Progyny, Inc. Announces First Quarter 2024 Results

Rhea-AI Summary

Progyny, Inc. announced strong Q1 2024 results with revenue of $278.1 million, a 7.6% increase from Q1 2023. Gross profit rose to $62.4 million, and net income was $16.9 million. The company saw an increase in clients and covered lives, leading to growth in fertility benefit and pharmacy benefit services revenue. Adjusted EBITDA was $50.3 million, with an 18.1% margin. Cash flow improved, and the company repurchased shares worth $26.4 million. The outlook for 2024 includes revenue of $1.23-$1.27 billion, net income of $68.4-$75.4 million, and Adjusted EBITDA of $216-$226 million.

Positive

• Revenue increased to $278.1 million, a 7.6% growth from Q1 2023.

• Gross profit rose to $62.4 million, reflecting higher revenue and efficiency gains.

• Net income reached $16.9 million, with a positive cash flow of $25.7 million.

• Growth in fertility and pharmacy benefit services revenue contributed to the overall performance.

• Adjusted EBITDA stood at $50.3 million with an 18.1% margin, showing operational efficiency.

• The company repurchased shares worth $26.4 million, returning value to shareholders.

Negative

• Lower net income was attributed to a provision for income taxes in the current period.

• Despite the growth, revenue in Q1 2024 was impacted by a mix shift and lower utilization levels.

• The company revised its guidance for 2024 due to slightly lower utilization compared to 2023 levels.

• While the outlook is positive, there is a need to monitor revenue growth in the coming quarters.

Insights

Financial Analyst

Progyny, Inc.'s first quarter 2024 results indicate a mixed financial performance. The company's revenue growth of 7.6% year-over-year, from $258.4 million to $278.1 million, is a positive sign that the demand for fertility and family building solutions is on the rise. However, the slight decrease in net income, from $17.7 million or $0.18 income per diluted share to $16.9 million or $0.17 income per diluted share, could raise concerns about the company's ability to scale profitably in the long term. The company's buyback program, which repurchased 723,577 shares for $26.4 million, is a strong indicator of confidence from management in the intrinsic value of the stock and a commitment to returning value to shareholders.

Healthcare Industry Analyst

From an industry perspective, Progyny's reference to the Alabama Supreme Court ruling is noteworthy, as it hints at potential volatility in the fertility treatment market due to evolving legal and regulatory environments. The company's position as a market leader, covering 6.7 million lives, suggests robust competitive strength, but the modest decline in March utilization rates compared to the previous year's record levels could signal a need for careful monitoring of market dynamics and consumer sentiment. The increase in Adjusted EBITDA margin to 18.1%, even if just a slight improvement, speaks to operational efficiencies and the management's ability to adapt in a changing market.

Market Research Analyst

Progyny's announcement of new partnerships and its healthy sales pipeline for 2025 launches indicates strategic moves to capitalize on the vast potential of the family building market, which they assess at over 105 million lives. This forward-looking approach to sales and partnership strategy could bode well for long-term growth prospects. However, investors should consider the revised full-year guidance for 2024, projecting revenue of $1,230 million to $1,270 million, which is based on currently observed utilization rates. This indicates management's cautious optimism and a realistic approach in forecasting future performance.

Early Sales Activity and New Partnerships Provide Strong Start to Selling Season, Affirming Continued Demand for Fertility and Family Building Solutions

NEW YORK, May 09, 2024 (GLOBE NEWSWIRE) -- Progyny, Inc. (Nasdaq: PGNY) (“Progyny” or the “Company”), a transformative fertility, family building and women's health benefits solution, today announced its financial results for the three-month period ended March 31, 2024 (“the first quarter of 2024”) as compared to the three-month period ended March 31, 2023 (“the first quarter of 2023” or “the prior year period”).

“Utilization through the end of February was consistent with the record engagement we saw a year ago. However, March was modestly below our expectations, coinciding with the national conversations concerning fertility treatments and access to maternal healthcare following the Alabama Supreme Court ruling. This, in combination with the previously-disclosed unfavorable treatment mix shift that we experienced for a limited period of time earlier in the first quarter, lowered our first quarter revenue growth rate,” said Pete Anevski, Chief Executive Officer of Progyny. “As the second quarter begins, utilization has persisted at a level that is higher than where it was in 2022, but remains below the record level from 2023, while mix has continued to be consistent with historical patterns. Accordingly, we expect an acceleration in revenue growth over the remainder of 2024.”

“While it is early in the selling season, our active pipeline and sales activity are favorable as compared to a year ago, with a healthy number of early commitments for 2025 launches,” continued Anevski. “Even though Progyny is the market leader with 6.7 million lives in 2024, this is just a fraction of the more than 105 million lives in our target market. During the quarter, we have also continued to advance agreements to expand our distribution reach through new strategic partnerships, including health plans, further validating our position as the provider of choice for fertility and family building solutions.”

“Our first quarter results reflect meaningful increases in gross profit, Adjusted EBITDA and operating cash flow, and we returned value to our shareholders through the purchase of more than 720,000 shares in the first quarter under the buyback program that began at the end of February,” said Mark Livingston, Progyny’s Chief Financial Officer.

First Quarter 2024 Highlights:

(unaudited; in thousands, except per share amounts)	1Q 2024				1Q 2023
Revenue	$	278,078			$	258,394
Gross Profit	$	62,406			$	58,640
Gross Margin		22.4	%			22.7	%
Net Income	$	16,898			$	17,678
Net Income per Diluted Share1	$	0.17			$	0.18
Adjusted Earnings Per Diluted Share2	$	0.39			$	0.34
Adjusted EBITDA2	$	50,291			$	46,360
Adjusted EBITDA Margin2		18.1	%			17.9	%

1. Net income per diluted share reflects weighted-average shares outstanding as adjusted for potential dilutive securities, including options, restricted stock units, warrants to purchase common stock, and shares issuable under the employee stock purchase plan.
2. Adjusted earnings per diluted share, Adjusted EBITDA, and Adjusted EBITDA margin are financial measures that are not required by, or presented in accordance with, U.S. generally accepted accounting principles ("GAAP"). Please see Annex A of this press release for a reconciliation of Adjusted earnings per diluted share to earnings per share, and Adjusted EBITDA to net income, the most directly comparable financial measures stated in accordance with GAAP for each of the periods presented. We calculate Adjusted earnings per diluted share as net income per diluted share excluding the impact of stock-based compensation, adjusted for the impact of taxes. We calculate Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.

Financial Highlights

Revenue was $278.1 million, a 7.6% increase as compared to the $258.4 million reported in the first quarter of 2023, primarily as a result of the increase in our number of clients and covered lives.

• Fertility benefit services revenue was $169.8 million, an 8.0% increase from the $157.1 million reported in the first quarter of 2023.
• Pharmacy benefit services revenue was $108.3 million, a 7.0% increase as compared to the $101.2 million reported in the first quarter of 2023.

Gross profit was $62.4 million, an increase of 6% from the $58.6 million reported in the first quarter of 2023, primarily due to the higher revenue. Gross margin was 22.4%, as compared to the 22.7% reported in the prior year period.

Net income was $16.9 million, or $0.17 income per diluted share, as compared to the $17.7 million, or $0.18 income per diluted share, reported in the first quarter of 2023. The lower net income was due primarily to a provision for income taxes in the current period, as compared to an income tax benefit in the prior year period.

Adjusted EBITDA was $50.3 million, an increase of 8% as compared to the $46.4 million reported in the first quarter of 2023, reflecting the higher gross profit and operating efficiencies realized on our higher revenues. Adjusted EBITDA margin was 18.1%, a slight increase from the 17.9% Adjusted EBITDA margin in the first quarter of 2023.

Please refer to Annex A for a reconciliation of Adjusted EBITDA to net income.

Cash Flow
Net cash provided by operating activities in the first quarter of 2024 was $25.7 million, compared to net cash provided by operating activities of $21.0 million in the prior year period. The higher cash flow as compared to the prior year period was primarily due to higher profitability as well as the impact of timing on certain working capital items.

Balance Sheet and Financial Position
As of March 31, 2024, the Company had total working capital of approximately $475.6 million and no debt. This included cash and cash equivalents and marketable securities of $371.8 million, an increase of $0.7 million from the balances as of December 31, 2023.

On February 29, 2024, the Company announced that its Board of Directors had approved a share repurchase program to repurchase up to $100 million of its common stock. During the first quarter of 2024, the Company purchased 723,577 shares for $26.4 million through the program. To date, the Company has purchased approximately 2 million shares in the program, and $32 million remains available under the existing authorization.

Key Metrics

The Company had 451 clients as of March 31, 2024, as compared to 379 clients as of March 31, 2023.

	Three Months Ended March 31,
	2024			2023
ART Cycles*	14,802			13,171
Utilization – All Members**	0.53	%		0.54	%
Utilization – Female Only**	0.46	%		0.48	%
Average Members***	6,350,000			5,335,000

^{* Represents the number of ART cycles performed, including IVF with a fresh embryo transfer, IVF freeze all cycles/embryo banking, frozen embryo transfers, and egg freezing.
** Represents the member utilization rate for all services, including, but not limited to, ART cycles, initial consultations, IUIs, and genetic testing. The utilization rate for all members includes all unique members (female and male) who utilize the benefit during that period, while the utilization rate for female only includes only unique females who utilize the benefit during that period. For purposes of calculating utilization rates in any given period, the results reflect the number of unique members utilizing the benefit for that period. Individual periods cannot be combined as member treatments may span multiple periods.
***Includes approximately 300,000 members from a single client who are not reflected in utilization as a result of the client's chosen benefit design.}

Financial Outlook
As previously disclosed, a number of clients are scheduled to launch over the coming months. Once all new clients are live in 2024, the Company continues to anticipate having more than 460 clients, representing an estimated 6.7 million covered lives by year end.

“Since becoming a public company, our guidance has always been based on the utilization we are currently seeing, which informed our previous view of 2024. As utilization is now slightly lower than the record levels we saw in 2023, we are revising our guidance for the year,” said Mr. Anevski.

The Company is providing the following financial guidance for the full year ending December 31, 2024 and the three-month period ending June 30, 2024:

• Full Year 2024 Outlook:
  • Revenue is now projected to be $1,230 million to $1,270 million, reflecting growth of 13% to 17%
  • Net income is projected to be $68.4 million to $75.4 million, or $0.68 to $0.75 per diluted share, on the basis of approximately 100 million assumed weighted-average fully diluted-shares outstanding
  • Adjusted EBITDA¹ is projected to be $216.0 million to $226.0 million
  • Adjusted earnings per diluted share¹ is projected to be $1.61 to $1.68
    
    
• Second Quarter of 2024 Outlook:
  
  
  • Revenue is projected to be $300.0 million to $310.0 million, reflecting growth of 7% to 11%
  • Net income is projected to be $15.7 million to $17.8 million, or $0.16 to $0.18 per diluted share, on the basis of approximately 99 million assumed weighted-average fully diluted-shares outstanding
  • Adjusted EBITDA¹ is projected to be $52.0 million to $55.0 million
  • Adjusted earnings per diluted share¹ is projected to be $0.39 to $0.41
    

1. Adjusted EBITDA and Adjusted earnings per diluted share are financial measures that are not required by, or presented in accordance with, GAAP. Please see Annex A of this press release for a reconciliation of forward-looking Adjusted EBITDA to forward-looking net income and Adjusted net income to net income, the most directly comparable financial measures stated in accordance with GAAP, for the period presented.
   

Conference Call Information
Progyny will host a conference call at 4:45 P.M. Eastern Time (1:45 P.M. Pacific Time) today, May 9, 2024, to discuss its financial results. Interested participants from the United States may join by calling 1.866.825.7331 and using conference ID 265484. Participants from international locations may join by calling 1.973.413.6106 and using the same conference ID. A replay of the call will be available until May 16, 2024 at 5:00 P.M. Eastern Time by dialing 1.800.332.6854 (U.S. participants) or 1.973.528.0005 (international) and entering passcode 265484. A live audio webcast of the call and subsequent replay will also be available through the Events & Presentations section of the Company’s Investor Relations website at investors.progyny.com.

About Progyny
Progyny (Nasdaq: PGNY) is a transformative fertility, family building and women's health benefits solution, trusted by the nation's leading employers, health plans and benefit purchasers. We envision a world where everyone can realize their dreams of family and ideal health. Our outcomes prove that comprehensive, inclusive and intentionally designed solutions simultaneously benefit employers, patients, and physicians.

Our benefits solution empowers patients with concierge support, coaching, education, and digital tools; provides access to a premier network of fertility and women's health specialists who use the latest science and technologies; drives optimal clinical outcomes; and reduces healthcare costs.

Headquartered in New York City, Progyny has been recognized for its leadership and growth by CNBC Disruptor 50, Modern Healthcare’s Best Places to Work in Healthcare, Forbes' Best Employers, Financial Times, INC. 5000, INC. Power Partners and Crain’s Fast 50 for NYC. For more information, visit www.progyny.com. 

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements contained in this press release other than statements of historical fact, including, without limitation, statements regarding our financial outlook for the second quarter and full year 2024, including the impact of our sales season and client launches; our anticipated number of clients and covered lives for 2024; our expected utilization rates and mix; the demand for our solutions; our expectations for our selling season for 2025 launches; our positioning to successfully manage economic uncertainty on our business; the timing of client decisions; our ability to retain existing clients and acquire new clients; and our business strategy, plans, goals and expectations concerning our market position, future operations, and other financial and operating information. The words “anticipates,” “assumes,” “believe,” “contemplate,” “continues, ” “could,” “estimates,” “expects,” “future,” “intends,” “may,” “plans,” “predict,” “potential,” “project,” “seeks,” “should,” “target,” “will,” and the negative of these or similar expressions and phrases are intended to identify forward-looking statements, though not all forward-looking statements use these words or expressions.

Forward-looking statements are neither promises nor guarantees, but involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, without limitation, failure to meet our publicly announced guidance or other expectations about our business; competition in the market in which we operate; our history of operating losses and ability to sustain profitability; risks related to the impact of the COVID-19 pandemic, such as the scope and duration of the outbreak, the spread of new variants, government actions and restrictive measures implemented in response, delays and cancellations of fertility procedures and other impacts to the business; competition in the market in which we operate; our history of operating losses and ability to sustain profitability in the future; unfavorable conditions in our industry or the United States economy; our limited operating history and the difficulty in predicting our future results of operations; our ability to attract and retain clients and increase the adoption of services within our client base; the loss of any of our largest client accounts; changes in the technology industry; changes or developments in the health insurance market; negative publicity in the health benefits industry; lags, failures or security breaches in our computer systems or those of our vendors; a significant change in the level or the mix of utilization of our solutions; our ability to offer high-quality support; positive references from our existing clients; our ability to develop and expand our marketing and sales capabilities; the rate of growth of our future revenue; the accuracy of the estimates and assumptions we use to determine the size of target markets; our ability to successfully manage our growth; reductions in employee benefits spending; seasonal fluctuations in our sales; the adoption of new solutions and services by our clients or members; our ability to innovate and develop new offerings; our ability to adapt and respond to the medical landscape, regulations, client needs, requirements or preferences; our ability to maintain and enhance our brand; our ability to attract and retain members of our management team, key employees, or other qualified personnel; our ability to maintain our Company culture; risks related to any litigation against us; our ability to maintain our Center of Excellence network of healthcare providers; our strategic relationships with and monitoring of third parties; our ability to maintain or any disruption of our pharmacy distribution network or their supply chain; our relationship with key pharmacy program partners or any decline in rebates provided by them; our ability to maintain our relationships with benefits consultants; exposure to credit risk from our members; risks related to government regulation; risks related to potential sales to government entities; our ability to protect our intellectual property rights; risks related to acquisitions, strategic investments, partnerships, or alliances; federal tax reform and changes to our effective tax rate; the imposition of state and local state taxes; our ability to utilize a significant portion of our net operating loss or research tax credit carryforwards; our ability to develop or maintain effective internal control over financial reporting and the increased costs of operating as a public company; and our ability to adapt and respond to the changing SEC expectations regarding environmental, social and governance practices. For a detailed discussion of these and other risk factors, please refer to our filings with the Securities and Exchange Commission (the “SEC”), including in the section entitled “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and subsequent reports that we file with the SEC which are available at http://investors.progyny.com and on the SEC’s website at https://www.sec.gov. 

Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this press release. Our actual future results could differ materially from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons.

Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release and the accompanying tables include the non-GAAP financial measures Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA margin on incremental revenue and Adjusted earnings per share.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA margin on incremental revenue and Adjusted earnings per share are supplemental financial measures that are not required by, or presented in accordance with, GAAP. We believe that these non-GAAP measures, when taken together with our GAAP financial results, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA margin on incremental revenue and Adjusted earnings per share are helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation, evaluating our operating performance, and for internal planning and forecasting purposes.

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA margin on incremental revenue and Adjusted earnings per share are presented for supplemental informational purposes only, have limitations as analytical tools and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the limitations of Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA margin on incremental revenue and Adjusted earnings per share include: (1) it does not properly reflect capital commitments to be paid in the future; (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures; (3) it does not consider the impact of stock-based compensation expense; (4) it does not reflect other non-operating income and expenses, including other income, net and interest income, net; (5) it does not reflect tax payments that may represent a reduction in cash available to us. In addition, our non-GAAP measures may not be comparable to similarly titled measures of other companies because they may not calculate such measures in the same manner as we calculate these measures, limiting their usefulness as comparative measures. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA margin on incremental revenue and Adjusted earnings per share alongside other financial performance measures, including our net income, gross margin, and our other GAAP results.

We calculate Adjusted EBITDA as net income, adjusted to exclude depreciation and amortization; stock-based compensation expense; other income, net; interest income, net; and (benefit) provision for income taxes. We calculate Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. We calculate Adjusted EBITDA margin on incremental revenue as incremental Adjusted EBITDA in 2024 divided by incremental revenue in 2024. We calculate Adjusted earnings per diluted share as net income per diluted share excluding the impact of stock-based compensation, adjusted for the associated impact of taxes. Please see Annex A: “Reconciliation of GAAP to Non-GAAP Financial Measures” elsewhere in this press release.

For Further Information, Please Contact:

Investors:
James Hart
investors@progyny.com 

Media:
Selena Yang
media@progyny.com 

PROGYNY, INC.
Consolidated Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)

		March 31,				December 31,
			2024				2023
ASSETS
Current assets:
Cash and cash equivalents		$	114,959			$	97,296
Marketable securities			256,872				273,791
Accounts receivable, net of $50,054 and $46,636 of allowances at March 31, 2024 and December 31, 2023, respectively			297,209				241,869
Prepaid expenses and other current assets			12,472				27,451
Total current assets			681,512				640,407
Property and equipment, net			10,234				10,213
Operating lease right-of-use assets			17,181				17,605
Goodwill			11,880				11,880
Deferred tax assets			70,269				73,120
Other noncurrent assets			3,228				3,395
Total assets		$	794,304			$	756,620
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	130,171			$	125,426
Accrued expenses and other current liabilities			75,748				60,524
Total current liabilities			205,919				185,950
Operating lease noncurrent liabilities			16,781				17,241
Total liabilities			222,700				203,191
Commitments and Contingencies (Note 6)
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value; 1,000,000,000 shares authorized; 96,839,393 and 96,348,522 shares issued; 96,115,816 and 96,348,522 shares outstanding at March 31, 2024 and December 31, 2023, respectively			9				9
Additional paid-in capital			489,343				461,639
Treasury stock, at cost, $0.0001 par value; 1,339,557 and 615,980 shares at March 31, 2024 and December 31, 2023, respectively			(27,367	)			(1,009	)
Accumulated earnings			106,869				89,971
Accumulated other comprehensive income			2,750				2,819
Total stockholders’ equity			571,604				553,429
Total liabilities and stockholders’ equity		$	794,304			$	756,620

PROGYNY, INC.
Consolidated Statements of Operations
(Unaudited)
(in thousands, except share and per share amounts)

	Three Months Ended March 31,
		2024			2023
Revenue	$	278,078		$	258,394
Cost of services		215,672			199,754
Gross profit		62,406			58,640
Operating expenses:
Sales and marketing		15,454			14,282
General and administrative		28,429			29,347
Total operating expenses		43,883			43,629
Income from operations		18,523			15,011
Other income, net:
Other income, net		3,360			498
Interest income, net		632			822
Total other income, net		3,992			1,320
Income before income taxes		22,515			16,331
Provision (benefit) for income taxes		5,617			(1,347	)
Net income	$	16,898		$	17,678
Net income per share:
Basic	$	0.18		$	0.19
Diluted	$	0.17		$	0.18
Weighted-average shares used in computing net income per share:
Basic		96,484,657			93,832,873
Diluted		101,052,933			100,166,008

PROGYNY, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)

		Three Months Ended March 31,
			2024				2023
OPERATING ACTIVITIES
Net income		$	16,898			$	17,678
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred tax expense (benefit)			2,877				(1,347	)
Non-cash interest income			(190	)			—
Depreciation and amortization			716				541
Stock-based compensation expense			31,052				30,808
Bad debt expense			4,772				5,244
Realized gains on sale of marketable securities			(3,395	)			(502	)
Foreign currency exchange rate loss			35				—
Changes in operating assets and liabilities:
Accounts receivable			(60,118	)			(78,422	)
Prepaid expenses and other current assets			15,169				(1,456	)
Accounts payable			4,790				36,445
Accrued expenses and other current liabilities			12,995				11,751
Other noncurrent assets and liabilities			131				221
Net cash provided by operating activities			25,732				20,961
INVESTING ACTIVITIES
Purchase of property and equipment, net			(850	)			(1,251	)
Purchase of marketable securities			(110,806	)			(23,435	)
Sale of marketable securities			131,000				40,813
Net cash provided by investing activities			19,344				16,127
FINANCING ACTIVITIES
Repurchase of common stock			(23,764	)			—
Proceeds from exercise of stock options			962				1,675
Payment of employee taxes related to equity awards			(4,959	)			(3,815	)
Proceeds from contributions to employee stock purchase plan			350				294
Net cash used in financing activities			(27,411	)			(1,846	)
Effect of exchange rate changes on cash and cash equivalents			(2	)			—
Net increase in cash and cash equivalents			17,663				35,242
Cash and cash equivalents, beginning of period			97,296				120,078
Cash and cash equivalents, end of period		$	114,959			$	155,320
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes, net of refunds received		$	(362	)		$	(20	)
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Additions of property and equipment, net included in accounts payable and accrued expenses		$	155			$	201

ANNEX A

PROGYNY, INC.
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited)
(in thousands, except share and per share amounts)

Costs of Services, Gross Margin and Operating Expenses Excluding Stock-Based Compensation Calculation
The following table provides a reconciliation of cost of services, gross profit, sales and marketing and general and administrative expenses to each of these measures excluding the impact of stock-based compensation expense for each of the periods presented:

		Three Months Ended
		March 31, 2024
		GAAP				Stock-Based Compensation Expense				Non-GAAP
Cost of services		$	215,672			$	(9,033	)		$	206,639
Gross profit		$	62,406			$	9,033			$	71,439
Sales and marketing		$	15,454			$	(7,503	)		$	7,951
General and administrative		$	28,429			$	(14,516	)		$	13,913
Expressed as a Percentage of Revenue
Gross margin			22.4	%			3.2	%			25.7	%
Sales and marketing			5.6	%		(2.7)%					2.9	%
General and administrative			10.2	%		(5.2)%					5.0	%
		Three Months Ended
		March 31, 2023
		GAAP				Stock-Based Compensation Expense				Non-GAAP
Cost of services		$	199,754			$	(8,214	)		$	191,540
Gross profit		$	58,640			$	8,214			$	66,854
Sales and marketing		$	14,282			$	(6,568	)		$	7,714
General and administrative		$	29,347			$	(16,026	)		$	13,321
Expressed as a Percentage of Revenue
Gross margin			22.7	%			3.2	%			25.9	%
Sales and marketing			5.5	%		(2.5)%					3.0	%
General and administrative			11.4	%		(6.2)%					5.2	%

Note: percentages shown in the table may not cross foot due to rounding.

Adjusted Earnings Per Diluted Share Calculation
The following table provides a reconciliation of net income to Adjusted Earnings Per Diluted Share for each of the periods presented:

		Three Months Ended
		March 31, 2024
Net Income		$	16,898
Add:
Stock-based compensation			31,052
Income tax effect of non-GAAP adjustment			(8,817	)
Adjusted Net income		$	39,133
Diluted Shares			101,052,933
Adjusted Earnings Per Diluted Share		$	0.39
		Three Months Ended
		March 31, 2023
Net Income		$	17,678
Add:
Stock-based compensation			30,808
Income tax effect of non-GAAP adjustment			(13,942	)
Adjusted Net income		$	34,544
Diluted Shares			100,166,008
Adjusted Earnings Per Diluted Share		$	0.34

Adjusted EBITDA and Adjusted EBITDA Margin on Incremental Revenue Calculation
The following table provides a reconciliation of Net income to Adjusted EBITDA for each of the periods presented:

		Three Months Ended
		March 31,
			2024				2023
Net income		$	16,898			$	17,678
Add:
Depreciation and amortization			716			$	541
Stock‑based compensation expense			31,052			$	30,808
Other income, net			(3,360	)		$	(498	)
Interest income, net			(632	)		$	(822	)
Provision (benefit) for income taxes			5,617			$	(1,347	)
Adjusted EBITDA		$	50,291			$	46,360
Revenue		$	278,078			$	258,394
Incremental revenue vs. 2023			19,684
Incremental Adjusted EBITDA vs. 2023			3,931
Adjusted EBITDA Margin on Incremental revenue			20.0	%

Reconciliation of Non-GAAP Financial Guidance for the Three Months Ending June 30, 2024 and Year Ending December 31, 2024

		Three Months Ending June 30, 2024								Year Ending December 31, 2024
(in thousands)		Low				High				Low				High
Revenue		$	300,000			$	310,000			$	1,230,000			$	1,270,000
Net Income		$	15,700			$	17,800			$	68,400			$	75,400
Add:
Depreciation and amortization			700				700				3,000				3,000
Stock-based compensation expense			32,000				32,000				131,000				131,000
Other income, net			(3,000	)			(3,000	)			(14,000	)			(14,000	)
Provision for income taxes			6,600				7,500				27,600				30,600
Adjusted EBITDA*		$	52,000			$	55,000			$	216,000			$	226,000

		Three Months Ending June 30, 2024								Year Ending December 31, 2024
		Low				High				Low				High
Net Income		$	15,700			$	17,800			$	68,400			$	75,400
Add:
Stock-based compensation			32,000				32,000				131,000				131,000
Income tax effect of non-GAAP adjustment			(9,500	)			(9,500	)			(38,100	)			(38,100	)
Adjusted Net income*		$	38,200			$	40,300			$	161,300			$	168,300
Diluted Shares			99,000,000				99,000,000				100,000,000				100,000,000
Adjusted Earnings Per Diluted Share		$	0.39			$	0.41			$	1.61			$	1.68

* All of the numbers in the table above reflect our future outlook as of the date hereof.  Net income and Adjusted EBITDA ranges do not reflect any estimate for other potential activities and transactions, nor do they contemplate any discrete income tax items, including the income tax impact related to equity compensation activity.

 

FAQ

<p>What was Progyny's revenue in Q1 2024?</p>

Progyny's revenue in Q1 2024 was $278.1 million.

<p>What was Progyny's net income in Q1 2024?</p>

Progyny's net income in Q1 2024 was $16.9 million.

<p>What is Progyny's financial outlook for 2024?</p>

Progyny's financial outlook for 2024 includes revenue of $1.23-$1.27 billion, net income of $68.4-$75.4 million, and Adjusted EBITDA of $216-$226 million.

<p>Did Progyny repurchase any shares in Q1 2024?</p>

Yes, Progyny repurchased 723,577 shares for $26.4 million in Q1 2024.

<p>How many clients did Progyny have as of March 31, 2024?</p>

Progyny had 451 clients as of March 31, 2024.