Progyny(PGNY) - 2019 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue increased 120% year-over-year to $61.2 million, up from $27.8 million in the same quarter last year [9][32] - Gross margin improved to 20.1%, an increase of 190 basis points from the prior year [9][37] - Adjusted EBITDA rose to $5.5 million, reflecting an over 8 times increase from the previous year [10][39] - Net loss attributable to common stockholders was $8.2 million, compared to a loss of $1.1 million in the prior year [40][41] - Cash flow from operations was a record $5.9 million, compared to cash used by operations of $0.5 million in the prior year [43] Business Line Data and Key Metrics Changes - Fertility benefits revenue increased 90% from $26.4 million to $50 million year-over-year [33] - Pharmacy benefits revenue rose from $1.4 million to $11.2 million [33] - Assisted Reproductive Technology (ART) cycles performed more than doubled to 3,753 from the previous year [11][35] - Utilization rate for female members was 0.47%, up from 0.45% a year ago [36] Market Data and Key Metrics Changes - The addressable market for fertility benefit solutions is significant, with 8,000 large self-insured employers representing 69 million covered lives in the U.S. [20] - Progyny had 84 clients covering 1.4 million lives as of September 30, 2019, indicating a penetration rate of only about 1% to 2% [20] Company Strategy and Development Direction - Progyny aims to disrupt the fertility benefits market by providing superior clinical outcomes and a supportive patient experience [15][23] - The company focuses on expanding its client base among large self-insured employers and enhancing its service offerings [20][22] - The strategy includes leveraging economies of scale to improve operating efficiencies and reduce costs for employers [38][39] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the macro trends in the fertility benefits market, noting a positive environment for growth [61] - The company anticipates revenue for Q4 2019 to be between $65 million and $66.5 million, reflecting growth of 123% to 128% [44] - For the full year 2019, revenue is expected to be between $229.6 million and $231.1 million, indicating growth of 118% to 119% [46] Other Important Information - Progyny completed its IPO on October 29, 2019, raising approximately $77 million [12] - The company plans to move into a new headquarters in New York in Q1 2020 due to growth in employee numbers [58] Q&A Session Summary Question: Highlights on the recent selling season and new client types - Management noted a diversified group of clients and positive macro trends, with network effects observed within industries [61] Question: Organic same-store growth within existing clients - Majority of revenue growth is driven by new client additions, but there is also same-store growth from upselling and increased employee headcount [62] Question: Sentiment on appetite for Progyny Rx - 75% of new clients opted for the integrated program with Rx, indicating strong demand [64] Question: Pipeline for growing sales reps and PCAs - Staffing models for PCAs are in place and being trained for new clients, with seasoned sales reps added to the sales force [65] Question: Competitive intensity post-IPO - No significant competitive threats observed, with a positive environment for Progyny's unique offerings [81] Question: Opportunities for improving reimbursement rates - Marginal improvements in reimbursement rates expected, with savings shared back with clients [83]