Progyny, Inc.

Good day, ladies and gentlemen, and welcome to the Progeny, Inc. Fourth Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, James Hart. The floor is yours.

Thank you, John, and good afternoon, everyone. Welcome to our Fourth Quarter Conference Call. With me today are Pete Inevsky, CEO of Progeny, Michael Stermer, President, and Mark Livingston, CFO. We will begin with some prepared remarks before we open the call for your questions. Before we begin, I'd like to remind you that our comments and responses to your questions today reflect management's views as of today only, and will include statements related to our financial outlook for both the first quarter and full year 2023, and the assumptions and drivers underlying such guidance, including the impact of our sales season and client launches, our anticipated number of clients and covered lives for 2023, anticipated employment levels of our clients in the industries that we serve, the timing of client decisions, our expected utilization rates and mix, the impact of COVID-19, including variants on our business, clients, member activity, and industry operations, our ability to acquire new clients and retain and upsell existing clients, our market opportunity, size, and expectation of long-term growth, our plans for the expansion of our business, including expansion into other markets and of services offered, our business performance, industry outlook, strategy, future investments, plans, and objectives, which are forward-looking statements under the federal securities law. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business, as well as other important factors. For a discussion of the material risks, uncertainties, assumptions, and other important factors that could impact our actual results, please refer to our SEC filings and today's press release, both of which can be found on our investor relations website. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During the call, we will also refer to non-GAAP financial measures, such as adjusted EBITDA, adjusted EBITDA margin, and adjusted EBITDA margin on incremental revenue. More importantly, Information about these non-GAAP financial measures, including reconciliations with the most comparable GAAP measures, are available in the press release, which is available at investors.progeny.com. I would now like to turn the call over to Pete. Thanks, Jamie.

Thanks, everyone, for joining us this afternoon. We're pleased to report that 2022 was another extraordinary year for Progeny. We achieved record levels of revenue with 57% growth over 2021 and profitability with a 16% adjusted EBITDA margin, and operating cash flow generating over 80 million in 2022, or more than 3x over 2021. While we're extremely proud of these results, we're even more excited about how we're positioned at the beginning of 2023, which is coming on the heels of our most successful selling season ever. We added more than 105 new clients, our most ever in any single season, representing 1.2 million new covered lives. That's an approximately 30% increase in lives from where we were at the start of the selling season a year ago, which we believe further demonstrates the continued demand we're seeing in the market. We also maintained, for the seventh straight year, a near 100% retention rate amongst our existing clients. That would be an extraordinary achievement for any business in any year, let alone to achieve this each year over the first seven years in market as we've done. In addition to our strong retention rates, existing clients didn't reduce their progeny benefit, and in fact, more than 25% of our clients increased their progeny program in some way for 2023. We believe the new logo sales success, existing client retention, and expansion of services for existing clients are clear indications of the value our solution provides to all of our constituents, our members, employers, consultants, and partners. I'll remind you that the vast majority of these buying and renewal decisions happened in the second half of 2022, despite an environment where high inflation, a potential looming recession, interest rate hikes, and other macro headwinds were affecting the economy. Our clients today include many of the most data-driven and sophisticated buyers of healthcare services in the world. They understand how to evaluate what's in the market and choose the solutions that will best meet their needs and objectives. We also continue to equally attract companies who are both adding a fertility benefit for the first time, as well as companies who are leaving their carrier for our expanded solution that's also more comprehensive, inclusive, and equitable. Accordingly, we believe our continued commercial success validates several things. First, the demand for fertility benefits amongst millennials is stronger than ever. Second, the increasing relevance and timeliness of family building benefits as employers look to modernize their health benefits and support the needs of their workforce, particularly the female population who have long been underserved. Third, the resilience of these benefits once the coverage has been added to the employer benefit design as employers tend to be extremely reluctant to take coverage away once it's been offered, especially when the member experience and outcomes are so strong while also controlling costs. And lastly, unlike the many digital point solutions that have sprung up across healthcare over the last few years, including in the fertility and family building, Progeny has and continues to successfully differentiate ourselves by being an integral part of the medical benefit itself, with a unique model, outcomes, and value. Ours is a true end-to-end solution that demonstrates real impact through a combination of plan design, an unprecedented level of collaboration across an industry-leading network, and an extraordinary level of patient education and support. In fact, we believe our success in 2022 is the most powerful testament there can be to the unique value we deliver. That value also explains why we have more than doubled our clients, members, and revenue over just the past two years alone. When we were at 135 clients 2.2 million covered lives, and 345 million in revenue in 2020. We believe this sustained success demonstrates our continued differentiation in the marketplace. As we begin the new year, our focus is on continuing to capitalize on this increasing demand into the 2023 selling season. The season is in its very earliest stage, so while it's too soon to offer any quantitative commentary, the early activity we're seeing thus far is extremely positive. We have a very healthy pipeline in place with meaningful increases in active pipeline year-to-date over 2022, partially reflecting the record level of opportunities that were carried over as not-nows from the 2022 season, as well as the addition of new opportunities created through traditional demand gen plus meaningful levels of inbound activity. We've also already picked up a number of early wins including an aviation manufacturing company, another union group, and one of the largest children's hospitals in the country, extending our recent track record of success across all these verticals. We've seen how an initial client win in an industry can often translate into continued success and expansion within that vertical. And while each of these early wins are further proof of that dynamic, our momentum in the healthcare industry is a particularly good example. Just four years ago, we won our first healthcare client, and today we have over 30 clients that represent approximately 600,000 covered lives in healthcare alone. As you might imagine, these are amongst the most sophisticated buyers of a healthcare solution, and these employers are increasingly choosing progeny. Perhaps the most exciting thing is that even with all our success, we are still at a very early stage of penetrating not only the healthcare industry, but also every one of the more than 40 other industries we're in today. In addition to the 2023 selling season beginning on such a promising note, we're also seeing an increase in activity with other non-traditional channel partners. For example, Progeny was recently selected by the Children's Hospital Association, or CHA, to be the exclusive preferred partner to its member hospitals for fertility and family building services. If you aren't familiar with CHA, it's a coalition of more than 220 children's hospitals, health systems, and related organizations across the country. Participating members have access to a range of programs and services, including benchmark data, shared best practices, and partner vetting programs. Our selection by this prestigious group is due in part to our extensive record of producing tangible results with other large hospitals and healthcare systems including some who are CHA members. While coalition members can choose whether or not to follow CHA's recommendations, their approval obviously carries significant weight, and we expect to leverage this relationship to further our penetration within this very attractive vertical. We believe CHA's selection of progeny is an example of the success we're having with other channel partners, and we expect to announce other agreements that will help further accelerate the awareness and adoption of this very important benefit. In conclusion, the early selling season activity gives us confidence that the macro trends driving the high demand for family building benefits, combined with our position as the leader in the space, position us well to sustain our momentum from last year's selling season into 2023. And given the caliber of the companies that we're both partnering with and seeing in our active pipeline, it's become even more evident that Progeny is the provider of choice for fertility solutions amongst the best-known and most successful companies in the world. Let me turn the call now over to Mark to walk you through the results in more detail. Thank you, Pete.