Progyny, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Limitations on Effectiveness of Controls and Procedures The Company maintains disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act) that are designed to ensure that information required to be disclosed in the Company’s reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. In designing and evaluating our disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. Evaluation of Disclosure Controls and Procedures Our management, with the participation of our principal executive officer and principal financial officer, has evaluated, as of the end of the period covered by this Annual Report on Form 10-K, the effectiveness of our disclosure controls and procedures (as that term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of December 31, 2022. Management's Annual Report on Internal Control Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as that term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act). Because of its inherent limitations, internal control over financial reporting may not prevent or detect material misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Under the supervision and with the participation of the Company’s principal executive officer and principal financial officer, our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the criteria set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2022. Attestation Report of the Independent Registered Public Accounting Firm Ernst & Young LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in the Annual Report on Form 10-K and has issued an attestation report on our internal control over financial reporting, which is included in this Item 9A below. Changes in Internal Control Over Financial Reporting There were no changes in our internal control over financial reporting (as that term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. 98 Table of Contents Report of Independent Registered Public Accounting Firm To the Stockholders and the Board of Directors of Progyny, Inc. Opinion on Internal Control over Financial Reporting We have audited Progyny, Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Progyny, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated March 1, 2023, expressed an unqualified opinion thereon. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control Over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. /s/ Ernst & Young LLP New York, NY March 1, 2023 99 Table of Contents ITEM 9B. OTHER INFORMATION None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not Applicable. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Code of Conduct Our Board of Directors has adopted a Code of Conduct applicable to all officers, directors and employees, including our principal executive officer, principal financial officer, principal accounting officer and controller, and persons performing similar functions. A copy of our Code of Conduct is available at the Investor Relations section of our website, located at investors.progyny.com , under “Governance—Documents & Charters.” We intend to make all disclosures required by law or Nasdaq Stock Market rules regarding any amendments to, or waivers from, any provisions of the code at the same location of our website. Our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider information on our website to be part of this Annual Report on Form 10-K. Other Information The remaining information required by this item will be included under the headings “Proposal 1—Election of Directors,” “Information Regarding Director Nominees and Current Directors,” “Information Regarding the Board of Directors and Corporate Governance,” and, if applicable, “Delinquent Section 16(a) Reports” in our definitive proxy statement relating to the 2023 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2022, which we refer to as our 2023 Proxy Statement, and such required information is incorporated herein by reference into this Annual Report on Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information required by this item will be included under the headings “Executive Compensation,” “Director Compensation,” and “Information Regarding the Board of Directors and Corporate Governance” in our 2023 Proxy Statement and is hereby incorporated by reference into this Annual Report on Form 10-K. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The information required by this item will be included under the heading “Equity Compensation Plan Information” and “Security Ownership of Certain Beneficial Owners and Management” in our 2023 Proxy Statement and is hereby incorporated by reference into this Annual Report on Form 10 K. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this item will be included under the headings “Transactions with Related Persons,” and “Information Regarding the Board of Directors and Corporate Governance” in our 2023 Proxy Statement and is hereby incorporated by reference into this Annual Report on Form 10-K. 100 Table of Contents ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information required by this item will be included under the heading “Principal Accountant Fees and Services” in our 2023 Proxy Statement and is hereby incorporated by reference into this Annual Report on Form 10-K. PART IV ITEM 15. EXHIBITS, AND FINANCIAL STATEMENT SCHEDULES. (a) Documents filed as part of this report: 1. List of Financial Statements The following financial statements are included in Item 8 “Financial Statements and Supplementary Data” herein. Page Report of Independent Registered Public Accounting Firm 71 Financial Statements: Consolidated Balance Sheets 72 Consolidated Statements of Operations 74 Consolidated Statements of Comprehensive Income 75 Consolidated Statements of Changes in Stockholders’ Equity 75 Consolidated Statements of Cash Flows 76 Notes to Consolidated Financial Statements 77 2. List of Financial Statement Schedules All schedules are omitted because they are not applicable, not required or the required information is shown in the consolidated financial statements or notes thereto. 3. List of Exhibits The exhibits to this report are listed below. Incorporated by Reference Exhibit Number Description Form File No. Exhibit Filing Date Filed/Furnished Herewith 3.1 Amended and Restated Certificate of Incorporation of Progyny, Inc. 8-K 001-39100 3.2 10/31/2019 3.2 Amended and Restated By-laws of Progyny, Inc . S-1 333-233965 3.4 9/27/2019 4.1 Form of common stock certificate . S-1/A 333-233965 4.1 10/15/2019 4.2 Form of 2013 Preferred Stock Warrant. S-1/A 333-233965 4.2 10/15/2019 4.3 Form of 2014 Preferred Stock Warrant. S-1/A 333-233965 4.3 10/15/2019 4.4 Form of 2015 Preferred Stock Warrant. S-1/A 333-233965 4.4 10/15/2019 4.5 Warrant to Purchase Stock issued to Silicon Valley Bank dated October 9, 2013. S-1/A 333-233965 4.5 10/15/2019 4.6 Description of Capital Stock. * 101 Table of Contents 10.1† Progyny, Inc. 2008 Stock Plan, as amended, and forms of agreements thereunder . S-1 333-233965 10.2 9/27/2019 10.2† Progyny, Inc. 2017 Equity Incentive Plan and forms of agreements thereunder . S-8 333-233965 99.2 10/25/2019 10.3† Amendment No. 1 to the Progyny, Inc. 2017 Equity Incentive Plan. 10-K 001-39100 10.4 3/10/2020 10.4† Progyny, Inc. 2019 Equity Incentive Plan and forms of agreements thereunder. S-1/A 333-233965 10.4 10/15/2019 10.5† Amendment No. 1 to the Progyny, Inc. 2019 Equity Incentive Plan. 10-K 001-3910 10.6 3/10/2020 10.6† Progyny, Inc. 2019 Employee Stock Purchase Plan. S-1/A 333-233965 10.5 10/15/2019 10.7† Form of Indemnification Agreement. S-1 333-233965 10.6 9/27/2019 10.8† Amended and Restated Employment Agreement between Progyny, Inc. and David Schlanger, dated December 23, 2021 10-Q 001-39100 10.1 5/6/2022 10.9† Amended and Restated Employment Agreement between Progyny, Inc. and Peter Anevski, dated December 23, 2021. 10-Q 001-39100 10.2 5/6/2022 10.10† Amended and Restated Employment Agreement between Progyny, Inc. and Mark Livingston dated June 7, 2022 10-Q 001-39100 10.1 8/5/2022 10.11† Employment Agreement between Progyny, Inc. and Allison Swartz dated October 27, 2022 * 10.12† Amended and Restated Employment Agreement between Progyny, Inc. and Michael Sturmer dated December 23, 2021 10-Q 001-39100 10.3 5/6/2022 10.13 Sublease Agreement, dated as of July 29, 2019 by and between IPREO Holdings, LLC and Progyny, Inc. S-1 333-233965 10.1 9/27/2019 10.14 Lease Agreement, dated as of February 25, 2022 by and between ESRT 1359 Broadway, LLC and Progyny, Inc. * 10.15 Loan and Security Agreement, dated as of June 8, 2018, between Silicon Valley Bank and Registrant. S-1 333-233965 10.10 9/27/2019 102 Table of Contents 10.15 Amendments to Loan and Security Agreement, dated as of June 8, 2018, between Silicon Valley Bank and Registrant. 10-Q 001-39100 10.1 8/7/2020 21.1 List of Subsidiaries. 10-K 001-39100 21.1 3/1/2022 23.1 Consent of Ernst & Young LLP * 24.1 Power of Attorney (incorporated by reference to the signature pages of this Annual Report on Form 10-K). * 31.1 Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14(a). * 31.2 Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a). * 32.1 Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350. ** 32.2 Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350. ** 101.INS Inline XBRL Instance Document. 101.SCH Inline XBRL Taxonomy Extension Schema Document. * 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. * 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. * 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. * 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. * 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). * * Filed herewith. ** Furnished herewith. † Indicates management contract or compensatory plan or arrangement in which any director or executive officer participates. 103 Table of Contents ITEM 16. FORM 10-K SUMMARY None. 104 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. PROGYNY, INC. Date: March 1, 2023 By: /s/ PETER ANEVSKI Peter Anevski Chief Executive Officer (Principal Executive Officer) 105 Table of Contents POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Peter Anevski and Mark Livingston, and each one of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in their name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated as of March 1, 2023. Signature Title /s/ PETER ANEVSKI Chief Executive Officer and Director Peter Anevski (principal executive officer) /s/ MARK LIVINGSTON Chief Financial Officer Mark Livingston (principal financial and accounting officer) /s/ DAVID SCHLANGER Executive Chairman David Schlanger /s/ BETH SEIDENBERG Lead Independent Director Beth Seidenberg, M.D. /s/ LLOYD DEAN Director Lloyd Dean /s/ FRED COHEN Director Fred Cohen, M.D., D.Phil. /s/ KEVIN GORDON Director Kevin Gordon /s/ ROGER HOLSTEIN Director Roger Holstein /s/ JEFFREY PARK Director Jeffrey Park / s / NORMAN PAYSON Director Norman Payson, M.D. /s/ CHERYL SCOTT Director Cheryl Scott 106