Progyny reported its revenue jumped 62% to $99 million in the third quarter of 2020 as fertility medical services began to recover after disruptions in care earlier in the year due to the COVID-19 pandemic.
New York-based Progyny, a company that manages fertility benefits for employees at large firms, brought in profits of $5.4 million during the quarter, reflecting an improvement of $13.6 million from the $8.2 million net loss reported during the same quarter a year ago.
The company reported earnings per diluted share of 5 cents compared to a loss of $1.10 per basic and diluted share a year ago.
Progyny's earnings results matched Wall Street estimates, and quarterly revenue beat Street expectations. Analysts were expecting revenue of $93 million.
"We have received commitments to date from 45 new clients for 2021, representing approximately 400,000 new covered lives, while also building a very robust pipeline of opportunities to pursue in next year’s selling season," Progyny CEO David Schlanger said during the company's third-quarter earnings call Nov. 5.
The company expects to enter 2021 with approximately 180 total clients and 2.7 million members, which represents increases of 36% and 29%, respectively, from the first quarter of 2020, he said.
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Mark Livingston, Progyny’s chief financial officer, said the results demonstrate that "people’s desire to build their families is not deterred, even against the backdrop of the COVID-19 pandemic."
During the third quarter, Progyny's fertility benefit services revenue came to $73 million, a 46% increase from the $50 million reported in the prior-year period, primarily driven by an increase in its number of clients and covered lives.
Pharmacy benefit services revenue was $26 million, a 131% increase as compared to $11 million reported in the prior-year period, the company reported.
The first fertility benefits management company to ever go public, Progyny has grown its client base to more than 135 employers, up from 84 clients a year ago.
The company's gross profit during the quarter was $21 million, an increase of 69% from the prior-year period, primarily due to the higher revenue. Gross margin was 21.1%, an increase of 100 basis points from the prior period.
Adjusted EBITDA was $10.6 million in the third quarter, an increase of $5 million from the $5.5 million reported in the prior-year period. Adjusted EBITDA margin was 10.7%, an increase of 170 basis points from the 9% margin in the prior-year period.
Pete Anevski, president and chief operating officer, said despite the disruptions in care caused by the COVID-19 pandemic, the larger macro forces that have been driving the company's growth remain intact.
"While some recent research has shown that COVID has caused a slight dip in overall birth rates, our utilization shows that fertility patients and Progyny members in particular remain focused on realizing the dreams of parenthood," he said.
He added, "If the pandemic causes even more people to consider delaying their family building till later in their lives, that increases the long-term relevance of the fertility industry given the biological reality that fertility declines with age and people in their 30s are more likely to need assistance to get pregnant."
Employers increasingly recognize their need to provide fertility coverage in order to remain relevant to the targeted workforce, because employees rank family building benefits highest on their list of what's important to them, Anevski said.
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To date, the company has penetrated a very low single-digit percentage of the approximately 8,000 employers or 69 million covered lives in its target market, affording significant room for ongoing organic growth well into the foreseeable future, he said.
The company's newest clients from the 2020 selling season represent a broad cross-section of over 20 industries including financial services, pharmaceuticals, business services, consumer products, technology and transportation, company executives said.
Progyny expects fourth-quarter revenue between $95 million and $100 million, reflecting growth of 47% to 54%. Net income in the fourth quarter of 2020 is projected to be between $5 million and $6.6 million, or 5 cents to 7 cents per share, on the basis of approximately 100 million assumed weighted-average fully diluted shares outstanding. Fourth-quarter adjusted EBITDA is projected to be $9 million to $10.3 million.
For full-year 2020, the company is projecting revenue to grow 48% to 50% to reach between $340 million and $345 million. Full-year 2020 net income is projected to be between $12.7 million and $14 million, or 13 cents to 14 cents per share.
Progyny expects adjusted EBITDA to be between $29.7 million and $31 million for full-year 2020.