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Our clients include many of the nation’s most prominent employers across a broad array of industries.
−Removed: 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 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.
+Added: We launched our fertility benefits solution in 2016 with our first five employer clients, and we have grown our current base of clients to over 265 with at least 1,000 covered lives.
+Added: We currently have contracts to provide coverage to approximately 4.0 million employees and their partners (known in our industry as covered lives), whom 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.
−Removed: We have retained substantially all of our clients since we launched our fertility benefits solution, and our member satisfaction over that same time period is evidenced by our most recent industry-leading Net Promoter Score, or NPS, of +79 for our fertility benefits solution and +81 for our integrated pharmacy benefits solution, Progyny Rx.
+Added: We have retained substantially all of our clients since we launched our fertility benefits solution, and our member satisfaction is evidenced by our most recent industry-leading Net Promoter Score, or NPS, of +81 for our fertility benefits solution and +79 for our integrated pharmacy benefits solution, Progyny Rx as of December 31, 2021.
We are redefining fertility and family building benefits, proving that a comprehensive fertility solution can simultaneously benefit employers, patients and physicians.
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Additionally, all Progyny members have access to our selective network of high-quality fertility specialists who we equip with a benefits design that enables them to pursue the best treatment pathways, providing our members with tailored treatments that result in optimal clinical outcomes.
−Removed: In addition to our fertility benefits solution, we offer an integrated pharmacy benefit solution, Progyny Rx, which can be added by our clients.
+Added: In addition to our fertility benefits solution, we offer an integrated pharmacy benefits solution, Progyny Rx, which can be added by our clients.
Progyny Rx provides our members with access to the medications needed during their fertility treatment.
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Provider clinics within our network produce outcomes that surpass their own reported practice averages when treating Progyny members because of our differentiated solution.
−Removed: Additionally, across our membership, our outcomes compared to national averages have been consistently superior.
−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: Additionally, across our membership, our outcomes compared to national averages have been consistently superior to date.
Industry Background
−Removed: The prevalence of infertility is high, affecting one in eight couples in the United States according to the Centers for Disease Control and Prevention, or CDC, and infertility is gaining attention as individuals are more openly discussing their struggles with fertility.
+Added: The prevalence of infertility is high, affecting one in eight couples in the United States according to the Centers for Disease Control and Prevention, or the CDC, and infertility is gaining attention as individuals are more openly
+Added: discussing their struggles with fertility.
As transparency and dialogue around infertility have increased, there has been a de-stigmatization of the disease.
Despite this change in perception of infertility and its high prevalence, it is one of the only high-prevalence medical conditions with limited or non-existent medical insurance.
−Removed: By comparison, medical conditions with a similar prevalence, such as diabetes (affecting one in 11 individuals, according to the CDC) and asthma (affecting one in 13 individuals, according to the CDC), are comprehensively covered by conventional health insurance carriers and employers.
+Added: By comparison, medical conditions with a similar prevalence, such as diabetes and asthma, are comprehensively covered by conventional health insurance carriers and employers.
Due to the high prevalence of infertility, its high costs of treatment and the limited insurance coverage provided for the disease, there is a significant unmet need for fertility services in the United States and several macro trends are driving that need for fertility treatments and propelling the overall size of the fertility market higher.
While fertility treatments have been available for almost 40 years to help individuals suffering from infertility build their families, access to these treatments has been limited due to the lack of comprehensive coverage and the prohibitive costs.
−Removed: The cost of care for a successful outcome can exceed $60,000 according to a study published in The Journal of the American Medical Association, yet only a small percentage of employers provide a benefits plan that addresses these costs.
+Added: Only a small percentage of employers provide a benefits plan that addresses these costs.
As a result, the vast majority of patients who undergo fertility treatment must pay for most or all of their care out-of-pocket, which is cost-prohibitive for many families and individuals.
−Removed: The lack of adequate coverage has been the result of both broader public policy issues, as well as conventional health insurance carrier-specific policies.
+Added: We believe that the lack of adequate coverage has been the result of both broader public policy issues, as well as conventional health insurance carrier-specific policies.
For example, it was not until 2017 that infertility was first recognized as a disease by the American Medical Association and, even now, only 19 states have mandated insurance coverage for infertility.
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"
+Added: When conventional health insurance carriers have chosen to structure fertility coverage for their employer clients, that coverage often has limited lifetime dollar maximums and clinically antiquated "one size fits all"
clinical protocols, such as mandated step therapy protocols.
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Industry Challenges
−Removed: Employers are faced with three major challenges relating to providing fertility benefits to their employee bases:
+Added: We believe employers are faced with three major challenges relating to providing fertility benefits to their employee bases:
● the lack of a comprehensive fertility benefits solution that optimizes their fertility treatment expenditures;
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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, which significantly escalate healthcare costs, including maternity care, labor and delivery costs and NICU expenses.
−Removed: 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.
−Removed: In the case of triplets, the costs escalate significantly and average $577,000, sometimes extending upwards of $1.0 million.
+Added: One of the most common complications associated with multiples is preterm births, which significantly escalates healthcare costs, including maternity care, labor and delivery costs and NICU expenses.
Conventional health insurance carriers also often mandate step therapy protocols and restrict access to use of advanced diagnostics and procedures, which exacerbates the inefficient utilization of dollars available under the lifetime dollar maximum and wastes valuable time on less effective treatments.
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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.
−Removed: The conventional pharmacy delivery infrastructure is not designed to address the uniqueness of fertility treatment, which requires highly coordinated and timely delivery of medication.
+Added: The conventional pharmacy delivery infrastructure is not designed to address the uniqueness of fertility treatment, which requires highly coordinated and timely delivery of medications.
Conventional benefits managers require extensive and multiple authorizations and have inconsistent approval processes, which can complicate and delay the provision of medications that are essential to fertility treatment.
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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: 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: 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.
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.
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Employers are facing increasing competition to attract and retain talent.
−Removed: As a result, employers are enhancing their value proposition to employees by evaluating and providing benefits that are most in demand.
+Added: As a result, we believe that employers are enhancing their value proposition to employees by evaluating and providing benefits that are most in demand.
Family building solutions are an increasing area of focus for employees, and in turn, employers.
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We believe we have a significant opportunity to provide employers with a superior comprehensive solution that addresses the unique challenges and complexities of fertility treatment and related fertility pharmacy services.
−Removed: Our core market for fertility benefits management is substantial and growing rapidly with strong tailwinds from major societal and cultural shifts, such as people starting families later in life, the growth in non-traditional paths to parenthood and other health-related burdens which have impacted the ability to have children.
−Removed: 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.
We estimate that the market for fertility treatments in the United States was approximately $8.0 billion in 2019, based on data published by the CDC regarding the number of treatment cycles and FertilityIQ’s estimate of the average cost per cycle.
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fertility market to be at least twice as large because this figure excludes those individuals who do not seek treatment for infertility.
−Removed: According to a recent study by Reproductive Medicine Associates of New York, approximately 50% of people suffering from infertility do not seek treatment.
Furthermore, when comparing the United States to other countries, the percentage of babies born utilizing ART is materially lower, at less than 2% in the United States (where fertility treatment is not adequately covered), compared to approximately 10% in Denmark and 5% in Japan (where there is more public health funding for fertility treatment).
We contract with employers to provide fertility and family building benefits to their employees and covered dependents.
−Removed: We believe our addressable market consists of the approximately 8,000 self-insured employers in the United States.
+Added: We believe our addressable market consists of the approximately 8,000 self-insured employers in the United States (excluding quasi-governmental entities, such as universities, school systems, and labor unions) .
These 8,000 employers have a minimum of 1,000 employees, representing approximately 75 million potential covered lives in total.
−Removed: Our current member base of 2.7 million lives under contract represents a low single digit percent of our total market opportunity.
+Added: As such, we estimate that our current member base of 4.0 million covered 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 single medication authorization and delivery process ensures that our members will not miss or delay cycles.
−Removed: We provide phone-based, clinical education and support seven days a week to ensure that our members understand any necessary medication storage requirements and administration techniques, including injection training.
+Added: We provide access to phone-based, clinical education and support seven days a week to ensure that our members understand any necessary medication storage requirements and administration techniques, including injection training.
To further support those members that require additional education, we also offer a library of on-demand videos.
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Our account management team also reviews all quarterly and annual program reports with our clients to reinforce the transparency we provide to clients into their expenditures and outcomes and to review and quantify the value created by our solutions.
−Removed: We believe our account management services, including our detailed client reporting, plays an important role in helping us maintain and strengthen our client relationships.
+Added: We believe our account management services, including our detailed client reporting, play an important role in helping us maintain and strengthen our client relationships.
Ease of Integration for Our Clients
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● Progyny Rx Savings.
−Removed: Progyny Rx delivers unit cost savings of between 10% and 20% to our clients, and additional savings of approximately 8% based on a reduction in unnecessary quantities of medication dispensed.
+Added: Progyny Rx delivers unit cost savings to our clients based on a reduction in unnecessary quantities of medication dispensed.
● Employee Productivity and Retention.
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● Superior Clinical Outcomes.
−Removed: 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: For example, as shown in the prior table, the in-network average live birth rate for Progyny members is 51.9%, as compared to the 43.7% average live birth rate for all of the patients at those same clinics.
+Added: Outcomes for Progyny members across our fertility specialist network are superior to the average outcomes that the same provider clinics report to the CDC for all of their patients.
+Added: Specifically, as shown in the table above, the in-network average live birth rate for Progyny members is 52.9%, as compared to the 43.6 % average live birth rate for all of the patients at those same clinics.
● Eliminating Financial Risk Associated With Collections.
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We intend to continue increasing our client base of self-insured employers throughout the United States by leveraging our experienced 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 base of over 180 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 (excluding quasi-governmental entities, such as universities, school systems, and labor unions), who have a minimum of 1,000 employees and, with our base of over 265 clients under contract, are still in the early stages of our growth trajectory.
Importantly, as we have continued to grow, we have meaningfully diversified our client base across an array of different industries.
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Expansion of Progyny Benefits Solutions within Our Existing Client Base
−Removed: We believe we will continue to see growth from existing clients that add incremental services to their fertility benefits program.
+Added: We expect to see further growth from existing clients that add incremental services to their fertility benefits program.
For example, a client can expand the fertility benefits they offer to their employees by increasing the number of Smart Cycles they contract for.
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We introduced Progyny Rx in the third quarter of 2017 and went live with a select number of clients in January 2018.
−Removed: Currently, 73% of our clients are utilizing this solution, including 84% of the clients we signed in 2020.
+Added: Currently, 81% of our clients under contract are utilizing this solution, including 93% of the clients we signed in 2021.
We believe our sales and marketing capabilities play an important role in informing and educating clients about the additional value and impact we can provide to them and their members by enhancing their benefit program.
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We believe the combination of these factors, coupled with our demonstrated track record of adding more services to our benefits design, highlights that we are well positioned to do so in the future.
−Removed: To date, we have identified several ways we believe we can potentially expand our offering and expand our client base in the future.
+Added: To date, we have identified several ways we believe we can potentially expand our offering, our addressable market, and our client base in the future.
We will continue to evaluate opportunities as our platform continues to expand.
−Removed: We serve over 180 self-insured employers in the United States across more than 30 industries.
−Removed: 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: We currently have contracts to serve over 265 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 at least 1,000 to 500,000 employees, represent approximately 4.0 million covered lives under contract.
For the year ended December 31, 2021, two clients accounted for 19% and 15%, or a combined 34%, of our total revenue.
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● benefits plan design;
−Removed: ● access for all employees and their dependents, including LGBTQ+ and single mothers by choice;
+Added: ● access for all employees and their covered dependents, including LGBTQ+ and single mothers by choice;
● equitable access to care across geographies;
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These competitors include conventional health insurance carriers, such as UnitedHealthcare, Cigna, Aetna and members of the Blue Cross Blue Shield Association.
−Removed: Other competitors who currently provide fertility benefits management services to employers include WIN Fertility and Optum Fertility Solutions.
+Added: Other competitors who currently provide fertility benefits management services to employers include WIN Fertility and Optum Fertility Solutions as well as emerging companies such as Carrot Fertility and Maven Clinic, among others.
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.
−Removed: These emerging companies, such as Carrot Fertility and Maven Clinic, currently offer employees post-tax reimbursement programs for fertility benefits.
In addition to our unique plan design, member support and fertility specialist network, one of the key structural differences between our pre-tax benefit and their post-tax reimbursement programs is that the individual receiving reimbursement for fertility treatments must pay income taxes on the amount of that reimbursement for the post-tax programs.
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Our sales team is organized principally by geography and account size and is responsible for identifying potential clients and managing the overall sales process.
−Removed: The success and effectiveness of our sales team is evidenced by the over 45 new clients that we added in 2020, and the fact that approximately 65% of our current clients terminated their existing fertility coverage to switch to Progyny.
+Added: The success and effectiveness of our sales team is evidenced by the approximately 85 new clients that we added in 2021, and the fact that a majority of our current clients terminated their existing fertility coverage to switch to Progyny.
We generate client leads, accelerate sales opportunities and build brand awareness through our marketing programs.
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Government Regulation
−Removed: As a participant in the health care industry, we are required to comply with extensive and complex U.S.
+Added: As a participant in the healthcare industry, we are required to comply with extensive and complex U.S.
laws and regulations at the federal and state levels.
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
−Removed: laws as a result of our contractual obligations.
+Added: laws, and we may be affected by these 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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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.
−Removed: Since its enactment in March 2010, there have been judicial, executive and Congressional challenges to certain aspects of the ACA.
−Removed: For example, the United States Supreme Court heard oral arguments in California v.
−Removed: Texas , which consolidated two cases regarding the constitutionality of the ACA, on November 10, 2020.
−Removed: It is unclear when a decision is expected to be made.
−Removed: 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: Since its enactment in March 2010, there have been judicial, executive and Congressional challenges
+Added: to certain aspects of the ACA, and on June 17, 2021, the U.S.
+Added: Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
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: In October 2020, the Departments of Health and Human Services (“HHS”), Labor (“DOL”) and the Treasury issued a final rule that requires most group health plans and health insurance issuers in the individual and group markets to disclose certain price and cost-sharing information for all covered healthcare items and services, including prescription drugs to participants, beneficiaries and enrollees (the “Rule”).
+Added: The Rule also requires plans and issuers to disclose in-network negotiated rates, historical out-of-network allowed amounts, and drug pricing information through three publicly available machine-readable files.
+Added: On August 20, 2021, the agencies jointly released guidance regarding the implementation of the Rule.
+Added: Importantly, the guidance announced that the agencies will (i) indefinitely defer enforcement of the Rule’s requirement that plans and issuers publish machine-readable files relating to prescription drug pricing pending further rulemaking and (ii) defer enforcement of the Rule’s requirement to publish the remaining machine-readable files until July 1, 2022.
+Added: The cost-sharing information requirements under the Rule take effect in a phased approach beginning January 1, 2023.
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.
−Removed: 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: As another example of recent healthcare legislative changes, the Consolidated Appropriations Act, or CAA, effective as of December 27, 2021, contains provisions impacting group health plans, including protections for plan participants from surprise medical bills and ensuring health plan price transparency.
Several items pertain to disclosure.
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.
−Removed: 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.
−Removed: 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.
−Removed: The CAA will also require certain service providers for health plans to comply with certain ERISA fee disclosure rules.
+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 DOL or HHS and the Internal Revenue Services, or the 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.
+Added: The CAA also requires certain service providers for health plans to comply with certain ERISA fee disclosure rules.
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.
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).
−Removed: 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.
−Removed: 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: 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 prohibits 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: Many states have also enacted comprehensive balance billing or surprise billing laws and the CAA defers to existing state requirements with respect to state-established payment amounts.
+Added: Such state laws vary in their approach, resulting in different impacts on the healthcare system as a whole.
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.
−Removed: Licensing Requirements
+Added: Licensing and Other Legal 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/or PBM licenses and registrations in certain jurisdictions and to ensure
−Removed: that such licenses and registrations are in good standing on an annual basis.
+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 that such licenses and registrations are in good standing on an annual basis.
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.
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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 determine that the nature of our business requires that we be licensed under such state laws, we may need to restructure our business to comply with any related requirements.
+Added: If a regulatory authority in any state determines that the nature of our business requires that we be licensed under such state laws, we may need to restructure our business to comply with any related requirements.
Fraud and Abuse Laws.
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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.
−Removed: 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.
+Added: However, there can be no assurance 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.
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.
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HIPAA Privacy and Security Requirements.
−Removed: 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
−Removed: 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.” 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: 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 organizational 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, we are permitted to use and disclose protected health information to perform our services and for other limited purposes, but other uses and
+Added: 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.
−Removed: In addition to HIPAA, numerous other federal and state laws govern the collection, dissemination, use, access to and confidentiality of personal information, some of which may be applicable to our business.
+Added: In addition to HIPAA, there are various federal and state laws that govern the collection, dissemination, use, access to and confidentiality of personal information, some of which may be applicable to our business.
Certain federal and state laws protect types of personal information that may be viewed as particularly sensitive.
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The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
+Added: Further, the California Privacy Rights Act, or the CPRA, recently passed in California.
+Added: The CPRA will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations of data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
+Added: It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement.
+Added: The majority of the provisions will go into effect on January 1, 2023, and additional compliance investment and potential business process changes may be required.
+Added: Similar laws have passed in Virginia and Colorado, and have been proposed in other states and at the federal level, reflecting a trend toward more stringent privacy legislation in the United States.
+Added: The majority of these laws have express exemptions relating to any data handled pursuant to HIPAA, so many of these state laws do not supersede or conflict with any rules and requirements of HIPAA.
+Added: However, the enactment of some state laws could still have potentially conflicting requirements that would make compliance challenging.
Data Protection and Breaches.
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HIPAA and its implementing regulations mandate format and data content standards and provider identifier standards (known as the National Provider Identifier) that must be used in certain electronic transactions, such as claims, payment advice and eligibility inquiries.
−Removed: Department of Health and Human Services, or HHS, now requires the use of updated standard code sets for diagnoses and procedures known as the ICD-10 code sets.
−Removed: Enforcement of compliance with these standards falls under HHS and is carried out by the Centers for Medicare & Medicaid Services, or CMS.
+Added: HHS now requires the use of updated standard code sets for diagnoses and procedures known as the ICD-10 code sets.
+Added: Enforcement of compliance with these standards falls under HHS and is carried out by CMS.
In the event new requirements are imposed, we will be required to modify our systems and processes to accommodate these changes.
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For example, we maintain social media accounts.
−Removed: As laws and regulations, including FTC enforcement, rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees or third parties acting at our direction to abide by applicable laws and regulations in the use of these platforms and devices could adversely impact our business, financial condition and results of operations or subject us to fines or other penalties.
+Added: As laws and regulations, including FTC enforcement, rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees or third parties acting at our direction to abide by applicable laws and regulations in the use of these
+Added: platforms and devices could adversely impact our business, financial condition and results of operations or subject us to fines or other penalties.
Intellectual Property
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Employees and Human Capital
−Removed: As of December 31, 2020, we had 210 full-time employees.
+Added: As of December 31, 2021, we had 313 employees, of which 311 are full-time.
Our employees are our most important asset and our culture is a key to our success.
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.
−Removed: This includes a work-from-home policy for all of our employees for most of 2020.
−Removed: We have not furloughed or laid off any employees due to the pandemic.
−Removed: 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: For instance, we implemented a remote working policy for all of our employees.
+Added: We have recently re-opened our corporate offices to employees on a hybrid basis, while implementing additional safety measures and protocols.
+Added: We are committed to creating and maintaining a healthy and safe workplace for our employees.
+Added: We have not furloughed or laid off any employees due to the ongoing pandemic.
We are united around our mission and committed to our shared values of Passion, Collaboration, Innovation, Integrity and Growth.
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We focus on creating opportunities for employee growth, development and training, including opportunities to cultivate talent and identify candidates for new roles from within the company, management and leadership development programs, technical skill building initiatives and mentoring programs.
+Added: We include the Progyny benefit in our own health plan, allowing Progyny employees to realize their dreams of parenthood.
+Added: We offer paid parental leave for new parents and offer a pregnancy loss leave benefit as an enhancement to our bereavement leave policy, explicitly recognizing the physical, emotional, and mental health impact of a pregnancy loss, or failed adoption or surrogacy, for any employee.
+Added: We also offer additional paid leave to all employees to support other family health and care challenges.
+Added: Additionally, we expanded our mental health resources to assist our employees with managing the stresses and uncertainties associated with COVID-19.
● Diversity, Equity and Inclusion .
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We strive to create a workplace where all individuals feel valued, empowered and welcomed.
−Removed: Our key initiatives focus on recruiting outreach, internal resource groups, mentoring programs and career development ladders.
+Added: Our key initiatives focus on recruiting outreach, internal resource groups representing employees and allies from historically underrepresented and/or marginalized communities, mentoring programs and career development ladders.
+Added: We published our first corporate sustainability report on our website, which further highlights our approach to diversity and inclusion, and we also publish EEO-1 reports on our website.
+Added: Nothing on our website shall be deemed incorporated by reference into this Annual Report on Form 10-K.
● Community Outreach and Support .
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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 .
+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 Auxogen, Inc.
+Added: 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 should not consider information on our website to be part of this Annual Report on Form 10-K.
Available Information
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Further, our references to website URLs are intended to be inactive textual references only.
+Added: We announce material information to the public through filings with the SEC, our investor relations website at investors.progyny.com , press releases, public conference calls, and webcasts to achieve broad, non-exclusionary distribution of information.
+Added: We therefore encourage investors and others interested in Progyny to review the information disclosed through such channels.
+Added: Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website.
R ISK FACTORS
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Risks Related to Our Business and Industry
−Removed: 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.
−Removed: 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.
−Removed: 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.
−Removed: The ongoing COVID-19 pandemic has adversely impacted, and may continue to adversely impact, many aspects of our business.
−Removed: 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: The ongoing COVID-19 pandemic, including variants, has had and is expected to continue to have, and similar health epidemics or pandemics 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: The ongoing COVID-19 pandemic, including variants, has adversely impacted, and may continue to adversely impact, many aspects of our business.
+Added: Our revenue growth for the years ended December 31, 2021 and 2020 were negatively impacted by COVID-19, including variants, and our revenue growth in future periods may continue to be adversely impacted by COVID-19.
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.
−Removed: 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.
−Removed: The lack of research on the impact of COVID-19 vaccines on pregnancy may also affect member behavior and utilization.
−Removed: 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.
−Removed: Each of these factors could affect our utilization rates and the number of members enrolled in our clients’ benefit plans.
−Removed: 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.
−Removed: 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.
−Removed: In light of the uncertainty and rapidly evolving situation relating to the spread of COVID-19 and in compliance
−Removed: 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.
−Removed: Although we have since re-opened our offices for a small group of employees, the majority of our employees continue to work remotely.
+Added: Many of our members live in communities that have been 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: Emerging research and the lack of consumer information 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, which may disproportionately impact fertility benefits, and delay or cancel implementation of fertility benefits.
+Added: Each of these factors could affect member behavior, our utilization rates and the number of members enrolled in our clients’ benefit plans.
+Added: In response to the COVID-19 pandemic, governments may at any time choose to impose and/or fully reinstate quarantines, executive orders, shelter-in-place orders, and similar government orders, restrictions and public health and safety measures in order to control the spread of the disease.
+Added: Such orders, restrictions or measures, or the perception that such orders, restrictions or measures could occur or reoccur, could result 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 and providers and could negatively impact member behavior.
+Added: In addition to the potential direct impacts to our business, the economy may continue to be impacted as a result of the actions taken in response to COVID-19.
+Added: To the extent a weakened economy impacts clients’ or members’ ability or willingness to pay for our benefit, or our vendors’, including any pharmacy program partners’, ability to provide services to us, we could see our business and results of operations negatively impacted.
+Added: We implemented a work-from-home policy for all of our employees in March 2020 and have recently re-opened our corporate offices to employees on a hybrid basis, while implementing additional safety measures and protocols.
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.
−Removed: 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.
−Removed: 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: While most of our operations can be performed remotely, there is no guarantee that we will be as effective while working partially 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, and in some cases, relative to our previous expectations, delays in onboarding new clients, responding to members, data collection and review, and a corresponding reduction in growth, or other decreases in productivity that could seriously harm our business.
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.
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.
−Removed: 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.
−Removed: 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: 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, which could reduce our ability to access capital and 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.
The global impact of COVID-19 continues to rapidly evolve, and we will continue to monitor the situation closely.
−Removed: The ultimate impact of the COVID-19 pandemic or a similar health epidemic is highly uncertain and subject to change.
We do not yet know the full extent of potential delays or impacts on our business, operations, or the global economy as a whole.
−Removed: 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: The ultimate impact of the COVID-19 pandemic or a similar health epidemic or pandemic is highly uncertain and subject to change;
+Added: and will depend on numerous evolving factors that we may not be able to accurately predict, including without limitation:
+Added: the trajectory, duration, scope, severity, and any resurgences of the COVID-19 pandemic;
+Added: the effectiveness of vaccine rollout plans, including any mandates;
+Added: the public’s perception of the safety of the vaccines and other treatments and their willingness to take the vaccines or other treatments;
+Added: the existence and prevalence of new variants of the virus;
+Added: the continued impact on worldwide macroeconomic conditions, including interest rates, employment rates and consumer confidence;
+Added: governmental, business, and individuals’ actions that have been, and continue to be, taken in response to the pandemic;
+Added: the effect on our providers, clients and members;
+Added: changes in demand for our services;
+Added: our ability to sell and provide our services;
+Added: the ability of our clients and members to pay for our services;
+Added: the health of, and the effect on, our workforce;
+Added: and the potential effects on our internal control, including those over financial reporting, as a result of changes in working environments for our employees and business partners.
+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 or pandemics will not occur, or that the global economy will recover, either of which could seriously harm our business.
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.
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In developing this guidance, our management must make certain assumptions and judgments about its future performance.
−Removed: 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.
−Removed: 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.
−Removed: 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: 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 members to return to normal practice volumes and behavior, 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 and may be revised at a later time, solely in our discretion, as we learn more information.
+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, economic conditions or member behavior, some of which may change.
Accordingly, our guidance is only an estimate of what management believes is realizable as of the date of release of such guidance.
Furthermore, analysts and investors may develop and publish their own projections of our business, which may form a consensus about our future performance.
−Removed: 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: 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, financial market conditions and member behavior caused by the COVID-19 pandemic, and which could adversely affect our business and future operating results.
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.
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.
−Removed: 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: 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 incomplete.
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.
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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 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
+Added: 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.
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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.
+Added: Many healthcare industry participants are consolidating to create larger and more integrated healthcare delivery systems with greater market power and we expect regulatory and economic conditions to result in additional consolidation in the healthcare industry.
+Added: Additionally, financial investors are acquiring fertility practices and this may accelerate consolidation within the industry.
+Added: Although comprehensive, our solution is a standalone fertility benefit.
+Added: Clients may prefer a single healthcare solution, which could adversely affect our ability to retain existing clients or grow our client base.
+Added: In addition, we work with partner organizations to market our benefit to potential clients.
+Added: As consolidation accelerates, the economies of scale of our partners’ organizations may grow.
+Added: If a partner experiences sizable growth following consolidation, it may determine that it no longer needs to rely on us and may reduce its demand for our services.
+Added: In addition, as healthcare providers consolidate to create larger and more integrated healthcare delivery systems with greater market power, these providers may try to use their market power to negotiate fee increases for their services.
+Added: Finally, consolidation may also result in the acquisition of our partners by competitors or development by our partners of products and services that compete with our products and services.
+Added: Any of these potential results of consolidation could have a material 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.
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In addition, our fertility benefits solution clients can purchase our add-on Progyny Rx solution.
−Removed: We went live with Progyny Rx in 2018 and 73% of our clients have now launched this solution, including approximately 84% of the clients we signed in 2020.
+Added: We went live with Progyny Rx in 2018 and 81% of our current clients under contract are utilizing this solution, including approximately 93% of the clients we signed in 2021.
Factors that may affect our ability to retain our existing clients and sell additional solutions to them include, but are not limited to, the following:
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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.
−Removed: We serve over 180 employers in the United States across more than 30 industries.
+Added: We currently have contracts to serve over 265 employers with at least 1,000 covered lives in the United States across more than 30 industries.
+Added: For the year ended December 31, 2021, two of our clients accounted for 19% and 15%, respectively, or a combined 34%, of our total revenue.
For the year ended December 31, 2020, two clients accounted for 18% and 17%, or a combined 35%, of our total revenue.
−Removed: No other clients accounted for more than 10% for the year ended December 31, 2020.
−Removed: In 2019, each of our largest three clients represented more than 10% of our total revenue, accounting for 16%, 15%, and 10%, respectively.
+Added: No other clients accounted for more than 10% for the years ended December 31, 2021 and 2020.
Engagement with these clients is generally covered through contracts that are multi-year in duration.
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.
−Removed: Clients could also renegotiate pricing terms at the time of renewal, which could have a negative impact on our revenue.
+Added: Clients, including our two largest 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.
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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.
−Removed: A significant change in the utilization of our solutions could have an adverse effect on our business, financial condition and results of operations.
−Removed: We do not control or impact the level of utilization of our solutions for each of our clients, in particular for newer clients.
+Added: A significant change in the level or the mix of the utilization of our solutions could have an adverse effect on our business, financial condition and results of operations.
+Added: We do not control nor can we impact the level of utilization of our solutions or the mix of utilization of our solutions for each of our clients, in particular for newer clients.
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 have and could continue to contribute to a reduction in the use of our
−Removed: solutions include:
+Added: Factors that have and could continue to contribute to a reduction in the use of our 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 or the worsening thereof, including the COVID-19 pandemic;
+Added: outbreaks of contagious diseases or the
+Added: 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;
+Added: labor shortages at our clinics;
federal and state regulatory changes;
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negative publicity, through social media or otherwise and news coverage.
−Removed: It is also difficult for us to predict the level of utilization of our services at the member level.
+Added: It is also difficult for us to predict the level or mix of utilization of our services at the member level nor do we have any control over the level or mix of utilization of our services.
If the actual utilization of our services by members is significantly greater than budgeted, the client may be responsible for corresponding costs that exceed its planned expenditure.
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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.
+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 healthcare 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.
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.
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We experienced net losses from 2015 to 2019.
−Removed: Our net loss from continuing operations was $8.6 million and $5.1 million for the years ended December 31, 2019 and 2018, respectively.
−Removed: 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: Our net loss from continuing operations was $8.6 million for the year ended December 31, 2019.
+Added: While we have experienced significant revenue growth since 2016, achieved profitability starting 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.
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.
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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.
+Added: We will also face increased compliance costs associated with growth, the expansion of our client base.
+Added: In addition, we incur significant legal, accounting and other expenses related to being a public company.
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.
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For example, there has been an ongoing national debate relating to the health insurance system in the United States.
−Removed: Certain elected officials have introduced proposals that would create a new single-payer
−Removed: 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.
−Removed: 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: Certain elected officials have introduced proposals that would create a new single-payer national health insurance program for all United States residents, replacing virtually all other sources of public and private
+Added: 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 healthcare system at the state level are regularly introduced, such as in New York and California.
At the federal level, President Biden and Congress may consider other legislation and/or executive orders to change elements of the ACA.
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On November 10, 2020, the U.S.
−Removed: Supreme Court heard oral arguments in this matter, and is in the process of reviewing this case.
−Removed: A decision is expected in 2021.
+Added: Supreme Court heard oral arguments in this matter, and issued its decision in June 2021, ruling that the plaintiffs lacked standing to challenge the individual mandate provision, thus leaving the ACA in effect without ruling on the constitutionality of the individual mandate.
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.
−Removed: 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: The Executive Order directed federal agencies to examine agency actions to determine whether they are consistent with the Administration’s commitment regarding the ACA, and begin rulemaking to suspend, revise, or rescind any inconsistent actions.
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.
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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.
−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 .
+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 or suffer a loss or inappropriate disclosure of confidential information, which could materially impact our business and the results of operations .
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.
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High-profile security breaches at other companies and in government agencies have increased in recent years.
−Removed: 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.
−Removed: 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: There is possibility of targeted cyber-attacks by foreign countries or entities that could impact United States government and private companies’ technological infrastructures, some of which we utilize to provide our services.
+Added: The healthcare industry has seen a shift to an accelerated use of digital and technological platforms, especially due to the ongoing COVID-19 pandemic.
+Added: As a result of such shift, there have been and may continue to be more targeted cybersecurity attacks and threats on us, our vendors, provider clinics and specialty pharmacies.
+Added: Despite the implementation
+Added: 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 in the past 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.
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.
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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.
−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: See “—Risks Related to Government Regulation—We operate in a highly regulated industry and must comply with a significant number of complex and evolving legal and regulatory requirements—Data Protection and Breaches.”
If we fail to offer high-quality support, our reputation could suffer.
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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.
−Removed: Our marketing efforts depend significantly on our ability to receive positive references from our existing clients.
−Removed: Our marketing efforts depend significantly on our ability to call on our current clients to provide positive references to new, potential clients.
−Removed: Given our limited number of long-term clients, the loss or dissatisfaction of any client could substantially harm our brand and reputation, inhibit the market adoption of our offering and impair our ability to attract new clients and maintain existing clients.
+Added: Our marketing efforts depend significantly on our ability to receive positive references from our existing clients, channel partners and benefit consultants.
+Added: Our marketing efforts depend significantly on our ability to call on our current clients, channel partners and benefit consultants to provide positive references to new, potential clients.
+Added: Given our limited number of long-term clients, the loss or dissatisfaction of any client, channel partnership or benefit consulting relationship could substantially harm our brand and reputation, inhibit the market adoption of our offering and impair our ability to attract new clients and maintain existing clients.
Any of these consequences could have an adverse effect on our business, financial condition and results of operations.
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Furthermore, the healthcare industry is rapidly evolving and the markets for fertility benefits management and the related fertility pharmacy benefits management are relatively immature.
−Removed: Market opportunity estimates and growth forecasts, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, including the risks described herein.
+Added: Market opportunity estimates and growth forecasts, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, including the risks
+Added: described herein.
Even if the markets in which we compete achieve the forecasted growth, our business could fail to grow at similar rates, if at all.
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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
−Removed: 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 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.
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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: 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.
−Removed: 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.
−Removed: 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: Reductions in employee benefits spending or price pressures 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: Market volatility and uncertainty related to general economic conditions remain widespread, making it very difficult for our clients and us to accurately forecast and plan future business activities.
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.
−Removed: 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.
+Added: Unfavorable economic conditions could result in the delay or cancellation by certain clients especially if purchases of our solution are perceived by clients and potential clients to be discretionary, or if they experience a reduction in their number of employees or there are material defaults by members on past amounts due.
+Added: To the extent purchases of our solution are perceived by clients and potential clients to be discretionary, our revenue may be disproportionately affected by delays or reductions in general healthcare spending.
+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: Further, economic conditions including inflation, interest rate fluctuations, changes in capital market conditions and regulatory changes, such as the taxability of medical benefits like
+Added: ours, may affect our ability to obtain necessary financing on acceptable terms.
+Added: An increase in the cost of obtaining fertility medication or general medical cost inflation could negatively impact our results of operation.
In addition, the increased pace of consolidation in the healthcare industry may result in competitors with greater market power.
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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
−Removed: 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 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.
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To date, we have derived a substantial majority of our revenue from sales of our fertility benefits and Progyny Rx solutions.
−Removed: As we operate in an evolving industry, our long-term results of operations and continued growth will depend on our ability to successfully develop and market new successful solutions and services to our clients.
+Added: As we operate in an evolving industry and new markets, our long-term results of operations and continued growth will depend on our ability to successfully develop and market new successful solutions and services to our clients.
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.
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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’ 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
+Added: 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.
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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: 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: 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.
In addition, to execute our growth plan, we must attract and retain highly qualified personnel.
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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.
−Removed: 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: If we are not successful in maintaining our relationships with top
+Added: 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.
Any of these events could have a material adverse effect on the provision of services to our members and our operations.
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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.
−Removed: Such organizations or groups of health
−Removed: 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.
−Removed: 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: Such organizations or groups of healthcare 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: Healthcare 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.
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.
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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.
−Removed: 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, from time to time, we may in the future be subject to class action or other lawsuits by healthcare providers with respect to claims payment procedures, reimbursement policies, network participation, or similar matters.
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.
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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.
−Removed: 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.
−Removed: 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.
+Added: Our growth depends in part on the success of our strategic relationships with, and monitoring of, third parties, including channel partners, vendors and insurance carriers.
+Added: In order to grow our business, we anticipate that we will continue to depend on our relationships with third parties, including channel partners, vendors and insurance carriers among others.
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 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: 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
+Added: 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.
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.
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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.
−Removed: 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.
−Removed: 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
−Removed: basis or under favorable terms enabling us to service our members profitably.
+Added: Specialty pharmacies could face supply chain issues that could result in higher medical costs or negatively impact our rebates and results of operations.
+Added: We do not control the pricing strategies of our specialty pharmacy partners, each of whom may be motivated by general economic considerations including inflation and other 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 basis or under favorable terms enabling us to service our members profitably.
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.
−Removed: 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.
−Removed: We maintain contractual relationships with select pharmaceutical manufacturers, which provide us with access to limited distribution specialty pharmaceutical rebates for drugs we purchase.
−Removed: 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.
−Removed: Pharmaceutical manufacturers generally direct medication pricing by setting medication list prices and offering rebates and/or discounts for their medications.
+Added: If we lose our relationship with one or more key pharmacy program partners, or if the rebates provided by pharmacy program partners decline, our business and results of operations could be adversely affected.
+Added: We maintain contractual relationships with select pharmacy program partners, which provide us with access to limited distribution specialty pharmaceutical rebates for drugs we purchase.
+Added: While we have contractual relationships with such pharmacy program partners, they 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: Pharmacy program partners generally direct medication pricing by setting medication list prices and offering rebates and/or discounts for their medications.
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.
−Removed: 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: Our ability to obtain and maintain 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.
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.
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Such non-compliance could also require significant investment to address and may prove costly.
−Removed: There are several additional
−Removed: 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 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 .
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If a professional board in any state determines that the services provided by our employed PCAs require a license to be provided, we may need to conduct additional training and credentialing, replace staff, obtain additional insurance, and pay increased salaries, which could adversely affect our results of operation.
−Removed: We may additionally need to suspend the PCA services we provide while our personnel obtains the necessary licensure, which may adversely affect our relationships with our clients and members and cause us to be in breach of our contracts.
+Added: We may additionally need to suspend the PCA services we provide while our
+Added: personnel obtains the necessary licensure, which may adversely affect our relationships with our clients and members and cause us to be in breach of our contracts.
● HIPAA Privacy and Security Requirements .
−Removed: 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 availability of electronic protected health information.
+Added: Regulations promulgated pursuant to 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 organizational 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.
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State laws are contributing to increased enforcement activity and may also be subject to interpretation by various courts and other governmental authorities.
−Removed: Further, California recently enacted the CCPA, which went into operation on January 1, 2020.
−Removed: The CCPA gives California residents expanded rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.
+Added: Further, California recently enacted the CCPA, which went into effect on January 1, 2020.
+Added: The CCPA gives California residents certain rights to access and delete their personal information, opt out of certain personal information sharing, and receive detailed information about how their personal information is used.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation.
−Removed: The CCPA may increase our compliance costs and potential liability.
−Removed: Some observers have noted that the CCPA could mark the beginning of a trend toward more stringent privacy legislation in the United States, which could increase our potential liability and adversely affect our business.
+Added: Further, the California Privacy Rights Act, or the CPRA, recently passed in California.
+Added: The CPRA will impose additional data protection obligations on covered businesses, including additional consumer rights processes, limitations on data uses, new audit requirements for higher risk data, and opt outs for certain uses of sensitive data.
+Added: It will also create a new California data protection agency authorized to issue substantive regulations and could result in increased privacy and information security enforcement.
+Added: The majority of the provisions will go into effect on January 1, 2023 and additional compliance investment and potential business process changes may be required.
+Added: Similar laws have passed in Virginia and Colorado, and have been proposed in other states and at the federal
+Added: level, reflecting a trend toward more stringent privacy legislation in the United States.
+Added: The enactment of such laws could have potentially conflicting requirements that would make compliance challenging.
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.
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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 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
+Added: 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.
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The ACA also requires HHS to establish standards for health claims attachment transactions.
−Removed: HHS has modified the standards for electronic healthcare transactions (e.g., eligibility, claims submission and payment and electronic remittance) from Version 4010/4010A to Version 5010.
+Added: HHS has modified the standards for electronic healthcare transactions (such as, eligibility, claims submission and payment and electronic remittance) from Version 4010/4010A to Version 5010.
Further, HHS now requires the use of updated standard code sets for diagnoses and procedures known as the ICD-10 code sets.
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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.
−Removed: 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.
+Added: Any determination by a federal or state regulatory authority that any of our activities or those of our clients or
+Added: 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.
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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.
−Removed: 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.
−Removed: 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.
−Removed: 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
−Removed: of operations, and financial condition.
+Added: Although we believe all of our arrangements with our network providers are in compliance with such laws, where applicable, 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, 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 of operations, and financial condition.
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.
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Like the healthcare anti-kickback laws, the corresponding provisions of ERISA are broadly written and their application to particular cases can be uncertain.
−Removed: 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: 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.
+Added: Separately, although ERISA generally preempts state laws that relate to ERISA plans, the recent Supreme Court ruling in Rutledge v.
Ass’n established that ERISA does not preempt all state laws imposing transparency or other requirements on PBMs.
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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.
−Removed: If we do not make payments to healthcare providers in a timely fashion consistent with prompt pay laws, we may be required to pay interest in addition to any amounts owed to such providers.
+Added: If we do not make payments to healthcare providers in a timely fashion consistent with prompt pay laws, we may be required to pay interest in addition to any amounts owed to such
In addition, our reputation may be harmed and our contractual obligations to certain clients may be breached, causing us to lose revenue or otherwise pay penalties under such contracts.
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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.
−Removed: Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA.
−Removed: For example, the United States Supreme Court heard oral arguments in California v.
−Removed: Texas , which consolidated two cases regarding the constitutionality of the ACA on November 10, 2020.
−Removed: A decision is expected in 2021.
−Removed: 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: Since its enactment, there have been judicial, executive and Congressional challenges to certain aspects of the ACA as well as efforts to repeal or replace certain aspects of the ACA, which may continue in the future.
+Added: For example, on June 17, 2021, the U.S.
+Added: Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA.
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.
−Removed: 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.
−Removed: 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: 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
+Added: 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, effective December 27, 2021, contains provisions impacting group health plans, including protections for plan participants from surprise medical bills and ensuring health plan price transparency.
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.
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.
−Removed: 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.
−Removed: The CAA will also require certain service providers for health plans to comply with certain ERISA fee disclosure rules.
+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.
+Added: The CAA also requires certain service providers for health plans to comply with certain ERISA fee disclosure rules.
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.
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).
−Removed: 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
−Removed: providers, subject to certain exceptions.
−Removed: 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: 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 balance billing or surprise billing laws and the CAA defers to existing state requirements with respect to state-established payment amounts.
+Added: Such state laws vary in their approach, resulting in different impacts on the health care system as a whole.
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: If we are unable to comply with these laws or regulations or provide adequate assistance to our clients subject to these laws or regulations, it is reasonably possible that our business operations and operating results could be materially adversely affected.
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.
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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.
−Removed: 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: 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 or pharmacy program partners, rules governing contractual provisions between PBMs and their contracted payers and/or pharmacies, and registration or licensing of PBMs.
For example, in 2019, the U.S.
−Removed: 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: 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
+Added: rebates on manufacturers that chose to increase their drug prices more rapidly than inflation.
Further, the U.S.
−Removed: Supreme Court’s recent decision in Rutledge v.
+Added: Supreme Court’s decision in Rutledge v.
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.
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.
−Removed: 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.
−Removed: At least 10 states have proposed new PBM legislation in 2021 alone, including New York, Texas, and Florida.
+Added: In the wake of the Rutledge ruling, for example, New York reintroduced previously vetoed PBM legislation and Governor Andrew Cuomo issued an Executive Budget for 2022 that highlights the need for PBM accountability.
+Added: States proposed over 100 separate PBM bills in 2021 alone, and at least 18 states adopted new PBM oversight laws.
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.
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PBM operations may also be subject to federal and state fraud and abuse laws.
−Removed: 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: We do not believe our operations are directly subject to such laws (including 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.
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.
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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
+Added: 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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In addition, any of our trademarks or trade names, whether registered or unregistered, may be challenged, opposed, infringed, cancelled, circumvented or declared generic, or determined to be infringing on other marks, as applicable.
−Removed: We may not be able to protect our rights to these trademarks and trade names, which we will need to build name recognition by potential collaborators or clients in our markets of interest.
+Added: We may not be able to protect our rights to these trademarks
+Added: and trade names, which we will need to build name recognition by potential collaborators or clients in our markets of interest.
Any litigation against us could be costly and time-consuming to defend and could harm our business, financial condition and results of operations.
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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.
−Removed: 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 discussed in Part I, Item 3 of this Annual Report on Form 10-K, we were subject to a vendor arbitration that was settled in December 2020.
As part of our settlement and to avoid further costs, we agreed to pay the vendor a total of $5.75 million.
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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.
+Added: See Note 14 – Commitments and Contingencies – in the notes to the consolidated financial statements included in Part II, Item 8, of this Annual Report on Form 10-K.
Acquisitions, strategic investments, partnerships, or alliances could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our business, financial condition and results of operations.
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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.
+Added: As of January 1, 2021, we adopted ASC No.
+Added: 2019-12, Income Taxes (Topic 740):
+Added: Simplifying the Accounting for Income Taxes, which did not have a material impact on our consolidated financial statements.
As of January 1, 2020, we adopted ASU No.
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If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our results of operations could be adversely affected.
−Removed: The preparation of financial statements in conformity with U.S.
+Added: The preparation of consolidated financial statements in conformity with U.S.
generally accepted accounting principles, or U.S.
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“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.
−Removed: 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: 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.
+Added: The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities and equity, and the
+Added: amount of revenue and expenses that are not readily apparent from other sources.
+Added: We believe that the assumptions and estimates associated with our accrued receivables related to revenue recognition, accrued claims payable, stock-based compensation, and accounting for income taxes have the greatest potential impact on our consolidated 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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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.
−Removed: The market price of our common stock may be highly volatile and may fluctuate or decline
−Removed: substantially as a result of this and a variety of factors, some of which are beyond our control, including, but not limited to:
+Added: The market price of our common stock may be highly volatile and may fluctuate or decline substantially as a result of this and a variety of factors, some of which are beyond our control, including, but not limited to:
● high volume of direct sales into the market by large investors;
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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, including those related to the recent COVID-19 pandemic, may also negatively impact the market price 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 ongoing COVID-19 pandemic, may also negatively impact the market price of our common stock.
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.
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● fluctuations in demand for or pricing of our solutions;
+Added: ● level and mix of utilization of our solutions by members;
● our ability to attract new clients;
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● 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, including those related to the recent COVID-19 pandemic;
+Added: ● general economic conditions, as well as economic conditions specifically affecting industries in which our clients participate, including those related to the ongoing COVID-19 pandemic;
● the impact of new accounting pronouncements;
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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: 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.
+Added: As a result of being a public company, we are obligated to develop and maintain proper and effective internal control over financial reporting, and any failure to maintain the adequacy of these internal control may adversely affect investor confidence in our company and, as a result, the value of our common stock.
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.
−Removed: 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: To maintain compliance with Section 404, we perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting in our Annual Report on Form 10-K filing for each year, as required by Section 404 of SOX.
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.
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.
−Removed: 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.
−Removed: 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
−Removed: review and oversight over financial reporting, which we determined we had remediated as of December 31, 2019.
+Added: During the evaluation and testing process of our internal control, 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 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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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.
−Removed: Any of the foregoing provisions could limit the price that investors might be willing to pay in the future for
−Removed: 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: 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.
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.
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UNRESOLVED STAFF COMMENTS
−Removed: 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.
−Removed: 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.