Progyny Sees Utilization Rebound as Early Renewals De-Risk Outlook

Progyny NASDAQ: PGNY CEO Pete Anevski said the company expects member engagement and utilization to rebound following a more pronounced summer seasonal slowdown, while early renewal and new-client commitments have increased management’s confidence in its outlook for the remainder of the year. Speaking at the 46th Annual Canaccord Genuity Growth Conference, Anevski said Progyny has visibility into scheduled appointments for approximately the next six weeks and uses models to forecast utilization beyond that period. He said the company typically experiences seasonality in the second half of July and August, as some members delay fertility treatment because of summer travel, weddings and other personal plans. This year’s slowdown has been sharper than in recent years and more comparable to 2022, he said. However, Anevski said September appointment visibility indicates engagement and utilization returning to levels seen during the first half of the year. “We wouldn’t put out guidance and expectations if we weren’t” comfortable with the outlook, Anevski said, adding that the early September activity is consistent with first-half trends. Renewal commitments arrive earlier Anevski said Progyny has received enough renewal commitments to “essentially de-risk” its renewal rates for next year earlier than it normally would in a sales cycle. About one-third of the company’s clients come up for renewal annually, generally under three-year contracts, he said. Some employer clients renew directly, while others conduct requests for proposals or market checks. Anevski attributed the earlier decisions in part to broader medical-cost pressures facing employers. He said clients have not identified issues with Progyny’s reporting, member experience or performance. Progyny also is seeing stronger early new-business commitments than it did at the same point last year, both in covered lives and expected contribution from those lives, according to Anevski. The company’s annual sales target is generally at least 1 million lives, and he said management expects to reach that goal based on current activity and the remaining pipeline. While it is too early to quantify expansion activity at renewing clients, Anevski said Progyny historically sees roughly 20% to 30% of clients add something to their benefits. Potential additions include egg freezing, additional fertility treatment cycles, adoption and surrogacy coverage, global coverage, and ancillary postpartum maternity and menopause offerings. He added that the company has received no indications that clients plan to reduce benefits. More competitive replacement opportunities The mix of early new-business commitments has included a higher proportion of “brownfield” opportunities than greenfield opportunities, Anevski said. He defined brownfield opportunities as employers that already offer fertility coverage through