Executive Summary

Q3 2024 revenue was $286.6M and diluted EPS $0.11; adjusted EPS $0.40 and adjusted EBITDA $46.5M. Revenue grew 2.0% YoY but came in below prior Q3 guidance ($290–$303M), while adjusted EPS was above guidance ($0.35–$0.38). Management revised full-year 2024 guidance lower, citing slower progression and fewer ART cycles per utilizer than historical patterns .
Utilization rates remained healthy (female 0.47%), but members consumed fewer stimulation-related ART cycles and took longer to progress through treatment; Q3 gross margin compressed to 20.7% on higher care management costs and mix dynamics .
Sales season produced 80+ new clients and ~1.1M new covered lives, and Progyny added a leading national and a regional health plan as preferred partners; 1.5M covered lives have adopted maternity/menopause programs for 2025 .
Cash flow remained strong ($44.5M from operations in Q3); the company repurchased 2.8M shares in Q3 and ~12.4M shares year-to-date, completing authorizations. FY24 revenue is now $1.135–$1.150B, adjusted EBITDA $189–$194M, adjusted EPS $1.54–$1.57 .

What Went Well and What Went Wrong

What Went Well

Expanded distribution via preferred partnerships with a leading national and a regional health plan; strong employer adoption for new women’s health services, with clients representing ~1.5M lives adopting maternity and/or menopause programs in 2025 .
Sales season momentum: 80+ new clients and ~1.1M new covered lives; retention ~99% with ~30% of clients expanding programs for 2025 (more smart cycles, Rx, and/or new programs), underscoring competitive positioning .
Adjusted EPS beat guidance ($0.40 vs $0.35–$0.38) and strong operating cash flow ($44.5M), enabling continued buybacks (2.8M shares in Q3; ~12.4M to date) .

Quote: “We’re extremely pleased with the advancement of our health plan strategy… and the reception for our newest services in maternity and menopause…” — CEO Pete Anevski .

What Went Wrong

Top-line and margin pressure from lower-than-expected ART cycles per utilizer and slower progression through treatment, resulting in revenue below Q3 guidance and a 160 bps YoY gross margin decline to 20.7% .
FY24 guidance cut (revenue, net income, adjusted EBITDA) reflecting ongoing variability in consumption despite steady utilization, and modest net reduction in covered lives at certain clients earlier in the year .
Higher tax expense and care management investments pressured GAAP EPS ($0.11 vs $0.16 LY); adjusted EBITDA margin declined to 16.2% (–160 bps YoY) .

Financial Results

Metric	Q1 2024	Q2 2024	Q3 2024
Revenue ($USD Millions)	$278.1	$304.1	$286.6
YoY Revenue Growth (%)	~8%	8.8%	2.0%
Gross Margin (%)	22.4%	22.5%	20.7%
Net Income ($USD Millions)	$16.9	$16.5	$10.4
Diluted EPS ($)	$0.17	$0.17	$0.11
Adjusted EPS ($)	$0.39	$0.43	$0.40
Adjusted EBITDA ($USD Millions)	$50.3	$54.5	$46.5
Adjusted EBITDA Margin (%)	18.1%	17.9%	16.2%

Segment Breakdown (Revenue)

Segment ($USD Millions)	Q1 2024	Q2 2024	Q3 2024
Fertility Benefit Services	$169.8	$193.6	$178.8
Pharmacy Benefit Services	$108.3	$110.5	$107.9

KPIs

KPI	Q1 2024	Q2 2024	Q3 2024
ART Cycles (count)	~14,800	15,562	14,911
Female Utilization Rate (%)	0.46%	0.47%	0.47%
Average Members (covered lives)	~6,400,000	6,409,000	6,444,000
Clients (≥1,000 lives)	451 (as of 3/31)	463 (as of 6/30)	468 (as of 9/30)

Q3 vs Guidance vs Estimates

Item	Q3 Guidance (Aug 6)	Q3 Actual	SPGI Consensus
Revenue ($USD Millions)	$290–$303	$286.6	Unavailable (SPGI rate limit)*
Diluted EPS ($)	$0.11–$0.14	$0.11	Unavailable (SPGI rate limit)*
Adjusted EPS ($)	$0.35–$0.38	$0.40	Unavailable (SPGI rate limit)*
Adjusted EBITDA ($USD Millions)	$47.5–$51.0	$46.5	Unavailable (SPGI rate limit)*

*Values retrieved from S&P Global could not be fetched at time of execution due to rate limits.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Revenue ($USD Billions)	FY 2024	$1.165–$1.200	$1.135–$1.150	Lowered
Net Income ($USD Millions)	FY 2024	$55.4–$62.4	$49.9–$53.3	Lowered
Adjusted EBITDA ($USD Millions)	FY 2024	$199–$209	$189–$194	Lowered
Adjusted EPS ($)	FY 2024	$1.53–$1.61	$1.54–$1.57	Narrowed range
Revenue ($USD Millions)	Q4 2024	N/A	$266.2–$281.2	New
Net Income ($USD Millions)	Q4 2024	N/A	$6.1–$9.5	New
Adjusted EBITDA ($USD Millions)	Q4 2024	N/A	$37.8–$42.8	New
Adjusted EPS ($)	Q4 2024	N/A	$0.31–$0.35	New
Provision for Income Taxes ($USD Millions)	Q4 2024	N/A	$2.66–$4.26	New
Other Income, net ($USD Millions)	Q4 2024	N/A	$(4.624)	New
Assumed Diluted Shares (Millions)	Q4 2024	N/A	~91	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Utilization vs Consumption	Q1: female utilization dipped vs 2023 peaks; cohort behavior normal; Q2: utilization ~0.47% with lower ART cycles per utilizer vs historical ramp .	Utilization healthy (0.47%); slower progression to treatment and fewer stimulation-related ART cycles per utilizer than long-term patterns .	Variability persists; cautious outlook.
Health plan/channel partnerships	Advancing new partnerships; preferred partner wins (Meritain/Aetna subsidiary); expanding with CVS, Evernorth, Vistica .	Added leading national and regional health plans as preferred partners for 2025; partners also becoming clients .	Expanding distribution.
Sales season and covered lives	Q1: target ≥1.3M lives; pipeline healthy; early commitments pacing ahead . Q2: commitments pacing ahead of prior year; broad industry wins .	~1.1M new lives; 80+ new clients; >530 clients expected in 2025 (~6.7M lives) .	Solid new logos; slight skew to larger deals.
Women’s health programs (maternity/menopause)	Early client interest; upsell pathways broaden beyond fertility .	~1.5M lives adopting programs in 2025; 40% of new clients, ~20% of existing clients adopting .	Strong adoption; limited 2025 revenue expected.
Regulatory/macro (Alabama IVF; elections)	Q1: Alabama decision coincided with March activity dip; recovery seen in Q2; bipartisan support expected .	Management not seeing direct election impact; no faith-based benefit demand observed; red/blue state differences moderated .	Noise abating; monitoring continues.
Margin/cost structure	Q2: gross margin +80 bps YoY; operating efficiencies; Rx growth moderated .	Q3 gross margin –160 bps YoY from care management costs and ART cycle dynamics; moderated hiring for 2025 onboarding .	Near-term pressure; disciplined cost control.
Capital returns	Q1/Q2: buybacks authorized and executed ($100M + $100M); ~6.8M shares repurchased by Q2 .	Q3: 2.8M shares repurchased; ~12.4M total to date, completing authorizations .	Ongoing returns; reduced diluted shares.

Management Commentary

“Members… took longer to progress through their treatment and… consumed fewer treatments overall, resulting in lower-than-expected revenue and profitability this quarter.” — CEO Pete Anevski .
“We’re extremely pleased with the advancement of our health plan strategy… and encouraged with the reception for our newest services in maternity and menopause…” — CEO Pete Anevski .
“Gross margin… decline due to investments in care management services as well as the impact of the unanticipated decline in cycles per utilizer.” — CFO Mark Livingston .
“We believe it’s prudent to assume yet another variance could occur and have contemplated the ranges accordingly.” — CFO Mark Livingston (on guidance philosophy) .

Q&A Highlights

Utilization visibility and drivers: Management tracks scheduled appointments and ART cycles per utilizer; PCAs focus on member support, not timing. The team ruled out coverage reductions and clinic backlogs as causes; consumption variability (e.g., freeze-all, egg freezing pacing) is the driver .
Margin outlook and hiring: Care management staffing for new launches and ART cycle dynamics drove gross margin compression; hiring will be moderated into 2025 given a previously disclosed large client loss .
Competitive landscape and retention: Continued strong win rates vs VC-backed peers and health plans; ~99% retention with only five losses (including one large loss previously disclosed) .
Potential business model adjustments: Management is exploring ways to mitigate utilization variability; does not support dollar-max benefits that lead to suboptimal care decisions .
Guidance philosophy: Incorporates more variability and less reliance on the latest datapoint after lessons in 2024; ranges widened when uncertainty is higher .

Estimates Context

SPGI/Wall Street consensus estimates for Q3 2024 and forward periods were unavailable at time of retrieval due to S&P Global rate limits; therefore, direct comparison to consensus cannot be provided in this report. Values would ordinarily be retrieved from S&P Global.
Implication: Given Q3 revenue missed prior guidance while adjusted EPS exceeded, and FY24 revenue/EBITDA guidance was lowered, consensus revenue and EBITDA likely require downward revisions, while adjusted EPS may be less negatively impacted due to share count reduction and non-GAAP adjustments .

Key Takeaways for Investors

Near-term: Expect continued variability in ART cycles per utilizer and cautious Q4 outlook; focus on margin discipline and cash generation as management moderates hiring and executes within revised ranges .
Sales/Distribution: Health plan partnerships and channel relationships expand go-to-market reach; strong 2025 adoption of maternity/menopause creates strategic optionality even if revenue contribution is initially modest .
Competitive Position: High retention and broad industry wins (80+ clients, ~1.1M lives) underscore leading market position despite a large client loss in 2025 .
Cash and Capital Returns: Robust operating cash flow supports continued shareholder returns; buybacks have reduced diluted shares, aiding adjusted EPS resilience .
Model Watch Items: Track ART cycles per utilizer trend in Q4; monitor gross margin progression and tax expense; watch client lives trajectory and Rx penetration (~94% in 2025) .
Medium-term Thesis: Diversification into broader women’s health, expanding partnerships, and employer demand should sustain growth; consumption variability appears episodic vs structural per management commentary .

Progyny, Inc. (PGNY)·Q3 2024 Earnings Summary