Progyny, Inc. [PGNY] Filings

10-Q 1 pgny-20240630.htm 10-Q pgny-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________________________________________

FORM 10-Q

____________________________________________

(Mark One)


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________ to ___________________

Commission File Number: 001-39100

____________________________________________

Progyny, Inc.

(Exact name of registrant as specified in its charter)

____________________________________________


Delaware			27-2220139
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
1359 Broadway New York, New York			10018
(Address of principal executive offices)			(Zip Code)

(212) 888-3124

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

____________________________________________

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	PGNY	The Nasdaq Global Select Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of July 31, 2024, the registrant had 90,276,226 shares of common stock, $0.0001 par value per share, outstanding.

Table of contents

Table of Contents


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of June 30, 202 4 and December 31, 202 3	6
	Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2024 and 2023	7
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June 30, 202 4 and 202 3	8
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Si x Months Ended June 30, 202 4 and 202 3	9
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 202 4 and 202 3	10
	Notes to Consolidated Financial Statements	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	35
Item 4.	Controls and Procedures	36

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	67
Item 4.	Mine Safety Disclosures	67
Item 5.	Other Information	67
Item 6.	Exhibits	68
	Signatures	69

Table of contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q 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, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. All statements other than statements of historical fact contained in this Quarterly Report on Form 10-Q are forward-looking statements, including, without limitation, statements regarding our future results of operations and financial position; our ability to acquire or invest in complementary businesses, products, and technologies; our ability to achieve profitability on an annual basis and sustain such profitability; the sufficiency of our cash and cash equivalents and anticipated sources and uses of cash; our business strategies, plans, objectives and goals; our ability to acquire new clients and successfully engage new and existing clients; our ability to effectively manage our growth; our ability to compete effectively with existing competitors and new market entrants; the impact of recently adopted accounting pronouncements; our ability to attract and retain qualified employees and key personnel; the plans and objectives of management for future operations and capital expenditures; general economic and market trends; the impacts of the COVID-19 pandemic, including variants, on our business, operations and the markets and communities in which we and our clients, members and providers operate; and the potential impact of evolving laws and regulations, including any laws and regulations restricting reproductive rights. These 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.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “seek,” “assume,” “future,” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of important factors that could cause actual results to differ materially from those in the forward-looking statements, including the factors described under Part II, Item 1A. “Risk Factors” and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

In addition, statements such as “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the filing date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained herein, whether as a result of any new information, future events, changed circumstances or otherwise.

Table of contents

SUMMARY OF RISKS AFFECTING OUR BUSINESS

Below is a summary of the principal factors that make an investment in our common stock speculative or risky. This summary does not address all of the risks that we face. Additional discussion of the risks summarized in this risk factor summary, and other risks that we face, can be found under the heading “Risk Factors” in Part II, Item 1A. of this Quarterly Report on Form 10-Q and should be carefully considered, together with other information in this Quarterly Report on Form 10-Q and our other filings with the U.S. Securities and Exchange Commission, or the SEC, before making an investment decision regarding our common stock.

•We may fail to meet our publicly announced guidance or other expectations about our business and future results of operations, which would cause our stock price to decline.

•The fertility market in which we participate is competitive, and if we do not continue to compete effectively, our results of operations could be harmed.

•Unfavorable conditions in the global economy or our industry could limit our ability to grow our business and negatively affect our results of operations.

•Our business depends on our ability to retain our existing clients and increase the adoption of our services within our client base. Any failure to do so would harm our business, financial condition and results of operations.

•Our largest clients account for a significant portion of our revenue and a significant number of our clients are in the technology industry. The loss of one or more of these clients, changes to pricing terms with these clients or changes within the technology industry could negatively impact our business, financial condition and results of operations.

•If we are unable to attract new clients, our business, financial condition and results of operations would be adversely affected.

•The COVID-19 pandemic, including variants and resurgences, has had and may continue to have, and similar health epidemics or pandemics could in the future have, an adverse impact on our business, operations, and the markets and communities in which we and our clients, members and providers operate.

•A significant change in the level or the mix of the utilization of our solutions could have an adverse effect on our business, financial condition and results of operations.

•We have a limited operating history with our current platform of solutions, which makes it difficult to predict our future results of operations.

•Changes or developments in the health insurance markets in the United States, including passage and implementation of a law to create a single-payer or government-run health insurance program, could adversely harm our business and results of operations.

•The health benefits industry may be subject to negative publicity, which could adversely affect our business, financial condition and results of operations.

•If our information technology systems, or those of our provider clinics, specialty pharmacies or other vendors, lag, fail or suffer security breaches, we may incur a material disruption of our services or suffer a loss or inappropriate disclosure of confidential information, which could materially impact our business and the results of operations.

•Our business depends on our ability to maintain our Center of Excellence network of high-quality fertility specialists and other healthcare providers. If we are unable to do so, our future growth would be limited and our business, financial condition and results of operations would be harmed.

•Our growth depends in part on the success of our strategic relationships with, and monitoring of, third parties, including channel partners and vendors, as well as insurance carriers.

Table of contents

•If we fail to maintain an efficient pharmacy distribution network or if there is a disruption to our network of specialty pharmacies or their supply chains, our business, financial condition and results of operations could suffer.

•We operate in a highly regulated industry and must comply with a significant number of complex and evolving legal and regulatory requirements, as well as complex judicial mandates.

•The healthcare regulatory and political framework is uncertain and evolving. Recent and future developments in the healthcare industry could have an adverse impact on our business, financial condition and results of operations.

GENERAL

Unless the context otherwise indicates, references in this Quarterly Report on Form 10-Q to the terms “Progyny,” “the Company,” “we,” “our” and “us” refer to Progyny, Inc. and its wholly owned subsidiaries.

“Progyny®” and our other registered and common law trade names, trademarks and service marks are the property of Progyny, Inc. Other trade names, trademarks and service marks used in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks and trade names in this Quarterly Report on Form 10-Q may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert their rights thereto.

We announce material information to the public through filings with the SEC, our investor relations website at investors.progyny.com, press releases, public conference calls, and webcasts to achieve broad, non-exclusionary distribution of information. We therefore encourage investors and others interested in Progyny to review the information disclosed through such channels. Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.

Table of contents

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

PROGYNY, INC.

Consolidated Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)


	June 30, 2024		December 31, 2023

ASSETS
Current assets:
Cash and cash equivalents	$	94,960	$	97,296
Marketable securities	167,228		273,791
Accounts receivable, net of $54,081 and $46,636 of allowances at June 30, 2024 and December 31, 2023, respectively	293,796		241,869
Prepaid expenses and other current assets	26,259		27,451
Total current assets	582,243		640,407
Property and equipment, net	10,637		10,213
Operating lease right-of-use assets	17,806		17,605
Goodwill	15,606		11,880
Intangible assets, net	1,479		—
Deferred tax assets	67,881		73,120
Other noncurrent assets	2,980		3,395
Total assets	$	698,632	$	756,620
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	151,747	$	125,426
Accrued expenses and other current liabilities	73,628		60,524
Total current liabilities	225,375		185,950
Operating lease noncurrent liabilities	17,064		17,241
Total liabilities	242,439		203,191
Commitments and Contingencies (Note 6)
STOCKHOLDERS' EQUITY
Common stock, $0.0001 par value; 1,000,000,000 shares authorized; 97,028,118 and 96,348,522 shares issued; 90,711,413 and 96,348,522 shares outstanding at June 30, 2024 and December 31, 2023, respectively	9		9
Additional paid-in capital	519,670		461,639
Treasury stock, at cost, $0.0001 par value; 6,932,685 and 615,980 shares at June 30, 2024 and December 31, 2023, respectively	(188,865)		(1,009)
Accumulated earnings	123,354		89,971
Accumulated other comprehensive income	2,025		2,819
Total stockholders’ equity	456,193		553,429
Total liabilities and stockholders’ equity	$	698,632	$	756,620

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of contents

PROGYNY, INC.

Consolidated Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Revenue	$	304,087	$	279,373	$	582,165	$	537,767
Cost of services	235,806		218,732		451,478		418,486
Gross profit	68,281		60,641		130,687		119,281
Operating expenses:
Sales and marketing	16,421		15,384		31,875		29,666
General and administrative	31,173		30,073		59,602		59,420
Total operating expenses	47,594		45,457		91,477		89,086
Income from operations	20,687		15,184		39,210		30,195
Other income, net:
Other income, net	3,564		1,277		6,924		1,775
Interest income, net	816		706		1,448		1,528
Total other income, net	4,380		1,983		8,372		3,303
Income before income taxes	25,067		17,167		47,582		33,498
Provision for income taxes	8,582		2,176		14,199		829
Net income	$	16,485	$	14,991	$	33,383	$	32,669
Net income per share:
Basic	$	0.18	$	0.16	$	0.35	$	0.35
Diluted	$	0.17	$	0.15	$	0.34	$	0.33
Weighted-average shares used in computing net income per share:
Basic	93,868,409		94,738,651		95,160,085		94,290,653
Diluted	97,839,576		100,615,919		99,456,335		100,391,573

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of contents

PROGYNY, INC.

Consolidated Statement of Comprehensive Income

(Unaudited)

(in thousands)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Net income	$	16,485	$	14,991	$	33,383	$	32,669
Other comprehensive (loss) income, net of tax
Unrealized gains on marketable securities before reclassifications	1,915		1,191		4,313		1,916
Reclassification of gains on the sale of marketable securities into net income	(2,630)		(822)		(5,118)		(1,324)
Net change on unrealized gains on marketable securities	(715)		369		(805)		592
Foreign currency translation adjustments	(10)		(11)		11		(11)
Total other comprehensive (loss) income, net of tax	(725)		358		(794)		581
Total comprehensive income	$	15,760	$	15,349	$	32,589	$	33,250

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of contents

PROGYNY, INC.

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)

(in thousands, except share amounts)


	Common Stock			Treasury Stock		Additional Paid in Capital		Accumulated Earnings		Accumulated Other Comprehensive Income		Total
	Shares	Amount

For the three months ended June 30, 2024:
Balance at March 31, 2024	96,115,816	$	9	$	(27,367)	$	489,343	$	106,869	$	2,750	$	571,604
Issuance of employee equity awards, net of shares withheld	188,725	0		—		(2,992)		—		—		(2,992)
Stock-based compensation	—	—		—		33,319		—		—		33,319
Repurchase of common stock	(5,593,128)	—		(161,498)		—		—		—		(161,498)
Other comprehensive loss, net of tax	—	—		—		—		—		(725)		(725)
Net income	—	—		—		—		16,485		—		16,485
Balance at June 30, 2024	90,711,413	$	9	$	(188,865)	$	519,670	$	123,354	$	2,025	$	456,193

For the three months ended June 30, 2023:
Balance at March 31, 2023	94,319,215	$	9	$	(1,009)	$	379,065	$	45,612	$	724	$	424,401
Issuance of employee equity awards, net of shares withheld	846,038	0		—		(2,150)		—		—		(2,150)
Stock-based compensation	—	—		—		31,899		—		—		31,899
Other comprehensive income, net of tax	—	—		—		—		—		358		358
Net income	—	—		—		—		14,991		—		14,991
Balance at June 30, 2023	95,165,253	$	9	$	(1,009)	$	408,814	$	60,603	$	1,082	$	469,499

For the six months ended June 30, 2024:
Balance at December 31, 2023	96,348,522	$	9	$	(1,009)	$	461,639	$	89,971	$	2,819	$	553,429
Issuance of employee equity awards, net of shares withheld	679,596	0		—		(6,494)		—		—		(6,494)
Stock-based compensation	—	—		—		64,525		—		—		64,525
Repurchase of common stock	(6,316,705)	—		(187,856)		—		—		—		(187,856)
Other comprehensive loss, net of tax	—	—		—		—		—		(794)		(794)
Net income	—	—		—		—		33,383		—		33,383
Balance at June 30, 2024	90,711,413	$	9	$	(188,865)	$	519,670	$	123,354	$	2,025	$	456,193

For the six months ended June 30, 2023:
Balance at December 31, 2022	93,301,156	$	9	$	(1,009)	$	349,533	$	27,934	$	501	$	376,968
Issuance of employee equity awards, net of shares withheld	1,864,097	0		—		(3,565)		—		—		(3,565)
Stock-based compensation	—	—		—		62,846		—		—		62,846
Other comprehensive income, net of tax	—	—		—		—		—		581		581
Net income	—	—		—		—		32,669		—		32,669
Balance at June 30, 2023	95,165,253	$	9	$	(1,009)	$	408,814	$	60,603	$	1,082	$	469,499

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of contents

PROGYNY, INC.

Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)


	Six Months Ended June 30,
	2024		2023
OPERATING ACTIVITIES
Net income	$	33,383	$	32,669
Adjustments to reconcile net income to net cash provided by operating activities:
Deferred tax expense	5,522		824
Non-cash interest income	(77)		—
Depreciation and amortization	1,470		1,068
Stock-based compensation expense	64,088		62,561
Bad debt expense	9,572		9,794
Realized gains on sale of marketable securities	(6,987)		(1,324)
Foreign currency exchange rate loss (gain)	30		(7)
Changes in operating assets and liabilities:
Accounts receivable	(61,496)		(34,686)
Prepaid expenses and other current assets	1,279		(9,189)
Accounts payable	26,396		20,853
Accrued expenses and other current liabilities	8,860		13,829
Other noncurrent assets and liabilities	386		581
Net cash provided by operating activities	82,426		96,973

INVESTING ACTIVITIES
Purchase of property and equipment, net	(1,716)		(2,010)
Purchase of marketable securities	(158,639)		(120,599)
Sale of marketable securities	271,099		79,813
Acquisition of business, net of cash acquired	(5,304)		—
Net cash provided by (used in) investing activities	105,440		(42,796)

FINANCING ACTIVITIES
Repurchase of common stock	(183,723)		—
Proceeds from exercise of stock options	988		3,124
Payment of employee taxes related to equity awards	(8,172)		(7,426)
Proceeds from contributions to employee stock purchase plan	707		617
Net cash used in financing activities	(190,200)		(3,685)
Effect of exchange rate changes on cash and cash equivalents	(2)		—
Net (decrease) increase in cash and cash equivalents	(2,336)		50,492
Cash and cash equivalents, beginning of period	97,296		120,078
Cash and cash equivalents, end of period	$	94,960	$	170,570

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes, net of refunds received	$	17,317	$	698
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Additions of property and equipment, net included in accounts payable and accrued expenses	$	158	$	438

The accompanying notes are an integral part of these unaudited consolidated financial statements.

Table of contents

PROGYNY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.Business and Basis of Presentation

Description of Business

Progyny, Inc. (together with its subsidiaries referred to as “Progyny” or the “Company”) was incorporated in the state of Delaware on April 3, 2008, and maintains its corporate headquarters in New York, NY.

Progyny is a provider of a fertility benefits solution and pharmacy benefits solution and operates and manages in one operating segment. The fertility benefits solution consists of a significant service that integrates: (1) the treatment services (“Smart Cycles”) that the Company has designed, (2) access to the Progyny network of high-quality fertility specialists that perform the Smart Cycle treatments and (3) active management of the selective network of high-quality provider clinics, real-time member eligibility and treatment authorization, member-facing digital tools and detailed quarterly reporting supported by the Company’s dedicated client success teams, and end to end comprehensive concierge member support provided by Progyny’s in-house staff of Patient Care Advocates (“PCAs”) (collectively, the “care management services”).

The Company enhanced its fertility benefits solution with the launch of Progyny Rx, its pharmacy benefits solution, effective January 1, 2018. Progyny Rx provides the Company's members with access to the medications needed during their fertility treatment. As part of this solution, the Company provides care management services, which include formulary plan design, simplified authorization, assistance with prescription fulfillment, and timely delivery of the medications by the Company’s network of specialty pharmacies, as well as medication administration training, pharmacy support services, and continuing PCA support. As a pharmacy benefits solution provider, Progyny manages the dispensing of pharmaceuticals through the Company’s specialty pharmacy contracts. The pharmacy benefits solution is only available as an add-on service to its fertility benefits solution.

Basis of Presentation

The accompanying interim unaudited consolidated financial statements include the accounts of Progyny, Inc. and its wholly owned subsidiaries. The interim unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”) applicable to interim financial reporting. These interim consolidated financial statements have been prepared on a basis consistent with the annual consolidated financial statements and, in the opinion of management, include all adjustments necessary to fairly state the Company's financial position as of June 30, 2024, the results of the Company's operations for the three and six months ended June 30, 2024 and 2023 and the results of the Company's cash flows for the six months ended June 30, 2024 and 2023. Therefore, these unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related footnotes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024 (the “Annual Report on Form 10-K”).

The results for the three and six months ended June 30, 2024 are not necessarily indicative of the operating results expected for the year ending December 31, 2024 or any other future period. Additionally, the coronavirus (“COVID-19”) pandemic continues to evolve and due to the uncertainty of the pandemic, including variants, the Company’s customers and members, provider network, specialty pharmacy partners, employees, suppliers, vendors, and other business partners may continue to be impacted in future periods. A resurgence of COVID-19 could have a material adverse effect on the Company’s business, financial condition, results of operations and growth prospects. The Company will continue to assess these potential impacts to its business and will make adjustments to its operations as necessary.

Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP generally requires management to make estimates and assumptions that affect the reported amount of certain assets, liabilities, revenue, and expenses, and the related disclosure of contingent assets and liabilities. Such estimates include, but are not limited to, the determination of accrued receivables related to revenue recognition, accrued claims payable, allowance for doubtful accounts, stock-based compensation expense, lease liabilities, and accounting for income taxes. Management bases its

Table of contents

estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

2.Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies as compared to the significant accounting policies described in Note 2 of the Company’s Annual Report on Form 10-K.

Revenue Recognition

Revenue is recognized when control of the promised goods or services is transferred to clients in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.

The Company applies the following five-step model to recognize revenue from contracts with clients:

•Identification of the contract, or contracts, with a client;

•Identification of the performance obligations in the contract;

•Determination of the transaction price;

•Allocation of the transaction price to the performance obligations in the contract; and

•Recognition of revenue when, or as, a performance obligation is satisfied.

Progyny’s contracts typically have a stated term of three years and include contractual termination options after the first year, allowing the client to terminate the contract with 30 to 90 days’ notice.

Fertility Benefits Solution Revenue

Progyny primarily generates revenue through its fertility benefits solution, in which Progyny provides self-insured enterprise entities (“clients”) and their employees and partners (together, “members”) with fertility benefits. As part of the fertility benefits solution, Progyny provides access to effective and cost-efficient fertility treatments, referred to as Smart Cycles, as well as other related services. Smart Cycles are proprietary treatment bundles that include certain medical services available to members through Progyny’s proprietary, credentialed network of provider clinics. In addition to access to Progyny’s Smart Cycle treatment bundles and access to Progyny’s network of provider clinics, the fertility benefits solution includes other comprehensive services, which Progyny refers to as care management services, such as active management of the provider clinic network, real-time member eligibility and treatment authorization, member-facing digital tools throughout the Smart Cycle and detailed quarterly reporting all supported by client facing account management and end-to-end comprehensive member support provided by Progyny’s in house staff of PCAs.

The promises within Progyny’s fertility benefits contract with a client represent a single performance obligation because Progyny provides a significant service of integrating the Progyny designed Smart Cycles and access to the fertility treatment services provided by provider clinics with the other comprehensive services into the combined fertility benefits solution that the client contracted to receive. Progyny’s fertility benefits solution is a stand-ready obligation that is satisfied over the contract term.

Progyny’s contracts include the following sources of consideration, which are all variable: a per employee per month (“PEPM”) administration fee (in most, but not all contracts) and a fixed rate per Smart Cycle. The PEPM administration fee is allocated between the fertility benefits solution and the pharmacy benefits solution based on standalone selling price, estimated using an expected cost-plus margin method. The Company allocates the variable consideration related to the fixed rate per Smart Cycle to the distinct period during which the related services were performed as those fees relate specifically to the Company’s efforts to provide its fertility benefits solution to its clients in the period and represents the consideration the Company is entitled to for the fertility benefits services provided. As a result, the fixed rate per Smart Cycle is included in the transaction price and recognized in the period in which the Smart Cycle is provided to the member.

Table of contents

Progyny’s contracts also include potential service level agreement refunds related to outcome-based service metrics. These service level refunds, which are determined based on results of a full plan year, if met, are based on a percentage of the PEPM fee paid by clients. The Company estimates the variable consideration related to the total PEPM administration fee, less estimated refunds related to service level agreements, and recognizes the amounts allocated to the fertility benefits solution ratably over the contract term. Progyny’s estimates of service level agreement refunds have not historically resulted in significant adjustments to the transaction price.

Clients are typically invoiced on a monthly basis for the PEPM administration fee. Progyny invoices its clients and members for their respective portions of the fixed rate per Smart Cycle bundle when all treatment services within a Smart Cycle are completed by the provider clinic. Once an invoice is issued, payment terms are typically between 30 to 60 days.

The Company assesses whether it is the principal or the agent for each arrangement with a client, since fertility treatment services are provided by a third party—the provider clinics. The Company is the principal in its arrangements with clients and therefore presents revenue gross of the amounts paid to the provider clinics because Progyny controls the specified service (the fertility benefits solution) before it is transferred to the client. Progyny integrates the fertility treatment services provided by the provider clinics into the overall fertility benefits solution that the client contracted to receive. In addition, Progyny defines the scope of the potential services to be performed by the provider clinics and monitors the performance of the provider clinics. Furthermore, Progyny is primarily responsible for fulfilling the promise to the client and has discretion in setting the pricing, as Progyny separately negotiates agreements with the provider clinics, which establish pricing for each treatment service. Pricing of services from provider clinics is independent from the fees charged to clients.

Pharmacy Benefits Solution Revenue

For clients that have the fertility benefits solution, Progyny offers, as an add-on, its pharmacy benefits solution, which is a separate, fully integrated pharmacy benefit. As part of the pharmacy benefits solution, Progyny provides care management services, which include Progyny’s formulary plan design, prescription fulfillment, simplified authorization and timely delivery of the medications used during treatment through Progyny’s network of specialty pharmacies, and clinical services consisting of member assessments, UnPack It calls, telephone support, online education, medication administration training, pharmacy support services and continuing PCA support.

The pharmacy-related promises represent a single performance obligation because Progyny provides a significant service of integrating the formulary plan design, prescription fulfillment, clinical services and PCA support into the combined pharmacy benefits solution that the client contracted to receive. The pharmacy benefits solution is a stand-ready obligation that is satisfied over the contract term.

Progyny’s contracts include the following sources of consideration, all of which are variable: a PEPM administration fee (in most, but not all contracts) and a fixed fee per fertility drug. As described above, the PEPM administration fee, less estimated refunds related to service level agreements, is allocated to the pharmacy benefits solution and recognized ratably over the contract term. The Company allocates the variable consideration related to the fixed fee per fertility drug to the distinct period during which the related services were performed, as those fees relate specifically to the Company’s efforts to provide its pharmacy benefits solution to clients in the period and represents the consideration the Company is entitled to for the pharmacy benefits services provided. As a result, the fixed fee per fertility drug is included in the transaction price and recognized in the period in which the Company is entitled to consideration from a client, which is when a prescription is filled and delivered to the members.

As stated above, clients are invoiced on a monthly basis for the PEPM administration fee. Progyny invoices the client and the member for their respective portions of the fixed fee per fertility drug, when the prescription services are completed by the specialty pharmacies. Once an invoice is issued, payment terms are typically between 30 to 60 days.

The Company assesses whether it is the principal or the agent for each arrangement with a client, as prescription fulfillment and clinical services are provided by a third party—the specialty pharmacies. The Company is the principal in its arrangements with clients, and therefore presents revenue gross of the amounts paid to the specialty pharmacies. Progyny controls the specified service (the pharmacy benefits solution) before it is transferred to the client. Progyny integrates the prescription fulfillment and clinical services provided by the pharmacies and PCAs into the overall pharmacy benefits solution that the client contracted to receive. In addition, Progyny defines the scope of the potential services to be performed by the specialty pharmacies and monitors the performance of the specialty pharmacies. Furthermore, Progyny is

Table of contents

primarily responsible for fulfilling the promise to the client and has discretion in setting the pricing, as Progyny separately negotiates agreements with pharmacies, which establish pricing for each drug. Pricing of fertility drugs is independent from the fees charged to clients.

The Company does not disclose the transaction price allocated to remaining performance obligations because all of the transaction price is variable and is allocated to the distinct periods to which the services relate, as discussed above. The remaining contract term is typically less than one year, due to the client’s contractual termination options. There were no material contract asset or contract liability balances as of June 30, 2024 and December 31, 2023.

Accrued Receivables and Accrued Claims Payable

Accrued receivables are estimated based on historical experience for those fertility benefits services provided but for which a claim has not been received from the provider clinic at the end of the reporting period, which includes assumptions regarding the lag between authorization date and service date as well as estimates for changes and cancellations of services. At the same time, cost of services and accrued claims payables are estimated based on the amount to be paid to the provider clinic and expected gross margin on fertility benefits services. Estimates are adjusted to actual at the time of billing. Adjustments to original estimates have not been material.

As of June 30, 2024 and December 31, 2023, accrued receivables were $67.6 million and $45.8 million, respectively. Accrued receivables are included within accounts receivable in the consolidated balance sheet.

Accrued claims payable of $40.0 million and $30.3 million as of June 30, 2024 and December 31, 2023, respectively, are included within accrued expenses and other current liabilities in the consolidated balance sheet. Claims payable are generally paid within 30 days based on contractual terms.

As of June 30, 2024 and December 31, 2023, unbilled receivables, which represent claims received and approved but unbilled at the end of the reporting period, were $76.5 million and $45.1 million, respectively. Unbilled receivables are typically billed to clients within 30 days of the approved claim based on the contractual billing schedule agreed upon with the client. Unbilled receivables are included in accounts receivable in the consolidated balance sheet.

Accounts Receivable and Allowance for Doubtful Accounts

The accounts receivable balance primarily includes amounts due from clients and members. The Company estimates the allowance for doubtful accounts based on the lifetime expected credit losses for the client and member receivable pools, respectively. Under this current expected credit losses model, the Company determines the allowance for doubtful accounts based on factors such as the age of the receivable balance, historical experience, current economic conditions, and reasonable and supportable forecasts of future economic conditions. An allowance for credit losses is applied at the time the asset is recognized. Expected credit losses are recorded as general and administrative expenses on the consolidated statements of operations. The following table provides a summary of the activity in this allowance (in thousands):


Six Months Ended June 30, 2024	Balance at Beginning of Period		Charged to Costs and Expenses		Write-offs		Balance at End of Period
Allowance for doubtful accounts	$	46,636	$	9,572	$	(2,127)	$	54,081

Cost of Services

Fertility Benefits Services

Fertility benefits services costs include: (1) fees paid to provider clinics within the Company’s network, labs and anesthesiologists; (2) costs incurred (including salaries, bonuses, benefits, stock-based compensation expense, other related costs, and an allocation of the Company's general overhead, depreciation and amortization) for those employees associated with care management service functions: Provider Account Management, PCA, Provider Relations and Claims Processing teams; and (3) related information technology support costs. Contracts with provider clinics are typically for a term of one to two years.

Table of contents

Pharmacy Benefits Services

Pharmacy benefits services costs include: (1) the fees for prescription drugs dispensed and clinical services provided during the reporting period by specialty pharmacy partners; (2) costs incurred (including salaries, bonuses, benefits, stock-based compensation expense, other related costs, and an allocation of the Company's general overhead, depreciation and amortization) for those employees associated with care management service functions: PCA, Provider Relations and Claims Processing teams; and (3) related information technology support costs. Contracts with the specialty pharmacies are typically for a term of one year.

In the specialty pharmacy contracts, the contractual fees of prescription drugs sold includes the cost of the prescription drugs purchased and shipped to members by the Company’s specialty mail service dispensing pharmacies, net of any volume-related or other discounts.

Vendor Rebates

The Company receives a rebate on formulations purchased and dispensed by the Company’s specialty pharmacies. The Company’s contractual arrangements with pharmacy program partners provide for the Company to receive a discount (or rebate) from established list prices paid subsequent to dispensing when products are purchased indirectly from a pharmacy program partner (such as through a specialty pharmacy). These rebates are recognized as a reduction of cost of services when prescriptions are dispensed and are generally estimated and billed to manufacturers within 20 days after the end of each month. The effect of adjustments resulting from the reconciliation of rebates recognized to the amounts billed and collected has not been material to the Company’s results of operations.

Accounting Pronouncements Issued but Not Yet Adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The standard is intended to provide a better understanding of an entity's overall performance and business activities through improved disclosure about an entity's reportable segments, including more detailed information about reportable segment expenses. The new standard will be effective for the Company for the fiscal year beginning January 1, 2024 and for interim periods within the fiscal year beginning January 1, 2025. While the new standard requires additional footnote disclosure, the Company currently does not expect the adoption of the new standard to have a material effect on its consolidated financial statements.

In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The standard is intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information. The new standard will be effective for the Company for the fiscal year beginning January 1, 2025. While the new standard requires further disaggregation of the income tax footnote, the Company currently does not expect the adoption of the new standard to have a material effect on its consolidated financial statements.

3.Revenue

Disaggregated revenue

The following table disaggregates revenue by service (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Fertility benefits services revenue	$	193,563	$	172,738	$	363,332	$	329,883
Pharmacy benefits services revenue	110,524		106,635		218,833		207,884
Total revenue	$	304,087	$	279,373	$	582,165	$	537,767

Table of contents

4.Fair Value of Financial Instruments

The fair value of financial instruments is determined based on assumptions that market participants would use when pricing an asset or liability at the balance sheet date. Certain assets are categorized based on the following fair value hierarchy of market participant assumptions:

Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date for identical assets or liabilities.

Level 2 — Inputs, other than quoted prices in active markets, that are observable either directly or indirectly.

Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair value of the asset or liability and supported by little or no market activity.

The Company uses observable market data when available, and minimizes the use of unobservable inputs when determining fair value.

As of June 30, 2024 and December 31, 2023, the Company had $96.4 million and $35.2 million, respectively, in financial assets held in money market accounts and $167.2 million and $273.8 million, respectively, held in marketable securities, including U.S. treasury bills. All were classified as Level 1 in the fair value hierarchy. The Company measured these assets at fair value. The Company classified these assets as Level 1 because the values of these assets are determined using unadjusted quoted prices in active markets for identical assets.

As of June 30, 2024 and December 31, 2023, the Company did not have any assets or liabilities classified as Level 2 or Level 3 in the fair value hierarchy.

5.Leases

In September 2019, the Company’s sublease agreement for the 25,212 square foot office in its corporate headquarters commenced in New York, NY and is scheduled to expire in May 2029. Pursuant to the sublease, the Company is obligated to pay the base rent of approximately $1.3 million per annum through the end of the fifth lease year and approximately $1.4 million per annum thereafter through the expiration date.

In February 2023, the Company's lease agreement for the additional 24,099 square foot office in its corporate offices commenced in New York, NY and is expected to expire in the fourth quarter of 2035. In accordance with ASC 842, the Company recorded right-of-use assets and lease liabilities of $12.2 million and $12.1 million, respectively. Pursuant to the lease, the Company is obligated to pay the base rent of approximately $1.4 million per annum through the end of the fifth lease year and approximately $1.5 million per annum thereafter through the expiration date.

The Company recognizes lease expense on a straight-line basis over the lease term. Lease expense for the three months ended June 30, 2024 and 2023 was $0.7 million and $0.6 million, respectively. For the six months ended June 30, 2024 and 2023, lease expense was $1.3 million and $1.0 million, respectively.

Cash outflows from operating activities attributable to the operating leases for the six months ended June 30, 2024 and 2023 was $0.9 million and $0.6 million, respectively.

Table of contents

Information related to the Company's leases is as follows (in thousands):


	Balance Sheet Location	June 30, 2024		December 31, 2023
Operating Leases
Right-of-use asset	Operating lease right-of-use assets	$	17,806	$	17,605
Short-term lease liabilities	Accrued expenses and other current liabilities	$	2,802	$	2,149
Long-term lease liabilities	Operating lease noncurrent liabilities	$	17,064	$	17,241

Other information
Weighted-average remaining lease term, operating lease		9.0 years		9.6 years
Weighted-average discount rate, operating lease		4.60%		4.60%

Future minimum facility lease payments related to the Company's operating lease liabilities as of June 30, 2024 were as follows (in thousands):


Year Ending December 31:	Operating Lease Payments as of June 30, 2024
2024	$	1,453
2025	2,992
2026	2,992
2027	2,992
2028	2,992
Thereafter	10,998
Total undiscounted lease payments	$	24,419
Less: imputed interest	4,553
Present value of lease liabilities	$	19,866
Less: current portion of operating lease liabilities	2,802
Operating lease noncurrent liabilities	$	17,064

February 2022 Lease Agreement

As noted above, the Company commenced its lease for the 24,099 square foot office in its corporate offices in New York, NY in February 2023, pursuant to a lease agreement entered into by the Company in February 2022. The lease agreement also provides for additional space in the Company's corporate offices, including an additional 21,262 square foot office and continued occupancy of the 25,212 square foot office after the expiration of the current sublease. For the 21,262 square foot office, the lease commencement date, which is when the premises will become available to the Company for use, is currently expected to be in the fourth quarter of 2024. The Company is obligated to pay the base rent of approximately $1.3 million starting in the fourth quarter of 2025 for five years and approximately $1.4 million per year thereafter through the fourth quarter of 2035, the expected expiration date. For the current 25,212 square foot office, the Company is obligated to pay the base rent of approximately $1.6 million per year beginning in June 2029, which is the lease commencement, through the fourth quarter of 2035, the expected expiration date.

6.Commitments and Contingencies

The Company records accruals for loss contingencies when it is probable that a liability will be incurred and the amount of the loss can be reasonably estimated. If the Company determines that a loss is reasonably possible, the Company discloses the matter, and the amount or range of the possible loss, if estimable, in the notes to the consolidated financial statements.

From time to time, the Company is involved in certain claims and litigation arising in the normal course of business. The Company is not aware of any legal proceedings or claims, that the Company believes will have, individually or in the aggregate, a material adverse effect on the Company’s financial position or results of operations.

Table of contents

7.Stockholders' Equity

Share Repurchase Programs

In February 2024, the Company’s Board of Directors authorized a share repurchase program of up to $100 million in shares of common stock (the “February 2024 share repurchase program”). In May 2024, the Company’s Board of Directors authorized an additional share repurchase program of up to $100 million in shares of common stock (the “May 2024 share repurchase program”).

During the six months ended June 30, 2024, the Company repurchased a total of 6,316,705 shares of common stock under the share repurchase programs at an average price per share of $29.45 and a total cost of $187.9 million, inclusive of excise taxes and trading fees. As of July 2024, the February share repurchase program and the May 2024 share repurchase program were completed, and no amounts remained available for repurchase under the programs.

In August 2024, the Company’s Board of Directors authorized an additional share repurchase program of up to $100 million in shares of common stock (the “August 2024 share repurchase program”). Repurchases under the program may be made in the form of open market repurchases, including through plans complying with Rule 10b5-1 under the Exchange Act, depending on stock price, market conditions, and other factors, as determined by the Company. There can be no assurance as to the number of shares to be repurchased by the Company under the August 2024 share repurchase program.

Stock-based Compensation Expense

The following table summarizes stock-based compensation expense, which was included in the statements of operations as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of services	$	9,448	$	8,812	$	18,481	$	17,026
Sales and marketing	7,911		6,883		15,414		13,451
General and administrative	15,677		16,058		30,193		32,084
Total stock-based compensation expense	$	33,036	$	31,753	$	64,088	$	62,561

Accumulated Other Comprehensive Income

Accumulated other comprehensive income consisted of the following (in thousands):


	Three Months Ended June 30, 2024						Three Months Ended June 30, 2023
	Unrealized gains on marketable securities		Foreign currency translation adjustments		Total		Unrealized gains on marketable securities		Foreign currency translation adjustments		Total
Balance at beginning of period	$	2,739	$	11	$	2,750	$	719	$	5	$	724
Other comprehensive income before reclassifications, net of tax(1)	1,915		(10)		1,905		1,191		(11)		1,180
Amounts reclassified from accumulated other comprehensive income, net of tax(3)	(2,630)		—		(2,630)		(822)		—		(822)
Net current period other comprehensive (loss) income	(715)		(10)		(725)		369		(11)		358
Balance at end of period	$	2,024	$	1	$	2,025	$	1,088	$	(6)	$	1,082

Table of contents


	Six Months Ended June 30, 2024						Six Months Ended June 30, 2023
	Unrealized gains on marketable securities		Foreign currency translation adjustments		Total		Unrealized gains on marketable securities		Foreign currency translation adjustments		Total
Balance at beginning of period	$	2,829	$	(10)	$	2,819	$	496	$	5	$	501
Other comprehensive income before reclassifications, net of tax(2)	4,313		11		4,324		1,916		(11)		1,905
Amounts reclassified from accumulated other comprehensive income, net of tax(3)	(5,118)		—		(5,118)		(1,324)		—		(1,324)
Net current period other comprehensive (loss) income	(805)		11		(794)		592		(11)		581
Balance at end of period	$	2,024	$	1	$	2,025	$	1,088	$	(6)	$	1,082

________________________________

(1) Represents unrealized gains of $2.6 million, net of tax expense of $0.7 million, for the three months ended June 30, 2024 and unrealized gains of $1.2 million, net of tax expense of $0, for the three months ended June 30, 2023

(2) Represents unrealized gains of $5.9 million, net of tax expense of $1.6 million, for the six months ended June 30, 2024 and unrealized gains of $1.9 million, net of tax expense of $0, for the six months ended June 30, 2023

(3) The effects on net income of amounts reclassified from accumulated other comprehensive income were as follows (in thousands):


Details about Accumulated Other Comprehensive Income Component	Three Months Ended June 30,				Six Months Ended June 30,				Affected Line Item in Statement of Operations
	2024		2023		2024		2023
Gains on marketable securities	$	3,593	$	822	$	6,988	$	1,324	Other income, net
	3,593		822		6,988		1,324		Income before income taxes
	963		—		1,870		—		Provision for income taxes
	$	2,630	$	822	$	5,118	$	1,324	Net income

8.Income Taxes

For the six months ended June 30, 2024 and 2023, the Company calculated its year-to-date provision for income taxes by applying the estimated annual effective tax rate to the year-to-date profit from operations before income taxes and adjusts the provision for income taxes for discrete tax items recorded in the period. The Company updates its estimate of its annual effective tax rate at the end of each quarterly period. The estimate takes into account annual forecasted income before income taxes and any significant permanent tax items. During the six months ended June 30, 2024 and 2023, the Company recorded a provision for income taxes of $14.2 million and $0.8 million, respectively, primarily driven by the Company's operating profit, partially offset by equity compensation activity that occurred during each period.

9.Acquisitions

On June 17, 2024, the Company completed its acquisition of Apryl GmbH, a Berlin-based fertility benefits platform, to expand its global offering. The transaction was for a purchase price of €5.1 million, or $5.5 million based on the exchange rate on the acquisition closing date, and was accounted for using the acquisition method. As a result, tangible and intangible assets acquired and liabilities assumed were recorded at their estimated fair values as of the acquisition date. Any excess consideration over the fair value of the assets and liabilities assumed was recognized as goodwill and is subject to revision as the purchase price allocation is completed during the measurement period (up to one year from acquisition date). This acquisition did not have a material impact on the Company’s consolidated financial statements.

10.Net Income Per Share

Basic net income per share is calculated by dividing the net income by the weighted-average number of shares of common stock outstanding for the period.

Table of contents

Diluted net income per share is computed by dividing the diluted net income by the weighted-average number of common shares outstanding for the period, including potential dilutive common shares assuming dilutive effect of outstanding common stock options, restricted stock units, common stock warrants, and shares issuable under the employee stock purchase plan. In periods when the Company has incurred a net loss, diluted net loss per share is the same as basic net loss per share because dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. A reconciliation of net income and the number of shares in the calculation of basic and diluted net income per share is as follows (in thousands, except share and per share amounts):


	Three Months Ended June 30				Six Months Ended June 30,
	2024		2023		2024		2023
Basic net income per common share:
Numerator:
Net income	$	16,485	$	14,991	$	33,383	$	32,669

Denominator:
Weighted-average shares used in computing basic net income per share	93,868,409		94,738,651		95,160,085		94,290,653
Basic net income per share	$	0.18	$	0.16	$	0.35	$	0.35

Diluted net income per common share:
Numerator:
Net income	$	16,485	$	14,991	$	33,383	$	32,669

Denominator:
Weighted-average shares used in computing basic net income per share	93,868,409		94,738,651		95,160,085		94,290,653
Effect of dilutive securities
Options to purchase common stock	3,558,853		4,964,878		3,748,342		5,276,642
Shares issuable under ESPP	3,040		1,647		4,523		105
Warrants to purchase common stock	288,081		538,316		290,035		537,118
Restricted stock units	121,193		372,427		253,350		287,055
Total effect of dilutive securities	3,971,167		5,877,268		4,296,250		6,100,920
Weighted-average shares used in computing diluted net income per share	97,839,576		100,615,919		99,456,335		100,391,573
Diluted net income per share	$	0.17	$	0.15	$	0.34	$	0.33

The following weighted-average outstanding shares of potentially dilutive securities were excluded from the computation of diluted income per share for the period presented because including them would have been antidilutive:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Options to purchase common stock	13,667,019	11,952,205	13,111,238	11,866,389
Restricted stock units	2,442,920	1,089,701	1,558,562	1,487,082
Total	16,109,939	13,041,906	14,669,800	13,353,471

Table of contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 29, 2024. In addition to historical financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those expressed or implied by such forward-looking statements. Important factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” under Part II, Item 1A. in this Quarterly Report on Form 10-Q.

Overview

We believe in a world where everyone can realize dreams of family and ideal health. Our mission is to empower healthier, supported journeys through transformative fertility, family building and women's health benefits. Through our differentiated approach to benefits plan design, patient education and support and active network management, our clients’ employees are able to pursue the most effective treatment across life's milestones from the best physicians and achieve optimal outcomes.

Progyny is a leading benefits management company specializing in fertility and family building benefits solutions in the United States. Our clients include many of the nation’s most prominent employers across a broad array of industries. We launched our fertility benefits solution in 2016 with our first five employer clients, and we have grown our current base of clients to over 460 with at least 1,000 covered lives. We currently provide coverage to approximately 6.4 million employees and their partners (known in our industry as covered lives), whom we refer to as our members. We have achieved this growth by demonstrating that our purpose-built, data-driven and disruptive platform consistently delivers superior clinical outcomes in a cost-efficient manner while driving exceptional client and member satisfaction. We have retained substantially all of our clients since inception, and our member satisfaction over that same time period is evidenced by our industry-leading Net Promoter Score, or NPS, of +80 for our fertility benefits solution and +80 for our integrated pharmacy benefits solution, Progyny Rx as of December 31, 2023. Our members experience healthier pregnancies and superior rates of pregnancy and live births, as well as reduced rates of miscarriages and multiple births, saving valuable time and money and limiting personal and professional disruption.


Outcome	National Averages for All Provider Clinics	Progyny In‑Network Provider Clinic Averages for All Patients	Progyny In‑Network Provider Clinic Averages for Progyny Members Only(3)
Live birth rate per attempted retrieval(2)	35.5%	37.4%	44.4%
Single embryo transfer rate(1)	75.5%	77.8%	93.9%
Pregnancy rate per IVF transfer(1)	53.8%	55.2%	62.8%
Miscarriage rate(1)	18.4%	18.2%	15.8%
Live birth rate per transfer(2)	41.6%	42.6%	52.9%
IVF multiples rate(2)	6.9%	6.2%	1.9%

________________________________

(1)Calculated based on the Society for Assisted Reproductive Technology, or SART, 2020 National Summary Report, finalized in 2023.

(2)Calculated based on CDC, 2021 National Summary and Clinic Data Sets, published in 2023.

(3)Calculated based on the 12-month period ended December 31, 2022.

Fertility Benefits Solution. Our fertility benefits solution includes providing members with access to effective and cost-efficient fertility treatments through our Smart Cycle plan design. Smart Cycles are proprietary treatment bundles designed by us to include those medical services available to our members through our selective network of high-quality fertility specialists. Medical services under our Smart Cycles include everything needed for a comprehensive fertility treatment cycle, including all necessary diagnostic testing and access to the latest technology (such as, in the case of in

Table of contents

vitro fertilization, or IVF, preimplantation genetic testing). We currently offer 20 different Smart Cycle treatment bundles, which may be used in various combinations depending on the member’s need. Each Smart Cycle treatment bundle has a separate unit value (i.e., some have fractional values and some have whole values). Our clients contract to purchase a cumulative Smart Cycle unit value per eligible member. These can range from one to an unlimited unit value. Members, in consultation with their PCAs can choose their preferred provider clinics within our network and utilize the specific Smart Cycle treatment bundles necessary for the treatment pathway they determine throughout their fertility journey.

In addition, we provide care management services as part of our fertility benefits solution, which include active management of our selective network of high-quality fertility specialists, real-time member eligibility and treatment authorization, member-facing digital solutions, detailed quarterly reporting for our clients supported by our dedicated client success teams and end-to-end comprehensive concierge member support provided by our in-house staff of PCAs. Clients can also add adoption and surrogacy reimbursement programs as part of this solution.

Pharmacy Benefits Solution. We went live with our integrated pharmacy benefits solution in 2018. Progyny Rx can only be purchased by clients that purchase our fertility benefits solution. Progyny Rx provides our members with access to the medications needed during their fertility treatment. As part of this solution, we provide care management services, which include our formulary plan design, simplified authorization, assistance with prescription fulfillment and timely delivery of the medications by our network of specialty pharmacies, as well as medication administration training, pharmacy support services and continuing PCA support.

Our Clients. We currently serve over 460 employers with at least 1,000 covered lives in the United States across more than 40 industries. Our current clients, who are industry leaders across both high-growth and mature industries and who range in size from approximately 1,000 to 600,000 employees, represent approximately 6.4 million covered lives.

Revenue Model

Our clients primarily contract with us to provide our fertility benefits solution and, where added on by our clients, our Progyny Rx solution. Our revenue has both a utilization-based component and a population-based component, as follows:

•Utilization Component. Clients pay us for the fertility benefits and Progyny Rx solutions utilized by their employees. With respect to the fertility benefits solution, we bill clients for Smart Cycles in accordance with our bundled case rates, which vary by the type of fertility service rendered and clinic location. Case rates include all third-party fertility specialists, anesthesiology and laboratory services, as well as all of our care management services. With respect to Progyny Rx, we bill the client for the fertility medication dispensed to their employees in connection with the authorized fertility treatments. Medication fees also include our formulary management, drug utilization review and cost containment services and other care management services.

•Population-Based Component. Clients who purchase our fertility benefits solution also typically pay us a per employee per month fee, or PEPM fee, which is population-based. This allows us to provide access to our PCAs for fertility and family building education and guidance and other digital tools to all of our members, regardless of whether they ultimately pursue fertility treatment. PEPM fees represented 1% of our total revenue for the six months ended June 30, 2024 and 2023, respectively.

Our revenue in a given year is determined by the level and mix of the utilization of our fertility benefits and Progyny Rx solutions by our members as well as the number of members enrolled in our clients’ benefits plans. Each year, we contract with new clients for our fertility benefits solution and, where added by the client, our Progyny Rx solution. Given that the majority of our clients contract with us for a January 1st benefits plan start date, our sales cycle follows the conventional healthcare benefits cycle, which largely concludes by the end of October of the prior year to allow for benefits education and annual open enrollment to occur in November. For some clients that are considering a start date later in the year, the sales cycle can extend through the next year.

Similarly, for existing clients, any changes in plan designs are typically elected by the end of October so that clients can inform their employees of the benefits during the open enrollment period ahead of a January 1st plan year start.

Table of contents

Key Operational and Business Metrics

In addition to the measures presented in our consolidated financial statements, we use the following key operational and business metrics to evaluate our business, measure our performance, develop financial forecasts, and make strategic decisions.

Member and Client Base. Our addressable market is primarily large self-insured employers as well as labor populations under the Labor Management Relations Act of 1947 (also known as the Taft-Hartley Act) and federal government populations. There are approximately 8,000 employers in the United States who have a minimum of 1,000 employees, who together with Taft-Hartley labor populations and federal government populations, represent approximately 106 million potential covered lives in total. Our current member base of approximately 6.4 million covered lives represents a mid-single digit percent of our total market opportunity. We intend to continue to drive new client acquisition by investing significantly in sales and marketing to engage, educate and drive awareness of the unmet need around fertility solutions among benefits executives. We also increase brand awareness and adoption with employers by leveraging our strong relationships with benefits consultants. In particular, we are focused on expanding the number of clients with more than 2,500 covered lives. As of June 30, 2024 and December 31, 2023, we served 463 and 392 clients, respectively, representing 6,410,000 and 5,418,000 members, respectively.

Importantly, as we have continued to grow, we have meaningfully diversified our client base across more than 40 different industries currently from just two industries when we launched our fertility benefits solution in 2016. We are expanding our client base within each industry and have an industry-specific strategy that enables us to most effectively target our addressable market. Because our clients within an industry compete with each other for employees, we believe our solutions are increasingly viewed as an important way for them to differentiate from, or remain competitive with, one another. Additionally, we believe that our expanding presence has resulted in a heightened awareness of the need to offer fertility benefits and has informed the market of the value we provide to our clients and our members, which we believe also helps facilitate growth. In addition, we are continuously utilizing our established client relationships to evaluate other potential fertility solutions that could benefit our members and simultaneously drive growth. Our ability to attract new clients will depend on a number of factors, including the effectiveness and pricing of our solutions, offerings of our competitors, the effectiveness of our marketing efforts to drive awareness and the demand for fertility benefits solutions overall. We define a client as an organization for which we have an active contract in the period indicated. We count each organization we contract with as a single client including divisions, segments or subsidiaries of larger organizations to the extent we contract separately with them.

Benefits Utilization. A key driver of our revenue is the number of members we serve and the rate at which they utilize their fertility benefits. As our client base has grown, our membership has grown from approximately 110,000 members in 2016 when we launched our fertility benefits solution to approximately 6.4 million members as of June 30, 2024.

The following table highlights the number of assisted reproductive treatment, or ART, cycles performed for Progyny members and the member utilization rates for each of the periods presented:


	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Assisted Reproductive Treatment (ART) Cycles(1)	15,562	14,771	30,364	27,942
Utilization - All Members(2)	0.55%	0.57%	0.84%	0.85%
Utilization - Female Only(2)	0.47%	0.50%	0.71%	0.73%
Average Members(3)	6,409,000	5,340,000	6,347,000	5,330,000

________________________________

(1)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.

(2)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 the purposes of calculating utilization rates in any given period, the results reflect

Table of contents

the number of unique members utilizing the benefit for that period. Individual periods cannot be combined as member treatments may span multiple periods.

(3)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.

Impact of COVID-19 on our Business

The COVID-19 pandemic significantly impacted various markets around the world, including the United States. Restrictions related to COVID-19, including variants, and our responses to them significantly impacted and may continue to impact how our members use our services, access our providers, and how our employees work and provide services to our clients and members, resulting in an impact on our revenue. To the extent that the markets we serve experience increased cases of COVID-19, including variants, state or local governments may reinstitute measures to control its spread, which could again negatively impact our members’ access to care, which could in turn impact our business. We will continue to evaluate the nature and extent of these potential impacts to our business, results of operations and liquidity.

For additional information on the various risks posed by the COVID-19 pandemic, please refer to Part II, Item 1A. "Risk Factors" included in this Quarterly Report on Form 10-Q.

Components of Results of Operations

Revenue

Revenue includes fertility benefits solution revenue, pharmacy benefits solution revenue and PEPM fees.

Fertility Benefits Solution Revenue

Fertility benefits solution revenue primarily represents utilization of our fertility benefits solution. Our client contracts are typically for a three-year term and pricing for this solution is established for each Smart Cycle treatment bundle, based in part on when the client first became a client and the number of members covered under the solution. Fertility benefits solution revenue includes amounts we receive directly from members, including deductibles, co-insurance and co-payments associated with the treatments under the fertility benefits solution. Revenue is recognized based on the negotiated price with our clients and includes the portion to be paid directly by the member. Revenue is recognized when Smart Cycle services are completed for a member. Revenue is also accrued for authorized Smart Cycle services rendered based on member appointments scheduled with a fertility specialist in our network but for which no claim has yet been reported, net of expected changes and cancellations of services.

Pharmacy Benefits Solution Revenue

Pharmacy benefits solution revenue primarily represents utilization of Progyny Rx. For clients who contract for the fertility benefits solution, we offer an add-on, separate, fully integrated pharmacy benefits solution designed by us. Progyny Rx provides our members with access to our formulary plan design, simplified authorization, prescription fulfillment and timely delivery of the medications used during treatment through our network of specialty pharmacies, as well as provides our members with medication administration training and other pharmacy support services. Prescription drugs are dispensed by our contracted mail order specialty pharmacies. Revenue related to the dispensing of prescription drugs by the specialty pharmacies in our network includes the prescription fees negotiated with our clients, including the portion that we collect directly from members (deductibles, co-insurance and co-payments). The contractual fees agreed to with our clients are inclusive of the cost of the prescription drug from our specialty providers, less any applicable discounts (or rebates), as well as the related clinical and care management services. Revenue from these arrangements is recognized when the drugs are dispensed. This solution was introduced in the marketplace in the third quarter of 2017 and went live with a select number of clients on January 1, 2018.

Per Employee Per Month (PEPM) Fee

Clients who purchase our fertility benefits solution also pay us a population based PEPM fee, which provides access to our PCAs for fertility and family building education and guidance and other digital tools for all of our covered members, regardless of whether or not they ultimately pursue fertility treatment. We earn a PEPM fee for the majority of

Table of contents

our clients. Revenue from the PEPM fee is billed and recognized monthly based upon the contractual fee and the number of employees at that specific client for that month.

Cost of Services

Our cost of services has three primary components: (1) fertility benefits services; (2) pharmacy benefits services; and (3) vendor rebates.

Fertility Benefits Services

Fertility benefits services costs include: (1) fees paid to provider clinics within our network, labs and anesthesiologists; (2) costs incurred (including salaries, bonuses, benefits, stock-based compensation expense, other related costs, and an allocation of our general overhead, depreciation and amortization) for those employees associated with our care management service functions: Provider Account Management, PCA, Provider Relations and Claims Processing teams; and (3) related information technology support costs. Our contracts with provider clinics are typically for a term of one to two years.

Pharmacy Benefits Services

Pharmacy benefits services costs include: (1) the fees for prescription drugs dispensed and clinical services provided during the reporting period by our specialty pharmacy partners; (2) costs incurred (including salaries, bonuses, benefits, stock-based compensation expense, other related costs, and an allocation of our general overhead, depreciation and amortization) for those employees associated with our care management service functions: PCA, Provider Relations and Claims Processing teams; and (3) related information technology support costs. Contracts with the specialty pharmacies are typically for a term of one year.

Vendor Rebates

We receive a rebate on certain medications purchased by our specialty pharmacies. Our contractual arrangements with pharmacy program partners provide for us to receive a rebate from established list prices, which is paid subsequent to dispensing. These rebates are recorded as a reduction to cost of services when prescriptions are dispensed.

Gross Profit and Gross Margin

Gross profit is total revenue less total cost of services. Gross margin is gross profit expressed as a percentage of total revenue. We expect that gross profit and gross margin will continue to be affected by various factors, including the geographic location where treatments are performed, as well as pricing with each of our clients, provider clinics, labs, specialty pharmacies and pharmaceutical companies, all of which are negotiated separately, have different contracting start and end dates and durations which are not coterminous with each other. Additionally, staffing levels and the related personnel costs, including stock-based compensation expense, and other costs necessary to deliver our care management services will continue to grow as we continue to add clients and their associated members.

Operating Expenses

Our operating expenses consist of sales and marketing and general and administrative expenses.

Sales and Marketing Expense

Sales and marketing expense consists primarily of employee related costs, including salaries, bonuses, commissions, benefits, stock-based compensation expense, other related costs, and an allocation of our general overhead, depreciation and amortization for those employees associated with sales and marketing. These expenses also include third-party consulting services, advertising, marketing, promotional events, and brand awareness activities. We expect sales and marketing expense to continue to increase in absolute dollars as we continue to invest and grow our business.

General and Administrative Expense

General and administrative expense consists primarily of employee related costs, including salaries, bonuses, benefits, stock-based compensation expense, other related costs, and an allocation of our general overhead, depreciation

Table of contents

and amortization for those employees associated with general and administrative services such as executive, legal, human resources, information technology, accounting, and finance. These expenses also include third-party consulting services and facilities costs. We anticipate that we will incur additional general and administrative expenses on an ongoing basis to support the growth of our business.

Other Income, Net

Other income, net primarily includes interest income and expense as well as investment income and losses.

Provision for Income Taxes

We are subject to income taxes in the United States. Income tax expense consists of taxes currently payable and changes in deferred tax assets and liabilities calculated according to local tax rules. Deferred income taxes are recorded for the expected tax consequences of temporary differences between the tax basis of assets and liabilities for financial reporting purposes and amounts recognized for income tax purposes. As of each reporting date, management considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. We believe there is sufficient positive evidence to conclude that it is more likely than not that the net deferred tax assets are realizable.

Results of Operations

The following tables set forth our results of operations for the periods presented and as a percentage of revenue for those periods:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

	(in thousands)				(in thousands)
Consolidated Statements of Operations Data:
Revenue	$	304,087	$	279,373	$	582,165	$	537,767
Cost of services(1)	235,806		218,732		451,478		418,486
Gross profit	68,281		60,641		130,687		119,281
Operating expenses:
Sales and marketing(1)	16,421		15,384		31,875		29,666
General and administrative(1)	31,173		30,073		59,602		59,420
Total operating expenses	47,594		45,457		91,477		89,086
Income from operations	20,687		15,184		39,210		30,195
Other income, net	4,380		1,983		8,372		3,303
Income before income taxes	25,067		17,167		47,582		33,498
Provision for income taxes	8,582		2,176		14,199		829
Net income	$	16,485	$	14,991	$	33,383	$	32,669

________________________________

(1)Includes stock-based compensation expense as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Cost of services	$	9,448	$	8,812	$	18,481	$	17,026
Sales and marketing	7,911		6,883		15,414		13,451
General and administrative	15,677		16,058		30,193		32,084
Total stock‑based compensation expense	$	33,036	$	31,753	$	64,088	$	62,561

Table of contents


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Consolidated Statements of Operations Data, as a percentage of revenue:
Revenue	100.0	%	100.0	%	100.0	%	100.0	%
Cost of services	77.5		78.3		77.6		77.8
Gross profit	22.5		21.7		22.4		22.2
Operating expenses:
Sales and marketing	5.4		5.5		5.5		5.5
General and administrative	10.3		10.8		10.2		11.1
Total operating expenses	15.7		16.3		15.7		16.6
Income from operations	6.8		5.4		6.7		5.6
Other income, net	1.4		0.7		1.4		0.6
Income before income taxes	8.2		6.1		8.2		6.2
Provision for income taxes	2.8		0.7		2.4		0.1
Net income	5.4	%	5.4	%	5.7	%	6.1	%

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

Non-GAAP Financial Measure – Adjusted EBITDA

Adjusted EBITDA is a supplemental financial measure that is not required by, or presented in accordance with, U.S. GAAP. We believe that Adjusted EBITDA, when taken together with our U.S. 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 is helpful to our investors as it is a measure 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 is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with U.S. GAAP. Some of the limitations of Adjusted EBITDA 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; and (5) it does not reflect tax payments that may represent a reduction in cash available to us. In addition, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner as we calculate the measure, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial performance measures, including our net income, gross margin, and other U.S. 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 provision for income taxes. The following table presents a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure stated in accordance with U.S. GAAP, for each of the periods indicated:

Table of contents


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

	(in thousands)
Net income	$	16,485	$	14,991	$	33,383	$	32,669
Add:
Depreciation and amortization	754		527		1,470		1,068
Stock‑based compensation expense	33,036		31,753		64,088		62,561
Other income, net	(3,564)		(1,277)		(6,924)		(1,775)
Interest income, net	(816)		(706)		(1,448)		(1,528)
Provision for income taxes	8,582		2,176		14,199		829
Adjusted EBITDA	$	54,477	$	47,464	$	104,768	$	93,824

Comparison of Three Months Ended June 30, 2024 and 2023

Revenue


	Three Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
Revenue	$304,087	$279,373	9	%

Revenue increased by $24.7 million, or 9%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase is primarily due to a $20.8 million, or 12%, increase in revenue from our fertility benefits solution and a $3.9 million, or 4%, increase in revenue from our Progyny Rx solution. The increases in revenue from our fertility benefits solution and Progyny Rx solution were primarily due to the increase in the number of clients and covered lives.

Cost of Services


	Three Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
Cost of services	$235,806	$218,732	8	%

Cost of services increased by $17.1 million, or 8%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to an increase in medical treatment and pharmacy prescription costs associated with fertility treatment delivered. This increase was also attributable to an increase in personnel-related costs primarily due to incremental headcount as well as a $0.6 million increase in stock-based compensation expense.

Gross Profit and Gross Margin


	Three Months Ended June 30,
	2024		2023		% Change

	(dollars in thousands)
Gross profit	$68,281		$60,641		13	%
Gross margin	22.5	%	21.7	%

Gross profit increased by $7.6 million, or 13%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023.

Table of contents

Gross margin increased 80 basis points for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to ongoing efficiencies realized in the delivery of our care management services, partially offset by an increase in personnel-related costs.

Operating Expenses

Sales and Marketing Expense


	Three Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
Sales and marketing	$16,421	$15,384	7	%

Sales and marketing expense increased by $1.0 million, or 7% for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase was due to a $0.8 million increase in personnel-related costs mainly attributable to an increase in stock-based compensation expense, as well as a $0.2 million increase in other related sales and marketing expenses.

General and Administrative Expense


	Three Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
General and administrative	$31,173	$30,073	4	%

General and administrative expense increased by $1.1 million, or 4%, for the three months ended June 30, 2024 compared to the three months ended June 30, 2023. This increase was due to a $1.3 million increase in personnel-related costs attributable to incremental headcount, and a $0.2 million increase in bad debt expense driven by our revenue growth, partially offset by a $0.4 million decrease in other related general and administrative expenses.

Other Income, Net


	Three Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
Other income, net	$4,380	$1,983	121	%

Other income, net increased by $2.4 million for the three months ended June 30, 2024 compared to the three months ended June 30, 2023, primarily due to an increase in investment and interest income.

Provision for Income Taxes


	Three Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
Provision for income taxes	$8,582	$2,176	294	%

For the three months ended June 30, 2024, we recorded a provision for income taxes of $8.6 million, as compared to $2.2 million for the three months ended June 30, 2023, primarily due to the higher operating profit as well as a decrease in tax benefits for equity compensation, including discrete tax benefits, in the current year period.

Table of contents

Comparison of Six Months Ended June 30, 2024 and 2023

Revenue


	Six Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
Revenue	$582,165	$537,767	8	%

Revenue increased by $44.4 million, or 8%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase is primarily due to a $33.4 million, or 10%, increase in revenue from our fertility benefits solution and a $10.9 million, or 5%, increase in revenue from our Progyny Rx solution. The increases in revenue from our fertility benefits solution and Progyny Rx solution were primarily due to the increase in the number of clients and covered lives.

Cost of Services


	Six Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
Cost of services	$451,478	$418,486	8	%

Cost of services increased by $33.0 million, or 8%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to an increase in medical treatment and pharmacy prescription costs associated with fertility treatments delivered. This increase was also attributable to an increase in personnel-related costs primarily due to incremental headcount as well as a $1.5 million increase in stock-based compensation expense.

Gross Profit and Gross Margin


	Six Months Ended June 30,
	2024		2023		% Change

	(dollars in thousands)
Gross profit	$130,687		$119,281		10	%
Gross margin	22.4	%	22.2	%

Gross profit increased by $11.4 million, or 10%, for the six months ended June 30, 2024 compared to the six months ended June 30, 2023.

Gross margin increased 20 basis points for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to ongoing efficiencies realized in the delivery of our care management services, partially offset by an increase in personnel-related costs.

Table of contents

Operating Expenses

Sales and Marketing Expense


	Six Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
Sales and marketing	$31,875	$29,666	7	%

Sales and marketing expense increased by $2.2 million, or 7% for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was primarily due to a $1.9 million increase in personnel-related costs attributable to an increase in stock-based compensation expense, as well as a $0.3 million increase in other related sales and marketing expenses.

General and Administrative Expense


	Six Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
General and administrative	$59,602	$59,420	0	%

General and administrative expense increased by $0.2 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023. This increase was primarily due to a $1.3 million increase in personnel-related costs attributable to incremental headcount, largely offset by a $0.9 million decrease in other related general and administrative expenses, as well as a $0.2 million decrease in bad debt expense.

Other Income, Net


	Six Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
Other income, net	$8,372	$3,303	153	%

Other income, net increased by $5.1 million for the six months ended June 30, 2024 compared to the six months ended June 30, 2023, primarily due to an increase in investment income.

Provision for Income Taxes


	Six Months Ended June 30,
	2024	2023	% Change

	(dollars in thousands)
Provision for income taxes	$14,199	$829	1,613	%

For the six months ended June 30, 2024, we recorded a provision for income taxes of $14.2 million as compared to $0.8 million for the six months ended June 30, 2023, primarily due to the higher operating profit as well as a decrease in tax benefits for equity compensation, including discrete tax benefits, in the current year period.

Liquidity and Capital Resources

As of June 30, 2024, we had $95.0 million of cash and cash equivalents and $167.2 million of marketable securities. Since inception, we have financed our operations primarily through sales of our solutions and the net proceeds we have received from sales of equity securities, including our initial public offering. Our cash and cash equivalents and

Table of contents

working capital are affected by the timing of payments to third party providers and collections from clients and have increased as our revenue has increased. In particular, during the ramp up and onboarding of new clients who typically begin their benefits plan year as of January 1st, our accounts receivable has historically increased more than our accounts payable, accrued expenses and other current liabilities in the early part of each calendar year. Historically, these timing impacts have reversed throughout the remainder of the fiscal year. Accordingly, our working capital, and its impact on cash flow from operations, can fluctuate materially from period to period.

We believe that our existing cash and cash equivalents, including the proceeds from our marketable securities, and cash flow from operations will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months. We also expect these sources of existing cash and cash equivalents will be sufficient to fund our long-term contractual obligations and capital needs. However, this is subject, to a certain extent, to general economic, financial, competitive, regulatory, and other factors that are beyond our control. Moreover, our future capital requirements will depend on many factors, including sales of our solutions and client renewals, the timing and the amount of cash received from clients, the expansion of our sales and marketing activities, and the continued market adoption of our solutions.

Other than the prior impact on our revenue growth and the related cash flows resulting from the various restrictions on activities due to the COVID-19 pandemic, as of June 30, 2024, our sources and uses of cash were not otherwise significantly impacted by the COVID-19 pandemic and, to date based on the information currently available to us, we have not identified and do not expect any material liquidity deficiencies as a result of the COVID-19 pandemic. For additional information on the various risks posed by the COVID-19 pandemic, please refer to Part II, Item 1A. "Risk Factors" included in this Quarterly Report on Form 10-Q.

We may, in the future, enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We may be required to seek additional equity or debt financing. In the event that we require additional financing, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, operations and financial condition.

The following table summarizes our cash flows from operations for the periods presented:


	Six Months Ended June 30,
	2024		2023

	(in thousands)
Cash provided by operating activities	$	82,426	$	96,973
Cash provided by (used in) investing activities	105,440		(42,796)
Cash used in financing activities	(190,200)		(3,685)
Effect of exchange rate changes on cash and cash equivalents	(2)		0
Net (decrease) increase in cash and cash equivalents	$	(2,336)	$	50,492

Operating Activities

Net cash provided by operating activities was $82.4 million for the six months ended June 30, 2024, primarily consisting of net income of $33.4 million adjusted for certain items, which include $64.1 million of stock-based compensation expense, $9.6 million of bad debt expense, $7.0 million of realized gains on the sale of marketable securities, $5.5 million of deferred tax expense, and $1.5 million of depreciation and amortization. Changes in operating assets and liabilities resulted in cash used in operating activities from increases in accounts receivable of $61.5 million, partially offset by cash provided by operating activities from increases in accounts payable of $26.4 million, accrued expenses and other current liabilities of $8.9 million, and other noncurrent assets and liabilities of $0.4 million as well as a decrease in prepaid expenses and other current assets of $1.3 million. These changes were a result of the impact of revenue growth and our operating results as well as the timing of cash collections and payments to third parties, including $17.3 million of cash paid for income taxes, net of refunds received in the six months ended June 30, 2024.

Net cash provided by operating activities was $97.0 million for the six months ended June 30, 2023, primarily consisting of net income of $32.7 million adjusted for certain non-cash items, which include $62.6 million of stock-based compensation expense, $9.8 million of bad debt expense, $1.3 million of realized gains on the sale of marketable securities, $1.1 million of depreciation and amortization, and $0.8 million of deferred tax expense. Changes in operating assets and

Table of contents

liabilities resulted in cash used in operating activities from increases in accounts receivable of $34.7 million and prepaid expenses and other current assets of $9.2 million, partially offset by cash provided by operating activities from increases in accounts payable of $20.9 million, accrued expenses and other current liabilities of $13.8 million, and other noncurrent assets and liabilities of $0.6 million. These changes were a result of the impact of revenue growth and our operating results as well as new agreements with our pharmacy program partners, which included more favorable payment receipt terms and resulted in an additional receipt in the six months ended June 30, 2023, and the timing of cash collections and payments to third parties.

Investing Activities

Net cash provided by investing activities was $105.4 million for the six months ended June 30, 2024, which primarily consisted of net proceeds from marketable securities of $112.5 million, partially offset by $5.3 million used for a business acquisition, net of cash acquired. For the six months ended June 30, 2023, net cash used in investing activities was $42.8 million, which primarily consisted of net investments in marketable securities of $40.8 million. The remainder of the activity for each of the six months ended June 30, 2024 and June 30, 2023 consisted of purchases of computers, software, including capitalized software development costs, and leasehold improvements.

Financing Activities

Net cash used in financing activities was $190.2 million for the six months ended June 30, 2024, consisting of repurchases of $183.7 million of common stock under the February 2024 and May 2024 share repurchase programs and payments of $8.2 million for employee taxes related to equity awards, partially offset by $1.0 million in proceeds from stock option exercises and $0.7 million in proceeds from contributions to our employee stock purchase plan.

Net cash used in financing activities was $3.7 million for the six months ended June 30, 2023, consisting of payments of $7.4 million for employee taxes related to equity awards, partially offset by $3.1 million in proceeds from stock option exercises and $0.6 million in proceeds from contributions to our employee stock purchase plan.

Share Repurchase Programs

In February 2024, our Board of Directors authorized a share repurchase program of up to $100 million in shares of common stock (the “February 2024 share repurchase program”). In May 2024, our Board of Directors authorized an additional share repurchase program of up to $100 million in shares of common stock (the “May 2024 share repurchase program”).

During the six months ended June 30, 2024, we repurchased a total of 6,316,705 shares of common stock under the share repurchase programs at an average price per share of $29.45 and a total cost of $187.9 million, inclusive of excise taxes and trading fees. To date, we repurchased a total of 6,805,426 shares of common stock under the share repurchase programs for a total cost of $200.1 million, inclusive of trading fees. As of July 2024, the February 2024 share repurchase program and May 2024 share repurchase program were completed, and no amount remained available for repurchase under the programs.

In August 2024, our Board of Directors authorized an additional share repurchase program of up to $100 million in shares of common stock (the “August 2024 share repurchase program”). Repurchases under the program may be made in the form of open market repurchases, including through plans complying with Rule 10b5-1 under the Exchange Act, depending on stock price, market conditions, and other factors, as determined by the Company. There can be no assurance as to the number of shares to be repurchased by us under the August 2024 share repurchase program.

Operating Lease Commitments

In September 2019, we commenced a sublease agreement for our corporate offices in New York, New York. The sublease is for a 25,212 square foot office and will expire in May 2029. Pursuant to the sublease, we will pay the base rent of approximately $1.3 million per year through the end of the fifth lease year and approximately $1.4 million per year thereafter through the expiration date.

In February 2022, we entered into a lease agreement for additional space in our corporate offices in New York, New York, consisting of a 24,099 square foot office and a 21,262 square foot office, and also for continued occupancy of the 25,212 square foot office after the expiration of the current sublease. For the 24,099 square foot office, we will pay the base rent of approximately $1.4 million per year through the end of the fifth lease year and approximately $1.5 million per

Table of contents

year thereafter through the fourth quarter of 2035, the expected expiration date. For the 21,262 square foot office, we will pay the base rent of approximately $1.3 million starting in the fourth quarter of 2025 for five years and approximately $1.4 million per year thereafter through the fourth quarter of 2035, the expected expiration date. For our current 25,212 square foot office, we will pay the base rent of approximately $1.6 million per year beginning in June 2029 through the fourth quarter of 2035, the expected expiration date.

Critical Accounting Estimates

Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected.

We believe that the assumptions and estimates associated with our accrued receivables related to revenue recognition, accrued claims payable, stock-based compensation expense, and accounting for income taxes have the greatest potential impact on our financial statements. Therefore, we consider these to be our critical accounting estimates.

For additional information about our critical accounting policies and estimates, see the disclosure included in our Annual Report on Form 10-K as well as "Financial Statements (Unaudited) — Note 1 – Business and Basis of Presentation" and "Financial Statements (Unaudited) — Note 2 – Significant Accounting Policies" in the notes to the unaudited consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. There have been no material changes to the Company’s critical accounting policies and estimates since our Annual Report on Form 10-K.

Recently Adopted Accounting Pronouncements

For a full discussion of recently adopted accounting pronouncements, see "Financial Statements (Unaudited) —Note 2 – Significant Accounting Policies", to the consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Table of contents

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our market risk exposure is primarily the result of fluctuations in interest rates.

Interest Rate Risk

Interest rate risk is highly sensitive due to many factors, including U.S. monetary and tax policies, U.S. and international economic factors and other factors beyond our control.

At June 30, 2024, we had cash and cash equivalents of $95.0 million and marketable securities of $167.2 million. Interest-earning instruments carry a degree of interest rate risk. We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. Our investments are exposed to market risk due to a fluctuation in interest rates, which may affect our interest income and the fair market value of our investments. A hypothetical 10% change in interest rates would not result in a material impact on our consolidated financial statements.

Inflation Rate Risk

While it is difficult to accurately measure the impact of inflation on our results of operations and financial condition, we do not believe that inflation has had a material effect on our business, financial condition or results of operations. Nonetheless, if our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition, and results of operations.

Table of contents

ITEM 4. CONTROLS AND PROCEDURES

Limitations on Effectiveness of Controls and Procedures

The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated, as of the end of the period covered by this Quarterly Report on Form 10-Q, the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2024.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Table of contents

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

See Part I, Item 1 “Financial Statements (Unaudited) — Note 6 — Commitments and Contingencies.”

ITEM 1A. RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider all of the information contained in this Quarterly Report on Form 10-Q, including the sections titled “Cautionary Note Regarding Forward-Looking Statements” and Part I, Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our unaudited consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q. Any of the following risks could materially and adversely affect our business, financial condition and results of operations, the actual outcome of matters as to which forward-looking statements are made in this Quarterly Report on Form 10-Q and could cause the trading price of our common stock to decline, which would cause you to lose all or part of your investment. Our business, financial condition and results of operations could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.

Risks Related to Our Business and Industry

We may fail to meet our publicly announced guidance or other expectations about our business and future results of operations, which would cause our stock price to decline.

We have provided and may continue to provide guidance about our business and future results of operations. On August 6, 2024, we issued guidance for the third quarter of 2024 and full year 2024. This guidance, which consists of forward-looking statements, is qualified by, and subject to, such assumptions, estimates and expectations as of the date such guidance is given and may be revised at a later time, solely in our discretion, as we learn more information. Such forward-looking statements 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. In developing this guidance, our management must make certain assumptions and judgments, including but not limited to, our business strategy, plans, goals, expectations concerning our market position, future operations and other financial and operating information, as well as the impact of events outside of our control (such as macroeconomic conditions), the COVID-19 pandemic, or shortages of fertility medications that are or were at this time inherently difficult to predict. While the guidance may be presented with numerical specificity, it is necessarily speculative in nature. Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release of such guidance. Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance. Our actual business results may vary significantly from such guidance or that consensus due to a number of factors, many of which are outside of our control, and which could adversely affect our business and future results of operations. Furthermore, if we make downward revisions of our previously announced guidance, or if our publicly announced guidance of our future results of operations fails to meet expectations of securities analysts, investors or other interested parties, the price of our common stock would decline.

The fertility market in which we participate is competitive, and if we do not continue to compete effectively, our results of operations could be harmed.

The market for our solutions is competitive and is likely to attract increased competition, which could make it hard for us to succeed. We compete on the basis of several factors, including the comprehensiveness of our benefits solutions and the Smart Cycle (our unique approach to benefits plan design which ensures that members always have coverage for a full treatment cycle as their access to treatment is not limited by a dollar maximum that could be exhausted mid-treatment), superior clinical outcomes, access for all employee groups (including LGBTQ+ and single mothers by choice), equitable access to care across geographies, quality of the member experience and comprehensive member support, access to our selective Center of Excellence (our proprietary, credentialed network of high-quality fertility specialists), data reporting and sharing and access to an integrated pharmacy solution. While we do not believe any single competitor offers a similarly robust and integrated fertility and family building benefits solution as to what we provide, there are alternative solutions in the market such as the health insurance companies that are able to provide fertility benefits management services as part of their overall administration of a company's health plan and that are our primary competition. In addition, other competitors include specialty fertility-focused solutions owned or sponsored by the health insurance companies to provide more comprehensive support to fertility patients than their general medical coverage

Table of contents

provides, such as case management or educational support, and the venture capital or private equity-backed companies that focus on maternity and reproductive health services more broadly, or who provide fertility-specific benefits solutions.

As we market our solutions to potential clients that currently utilize other vendors to manage their employees’ fertility benefits, we may fail to convince their internal stakeholders that our offerings and our model are superior to their current solutions. Some of our competitors are more established, benefit from greater brand recognition and have substantially greater financial, technical and marketing resources. Our competitors may seek to develop or integrate solutions and services that may become more efficient or appealing to our existing and potential clients. For example, fertility-focused pharmacy benefits managers, or PBMs, could emerge that would compete with Progyny Rx. In addition, we believe one of our key competitive advantages is our purpose-built, data-driven platform. While we do not believe any competitors have developed a similarly robust data collection, analysis and reporting process at this time, current or future competitors may be successful in doing so in the future.

In addition, as the fertility benefits field gains more attention, more competitors may be drawn into the market. We also could be adversely affected if we fail to identify or effectively respond to changes in market dynamics. As a result of any of these factors, we may not be able to continue to compete successfully against our current or future competitors, and this competition could result in the failure of our platform to continue to maintain market acceptance, which would harm our business, financial condition and results of operations.

Many healthcare industry participants are consolidating to create larger and more integrated healthcare delivery systems with greater market power and we expect regulatory and economic conditions to result in additional consolidation in the healthcare industry. Additionally, financial investors are acquiring fertility practices and this may accelerate consolidation within the industry. Although comprehensive, our solution is a standalone fertility benefit. Clients may prefer a single healthcare solution, which could adversely affect our ability to retain existing clients or grow our client base. In addition, we work with partner organizations to market our benefit to potential clients. As consolidation accelerates, the economies of scale of our partners’ organizations may grow. If a partner experiences sizable growth following consolidation, it may determine that it no longer needs to rely on us and may reduce its demand for our services. Furthermore, as healthcare providers consolidate to create larger and more integrated healthcare delivery systems with greater market power, these providers may try to use their market power to negotiate fee increases for their services. Finally, consolidation may also result in the acquisition of our partners by competitors or development by our partners of products and services that compete with our products and services. Any of these potential results of consolidation could have a material adverse effect on our business, financial condition and results of operations.

Unfavorable conditions in the global economy or our industry could limit our ability to grow our business and negatively affect our results of operations.

Market volatility and uncertainty related to general economic conditions remain widespread, making it very difficult for our clients and us to accurately forecast and plan future business activities. Negative conditions in the general economy in the United States and elsewhere, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, inflation, consumer confidence, international trade relations, geopolitical conflict, political turmoil, natural catastrophes, resurgences or outbreaks of contagious diseases or the worsening thereof, including the COVID-19 pandemic, warfare and terrorist attacks, could cause a decrease in business investments, including spending on employee benefits, and negatively affect the growth of our business. Economic conditions including inflation, interest rate fluctuations, changes in capital market conditions, disruptions in the banking industry and other parts of the financial services sector, and regulatory changes, such as the taxability of medical benefits like ours, may affect our ability to obtain necessary financing on acceptable terms.

Unfavorable changes in our industry, including reductions in general healthcare spending, or in the United States and global economy could have a negative effect on our and our clients’ and potential clients’ results of operations. This could result in the delay or cancellation by certain clients, including if purchases of our solution are perceived by clients and potential clients to be discretionary, if they experience a reduction in their employee headcounts, whether due to reductions in force or turnover, or are unable to grow employee headcounts or there are material defaults by members on past amounts due. An increase in the cost of obtaining fertility medication or general medical cost inflation could also negatively impact our results of operation. In addition, the increased pace of consolidation in the healthcare industry may result in competitors with greater market power. Many economists believe the global economy will likely experience a recessionary environment in the near future. The Federal Reserve’s efforts to tame inflation have led to, and may continue to lead to, increased interest rates. A significant escalation or expansion of economic disruption could have a material adverse effect on our results of operations. We cannot predict the timing, strength, or duration of any economic slowdown, instability, or recovery, generally or within any particular industry, nor its impact on us or our clients.

Table of contents

Our business depends on our ability to retain our existing clients and increase the adoption of our services within our client base. Any failure to do so would harm our business, financial condition and results of operations.

As part of our growth strategy, we are focused on retaining and expanding our services within our existing client base. A client can expand the fertility benefits they offer to their employees in a number of ways, including by adding egg freezing or increasing the number of Smart Cycle units under their benefits plan (i.e., from two to three Smart Cycles per household). In addition, our fertility benefits solution clients can purchase our add-on Progyny Rx solution. We went live with Progyny Rx in 2018 and 91% of our current clients have now launched this solution, including approximately 98% of the clients we signed in 2023.

Factors that may affect our ability to retain our existing clients and sell additional solutions to them include, but are not limited to, the following:

•the price, timeliness and outcomes of our solutions;

•the availability, price, timeliness, outcome, performance and functionality of competing solutions;

•our ability to maintain and appropriately expand our Center of Excellence network of high-quality fertility specialists;

•our ability to offer complementary solutions and services that will enhance our comprehensive family building offering;

•changes in healthcare laws, regulations or the enforcement of such laws and regulations, or trends;

•any material increase in the unemployment rate;

•global economic conditions and the business environment of our clients and, in particular, slowing growth or reduction in our clients’ headcount; and

•consolidation of our clients, resulting in a change to their benefits program or a shift to one of our competitors.

Any of the above factors, alone or together, could negatively affect our ability to retain existing clients and sell additional solutions to them, which would have an adverse effect on our business, revenue growth and results of operations.

Our largest clients account for a significant portion of our revenue and a significant number of our clients are in the technology industry. The loss of one or more of these clients, changes to pricing terms with these clients or changes within the technology industry could negatively impact our business, financial condition and results of operations.

We currently serve over 460 employers with at least 1,000 covered lives in the United States across more than 40 industries. For the six months ended June 30, 2024, one of our clients accounted for 12% of our total revenue. For the six months ended June 30, 2023, one of our clients accounted for 13% of our total revenue. No other clients accounted for more than 10% of our total revenue for the six months ended June 30, 2024 and 2023. Engagement with these clients is generally covered through contracts that are multi-year in duration. These clients may terminate early or decline to renew their existing contracts with us upon expiration and any such termination or failure to renew could have a negative impact on our revenue and compromise our growth strategy. Our clients could also renegotiate pricing terms at the time of renewal, which could have a negative impact on our revenue. In addition, we generate a significant portion of our revenue from clients in the technology industry. Any of a variety of changes in that industry, including reductions in workforce or heightened employee attrition, changes in economic conditions, mergers or consolidations, reduced spending on benefits programs and other factors, could adversely affect our business, financial condition and results of operations.

If we are unable to attract new clients, our business, financial condition and results of operations would be adversely affected.

To increase our revenue, we must continue to attract new clients. Our ability to do so depends in large part on the success of our sales and marketing efforts, and the success of attracting industry leaders in diversified sectors, which could prompt others in the same sectors to follow suit to remain competitive. Potential clients may seek out other options; therefore, we must demonstrate that our solutions are valuable and superior to alternatives. If we fail to provide high-

Table of contents

quality solutions and convince clients of the benefits of our model and value proposition, we may not be able to attract new clients. The market for our solutions could decline or grow more slowly than we expect, including due to general economic conditions, and high unemployment rates, reductions in workforce or employee attrition, impacts related to outbreaks and resurgences of contagious diseases or worsening thereof, including the COVID-19 pandemic, a decrease in business investments, including spending on employee benefits, and other factors. If the markets for our solutions decline or grow more slowly than we expect, or if the number of clients that contract with us for our solutions declines or fails to increase as we expect, our financial results could be impacted. As the markets in which we participate mature, fertility solutions and services evolve and competitors begin to enter into the market and introduce differentiated solutions or services that are perceived to compete with our solutions, particularly if such competing solutions are adopted by an industry leader in a particular sector, our ability to sell our solutions could be impaired. As a result of these and other factors, we may be unable to attract new clients, which would have an adverse effect on our business, financial condition and results of operations.

The COVID-19 pandemic, including variants and resurgences, has had and may continue to have, and similar health epidemics or pandemics could in the future have, an adverse impact on our business, operations, and the markets and communities in which we and our clients, members and providers operate.

The COVID-19 pandemic continues to evolve, with pockets of resurgence and the emergence of variant strains contributing to continued uncertainty about its scope, duration, severity, trajectory and lasting impact. The pandemic adversely impacted, and may continue to adversely impact, many aspects of our business. Our revenue growth in past periods was negatively impacted by COVID-19, including variants, and our revenue growth in future periods may continue to be adversely impacted by COVID-19.Our providers have delayed and may in the future delay new fertility cycles because they operate in areas acutely affected by the COVID-19 pandemic. Many of our members live in communities that have been acutely affected by the COVID-19 pandemic and have delayed and may not want to continue or begin new fertility cycles during the pandemic, including due to resurgences in and the emergence of variant strains. Furthermore, as certain of our potential clients experience downturns or uncertainty in their own business operations and revenue because of the economic effects resulting from the COVID-19 pandemic, they have and may continue to decrease their spending on health benefits, which may disproportionately impact fertility benefits, and delay or cancel implementation of fertility benefits. Each of these factors could affect member behavior, our utilization rates and the number of members enrolled in our clients’ benefit plans.

In addition to the direct and indirect impacts to our business, the economy may continue to be impacted as a result of the COVID-19 pandemic, including any resurgences in infections, and actions taken in response to it. To the extent a weakened economy impacts clients’ or members’ ability or willingness to pay for our benefit, or our vendors’, including any pharmacy program partners’, ability to provide services to us, we could see our business and results of operations negatively impacted.

In addition, the pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, which could reduce our ability to access capital and could negatively affect our liquidity in the future. Moreover, to the extent the COVID-19 pandemic adversely affects our business, financial condition and results of operations, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, including but not limited to, those related to our ability to expand our customer base and develop and expand our sales and marketing capabilities.

The global impact of COVID-19, due to variants and resurgences of infections, continues to evolve, and we will continue to monitor the situation closely. The ultimate impact of the COVID-19 pandemic or a similar health epidemic or pandemic is highly uncertain and subject to change; and will depend on numerous evolving factors that we may not be able to accurately predict, including without limitation: the trajectory, duration, scope, severity, and any resurgences of the COVID-19 pandemic; any mandates, in particular as new variants emerge; the public’s perception of the safety of the vaccines and other treatments and their willingness to take the vaccines or other treatments; the existence and prevalence of new variants of the virus; the continued impact on worldwide macroeconomic conditions, including interest rates, employment rates and consumer confidence; governmental, business, and individuals’ actions that have been, and continue to be, taken in response to the pandemic; the effect on our providers, clients and members; changes in demand for our services; our ability to sell and provide our services; the ability of our clients and members to pay for our services; the health of, and the effect on, our workforce; and the potential effects on our internal controls, including our internal control over financial reporting, as a result of changes in working environments for our employees and business partners. There is no guarantee that any future resurgences or future outbreaks of this or any other widespread epidemics or pandemics will not occur, or that the global economy will fully recover, either of which could seriously harm our business.

Table of contents

A significant change in the level or the mix of the utilization of our solutions could have an adverse effect on our business, financial condition and results of operations.

We do not control nor can we impact the level of utilization of our solutions or the mix of utilization of our solutions for each of our clients, in particular for newer clients. A significant reduction in the number of members using our solutions could adversely affect our business, financial condition and results of operations. Factors that have and could continue to contribute to a reduction in the use of our solutions include: reductions in workforce by existing clients; general economic downturn that results in business failures and high unemployment rates; impacts related to outbreaks and resurgence of contagious diseases and/or the worsening thereof, including the COVID-19 pandemic; employers no longer offering comprehensive health coverage or offering alternative solutions such as coverage on a voluntary, employee-funded basis; labor shortages at our clinics; federal and state legal and/or regulatory changes; changes to taxability of medical benefits; failure to adapt and respond effectively to the changing medical landscape, changing laws, regulations and government enforcement priorities, changing client needs, requirements or preferences; premium increases and benefits changes; or negative publicity through social media or otherwise and news coverage.

It is also difficult for us to predict the level or mix of utilization of our services at the member level nor do we have any control over the level or mix of utilization of our services. If the actual utilization of our services by members is significantly greater than budgeted, the client may be responsible for corresponding costs that exceed its planned expenditure. If we cannot help our clients accurately predict the level of utilization by their employees, our clients may turn to alternative solutions, and our business and profitability would be adversely impacted. In addition, higher clinical success rates and other factors could also impact timing and treatment paths, which may result in lower revenue per utilizing member.

We have a limited operating history with our current platform of solutions, which makes it difficult to predict our future results of operations.

We went live with our fertility benefits solution in 2016 and Progyny Rx in 2018. As a result of our limited operating history with the current platform of solutions, as well as a limited amount of time serving a majority of our client base, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth. Our historical revenue growth should not be considered indicative of our future performance. Further, in future periods, our revenue growth could slow or decline for a number of reasons, including slowing demand for our solutions and fertility benefits in general, change in utilization trends by our members, general economic slowdown, an increase in unemployment, an increase in competition, changes to healthcare trends and regulations, changes to science relating to the fertility market, a decrease in the growth of the fertility market, or our failure, for any reason, to continue to take advantage of growth opportunities. If our assumptions regarding these risks and uncertainties and our future revenue growth are incorrect or change, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer.

We have a history of operating losses and may not sustain profitability in the future.

We experienced net losses from 2015 to 2019. For example, our net loss was $8.6 million for the year ended December 31, 2019. While we have experienced significant revenue growth since 2016, achieved profitability starting in 2020 and currently project future profitability, we cannot guarantee whether we will obtain sufficient levels of sales to sustain our growth or maintain profitability in the future. We also expect our costs and expenses to increase in future periods, which could negatively affect our future results of operations if our revenue does not increase. In particular, we intend to continue to incrementally expand our sales and client success teams to educate potential clients and drive new client adoption, as well as enhance the scope of Progyny benefits within our existing client base. We also expect to incur additional costs as we introduce new solutions and services to enhance our comprehensive family building offering. We will also face increased compliance costs associated with our growth, and the expansion of our client base. In addition, we incur significant legal, accounting and other expenses related to being a public company. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses. We may incur significant losses in the future for a number of reasons, including the other risks described herein, and unforeseen expenses, diffic

Progyny, Inc. [PGNY] Filings
10-Q	[2024-08-07]
10-Q	[2024-05-10]
10-K	[2024-02-29]
10-Q	[2023-11-08]
10-Q	[2023-08-04]
10-Q	[2023-05-09]
10-K	[2023-03-01]
10-Q	[2022-11-04]
10-Q	[2022-08-05]
10-Q	[2022-05-06]
10-K	[2022-03-01]
10-Q	[2021-11-08]
10-Q	[2021-08-06]
10-Q	[2021-05-07]
10-K	[2021-03-01]
10-Q	[2020-11-06]
10-Q	[2020-08-07]
10-Q	[2020-05-14]
10-K	[2020-03-10]
10-Q	[2019-12-06]
S-1	[2019-09-27]