY) added 1.1 million new lives from over 80 new client commitments, marking the fourth consecutive year of adding over a million lives.
• The company maintained a high client retention rate with 99% of clients renewing their contracts.
• Progyny Inc (NASDAQ:PGNY) saw strong interest in new services such as maternity, postpartum, and menopause, with 20% of existing clients and 40% of new clients adopting these services.
• The company successfully expanded its channel partner relationships, adding its first national health plan and another large regional health plan.
• Progyny Inc (NASDAQ:PGNY) reported a diverse client base across nearly two dozen industries, emphasizing the universal need for its services.

Negative Points

• Third quarter results were below expectations due to unexpected patterns in member activity and consumption.
• The progression of treatment has slowed, with members taking longer to move from consultation to treatment, impacting overall consumption.
• There was a decline in the average number of stimulation-related ART cycles per utilizer, particularly in egg freezing.
• The company experienced a loss of a large client, impacting its overall client base and financial outlook.
• Gross margin declined due to investments in care management services and the unexpected decline in ART cycle revenue.

Q & A Highlights

• Warning! GuruFocus has detected 1 Warning Sign with PGNY.

Q: Can you provide insight into what's affecting utilization and consumption trends? Are there any insights from PCAs on these trends? A: We analyze contextualized data to understand utilization and consumption trends. PCAs focus on member needs and do not discuss timing or other activities. Aggregating conversations from 30,000 unique utilizers is unrealistic, and PCAs are not involved in such discussions. (Respondent: CEO, Peter Esy)

Q: Has the national conversation on fertility or recent elections impacted utilization? Are members requesting faith-based fertility programs? A: We haven't received requests for faith-based programs. It's unclear if the election impacted utilization, but both political sides discussed protecting fertility, which is positive. We haven't heard of any direct impact from the election on utilization. (Respondent: CEO, Peter Esy)

Q: With a comprehensive women's health benefit, did this catalyze conversations or uptake of the core fertility benefit? A: There was strong interest in our new products, contributing to a successful sales season. This interest was evident from both new prospects and existing clients. (Respondent: President, Michael Stermer)

Q: What drove the gross margin compression this quarter, and what should we expect for 2025? A: Gross margin was impacted by investments in care management services and unexpected art cycle revenue levels. We are moderating hiring in care management for next year. It's early to comment on 2025, but we are reviewing costs closely. (Respondent: CFO, Mark Livingston)

Q: Are you seeing demand for plans with moderated utilization trends, and do you plan to offer such options? A: We don't support benefits that restrict access or have arbitrary dollar limits, as they can negatively impact treatment decisions. We believe in doctors making appropriate treatment decisions. (Respondent: CEO, Peter Esy)

For the complete transcript of the earnings call, please refer to the full earnings call transcript.