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PI

Progyny, Inc. (PGNY)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarter: revenue $332.9M (+9.5% YoY), gross margin up 120 bps to 23.7%, Adjusted EPS $0.48; both revenue and Adjusted EPS beat S&P Global consensus, and revenue topped the company’s own guidance, driven by stronger member engagement across the base .
  • Mix: Fertility benefits +11% YoY to $213.9M and pharmacy benefits +8% to $118.9M; ART cycles hit an all‑time high at 16,938 (+9% YoY), while female utilization was 0.48%, consistent with historical patterns .
  • Guidance: Full‑year 2025 raised across the board—revenue to $1.235–$1.270B, Adjusted EBITDA $205.5–$214.5M, Adjusted EPS $1.70–$1.78; Q3 2025 introduced with revenue $290–$305M and Adjusted EPS $0.37–$0.40 .
  • Strategic catalysts: Credit facility established ($200M revolver, undrawn), Amazon Health Benefits Connector collaboration, ŌURA partnership for data‑driven women’s health, and pelvic floor therapy added—supporting distribution, engagement, and solution breadth .
  • Narrative drivers: Management emphasized healthy, seasonally consistent engagement and strong pipeline/early commitments; investments in platform and acquisitions are pressuring margins modestly near‑term but aim to accelerate product innovation and member experience .

What Went Well and What Went Wrong

What Went Well

  • Strong top‑line and margin: Revenue $332.9M (+9.5% YoY) with gross margin up to 23.7% (22.5% a year ago); excluding a non‑renewed large client’s transition, core revenue growth was 18% YoY .
  • Record engagement metrics: ART cycles reached 16,938 (+9% YoY), with female utilization 0.48% and clients rising to 542; CFO: “Total revenue… exceeded the top end of our guidance by nearly $8 million driven by improved member engagement” .
  • Raised FY25 and issued Q3 guidance: FY revenue upgraded to $1.235–$1.270B; CEO: “we're pleased to raise our guidance for the year” amid healthy, seasonal activity .

What Went Wrong

  • Margin pressure from investments: Adjusted EBITDA margin dipped to 17.4% (17.9% a year ago), reflecting spend to expand the platform and integrate acquisitions; management expects additional hiring to temper gross margin expansion in 2H .
  • Tax headwinds: Net income growth was partially offset by higher tax provision driven by discrete equity compensation impacts .
  • Transition client churn: The large client did not renew for 2025; Q2 included $17.2M of transition revenue, which ends after June 30—creating a tougher 2H comp despite underlying growth .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$298.4 $324.0 $332.9
Gross Profit ($USD Millions)$63.4 $75.8 $79.0
Gross Margin %21.3% 23.4% 23.7%
Net Income ($USD Millions)$10.5 $15.1 $17.1
Diluted EPS ($USD)$0.12 $0.17 $0.19
Adjusted EPS ($USD)$0.42 $0.48 $0.48
Adjusted EBITDA ($USD Millions)$47.5 $57.8 $57.9
Adjusted EBITDA Margin %15.9% 17.8% 17.4%

Segment breakdown:

Segment RevenueQ4 2024Q1 2025Q2 2025
Fertility Benefit Services ($USD Millions)$187.5 $206.4 $213.9
Pharmacy Benefit Services ($USD Millions)$111.0 $117.6 $118.9

KPIs:

KPIQ4 2024Q1 2025Q2 2025
Clients (count)473 532 542
ART Cycles (count)15,839 16,160 16,938
Utilization – All Members (%)0.55% 0.54% 0.55%
Utilization – Female Only (%)0.48% 0.46% 0.48%
Average Members (count)6,471,000 6,695,000 6,743,000

Consensus vs Actual:

MetricQ4 2024Q1 2025Q2 2025
Revenue Consensus Mean ($USD)$277.3M*$307.8M*$320.1M*
Revenue Actual ($USD)$298.4M $324.0M $332.9M
Primary EPS Consensus Mean ($USD)$0.37*$0.446*$0.428*
Adjusted EPS Actual ($USD)$0.42 $0.48 $0.48
Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Billions)FY 2025$1.185–$1.235 $1.235–$1.270 Raised
Net Income ($USD Millions)FY 2025$42.4–$51.8 $52.3–$58.9 Raised
Adjusted EBITDA ($USD Millions)FY 2025$190.0–$203.0 $205.5–$214.5 Raised
Adjusted EPS ($USD)FY 2025$1.54–$1.64 $1.70–$1.78 Raised
Revenue ($USD Millions)Q3 2025—$290–$305 New
Net Income ($USD Millions)Q3 2025—$9.4–$12.3 New
Adjusted EBITDA ($USD Millions)Q3 2025—$45–$49 New
Adjusted EPS ($USD)Q3 2025—$0.37–$0.40 New
Female Utilization (%)FY 20251.02–1.04 1.04–1.06 Raised
ART Cycles per Unique Female UtilizerFY 20250.89–0.91 0.91–0.92 Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Q1 2025Current Period (Q2 2025)Trend
Member engagement/seasonalityEngagement trending to historical levels; FY25 guide framed with variability Engagement consistent with Q1; raised FY guide Healthy, seasonally consistent; revenue/Adjusted EPS top guidance due to engagement Improving
Platform & product investmentsFY24 investments; program breadth expanding Investments to expand platform; new modules in maternity/postpartum/menopause Continued platform build; Benefit Bump integration; pelvic floor therapy; global expansion Expanding
Distribution/channel—Cigna and regional plan relationships; CVS/Evernorth channels Amazon Health Benefits Connector collaboration to aid benefit discovery Expanding
Technology/AI/data—Building platform and digital capabilities ŌURA partnership to integrate wearable data in care Expanding
Macro/tariffs—Tariff Q&A: minimal impact; uncertain potential inputs; mitigation levers Macro uncertainty acknowledged in guidance ranges Stable caution
Mix dynamics (pharmacy vs medical)—Q1 differential driven by lower proportion requiring pharmacy Pharmacy growth timing expected to align with medical by year‑end Normalizing
Regulatory/policy—Executive Order on IVF access/affordability noted; awaiting recommendations No new updates referencedWatching

Management Commentary

  • CEO: “As the third quarter begins, member activity continues to remain healthy and more consistent with historical seasonal patterns… we’re pleased to raise our guidance for the year” .
  • CFO: “Total revenue… exceeded the top end of our guidance by nearly $8 million driven by the improved member engagement” and “Adjusted EBITDA grew 6%… margin declined modestly… as expected from our investments” .
  • CEO on selling season: “Early commitments are comparable… lives for those early wins are trailing last year due to differences in client demographics… we expect those demographics to normalize” .
  • Strategic initiatives: Benefit Bump integration complete; pelvic floor therapy added; ŌURA partnership; Amazon Health Benefits Connector collaboration to improve benefit discovery/enrollment .

Q&A Highlights

  • Selling season pacing and demographics: Early commitments comparable in count and expected revenue; current mix skews to higher‑utilization industries, explaining revenue per client with fewer lives; pipeline additions accelerated in June/July, now comparable to prior year .
  • Pharmacy vs medical growth: First‑half pharmacy growth lagged due to timing; expected to be close to medical growth for full year .
  • ART cycles/consumption: Q2 cycles per unique at 0.52 at high end of expectations; engagement returning to pre‑2024 seasonal norms .
  • Layoffs impact: No notable change in utilization at large tech clients; engagement normal .
  • New product adoption: Active discussions across new adjacencies (global, leave navigation, menopause); contributions expected to be relatively equal over time rather than concentrated in one module .

Estimates Context

  • Q2 2025 beat: Revenue $332.9M vs $320.1M consensus; Adjusted EPS $0.48 vs $0.428 consensus* .
  • Prior quarters: Q1 2025 revenue $324.0M vs $307.8M consensus; Adjusted EPS $0.48 vs $0.446 consensus* . Q4 2024 revenue $298.4M vs $277.3M consensus; Adjusted EPS $0.42 vs $0.37 consensus* .
    Values retrieved from S&P Global.*

Where estimates may need to adjust:

  • FY25 guidance raised across revenue, Adjusted EBITDA, Adjusted EPS; consensus trajectories likely to move higher, and Q3 revenue guide ($290–$305M) implies underlying core growth of 14–20% ex the prior client, supporting higher top‑line and margin expectations into 2H despite investment ramp .

Key Takeaways for Investors

  • Quarter beat and guide raise are primary catalysts; underlying demand remains healthy and seasonally normal—supports positive estimate revisions near‑term .
  • Mix normalizing and record ART cycles indicate durable utilization trends; pharmacy timing should converge with medical by year‑end .
  • Near‑term margin headwinds from deliberate investments (platform, acquisitions) are modest; expect gross margin expansion vs 2024 but less pronounced in 2H .
  • Distribution and engagement enhancers (Amazon connector, ŌURA data, pelvic floor therapy) broaden funnel and cross‑sell opportunity across women’s health continuum .
  • Transition client contribution ended after Q2; comps will be cleaner, highlighting true core growth (Q3 guide implies 14–20% ex the client) .
  • Liquidity optionality via undrawn $200M revolver with no planned use enhances flexibility for tuck‑ins, channel expansion, or opportunistic repurchases .
  • Watch selling season execution through early fall; management expects demographics/lives to normalize as closures peak, reinforcing FY revenue trajectory .