Awesome. Good afternoon, and welcome to the 2025 Jefferies London Global Healthcare Conference. I'm Brian Tanquilut, Healthcare Services Analyst, U.S.-based here at Jefferies. With us this afternoon is Progyny, the number one provider or manager of fertility benefits and women's health services benefits in the U.S. Mark Livingston, the company's CFO is with us today. Mark, thank you so much for being here.
Thank you for having us. Happy to be here.
I'll get the ball rolling, Mark. Like, maybe we'll just throw it out there. What does Progyny do for folks here in the audience that are not very familiar with what Progyny is?
Sure. We're the leading provider of fertility benefits and women's health solutions in the U.S. We started about 10 years ago with two clients, two founding clients, a handful of clients and a couple of hundred thousand lives. What we do is we help manage the fertility process from beginning to end. We have industry-leading concierge-level support for our members.
We have patient care advocates that work with them and support them through their journey. We have a network of the best fertility doctors in the U.S. They represent about 80% of all the cycles that are done in the U.S. We have great coverage. We manage them very closely to ensure that they're adhering to best practice. What that leads to is the best clinical outcomes out there. All of the key indicators around a successful fertility journey, we track, monitor, and report. All of that leads to a great member experience and savings for our clients.
Maybe, Mark, just to take a step back, right? W ho are your clients, and someone who wants fertility benefits, how does that all work for the employees and the employers? How do you market and how do you sell your services?
Sure. Our addressable market today is 106 million lives in the U.S. We currently have been targeting employers that are 1,000 employees and greater. That puts them in the self-insured marketplace. We are a carve-out fertility benefit. We handle everything in and around fertility, including prescription drug management. We are also coordinated within the health plan itself. We share out-of-pocket maximums, deductibles, et c. We make it very cost-effective for the member in the structure that we have put together.
No, that's really helpful. Mark, since you mentioned your addressable market, how should investors be thinking about the TAM, number one and then the penetration of fertility benefits in the U.S., and the remaining runway that you see for folks like Progyny?
As we start 2026, within 2026, we'll have about 7.6 million lives, 600 customers, out of that 106 million TAM that I mentioned a minute ago. Pretty early penetration, high single digits in the fertility marketplace. There's a lot of conflicting data out there about how many employers actually offer coverage. It's been our experience over the last several years, that about half of our new clients have had some type of an offering prior to joining us and about half that do not have anything. Even the ones that have some kind of coverage, it tends to be more, you know, stipends or dollar maximums that restrict the amount of access that a particular member has to move forward with their treatment. They typically end up out of pocket as they progress through their journey.
When I think about the growth algorithm for the business, right, I mean, you've added just in this last selling season, 900,000 lives. Maybe if we can walk through how you're thinking about the growth outlook for the business going forward in terms of lives and how do you drive that share growth?
You know, again, being the leader in the space, you know, we have relationships with all of the major consulting firms, the Willis Towers Watsons, the Mercers of the universe, who are integral into some of the decision-making at our clients. We know that we're in the decisions that are being made out there. It's a matter of removing roadblocks. We've done relationships over the last several years with some of the PBMs, for example, that allow an easier contracting and papering process for our clients. I think from a growth algorithm standpoint, we've introduced some new products over the last few years. Some of them are, you know, again adjacent to and within the women's health journey, menopause, for example, pregnancy, postpartum. We even added a [leave-in] benefit navigation product this year.
We're excited because after this selling season, about 2.7 million lives out of the 7.6, are about 1/3 of the overall base. We'll have access to some of these expanded products, which we look to grow over the next few years. We did an Investor Day in the middle of last summer, sort of laid out this longer-term plan of how we expect to grow the company. These products are an important piece of the overall strategy. Employers are coming to us, looking for us to expand what we do. They love what we do in the fertility space, and they're looking for us to do more. This is where we've begun to enter.
I would say the other exciting thing, which we just talked about the other day, is our entry into the small and middle-market employer sector. That's going to add an additional 50 million or about 50% increase in our TAM. We've been working for the last couple of years on that product, and are excited to be really in market here as we begin 2026. Hope to be here next year talking about how much that's contributed on top of the 900,000 that we did this year.
No, that's great. Maybe just to the point of the 900,000, I think in the past, you've said the goal is to add at least roughly 1 million lives a year, give or take, right? 900 was a good number considering the macro environment that we're in today. How do you view macro as it relates to, number one, your ability to deliver that million-life goal? S econd is the utilization at the patient level, given the macroeconomic pressures on the consumer.
Yeah, it is both sides of the coin that drive growth. One is the employer demand to provide the access to their employees, our members. The other is the members' decisions themselves to move forward. From the employer side, look, we've been really successful since we went public in 2019. You know, there's been some interesting things that have happened across the world. COVID during 2020, six months after we launched, there was high inflation in the U.S. for a couple of years there, looming recession that didn't quite show up the way that we thought. All of those things were weighing on employers' minds, but nevertheless, we're 5x the size that we were back then. Fertility is always one of the top two or three things that are on the request list for millennials when they're looking for benefits in a company.
There is a significant percentage that indicate they would leave their company to join one that has fertility benefits, so b ig driver there. From the member moving forward with their family standpoint, we get this question a lot from investors. People are apprehensive in this current economic environment. Do they really want to build their family? Is now the right time to have a baby? W hich I think is maybe the right way of thinking of it when you do not know that you have a fertility challenge. When you insert that incremental challenge, they understand, their doctors help them understand that time is of the essence. Repeatedly throughout our history, we have seen eras when, you know, you would think that people might be stepping away or restricting their moving forward with building their family, but t hat just is not the case.
I'll give one quick example of it. It's probably the best one, is during COVID, right after we all sort of huddled in our homes and the clinics had mostly closed, they did help see people through the balance of their journey. The normal level of use of the benefit was at about 15%, almost instantly of normal. Once those clinics began to open six or eight weeks later, PPE was more available. Remember PPE? We were all conserving that. You know, within literally a couple of weeks after those clinics opened, we were back at a 90% rate of normal utilization at that point. I just think that's such a great example that speaks to that sort of drive and demand. Like, if I'm going to have my baby, now is the time and s o many other considerations I think are just put off to the side.
No, that makes a lot of sense. Mark, maybe since you mentioned the term utilization, you know, putting the CFO hat on today, right? As we think about the metrics that you look at, right? I mean, the utilization within the population that you cover, how has that trended?
Utilization is a topic that , you know, we talk about it with investors all the time. There is a lot of focus on it. In our view, the quarterly utilization has been pretty tight over a long period of time. We have put out presentations at various conferences, sort of demonstrating how that stays within a very tight band over long periods of time. Now, quarter to quarter, it can vary a little bit just based on, you know, pathways of humans making decisions slightly differently. It has been pretty tight. In the aggregate, on a yearly basis, it has been within a really tight band. Last year, and I like to call utilization as, somebody came in our front door and started to do something.
Consumption, which we've identified a metric around the number of ART cycles per utilizer who's in the door doing something, that's a better measure of the pace at which they're progressing through their journeys. Last year, in the third quarter, it was a little bit less. The time frames were getting a little bit more extended. There was some uncertainty, I gather, potentially around the presidential election, but we don't really know for sure. You know, that's normalized through the end of last year, and now has been pretty consistent through the balance of this year, which has allowed us to, you know, beat and actually raise our guidance through the year as those variability elements, which we do factor into our guidance, you know, just didn't come to pass.
Mark, when we were sitting outside and we were talking about the growth rate, and how you guys have been successful in executing, but obviously, the stock has not reflected that. As we think about, you know, just on the idea of execution, when we think about the cross-sell, maybe if you can talk to us about what that looks like and how that's translating to whether it's upside to numbers or in the KPIs that you track, how is the cross-sell into these new service lines translating into the P&L?
Look, a big part of execution frankly is happening right now. Unlike other businesses that are adding people and services throughout the year and new clients, a big part of our step-up happens on literally January 1st. Our phones, well, they do get flooded in the fall as people go through open enrollment, become aware that they have the benefit, and have a lot of questions. Really, it hits in earnest on January 2nd. There are people who are beginning, they're starting, they have their new plan year, and they're ready to get started and moving forward. For us, it's about preparing for that. You'll see actually in our Q4 P&L, we do start to add some of those teams late in the year to prepare for it all.
You know, as we work throughout the year, we're monitoring all of our clients very, very closely. We meet with every client on a quarterly basis, go through , you know, the extensive list of metrics that we're tracking for them. Same thing with our providers. We monitor them very closely with a clinic scorecard that we've developed to ensure that they're following best practices. Look, that's really the foundation of what we do. The clinical outcomes provides the foundation of value that we give our clients. We're hyper-focused on making sure that those values are being delivered, and that our members are delighted with their experience, which, you know, we evidence with our NPS score.
Maybe just to that point, Mark, when I look at your retention rate, I mean, I think this past selling season was probably one of your highest. I know a lot of folks were concerned heading into the selling season, or you're reporting the selling season that there would be some turnover because of what's happening in the tech industry, or other industries with layoffs and whatnot. If you can walk us through, you know, the experience for you guys with the selling season and how you approached it, and the conclusion as you exit the selling season.
Yeah. I mean, I think focusing in on retaining clients, our average client term is three years a nd so we've been in business for 10 years. B y definition, we've had multiple renewals with, you know, quite a number of our clients. The vast majority frankly, have been renewed at least once or twice. Y ou know, I think you earn that business. You know, again, our model with our customers is, we provide them with a targeted outcomes analysis before they even come on board. We give them a sense of what it's going to cost and what they can expect from those clinical outcomes. What should they see? W e follow that up quarter after quarter. I think that's where the business is earned because that trust is built, and that credibility with the information that we're sharing.
You know, as we come around to that three-year renewal process, it's more of an affirmation of what's been happening and what we take forward. I have to say, like save for, there was a lot of focus certainly last year. We had one significant client, large client that chose not to renew with us. Candidly, they were changing everything about their health plan structure.
It wasn't necessarily a laser shot at fertility as much as it was, you know, a broader reduction. It certainly did introduce an element of concern, I think in the investing community. Save for that one decision, you know, our renewal rate has been near 100% throughout our entire existence. In a lot of ways, it's business as usual, which is staying focused on the client and delivering. You know, happy to say that, you know, our experience this year was once again the same.
No, that's awesome. Maybe shifting gears a little bit. Obviously, you know, when President Trump first came on board, IVF was front and center as a topic. R ecently with Trump Rx, IVF drugs became a topic. Let's hit on the drugs first. I mean, how are you thinking about what that does to your business or IVF in general?
Yeah. If I step back just quickly for a second, just the evolution of this, just reminding people or educating people if they have not been as close to the story. If you wind the clock back 19, 20 months, we were talking about Supreme Court decisions in Alabama that were essentially preventing IVF within that state. The legislature there within a couple of weeks, passed laws to sort of override that decision. I think it was ultimately, looking back, a pivotal moment because, you know, sides had to be picked on whether you were for or against IVF. You know, happily, both parties in the U.S. realized that the vast majority of Americans are supportive of IVF. They both chose that side. I think candidly, it is probably the only thing that both parties agreed on during the presidential election.
The president did make promises around beginning to drive greater access and affordability to IVF. That led to an executive order earlier this year, which they finally announced the outcome of here just a few weeks ago. What they announced, I think is important to understand the detail of. On the drug side, for example , one, you have to not have coverage in order to qualify for these, you know, cash prices. You also are required to be beneath a certain income level to qualify. That is effectively a patient assistance program that has been in place for quite a long time now. They are expanding it, highlighting it, certainly looking to amplify it. It is not really new. It is something that has been out there for quite a while. The covered business, we do not think is impacted by that.
I think importantly, and some investors have asked us, why doesn't a company just drop their coverage for these drugs? You know, perhaps they'll give them an incremental stipend or something. Again, you're putting your employees in a position where, one, they have to be below a certain income level to qualify. Certainly, there's a whole lot of employees that would not. Secondly, any kind of stipend or reimbursement would effectively be coverage, which would then disallow them from being able to participate in the program. Look, we'll see. Like many things, some of the details are still getting, you know, flushed out. Our read on it and those that we work closely with have sort of set that aside.
I have to say, the other part of it was probably more exciting, where they talked about again, amplifying something that was already possible, which is to create supplemental fertility-focused plans. Although there was nothing preventing that per se, they took some administrative hurdles out of the way. It's actually something that we've been working on for quite a while. This is our entry into the middle and small market, which we talked about. It's quite a long road.
There's a lot of regulatory hurdles, a lot of licensing hurdles, getting the structure in place, the channels to sell it into. That was what we announced on our call, is that we're ready to roll on that and happy that the administration has sort of focused that in on, as the solution for smaller companies who are looking to provide fertility access to their employees. O bviously, we're supportive of their position on it.
Mark, would you say that all this spotlight on IVF, whether it's through the recent announcement of the drugs, I mean, eventually will be a positive for the industry? I mean, is that a good view to take?
I think so. I think to the extent that it expands access to more people, certainly. As it relates to people who already have access to our program, look, we believe that the way our program is designed that, you know, to the extent that somebody is aware that they need this type of assistance, they're getting it from us. W e've gotten that question from a number of people as well. Like, will this expand the existing business? It's a little hard to sort of put my foot on the gas pedal there.
I think to the extent that it does widen the number of people who have access and can enter into it, yeah, it's great. In Israel and Denmark, the percentage of babies born out of the overall population under IVF is about 10%. Here in the States, it's about 2%. It really just has to do with access to and affordability of the benefit itself. I think there's a lot of room to grow here in the U.S. Anything that we can do, and certainly the administration can do to help enable that will be good for everyone.
Sounds good. Maybe as I think about capital deployment next, I mean, you guys have done a good job beating, raising, generating free cash flow. How should we be thinking about what your plans are for the cash you're generating?
Yeah. A gain, it's something that we tried to be really crystal with at our Investor Day, our priorities, and they haven't changed. We're focused on, you know, expanding the platform that we have today, investing in that, which is already in our run rate, if you will. Expanding our go-to-market resources, including for some of these newer products that we've launched, to ensure their success, again, already in our run rate. We've done a little bit of M&A over the last year or two. We'd love to find companies where the valuation and what they work on can either help us expand, or accelerate areas that we're in. So far, you know, relatively smaller acquisitions, but we always have our eye out for that. J ust as a quick aside, I mean, I've done countless acquisitions over the years. Pete, our CEO, has as well.
Like for us, you know, that pathway, that line of sight to profitability and accretion is important. We both have experience and know what it's like to not just buy something, but integrate it and make it successful. Our eyes are pretty sharp and clear on that, but certainly still part of our priority set. Share repurchases, we've done a number of them last year. We announced a new program here a couple of weeks ago. We view that as a way of returning, you know, capital to our shareholders, but still giving us plenty of flexibility to go after those first three priorities as well. We had $345 million in cash and cash equivalents. We have a $200 million line of credit that's available to us at any time. We think there's ample capital available to us even after the share program.
We've got three minutes left. I'll ask the audience if there's anyone who wants to ask a question here. We've got a few more questions, but since there's no one, I've got one more.
Yeah .
Yeah. Since you just talked about that, the capital deployment strategy and you know, some of these new service lines that you've launched, there's a lot of focus right now, whether it's in private equity or among payers and employers on women's health as a whole, whether it's post-menopausal care and a lot of the other things. I'm just curious how you're thinking about the ramp in that business. I mean, obviously, the core still is fertility for you guys today, but how are you thinking about the expansion and the ramp for all the other new service lines?
Yeah. Again, so it's interesting. It's a little bit like what we were talking about with fertility. First, there's the access that's offered through the employer, and then there's the member engagement part. You know, access again has been great for us. Virtually 1/3 of our members have access to one or more of the additional programs that we have. I'll use menopause as an example. The difference here is that, in fertility, if you have an infertility challenge, you're going to need help and assistance, and you're going to come to us effectively in order to make that happen. Menopause, you can just suffer, right? You don't necessarily have to address it with care. I think member awareness, engagement, etc , is something that we'll need to build over time. Whereas on the fertility side, we launch a client, utilization starts.
Just to flip .
I just said it on January 2nd, p eople are calling, it switches, and it builds over a year or two. In this case, it's going to take a little bit longer. Again, in the Investor Day, you know, presentation we did, we talked about that a bit. We still are expecting all of these incremental products to contribute between 8% and 10% of our revenue in 2028. Obviously, it's going to take a little bit to get that ramped up. It's already beginning and contributing a little bit, not enough to make a meaningful, you know, change in the profile. We're not breaking it out yet.
We'll likely do that here in the future. Yeah, I think, you know, cooperation with our employer customers and driving that engagement is what's going to be key to that. It's great that there's so much awareness, especially in and around menopause these days, even with the black box warning coming off the HRT protocols, which is another thing, obviously we can connect in with our pharmacy offering. Yeah, I think, you know, really great promise in and around those areas.
Mark, we've got 52 seconds left. W hat's your parting message for the audience as they think through the Progyny investment thesis?
Look, I think I'm excited about the reaction to our most recent earnings. I think we've had an overhang of questions around utilization variability. You asked it before, is this going to impact the selling season, retention, you know, where is this company going? Is it going to be stable or is it going to be impacted? I think the answers to all those questions were resounding, you know, yeses across the November call. I think you're seeing a reaction where, you know, investors are bought back into, you know, the direction that we're going. We're pleased to do that. We'll continue to keep driving and executing that way.
That's awesome. That's exciting. Thank you, Mark. Thank you so much to everyone.
Thank you.