Reports Record First Quarter Revenue of
Issues Revenue Guidance of
Continues to Demonstrate Leverage in Operating Model Through Increased Profitability
“Progyny had a solid first quarter, with record revenue reflecting strong utilization as well as the continued expansion of our client base and covered lives,” said
“In the first quarter, our profitability and margins continued to expand, reflecting both the operational efficiencies we have realized as we continue to scale the business, as well as favorable comparisons to the prior year period, which reflected a modest impact from COVID-19 at that time,” said
First Quarter Highlights:
(unaudited; in thousands, except per share amounts) | 1Q 2021 | 1Q 2020 | ||||
Revenue | ||||||
Gross Profit | ||||||
Gross Margin | 23.7% | 20.5% | ||||
Net Income | ||||||
Net Income per Diluted Share1 | ||||||
Adjusted EBITDA2 | ||||||
Adjusted EBITDA Margin2 | 14.1% | 8.3% |
- Net income per diluted share reflects weighted-average shares outstanding as adjusted for potential dilutive securities, including options and warrants to purchase common stock, as well as restricted stock units.
- Adjusted EBITDA and Adjusted EBITDA margin are financial measures that are not required by, or presented in accordance with,
U.S. GAAP. Please see Annex A of this release for a reconciliation of Adjusted EBITDA to net income, the most directly comparable financial measure stated in accordance with GAAP for each of the periods presented. We calculate Adjusted EBITDA margin as Adjusted EBITDA divided by revenue.
Financial Highlights
1st Quarter
Revenue was
- Fertility benefit services revenue was
$88.9 million , a 50% increase from the$59.4 million reported in the first quarter of 2020. - Pharmacy benefit services revenue was
$33.3 million , a 54% increase as compared to the$21.6 million reported in the first quarter of 2020.
Gross profit was
Net income was
Adjusted EBITDA was
Readers are encouraged to review Annex A for a reconciliation of Adjusted EBITDA to net income and the calculation of net income and net income per diluted share.
Cash Flow
Net cash provided by operating activities for the first quarter of 2021 was
Balance Sheet and Financial Position
As of
Key Metrics
The company had 179 clients as of
Three Months Ended | ||||
2021 | 2020 | |||
ART Cycles* | 6,558 | 4,443 | ||
Utilization – All Members** | 0.54% | 0.46% | ||
Utilization – Female Only** | 0.47% | 0.41% | ||
Average Members | 2,657,000 | 2,052,000 |
* 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.
** 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 purposes of calculating utilization rates in any given period, the results reflect the number of unique members utilizing the benefit for that period. Individual periods cannot be combined as member treatments may span multiple periods.
Financial Outlook
“Although we are in the earliest stages of our selling season, companies appear more able to evaluate new benefits than they were at this time last year, and we are pleased with the sales and pipeline activity that we have seen thus far,” said
“Utilization continues to be consistent with the expectations we set last quarter, reflecting the essential nature of fertility treatments and its time sensitivity for many patients. Given our strong start to the year, as well as the favorable economic terms with our partners, primarily in pharmacy, we are comfortable with raising our earnings guidance for 2021.”
The company is providing the following financial guidance for both the year ended
- Full Year 2021 Outlook:
- Revenue is affirmed to be
$520.0 million to$540.0 million , reflecting growth of 51% to 57% - Net income is projected to be
$34.3 million to$42.2 million , or$0.33 to$0.41 per diluted share, on the basis of approximately 103 million assumed weighted-average fully diluted-shares outstanding - Adjusted EBITDA1 is projected to be
$70.0 million to$75.0 million
- Revenue is affirmed to be
- Second Quarter of 2021 Outlook:
- Revenue is projected to be
$126.0 million to$131.0 million , reflecting growth of 95% to 103% - Net income is projected to be
$6.5 million to$8.8 million , or$0.06 to$0.09 per diluted share, on the basis of approximately 101 million assumed weighted-average fully diluted-shares outstanding - Adjusted EBITDA1 is projected to be
$17.5 million to$19.0 million
- Revenue is projected to be
- Adjusted EBITDA is a financial measure that is not required by, or presented in accordance with,
U.S. GAAP. Please see Annex A of this release for a reconciliation of forward-looking Adjusted EBITDA to forward-looking net income, the most directly comparable financial measure stated in accordance with GAAP for the period presented.
Conference Call Information
About
Our benefits solution empowers patients with education and guidance from a dedicated
Headquartered in
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
This press release includes forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to management. 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, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statements regarding our positioning to successfully manage the ongoing impact of COVID-19 and the associated economic uncertainty on our business, trends regarding diversity, equity and inclusion initiatives and our ability to benefit from such trends, the timing of client decisions, our financial outlook for the second quarter and full year 2021, our ability to retain existing clients and acquire new clients, and our business strategy, plans, goals and expectations concerning our market position, future operations, and other financial and operating information, including our topline growth and margin expansion. The words “may,” “believes,” “intends,” “seeks,” “anticipates,” “plans,” “estimates,” “expects,” “should,” “assumes,” “continues,” “could,” “will,” “future,” “project,” and the negative of these or similar terms and phrases are intended to identify forward-looking statements.
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. These risks include, without limitation, risks related to the ongoing impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, material delays and cancellations of fertility procedures and other impacts to the business; failure to meet our publicly announced guidance or other expectations about our business; competition in the market in which we operate; our history of operating losses and ability to sustain profitability in the future; our limited operating history and the difficulty in predicting our future results of operations; our ability to attract and retain clients and increase the adoption of services within our client base; the loss of any of our largest client accounts; changes in the technology industry; changes in the health insurance market; negative publicity in the health benefits industry; lags, failures or security breaches in our computer systems or those of our vendors; a significant change in the utilization of our solutions; our ability to offer high-quality support; positive references from our existing clients; our ability to develop and expand our marketing and sales capabilities; the rate of growth of our future revenues; the accuracy of the estimates and assumptions we use to determine the size of target markets; our ability to successfully manage our growth; unfavorable conditions in our industry or
Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this press release. Our actual future results could differ materially from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons.
Non-GAAP Financial Measures
In addition to disclosing financial measures prepared in accordance with
Adjusted EBITDA and Adjusted EBITDA margin are supplemental financial measures that are not required by, or presented in accordance with, GAAP. We believe that Adjusted EBITDA and Adjusted EBITDA margin, when taken together with our 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 and Adjusted EBITDA margin are helpful to our investors as they are measures 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 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 expenses, including other income and interest (income) expense, net; (5) it does not reflect tax payments that may represent a reduction in cash available to us; and (6) it does not include legal fees associated with a vendor arbitration. 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 from continuing operations and other GAAP results.
We calculate Adjusted EBITDA as net income, adjusted to exclude depreciation and amortization; stock-based compensation expense; other income; interest (income) expense, net; provision for income taxes; and legal fees associated with a vendor arbitration. We calculate Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. Please see Annex A: “Reconciliation of GAAP to Non-GAAP Financial Measures” elsewhere in this press release.
For Further Information, Please Contact:
Investors:
investors@progyny.com
Media:
media@progyny.com
Balance Sheets
(Unaudited)
(in thousands, except share and per share amounts)
2021 | 2020 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 29,820 | $ | 70,305 | ||||
77,095 | 38,994 | |||||||
Accounts receivable, net of | 116,666 | 75,664 | ||||||
Prepaid expenses and other current assets | 4,218 | 5,259 | ||||||
Total current assets | 227,799 | 190,222 | ||||||
Property and equipment, net | 3,583 | 3,400 | ||||||
Operating lease right-of-use assets | 8,456 | 8,668 | ||||||
11,880 | 11,880 | |||||||
Intangible assets, net | 973 | 1,213 | ||||||
Deferred tax assets | 41,341 | 37,971 | ||||||
Other noncurrent assets | 556 | 573 | ||||||
Total assets | $ | 294,588 | $ | 253,927 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 57,306 | $ | 43,514 | ||||
Accrued expenses and other current liabilities | 43,692 | 34,272 | ||||||
Total current liabilities | 100,998 | 77,786 | ||||||
Operating lease noncurrent liabilities | 8,096 | 8,318 | ||||||
Other noncurrent liabilities | 876 | 876 | ||||||
Total liabilities | 109,970 | 86,980 | ||||||
Commitments and Contingencies | ||||||||
STOCKHOLDERS' EQUITY | ||||||||
Common stock, | 9 | 9 | ||||||
Additional paid-in capital | 238,695 | 236,139 | ||||||
(1,009 | ) | (1,009 | ) | |||||
Accumulated deficit | (53,027 | ) | (68,193 | ) | ||||
Accumulated Other Comprehensive Income | (50 | ) | 1 | |||||
Total stockholders’ equity | 184,618 | 166,947 | ||||||
Total liabilities and stockholders’ equity | $ | 294,588 | $ | 253,927 | ||||
Statements of Operations
(Unaudited)
(in thousands, except share and per share amounts)
Three Months Ended | |||||||
2021 | 2020 | ||||||
Revenue | $ | 122,133 | $ | 81,024 | |||
Cost of services | 93,226 | 64,422 | |||||
Gross profit | 28,907 | 16,602 | |||||
Operating expenses: | |||||||
Sales and marketing | 4,014 | 3,267 | |||||
General and administrative | 13,086 | 9,904 | |||||
Total operating expenses | 17,100 | 13,171 | |||||
Income from operations | 11,807 | 3,431 | |||||
Other income (expense): | |||||||
Other income | 7 | 164 | |||||
Interest income (expense), net | (18 | ) | 150 | ||||
Total other income (expense), net | (11 | ) | 314 | ||||
Income before income taxes | 11,796 | 3,745 | |||||
Benefit (provision) for income taxes | 3,370 | (116 | ) | ||||
Net income | $ | 15,166 | $ | 3,629 | |||
Net income per share: | |||||||
Basic | $ | 0.17 | $ | 0.04 | |||
Diluted | $ | 0.15 | $ | 0.04 | |||
Weighted-average shares used in computing net income per share: | |||||||
Basic | 87,404,287 | 84,537,538 | |||||
Diluted | 100,106,497 | 99,665,158 |
Statements of Cash Flows
(Unaudited)
(in thousands)
Three Months Ended | ||||||||
2021 | 2020 | |||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 15,166 | $ | 3,629 | ||||
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||||||||
Deferred tax expense (benefit) | (3,370 | ) | 116 | |||||
Non-cash interest expense | 19 | 19 | ||||||
Depreciation and amortization | 422 | 520 | ||||||
Stock-based compensation expense | 5,034 | 2,049 | ||||||
Bad debt expense | 2,518 | 1,685 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | (43,520 | ) | (20,054 | ) | ||||
Prepaid expenses and current other assets | 1,046 | 561 | ||||||
Accounts payable | 13,797 | 20,359 | ||||||
Accrued expenses and other current liabilities | 9,413 | 3,256 | ||||||
Other noncurrent assets and liabilities | 7 | — | ||||||
Net cash provided by operating activities | 532 | 12,140 | ||||||
INVESTING ACTIVITIES | ||||||||
Purchase of property and equipment, net | (369 | ) | (693 | ) | ||||
Purchase of marketable securities | (62,146 | ) | — | |||||
Sale of marketable securities | 23,995 | — | ||||||
Net cash (used in) investing activities | (38,520 | ) | (693 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Payment of initial public offering costs | — | (791 | ) | |||||
Proceeds from exercise of stock options | 539 | 597 | ||||||
Payment of employee taxes related to equity awards | (3,523 | ) | — | |||||
Proceeds from contributions to employee stock purchase plan | 487 | — | ||||||
Net cash (used in) financing activities | (2,497 | ) | (194 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (40,485 | ) | 11,252 | |||||
Cash and cash equivalents, beginning of period | 70,305 | 80,382 | ||||||
Cash and cash equivalents, end of period | $ | 29,820 | $ | 91,634 | ||||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
Additions of property and equipment, net included in accounts payable and accrued expenses | $ | 20 | $ | 68 |
ANNEX A
Reconciliation of GAAP to Non-GAAP Financial Measures
(unaudited)
(in thousands)
Adjusted EBITDA and Adjusted EBITDA Margin on Incremental Revenue Calculation
The following table provides a reconciliation of Net income to Adjusted EBITDA for each of the periods presented:
Three Months Ended | ||||||||
2021 | 2020 | |||||||
Net income | $ | 15,166 | $ | 3,629 | ||||
Add: | ||||||||
Depreciation and amortization | 422 | 520 | ||||||
Stock‑based compensation expense | 5,034 | 2,049 | ||||||
Other income | (7 | ) | (164 | ) | ||||
Interest (income) expense, net | 18 | (150 | ) | |||||
Provision for income taxes | (3,370 | ) | 116 | |||||
Legal fees associated with a vendor arbitration(a) | — | 693 | ||||||
Adjusted EBITDA | $ | 17,263 | $ | 6,693 | ||||
Revenue | $ | 122,133 | $ | 81,024 | ||||
Incremental revenue vs. 2020 | 41,109 | |||||||
Incremental Adjusted EBITDA vs. 2020 | 10,570 | |||||||
Incremental Adj EBITDA margin on incremental revenue | 25.7 | % |
(a) We engaged in other activities and transactions that can impact our net income. In recent periods, these other items included, but were not limited to, legal fees related to an arbitration resulting from our termination of an agreement with a specialty pharmacy vendor and its settlement in the fourth quarter of 2020.
Reconciliation of Non-GAAP Financial Guidance for the Three Months Ending
Three Months Ending | Year Ending | |||||||||||
(in thousands) | Low | High | Low | High | ||||||||
Revenue | $ | 126,000 | $ | 131,000 | $ | 520,000 | $ | 540,000 | ||||
Net Income | $ | 6,500 | $ | 8,800 | $ | 34,300 | $ | 42,200 | ||||
Add: | ||||||||||||
Depreciation and amortization | 500 | 400 | 2,000 | 1,600 | ||||||||
Stock-based compensation | 7,200 | 7,000 | 27,000 | 26,000 | ||||||||
Interest expense (income), net | — | — | 200 | 100 | ||||||||
Provision for income taxes | 3,300 | 2,800 | 6,500 | 5,100 | ||||||||
Adjusted EBITDA* | $ | 17,500 | $ | 19,000 | $ | 70,000 | $ | 75,000 | ||||
* All of the numbers in the table above reflect our future outlook as of the date hereof. Net income and Adjusted EBITDA ranges do not reflect any estimate for other potential activities and transactions, nor do they contemplate any discrete income tax items, including the income tax impact related to equity compensation activity.
Source:
2021 GlobeNewswire, Inc., source