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Our mission is to make dreams of parenthood come true through healthy, timely and supported fertility journeys.
−Removed: Through our differentiated approach to benefits plan design, patient education and support and active network management, our clients’
−Removed: employees are able to pursue the most effective treatment from the best physicians and achieve optimal outcomes.
+Added: 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.
Progyny is a leading benefits management company specializing in fertility and family building benefits solutions in the United States.
−Removed: Our clients include many of the nation’s most prominent employers across a broad array of industries.
+Added: Our clients include many of the nation’s most prominent employers across a broad array of industries.
We launched our fertility benefits solution in 2016 with our first five employer clients, and we have grown our base of clients to over 180.
−Removed: We currently provide coverage to approximately 2.1 million employees and their partners (known in our industry as covered lives), who we refer to as our members.
+Added: We currently have contracts to provide coverage to approximately 2.7 million employees and their partners (known in our industry as covered lives), who we refer to as our members.
We have achieved this growth by demonstrating that our purpose-built, data-driven and disruptive platform consistently delivers superior clinical outcomes in a cost-efficient manner while driving exceptional client and member satisfaction.
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In order to simplify the process for our members, we position the benefit to them using our proprietary Smart Cycle approach.
−Removed: Smart Cycles are designed by us to include the medical services required for a member’s full course of treatment, including all necessary diagnostic testing and access to the latest technology.
+Added: Smart Cycles are designed by us to include the medical services required for a member’s full course of treatment, including all necessary diagnostic testing and access to the latest technology.
In conjunction with the Smart Cycle plan design, each of our members who utilizes our benefit has a dedicated Patient Care Advocate, or PCA, who has fertility expertise and provides end-to-end concierge support, including logistical support (i.e., fertility specialist selection, appointment scheduling, treatment authorization and treatment payment), clinical guidance (i.e., treatment options, outcomes statistics and what to expect) and emotional support during the often challenging and unpredictable fertility journey.
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Additionally, across our membership, our outcomes compared to national averages have been consistently superior.
+Added: Our Corporate Information
+Added: We were incorporated in Delaware in 2008 under the name Auxogen Bioscience, Inc.
+Added: In 2010, we changed our name to Auxogyn, Inc., and in 2015 we changed our name to Progyny, Inc.
+Added: Our principal executive offices are located at 1359 Broadway, New York, New York 10018, and our telephone number is (212) 888-3124.
+Added: Our website address is www.progyny.com.
+Added: Information contained on, or that can be accessed through, 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.
+Added: We completed our initial public offering, or our IPO, in October 2019, and our common stock is listed on the Nasdaq Global Select Market under the symbol “PGNY.”
Industry Background
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For the states that do mandate coverage, the mandates vary greatly and often leave patients with inadequate coverage or unable to pursue care at all.
−Removed: When conventional health insurance carriers have chosen to structure fertility coverage for their employer clients, that coverage often has limited lifetime dollar maximums (with median coverage maximum of $15,000 according to Mercer) and clinically antiquated "one size fits all" clinical protocols, such as mandated step therapy protocols.
+Added: When conventional health insurance carriers have chosen to structure fertility coverage for their employer clients, that coverage often has limited lifetime dollar maximums (with median coverage maximum of $15,000 according to Mercer) and clinically antiquated "one size fits all"
+Added: clinical protocols, such as mandated step therapy protocols.
Major cultural shifts and the evolving demographics of the workforce in the United States are driving demand for fertility treatments and adequate coverage to support them.
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Additionally, the increased acceptance of non-traditional paths to parenthood has created an increased need for access to fertility treatments.
−Removed: As employees are demanding more robust fertility benefits coverage, employers are increasingly focused on providing a comprehensive fertility benefits that supports an inclusive and diverse workplace in order to attract and retain top employees.
+Added: As employees are demanding more robust fertility benefits coverage, employers are increasingly focused on providing a comprehensive fertility benefits plan that supports an inclusive and diverse workplace in order to attract and retain top employees.
Because employers in the same industry are competing for employee talent, once the availability of fertility benefits begins to penetrate a particular industry, a demonstrable network effect occurs in which employees within that industry begin to expect the benefit from their employers, which can cause an employer to adopt the benefit to remain competitive and bolster employee satisfaction.
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In addition, these plan designs have failed to provide access to premier fertility specialists, robust patient support and the ability to dispense fertility medication in a timely manner.
−Removed: Given the evolution of fertility science, such conventional plans have not kept pace and have generated suboptimal clinical outcomes, as well as greater upfront treatment costs and maternity and NICU expenses.
−Removed: This in turn leads to inefficient utilization of employers’
−Removed: expenditures on their fertility benefits programs.
When conventional fertility benefits coverage is restrictively structured with a lifetime dollar maximum, the patient often makes poor clinical decisions that ultimately result in greater costs for the employer.
Because the dollar maximum can easily be exhausted in the midst of a fertility treatment cycle, patients may elect to transfer multiple embryos because they are under financial pressure and mistakenly believe that it will optimize their chance of becoming pregnant.
−Removed: According to a 2015 survey conducted by Reproductive Medicine Associates of New Jersey among 1,000 nationally representative U.S.
−Removed: adults aged 25 to 40, or the 2015 RMANJ Report, 94% of respondents who are actively trying to have a child believe that they must use multiple embryos to increase their chance of having a child through in vitro fertilization, or IVF.
The common use of multiple embryo transfer belies the fact that this procedure greatly increases the risk of multiple births and health complications among the mother and babies.
−Removed: One of the most common complications associated with multiples is preterm births.
−Removed: Preterm births significantly escalate healthcare costs, including maternity care, labor and delivery costs and NICU expenses.
+Added: One of the most common complications associated with multiples is preterm births, which significantly escalate healthcare costs, including maternity care, labor and delivery costs and NICU expenses.
According to a study published in the American Journal of Obstetrics & Gynecology that analyzed the total costs of care over 400,000 deliveries between 2005 and 2010, as adjusted for inflation, the maternity and perinatal healthcare costs attributable to a set of twins are approximately $153,000 on average, more than four times the comparable costs attributable to singleton births of approximately $36,000, and often exceed this average.
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A patient with mandated fertility step therapy protocol may be required to undergo three to six cycles of intrauterine insemination, or IUI, which has an average success rate range of 5% to 15%, takes place over three to six months and can cost up to $4,000 per cycle (or an aggregate of approximately $12,000 to $24,000), according to FertilityIQ.
−Removed: Multiple rounds of mandated IUI is likely to exhaust the patient’s lifetime dollar maximum fertility benefits and waste valuable time before more effective IVF treatment can be pursued.
−Removed: Additionally, conventional fertility benefits programs generally do not cover certain advanced diagnostics and procedures that have been demonstrated to increase the likelihood of a healthy live birth.
−Removed: In addition to restrictive plan designs, the success of conventional fertility programs is also limited because many of the nation’s top fertility specialists do not broadly participate in conventional health insurance carriers’
The fertility process is a long, rigorous journey, both emotionally and physically.
−Removed: Conventional benefits programs also lack any meaningful care coordination, education or patient support.
+Added: Conventional benefits programs lack any meaningful care coordination, education or patient support.
Patients and their dependents have no help in understanding the complex choices they are faced with and discerning between treatment alternatives.
−Removed: For example, patients are often uneducated on the health risks and financial implications associated with preterm multiple births caused by the transfer of multiple embryos.
−Removed: There is also limited emotional support when patients face setbacks or
−Removed: unexpected outcomes as the current system ignores the emotional burden of patients embarking on the path to pregnancy through assisted reproductive technology, or ART, treatments and the impact that burden has on employee productivity and the workplace.
−Removed: In the 2015 RMANJ Report, 55% of surveyed individuals believe infertility to be more stressful than unemployment, and 61% believe infertility to be more stressful than divorce.
−Removed: Another study published by European Society of Human Reproduction and Embryology reported that 50% of women with infertility reported feeling depressed most or all of the time.
−Removed: The current system places the heavy burden of coping with the infertility journey completely on the patient, without adequate resources for emotional and educational support.
+Added: There is also limited emotional support when patients face setbacks or unexpected outcomes as the current system ignores the emotional burden of patients embarking on the path to pregnancy through assisted reproductive technology, or ART, treatments and the impact that burden has on employee productivity and the workplace.
The conventional pharmacy delivery infrastructure is not designed to address the uniqueness of fertility treatment, which requires highly coordinated and timely delivery of medication.
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If medications are not received on time, patients may have to wait a month or longer to commence another round of fertility treatment, wasting valuable time and money.
−Removed: In addition, the storage, preparation and administration of fertility medication is complex and requires extensive self-administered injections, yet most fertility benefits programs offer limited guidance and clinical support to patients around these issues.
−Removed: Additionally, fertility medications are often self-administered injectable drugs, and the effectiveness of a patient’s treatment may be compromised by improper storage and/or incorrect administration of their medications if the patient is not provided access to education and support.
−Removed: Because of the unique challenges of infertility, including the high costs and complexity of treatment and the variability of outcomes across fertility specialists, conventional benefits solutions have been unable to optimize outcomes and efficiently utilize employers’
−Removed: dollars committed to fertility.
+Added: addition, the storage, preparation and administration of fertility medication is complex and requires extensive self-administered injections, yet most fertility benefits programs offer limited guidance and clinical support to patients around these issues.
+Added: Additionally, fertility medications are often self-administered injectable drugs, and the effectiveness of a patient’s treatment may be compromised by improper storage and/or incorrect administration of their medications if the patient is not provided access to education and support.
+Added: Because of the unique challenges of infertility, including the high costs and complexity of treatment and the variability of outcomes across fertility specialists, conventional benefits solutions have been unable to optimize outcomes and efficiently utilize employers’ dollars committed to fertility.
As a result, employers are facing increased demand for an expensive benefits program without the availability of an effective solution in the conventional managed care environment.
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As a result of these suboptimal treatment outcomes, employers also bear the related costs of increased employee absenteeism at the workplace, which is common with instances of multiples births.
−Removed: Employers may not be fully aware of the causal effect and ultimate impact of suboptimal fertility care under the current solutions offered by the conventional benefits programs since these programs do not collect outcomes data from their fertility specialists and therefore cannot accurately report on their program’s performance in a timely manner.
+Added: Employers may not be fully aware of the causal effect and ultimate impact of suboptimal fertility care under the current solutions offered by the conventional benefits programs since these programs do not collect outcomes data from their fertility specialists and therefore cannot accurately report on their program’s performance in a timely manner.
Ability to Attract and Retain Talent
−Removed: Employers are facing increasing competition to attract and retain talent as the labor market is at historically low unemployment levels.
+Added: Employers are facing increasing competition to attract and retain talent.
As a result, employers are enhancing their value proposition to employees by evaluating and providing benefits that are most in demand.
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In addition, we believe that continued de-stigmatization of infertility, along with increased financial support from employers, will continue to drive better access to, and stronger demand for, fertility treatment services, thereby further enabling the expansion of our addressable market.
−Removed: We estimate that the market for fertility treatments in the United States was approximately $6.7 billion in 2017, based on data published by the CDC regarding the number of treatment cycles and FertilityIQ’s estimate of the average cost per cycle.
+Added: We estimate that the market for fertility treatments in the United States was approximately $7.0 billion in 2018, based on data published by the CDC regarding the number of treatment cycles and FertilityIQ’s estimate of the average cost per cycle.
We estimate the potential size of the U.S.
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These 8,000 employers have a minimum of 1,000 employees, representing approximately 69 million potential covered lives in total.
−Removed: Our current member base of 2.1 million represents only 3% of our total market opportunity.
+Added: Our current member base of 2.7 million lives under contract represents a low single digit percent of our total market opportunity.
Regardless of whether or not these self-insured employers currently provide a fertility benefit, we believe they are prospective clients of Progyny.
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Our innovative and comprehensive fertility solution has proven to be simultaneously beneficial for our clients, our members and our network of fertility specialists.
−Removed: Through our differentiated approach to benefits plan design, patient education and support and active network management, our clients’
−Removed: employees are able to pursue the most effective treatment from the best fertility specialists and achieve optimal outcomes in a cost-efficient manner, while our clients achieve savings in upfront treatment costs as well as reduced maternity and NICU expenses.
+Added: 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 fertility specialists and achieve optimal outcomes in a cost-efficient manner, while our clients and members achieve savings in upfront treatment costs as well as reduced maternity and NICU expenses.
Fertility Benefits Solution
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The innovative Smart Cycle is our easy-to-understand fertility benefits design.
−Removed: Our Smart Cycle plan design allows members equitable access to the treatment they need and is designed to drive superior outcomes and reduce both upfront treatment and subsequent costs.
+Added: Our Smart Cycle plan design allows members equitable access to the treatment they need and is designed to drive superior outcomes and reduce both upfront treatment expenses and subsequent costs.
Everything needed for a comprehensive fertility treatment is contained within a Smart Cycle treatment bundle, including all necessary diagnostic testing and access to the latest technology (e.g., in the case of IVF treatment, preimplantation genetic testing).
−Removed: We currently offer 17 different Smart Cycle treatment bundles, which may be used independently or in combination depending on the member’s need.
+Added: We currently offer 17 different Smart Cycle treatment bundles, which may be used independently or in combination depending on the member’s need.
Each Smart Cycle has a separate unit value (i.e., some have fractional values and some have whole values).
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Members can choose their preferred provider clinics within our network and utilize their Smart Cycles for whichever treatments they and their fertility specialists determine to be necessary throughout their fertility journey.
−Removed: The Smart Cycle structure allows our members, together with the advice of their fertility specialists and the support of their PCAs, to select the Smart Cycle treatment bundles that align with their unique treatment needs and their intended family building pathway, without having to follow the “one size fits all”
−Removed: protocols common to conventional health insurance carriers, and without the worry that their desired treatment approach will not be authorized or covered for the full treatment cycle.
+Added: The Smart Cycle structure allows our members, together with the advice of their fertility specialists and the support of their PCAs, to select the Smart Cycle treatment bundles that align with their unique treatment needs and their intended family building pathway, without having to follow the “one size fits all” protocols common to conventional health insurance carriers, and without the worry that their desired treatment approach will not be authorized or covered for the full treatment cycle.
Our comprehensive Smart Cycles, which are our proprietary treatment bundles, are assessed regularly by our Medical Advisory Board, and include access to the latest science and technologies, enabling our network of fertility specialists to utilize best practices.
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Our fertility benefits solution provides members with access to significant support services that are crucial to the success of the fertility and family building journey.
−Removed: Before the fertility treatment process begins, and throughout every step of the fertility journey, we deliver high-touch member support services through a dedicated PCA.
+Added: Before the fertility treatment process begins, and throughout every step of the fertility journey, we deliver high-touch member support services through a dedicated PCA, who is paired to a member and interacts with them an average of 15 times over the course of their treatment.
Our PCAs have deep fertility expertise and provide extensive clinical education, guidance and emotional support to our members.
−Removed: Additionally, we have an in-house clinical staff, comprised of professionals with substantial expertise in reproductive
−Removed: endocrinology, fertility nursing, clinical psychology and social work that design our PCA training curriculum and direct our comprehensive member experience.
+Added: Additionally, we have an in-house clinical staff, comprised of professionals with substantial expertise in reproductive endocrinology, fertility nursing, clinical psychology and social work that design our PCA training curriculum and direct our comprehensive member experience.
Our comprehensive member portal, accessible via any desktop or mobile device, further supports the member experience by providing key educational resources and easy-to-access benefits information to our members.
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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.
−Removed: Our members receive access to our selective Center of Excellence network of high-quality providers that includes approximately 800 fertility specialists who practice at approximately 600 provider clinic locations throughout the United States.
+Added: Our members receive access to our selective Center of Excellence network of high-quality providers that includes approximately 900 fertility specialists who practice at over 650 provider clinic locations throughout the United States.
Our network includes 46 of the top 50 fertility practice groups by volume in the United States according to 2018 CDC data, which was published in 2020 and is the most recent data available.
Fertility specialists who are invited to join our network must meet and maintain rigorous credentialing standards and quality thresholds that we set for inclusion in our network to ensure that our members receive the highest quality of care.
−Removed: Our fertility specialist network is unique in that approximately 30% of our provider clinics do not broadly participate in conventional health insurance carrier networks, meaning they contract with us and no more than one other health insurance carrier.
−Removed: Our national network serves members in virtually every state (two states have no practicing reproductive endocrinologists), providing extensive geographic coverage to our national employers.
+Added: Our national network serves members in virtually every state, providing extensive geographic coverage to our national employers.
Progyny Rx, an Integrated Pharmacy Benefits Solution
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To further support those members that require additional education, we also offer a library of on-demand videos.
−Removed: Given the importance of the timely use of medication to the success of fertility treatments, and the
−Removed: complexity involved in administering the medications, we believe Progyny Rx provides a differentiated and effective pharmacy solution for our clients and their employees.
+Added: Given the importance of the timely use of medication to the success of fertility treatments, and the complexity involved in administering the medications, we believe Progyny Rx provides a differentiated and effective pharmacy solution for our clients and their employees.
Robust Data Collection Process
We believe that we are the only fertility and family building benefits company to collect data in a timely manner directly from providers on adherence to treatment protocols and clinical outcomes, including single embryo transfer rates, pregnancy rates, miscarriage rates, live birth rates, multiple birth rates, practice patterns, treatment timelines and costs per birth.
−Removed: Our data is used to understand the utilization of our benefits, our provider clinics’
−Removed: adherence to best practices and the outcomes produced by each clinic and across our network.
+Added: Our data is used to understand the utilization of our benefits, our provider clinics’ adherence to best practices and the outcomes produced by each clinic and across our network.
This data informs decisions across our platform, from services covered to our fertility network standards.
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Prestigious Medical Advisory Board
−Removed: Our Medical Advisory Board, comprised of nationally recognized fertility specialists who are advancing fertility science and research.
−Removed: They are responsible for oversight of key clinical issues, including evaluating new fertility treatment diagnostics and procedures to ensure that our benefits design and overall program is comprehensive and is designed to drive to the best outcomes.
+Added: Our Medical Advisory Board is comprised of nationally recognized fertility specialists who are advancing fertility science and research.
+Added: They are responsible for oversight of key clinical issues, including evaluating new fertility treatment diagnostics and procedures to ensure that our benefits design and overall program is comprehensive and designed to drive to the best outcomes.
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.
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We provide a dedicated account management team to ensure that we are delivering superior service.
−Removed: Our account managers support our clients’
−Removed: day-to-day needs and resolve issues that arise.
+Added: 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.
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(2) deliver a better and more supported fertility journey to our members;
−Removed: and (3) provide value to, and work collaboratively with, the nation’s finest fertility specialists.
+Added: and (3) provide value to, and work collaboratively with, the nation’s finest fertility specialists.
We Provide Measurable Value to Our Employer Clients
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● Appeal to Existing and Prospective Employees.
−Removed: Better fertility benefits programs can be a key component of enhancing a company’s overall benefits and an important tool in its recruiting efforts and in helping retain key talent.
+Added: Better fertility benefits programs can be a key component of enhancing a company’s overall benefits and an important tool in its recruiting efforts and in helping retain key talent.
An appealing feature of the Progyny benefit from an employee retention perspective is that the benefit is both comprehensive and is accessible by all groups across an employee population.
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Superior Clinical Outcomes.
−Removed: Our members experience healthier pregnancies (with significantly increased utilization of single embryo transfer) and superior rates of pregnancy and live births, as well as reduced
−Removed: rates of miscarriages and multiple births, saving valuable time and money and limiting personal and professional disruption.
−Removed: Progyny In‑Network
−Removed: Progyny In‑Network
+Added: Our members experience healthier pregnancies (with significantly increased utilization of single embryo transfer) and superior rates of pregnancy and live births, as well as reduced rates of miscarriages and multiple births, saving valuable time and money and limiting personal and professional disruption.
+Added: Progyny In ‑ Network
+Added: Progyny In ‑ Network
Provider Clinic
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IVF multiples rate (2)
−Removed: Calculated based on the Society for Assisted Reproductive Technology, or SART, 2017 National Summary Report, published in 2019.
−Removed: Calculated based on CDC, 2016 National Summary and Clinic Data Sets, published in 2018.
+Added: (1) Calculated based on the Society for Assisted Reproductive Technology, or SART, 2017 National Summary Report, finalized in 2020.
(2) Calculated based on CDC, 2018 National Summary and Clinic Data Sets, published in 2020.
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● Access to Selective, Premier Fertility Specialist Network.
−Removed: Our solution provides members with access to the nation’s most desired fertility providers, including approximately 800 fertility specialists who practice at approximately 600 provider clinic locations throughout the United States.
+Added: Our solution provides members with access to the nation’s most desired fertility providers, including approximately 900 fertility specialists who practice at approximately 650 provider clinic locations throughout the United States.
Our network includes 46 of the top 50 fertility practice groups by volume in the United States according to 2018 CDC data.
−Removed: In addition, approximately 30% of our provider clinics do not broadly participate in conventional health insurance carrier networks.
● Integrated Pharmacy Benefits Solution.
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● Eliminating Financial Risk Associated With Collections.
−Removed: We assume full responsibility for the collection of all members’
−Removed: deductibles and coinsurance, thereby eliminating the burden and cost of collection (and bad debt expense) for member payments that our provider clinics otherwise would experience.
+Added: We assume full responsibility for the collection of all members’ deductibles and coinsurance, thereby eliminating the burden and cost of collection (and bad debt expense) for member payments that our provider clinics otherwise would experience.
● Data Sharing and Reporting.
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Fertility specialists in our network often experience an increase in patient volume, and because of our comprehensive benefits design, an increase in the number of patients who progress from consultation to treatment.
−Removed: Our Competitive Strengths
−Removed: Market Leadership
−Removed: We are a leading benefits management company specializing in fertility and family building benefits solutions in the United States, with a client base of over 130 self-insured employer clients representing approximately 2.1 million members.
−Removed: We drive superior clinical outcomes for our members including higher pregnancy success rates, lower miscarriage rates, fewer multiple births and a higher live birth rate.
−Removed: We are a recognized and trusted brand and believe that our leadership and market differentiation is evidenced by our retention of substantially all of our clients since we first began offering our fertility benefits solutions in 2016.
−Removed: Differentiated Model Drives Superior Clinical Outcomes at Reduced Overall Cost
−Removed: In contrast to conventional fee-for-service coverage, which is designed to simply contain utilization, our case management-driven benefits model is comprehensive, does not exhaust coverage mid treatment cycle, includes access to the latest technologies and best clinical practices and drives superior outcomes.
−Removed: The success of our plan design in driving more favorable outcomes is evidenced by the fact that outcomes for Progyny members across our fertility specialist network are superior to the average outcomes that these same provider clinics report to the CDC for all of their patients.
−Removed: In addition to the tangible medical and pharmacy cost savings, our clients are also able to avoid some of the indirect costs of infertility such as employee absenteeism and loss of productivity caused by stress and depression, as well as lack of employee retention caused by multiple births.
−Removed: Superior Member Experience
−Removed: We believe that a key differentiator of our services is our concierge member support delivered by our PCAs who are unique to our platform and a valuable resource to our members.
−Removed: PCAs provide meaningful education, clinical guidance and emotional support for our members and are available throughout the member's fertility and family building journey.
−Removed: In addition, the member experience is tailored to meet the unique needs of our clients' employees and the PCAs have expertise in fertility treatment issues uniquely affecting LGBTQ+ individuals, single mothers by choice and individuals looking to pursue surrogacy or adoption.
−Removed: Selective, Premier Fertility Specialist Network
−Removed: Our fertility specialists are thought leaders in the treatment of fertility and are driving differentiated outcomes for our members.
−Removed: Because of the unique Progyny benefits design, our fertility specialists can utilize the most effective treatment for members the first time, without the restrictions of conventional benefits programs.
−Removed: Our network includes 22 of the top 25 fertility practice groups by volume in the United States according to 2017 CDC data.
−Removed: Value-Added Integrated Pharmacy Program
−Removed: We more effectively manage the complex fertility medication process through a single authorization mechanism for fertility treatments and the related prescription drugs, with guaranteed timely delivery and extensive clinical support around drug storage and administration techniques, including injection training, seven days a week.
−Removed: In addition to the unit-cost savings we deliver through our negotiated formulary rates, we also employ an innovative cost containment program that has enabled our clients and members to save additional costs through the reduction in overprescribing that is typical of conventional fertility pharmacy management.
−Removed: Purpose-Built, Data-Driven and Disruptive Platform
−Removed: The outcomes data we collect and analyze provides insights across our business, including the creation and management of our plan design and clinical protocols to ensure the efficiency of employer expenditures.
−Removed: We also manage our fertility specialist network and ensure adherence to Progyny practice standards based on this data to ensure that fertility specialists are driving improved clinical outcomes and member satisfaction.
−Removed: A key differentiator of our solution is our in-depth client reporting.
−Removed: We synthesize our data into comprehensive reporting for our employer clients so that they can see the detail of the utilization of the benefit by their employees, their expenditures, the outcomes and value created and their employees' satisfaction with the experience.
−Removed: We believe we are the only benefits manager that tracks fertility outcomes from medical record data on a timely basis, and we believe this unique data reporting to be important for our employer clients to understand why Progyny offers a superior solution.
−Removed: Highly Scalable Platform
−Removed: Since launching our benefits solution, we have increased our client base every year without any dilution to or decrease in the level and quality of services.
−Removed: Once we begin providing services to a client, we believe it is difficult for our clients to replicate our outcomes with another solution.
−Removed: In addition, we have been able to add new solutions and technologies to our offering while sustaining this growth and believe our platform is capable of continuing to rapidly adopt more clients without meaningful infrastructure enhancements.
−Removed: Deeply Experienced Management Team with Strong Culture
−Removed: Our management team has extensive operational experience and background in healthcare, technology and services.
−Removed: Additionally, our sales, support and development teams have significant healthcare, technology and benefits
−Removed: experience and are a key competitive advantage to our success.
−Removed: Their demonstrated track record of success in running public companies and scaling growth organizations will allow us to continue to be leaders in our industry.
−Removed: A large part of our continued success is driven by our unique culture and the dedication and commitment of our Progyny team.
−Removed: We have been recognized by Modern Healthcare as one of the Best Places to Work in Healthcare in 2018 and 2019, positioning us well to continue to attract and retain top talent.
Our Growth Strategy
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We intend to continue increasing our client base of self-insured employers throughout the United States by leveraging our experienced salesforce and strong relationships with benefits consultants.
−Removed: We believe we have an addressable market of approximately 8,000 potential self-insured employer clients in the United States and, with our current base of over 130 clients, are still in the early stages of our growth trajectory.
+Added: We believe we have an addressable market of approximately 8,000 potential self-insured employer clients in the United States and, with our base of over 180 clients, 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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We will continue to evaluate opportunities as our platform continues to expand.
−Removed: We currently serve over 130 self-insured employers in the United States across more than 25 industries.
−Removed: Our current clients, who are industry leaders across both high-growth and mature industries and range in size from 1,000 to 250,000 employees, represent approximately 2.1 million covered lives.
−Removed: In 2019, 2018 and 2017, each of our largest three clients represented more than 10% of our total revenue.
−Removed: For the years ended December 31, 2019, 2018 and 2017, Google Inc.
−Removed: accounted for 16%, 24% and 45% of our total revenue, respectively.
−Removed: In addition, Amazon.com, Inc.
−Removed: accounted for 15% of our total revenue for the year ended December 31, 2019.
−Removed: Finally, Microsoft Corporation accounted for 10% and 14% of our total revenue for the years ended December 31, 2019 and December 31, 2018, respectively.
−Removed: Our clients represent a large proportion of companies identified by FertilityIQ as the “best companies to work for as a fertility patient”
−Removed: in their 2019-2020 industry study.
+Added: We serve over 180 self-insured employers in the United States across more than 30 industries.
+Added: Our current clients, who are industry leaders across both high-growth and mature industries and range in size from approximately 1,000 to 350,000 employees, represent approximately 2.7 million covered lives under contract.
+Added: For the year ended December 31, 2020, two clients accounted for 18% and 17%, or a combined 35%, of our total revenue.
+Added: No other clients accounted for more than 10% for the year ended December 31, 2020.
We believe that our employer clients are thought leaders in their respective industries and are creating a network effect that is helping to drive more widespread adoption of fertility benefits in their specific industries.
−Removed: We have clients in the technology, consumer retail, industrial, healthcare, media, insurance, legal, food and beverage, financial services, life sciences, professional services, energy, manufacturing, logistics, transportation, real estate, nonprofit and hospitality sectors.
+Added: We have clients in the technology, consumer retail, industrial, healthcare, media, insurance, legal, food and beverage, financial services, life sciences, professional services, government services, energy, manufacturing, logistics, transportation, real estate, nonprofit and hospitality sectors.
Substantially all of our clients have renewed their benefits management contracts since our initial benefits offerings launched in 2016.
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Other competitors who currently provide fertility benefits management services to employers include WIN Fertility and Optum Fertility Solutions.
−Removed: Our solutions are structured as a pre-tax benefit program integrated into employers’
−Removed: overall employee medical insurance, which is unique compared to the offerings of benefits managers new to the industry that do not have integrated health insurance carrier solutions.
+Added: Our solutions are structured as a pre-tax benefit program integrated into employers’ overall employee medical insurance, which is unique compared to the offerings of benefits managers new to the industry that do not have integrated health insurance carrier solutions.
These emerging companies, such as Carrot Fertility and Maven Clinic, currently offer employees post-tax reimbursement programs for fertility benefits.
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Although many regulatory and governmental requirements do not directly apply to our business, our clients are required to comply with a variety of U.S.
−Removed: laws, and we may be affected by these laws as a result of our contractual obligations.
+Added: laws, and we may be affected by these
+Added: laws as a result of our contractual obligations.
We have attempted to structure our operations to comply with laws, regulations and other requirements applicable to us directly and to our clients, members, fertility specialists and specialty pharmacies, but there can be no assurance that our operations will not be challenged or impacted by enforcement initiatives.
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It is uncertain how our operations will be affected by the changing political, legislative, and regulatory landscapes, as well as other influences impacting the healthcare industry.
−Removed: While the most salient vehicle for healthcare reform, the Patient Protection and Affordable Care Act, or ACA, does not directly regulate our business as a benefit area,
−Removed: it does affect the coverage and plan designs that are or will be provided by certain insurance carriers and certain of our clients, as well as the overall reimbursement environment for healthcare providers.
−Removed: There remain judicial and Congressional challenges to certain aspects of the ACA, as well as efforts by the Trump administration to repeal or replace certain aspects of the ACA.
−Removed: Further, the United States Supreme Court announced on March 2, 2020 that it will consolidate two cases regarding the constitutionality of the ACA.
+Added: While the most salient vehicle for healthcare reform, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA, does not directly regulate our business, it does affect the coverage and plan designs that are or will be provided by certain insurance carriers and certain of our clients, as well as the overall reimbursement environment for healthcare providers.
+Added: Since its enactment in March 2010, there have been judicial, executive and Congressional challenges to certain aspects of the ACA.
+Added: For example, the United States Supreme Court heard oral arguments in California v.
+Added: Texas , which consolidated two cases regarding the constitutionality of the ACA, on November 10, 2020.
It is unclear when a decision is expected to be made.
−Removed: Other health reform efforts have been proposed by members of Congress, such as measures that would expand the role of government-sponsored coverage, including further reform to the ACA, as well as single payer or so-called “Medicare-for-All”
−Removed: proposals, which could have far-reaching implications for the healthcare industry if enacted.
−Removed: We are unable to predict how the full impact of healthcare reform initiatives events will ultimately be resolved and what the potential impact may be on our business and on our relationships with current and future clients, insurance carriers, and healthcare providers.
+Added: The Supreme Court’s decision could end the case, or it could result in the case being sent back to the lower courts for continued litigation.
+Added: Other health reform efforts have been proposed by members of Congress, such as measures that would expand the role of government-sponsored coverage, including further reform to the ACA, as well as single payer or so-called “Medicare-for-All” proposals, which could have far-reaching implications for the healthcare industry if enacted.
+Added: On January 28, 2021, President Joe Biden issued an Executive Order directing federal agencies to examine all existing regulations, orders, guidance documents, policies and similar agency actions to determine if any such actions are inconsistent with the policy set forth in the Executive Order to protect and strengthen the ACA and make high-quality healthcare accessible and affordable for every American.
+Added: As another example of recent healthcare legislative changes, the Consolidated Appropriations Act, or CAA, enacted on December 27, 2020, contain provisions impacting group health plans, including protections for plan participants from surprise medical bills and ensuring health plan price transparency.
+Added: Several items pertain to disclosure.
+Added: The CAA prohibits plans from entering into services agreements that directly or indirectly restrict the plans from disclosing provider-specific costs and quality of care information.
+Added: It will also require disclosure by health insurance brokers and consultants to plan sponsors regarding reasonably expected direct and indirect compensation for referral of services to group health plans.
+Added: Additionally, the CAA requires plans to submit reports to the Department of Labor, HHS and IRS with certain information on pharmacy benefits and drug costs for participants and beneficiaries and the application of in-network rates to out of network services, effective December 27, 2021.
+Added: The CAA will also require certain service providers for health plans to comply with certain ERISA fee disclosure rules.
+Added: In addition, effective January 1, 2022, the No Surprises Act (enacted as part of the CAA) provides protection against surprise medical bills by prohibiting plans and providers from balance billing patients for emergency care performed by out-of-network providers as well as non-emergency and ancillary services performed by out-of-network providers at in-network facilities, subject to certain notice and consent exceptions for non-emergency and ancillary services.
+Added: The new law also grants additional patient protections, including requiring providers to send a good faith estimate of the expected charges for furnishing items or services to an insured patient’s health plan (or directly to an uninsured patient) before such items or services are delivered (including items or services reasonably expected to be provided in conjunction with scheduled items or services or that are reasonably expected to be delivered by another provider).
+Added: The No Surprises Act also provides a dispute resolution process in the event the actual charges for such items and services are substantially higher than the plan’s estimate, and will prohibit providers from charging patients an amount beyond the in-network cost sharing amount for services rendered by out-of-network providers, subject to certain exceptions.
+Added: Several states have also enacted comprehensive surprise billing laws and the CAA defers to existing state requirements with respect to state-established payment amounts.
+Added: We are unable to predict how these changes to the ACA and other healthcare reform initiatives from new legislation, regulation, judicial action and/or executive action, including the CAA and No Surprises Act and state laws, will ultimately impact the healthcare industry and what the potential impact may be on our business and on our relationships with current and future clients, insurance carriers, and healthcare providers.
Licensing Requirements
Many states have licensure or registration requirements for entities providing third-party administrator, or TPA, or pharmacy benefit management, or PBM, services.
−Removed: Given the nature and scope of the solutions and services that we provide, we are required to maintain TPA and PBM licenses and registrations in certain jurisdictions and to ensure that such licenses and registrations are in good standing on an annual basis.
−Removed: These licenses require us to comply with the rules and regulations of the governmental bodies that issued such licenses.
+Added: Given the nature and scope of the solutions and services that we provide, we are required to maintain TPA and/or PBM licenses and registrations in certain jurisdictions and to ensure
+Added: that such licenses and registrations are in good standing on an annual basis.
+Added: These licenses require us to comply with the rules and regulations of the governmental bodies that issued such licenses, including maintaining certain solvency or bond requirements.
Our failure to comply with such rules and regulations could result in administrative penalties, the suspension of a license, or the loss of a license, all of which could negatively impact our business.
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For example, certain states have anti-kickback and false claims laws that may be broader in scope than analogous federal laws and may apply regardless of payor.
−Removed: The Employee Retirement Income Security Act of 1974, or ERISA, regulates certain aspects of employee pension and health benefits plans, including self-funded corporate health plans, sponsored by our clients, with which we have agreements to provide TPA services.
−Removed: We believe the conduct of our business vis-a-vis these plans is not generally subject to the fiduciary obligations of ERISA.
+Added: The Employee Retirement Income Security Act of 1974, or ERISA, regulates certain aspects of employee health benefits plans, which includes both insured and self-funded health plans sponsored by our clients, with which we have agreements to provide TPA services.
+Added: Although health plans and their fiduciaries are subject to the fiduciary obligations of ERISA, we believe that we are not fiduciaries in the conduct of our business vis-a-vis these plans.
However, there can be no assurance the United States Department of Labor, or the DOL, which is the agency that enforces ERISA, would not in the future assert that the fiduciary obligations imposed by ERISA apply to certain aspects of our operations or courts would not reach such a ruling in private ERISA litigation.
−Removed: In addition to its fiduciary provisions, ERISA has broad preemptive effect and has been held to preempt state laws imposing transparency requirements on PBMs.
−Removed: ERISA also imposes civil and criminal liability on service providers to health plans subject to ERISA and certain other persons with relationships to such plan if certain forms of illegal or prohibited remuneration are made or received by such service providers or other persons.
−Removed: These provisions of ERISA are similar, but not identical, to the healthcare anti-kickback laws described above, although ERISA lacks the statutory and regulatory “safe harbor”
−Removed: exceptions incorporated into the healthcare anti-kickback laws.
+Added: ERISA also imposes civil and criminal liability on service providers and certain other persons with relationships to health plans subject to ERISA if certain forms of illegal or prohibited remuneration are made or received by such service providers or other persons.
+Added: These provisions of ERISA are similar, but not identical, to the healthcare anti-kickback laws described above, although ERISA lacks the statutory and regulatory “safe harbor” exceptions incorporated into the healthcare anti-kickback laws.
Like the healthcare anti-kickback laws, the corresponding provisions of ERISA are broadly written and their application to particular cases can be uncertain.
Employee benefits plans subject to ERISA are subject to certain rules, published by the DOL, including certain reporting requirements for direct and indirect compensation received by plan service providers.
−Removed: However, many self-funded health plans such as the plans that we have contracts with are exempt from these
−Removed: reporting requirements under current law.
−Removed: At this time, we are unable to predict whether the DOL will issue additional regulations or guidance on reporting or which additional regulations, if any, may be proposed in formal rulemaking by the DOL.
+Added: Finally, although ERISA has broad preemptive effect with respect to certain state laws that “relate” to benefit plans, it does not preempt state laws imposing transparency requirements on PBMs.
Prompt Pay Laws.
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There are numerous federal and state laws and regulations related to the privacy and security of health information.
−Removed: In particular, regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, or collectively referred to as HIPAA, establish privacy and security standards that limit the use and disclosure of certain individually identifiable health information (known as “protected health information”) and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and availability of electronic protected health information.
−Removed: As a provider of services to entities subject to HIPAA, we are directly subject to certain provisions of the regulations as a “Business Associate.”
−Removed: When acting as a Business Associate under HIPAA, to the extent permitted by applicable privacy regulations and contracts and associated Business Associate Agreements with our clients, we are permitted to use and disclose protected health information to perform our solutions and for other limited purposes, but other uses and disclosures, such as marketing communications, require written authorization from the patient or must meet an exception specified under the privacy regulations.
+Added: In particular, regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, or collectively referred to as HIPAA, establish privacy and security standards that limit the use and disclosure of certain individually identifiable health information (known as “protected health information”) and require
+Added: the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and availability of electronic protected health information.
+Added: As a provider of services to entities subject to HIPAA, we are directly subject to certain provisions of the regulations as a “Business Associate.” When acting as a Business Associate under HIPAA, to the extent permitted by applicable privacy regulations and contracts and associated Business Associate Agreements with our clients, we are permitted to use and disclose protected health information to perform our solutions and for other limited purposes, but other uses and disclosures, such as marketing communications, require written authorization from the patient or must meet an exception specified under the privacy regulations.
Other Privacy and Security Requirements.
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Certain federal and state laws protect types of personal information that may be viewed as particularly sensitive.
−Removed: For example, New York’s Public Health Law, Article 27-F protects information that could reveal confidential HIV-related information about an individual.
+Added: For example, New York’s Public Health Law, Article 27-F protects information that could reveal confidential HIV-related information about an individual.
State laws are contributing to increased enforcement activity and may also be subject to interpretation by various courts and other governmental authorities.
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Laws in all 50 states require businesses to provide notice to clients whose personally identifiable information has been disclosed as a result of a data breach.
−Removed: Most states require holders of personal information to maintain safeguards and take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals or the state’s attorney general.
+Added: Most states require holders of personal information to maintain safeguards and take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals or the state’s attorney general.
A non-permitted use or disclosure of protected health information is presumed to be a breach under HIPAA unless the Covered Entity or Business Associate establishes that there is a low probability the information has been compromised consistent with requirements enumerated in HIPAA.
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Consumer Protection Laws.
−Removed: Federal and state consumer protection laws are being applied increasingly by the Federal Trade Commission, or FTC, Federal Communications Commission, or FCC, and states’
−Removed: attorneys general to regulate the collection, use, storage and disclosure of personal or health information, through websites or otherwise, and to regulate the presentation of website content.
+Added: Federal and state consumer protection laws are being applied increasingly by the Federal Trade Commission, or FTC, Federal Communications Commission, or FCC, and states’ attorneys general to regulate the collection, use, storage and disclosure of personal or health information, through websites or otherwise, and to regulate the presentation of website content.
Courts may also adopt the standards for fair information practices promulgated by the FTC, which concern consumer notice, choice, security and access.
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We have in the past and expect in the future to experience seasonal fluctuations in our revenue as more members choose to start their fertility journey while also seeking to minimize their out-of-pocket costs as the calendar year progresses.
−Removed: Working Capital
−Removed: Our working capital is affected by the timing of payments to third party providers and collections from clients and have increased as our revenue has increased.
−Removed: In particular, during the ramp up and onboarding of new clients who typically begin their benefits plan year as of January 1 st , our accounts receivable has historically increased more than our accounts payable, accrued expenses and other current liabilities in the early part of each calendar year.
−Removed: Historically, these timing impacts have reversed throughout the remainder of the fiscal year.
−Removed: Accordingly, our working capital, and its impact on cash flow from operations, can fluctuate materially from period to period.
−Removed: Our Employees
+Added: Employees and Human Capital
As of December 31, 2020, we had 210 full-time employees.
−Removed: None of our employees are represented by a labor union or covered by collective bargaining agreements, and we have not experienced any work stoppages.
−Removed: Our Corporate Information
−Removed: We were incorporated in Delaware in 2008 under the name Auxogen Bioscience, Inc.
−Removed: In 2010, we changed our name to Auxogyn, Inc., and in 2015 we changed our name to Progyny, Inc.
−Removed: Our principal executive offices are located at 1359 Broadway, New York, New York 10018, and our telephone number is (212) 888-3124.
−Removed: Our website address is www.progyny.com.
−Removed: Information contained on, or that can be accessed through, 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.
−Removed: We completed our initial public offering, or our IPO, in October 2019, and our common stock is listed on the Nasdaq Global Select Market under the symbol “PGNY.”
+Added: Our employees are our most important asset and our culture is a key to our success.
+Added: In response to the COVID-19 pandemic, we implemented significant changes designed to ensure the safety and well-being of our employees as well as the communities in which we operate.
+Added: This includes a work-from-home policy for all of our employees for most of 2020.
+Added: We have not furloughed or laid off any employees due to the pandemic.
+Added: We recently re-opened our offices for a small group of employees, while implementing additional safety measures including testing, masks and social distancing protocols.
+Added: We are united around our mission and committed to our shared values of Passion, Collaboration, Innovation, Integrity and Growth.
+Added: Our people strategy is focused on employee culture and engagement, competitive compensation and development, diversity, equity and inclusion, and community outreach and support.
+Added: ● Culture and Engagement.
+Added: Our benefits are designed to help employees and their families stay healthy, meet their financial goals, protect their income and help them balance their work and personal lives.
+Added: These include access to mental health services, life and financial planning workshops, wellness initiatives, employee assistance programs, and new parent and return to work benefits.
+Added: We also measure employee engagement on an ongoing basis, including through broad employee satisfaction surveys and pulse surveys on specific issues, intended to assess our success in promoting an environment where employees are engaged, satisfied, productive and possess a strong understanding of our business goals.
+Added: The results from engagement surveys are used to implement programs and processes designed to enhance employee engagement and improve the employee experience or modify existing programs and benefits offerings.
+Added: ● Competitive Compensation and Development.
+Added: We invest in our workforce by offering competitive salaries, attractive incentives and innovative benefits.
+Added: 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.
+Added: ● Diversity, Equity and Inclusion .
+Added: We believe diversity, equity and inclusion results in business growth and encourages increased innovation, retention of talent and a more engaged workforce.
+Added: We strive to create a workplace where all individuals feel valued, empowered and welcomed.
+Added: Our key initiatives focus on recruiting outreach, internal resource groups, mentoring programs and career development ladders.
+Added: ● Community Outreach and Support .
+Added: 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.
+Added: 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 .
Available Information
We file electronically with the SEC, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K (including amendments to those reports), proxy statements, and other information.
−Removed: Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov.
−Removed: We make available on our website at investors.progyny.com, under “Financials—SEC Filings,”
−Removed: free of charge, copies of these reports as soon as reasonably practicable after filing or furnishing these reports with the SEC.
+Added: Our SEC filings are available to the public over the Internet at the SEC’s website at http://www.sec.gov.
+Added: We make available on our website at investors.progyny.com, under “Financials—SEC Filings,” free of charge, copies of these reports as soon as reasonably practicable after filing or furnishing these reports with the SEC.
The information contained on the websites referenced in this Annual Report on Form 10-K is not incorporated by reference into this filing.
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Investing in our common stock involves a high degree of risk.
−Removed: You should carefully consider all of the information in this Annual Report on Form 10-K, including the sections titled “Cautionary Note Regarding Forward-Looking Statements,”
−Removed: and Part II, Item 7.“Management’s Discussion and Analysis of Financial Condition and Results of Operation”
−Removed: and our consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K.
+Added: You should carefully consider all of the information in this Annual Report on Form 10-K, including the sections titled “Cautionary Note Regarding Forward-Looking Statements,” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and our consolidated financial statements and the accompanying notes included elsewhere in this Annual Report on Form 10-K.
The risks described below are not the only ones we face.
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Risks Related to Our Business and Industry
+Added: The COVID-19 pandemic has had and is expected to continue to have, and similar health epidemics could in the future have, an adverse impact on our business, operations, and the markets and communities in which we and our clients, members and providers operate.
+Added: Our business and operations have been adversely affected by the COVID-19 pandemic, which has impacted the markets and communities in which we and our clients, members and providers operate.
+Added: Since December 2019, when COVID-19 was first reported, the virus has spread to countries worldwide, including the United States and more specifically, New York, New York, where our primary office is located.
+Added: The ongoing COVID-19 pandemic has adversely impacted, and may continue to adversely impact, many aspects of our business.
+Added: Our revenue growth for the year ended December 31, 2020 was negatively impacted by COVID-19 and our revenue growth in future periods may continue to be adversely impacted by COVID-19.
+Added: Our providers have and may in the future delay new fertility cycles because they operate in areas acutely affected by the COVID-19 pandemic, on account of executive orders to postpone non-emergent surgeries or other medical treatments, or in order to conserve medical resources for non-fertility related medical treatments.
+Added: Many of our members live in communities that are acutely affected by the COVID-19 pandemic and have delayed and may not want to continue or begin new fertility cycles during the pandemic.
+Added: The lack of research on the impact of COVID-19 vaccines on pregnancy may also affect member behavior and utilization.
+Added: Furthermore, as certain of our potential clients experience downturns or uncertainty in their own business operations and revenue because of the economic effects resulting from the spread of COVID-19, they have and may continue to decrease their spending on health benefits and delay or cancel implementation of fertility benefits.
+Added: Each of these factors could affect our utilization rates and the number of members enrolled in our clients’ benefit plans.
+Added: In response to the COVID-19 pandemic, many state, local, and foreign governments have put in place, and continue to enforce in whole or in part, and may at any time choose to fully reinstate, quarantines, executive orders, shelter-in-place orders, and similar government orders and restrictions in order to control the spread of the disease.
+Added: Such orders or restrictions, or the perception that such orders or restrictions could occur or reoccur, have resulted in business closures, work stoppages, slowdowns and delays, work-from-home policies, travel restrictions, and cancellation or postponement of events, among other effects that could negatively impact productivity and disrupt our operations and those of our clients, members and providers.
+Added: In light of the uncertainty and rapidly evolving situation relating to the spread of COVID-19 and in compliance
+Added: with shelter-in-place orders and other government executive orders directing that all non-essential businesses close their physical operations, we implemented a work-from-home policy for all of our employees.
+Added: Although we have since re-opened our offices for a small group of employees, the majority of our employees continue to work remotely.
+Added: We may take further actions that alter our operations as may be required by federal, state, or local authorities, or which we determine are in the best interests of our business, our employees and the communities we serve.
+Added: While most of our operations can be performed remotely, there is no guarantee that we will be as effective while working remotely because our team is dispersed, many employees may have additional personal needs to attend to (such as looking after children as a result of school closures or family who become sick), and employees may become sick themselves and be unable to work.
+Added: Decreased effectiveness of our team could adversely affect our results due to our inability to meet in person with potential clients, longer time periods to complete implementation of new clients, longer time to respond to members, extended timelines for data collection and review and a corresponding reduction in growth, or other decreases in productivity that could seriously harm our business.
+Added: In addition, working remotely could increase our cybersecurity risk and make us more susceptible to communication disruptions, which could adversely impact our business operations or delay necessary interactions with our clients, member, providers and other third parties.
+Added: Furthermore, we may decide to postpone or cancel planned investments in our business in response to changes in our business as a result of the spread of COVID-19, which may impact our member utilization and rate of growth, either of which could seriously harm our business.
+Added: In addition, while the potential impact and duration of the COVID-19 pandemic on the global economy and our business in particular may be difficult to assess or predict, the pandemic has resulted in, and may continue to result in, significant disruption of global financial markets, reducing our ability to access capital, which could negatively affect our liquidity in the future.
+Added: Moreover, to the extent the COVID-19 pandemic adversely affects our business, financial condition and results of operations, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section, including but not limited to, those related to our ability to expand our customer base and develop and expand our sales and marketing capabilities, and may impact our ability to comply with the financial covenant relating to revenue targets in our loan agreement with Silicon Valley Bank if a material economic downturn results in substantially lower revenue than expected under our annual financial projections.
+Added: The global impact of COVID-19 continues to rapidly evolve, and we will continue to monitor the situation closely.
+Added: The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.
+Added: We do not yet know the full extent of potential delays or impacts on our business, operations, or the global economy as a whole.
+Added: While the spread of COVID-19 may eventually be contained or mitigated, there is no guarantee that a future outbreak of this or any other widespread epidemics will not occur, or that the global economy will recover, either of which could seriously harm our business.
+Added: We may fail to meet our publicly announced guidance or other expectations about our business and future operating results, which would cause our stock price to decline.
+Added: We have provided and may continue to provide guidance about our business and future operating results.
+Added: On February 24, 2021, we issued guidance for the first quarter of 2021 and full year 2021.
+Added: In developing this guidance, our management must make certain assumptions and judgments about its future performance.
+Added: Some of those key assumptions relate to the impact of the COVID-19 pandemic and the associated economic uncertainty on our business and the timing and scope of economic recovery globally and how long it will take both clinics and patients to return to normal practice volumes, which are inherently difficult to predict.
+Added: This guidance, which consists of forward-looking statements, is qualified by, and subject to, such assumptions, estimates and expectations as of the date such guidance is given.
+Added: While presented with numerical specificity, this guidance is necessarily speculative in nature, and is inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and are based upon specific assumptions with respect to future business decisions or economic conditions, some of which may change.
+Added: Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release of such guidance.
+Added: Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance.
+Added: Our actual business results may vary significantly from such guidance or that consensus due to a number of factors, many of which are outside of our control, including due to the global economic uncertainty and financial market conditions caused by the COVID-19 pandemic, and which could adversely affect our business and future operating results.
+Added: There are no comparable recent events that provide insights as to the probable effect of the COVID-19 pandemic, and, as a result, the ultimate impact of the COVID-19 outbreak is highly uncertain and subject to change.
+Added: We are relying on the reports and models of economic and medical experts in making assumptions relating to the duration of this crisis and predictions as to timing and pace of any future economic recovery.
+Added: If these models are incorrect or incomplete, or if we fail to accurately predict the full impact that the COVID-19 pandemic will have on all aspects of our business, the guidance and other forward-looking statements we provide may also be incorrect or
+Added: Furthermore, if we make downward revisions of our previously announced guidance, or if our publicly announced guidance of future operating results fails to meet expectations of securities analysts, investors or other interested parties, the price of our common stock would decline.
The fertility market in which we participate is competitive, and if we do not continue to compete effectively, our results of operations could be harmed.
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We compete on the basis of several factors, including the comprehensiveness of our benefits solutions and the Smart Cycle (our unique approach to benefits plan design which ensures that members always have coverage for a full treatment cycle as their access to treatment is not limited by a dollar maximum that could be exhausted mid-treatment), superior clinical outcomes, access for all employee groups (including LGBTQ+ and single mothers by choice), equitable access to care across geographies, quality of the member experience and comprehensive member support, access to our selective Center of Excellence (our proprietary, credentialed network of high-quality fertility specialists), data reporting and sharing and access to an integrated pharmacy solution.
−Removed: While we do not believe any single
−Removed: competitor offers a similarly robust and integrated fertility and family building benefits solution, we compete primarily with health insurance companies and benefits administrators that also provide fertility benefits management services as part of their overall healthcare coverage.
+Added: While we do not believe any single competitor offers a similarly robust and integrated fertility and family building benefits solution, we compete primarily with health insurance companies and benefits administrators that also provide fertility benefits management services as part of their overall healthcare coverage.
These competitors include all conventional health insurers, such as UnitedHealthcare, Cigna, Aetna and members of the Blue Cross Blue Shield Association.
1 unchanged sentence
We also compete with benefits managers that are new to the industry that do not have integrated health insurance carrier solutions, such as Carrot Fertility and Maven Clinic, which currently offer employees post-tax reimbursement programs for fertility benefits.
−Removed: As we market our solutions to potential clients that currently utilize other vendors to manage their employees’
−Removed: fertility benefits, we may fail to convince their internal stakeholders that our offerings and our model are superior to their current solutions.
+Added: As we market our solutions to potential clients that currently utilize other vendors to manage their employees’ fertility benefits, we may fail to convince their internal stakeholders that our offerings and our model are superior to their current solutions.
Some of our competitors are more established, benefit from greater brand recognition and have substantially greater financial, technical and marketing resources.
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As a result of any of these factors, we may not be able to continue to compete successfully against our current or future competitors, and this competition could result in the failure of our platform to continue to maintain market acceptance, which would harm our business, financial condition and results of operations.
−Removed: We have a history of operating losses and may not sustain profitability in the future.
−Removed: We experienced net losses from 2015 to 2019.
−Removed: Our net loss from continuing operations was $(8.6) million and $(5.1) million and for the years ended December 31, 2019 and 2018, respectively.
−Removed: While we have experienced significant revenue growth since 2016, we are not certain whether we will obtain sufficient levels of sales to sustain our growth or maintain profitability in the future.
−Removed: We also expect our costs and expenses to increase in future periods, which could negatively affect our future results of operations if our revenue does not increase.
−Removed: In particular, we intend to continue to incrementally expand our sales and client account management teams to educate potential clients and drive new client adoption, as well as enhance the scope of Progyny benefits within our existing client base.
−Removed: We also expect to incur additional costs as we introduce new solutions and services to enhance our comprehensive fertility offering.
−Removed: We will also face increased compliance costs associated with growth, the expansion of our client base and being a public company.
−Removed: Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses.
−Removed: We may incur significant losses in the future for a number of reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications and delays, and other unknown events.
−Removed: If we are unable to sustain profitability, the value of our business and common stock may significantly decrease.
−Removed: We have a limited operating history with our current platform of solutions, which makes it difficult to predict our future results of operations.
−Removed: We went live with our fertility benefits solution in 2016 and Progyny Rx in 2018.
−Removed: As a result of our limited operating history with the current platform of solutions, as well as a limited amount of time serving a majority of our client base, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth.
−Removed: Our historical revenue growth should not be considered indicative of our future performance.
−Removed: Further, in future periods, our revenue growth could slow or decline for a number of reasons, including slowing demand for our solutions and fertility benefits in general, change in utilization trends by our members, general economic slowdown, an increase in unemployment, an increase in competition, changes to health care trends and regulations, changes to science relating to the fertility market, a decrease in the growth of the fertility market, or our failure, for any reason, to continue to take advantage of growth opportunities.
−Removed: If our assumptions regarding these
−Removed: risks and uncertainties and our future revenue growth are incorrect or change, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer.
−Removed: If we are unable to attract new clients, our business, financial condition and results of operations would be adversely affected.
−Removed: To increase our revenue, we must continue to attract new clients.
−Removed: Our ability to do so depends in large part on the success of our sales and marketing efforts, and the success of attracting industry leaders in diversified sectors, which could prompt others in the same sectors to follow suit to remain competitive.
−Removed: Potential clients may seek out other options;
−Removed: therefore, we must demonstrate that our solutions are valuable and superior to alternatives.
−Removed: If we fail to provide high-quality solutions and convince clients of the benefits of our model and value proposition, we may not be able to attract new clients.
−Removed: The market for our solutions could decline or grow more slowly than we expect due to general economic conditions, outbreaks of contagious diseases, a decrease in business investments, including spending on employee benefits, and other factors.
−Removed: If the markets for our solutions decline or grow more slowly than we expect, or if the number of clients that contract with us for our solutions declines or fails to increase as we expect, our financial results could be harmed.
−Removed: As the markets in which we participate mature, fertility solutions and services evolve and competitors begin to enter into the market and introduce differentiated solutions or services that are perceived to compete with our solutions, particularly if such competing solutions are adopted by an industry leader in a particular sector, our ability to sell our solutions could be impaired.
−Removed: As a result of these and other factors, we may be unable to attract new clients, which would have an adverse effect on our business, financial condition and results of operations.
Our business depends on our ability to retain our existing clients and increase the adoption of our services within our client base.
2 unchanged sentences
A client can expand the fertility benefits they offer to their employees a number of ways, including by adding egg freezing or increasing the number of Smart Cycle units under their benefits plan (i.e., from two to three Smart Cycles per household).
−Removed: For example, 6% of our existing 2019 clients increased their Smart Cycle benefit for their 2020 benefits plan year.
In addition, our fertility benefits solution clients can purchase our add-on Progyny Rx solution.
5 unchanged sentences
● our ability to offer complementary solutions and services that will enhance our comprehensive fertility offering;
−Removed: changes in healthcare laws, regulations or trends;
+Added: ● changes in healthcare laws, regulations or the enforcement of such laws and regulations, or trends;
● any material increase in unemployment rate;
−Removed: the business environment of our clients and, in particular, reduction in our clients’
+Added: ● the business environment of our clients and, in particular, reduction in our clients’ headcount;
● consolidation of our clients, resulting in a change to their benefits program or a shift to one of our competitors.
1 unchanged sentence
Our largest clients account for a significant portion of our revenue and a significant number of our clients are in the technology industry.
−Removed: The loss of one or more of these clients or changes within the technology industry could negatively impact our business, financial condition and results of operations.
−Removed: We currently serve over 130 self-insured employers in the United States across more than 25 industries.
−Removed: In 2019 and 2018, each of our largest three clients represented more than 10% of our total revenue.
−Removed: For the years ended December 31, 2019 and 2018, one of our clients accounted for 16 % and 24% of our total revenue, respectively.
−Removed: In addition, another client accounted for 15% of our revenue for year ended December 31, 2019.
−Removed: Finally, a third client accounted for 10% and 14% of our total revenue for the years ended December 31, 2019 and 2018, respectively.
+Added: The loss of one or more of these clients, changes to pricing terms with these clients or changes within the technology industry could negatively impact our business, financial condition and results of operations.
+Added: We serve over 180 employers in the United States across more than 30 industries.
+Added: For the year ended December 31, 2020, two clients accounted for 18% and 17%, or a combined 35%, of our total revenue.
+Added: No other clients accounted for more than 10% for the year ended December 31, 2020.
+Added: In 2019, each of our largest three clients represented more than 10% of our total revenue, accounting for 16%, 15%, and 10%, respectively.
Engagement with these clients is generally covered through contracts that are multi-year in duration.
−Removed: One or more of these clients may terminate early or decline to renew their existing contracts with us upon expiration and any such termination or failure to renew could have a negative impact on our revenue and compromise our growth strategy.
+Added: One or both of these clients may terminate early or decline to renew their existing contracts with us upon expiration and any such termination or failure to renew could have a negative impact on our revenue and compromise our growth strategy.
+Added: Clients could also renegotiate pricing terms at the time of renewal, which could have a negative impact on our revenue.
In addition, we generate a significant portion of our revenue from clients in the technology industry.
Any of a variety of changes in that industry, including changes in economic conditions, mergers or consolidations, reduced spending on benefits programs and other factors, could adversely affect our business, financial condition and results of operations.
−Removed: Changes in the health insurance market could harm our business, financial condition and results of operations.
−Removed: The market for private health insurance in the United States is evolving and, as our solutions are integrated with health insurance plans offered by insurance carriers for our clients, our future financial performance will depend in part on the growth in this market.
−Removed: Changes and developments in the health insurance system in the United States, including taxability of medical benefits like ours, could reduce demand for our solutions and harm our business.
−Removed: For example, there has been an ongoing national debate relating to the health care reimbursement system in the United States.
−Removed: Some members of Congress have introduced proposals that would create a new single payor national health insurance program for all United States residents, others have proposed more incremental approaches such as creating a new public health insurance plan option as a supplement to private sources of coverage.
−Removed: In the event that laws, regulations or rules that eliminate or reduce private sources of health insurance or require such benefits to be taxable are adopted, the subsequent impact on the insurance carriers may in turn adversely impact our ability to accurately forecast future results and harm our business, financial condition and results of operations.
−Removed: The health benefits industry may be subject to negative publicity, which could adversely affect our business, financial condition and results of operations.
−Removed: The health benefits industry may be subject to negative publicity, which can arise from, among other things, increases in premium rates, industry consolidation, cost of care initiatives, drug prices and the ongoing debate over the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA.
−Removed: There remain judicial and Congressional challenges to certain aspects of the ACA, as well as efforts by the Trump administration to repeal or replace certain aspects of the ACA.
−Removed: Further, the United States Supreme Court announced on March 2, 2020 that it will consolidate two cases regarding the constitutionality of the ACA.
−Removed: It is unclear when such oral arguments are to be held and when a decision is expected to be made.
−Removed: In addition, negative publicity may result in increased regulation and legislative review of industry practices, which may further increase our costs of doing business and adversely affect our profitability.
−Removed: For example, PBM programs and drug rebates have recently been criticized as leading to a lack of transparency about the true cost of a drug, and this negative publicity may lead to regulatory changes that could potentially affect our business and operations.
−Removed: Negative public perception or publicity of the health benefits industry in general, the insurance carriers with whom we integrate our solutions, or us could adversely affect our business, financial condition and results of operations.
−Removed: If our computer systems, or those of our provider clinics, specialty pharmacies or other downstream vendors lag, fail or suffer security breaches, we may incur a material disruption of our services, which could materially impact our business and the results of operations .
−Removed: Our business is increasingly dependent on critical, complex and interdependent information technology systems, including cloud-based systems, to support business processes as well as internal and external communications.
−Removed: Our success therefore is dependent in part on our ability to secure, integrate, develop, redesign and enhance our (or contract with vendors to provide) technology systems that support our business strategy initiatives and processes in a compliant, secure, and cost and resource efficient manner.
−Removed: If we or our provider clinics, specialty pharmacies or other downstream vendors have an issue with our or their respective technology systems, it may result in a disruption to our operations or downstream disruption to our relationships with our clients or our selective network of high-quality fertility specialists.
−Removed: Additionally, if we choose to insource any of the services currently handled by a third party, it may result in technological or operational disruptions.
−Removed: In addition, despite the implementation of security measures, our internal computer systems, and those of our provider clinics, specialty pharmacies or other downstream vendors, are potentially vulnerable to damage from malicious intrusion, malware, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures.
−Removed: While we are not aware that we have experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption to our ability to deliver our solutions.
−Removed: In addition, to the extent that any disruption or security breach were to result in a loss or inappropriate disclosure of confidential information, we could incur liability.
−Removed: See “—Risks Related to Government Regulation—We operate in a highly regulated industry and must comply with a significant number of complex and evolving requirements—Data Protection and Breaches.”
+Added: If we are unable to attract new clients, our business, financial condition and results of operations would be adversely affected.
+Added: To increase our revenue, we must continue to attract new clients.
+Added: Our ability to do so depends in large part on the success of our sales and marketing efforts, and the success of attracting industry leaders in diversified sectors, which could prompt others in the same sectors to follow suit to remain competitive.
+Added: Potential clients may seek out other options;
+Added: therefore, we must demonstrate that our solutions are valuable and superior to alternatives.
+Added: If we fail to provide high-quality solutions and convince clients of the benefits of our model and value proposition, we may not be able to attract new clients.
+Added: The market for our solutions could decline or grow more slowly than we expect due to general economic conditions, outbreaks of contagious diseases or worsening thereof, including the COVID-19 pandemic, a decrease in business investments, including spending on employee benefits, and other factors.
+Added: If the markets for our solutions decline or grow more slowly than we expect, or if the number of clients that contract with us for our solutions declines or fails to increase as we expect, our financial results could be harmed.
+Added: As the markets in which we participate mature, fertility solutions and services evolve and competitors begin to enter into the market and introduce differentiated solutions or services that are perceived to compete with our solutions, particularly if such competing solutions are adopted by an industry leader in a particular sector, our ability to sell our solutions could be impaired.
+Added: As a result of these and other factors, we may be unable to attract new clients, which would have an adverse effect on our business, financial condition and results of operations.
A significant change in the utilization of our solutions could have an adverse effect on our business, financial condition and results of operations.
1 unchanged sentence
A significant reduction in the number of members using our solutions could adversely affect our business, financial condition and results of operations.
−Removed: Factors that could contribute to a reduction in the use of our solutions include:
+Added: Factors that have and could continue to contribute to a reduction in the use of our
+Added: solutions include:
reductions in workforce by existing clients;
general economic downturn that results in business failures and high unemployment rates;
−Removed: outbreaks of contagious diseases;
+Added: outbreaks of contagious diseases or the worsening thereof, including the COVID-19 pandemic;
employers no longer offering comprehensive health coverage or offering alternative solutions such as coverage on a voluntary, employee-funded basis;
1 unchanged sentence
changes to taxability of medical benefits;
−Removed: failure to adapt and respond effectively to changing medical landscape, changing regulations, changing client needs, requirements or preferences;
+Added: failure to adapt and respond effectively to the changing medical landscape, changing laws, regulations and government enforcement priorities, changing client needs, requirements or preferences;
premium increases and benefits changes;
3 unchanged sentences
If we cannot help our clients accurately predict the level of utilization by their employees, our clients may turn to alternative solutions, and our business and profitability would be adversely impacted.
+Added: We have a limited operating history with our current platform of solutions, which makes it difficult to predict our future results of operations.
+Added: We went live with our fertility benefits solution in 2016 and Progyny Rx in 2018.
+Added: As a result of our limited operating history with the current platform of solutions, as well as a limited amount of time serving a majority of our client base, our ability to accurately forecast our future results of operations is limited and subject to a number of uncertainties, including our ability to plan for and model future growth.
+Added: Our historical revenue growth should not be considered indicative of our future performance.
+Added: Further, in future periods, our revenue growth could slow or decline for a number of reasons, including slowing demand for our solutions and fertility benefits in general, change in utilization trends by our members, general economic slowdown, an increase in unemployment, an increase in competition, changes to health care trends and regulations, changes to science relating to the fertility market, a decrease in the growth of the fertility market, or our failure, for any reason, to continue to take advantage of growth opportunities.
+Added: If our assumptions regarding these risks and uncertainties and our future revenue growth are incorrect or change, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations, and our business could suffer.
+Added: We have a history of operating losses and may not sustain profitability in the future.
+Added: We experienced net losses from 2015 to 2019.
+Added: Our net loss from continuing operations was $8.6 million and $5.1 million for the years ended December 31, 2019 and 2018, respectively.
+Added: While we have experienced significant revenue growth since 2016, achieved profitability in 2020 and currently project future profitability, we cannot guarantee whether we will obtain sufficient levels of sales to sustain our growth or maintain profitability in the future.
+Added: We also expect our costs and expenses to increase in future periods, which could negatively affect our future results of operations if our revenue does not increase.
+Added: In particular, we intend to continue to incrementally expand our sales and client account management teams to educate potential clients and drive new client adoption, as well as enhance the scope of Progyny benefits within our existing client base.
+Added: We also expect to incur additional costs as we introduce new solutions and services to enhance our comprehensive fertility offering.
+Added: We will also face increased compliance costs associated with growth, the expansion of our client base and being a public company.
+Added: Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses.
+Added: We may incur significant losses in the future for a number of reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications and delays, and other unknown events.
+Added: If we are unable to sustain profitability, the value of our business and common stock may significantly decrease.
+Added: Changes or developments in the health insurance markets in the United States, including passage and implementation of a law to create a single-payer or government-run health insurance program, could materially and adversely harm our business and operating results.
+Added: Our business operates within the public and private sectors of the U.S.
+Added: health insurance system, which are evolving quickly and subject to a changing regulatory environment, and our future financial performance will depend in part on growth in the market for private health insurance, as our solutions are integrated with health insurance plans offered by insurance carriers for our clients or our clients’ self-insured plans, as well as our ability to adapt to regulatory developments.
+Added: Changes and developments in the health insurance system in the United States could reduce demand for our services and harm our business.
+Added: For example, there has been an ongoing national debate relating to the health insurance system in the United States.
+Added: Certain elected officials have introduced proposals that would create a new single-payer
+Added: national health insurance program for all United States residents, replacing virtually all other sources of public and private insurance, to more incremental approaches, or creating a new public health insurance option that would compete with private insurers.
+Added: Additionally, proposals to establish a single-payer or government-run health care system at the state level are regularly introduced, such as in New York and California.
+Added: At the federal level, President Biden and Congress may consider other legislation and/or executive orders to change elements of the ACA.
+Added: In December 2019, a federal appeals court held that the individual mandate portion of the ACA was unconstitutional and left open the question whether the remaining provisions of the ACA would be valid without the individual mandate.
+Added: On November 10, 2020, the U.S.
+Added: Supreme Court heard oral arguments in this matter, and is in the process of reviewing this case.
+Added: A decision is expected in 2021.
+Added: On January 28, 2021, President Biden issued an Executive Order that iterates the policy of the Administration to protect and strengthen the ACA, making high-quality healthcare accessible and affordable to all Americans.
+Added: The Executive Order directs federal agencies to examine agency actions to determine whether they are consistent with that the Administration’s commitment regarding the ACA, and begin rulemaking to suspend, revise, or rescind any inconsistent actions.
+Added: Areas of focus include policies or practices that may reduce affordability of coverage, present unnecessary barriers to coverage, or undermine protections for people with preexisting conditions.
+Added: We continue to evaluate the effect that the ACA and its possible modifications, repeal and replacement has on our business.
+Added: In the event that laws, regulations or rules that eliminate or reduce private sources of health insurance or require such benefits to be taxable are adopted, the subsequent impact on the insurance carriers and/or self-insured plans may in turn adversely impact our ability to accurately forecast future results and harm our business, financial condition and results of operations.
+Added: The health benefits industry may be subject to negative publicity, which could adversely affect our business, financial condition and results of operations.
+Added: The health benefits industry may be subject to negative publicity, which can arise from, among other things, increases in premium rates, industry consolidation, cost of care initiatives, drug prices and the ongoing debate over the ACA.
+Added: In addition, negative publicity may result in increased regulation and legislative review of industry practices, which may further increase our costs of doing business and adversely affect our profitability.
+Added: For example, PBM programs and drug rebates have recently been criticized as leading to a lack of transparency about the true cost of a drug, and certain members of Congress as well as HHS’s Office of Inspector General, or OIG, have proposed regulatory changes that could potentially affect our business and operations.
+Added: Negative public perception or publicity of the health benefits industry in general, the insurance carriers with whom we integrate our solutions, our self-insured employer clients, or us could adversely affect our business, financial condition and results of operations.
+Added: If our computer systems, or those of our provider clinics, specialty pharmacies or other downstream vendors lag, fail or suffer security breaches, we may incur a material disruption of our services, which could materially impact our business and the results of operations .
+Added: Our business is increasingly dependent on critical, complex and interdependent information technology systems, including cloud-based systems, to support business processes as well as internal and external communications.
+Added: Our success therefore is dependent in part on our ability to secure, integrate, develop, redesign and enhance our (or contract with vendors to provide) technology systems that support our business strategy initiatives and processes in a compliant, secure, and cost and resource efficient manner.
+Added: If we or our provider clinics, specialty pharmacies or other downstream vendors have an issue with our or their respective technology systems, it may result in a disruption to our operations or downstream disruption to our relationships with our clients or our selective network of high-quality fertility specialists.
+Added: Additionally, if we choose to insource any of the services currently handled by a third party, it may result in technological or operational disruptions.
+Added: In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error.
+Added: High-profile security breaches at other companies and in government agencies have increased in recent years.
+Added: Despite the implementation of security measures, including steps designed to secure our technology infrastructure and sensitive data, we can provide no assurance that our current technology system or any updates or upgrades thereto, the current or future technology systems of our provider clinics, specialty pharmacies or other downstream vendors, are fully protected against malicious intrusion, malware, computer viruses, unauthorized access, natural disasters, terrorism, war, telecommunication and electrical failures, information or data theft or other similar risks.
+Added: We have experienced and expect to continue to experience actual and attempted cyber-attacks of our IT networks, such as through email phishing scams, spoofing attempts and malicious attachments.
+Added: Although none of these actual or attempted cyber-attacks has had a material adverse impact on our operations or financial condition, we cannot guarantee that such incidents will not have such an impact in the future.
+Added: In addition, to the extent that any disruption or security breach were to result in a loss or inappropriate disclosure of confidential information, we could incur liability.
+Added: We have access to sensitive information relating to members, our employees and our business partners in the ordinary course of our business.
+Added: Any failure or perceived failure by us, or our third-party contractors on our behalf, to comply with local and foreign laws regarding privacy and data security, as well as contractual commitments in this respect, may result in governmental enforcement claims, fines, or litigation, which could have an adverse effect on our reputation and business.
+Added: If a significant data breach occurred, our reputation could be materially and adversely affected, confidence among our clients and members may be diminished, or we may be subject to legal claims, any of which may contribute to the loss of customers and have a material adverse effect on us.
+Added: To the extent such disruptions or uncertainties result in the theft, destruction, loss or misappropriation or release of our confidential data or our intellectual property, our business and results of operations could be materially and adversely affected.
+Added: See “—Risks Related to Government Regulation—We operate in a highly regulated industry and must comply with a significant number of complex and evolving requirements—Data Protection and Breaches.”
If we fail to offer high-quality support, our reputation could suffer.
3 unchanged sentences
If we do not help our clients quickly resolve issues and provide effective ongoing support, our ability to maintain and expand our offerings to existing and new clients could suffer, and our reputation with existing or potential clients could suffer.
−Removed: Further, to the extent that we are unsuccessful in hiring, training and retaining adequate PCAs and client account management personnel, our ability to provide adequate and timely support to our members and clients would be negatively impacted, and our members’
−Removed: and clients’
−Removed: satisfaction with our solutions and services would be adversely affected.
+Added: Further, to the extent that we are unsuccessful in hiring, training and retaining adequate PCAs and client account management personnel, our ability to provide adequate and timely support to our members and clients would be negatively impacted, and our members’ and clients’ satisfaction with our solutions and services would be adversely affected.
Our marketing efforts depend significantly on our ability to receive positive references from our existing clients.
39 unchanged sentences
In addition, we believe we are expanding the size of the fertility market as we enhance demand and increase awareness for fertility benefits.
−Removed: If these assumptions prove inaccurate, or if the increase in awareness of fertility benefits attracts potential competitors to enter the market and results in greater competition, our business, financial condition and results of operations could be adversely affected.
+Added: If these assumptions prove inaccurate, or if the increase in awareness of fertility
+Added: benefits attracts potential competitors to enter the market and results in greater competition, our business, financial condition and results of operations could be adversely affected.
It is difficult to predict member utilization rates and demand for our solutions, the entry of competitive solutions or the future growth rate and size of the fertility market, and more specifically the fertility benefits management market and the pharmacy benefits management market.
2 unchanged sentences
Further, the expansion of the fertility benefits management market and the pharmacy benefits market both depend on a number of factors, including, but not limited to:
−Removed: the continued trends of a competitive workforce with employers competing for talent based on benefits that they provide and employers’
−Removed: focus on benefits to attract and retain top talent.
−Removed: If fertility benefits management or pharmacy benefits management do not continue to achieve market acceptance, or if there is a reduction in demand caused by a lack of client or member acceptance, a reduction in employers’
−Removed: focus on enhancing benefits to employees, weakening economic conditions, data security or privacy concerns, governmental regulation, competing offerings or otherwise, the market for our solutions and services might not continue to develop or might develop more slowly than we expect, which would adversely affect our business, financial condition and results of operations.
+Added: the continued trends of a competitive workforce with employers competing for talent based on benefits that they provide and employers’ focus on benefits to attract and retain top talent.
+Added: If fertility benefits management or pharmacy benefits management do not continue to achieve market acceptance, or if there is a reduction in demand caused by a lack of client or member acceptance, a reduction in employers’ focus on enhancing benefits to employees, weakening economic conditions, data security or privacy concerns, governmental regulation, competing offerings or otherwise, the market for our solutions and services might not continue to develop or might develop more slowly than we expect, which would adversely affect our business, financial condition and results of operations.
We may not be able to successfully manage our growth, and if we are not able to grow efficiently, our business, financial condition and results of operations could be harmed .
5 unchanged sentences
We cannot be sure that the expansion and improvements to our internal infrastructure will be effectively implemented on a timely basis, and such failures could harm our business, financial condition and results of operations.
−Removed: Unfavorable conditions in our industry or the United States economy, or reductions in employee benefits spending, could limit our ability to grow our business and negatively affect our results of operations.
−Removed: Unfavorable changes in our industry or in the United States economy could have a negative effect on ours and our clients’
−Removed: and potential clients’
−Removed: results of operations.
−Removed: Negative conditions in the general economy in the United States, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, international trade relations, political turmoil, natural catastrophes, outbreaks of contagious diseases, warfare and terrorist attacks on the United States, could cause a decrease in business investments, including spending on employee benefits, and negatively affect the growth of our business.
−Removed: In addition, unfavorable economic conditions could result in the cancellation by certain clients or material defaults by members on their cost share.
+Added: Reductions in employee benefits spending or material defaults by members on their cost share due to unfavorable conditions in our industry or the United States economy could limit our ability to grow our business and negatively affect our results of operations.
+Added: Unfavorable economic conditions could result in the cancellation by certain clients, a reduction in their number of employees or material defaults by members on their cost share, particularly if they lose their employer coverage and do not replace it with a health benefit plan that provides fertility coverage.
+Added: Unfavorable changes in our industry or in the United States economy could have a negative effect on our and our clients’ and potential clients’ results of operations.
+Added: Negative conditions in the general economy in the United States, including conditions resulting from changes in gross domestic product growth, financial and credit market fluctuations, international trade relations, political turmoil, natural catastrophes, outbreaks of contagious diseases or the worsening thereof, including the COVID-19 pandemic, warfare and terrorist attacks on the United States, could cause a decrease in business investments, including spending on employee benefits, and negatively affect the growth of our business.
Further, economic conditions including interest rate fluctuations, changes in capital market conditions and regulatory changes, such as the taxability of medical benefits like ours, may affect our ability to obtain necessary financing on acceptable terms.
1 unchanged sentence
We cannot predict the timing, strength, or duration of any economic slowdown, instability, or recovery, generally or within any particular industry.
−Removed: Seasonality may cause fluctuations in our sales and results of operations.
+Added: Our business experiences seasonality, which may cause fluctuations in our sales and results of operations.
Our business experiences moderate seasonality in revenue with a slightly higher proportion of revenue during the second half of the year as compared with the first half.
Given that the majority of our clients contract with us for a January 1 st benefits plan start date and that the average cost of treatments earlier in the overall treatment process is somewhat lower than the average cost as treatment progresses, our revenue from treatment services tend to grow as the year continues, particularly for new clients.
−Removed: In addition, as with most medical benefits plans, members will typically seek to maximize the use of their benefits once they have reached their annual deductible and/or annual out-of-pocket maximums, thereby increasing treatments in the latter part of the year.
+Added: In addition, as with most medical benefits plans, members will typically seek to maximize the use of their benefits once they have reached their annual deductible and/or annual out-of-pocket maximums, thereby
+Added: increasing treatments in the latter part of the year.
We expect that this seasonality will continue to affect our revenue and results of operations in the future as we continue to target larger enterprise clients.
5 unchanged sentences
If our existing clients and members do not value and/or are not willing to make additional payments for such new solutions or services, it could adversely affect our business, financial condition and results of operations.
−Removed: If we are unable to predict clients’
−Removed: or members’
−Removed: preferences, if the markets in which we participate change, including in response to government regulation, or if we are
−Removed: unable to modify our solutions and services on a timely basis, we may lose clients.
+Added: If we are unable to predict clients’ or members’ preferences, if the markets in which we participate change, including in response to government regulation, or if we are unable to modify our solutions and services on a timely basis, we may lose clients.
Our results of operations would also suffer if our innovations are not responsive to the needs of the members, appropriately timed with market opportunity or effectively brought to market.
−Removed: If we fail to adapt and respond effectively to the changing medical landscape, changing regulations, changing client needs, requirements or preferences, our offerings may become less competitive.
−Removed: The market in which we compete is subject to a changing medical landscape and changing regulations, as well as changing client needs, requirements and preferences.
+Added: If we fail to adapt and respond effectively to the changing medical landscape, changing laws, regulations and government enforcement priorities, changing client needs, requirements or preferences, our offerings may become less competitive.
+Added: The market in which we compete is subject to a changing medical landscape and changing laws, regulations and government enforcement priorities, as well as changing client needs, requirements and preferences.
The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis.
8 unchanged sentences
We also believe that the importance of brand recognition will increase as competition in our market increases.
−Removed: Successfully maintaining and enhancing our brand will depend largely on the effectiveness of our marketing efforts, our ability to provide reliable services that continue to meet the needs of our clients at competitive prices, our ability to maintain our clients’
−Removed: trust, our ability to continue to develop new solutions, and our ability to successfully differentiate our platform from competitive solutions and services.
+Added: Successfully maintaining and enhancing our brand will depend largely on the effectiveness of our marketing efforts, our ability to provide reliable services that continue to meet the needs of our clients at competitive prices, our ability to maintain our clients’ trust, our ability to continue to develop new solutions, and our ability to successfully differentiate our platform from competitive solutions and services.
Our brand promotion activities may not generate client awareness or yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand.
4 unchanged sentences
Our executive officers and other key employees are employed on an at-will basis, which means that these personnel could terminate their employment with us at any time.
−Removed: The loss of one or more of our executive officers, or the failure by our executive team to effectively work with our employees and lead our company, could harm our business.
+Added: one or more of our executive officers, or the failure by our executive team to effectively work with our employees and lead our company, could harm our business.
In addition, to execute our growth plan, we must attract and retain highly qualified personnel.
6 unchanged sentences
If the perceived value of our equity awards declines, experiences significant volatility, or increases such that prospective employees believe there is limited upside to the value of our equity awards, it may adversely affect our ability to recruit and retain key employees.
−Removed: If we fail to attract
−Removed: new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be harmed.
+Added: If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be harmed.
+Added: Further, if members of our management and other key personnel in critical functions across our organization are unable to perform their duties or have limited availability due to COVID-19, we may not be able to execute on our business strategy and/or our operations may be negatively impacted.
If we cannot maintain our company culture as we grow, our success and our business and competitive position may be harmed.
7 unchanged sentences
Our success is dependent upon our continued ability to maintain a selective Center of Excellence, our proprietary, credentialed network of high-quality fertility specialists.
−Removed: Fertility specialists could refuse to contract, demand higher payments or take other actions that could result in higher medical costs, less attractive service for our members or difficulty meeting regulatory or accreditation requirements.
−Removed: Identifying high-quality fertility specialists, credentialing and negotiating contracts with them and evaluating, monitoring and maintaining our network, requires significant time and resources.
+Added: Fertility specialists and our other network providers could refuse to contract, demand higher payments or take other actions that could result in higher medical costs, less attractive service for our members or difficulty meeting regulatory or accreditation requirements.
+Added: Identifying high-quality fertility specialists and other healthcare providers, credentialing and negotiating contracts with them and evaluating, monitoring and maintaining our network, requires significant time and resources.
+Added: Our network provider arrangements generally may be terminated or not renewed by either party without cause upon prior written notice.
+Added: We cannot provide any assurance that we will be able to continue to renew our existing contracts or enter into new contracts on a timely basis or under favorable terms enabling us to service our members profitably.
If we are not successful in maintaining our relationships with top fertility specialists, these fertility specialists may refuse to renew their contracts with us, and potential competitors may be effective in onboarding these or other high-quality fertility specialists to create a similarly high-quality network.
+Added: Any of these events could have a material adverse effect on the provision of services to our members and our operations.
There may be additional shifts in the fertility specialty provider space as the fertility market matures, and high-quality fertility specialists may become more demanding in re-negotiating to remain in our network.
−Removed: Our ability to develop and maintain satisfactory relationships with high-quality fertility specialists also may be negatively impacted by other factors not associated with us, such as regulatory changes impacting providers or consolidation activity among hospitals, physician groups and healthcare providers.
−Removed: In addition, certain organizations of physicians, such as practice management companies (which group together physician practices for administrative efficiency), may change the way in which healthcare providers do business with us and may compete directly with us, which could adversely affect our business, financial condition and results of operations.
−Removed: In addition, the perceived value of our solutions and our reputation may be negatively impacted if the services provided by one or more of our fertility specialists are not satisfactory to our members, including as a result of provider error that could result in litigation.
+Added: Our ability to develop and maintain satisfactory relationships with high-quality fertility specialists and other healthcare providers also may be negatively impacted by other factors not associated with us, such as legal and regulatory changes, including changes in government enforcement priorities, impacting providers or consolidation activity among hospitals, physician groups and healthcare providers.
+Added: In addition, in some markets and geographies, certain organizations of physicians or healthcare providers, such as practice management companies (which group together physician practices for administrative efficiency and marketing leverage), accountable care organizations, clinically integrated networks, independent practice associations, and other organizational structures that physicians and other healthcare providers choose may change the way in which these providers do business with us, and may change the competitive landscape.
+Added: Such organizations or groups of health
+Added: care providers may compete directly with us, which could adversely affect our operations, and our results of operations, financial position, and cash flows by impacting our relationships with these providers or affecting the way that we price our products and estimate our costs, which might require us to incur costs to change our operations.
+Added: Health care providers in our network may consolidate or merge into other groups or healthcare systems, resulting in a reduction of providers in our network and in the competitive environment.
+Added: In addition, if these providers refuse to contract with us, use their market position to negotiate contracts unfavorable to us or place us at a competitive disadvantage, our ability to market our solutions or to be profitable in those areas could be materially and adversely affected.
+Added: From time to time, our network providers may assert, or threaten to assert, claims seeking to terminate our contractual arrangements.
+Added: If enough provider agreements were terminated, such termination could adversely impact the adequacy of our network to service our members, and may put us at risk of non-compliance with applicable federal and state laws.
+Added: If we are unable to retain our current provider contract terms or enter into new provider contracts timely or on favorable terms, our profitability may be harmed.
+Added: In addition, from time to time, we may in the future be subject to class action or other lawsuits by health care providers with respect to claims payment procedures, reimbursement policies, network participation, or similar matters.
+Added: In addition, regardless of whether any such lawsuits brought against us are successful or have merit, they will be time-consuming and costly, and could have an adverse impact on our reputation.
+Added: As a result, under such circumstances, we may be unable to operate our business effectively.
+Added: In addition, the perceived value of our solutions and our reputation may be negatively impacted if the services provided by one or more of our fertility specialists or another network healthcare provider are not satisfactory to our members, including as a result of provider error that could result in litigation.
For example, if a provider within our network experiences an issue with their cryopreservation techniques or releases sensitive information of our members, we could incur additional expenses and it could give rise to litigation against us.
−Removed: Any such issue with one of our providers may expose us to public scrutiny, adversely affect our brand and reputation, expose us to litigation or regulatory action, and otherwise make our operations vulnerable.
+Added: Any such issue with one of our providers may expose us to public scrutiny, adversely affect our brand and reputation, expose us to litigation and/or regulatory action, and otherwise make our operations vulnerable.
Further, if a fertility specialist provides services that result in less than favorable outcomes, this could cause us to fail to meet our contractually guaranteed specified service metrics, and we could be obligated to provide the client with a fee reduction.
−Removed: The failure to maintain our selective network of high-quality fertility specialists or the failure of those specialists to meet and exceed our members’
−Removed: expectations, may result in a loss of or inability to grow or maintain our client base, which could adversely affect our business, financial condition and results of operations.
+Added: The failure to maintain our selective network of high-quality fertility specialists and other healthcare providers or the failure of those providers to meet and exceed our members’ expectations, may result in a loss of or inability to grow or maintain our client base, which could adversely affect our business, financial condition and results of operations.
Our growth depends in part on the success of our strategic relationships with, and monitoring of, third parties, including vendors, as well as insurance carriers.
In order to grow our business, we anticipate that we will continue to depend on our relationships with third parties, including vendors and insurance carriers.
−Removed: As the fertility management market and our client base grow, if we do not successfully maintain our relationships with insurance carriers, they may make integration more difficult or expensive, such as implementing an onerous fee structure in exchange for our ability to continue to integrate our solutions with their
+Added: As the fertility management market and our client base grow, if we do not successfully maintain our relationships with insurance carriers, they may make integration more difficult or expensive, such as implementing an onerous fee structure in exchange for our ability to continue to integrate our solutions with their platforms.
If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our results of operations may suffer.
−Removed: In addition, our arrangements with these third parties may expose us to public scrutiny, adversely affect our brand and reputation, expose us to litigation or regulatory action, and otherwise make our operations vulnerable if we fail to adequately monitor their performance or if they fail to meet their contractual obligations to us or to comply with applicable laws or regulations.
−Removed: If we fail to maintain an efficient pharmacy distribution network or if there is a disruption to our distribution network, our business, financial condition and results of operations could suffer.
+Added: In addition, our arrangements with these third parties may expose us to public scrutiny, adversely affect our brand and reputation, expose us to litigation and/or regulatory action, and otherwise make our operations vulnerable if we fail to adequately monitor their performance or if they fail to meet their contractual obligations to us or to comply with applicable laws or regulations.
+Added: If we fail to maintain an efficient pharmacy distribution network or if there is a disruption to our network of specialty pharmacies, our business, financial condition and results of operations could suffer.
The timely delivery of fertility prescriptions is essential for fertility treatments.
−Removed: If prescriptions are delivered late, the delay may result in postponement of a member’s treatment cycle and member dissatisfaction with our solutions.
+Added: If prescriptions are delivered late, the delay may result in postponement of a member’s treatment cycle and member dissatisfaction with our solutions.
We believe that our ability to maintain and grow the adoption of Progyny Rx is highly dependent on our success in maintaining an efficient pharmacy distribution network and our record of on-time delivery.
−Removed: If we are unable to maintain an efficient pharmacy distribution network, or if a significant disruption thereto should occur, the use of Progyny Rx may decline due to the inability to timely deliver prescription to members, which could cause our business, financial condition and results of operations to suffer.
+Added: The specialty pharmacies in our network could refuse to contract, demand higher drug pricing or take other actions that could result in higher medical costs or less attractive services for our members.
+Added: We do not control the pricing strategies of our specialty pharmacy partners, each of whom may be motivated by independent considerations and drivers that are outside our control and has the ability to set or impact market price for different prescription medications.
+Added: We also cannot provide any assurance that we will be able to continue to renew our existing contracts, current negotiated pricing or discounts, or enter into new contracts on a timely
+Added: basis or under favorable terms enabling us to service our members profitably.
+Added: If we are not successful in maintaining our relationships with the specialty pharmacies in our network, are otherwise unable to maintain an efficient pharmacy distribution network, or if a significant disruption thereto should occur, the use of Progyny Rx may decline due to the inability to timely deliver prescription or offer competitive drug pricing to members, which could cause our business, financial condition and results of operations to suffer.
If we lose our relationship with one or more key pharmaceutical manufacturers, or if the rebates provided by pharmaceutical manufactures decline, our business and results of operations could be adversely affected.
We maintain contractual relationships with select pharmaceutical manufacturers, which provide us with access to limited distribution specialty pharmaceutical rebates for drugs we purchase.
−Removed: The consolidation of pharmaceutical manufacturers, the shortages of drugs provided by such manufacturers, the termination or material alteration of our contractual relationships, or our failure to renew such contracts on favorable terms could have a material adverse effect on our business and results of operations.
−Removed: In addition, PBM programs have been the subject of debate in federal and state legislatures and various other public and governmental forums.
−Removed: Adoption of new laws, rules or regulations or changes in, or new interpretations of, existing laws, rules or regulations, relating to any of these programs could materially adversely affect our business and results of operations.
+Added: While we have contractual relationships with such pharmaceutical manufacturers, such manufacturers in turn often negotiate complex and multi-party pricing structures with other industry participants, and we have no control over the policies and strategies implemented in negotiating these pricing structures, and such structures may set or significantly impact market prices for prescription drugs we purchase and associated rebates for such drugs.
+Added: Pharmaceutical manufacturers generally direct medication pricing by setting medication list prices and offering rebates and/or discounts for their medications.
+Added: Various market considerations—such as the number of competitor medications, the availability of alternative treatment options, and negotiated rates among industry participants—impact the list prices for medications.
+Added: Our ability to obtain specialty pharmaceutical rebates, our relative bargaining power, the value of any such rebates and our ability to generate revenue are directly affected by the pricing structures in place among the various industry participants, and changes in medication pricing and in the general pricing structures, whether due to regulatory requirements, competitive pressures or otherwise, could have an adverse effect on our business, financial condition and results of operations.
+Added: Further, the consolidation of pharmaceutical manufacturers, the shortages of drugs provided by such manufacturers, the termination or material alteration of our contractual relationships, or our failure to renew such contracts on favorable terms could have a material adverse effect on our business and results of operations.
Our marketing efforts depend on our ability to maintain our relationship with benefits consultants.
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Risks Related to Government Regulation
−Removed: We operate in a highly regulated industry and must comply with a significant number of complex and evolving requirements.
+Added: We operate in a highly regulated industry and must comply with a significant number of complex and evolving legal and regulatory requirements.
We have attempted to structure our operations to comply with laws, regulations and other requirements applicable to us directly and to our clients and vendors, but there can be no assurance that our operations will not be challenged or impacted by regulatory authorities or enforcement initiatives.
We have been, and in the future may become, involved in governmental investigations, audits, reviews and assessments.
−Removed: Any determination by a court or agency that our solutions or services violate, or cause our clients to violate, applicable laws, regulations or other requirements could subject us or our clients to significant administrative, civil or criminal penalties.
−Removed: Such a determination also could require us to change
−Removed: or terminate portions of our business, disqualify us from serving clients that do business with government entities, or cause us to refund some or all of our service fees or otherwise compensate our clients.
+Added: Any determination by a court or agency that our corporate structure, solutions or services violate, or cause our clients to violate, applicable laws, regulations or other requirements could subject us or our clients to significant administrative, civil or criminal penalties.
+Added: Such a determination also could require us to change or terminate portions of our business, disqualify us from serving clients that do business with government entities, or cause us to refund some or all of our service fees or otherwise compensate our clients.
In addition, failure to satisfy laws, regulations or other requirements could adversely affect demand for our solutions and could force us to expend significant capital, research and development and other resources to address the failure.
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Such non-compliance could also require significant investment to address and may prove costly.
−Removed: There are several additional federal and state statutes, regulations, guidance and contractual provisions related to or impacting the healthcare industry that may apply to our business activities directly or indirectly, including, but not limited to:
+Added: There are several additional
+Added: federal and state statutes, regulations, guidance and contractual provisions related to or impacting the healthcare industry that may apply to our business activities directly or indirectly, including, but not limited to:
● Licensing and Licensed Personnel .
−Removed: Many states have licensure or registration requirements for entities acting as a third-party administrator, or TPA, and PBMs.
−Removed: The scope of these laws differs from state to state, and the application of such laws to the activities of TPAs and PBMs is often unclear.
+Added: Many states have licensure or registration requirements for entities acting as a third-party administrator, or TPA, and/or PBMs.
+Added: The scope of these laws differs from state to state, and the application of such laws to the activities of TPAs and/or PBMs is often unclear.
Given the nature and scope of the solutions and services that we provide, we are required to maintain TPA and PBM licenses and registrations in certain jurisdictions and to ensure that such licenses and registrations are in good standing on an annual basis.
−Removed: We are licensed, have licensure applications pending before appropriate regulatory bodies, are exempt from licensure or registration, or are otherwise authorized under such laws in those states in which we provide our TPA and PBM services.
−Removed: These licenses require us to comply with the rules and regulations of the governmental bodies that issued such licenses.
+Added: We are licensed, have licensure applications pending before appropriate regulatory bodies, are exempt from licensure or registration, or believe that we are otherwise authorized under such laws in those states in which we provide our TPA and PBM services.
+Added: These licenses require us to comply with the rules and regulations of the governmental bodies that issued such licenses, including maintaining certain solvency or bonds requirements.
Our failure to comply with such rules and regulations could result in significant administrative penalties, the suspension of a license, or the loss of a license, all of which could negatively impact our business.
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We do not believe that the nature of our services requires us to be licensed under applicable state law.
−Removed: We are unable to predict, however, how our services may be viewed by regulators over time, how these laws and regulations will be interpreted, or the full extent of their application.
−Removed: If a regulatory authority in any state determines that the nature of our business requires that we be licensed under applicable state laws, we may need to restructure our business to comply with any related requirements, such as maintaining adequate reserves, creating new compliance processes, hiring additional personnel to manage regulatory compliance, and paying additional regulatory fees, which could adversely affect our results of operation.
+Added: We are unable to predict, however, how our services may be viewed by regulators over time, how these laws and regulations will be interpreted and enforced, or the full extent of their application.
+Added: If a regulatory authority in any state determines that the nature of our business requires that we be licensed under applicable state laws, we may need to restructure our business to comply with any related requirements, such as maintaining adequate reserves, creating new compliance processes, hiring additional personnel to manage regulatory compliance, and paying additional regulatory fees or penalties, which could adversely affect our results of operation.
Additionally, we may need to cease operations until we are able to obtain appropriate licensure, which may adversely affect our revenue for a period of time that we cannot estimate.
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There are numerous federal and state laws and regulations related to the privacy and security of health information.
−Removed: In particular, regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996, or HIPAA, establish privacy and security standards that limit the use and disclosure of certain individually identifiable health information (known as “protected health information”) and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and
−Removed: availability of electronic protected health information.
+Added: In particular, regulations promulgated pursuant to the Health Insurance Portability and Accountability Act of 1996, or HIPAA, establish privacy and security standards that limit the use and disclosure of certain individually identifiable health information (known as “protected health information”) and require the implementation of administrative, physical and technological safeguards to protect the privacy of protected health information and ensure the confidentiality, integrity and availability of electronic protected health information.
The privacy regulations established under HIPAA also provide patients with rights related to understanding and controlling how their protected health information is used and disclosed.
−Removed: As a provider of services to entities subject to HIPAA, we are directly subject to certain provisions of the regulations as a “Business Associate.”
−Removed: When acting as a Business Associate under HIPAA, to the extent permitted by applicable privacy regulations and contracts and associated Business Associate Agreements with our clients, we are permitted to use and disclose protected health information to perform our services and for other limited purposes, but other uses and disclosures, such as marketing communications, require written authorization from the patient or must meet an exception specified under the privacy regulations.
+Added: As a provider of services to entities subject to HIPAA, we are directly subject to certain provisions of the regulations as a “Business Associate.” When acting as a Business Associate under HIPAA, to the extent permitted by applicable privacy regulations and contracts and associated Business Associate Agreements with our clients, we are permitted to use and disclose protected health information to perform our services and for other limited purposes, but other uses and disclosures, such as marketing communications, require written authorization from the patient or must meet an exception specified under the privacy regulations.
We also have downstream Business Associates, which provide us with services and are also subject to HIPAA regulations.
−Removed: If we, or any of our downstream Business Associates, are unable to properly protect the privacy and security of protected health information entrusted to us, we could be found to have breached our contracts with our clients and be subject to investigation by the U.S.
−Removed: Department of Health and Human Services, or HHS, Office for Civil Rights, or OCR.
+Added: If we, or any of our downstream Business Associates, are unable to properly protect the privacy and security of protected health information entrusted to us, we could be found to have breached our contracts with our clients and be subject to investigation by HHS, Office for Civil Rights, or OCR.
In the event OCR finds that we have failed to comply with applicable HIPAA privacy and security standards, we could face civil and criminal penalties.
9 unchanged sentences
Certain federal and state laws protect types of personal information that may be viewed as particularly sensitive.
−Removed: For example, New York’s Public Health Law, Article 27-F protects information that could reveal confidential HIV-related information about an individual.
+Added: For example, New York’s Public Health Law, Article 27-F protects information that could reveal confidential HIV-related information about an individual.
In many cases, state laws are more restrictive than, and not preempted by, HIPAA, and may allow personal rights of action with respect to privacy or security breaches, as well as fines.
6 unchanged sentences
Certain of our solutions and services involve the transmission and storage of client and member data in various jurisdictions, which subjects the operation of those solutions and services to privacy or data protection laws and regulations in those jurisdictions.
−Removed: While we believe these solutions and services comply with current regulatory and security requirements in the jurisdictions in which we provide these solutions and services, there can be no assurance that such requirements will not change or that we will not otherwise
−Removed: be subject to legal or regulatory actions.
+Added: While we believe these solutions and services comply with current regulatory and security requirements in the jurisdictions in which we provide these solutions and services, there can be no assurance that such requirements will not change or that we will not otherwise be subject to legal or regulatory actions.
These laws and regulations are rapidly evolving and changing, and could have an adverse impact on our operations.
11 unchanged sentences
States are also constantly amending existing laws, requiring attention to frequently changing regulatory requirements.
−Removed: Most states require holders of personal information to maintain safeguards and take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals or the state’s attorney general.
+Added: Most states require holders of personal information to maintain safeguards and take certain actions in response to a data breach, such as providing prompt notification of the breach to affected individuals or the state’s attorney general.
In some states, these laws are limited to electronic data, but states increasingly are enacting or considering stricter and broader requirements.
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If our security measures, some of which are managed by third parties, or the security measures of our service providers or vendors, are breached or fail, it is possible that unauthorized or illegal access to or acquisition, disclosure, use or processing of personal information, confidential information, or other sensitive client, member, or employee data, including HIPAA-regulated protected health information, may occur.
−Removed: A security breach or failure could result from a variety of circumstances and events, including third-party action, human negligence or error, malfeasance, employee theft or misuse, phishing and other social engineering schemes, computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing
−Removed: software, databases or components thereof, power outages, hardware failures, telecommunication failures, and catastrophic events.
+Added: A security breach or failure could result from a variety of circumstances and events, including third-party action, human negligence or error, malfeasance, employee theft or misuse, phishing and other social engineering schemes, computer viruses, attacks by computer hackers, failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures, telecommunication failures, and catastrophic events.
If our security measures, or those of our service providers or vendors, were to be breached or fail, our reputation could be severely damaged, adversely affecting client or investor confidence.
17 unchanged sentences
Many of our clients, insurance carriers, and network healthcare providers are impacted directly and indirectly by certain fraud and abuse laws, including the federal Anti-Kickback Statute, the Physician Self-Referral Law, commonly referred to as the Stark Law, and the False Claims Act, as well as their state equivalents.
−Removed: Because the solutions and services we provide are not reimbursed by government healthcare payors, such fraud and abuse laws generally do not directly apply to our business, however, some laws may be applicable.
−Removed: For example, certain states have anti-kickback and false claims laws that may be broader in scope than analogous federal laws and may apply regardless of payor.
−Removed: The laws, regulations and other requirements in this area are both broad and vague and judicial interpretation can also be inconsistent.
+Added: Because the solutions and services we provide are not reimbursed by government healthcare payors, such fraud and abuse laws generally do not directly apply to our business, however, some laws may be applicable to us.
+Added: For example, certain states have anti-kickback and false claims laws that may be broader in scope than analogous federal laws and may apply to items and services reimbursed by any third-party payor, including private insurers, self-insured employers and on a cash basis by patients.
+Added: The laws, regulations and other requirements in this area are both broad and complex and judicial and regulatory interpretation can also be inconsistent.
We review our practices with regulatory experts in an effort to comply with all applicable laws, regulatory and other requirements.
−Removed: However, we are unable to predict how these laws, regulations and other requirements will be interpreted or the full extent of their application, particularly to services that are not directly reimbursed by federal healthcare programs.
−Removed: Any determination by a federal or
−Removed: state regulatory authority that any of our activities or those of our clients or vendors violate any of these laws or regulations could subject us to significant administrative, civil or criminal penalties, damages, disgorgement, monetary fines or imprisonment, require us to enter into corporate integrity agreements or similar agreements with ongoing compliance obligations, disqualify us from providing services to clients that are, or do business with, government programs and/or have an adverse impact on our business, financial condition and results of operations.
+Added: However, we are unable to predict how these laws, regulations and other requirements will be interpreted or the full extent of their application, particularly to services that are not directly reimbursed by federal and state healthcare programs.
+Added: Any determination by a federal or state regulatory authority that any of our activities or those of our clients or vendors violate any of these laws or regulations could subject us to significant administrative, civil or criminal penalties, damages, disgorgement, monetary fines or imprisonment, require us to enter into corporate integrity agreements or similar agreements with ongoing compliance obligations, disqualify us from providing services to clients that are, or do business with, government healthcare programs and/or have an adverse impact on our business, financial condition and results of operations.
Even an unsuccessful challenge by a regulatory authority of our activities could result in adverse publicity and could require a costly response from us.
+Added: ● State Corporate Practice and Fee-Splitting Prohibitions.
+Added: There is a risk that regulatory authorities in some jurisdictions may find that our contractual relationships with our fertility specialists violate laws prohibiting the corporate practice of medicine and/or fee-splitting.
+Added: These laws generally prohibit non-physician entities from practicing medicine, exercising control over physicians or engaging in certain practices such as fee-splitting with physicians.
+Added: Although we believe all of our arrangements with our network providers are in compliance with such laws, there can be no assurance that these laws will be interpreted in a manner consistent with our practices or that other laws or regulations will not be enacted in the future that could have a material and adverse effect on our business, results of operations, and financial condition.
+Added: Regulatory authorities, state medical boards of medicine, state attorneys general and other parties, including our network physicians, may assert that we are engaged in the prohibited corporate practice of medicine, and/or that our arrangement with our network providers constitutes unlawful fee-splitting.
+Added: If a state’s prohibition on corporate practice of medicine or fee-splitting law is interpreted in a manner that is inconsistent with our practices, we would be required to restructure or terminate our contractual relationship with our network providers to bring our activities into compliance with such laws, disciplinary action, penalties, damages, fines, and/or a loss of revenue, any of which could have a material and adverse effect on our business, results
+Added: of operations, and financial condition.
+Added: State corporate practice of medicine doctrines and fee-splitting prohibitions also often impose penalties on physicians themselves for aiding the corporate practice of medicine or unlawful fee-splitting, which could discourage physicians from participating in our network of providers.
● ERISA Regulation .
−Removed: The Employee Retirement Income Security Act of 1974, or ERISA, regulates certain aspects of employee pension and health benefits plans, including self-funded corporate health plans sponsored by our clients, with which we have agreements to provide TPA services.
+Added: The Employee Retirement Income Security Act of 1974, or ERISA, regulates certain aspects of employee health plans, including both insured and self-funded health plans sponsored by our clients, with which we have agreements to provide TPA services.
As part of our agreements with a number of these clients, we offer PBM services through Progyny Rx.
−Removed: We believe the conduct of our business vis-à-vis these plans is not generally subject to the fiduciary obligations of ERISA.
+Added: Because we believe the conduct of our business vis-à-vis these plans is not of a fiduciary nature, it is not generally subject to the fiduciary obligations of ERISA.
However, there can be no assurance the United States Department of Labor, or the DOL, which is the agency that enforces ERISA, would not in the future assert that the fiduciary obligations imposed by ERISA apply to certain aspects of our operations or courts would not reach such a ruling in private ERISA litigation.
−Removed: In addition to its fiduciary provisions, ERISA has broad preemptive effect and has been held to preempt state laws imposing transparency requirements on PBMs.
ERISA also imposes civil and criminal liability on service providers to health plans subject to ERISA and certain other persons with relationships to such plans if certain forms of illegal or prohibited remuneration are made or received by such service providers or other persons.
−Removed: These provisions of ERISA are similar, but not identical, to the healthcare anti-kickback laws described above, although ERISA lacks the statutory and regulatory “safe harbor”
−Removed: exceptions incorporated into the healthcare anti-kickback laws.
+Added: These provisions of ERISA are similar, but not identical, to the healthcare anti-kickback laws described above, although ERISA lacks the statutory and regulatory “safe harbor” exceptions incorporated into the healthcare anti-kickback laws.
Like the healthcare anti-kickback laws, the corresponding provisions of ERISA are broadly written and their application to particular cases can be uncertain.
−Removed: Employee benefits plans subject to ERISA are subject to certain rules, published by the DOL, including certain reporting requirements for direct and indirect compensation received by plan service providers.
−Removed: However, many self-funded health plans such as the plans that we have contracts with are exempt from these reporting requirements under current law.
−Removed: At this time, we are unable to predict whether the DOL will issue additional regulations or guidance on reporting or which additional regulations, if any, may be proposed in formal rulemaking by the DOL.
+Added: ERISA plans are subject to certain rules, published by the DOL, including certain reporting requirements for direct and indirect compensation received by plan service providers Separately, although ERISA generally preempts state laws that relate to ERISA plans, the recent Supreme Court ruling in Rutledge v.
+Added: Ass’n established that ERISA does not preempt all state laws imposing transparency or other requirements on PBMs.
● Prompt Pay Laws .
Certain states have laws regulating the amount of time that may elapse from when a third-party payor receives a claim for services rendered to when those services are paid.
−Removed: These “prompt pay”
−Removed: laws may impact us as well as our clients and insurance carriers.
−Removed: Under these “prompt pay”
−Removed: laws, we may be obligated to pay healthcare providers within established time periods, and such time periods may be shorter than existing contracted terms and/or via electronic transfer.
+Added: These “prompt pay” laws may impact us as well as our self-insured clients and insurance carriers.
+Added: Under these “prompt pay” laws, we may be obligated to pay healthcare providers within established time periods, and such time periods may be shorter than existing contracted terms and/or via electronic transfer.
In many states, we are deemed to be exempt from the prompt pay laws, however, we seek to comply with them in each state in which we do business to the extent applicable, and our efforts include the use of controls such as policies and processing systems that ensure we pay claims as quickly as possible and contract language related to timeframes permitted by applicable law.
3 unchanged sentences
Network adequacy and access laws require health plans to maintain a network of healthcare providers sufficient to deliver the benefits they contract to provide to their enrollees.
−Removed: In light of the increase in “narrow networks”, there has been a legislative push to ensure that commercial payors contract with a sufficient number of healthcare providers to create an “adequate network.”
−Removed: Additionally, a majority of states now have some form of legislation affecting our payor clients’
−Removed: ability to limit access to a provider network or remove a provider from the network.
−Removed: Such legislation may require our clients to admit any healthcare provider including any pharmacy provider willing to meet the plan’s price and other terms for network participation (“any willing provider”
−Removed: legislation) or may provide that a provider may not be removed from a network except in compliance with certain procedures (“due process”
−Removed: legislation).
−Removed: Further, to ensure network adequacy and quality, a network may seek to accredit its healthcare providers through any number of accrediting bodies, such as the National Committee for Quality Assurance,
−Removed: or NCQA, and the Utilization Review Accreditation Commission.
+Added: In light of the increase in “narrow networks”, there has been a legislative push to ensure that commercial payors contract with a sufficient number of healthcare providers to create an “adequate network.” Additionally, a majority of states now have some form of legislation affecting our payor clients’ ability to limit access to a provider network or remove a provider from the network.
+Added: Such legislation may require our clients to admit any healthcare provider including any pharmacy provider willing to meet the plan’s price and other terms for network participation (“any willing provider” legislation) or may provide that a provider may not be removed from a network except in compliance with certain procedures (“due process” legislation).
+Added: Further, to ensure network adequacy and quality, a network may seek to accredit its healthcare providers through any number of accrediting bodies, such as the National Committee for Quality Assurance, or NCQA, and the Utilization Review Accreditation Commission.
We follow NCQA standards to credential the health providers with whom we contract to provide services within our network, and engage Council for Affordable Quality Healthcare to conduct provider credentialing where required.
2 unchanged sentences
● Consumer Protection Laws .
−Removed: Federal and state consumer protection laws are being applied increasingly by the Federal Trade Commission, or FTC, Federal Communications Commission, or FCC, and states’
−Removed: attorneys general to regulate the collection, use, storage and disclosure of personal or health information, through websites or otherwise, and to regulate the presentation of website content.
+Added: Federal and state consumer protection laws are being applied increasingly by the Federal Trade Commission, or FTC, Federal Communications Commission, or FCC, and states’ attorneys general to regulate the collection, use, storage and disclosure of personal or health information, through websites or otherwise, and to regulate the presentation of website content.
Courts may also adopt the standards for fair information practices promulgated by the FTC, which concern consumer notice, choice, security and access.
10 unchanged sentences
Healthcare laws and regulations are rapidly evolving and may change significantly in the future.
−Removed: For example, while ACA does not directly regulate our business as a benefit area, it does affect the coverage and plan designs that are or will be provided by certain insurance carriers and certain of our clients, taxability of such plans, as well as the overall reimbursement and drug pricing environment for healthcare providers.
−Removed: There remain judicial and Congressional challenges to certain aspects of the ACA, as well as efforts by the Trump administration to repeal or replace certain aspects of the ACA.
−Removed: Further, the United States Supreme Court announced on March 2, 2020 that it will consolidate two cases regarding the constitutionality of the ACA.
−Removed: It is unclear when a decision is expected to be made.
−Removed: Health reform efforts, including reforms to the ACA, and measures that would expand the role of government-sponsored coverage, including single payer or so-called “Medicare-for-All”
−Removed: proposals, which could have far-reaching implications for the healthcare industry if enacted.
−Removed: We are unable to predict the full impact of health reform initiatives on our operations in light of the uncertainty regarding whether, when and how the ACA will be further changed, what alternative reforms (including single payer proposals), if any, may be enacted, the timing of enactment and implementation of alternative provisions and the impact of alternative provisions on various healthcare industry participants.
−Removed: Government regulation, industry standards and other requirements create risks and challenges with respect to our compliance efforts and our business strategies.
−Removed: The healthcare industry is highly regulated and subject to frequently changing laws, regulations, industry standards and other requirements.
−Removed: Many healthcare laws and regulations are complex, and their application to specific
−Removed: solutions, services and relationships may not be clear.
+Added: For example, the ACA may affect the coverage and plan designs that are or will be provided by certain insurance carriers and certain of our clients with self-insured plans, taxability of benefits under such plans, as well as the overall reimbursement and drug pricing environment for healthcare providers.
+Added: Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA.
+Added: For example, the United States Supreme Court heard oral arguments in California v.
+Added: Texas , which consolidated two cases regarding the constitutionality of the ACA on November 10, 2020.
+Added: A decision is expected in 2021.
+Added: The Supreme Court’s decision could end the case, or it could result in the case being sent back to the lower courts for continued litigation.
+Added: Other health reform efforts have been proposed by members of Congress, such as measures that would expand the role of government-sponsored coverage, including further reform to the ACA, which could have far-reaching implications for the healthcare industry if enacted.
+Added: On January 28, 2021, President Joe Biden issued an Executive Order directing federal agencies to examine all existing regulations, orders, guidance documents, policies and similar agency actions to determine if any such actions are inconsistent with the policy set forth in the Executive Order to protect and strengthen the ACA and make high-quality healthcare accessible and affordable for every American.
+Added: As another example of recent healthcare legislative changes, the Consolidated Appropriations Act, or CAA, enacted on December 27, 2020, contain provisions impacting group health plans, including protections for plan participants from surprise medical bills and ensuring health plan price transparency.
+Added: The CAA prohibits plans from entering into services agreements that directly or indirectly restrict the plans from disclosing provider-specific costs and quality of care information.
+Added: It also requires disclosure by health insurance brokers and consultants to plan sponsors regarding reasonably expected direct and indirect compensation for referral of services to group health plans.
+Added: Additionally, the CAA requires plans to submit reports to the Department of Labor, HHS and IRS with certain information on pharmacy benefits and drug costs for participants and beneficiaries and the application of in-network rates to out of network services, effective December 27, 2021.
+Added: The CAA will also require certain service providers for health plans to comply with certain ERISA fee disclosure rules.
+Added: In addition, effective January 1, 2022, the No Surprises Act (enacted as part of the CAA) provides protection against surprise medical bills by prohibiting plans and providers from balance billing patients for emergency care performed by out-of-network providers as well as non-emergency and ancillary services performed by out-of-network providers at in-network facilities, subject to certain notice and consent exceptions for non-emergency and ancillary services.
+Added: The new law also grants additional patient protections, including requiring providers to send a good faith estimate of the expected charges for furnishing items or services to an insured patient’s health plan (or directly to an uninsured patient) before such items or services are delivered (including items or services reasonably expected to be provided in conjunction with scheduled items or services or that are reasonably expected to be delivered by another provider).
+Added: The No Surprises Act also provides a dispute resolution process in the event the actual charges for such items and services are substantially higher than the plan’s estimate, and will prohibit providers from charging patients an amount beyond the in-network cost sharing amount for services rendered by out-of-network
+Added: providers, subject to certain exceptions.
+Added: Several states have also enacted comprehensive surprise billing laws and the CAA defers to existing state requirements with respect to state-established payment amounts.
+Added: We are unable to predict how these changes to the ACA and other healthcare reform initiatives from new legislation, regulation, judicial action and/or executive action, including the CAA and No Surprises Act and state laws, will ultimately impact the healthcare industry and what the potential impact may be on our business or on our business and on our relationships with future clients, insurance carriers, and healthcare providers.
+Added: We are subject to potential changes in laws, regulations, government enforcement priorities, public policy, industry standards and other requirements, including with respect to Progyny Rx’s PBM practices, which create risks and challenges with respect to our compliance efforts and our business strategies, and may adversely affect our business.
+Added: The healthcare industry is highly regulated and subject to frequently changing laws, regulations, government enforcement priorities, public policies, industry standards and other requirements.
+Added: Many healthcare laws and regulations are complex, and their application to specific solutions, services and relationships may not be clear.
Because our clients are subject to various requirements, we may be impacted as a result of our contractual obligations even when we are not directly subject to such requirements.
In particular, many existing healthcare laws and regulations, when enacted, did not anticipate the solutions and services that we provide, and these laws and regulations may be applied to our solutions and services in ways that we do not anticipate.
−Removed: The ACA, efforts to repeal or materially change the ACA, and other federal and state efforts to reform or revise aspects of the healthcare industry or to revise or create additional legal or and regulatory requirements could impact our operations, the use of our solutions and services, and our ability to market new solutions and services, or could create unexpected liabilities for us.
−Removed: There have also been a number of reform efforts around PBMs including pricing and transparency which could affect our business.
+Added: The ACA, efforts to revise, expand or materially change the ACA, and other federal and state efforts to reform or revise aspects of the healthcare industry or to revise or create additional legal or and regulatory requirements could impact our operations, the use of our solutions and services, and our ability to market new solutions and services, or could create unexpected liabilities for us.
We also may be impacted by laws, industry standards and other requirements that are not specific to the healthcare industry, such as consumer protection laws and payment card industry standards.
These requirements may impact our operations and, if not followed, could result in fines, penalties and other liabilities and adverse publicity and injury to our reputation.
+Added: In recent years, there have been a number of reform efforts, including from federal and state legislatures as well as the HHS OIG, around PBM program pricing and transparency that could affect our business.
+Added: Current PBM laws and regulations govern, and proposed legislation and regulations may govern and/or further restrict critical PBM practices, including, among other things, disclosure, receipt and retention of rebates and other payments received from pharmaceutical manufacturers, rules governing contractual provisions between PBMs and their contracted payers and/or pharmacies, and registration or licensing of PBMs.
+Added: For example, in 2019, the U.S.
+Added: Senate and House of Representatives proposed a number of bills that would, among other things, require PBMs to submit information on their costs, fees and rebates, requiring 100% of the rebates to be passed on to consumers, and/or impose rebates on manufacturers that chose to increase their drug prices more rapidly than inflation.
+Added: Further, the U.S.
+Added: Supreme Court’s recent decision in Rutledge v.
+Added: Ass’n on December 10, 2020, which held that an Arkansas state law requiring PBMs to reimburse pharmacies at a price equal to or greater than the price pharmacies pay in purchasing medications from a wholesaler, was not preempted by the federal ERISA statute.
+Added: The Supreme Court’s ruling solidifies the legality of state-level legislation regulating PBMs, which may encourage a new wave of legislation aimed at controlling prescription drug costs and providing pricing transparency.
+Added: In the wake of the Rutledge ruling, for example, New York has already reintroduced previously vetoed PBM legislation and Governor Andrew Cuomo has issued an Executive Budget for 2022 that highlights the need for PBM accountability.
+Added: At least 10 states have proposed new PBM legislation in 2021 alone, including New York, Texas, and Florida.
+Added: A number of these proposed laws would require PBMs to submit annual transparency reports or otherwise disclose contractual arrangements with health benefit plans or health insurance issuers, or allow regulators to conduct audits of PBM operations.
+Added: Additionally, certain quasi-regulatory organizations, including the National Association of Boards of Pharmacy and the National Association of Insurance Commissioners, have issued model regulations or may propose future model regulations concerning PBM operations.
+Added: PBM credentialing organizations may also establish voluntary standards regarding PBM activities.
+Added: While the model regulations and standards of these quasi-regulatory or credentialing organizations are not legal requirements, federal and state lawmakers may be influenced to adopt similar legislation and such model regulations and standards may also impact client expectations or requirements for PBM services.
+Added: PBM operations may also be subject to federal and state fraud and abuse laws.
+Added: We do not believe our operations are directly subject to such laws (including the recent finalization of regulations under the federal anti-kickback statute directly applicable to PBMs) as the PBM solutions and services we provide are not reimbursed by government healthcare payors.
+Added: Some states’ anti-kickback and false claims laws may be broader in scope than analogous federal laws and may apply to items and services reimbursed by any third-party payor, including private insurers, self-insured employers and on a cash basis by patients, and may be applicable to us.
+Added: Accordingly, it is reasonably possible that our business operations and operating results could be materially adversely affected by legislative, regulatory and public policy changes at the federal or state level, increased government involvement in drug reimbursement and pricing, and/or increased regulation of PBMs.
+Added: Adoption of new laws, rules or regulations or changes in government enforcement priorities of or new interpretations of, existing laws, rules or regulations relating to PBMs could materially adversely affect our business and results of operations with respect to Progyny Rx.
+Added: Additionally, such legal and regulatory changes may adversely affect our ability to conduct business on commercially reasonable terms in states where PBM legislation is in effect and the Company’s ability to standardize its Progyny Rx PBM products and services across state lines.
+Added: Further, failure by the Company to comply with these laws or regulations could result in material fines and/or sanctions and could have a material adverse effect on the Company’s operating results and/or cash flows.
We are subject to anti-corruption, anti-bribery, anti-money laundering, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business, financial condition and results of operations.
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If any subpoenas or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our business, financial condition and results of operations could be harmed.
−Removed: In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees, which could adversely affect our business, financial condition and results of operations.
+Added: In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees, which could adversely affect our business, financial condition and results of operations.
Any potential sales to government entities are subject to a number of challenges and risks.
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Further, governmental and highly regulated entities may demand contract terms that differ from our standard arrangements.
−Removed: Such entities may have statutory, contractual, or other legal rights to terminate contracts with us or our
−Removed: partners due to a default or for other reasons.
+Added: Such entities may have statutory, contractual, or other legal rights to terminate contracts with us or our partners due to a default or for other reasons.
Any such termination may adversely affect our reputation, business, financial condition and results of operations.
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If any of our trade secrets were to be lawfully obtained or independently developed by a competitor or other third party, we would have no right to prevent them from using that technology or information to compete with us and our competitive position would be harmed.
−Removed: Third parties may allege that our products and services, or the conduct of our business, infringe, misappropriate or otherwise violate such third party’s intellectual property rights.
−Removed: Even if such claims are without merit, defending such claims would cause us to incur substantial expenses and could cause us to pay substantial damages or seek a costly license if we are found to be infringing, misappropriating, or otherwise violating a third party’s intellectual property rights.
+Added: Third parties may allege that our products and services, or the conduct of our business, infringe, misappropriate or otherwise violate such third party’s intellectual property rights.
+Added: Even if such claims are without merit, defending such claims would cause us to incur substantial expenses and could cause us to pay substantial damages or seek a costly license if we are found to be infringing, misappropriating, or otherwise violating a third party’s intellectual property rights.
If we are unable to enter into a license on acceptable terms or at all, we could be forced to cease some aspect of our business operations or be forced to redesign our products or services so that we no longer infringe the third-party intellectual property rights, which may result in significant cost and delay to us, or which redesign could be technically infeasible.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our employees and management personnel from their normal responsibilities.
−Removed: Moreover, although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any third parties, including such individual’s former employer.
+Added: Moreover, although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any third parties, including such individual’s former employer.
If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel.
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We have in the past and may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought by our clients or vendors in connection with commercial disputes or employment claims made by our current or former employees.
−Removed: We are currently in arbitration with a former vendor who alleges a breach of our contract with such vendor, as described in Part I, Item 3.
−Removed: “Legal Proceedings”
−Removed: of this Annual Report on Form 10-K.
−Removed: We are unable to predict the outcome of any of these legal proceedings.
−Removed: Such proceedings might result in substantial costs, regardless of the outcome, and may divert management’s attention and resources, which might seriously
−Removed: harm our business, financial condition and results of operations.
−Removed: Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us.
+Added: We are unable to predict the outcome of any legal proceedings.
+Added: Such proceedings might result in substantial costs, regardless of the outcome, and may divert management’s attention and resources, which might seriously harm our business, financial condition and results of operations.
+Added: As discussed in Part I, Item 3 of this Annual Report on the Form 10-K, we were subject to a vendor arbitration that was recently settled in December 2020.
+Added: As part of our settlement and to avoid further costs, we agreed to pay the vendor a total of $5.75 million.
+Added: Insurance might not cover litigation claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us.
A claim brought against us that is uninsured or underinsured could result in unanticipated costs, potentially harming our business, financial condition and results of operations.
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In addition, if the resulting business from such a transaction fails to meet our expectations, or we fail to successfully integrate such businesses into our own, our business, financial condition and results of operations may be adversely affected or we may be exposed to unknown risks or liabilities.
−Removed: The December 2017 U.S.
−Removed: federal tax reform may subject us to potential adverse tax consequences .
−Removed: The Tax Cuts and Jobs Act, or the Tax Act, enacted in December 2017, among other things, includes changes to U.S.
−Removed: federal tax rates, imposes additional limitations on the deductibility of interest, has both positive and negative changes to the utilization of future net operating loss carryforwards, allows for the expensing of certain capital expenditures, and puts into effect the migration from a “worldwide”
−Removed: system of taxation to a “quasi-territorial system”.
−Removed: Our net deferred tax assets and liabilities and valuation allowance have been revalued at the U.S.
−Removed: corporate rate, which the Tax Act reduced to 21%.
−Removed: We continue to examine the impact this tax reform legislation may have on our business.
−Removed: The impact of this tax reform on holders of our common stock is uncertain and could be adverse.
−Removed: Changes in our effective tax rate or tax liability may have an adverse effect on our results of operations.
−Removed: Our effective tax rate could increase due to several factors, including, but not limited to:
+Added: Changes in our effective tax rate or tax liabilities may have an adverse effect on our results of operations.
+Added: Our effective tax rate could be impacted due to several factors, including, but not limited to:
● changes in the relative amounts of income before taxes in the various jurisdictions in which we operate that have differing statutory tax rates;
−Removed: changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Tax Act;
+Added: ● changes in tax laws, tax treaties, and regulations or the interpretation of them;
● changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business;
1 unchanged sentence
● limitations or adverse findings regarding our ability to do business in some jurisdictions;
+Added: ● discrete impact tax items, including such items resulting from the amount and timing of equity exercises and our share price.
Any of these developments could have an adverse effect on our results of operations.
−Removed: state tax authorities may assert that we have a state nexus and seek to impose state and local income taxes which could adversely affect our results of operations.
−Removed: We currently file state income tax returns in certain states.
−Removed: There is a risk that certain state tax authorities where we do not currently file a state income tax return could assert that we are liable for state and local income taxes based upon income or gross receipts allocable to such states.
−Removed: States are becoming increasingly aggressive in asserting a nexus for state income tax purposes.
−Removed: We could be subject to state and local taxation, including penalties and interest attributable to prior periods, if a state tax authority in which we do not currently file a state income tax return successfully asserts that our activities give rise to a taxable nexus.
+Added: state tax authorities may assert that we have a state nexus and seek to impose state and local taxes which could adversely affect our results of operations.
+Added: We currently file state tax returns in certain states.
+Added: There is a risk that certain state tax authorities, where we do not currently file a state tax return, could assert that we are liable for state and local taxes based upon income or gross receipts allocable to such states.
+Added: States are becoming increasingly aggressive in asserting a nexus for state tax purposes.
+Added: We could be subject to state and local taxation, including penalties and interest attributable to prior periods, if a state tax authority in which we do not currently file a state tax return successfully asserts that our activities give rise to a taxable nexus.
Such tax assessments, penalties and interest may adversely affect our results of operations.
We may not be able to utilize a significant portion of our net operating loss or research tax credit carryforwards, which could adversely affect our profitability.
−Removed: As of December 31, 2019, we had federal and state net operating loss carryforwards of approximately $92 million and $71 million, respectively, due to prior period losses, some of which, if not utilized, will begin to expire in 2031 for federal and state purposes.
−Removed: Federal and California research and development tax credit carryforwards are approximately $729,000 and $830,000, respectively.
−Removed: The federal research and development tax credits begin to expire in 2030, and the California research and development tax credits have no expiration date.
−Removed: These net operating loss and research tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability.
−Removed: In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, our ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if we experience an “ownership change.”
−Removed: A Section 382 “ownership change”
−Removed: generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
+Added: Under Section 382 of the Internal Revenue Code of 1986, as amended, our ability to utilize net operating loss carryforwards or other tax attributes in any taxable year may be limited if we experience an “ownership change.” A Section 382 “ownership change” generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period.
Similar rules may apply under state tax laws.
−Removed: Future issuances of our stock could cause an “ownership change.”
−Removed: Any future ownership change, which could be outside of our control, could also have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.
+Added: Future issuances of our stock could cause an “ownership change.” Any future ownership change, which could be outside of our control, could also have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability.
Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
Accounting principles generally accepted in the United States are subject to interpretation by the Financial Accounting Standards Board, or FASB, the SEC and various bodies formed to promulgate and interpret appropriate accounting principles.
−Removed: A change in these principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions already completed before the announcement of a change.
−Removed: For example, in February 2016, the FASB issued ASU No.
−Removed: 2016-02, Leases (Topic 842).
−Removed: The new standard establishes a right-of-use (ROU) model that requires a lessee to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months.
−Removed: Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.
−Removed: As an “emerging growth company,”
−Removed: we are allowed under the JOBS Act to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies.
+Added: As of January 1, 2020, we adopted ASU No.
+Added: 2016-02, Leases (Topic 842) using the modified retrospective transition method and recorded a right-of-use asset and lease liabilities of $9.5 million and $9.9 million, respectively.
+Added: In addition, as of January 1, 2020, we also adopted ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) using the modified retrospective transition method, which resulted in a cumulative-effect adjustment to accumulated deficit of $1.2 million and impacted our methodology for calculating and estimating our allowance for doubtful accounts.
+Added: See Note 2 – Summary of Significant Accounting Policies, in the consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K for additional information on recently adopted accounting standards.
+Added: A change in accounting principles or interpretations could have a significant effect on our reported results of operations and could affect the reporting of transactions already completed before the announcement of a change.
The adoption of new or revised accounting principles may require us to make changes to our systems, processes and control, which could have a significant effect on our reported financial results, cause unexpected financial reporting fluctuations, retroactively affect previously reported results or require us to make costly changes to our operational processes and accounting systems upon or following the adoption of these standards.
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We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in Part II, Item 7.
−Removed: “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates”
−Removed: of this Annual Report on Form 10-K.
+Added: “Management’s Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Policies and Estimates” of this Annual Report on Form 10-K.
The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.
−Removed: Significant estimates and judgments used in preparing our consolidated financial statements include those related to the determination of fair value of our common stock, estimates of accounts receivable relating to member copayments and revenue recognition relating to services rendered but for which no claim has yet been reported, among others.
+Added: We believe that the assumptions and estimates associated with our revenue recognition including accrued receivables and allowance for service changes and cancellations, accrued claims payable, stock-based compensation, and accounting for income taxes have the greatest potential impact on our financial statements and therefore, we consider these to be our critical accounting policies and estimates.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our results of operations to fall below the expectations of securities analysts and investors, resulting in a decline in the market price of our common stock.
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Our stock price may be volatile, and the value of our common stock may decline.
−Removed: The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including, but not limited to:
+Added: As tenured investors look to monetize their positions, we have seen large blocks of shares enter the public market over a short period of time.
+Added: The market price of our common stock may be highly volatile and may fluctuate or decline
+Added: substantially as a result of this and a variety of factors, some of which are beyond our control, including, but not limited to:
+Added: ● high volume of direct sales into the market by large investors;
● actual or anticipated fluctuations in our financial condition or results of operations;
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● our involvement in litigation;
−Removed: future sales of our common stock by us or our stockholders, as well as the anticipation of lock-up releases;
+Added: ● future sales of our common stock by us or our stockholders;
● changes in senior management or key personnel;
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● general economic, industry, and market conditions.
−Removed: Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, may also negatively impact the market price of our common stock.
−Removed: These and other factors may cause the market price
−Removed: and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.
+Added: Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, including those related to the recent COVID-19 pandemic, may also negatively impact the market price of our common stock.
+Added: Fluctuations in our quarterly operating results and the price of our common stock may be particularly pronounced in the current economic environment due to the uncertainty caused by and the unprecedented nature of the current COVID-19 pandemic.
+Added: These and other factors may cause the market price and demand for our common stock to fluctuate substantially, which may limit or prevent investors from readily selling their shares of common stock and may otherwise negatively affect the liquidity of our common stock.
In the past, companies that have experienced volatility in the market price of their securities have been subject to securities class action litigation.
−Removed: We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.
+Added: We may be the target of this type of litigation in the future, which could result in substantial expenses and divert our management’s attention.
An active trading market for our common stock may not be sustained.
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● client expansion rates;
−Removed: changes in clients’
−Removed: budgets and in the timing of their budget cycles and purchasing decisions;
+Added: ● changes in clients’ budgets and in the timing of their budget cycles and purchasing decisions;
● our ability to control costs, including our operating expenses and healthcare costs;
2 unchanged sentences
● the amount and timing of costs associated with recruiting, training and integrating new employees and retaining and motivating existing employees;
−Removed: general economic conditions, as well as economic conditions specifically affecting industries in which our clients participate;
+Added: ● general economic conditions, as well as economic conditions specifically affecting industries in which our clients participate, including those related to the recent COVID-19 pandemic;
● the impact of new accounting pronouncements;
2 unchanged sentences
Any of these and other factors, or the cumulative effect of some of these factors, may cause our results of operations to vary significantly.
+Added: For example, the full impact of the COVID-19 pandemic is unknown at this time, but could result in adverse changes in our results of operations for an unknown period of time as the virus and its related political, social and economic impacts spread.
If our quarterly results of operations fall below the expectations of investors and securities analysts who follow our stock, the price of our common stock could decline substantially, and we could face costly lawsuits, including securities class action suits.
−Removed: In connection with our preparation of our annual financial statements for the year ended December 31, 2018, we and our independent registered public accounting firm identified a material weakness in our internal control over financial reporting.
−Removed: Any failure to maintain effective internal control over financial reporting could harm us.
−Removed: Our management is responsible for establishing and maintaining adequate internal control over financial reporting.
−Removed: 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 in accordance with U.S.
−Removed: In connection with our audit of the fiscal year 2018 consolidated financial statements, we and our independent registered public accounting firm identified one material weakness in our controls related to the lack of review and oversight over financial reporting.
−Removed: We determined that we had insufficient financial statement close processes and procedures relating to the classification and presentation of certain revenue and expenses.
−Removed: Under standards established by the United States Public Company Accounting Oversight Board, a material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis.
−Removed: During 2019, we completed the remediation measures related to the material weakness and concluded that our internal control over financial reporting was effective as of December 31, 2019.
−Removed: Completion of remediation does not provide assurance that our remediation or other controls will continue to operate properly.
−Removed: If we are unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price.
−Removed: If we are unable to assert that our internal control over financial reporting is effective, or when required in the future, if our independent registered public accounting firm is unable to express an unqualified opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, the market price of our common stock could be adversely affected and we could become subject to litigation or investigations by the stock exchange on which our securities are listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
As a result of being a public company, we are obligated to develop and maintain proper and effective internal controls over financial reporting, and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common stock.
−Removed: We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting for the fiscal year ending December 31, 2020, which is the year covered by the second annual report following the completion of our IPO.
−Removed: This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
−Removed: In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting in our first annual report required to be filed with the SEC following the date we are no longer an “emerging growth company.”
−Removed: We have recently commenced the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404, but we may not be able to complete our evaluation, testing and any required remediation in a timely fashion once initiated.
−Removed: Our compliance with Section 404 will require that we incur substantial accounting expenses and expend significant management efforts.
−Removed: We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.
+Added: We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting and our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting.
+Added: To achieve compliance with Section 404, we perform system and process evaluation and testing of our internal controls over financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Annual Report on Form 10-K filing for each year, as required by Section 404 of SOX.
+Added: Our existing management team has and will continue to devote a substantial amount of time to these compliance initiatives, and we may need to hire additional accounting and financial staff with appropriate public company experience to assist us in ongoing compliance with these requirements.
+Added: Moreover, these rules and regulations have increased and will continue to increase our legal and financial compliance costs and will make some activities more time consuming and costly.
During the evaluation and testing process of our internal controls, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to certify that our internal control over financial reporting is effective.
+Added: For example, in connection with our audit of the fiscal year 2018 consolidated financial statements, we and our independent registered public accounting firm identified one material weakness in our controls related to the lack of
+Added: review and oversight over financial reporting, which we determined we had remediated as of December 31, 2019.
We cannot assure you that there will not be material weaknesses or significant deficiencies in our internal control over financial reporting in the future.
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Future sales of our common stock in the public market could cause the market price of our common stock to decline.
−Removed: Future sales of a substantial number of shares of our common stock in the public market, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
+Added: Future sales of a substantial number of shares of our common stock in the public market by us or our stockholders, or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities.
We are unable to predict the effect that such sales may have on the prevailing market price of our common stock.
−Removed: All of our directors and officers and the holders of substantially all of our capital stock and securities convertible into our capital stock are subject to lock-up agreements that restrict their ability to transfer shares of our capital stock through the end of the day on April 21, 2020.
−Removed: These lock-up agreements limit the number of shares of capital stock that may be sold immediately following our IPO.
−Removed: Subject to certain limitations, substantially all of these shares will become eligible for sale upon expiration of the 180-day lock-up period.
−Removed: Morgan Securities LLC, Goldman Sachs & Co.
−Removed: LLC and BofA Securities, Inc.
−Removed: may, in their sole discretion, permit our stockholders who are subject to these lock-up agreements to sell shares prior to the expiration of the lock-up agreements.
−Removed: In addition, as of December 31, 2019, there were an aggregate of 15,721,139 shares of our common stock subject to outstanding options, and we have registered all of the shares of common stock issuable upon exercise of outstanding options or other equity awards we may grant in the future, for public resale under the Securities Act.
−Removed: Accordingly, these shares will be eligible for sale in the public market to the extent such options are exercised, subject to the lock-up agreements described above and compliance with applicable securities laws.
+Added: In addition, as of December 31, 2020, there were an aggregate of 13,384,301 and 489,067 shares of our common stock subject to outstanding options and unvested restricted stock units, respectively.
+Added: We have registered all of the shares of common stock issuable upon exercise of outstanding options or other equity awards we may grant in the future, for public resale under the Securities Act.
+Added: Accordingly, these shares will be eligible for sale in the public market to the extent such options are exercised and restricted stock units are vested, in compliance with applicable securities laws.
Further, holders of a substantial number of shares of our common stock have rights, subject to certain conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.
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If few securities analysts commence coverage of us, or if industry analysts cease coverage of us, our stock price would be negatively affected.
−Removed: If securities or industry analysts do not publish research or reports about our business, downgrade our common stock, or
−Removed: publish negative reports about our business, our stock price would likely decline.
+Added: If securities or industry analysts do not publish research or reports about our business, downgrade our common stock, or publish negative reports about our business, our stock price would likely decline.
If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our common stock.
+Added: We have experienced and may in the future experience analyst coverage reduction due to analysts leaving firms, changing firms or going on temporary leaves of absences.
+Added: Such reduction in analyst coverage, even if temporary, could lead to volatility in our stock price.
We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.
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Accordingly, you may need to rely on sales of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on your investment.
−Removed: We are an “emerging growth company”
−Removed: and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
−Removed: We are an “emerging growth company”
−Removed: as defined in the JOBS Act and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,”
−Removed: including the auditor attestation requirements of Section 404 reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
−Removed: Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies.
−Removed: As a result, our consolidated financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make our common stock less attractive to investors.
−Removed: In addition, if we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards.
−Removed: We will remain an emerging growth company until the earliest of (1) December 31, 2024;
−Removed: (2) the last day of our first fiscal year in which we have total annual gross revenue of at least $1.07 billion;
−Removed: (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period;
−Removed: and (4) the last day of our first fiscal year in which the market value of our common stock that is held by non-affiliates exceeds $700.0 million as of the prior June 30th.
−Removed: We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions.
−Removed: For example, if we do not adopt a new or revised accounting standard, our future results of operations may not be as comparable to the results of operations of certain other companies in our industry that adopted such standards.
−Removed: If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.
We incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
−Removed: As a public company, we incur significant legal, accounting, and other expenses that we did not incur as a private company, which we expect to further increase after we are no longer an “emerging growth company.”
+Added: As a public company, we have incurred and will continue to incur significant legal, accounting, and other expenses that we did not incur prior to our initial public offering.
The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Stock Market, or Nasdaq, and other applicable securities rules and regulations impose various requirements on public companies.
Our management and other personnel devote a substantial amount of time to compliance with these requirements.
−Removed: Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time- consuming and costly.
+Added: Effective January 1, 2021, we became a “large accelerated filer” under SEC reporting rules and are required to file our annual report and quarterly reports more quickly than we previously had been required to file them, which may require us to dedicate additional resources to the timely filing of such reports.
+Added: Moreover, these rules and regulations have increased and will continue to increase our legal and financial compliance costs and make some activities more time-consuming and costly.
We cannot predict or estimate the amount of additional costs we will incur as a public company or the specific timing of such costs.
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● prohibit cumulative voting in the election of directors;
−Removed: provide that our directors may be removed for cause only upon the vote of at least 662/3% of our outstanding shares of voting stock;
+Added: ● provide that our directors may be removed for cause only upon the vote of at least 66 and 2/3% of our outstanding shares of voting stock;
● provide that vacancies on our Board of Directors may be filled only by a majority of directors then in office, even though less than a quorum;
−Removed: require the approval of our Board of Directors or the holders of at least 662/3% of our outstanding shares of voting stock to amend our bylaws and certain provisions of our certificate of incorporation.
+Added: ● require the approval of our Board of Directors or the holders of at least 66 and 2/3% of our outstanding shares of voting stock to amend our bylaws and certain provisions of our certificate of incorporation.
These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board of Directors, which is responsible for appointing the members of our management.
−Removed: In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested”
−Removed: stockholder for a period of three years following the date on which the stockholder became an “interested”
−Removed: Any of the foregoing provisions could limit the price that investors might be willing to pay in the future for shares of our common stock, and they could deter potential acquirers of our company, thereby reducing the likelihood that you would receive a premium for your shares of our common stock in an acquisition.
+Added: In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
+Added: Any of the foregoing provisions could limit the price that investors might be willing to pay in the future for
+Added: shares of our common stock, and they could deter potential acquirers of our company, thereby reducing the likelihood that you would receive a premium for your shares of our common stock in an acquisition.
Our amended and restated certificate of incorporation designates the state courts in the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could discourage lawsuits against us or our directors, officers, or employees.
−Removed: Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, any state court located within the State of Delaware, or if all such state courts
−Removed: lack jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:
+Added: Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, any state court located within the State of Delaware, or if all such state courts lack jurisdiction, the federal district court for the District of Delaware) will be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law:
(1) any derivative action or proceeding brought on our behalf;
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(5) any action or proceeding as to which the Delaware General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware;
−Removed: or (6) any action asserting a claim against us, or any of our directors, officers or other employees, that is governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.
+Added: or (6) any action asserting a claim against us, or any of our directors, officers or other employees, that is governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants.
For the avoidance of doubt, these choice of forum provisions will not apply to suits brought to enforce a duty or liability created by the Securities Act, the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
−Removed: These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees and may discourage these types of lawsuits.
+Added: In particular, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.
+Added: These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees and may discourage these types of lawsuits.
+Added: A stockholder may, nevertheless, seek to bring a claim in a venue other than that designated in our amended and restated certificate of incorporation.
+Added: In such instance we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions, which may require significant additional costs.
Furthermore, if a court were to find the choice of forum provisions contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions.
UNRESOLVED STAFF COMMENTS
−Removed: Our corporate headquarters is located at 1359 Broadway, New York, New York 10018, under a sublease that began in July 2019 and expires in May 2029.
+Added: Our corporate headquarters is located at 1359 Broadway, New York, New York 10018, under a sublease that commenced in September 2019 and expires in May 2029.
We use this space for administration, sales and marketing and client support.
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.