Progyny, Inc. Common Stock Canaccord Genuity's 46th Annual Growth Conference

Sure. First of all, thanks for having us. We appreciate it. We just reported Q2 earnings, and we also talked about what we're seeing so far in engagement and utilization from members in the summer, which is sort of the visibility we have right now. We have visibility of about actual scheduled appointments over the next six weeks, and as the weeks go out further out, a little less visibility. Then we use models and algorithms to predict utilization for the balance of the year. Every year, we see seasonality in the summer relative to the heart of the summer months. Think back half of July and August. We see some seasonality. This year, it's more pronounced than what we've seen in a number of years. It's more akin to sort of what we saw in 2022, where we saw a sharper seasonality that came back.

When I say came back, visibility for September is showing utilization and engagement at the levels that we saw in the first half of the year. The expectation is that'll continue through the balance of the year, not unlike what we've seen again in '22 when it was the sharpest sort of seasonality that we saw, but also, excuse me, every year we see a little bit of seasonality. It comes back on that pattern because the reality is that the reason why there's seasonality is people choose to, even if they're ready to do treatment, some portion of people choose to wait a little longer to start doing it because they have summer plans or weddings or whatever they have to go to, and they're not looking to get pregnant in that moment. They're going to wait a little longer, and that's the nature of the seasonality.

Yeah. We wouldn't put out guidance and expectations if we weren't. And again, it's based on what we're already seeing for September. Limited but still good. And again, what we're seeing already for September, consistent with what we saw in the first half of the year.

Sure. Every year we give color on our sales season. There's a couple of important distinctions this year relative to that color. You started with the renewals, so I'll talk about that first. Each year, we go through a process. About a third of our clients are up for renewal every year. They're generally on three-year contracts. And they all renew in different ways, but nonetheless, they're up. Some of them renew, it's an easy renewal process. Some of them renew with an RFP process, market check, company policies, that kind of thing. The long and short of it is, the amount of commitments that we've gotten for renewal have essentially de-risked renewal rates for us going into next year way earlier than what we normally would see in a given year.

Part of what we believe is driving that is medical cost trends that are out there are real and significant. A lot of these employers are dealing with other issues there. They're not seeing a problem with us. We give them a ton of transparency and reporting. They have no concerns. It's a good member experience, et cetera. Even of those that did RFPs, they did them earlier, came to their conclusions that they're going to continue with us, and we were able to get to a place where we can make the statement that we're making, which is we've essentially de-risked, from a renewal standpoint, our book of business, which is significant because it's a lot earlier.

As it relates to new sales activity, we are also seeing meaningfully better commitments earlier, both in lives and in contribution from those lives than we did this time last year. When I say this time, as of when we reported earnings last week. That's important because obviously it takes a little bit of risk out of how much you have to predict remaining to close to hit your sales target. Our sales target is generally 1 million lives or more each year. We talked about that we have an expectation that we'll be able to hit that target this year given the activity we're seeing so far. We also still have a healthy pipeline for the remainder of the sales year. Also part of what's considered when we talk about that expectation of us hitting our target.

Yeah. I'll take the second part first. When people take the benefit, whether it's the initial year or over the years as they adjust the benefit, they're generally going to add something to the benefit versus their first year. So maybe their first year, they took two Smart Cycles, and on top of it, pharmacy, for example, but they didn't take egg freezing, they didn't take adoption and surrogacy. They may have a global population, they didn't take it. Or there's also opportunities around our ancillary products, postpartum maternity, and menopause. All of these are opportunities for upsells, and the upsells take the form of, oh, now I will add the egg freezing benefit. I'll go from a two-cycle benefits with three-cycle or an unlimited. I will add adoption and surrogacy, et cetera. That's the upsells that we talk about.

That process is later in terms of the actual plan design for renewal, so it is early to say what that activity looks like right now, it is a little too early to say. It is positive. Every year we generally have something in the 20%-30% of clients adding something to the benefit. The good news is we are getting no indications of anybody reducing the benefit. That is not inconsistent with prior years, but with medical cost inflation, again, that is happening in the country, it is something that we get as a question regularly, so I like to say it out loud ahead of time.