Progyny, Inc.

Good afternoon, ladies and gentlemen, and welcome to the Progeny Incorporated First Quarter 2021 Earnings Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation. It is now my pleasure to turn the floor over to your host, James Hart. Sir, the floor is yours.

Thank you, Catherine, and good afternoon, everyone. Welcome to our First Quarter Conference Call. With me today are David Schlanger, CEO of Progeny, Peter Neske, President and COO, and Mark Livingston, CFO. We will begin with some prepared remarks before we open the call with questions. Before we begin, I'd like to remind you that today's call contains forward-looking statements, including but not limited to statements about our financial outlook for both the second quarter and full year of 2021, the impact of COVID-19 on our business, clients, member activity, and industry operations, our ability to acquire new clients and retain existing clients, our market opportunity, size, and expectation of long-term growth, Our forward governance plans, business performance, industry outlook, financial outlook, strategy, future investments, plans and objectives, and other non-historical statements as further described in our press release that was issued this afternoon. These forward-looking statements are subject to certain risks, uncertainties, and assumptions, including those related to progeny's growth, market opportunities, and general economic and business conditions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. Although we believe these expectations are reasonable, we undertake no obligation to revise any statement to reflect changes that occur after this call. Descriptions of these and other risks that could cause actual results to differ materially from these forward-looking statements are discussed in our periodic and current reports filed with ESDC, including in the section entitled Risk Factors in our most recent 10-K. During the call, we will also refer to non-GAAP financial measures, such as adjusted EBITDA and adjusted EBITDA margin. Reconciliations with the most comparable GAAP measures are also available in the press release, which is available at investors.progeny.com. I will now like to turn the call over to David.

Thank you, Jamie, and thank you, everyone, for joining us today. We are pleased to report a solid start to the year, reflecting record quarterly revenue, strong utilization, and the continued expansion of our margins. Mark will walk you through the details of the results in a few moments, but here are a few of the highlights. Revenue grew 51 percent over the first quarter of last year to $122.1 million. Average members in the first quarter grew nearly 30 percent from the year-ago period to 2.7 million. reflecting not only the addition of our newest clients, but also the organic growth we've seen within our existing base, as our clients have continued to expand their workforce over the last year. Art cycles in the quarter grew 48% to nearly 6,600, which is the most cycles we've ever managed in a quarter. Female utilization ticked up on a sequential basis from the fourth quarter of 2020 to 0.47%, demonstrating that fertility continues to be a priority for those who need treatment in order to start to build their families, even against the backdrop of the ongoing pandemic. And lastly, adjusted EBITDA in the first quarter more than doubled to $17.3 million, and our margins increased over the first quarter last year. In addition to these strong results, during the quarter we also successfully ensured that the onboarding for the 44 new clients who went live with their progeny benefit went seamlessly. From an operations perspective, The first quarter will always be critically important to us because unlike businesses that grow ratably throughout the year, the substantial majority of our new clients begin their programs with us on January 1st. As a result, we need to prepare in advance for a step function increase overnight in our business volumes, which demands that we have the necessary processes and personnel in place to ensure the smooth launch of each client. As we have done in the past, this year we have successfully completed our newest implementations and have been managing the increased volumes of member activity while also maintaining a focus on the service levels for all of our clients, both new and existing. Each year, one of our strategic priorities is to ensure that we not only maintain the industry-leading service levels our clients have come to expect from us, but we identify ways of improving that experience for both our clients and their employees each year. We believe it is because of this focus that we've been able to maintain very strong levels of client retention since our inception. One of the ways we foster strong relationships at the client level and reinforce our value proposition is through extensive quarterly reviews where we provide comprehensive reports containing hundreds of data points detailing the experiences and outcomes our clients' members have had with progeny. In addition, we also conduct an extensive annual review with each client to both deepen our understanding of the specific issues that are important to them and to further reinforce the unique benefits of our solution. These reviews typically happen during the first quarter and one of the recurring themes we've heard from clients so far this year is that progeny has distinguished itself by being one of the few or even only health solution provider where the clients aren't hearing employees report negative experiences during the COVID outbreak and remote work environment. The result of this feedback is also demonstrated in our NPS score this quarter, which increased to 81 for fertility services, which is the highest it's ever been. This exceptional result indicates that members continue to rate progeny at or near the highest possible scores, which we believe reflects both the quality of the service we are providing as well as the outcomes we are achieving. I'll spend a few moments discussing each of these, starting with the quality of our service. One of the core components of our service is the unprecedented level of patient education and support that we provide to help members navigate through the complexities of their fertility journey. By now, many of you are familiar with the role our PCAs have in providing this service, but you may be less familiar with the other ways we are supporting our members. For instance, we routinely hold events to provide members with relevant, topical information on issues of importance to them. Recently, we've held webinars examining issues of infertility and maternal health in the black community, fertility preservation for cancer patients, and what fertility patients need to know with respect to the COVID-19 vaccine. We are also mindful that our members are very diverse and have many different perspectives. As just one illustration, we enhanced our content geared to the male partner in the family building journey to address issues of male infertility. We've created similarly in-depth content on managing mental health during fertility journeys and on explaining the pathways to parenthood that are available for same-sex couples or single parents by choice. Turning now to our outcomes, the CDC and the Society for Assisted Reproductive Technology recently released their latest fertility data, which reaffirms that progeny's outcomes continue to significantly outperform the national averages. To highlight just a few of the takeaways, Our pregnancy rate is now 16% better than the national average, and our miscarriage rate is 26% lower than the national average. As a result, our live birth rate, which had been 23% better than the national average a year ago, is now 25% better. In practical terms, our higher live birth rate translates to meaningful financial savings because the client needs to fund significantly fewer rounds of IVF treatment with progeny than they would otherwise would in order to help their employees achieve their family-building goals. An important point to note is that progeny's live birth rate has improved 14% since 2016, while the national average has remained flat. This shows that we've been improving while other benefit managers have not. Lastly, our single embryo transfer rate now exceeds 90%, And our multiples birth rate, which at 2.8% is close to the natural twinning rate, is now 72% better than the national average. Multiple gestations are high risk pregnancies and the largest cause of preterm births. So this outcome translates to significant downstream medical cost savings for primary clients because they avoid those substantial maternity and NICU costs as well as the chronic care costs that are associated with low birth weight babies that often result from twin and triplet pregnancies. Let me now turn the call over to Mark to walk you through the quarter. Mark?