What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-02-27 compared with 2025-03-03 · 60 added, 46 removed, 335 unchanged (24% of the section changed)

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“Risk Factors” of this Annual Report on Form 10-K.

A discussion of the fiscal year ended December 31, 2023 compared to the year ended December 31, 2022 has been reported previously in our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the SEC on February 29, 2024 (File No.

A discussion of the year ended December 31, 2024 as compared to the year ended December 31, 2023 has been reported previously in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with the SEC on March 3, 2025 (File No.

001-39100) under the heading “ Management's Discussion and Analysis of Financial Condition and Results of Operations - Comparison of Years Ended December 31, 2024 and 2023.

Executive Overview

We are a benefits management company specializing in fertility, family building, and women's health benefits solutions in the United States.

We are a benefits management company specializing in fertility, family building, and women's health benefits solutions primarily in the United States.

For further information on our business and strategy, see Part I, Item 1.

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Smart Cycles are proprietary treatment bundles designed by us to include those medical services available to our members through our selective network of high-quality fertility specialists.

Medical services under our Smart Cycles include everything needed for a comprehensive fertility treatment cycle, including all necessary diagnostic testing and access to the latest technology (such as, in the case of in vitro fertilization, or IVF, preimplantation genetic testing).

Medical services under our Smart Cycles include everything needed for a comprehensive fertility treatment cycle, including all necessary diagnostic testing and access to the latest technology (such as preimplantation genetic testing, in the case of in vitro fertilization, or IVF).

We currently offer 20 different Smart Cycle treatment bundles, which may be used in various combinations depending on the member’s need.

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These can range from one to an unlimited unit value.

Members, in consultation with their Patient Care Advocates, or PCAs, can choose their preferred provider clinics within our network and utilize the specific Smart Cycle treatment bundles necessary for the treatment pathway they determine throughout their fertility journey.

Members, in consultation with their Progyny Care Advocates, or PCAs, can choose their preferred provider clinics within our network and utilize the specific Smart Cycle treatment bundles necessary for the treatment pathway they determine throughout their fertility journey.

In addition, we provide care management services as part of our fertility benefits solution, which include active management of our selective network of high-quality fertility specialists, real-time member eligibility and treatment authorization, member-facing digital solutions, detailed quarterly reporting for our clients supported by our dedicated client success teams and end-to-end comprehensive concierge member support provided by our in-house staff of PCAs.

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With respect to Progyny Rx, we bill the client for the fertility medication dispensed to their employees in connection with the authorized fertility treatments.

Medication fees also include our

formulary management, drug utilization review and cost containment services and other care management services.

Medication fees also include our formulary management, drug utilization review and cost containment services and other care management services.

• Population-Based Component.

Clients who purchase our fertility benefits solution also typically pay us a per employee per month fee, or PEPM fee, which is population-based.

This allows us to provide access to our PCAs for fertility and family building education and guidance and other digital tools to all of our members, regardless of whether they ultimately pursue fertility treatment.

This allows us to provide members with access to our PCAs for fertility and family building education and guidance and other digital tools to all of our members, regardless of whether they ultimately pursue fertility treatment.

PEPM fees represented 1% of our total revenue for the years ended December 31, 2025 and 2024, respectively.

Our revenue in a given year is determined by the utilization, including rate of consumption and mix, of our fertility benefits and Progyny Rx solutions by our members as well as the number of members enrolled in our clients’ benefits plans.

Each year, we contract with new clients for our fertility benefits solution and, where added by the client, our Progyny Rx solution.

Each year, we contract with new clients for our fertility benefits and Progyny Rx solutions.

Given that the majority of our clients contract with us for a January 1 st benefits plan start date, our sales cycle follows the conventional healthcare benefits cycle, which largely concludes by the end of October of the prior year to allow for benefits education and annual open enrollment to occur in November.

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Similarly, for existing clients, any changes in plan designs are typically elected by the end of October so that clients can inform their employees of the benefits during the open enrollment period ahead of a January 1 st plan year start.

We continue to expand our women's health and family building solutions to include pregnancy and postpartum, menopause and midlife, benefit and leave navigation, and parent and child wellbeing solutions.

While these offerings represent strategic areas of investment, they were not a significant portion of our revenue for the years ended December 31, 2025 and 2024.

Key Operational and Business Metrics

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(1) Represents the number of ART cycles performed, including IVF with a fresh embryo transfer, IVF freeze all cycles/embryo banking, frozen embryo transfers and egg freezing.

(2) Represents the member utilization rate for all services, including but not limited to, ART cycles, initial consultations, IUIs and genetic testing.

Includes ART cycles performed in the first half of 2025 under the extended transition of care agreement with the large client who did not renew its service agreement.

(2) Represents the member utilization rate for all fertility and family building services, including but not limited to, ART cycles, initial consultations, IUIs and genetic testing.

The utilization rate for all members includes all unique members (female and male) who utilize the benefit during that period while the utilization rate for female only includes only unique females who utilize the benefit during that period.

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Individual periods cannot be combined as member treatments may span multiple periods .

Utilization for 2025 excludes activity under the extended transition of care agreement that ended June 30, 2025 with the large client who did not renew its service agreement, as only members meeting certain criteria were eligible to use the benefit.

(3) Includes approximately 300,000 members from a single client who are not reflected in utilization as a result of the client's chosen benefit design.

2025 excludes the limited number of members who were eligible to use the benefit under the extended transition of care agreement that ended June 30, 2025 with the large client who did not renew its service agreement.

Components of Results of Operations

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We expect that gross profit and gross margin will continue to be affected by various factors including the geographic location where treatments are performed, as well as pricing with each of our clients, provider clinics, labs, specialty pharmacies and pharmaceutical companies, all of which are negotiated separately, have different contracting start and end dates and durations which are not coterminous with each other.

Additionally, staffing levels and the related

personnel costs, including stock-based compensation expense, and other costs necessary to deliver our care management services will continue to grow as we continue to add clients and their associated members.

Additionally, staffing levels and the related personnel costs, including stock-based compensation expense, and other costs necessary to deliver our care management services will continue to grow as we continue to add clients and their associated members.

Operating Expenses

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General and Administrative Expense

General and administrative expense consists primarily of employee related costs, including salaries, bonuses, benefits, stock-based compensation expense, other related costs, and an allocation of our general overhead, depreciation and amortization for those employees associated with general and administrative services such as executive, legal, human resources, information technology, accounting, and finance.

These expenses also include third-party consulting services and facilities costs.

These expenses also include third-party consulting services, facilities costs, and bad debt expense.

We anticipate that we will incur additional general and administrative expenses on an ongoing basis to support the growth of our business.

Interest and Other Income, Net

Interest and other income, net primarily includes interest income and expense, as well as investment income and losses.

Interest and other income, net includes interest income and expense as well as investment income and losses.

Provision for Income Taxes

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Cost of services increased by $70.3 million, or 8%, for the year ended December 31, 2025 compared to the year ended December 31, 2024 primarily due to an increase in medical treatment and pharmacy prescription costs associated with fertility treatments delivered.

This increase in cost of services was also attributable to an increase in personnel-related costs primarily due to incremental headcount as well as an $2.3 million increase in stock-based compensation expense.

This increase in cost of services was also attributable to an increase in personnel-related costs as higher costs attributable to incremental head count were partially offset by a decrease in stock-based compensation expense of $1.5 million.

Gross Profit and Gross Margin

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Gross profit increased by $51.1 million, or 20%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.

Gross margin decreased 20 basis points for the year ended December 31, 2024 compared to year ended December 31, 2023, primarily due to an increase in personnel-related costs in the delivery of our care management services.

Gross margin increased 190 basis points for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to ongoing efficiencies realized in the delivery of our care management services.

Operating Expenses

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Sales and marketing expense increased by $8.2 million, or 13%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.

This increase was primarily due to a $3.5 million increase in personnel-related costs attributable to an increase in stock-based compensation expense, as well as a $1.0 million increase in other related sales and marketing expenses.

This increase was due to a $5.8 million increase in personnel-related costs attributable to incremental head count which included an increase in stock-based compensation expense of $0.2 million, and a $2.4 million increase in other related sales and marketing expenses.

General and Administrative Expense

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General and administrative expense increased by $25.1 million, or 21%, for the year ended December 31, 2025 compared to the year ended December 31, 2024.

This increase was primarily due to a $6.0 million increase in personnel-related costs attributable to incremental head count, and a $2.3 million increase in other related general and administrative expenses, partially offset by a $3.5 million decrease in bad debt expense.

This increase was due to a $16.5 million increase in personnel-related costs, which included an increase of $5.0 million in stock-based compensation expense, attributable to incremental head count and executive severance costs, a $4.1 million increase in bad debt expense driven by our revenue growth, and a $4.5 million net increase in other related general and administrative expenses.

Stock-based compensation expense included $7.7 million of executive severance costs in the year ended December 31, 2025 mainly attributable to the accelerated vesting of awards upon the termination of an executive in December 2025.

Other related general and administrative expense also included a benefit of $2.1 million in the year ended December 31, 2025 related to employee retention credit refunds.

Interest and Other Income, Net

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Interest and other income, net $10,155 $15,747 (36 %)

Interest and other income, net increased by $7.2 million for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to increases in investment and interest income.

Interest and other income, net decreased by $5.6 million or 36%, for the year ended December 31, 2025 compared to the year ended December 31, 2024, as higher interest income was more than offset by a decrease in investment income and an increase in interest expense.

Provision for Income Taxes

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Provision for income taxes $ 36,912 $ 28,866 28 %

For the year ended December 31, 2024, we recorded a provision for income taxes of $28.9 million, as compared to a provision for income taxes of $8.7 million for the year ended December 31, 2023, primarily due to a higher operating profit as well as a decrease in tax benefits for equity compensation.

For the year ended December 31, 2025, we recorded a provision for income taxes of $36.9 million, as compared to $28.9 million for the year ended December 31, 2024, primarily due to a higher operating profit and a decrease in tax benefits for equity compensation in the current year period.

Liquidity and Capital Resources

As of December 31, 2025, we had $112.2 million of cash and cash equivalents and $197.9 million of marketable securities.

We have financed our operations primarily through sales of our solutions and the net proceeds we have received from sales of equity securities.

We have financed our operations primarily through cash generated from the sales of our solutions.

Our cash and cash equivalents and working capital are affected by the timing of payments to third party providers and collections from clients and have increased as our revenue has increased.

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Accordingly, our working capital, and its impact on cash flow from operations, can fluctuate materially from period to period.

We believe that our existing cash and cash equivalents, including the proceeds from our marketable securities, and cash flow from operations will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.

On July 1, 2025, we entered into a revolving credit facility (the “Facility”) pursuant to a Credit Agreement (the “Credit Agreement”) with the lenders and issuing banks, party thereto and JPMorgan Chase Bank, N.A., as administrative agent, collateral agent, and swing line lender.

The Credit Agreement makes available a maximum aggregate amount of $200 million, subject to customary borrowing conditions, until its maturity on July 1, 2030.

We are in compliance with all financial covenants under the Credit Agreement as of December 31, 2025.

As of the date of this filing, no amounts were drawn under the Facility.

Refer to Note 9 to the Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.

We believe that our existing cash and cash equivalents, including the proceeds from our marketable securities, cash flow from operations, and the availability of funds under the Facility will be sufficient to support working capital and capital expenditure requirements for at least the next 12 months.

We also expect these sources of existing cash and cash equivalents will be sufficient to fund our long-term contractual obligations and capital needs.

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(in thousands)

Cash provided by operating activities $ 179,105 $ 188,814

Cash provided by (used in) investing activities 195,792 (200,525)

Cash used in financing activities (309,880) (11,072)

Effect of exchange rate changes on cash and cash equivalents $ 1 $ 1

Net increase (decrease) in cash and cash equivalents $ 65,018 $ (22,782)

Net cash provided by operating activities $ 210,192 $ 179,105

Net cash (used in) provided by investing activities (159,013) 195,792

Net cash used in financing activities (99,362) (309,880)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash 62 1

Net (decrease) increase in cash, cash equivalents, and restricted cash $ (48,121) $ 65,018

Operating Activities

Net cash provided by operating activities was $210.2 million for the year ended December 31, 2025, primarily consisting of net income of $58.5 million adjusted for certain items, which includes $131.9 million of stock-based compensation expense, $20.5 million of bad debt expense, $8.1 million of deferred tax benefit, $4.9 million of depreciation and amortization expense, $0.9 million of net accretion of discounts on marketable securities, $0.4 million of non-cash interest expense, and $0.1 million of loss on disposal of property and equipment.

Changes in operating assets and liabilities resulted in cash provided by operating activities from an increase in accounts payable of $28.8 million and accrued expenses and other current liabilities of $0.4 million, that was partially offset by cash used in operating activities from an increase in prepaid expenses and other current assets of $11.9 million, other noncurrent assets and liabilities of $9.3 million, and accounts receivable of $5.1 million.

These changes were a result of the impact of revenue growth and our operating results as well as the timing of cash collections and payments to third parties, including $55.5 million of cash paid for income taxes, net of refunds for the year ended December 31, 2025.

Net cash provided by operating activities was $179.1 million for the year ended December 31, 2024, primarily consisting of net income of $54.3 million adjusted for certain non-cash items, which included $128.1 million of stock-based compensation expense, $16.4 million of bad debt expense, $10.5 million of deferred tax benefit, $3.2 million of depreciation and amortization, $2.1 million of net accretion of discounts on marketable securities, and $1.4 million loss on disposal of property and equipment.

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These changes are a result of the impact of revenue growth and our operating results as well as the timing of cash collections and payments to third parties, including $40.4 million of cash paid for income taxes, net of refunds for the year ended December 31, 2024.

Net cash provided by operating activities was $188.8 million for the year ended December 31, 2023, primarily consisting of net income of $62.0 million adjusted for certain non-cash items, which included $122.6 million of stock-based compensation expense, $19.9 million of bad debt expense, $3.7 million of deferred tax expense, and $2.3 million of depreciation and amortization.

Changes in operating assets and liabilities resulted in cash used in operating activities from an increase in prepaid expenses and other current assets of $22.9 million and accounts receivable of $21.7 million, partially

offset by cash provided by operating activities from increases in accounts payable of $16.2 million, accrued expenses and other current liabilities of $10.4 million and other noncurrent assets and liabilities of $0.6 million.

These changes are a result of the impact of revenue growth and our operating results as well as new agreements with our pharmacy program partners, which include more favorable payment receipt terms and resulted in an additional receipt in the year ended December 31, 2023, and the timing of cash collections and payments to third parties, including a $20.0 million prepayment on the dispensing of certain medications from one of our pharmacy program partners in the year ended December 31, 2023.

Investing Activities

Net cash provided by investing activities was $195.8 million for the year ended December 31, 2024, which primarily consisted of net sales in marketable securities of $206.5 million, partially offset by $5.3 million used in a business acquisition, net of cash acquired.

For the year ended December 31, 2023, net cash used in investing activities was $200.5 million, which primarily consisted of net investments in marketable securities of $196.9 million.

The remainder of the activity for the year ended December 31, 2024 consisted of purchases of computers, software, including capitalized software development costs, and furniture and fixtures.

Net cash used in investing activities was $159.0 million for the year ended December 31, 2025, which primarily consisted of net investment in marketable securities of $131.3 million, and $9.3 million used in a business acquisition, net of cash acquired.

For the year ended December 31, 2024, net cash provided by investing activities was $195.8 million, which primarily consisted of net sales in marketable securities of $206.5 million, partially offset by $5.3 million used in a business acquisition, net of cash acquired.

The remainder of the activity for the years ended December 31, 2025 and 2024, respectively, consisted of purchases of computers, software, including capitalized software development costs, and furniture and fixtures.

Our capital investments, including investments in technology and the development of software, are expected to increase over the next 12 months as we continue to invest in our benefits offerings and growth strategy.

Financing Activities

Net cash used in financing activities was $309.9 million for the year ended December 31, 2024, consisting of $300.3 million of repurchases of common stock under the 2024 Share Repurchase Programs, inclusive of $0.4 million in trading fees and payments of $12.0 million for employee taxes related to the net settlement of equity awards, partially offset by $1.1 million in proceeds from stock option exercises and $1.3 million in proceeds from contributions to our employee stock purchase plan.

Net cash used in financing activities was $11.1 million for the year ended December 31, 2023, consisting of payments of $17.2 million for employee taxes related to the net settlement of equity awards, partially offset by $4.9 million in proceeds from stock option exercises and $1.3 million in proceeds from contributions to our employee stock purchase plan.

Net cash used in financing activities was $99.4 million for the year ended December 31, 2025, consisting of $81.7 million of repurchases of common stock under the November 2025 share repurchase program, inclusive of $0.1 million in trading fees, payments of $15.8 million for employee taxes related to the net settlement of equity awards, and $3.1 million of issuance costs related to the Facility, partially offset by $1.1 million in proceeds from contributions to our employee stock purchase plan and $0.1 million in proceeds from stock option exercises.

Net cash used in financing activities was $309.9 million for the year ended December 31, 2024, consisting of $300.3 million of repurchases of common stock under the 2024 share repurchase program, inclusive of $0.4 million in trading fees and payments of $12.0 million for employee taxes related to the net settlement of equity awards, partially offset by $1.1 million in proceeds from stock option exercises and $1.3 million in proceeds from contributions to our employee stock purchase plan.

Share Repurchase Programs

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In August 2024, our Board of Directors authorized an additional share repurchase program of up to $100 million in shares of common stock.

During the year ended December 31, 2024, we repurchased a total of 12,382,193 shares of common stock under the 2024 Share Repurchase Programs at an average price per share of $24.22 and a total cost of $300.3 million, inclusive of $0.4 million in trading fees.

In addition, the Company recognized $2.6 million of excise taxes related to the share repurchases.

As of the year ended December 31, 2024, the share repurchase programs were completed, and no amounts remained available for repurchase under the programs.

As of the year ended December 31, 2024, the share repurchase programs were completed, and no amounts remained available for repurchase under the program.

In November 2025, our Board of Directors authorized a share repurchase program of up to $200 million in shares of common stock (the “November 2025 share repurchase program”).

Repurchases under the November 2025 share repurchase program may be made in the form of open market repurchases, including through plans complying with Rule 10b5-1 under the Exchange Act, depending on stock price, market conditions, and other factors, as determined by the Company.

There can be no assurance as to the total number of shares that will be repurchased by the Company under the November 2025 share repurchase program.

During the year ended December 31, 2025, we repurchased a total of 3,301,596 shares of common stock under the November 2025 share repurchase program at an average price per share of $25.31 and a total cost of $83.6 million, inclusive of $0.1 million in trading fees.

In addition, we recognized $0.5 million of excise taxes related to the share repurchases.

As of the date of this filing, we have repurchased a total of 6,530,363 shares of common stock under the November 2025 share repurchase program for a total cost of $159.4 million.

Operating Lease Commitments

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Pursuant to the sublease, we will pay the base rent of approximately $1.3 million per year through the end of the fifth lease year and approximately $1.4 million per year thereafter through the expiration date.

In February 2022, we entered into a lease agreement commencing in February 2023 for additional space in our corporate offices in New York, New York, consisting of a 24,099 square foot office and a 21,262 square foot office, and also for continued occupancy of the 25,212 square foot office after the expiration of the current sublease.

For the 24,099 square foot office, we pay base rent of approximately $1.4 million per year through the end of the fifth year and approximately $1.5 million per year thereafter through the second quarter of 2036, the expected expiration date.

For the 21,262 square foot office, we will pay the base rent of approximately $1.3 million starting in the second quarter of 2026 for five years and approximately $1.4 million per year thereafter through the second quarter of 2036, the expected expiration date.

For our current 25,212 square foot office, we will pay the base rent of approximately $1.6 million per year beginning in June 2029, which is the lease commencement date, through the second quarter of 2036, the expected expiration date.

In February 2022, we entered into a lease agreement for leases commencing in February 2023 and March 2025 for additional space in our corporate offices in New York, New York, consisting of a 24,099 square foot office and a 21,262 square foot office, respectively.

The lease agreement also provides for continued occupancy of the 25,212 square foot office after the expiration of the current sublease.

For the 24,099 square foot office, we pay the base rent of approximately $1.4 million per year through the end of the fifth year and approximately $1.5 million per year thereafter through the April 2036, the expiration date.

For the 21,262 square foot office, we will pay the base rent of approximately $1.3 million per year starting in April 2026 through the end of the fifth year and approximately $1.4 million per year thereafter through April 2036, the expiration date.

For our current 25,212 square foot office, we will pay the base rent of approximately $1.6 million per year beginning in June 2029, which is the lease commencement date, through April 2036, the expiration date.

Critical Accounting Estimates

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At the same time, we estimate cost of services and accrued claims payables based on the amount to be paid to the provider clinic and expected gross margin on fertility benefit services.

Accrued claims payable of $32.1 million and $30.3 million as of December 31, 2024 and 2023, respectively, are included within accrued expenses and other current liabilities in the consolidated balance sheet.

Accrued claims payable of $30.0 million and $32.1 million as of December 31, 2025 and 2024, respectively, are included within accrued expenses and other current liabilities in the consolidated balance sheets.

Our estimates are adjusted to actual at the time of billing and these adjustments have historically not been material.

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We recognize stock-based compensation expense based on the fair value of stock-based awards granted to employees and directors on the date of grant.

We estimate the fair value of each stock-based award on the measurement date using either the Black-Scholes option-pricing model for stock options and stock purchased under the employee stock purchase plan or the closing market price of our common stock for restricted stock units, including those with performance-based vesting criteria.

We estimate the fair value of each stock-based award on the measurement date using either the Black-Scholes option-pricing model for stock options and stock purchased under the employee stock purchase plan on the closing market price of our common stock for restricted stock units, including those with performance-based vesting conditions.

The Black-Scholes option-pricing model requires the input of subjective assumptions, including (1) the expected stock price volatility, (2) the expected term of the award, (3) the risk-free interest rate and (4) expected dividends.

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53.0% - 55.0%

Expected term (years) 5.25 - 6.11

Expected term (in years) 5.50 - 6.25

Risk‑free interest rate 3.6% - 4.5%

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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 7. Management’s Discussion and Analysis