Progyny's Q3 2025: Contradictions Emerge on Win Rates, Cash Pay Affordability, and Sales Forecasting

Date of Call: November 6, 2025

Financials Results

• Revenue: Revenue growth: up 9% as-reported in Q3; up 23% excluding a large former client (no absolute Q3 revenue figure provided)
• Gross Margin: 23% gross margin (reported for the quarter)
• Operating Margin: 17.5% adjusted EBITDA margin (reported for the quarter)

Guidance:

• Q4 revenue expected $292.7M–$307.7M (growth -1.9% to +3.1%; excl. prior large client: +11.5% to +17.2%).
• Q4 adjusted EBITDA $45.3M–$49.3M; net income $12.5M–$15.5M; GAAP EPS $0.14–$0.17; adjusted EPS $0.37–$0.40 (≈91M FD shares).
• Full-year revenue $1.263B–$1.278B (growth 8.2%–9.5%; excl. large client: 17.8%–19.2%).
• FY adjusted EBITDA $216M–$220M; net income $58.5M–$61.5M; FY GAAP EPS $0.65–$0.68; adj EPS $1.79–$1.82 (≈90M FD shares).
• Full-year utilization narrowed to 1.05%–1.06%; ART cycles/unique 0.91–0.92.
• Announced share repurchase program up to $200M.

Business Commentary:

• Revenue and Profitability Growth:
• Progyny reported revenue and profitability that exceeded the high end of their guidance ranges for Q3 2025, with a 9% revenue growth on an as-reported basis.

• The growth was driven by consistent member engagement and healthy utilization rates, along with strategic expansion of their services and client retention.

• Selling Season Success:

• Progyny secured over 80 new logos and approximately 900,000 lives during the latest selling season, despite macroeconomic uncertainties.
• The success was due to the company's strong value proposition and strategic expansion of services that resonated with employers and their members, including new services like pregnancy, postpartum, and menopause support.

• Operational Efficiency and Cash Flow:
• The company generated more than $50 million in operating cash flow in Q3, bringing the total to a record $156 million over the first nine months of 2025.

• This was achieved through disciplined management, strategic investments in member experience and acquisitions, and effective cost control measures.

• Market Expansion and New Product Offerings:

• Progyny plans to introduce a supplemental plan for small and mid-market companies, providing a covered solution tailored to their needs.

• This expansion aligns with the White House's focus on expanding access to fertility care and positions Progyny to address the needs of more than 50 million covered lives in this market segment.

• Investment in Global Services:

• Progyny Global provides multinational employers with a continuum of integrated services, including family building, pregnancy, postpartum, and menopause support.
• This platform enhancement, incorporating acquired capabilities and in-house solutions, aims to deliver comprehensive offerings tailored to local environments and expand Progyny's global market presence.

Sentiment Analysis:

Overall Tone: Positive

• Management: "very strong third quarter with revenue and profitability that exceeded the high end of our guidance ranges"; raised full-year guidance; "generating more than $50 million in operating cash flow this quarter"; Board authorized up to $200 million share repurchase—signals confidence and positive execution.

Q&A:

• Question from Jailendra Singh (Truist Securities, Inc., Research Division): You added ~900,000 covered lives (slightly below 1M goal). How should we think about this in light of prior messaging about lower lives? Did win rates change late in the season and does revenue attach remain higher than prior year?
  Response: Execution was strong; 900k lives are roughly proportionate in revenue to last year's incremental book, the ~100k shortfall reflects a few late decisions and won't be counted this year but sets up next year's pipeline.

• Question from Jailendra Singh (Truist Securities, Inc., Research Division): If cash-pay fertility drug prices fall due to the administration's focus, what is the impact on Progyny Rx and could employers seek pricing concessions?
  Response: Manufacturer patient-assistance programs have long existed; the announcement deepens discounts for uninsured but most won't qualify, and management does not expect it to affect covered-benefit pricing or Progyny Rx economics.

• Question from Brian Tanquilut (Jefferies LLC, Research Division): What were the market discussions this selling season and are layoffs among employer clients affecting utilization going forward?
  Response: No meaningful layoffs observed among clients; selling conversations remain centered on member experience, quality/outcomes and cost control—Progyny's value proposition addresses all three.

• Question from Brian Tanquilut (Jefferies LLC, Research Division): How should we model gross profit margin going forward?
  Response: Management expects to maintain expanded gross profits long-term; Q4 modeled lower partly due to hiring ramp for client launches, with leverage expected as revenue grows.

• Question from Michael Cherny (Leerink Partners LLC, Research Division): How do cash prices compare to the net prices you offer clients?
  Response: Cash prices vary by drug and are generally lower, but patient-assistance and longstanding cash programs mean this hasn't driven changes in coverage pricing to date.

• Question from Michael Cherny (Leerink Partners LLC, Research Division): With 1.2M incremental lives on new products, does this create ongoing upsell opportunities throughout the year?
  Response: Yes — account teams meet quarterly and can sell/expand new products year-round, enabling incremental upsells beyond the main selling season.

• Question from Scott Schoenhaus (KeyBanc Capital Markets Inc., Research Division): How do you predict cohort utilization for new clients — what data do you use?
  Response: Forecasts use plan design, purchased products, industry and client size; aggregating client-level expectations creates a predictable pooled revenue outcome.

• Question from Scott Schoenhaus (KeyBanc Capital Markets Inc., Research Division): Given choppiness in recent years, how will you approach guidance going forward?
  Response: They will continue to factor observed variability into guidance ranges and maintain the same conservative approach used throughout the year.

• Question from Nisala Devanath Weerasuriya (BofA Securities, Research Division): ART cycles per utilizer seem below historical ranges; how did Q3 trend versus expectations and will cycles recover?
  Response: Q4 seasonality (holidays, clinic capacity) explains expected sequential softness; management sees utilization firm versus Q3 and not signaling underlying weakness.

• Question from Nisala Devanath Weerasuriya (BofA Securities, Research Division): Rx revenue growth is trailing medical; was this mix-related again and when should they converge?
  Response: Rx lags due to timing, treatment and program mix, pricing dynamics and instances where company absorbed manufacturer increases; new products are booked in fertility services (not separated), and Rx and medical should converge over the long term.

• Question from David Larsen (BTIG, LLC, Research Division): Is the supplemental product cash-based for middle-market accounts or a covered solution?
  Response: Supplemental plan is a covered, predictable-cost solution for small/mid-market (ASO, minimum premium or fully insured), designed to provide cost predictability, not cash-pay.

• Question from David Larsen (BTIG, LLC, Research Division): You expect fewer new clients but more lives in 2026—how should we think about clients vs lives growth?
  Response: Timing and early/ off-cycle go-lives drive client counts; many new clients have live dates that cause the majority of associated lives and revenue to begin next year.

• Question from Unknown Analyst (Cantor Fitzgerald) (on behalf of Sarah James): Will rolling out supplemental plans require materially more sales/marketing spend in 2026 and will they impact 2027 revenues/EBITDA?
  Response: Go-to-market resources will increase modestly but not meaningfully change S&M profitability; impact to revenue/EBITDA will not be a material near-term profitability shift.

• Question from Unknown Analyst (Cantor Fitzgerald): Any update on the global/international rollout?
  Response: Global offering is gaining traction with nice adds this year; expanded U.S. portfolio is now available internationally and will be sold next year.

Contradiction Point 1

Win Rates and Pipeline Growth

It involves the company's explanation of win rates and pipeline growth, which are critical for understanding its sales performance and future growth expectations.

How should we interpret the 900,000 new covered lives given your prior guidance on declining YoY growth over the past few quarters? Did win rates improve in recent months? - Jailendra Singh(Truist Securities, Inc., Research Division)

2025Q3: The team executed well despite headwinds during the season like a late developing pipeline and high macro health care inflation. The 100,000 shortfall is a relatively small number of clients, representing a small portion of the overall base. There are some deals that may close in November, but they are not expected to impact the overall strong start for the next year's pipeline. - Michael Sturmer(CRO)

Are you seeing more smaller employer client wins with multiple Progyny services, or is it a change in win rates for large employer clients? - Jailendra P. Singh(Truist Securities, Inc., Research Division)

2025Q2: It is not about the client size win rates. The sales year started with a slower pipeline in terms of lives, which caught up in June and July. Both smaller and larger clients are closing deals. The expectation is for the year to catch up with the pipeline from last year. - Peter Anevski(CEO)

Contradiction Point 2

The Impact of Cash Pay Market Affordability

It involves the company's stance on the affordability of the cash pay market for fertility medications and how this affects its Progyny Rx business, which is crucial for understanding the company's pricing strategy and potential financial implications.

Could efforts to improve fertility medication affordability in the cash pay market impact Progyny Rx's pricing or lead to employer price concessions? - Jailendra Singh(Truist Securities, Inc., Research Division)

2025Q3: The announcement is about deepening the discount for cash assistance programs, which have existed for years. These programs are separate from covered benefits and have little impact on manufacturers' pricing for covered benefits. Employers are aware of patient assistance programs and understand their separation from covered benefits. - Peter Anevski(CEO)

Did Progyny Rx's pharmacy growth in the first half lag at roughly half the rate of fertility benefits, and will this trend persist in the second half? - Jailendra P. Singh(Truist Securities, Inc., Research Division)

2025Q2: The difference in growth is more due to timing, not a trend. Both Progyny Rx and fertility benefits are expected to be close and comparable in growth by the end of the year. - Peter Anevski(CEO)

Contradiction Point 3

Sales Goals and Forecasting

It involves differing statements about sales goals and expectations for new life additions, which are crucial for business planning and investor expectations.

How should we interpret the 900,000 new covered lives given the previous year-over-year decline in lives mentioned in recent calls? Did win rates improve over the past two months? - Jailendra Singh(Truist Securities, Inc., Research Division)

2025Q3: Our sales goal is the same as it is every year. We're trying to bring on as much new business as we can, and our target is to add at least 1 million new lives each year. - Michael Sturmer(President)

Are there signs of employers delaying the RFP process or extending decision timelines for the 2026 selling season? Is this year's sales goal aligned with your historical target of adding 1.1 million new lives (excluding Amazon)? - Jailendra Singh(Truist Securities)

2025Q1: Our sales goal is the same as it is every year. We're trying to bring on as much new business as we can, and our target is to add at least 1 million new lives each year. - Michael Sturmer(President)

Contradiction Point 4

Client Acquisition and Win Rates

It involves differing explanations of client acquisition and win rates, which are critical to understanding the company's growth strategies and sales performance.

Can you explain the 900,000 new covered lives given your previous comments on declining lives year-over-year? Did win rates increase in recent months? - Jailendra Singh(Truist Securities, Inc., Research Division)

2025Q3: The team executed well despite headwinds during the season like a late developing pipeline and high macro health care inflation. The 100,000 shortfall is a relatively small number of clients, representing a small portion of the overall base. - Michael Sturmer(President)

Did the large client's departure affect the full-year guidance? - John Pinney(Canaccord Genuity)

2024Q4: The large client's departure had a dilutive effect on utilization rate, but it doesn't mean underlying clients aren't performing well. It's a trade-off from a mature client being replaced by new clients. - Mark Livingston(CFO)

Contradiction Point 5

Fertility Medications Affordability and Pricing

It involves different perspectives on the affordability initiatives for cash pay market and its impact on pricing for covered benefits, which could influence employer decisions and Progyny's business strategy.

How will your focus on affordability in the cash-pay fertility market impact Progyny Rx? Will this lead employers to seek pricing concessions? - Jailendra Singh(Truist Securities, Inc., Research Division)

2025Q3: The announcement is about deepening the discount for cash assistance programs, which have existed for years. These programs are separate from covered benefits and have little impact on manufacturers' pricing for covered benefits. Employers are aware of patient assistance programs and understand their separation from covered benefits. - Peter Anevski(CEO)

How do branded versus generic drug price inflation impacts factor into the quarter and annual expectations? - Unidentified Analyst (Bank of America)

2025Q1: The pharmacy benefit is driven by a larger number of lives under management and the activity within those members. - Pete Anevski(CEO)