What changed in this filing

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Item 1. Business

2024-02-29 compared with 2023-03-01 · 42 added, 59 removed, 369 unchanged (21% of the section changed)

We envision a world where anyone who wants to have a child can do so.

Our mission is to make dreams of parenthood come true through healthy, timely and supported fertility journeys.

Through our differentiated approach to benefits plan design, patient education and support and active network management, our clients’ employees are able to pursue the most effective treatment from the best physicians and achieve optimal outcomes.

We believe in a world where everyone can realize dreams of family and ideal health.

Our mission is to empower healthier, supported journeys through transformative fertility, family building and women's health benefits.

Through our differentiated approach to benefits plan design, patient education and support and active network management, our clients’ employees are able to pursue the most effective treatment across life's milestones from the best physicians and achieve optimal outcomes.

Progyny is a leading benefits management company specializing in fertility and family building benefits solutions in the United States.

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As part of this solution, we provide care management services, which include our formulary plan design, simplified authorization, assistance with prescription fulfillment and timely delivery of the medications by our network of specialty pharmacies, as well as medication administration training, pharmacy support services and continuing PCA support.

We have also begun to offer additional supported benefits for those considering conception, for maternity and postpartum care, and during menopause.

We have demonstrated our ability to drive better outcomes for our clients, members and provider clinics across multiple metrics.

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As transparency and dialogue around infertility have increased, there has been a de-stigmatization of the disease.

Despite this change in perception of infertility and its high prevalence, it is one of the only high-prevalence medical conditions with limited or non-existent medical insurance.

By comparison, medical conditions with a similar prevalence, such as diabetes and asthma, are

comprehensively covered by conventional health insurance carriers and employers.

Despite this change in perception of infertility and its high prevalence, it is one of the only high-prevalence medical conditions with limited or non-existent

medical insurance.

By comparison, medical conditions with a similar prevalence, such as diabetes and asthma, are comprehensively covered by conventional health insurance carriers and employers.

Due to the high prevalence of infertility, its high costs of treatment and the limited insurance coverage provided for the disease, there is a significant unmet need for fertility services in the United States and several macro trends are driving that need for fertility treatments and propelling the overall size of the fertility market higher.

While fertility treatments have been available for over 40 years to help individuals suffering from infertility build their families, access to these treatments has been limited due to the lack of comprehensive coverage and the prohibitive costs.

Only a small percentage of employers provide a benefits plan that addresses these costs.

As a result, the vast majority of patients who undergo fertility treatment must pay for most or all of their care out-of-pocket, which is cost-prohibitive for many families and individuals.

We believe that the lack of adequate coverage has been the result of both broader public policy issues, as well as conventional health insurance carrier-specific policies.

For example, it was not until 2017 that infertility was first recognized as a disease by the American Medical Association and, as of June 2022, only 20 states have mandated insurance coverage for infertility.

For example, it was not until 2017 that infertility was first recognized as a disease by the American Medical Association and, as of February 2024, only 21 states and the District of Columbia have mandated insurance coverage for infertility.

For the states that do mandate coverage, the mandates vary greatly and may leave patients with inadequate coverage or unable to pursue care at all.

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We estimate that the market for fertility treatments in the United States will continue to grow, especially as current estimates of the market exclude those individuals who do not have access to a comprehensive family building benefit and, as a result, do not seek treatment for infertility.

Furthermore, when comparing the United States to other countries, the percentage of babies born utilizing ART is materially lower, at less than 2% in the United States (where fertility treatment is not adequately covered), compared to approximately 10% in Denmark and 6% in Japan (where there is more public health funding for fertility treatment).

Furthermore, when comparing the United States to other countries, the percentage of babies born utilizing ART is materially lower, at approximately 2% in the United States (where fertility treatment is not adequately covered), compared to approximately 10% in Denmark and more than 8% in Japan (where there is more public health funding for fertility treatment).

We contract with employers to provide fertility and family building benefits to their employees and covered dependents.

We believe our initial addressable market consists of the approximately 8,000 self-insured employers in the United States (excluding but not limited to quasi-governmental entities, such as universities, school systems, and labor unions).

These 8,000 employers have a minimum of 1,000 employees, representing approximately 75 million potential covered lives in total.

As such, we estimate that our current member base of 5.4 million covered lives under contract represents a mid-single digit percent of our initial market opportunity.

If we were to include quasi-governmental entities in our potential addressable market, we believe our market penetration is even lower.

Regardless of whether or not these self-insured employers currently provide a fertility benefit, we believe they are prospective clients of Progyny.

We believe our addressable market primarily consists of large self-insured employers as well as labor populations under the Labor Management Relations Act of 1947 (also known as the Taft-Hartley Act), and federal government populations.

There are approximately 8,000 employers in the United States who have a minimum of 1,000 employees, who together with the Taft-Hartley populations and federal government populations, represent approximately 106 million potential covered lives in total.

As such, we estimate that our current member base of 6.4 million covered lives under contract represents a mid-single digit percent of our total market opportunity.

Regardless of whether or not these employers currently provide a fertility benefit, we believe they are prospective clients of Progyny.

Further, 37% of our current clients had no prior fertility coverage before adopting Progyny and 90% of our current clients enhanced their coverage when they switched to Progyny.

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We have utilized our deep industry knowledge and the insights derived from our data analytics platform to establish and actively manage a national network of the leading fertility specialists in the country.

Our members receive access to our selective Center of Excellence network of high-quality providers that includes over 950 fertility specialists who practice at over 650 provider clinic locations throughout the United States.

Our network includes 44 of the top 50 fertility practice groups by volume in the United States according to 2021 CDC data, which was published in 2023 and is the most recent data available.

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This review ensures that we are evaluating and covering the latest and most effective fertility treatments and identifying opportunities to improve our plan design, member experience and fertility specialists network standards.

Full Service Client Account Management

We provide a dedicated account management team to ensure that we are delivering superior service.

Our account managers support our clients’ day-to-day needs and resolve issues that arise.

For example, to help our clients ensure that their employees are fully aware of the Progyny program, our account management teams work with our clients to create co-branded materials to support health fairs, open enrollment events and other employee communications.

The account management team also attends open enrollment benefits fairs and other health fairs throughout the year and hosts virtual open enrollment webinars for members to attend live or on-demand.

Our account management team also reviews all quarterly and annual program reports with our clients to reinforce the transparency we provide to clients into their expenditures and outcomes and to review and quantify the value created by our solutions.

We believe our account management services, including our detailed client reporting, play an important role in helping us maintain and strengthen our client relationships.

Full Service Client Success

We provide a dedicated client success team to ensure that we are delivering superior service.

Our client success managers support our clients’ day-to-day needs and resolve issues that arise.

For example, to help our clients ensure that their employees are fully aware of the Progyny program, our client success teams work with our clients to create co-branded materials to support health fairs, open enrollment events and other employee communications.

The client success team also attends open enrollment benefits fairs and other health fairs throughout the year and hosts virtual open enrollment webinars for members to attend live or on-demand.

Our client success team also reviews all quarterly and annual program reports with our clients to reinforce the transparency we provide to clients into their expenditures and outcomes and to review and quantify the value created by our solutions.

We believe our client success services, including our detailed client reporting, play an important role in helping us maintain and strengthen our client relationships.

Ease of Integration for Our Clients

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We believe our ability to integrate our benefits solutions with all of the large national health insurance carriers is a differentiating factor within the industry.

Surrogacy and Adoption Reimbursement Program

We also offer a surrogacy and adoption reimbursement program.

We can manage the reimbursement of surrogacy and adoption expenses for those clients who offer such reimbursement benefits.

For these programs, employers designate a specific lifetime dollar amount toward surrogacy and/or adoption services for their employees.

Assistance Service Reimbursement Programs

We also offer an assistance service program where certain services can be offered through a reimbursement program, including adoption, surrogacy, doula, and travel reimbursement when travel is required to receive medical services.

We can manage the reimbursement of these expenses for those clients who offer such reimbursement benefits.

For these programs, employers designate a specific lifetime dollar amount toward the elected assistance service for their employees.

We then administer the expense reimbursement to employees up to this dollar amount.

We work with our clients to determine what expenses related to adoption and/or surrogacy will be covered under their plan, thereby alleviating their administrative burden.

Examples of reimbursement expenses typically include agency fees, surrogacy fees, travel expenses and healthcare expenses for the surrogate.

We work with our clients to determine what expenses related to adoption or surrogacy or any other elected benefit will be covered under their plan, thereby alleviating their administrative burden.

Our Value Proposition

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for Progyny Members Only (3)

Live birth rate per attempted retrieval (2)

35.5 % 37.4 % 44.4 %

Single embryo transfer rate (1)

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18.4 % 18.2 % 15.8 %

Live birth rate (2)

Live birth rate per transfer (2)

41.6 % 42.6 % 52.9 %

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Outcomes for Progyny members across our fertility specialist network are superior to the average outcomes that the same provider clinics report to the CDC for all of their patients.

Specifically, as shown in the table above, the in-network average live birth rate for Progyny members is 54.3%, as compared to the 44.1% average live birth rate for all of the patients at those same clinics.

Specifically, as shown in the table above, the in-network average live birth rate per attempted retrieval for Progyny members is 44.4%, as compared to the 37.4% average live birth rate per attempted retrieval for all of the patients at those same clinics.

This results in the typical Progyny member undergoing 2.2 retrievals for a live birth as compared to the national average of 3.5 retrievals.

This difference of more than one retrieval represents substantial cost avoidance for our clients, as well as significantly less physical and emotional stress on the member.

• Eliminating Financial Risk Associated With Collections.

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We intend to continue increasing our client base of self-insured employers throughout the United States by leveraging our experienced sales force and strong relationships with benefits consultants.

We believe we have an initial addressable market of approximately 8,000 potential self-insured employer clients in the United States (excluding but not limited to quasi-governmental entities, such as universities, school systems, and labor unions), who have a minimum of 1,000 employees and, with our base of over 370 clients under contract, are still in the early stages of our growth trajectory.

We believe we have a total addressable market of approximately 8,000 potential employer clients in the United States, who have a minimum of 1,000 employees, as well as Taft-Hartley labor populations, and federal government populations and, with our base of over 450 clients under contract, are still in the early stages of our growth trajectory.

Importantly, as we have continued to grow, we have meaningfully diversified our client base across an array of different industries.

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In addition, we believe we have positive and collaborative relationships with our clients that offer us additional insights into their needs.

We believe the combination of these factors, coupled with our demonstrated track record of adding more services to our benefits design, highlights that we are well positioned to do so in the future.

To date, we have identified several ways we believe we can potentially expand our comprehensive family building offering, our addressable market, and our client base in the future.

We believe the combination of these factors, coupled with our demonstrated track record of adding more services to our benefits design, highlights that we are well positioned to continue to do so in the future.

To date, we have identified several ways we believe we can potentially expand our comprehensive family building offering, our addressable market, and our client base in the future, including the new preconception, maternity and postpartum, and menopause offerings.

We will continue to evaluate opportunities as our platform continues to expand.

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Sales and Marketing

We sell our solutions through our sales organization and, in many cases, we leverage our relationships with top benefits consultants to establish relationships with potential clients.

We sell our solutions through our sales organization and, in many cases, we leverage our relationships with top benefits consultants and channel partners to establish relationships with potential clients.

Our sales team has broad experience in health benefits management and extensive long-term relationships with industry participants and benefits executives at large employers.

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Privacy and security laws, regulations, and other obligations are constantly evolving, may conflict with each other to complicate compliance efforts, and can result in investigations, proceedings, or actions that lead to significant civil and/or criminal penalties and restrictions on data processing.

Cybersecurity

In the normal course of business, we may collect and store personal information and other sensitive information, including proprietary and confidential business information, trade secrets, intellectual property, information regarding trial participants in connection with clinical trials, sensitive third-party information and employee information.

To protect this information, our existing cybersecurity policies require monitoring and detection programs, network security measures, encryption of critical data, and security assessment of vendors.

We maintain various protections designed to safeguard against cyberattacks, including firewalls and virus detection software.

We have established and test our disaster recovery plan and we protect against business interruption by backing up our major systems.

In addition, we periodically scan our environment for any vulnerabilities, perform penetration testing and engage third parties to assess effectiveness of our data security practices.

A third party security consultant conducts regular network security reviews, scans and audits.

In addition, we maintain insurance that includes cybersecurity coverage.

Our cybersecurity program is led by our chief information security officer and a team of highly skilled cybersecurity professionals .

The program incorporates industry-standard frameworks, policies and practices designed to protect the privacy and security of our sensitive information.

As needed, our cybersecurity team reports to the Audit Committee of our Board of Directors on information security and cybersecurity matters.

The Audit Committee has oversight responsibility for our information security policies and practices.

Despite the implementation of our cybersecurity program, our security measures cannot guarantee that a significant cyberattack will not occur.

A successful attack on our information technology systems could have significant consequences to the business.

While we devote resources to our security measures to protect our systems and information, these measures cannot provide absolute security.

See “Risk Factors – Risks Related to Our Business and Industry” for

additional information about the risks to our business associated with a breach or compromise to our information technology systems.

Intellectual Property

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We focus on creating opportunities for employee growth, development and training, including opportunities to cultivate talent and identify candidates for new roles from within the Company, management and leadership development programs, technical skill building initiatives and mentoring programs.

We include the Progyny benefit in our own health plan, allowing Progyny employees to realize their dreams of parenthood.

We offer paid parental leave for new parents and offer a pregnancy loss leave benefit as an enhancement to our bereavement leave policy, explicitly recognizing the physical, emotional, and mental health impact of a pregnancy loss, or failed adoption or surrogacy, for any employee.

We include the Progyny benefit in our own health plan, allowing Progyny employees to realize their dreams of family and ideal health.

We offer paid parental leave for new parents with an extension of leave for those with an infant in the NICU and offer a pregnancy loss leave benefit as an enhancement to our bereavement leave policy, explicitly recognizing the physical, emotional, and mental health impact of a pregnancy loss, or failed fertility procedure, adoption or surrogacy, for any employee.

We also offer additional paid leave to all employees to support other family health and care challenges.

Additionally, we expanded our mental health resources to further support our employees.

Additionally, we offer a number of different ways to access our mental health resources to further support our employees.

• Diversity, Equity and Inclusion .

We believe diversity, equity and inclusion results in business growth and encourages increased innovation, retention of talent and a more engaged workforce.

We believe diversity, equity, inclusion and belonging result in business growth and encourage increased innovation, retention of talent and a more engaged workforce.

We strive to create a workplace where all individuals feel valued, empowered and welcomed.

Our key initiatives focus on recruiting outreach, internal resource groups representing employees and allies from historically underrepresented and/or marginalized communities, mentoring programs and career development ladders.

We are in the process of updating our corporate sustainability report on our website, which highlights our approach to diversity and inclusion, and we also publish EEO-1 reports on our website.

Our employees participate in pulse surveys that have deepened our perception of the workforce.

Our employees participate in pulse surveys that have deepened our perception of the workforce and we also publish EEO-1 reports on our website.

We staffed a Vice President whose responsibility is to develop, enhance, and communicate our DEI Initiatives throughout the organization.

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We believe it is important to give back and promote community outreach and support through corporate giving, charitable matching, and employee volunteerism in the communities in which we live and work.

We allow flexible work hours to accommodate employee volunteer opportunities, provide corporate sponsored charitable events and have designed initiatives in the fertility and maternal health space to include corporate matching of employee charitable donations.

We allow flexible work hours to accommodate employee volunteer opportunities, provide corporate sponsored charitable events and continue to develop partnerships with community organizations that align with our priorities in fertility, family building and equity in healthcare.

Our Corporate Information

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business