Progyny brings in $9.6M in profits in 2019 but misses Wall Street estimates

New York-based Progyny, a company that manages fertility benefits for employees at large firms, saw revenue surge 118% to $229.7 million last year, bringing in $9.6 million in profits. 

It's the third consecutive year that the New York-based company has more than doubled its revenue from the previous year, Progyny CEO David Schlanger said during the company's latest earnings call Thursday. The company's full-year 2018 revenue was $105.4 million, representing year-over-year growth of 117% compared to 2017.

"We achieved this while also expanding our gross margin and our income from continuing operations to the highest levels they’ve ever been," said Pete Anevski, Progyny’s President, Chief Financial and Operating Officer.

Progyny reported fourth-quarter 2019 revenue reached $65.1 million, a 123% increase compared to $29.2 million reported in the prior-year period. Earnings in the fourth quarter totaled $1.4 million, or $0.01 per share, on the basis of 97.7 million weighted-average diluted shares outstanding.

Despite its strong revenue growth, the company missed Wall Street estimates. Analysts were expecting fourth-quarter earnings per share of $0.02 and a revenue consensus estimate of $66.1 million, according to Street Insider.

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In 2019, Progyny's fertility benefit services revenue came to $189.6 million, a 90% increase from the $99.8 million reported in the prior-year period, primarily driven by an increase in its number of clients.

Pharmacy benefit services revenue was $40.1 million as compared to $5.6 million reported in the prior-year period. 

In 2018, the company expanded its offerings with the launch of Progyny Rx, a member portal and proprietary digital emotional support tool. The availability of that service in 2019 helped boost pharmacy benefit services revenue, the company said.

The first fertility benefits management company to ever go public, Progyny has grown its client base to more than 130 large self-insured employers including Google, Facebook and Microsoft. 

The company added 57 new clients in 2019.

Schlanger said the 2019 selling season produced the greatest number of new clients and covered lives in the company's history. This demonstrates that awareness of infertility as a medical condition is growing, and employers are looking for leading benefits solutions that both provide the appropriate coverage and generate the best clinical outcomes, he said.

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Responding to analysts' questions during a Q&A after the earnings presentation, Schlanger said fertility clinics are not seeing impacts on appointment volume due to coronavirus outbreak fears, and the company's member activity remains normal.

"In any particular geography, if local health authorities tell people to stay home that obviously could have a temporary impact," he said.

Societal trends such as women and couples waiting longer to have children as well as growing awareness of fertility issues are driving demand for Progyny's services and solutions, according to executives.

Progyny aims to disrupt the market by offering a "purpose-built, data-driven and disruptive platform" that delivers "superior clinical outcomes in a cost-efficient manner," the company said.

To date, the company has penetrated 2% to 3% of the self-insured employer market and has enormous headroom for future growth, Schlanger told FierceHealthcare in an interview before the earnings call.

"Given our solution, where we consistently produce clinical outcomes far better than the national averages, we will continue to grow at a strong rate," he said.

Progyny offers treatment bundles that cover diagnostic testing and connect members with patient care advocates. The company said its unique approach and range of benefits result in above-average fertility outcomes for its members, with Progyny members using in-network clinics reporting an 89% rate of single embryo transfer compared with the 53.1% rate for all patients at Progyny network clinics and the 49.5% national average, according to Securities and Exchange Commission documents.

The company considers its addressable market to include governmental employers, unions and small, fully insured groups along with the 8,000 self-insured employers, Schlanger said.

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Progyny expects first-quarter 2020 revenue between $89 million and $94 million, reflecting growth of 89% to 99%. Net income in the first quarter of 2020 is projected to be between $5.4 million and $6.4 million, or $0.05 to $0.06 per share, on the basis of approximately 100 million assumed weighted-average fully diluted shares outstanding. First-quarter adjusted EBITDA is projected to be $8.4 million to $9.3 million.

For 2020, the company is projecting revenue to grow 72% to 81% to reach between $395 million and $415 million. Full-year 2020 net income is projected to be $30 million to $34 million, or $0.30 to $0.34 per share.

Progyny expects adjusted EBITDA to be between $41.7 million and $45.3 million.