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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 24, 2021

Progyny, Inc.

(Exact name of Registrant as Specified in Charter)

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(212) 888-3124

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

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Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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Item 2.02 Results of Operations and Financial Conditions

On February 24, 2021, Progyny, Inc. (the “Company”) issued a press release announcing its financial results for the fiscal quarter and year ended December 31, 2020. A copy of this press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein. The information contained on the website cited in the press release is not incorporated herein.

The information furnished under this Item 2.02 and in the accompanying Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

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Item 9.01 Financial Statements and Exhibits.

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(d)     Exhibits

The following exhibit relates to Item 2.02, which shall be deemed to be furnished, and not filed:

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

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Exhibit 99.1

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Progyny, Inc. Announces Fourth Quarter and Full Year 2020 Results

Reports Record Fourth Quarter Revenue of $100.3 Million

Issues Revenue Guidance of $520.0 to $540.0 Million for 2021, Reflecting Growth of 51% to 57%

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NEW YORK, February 24, 2021 /GlobeNewswire/ - Progyny, Inc. (Nasdaq: PGNY), a leading benefits management company specializing in fertility and family building benefits solutions in the United States, today announced its financial results for the three- and twelve-month periods ended December 31, 2020 (“the fourth quarter of 2020” and “the full year”, respectively) as compared to the three- and twelve-month periods ended December 31, 2019 (“the fourth quarter of 2019” and “the prior year period”, respectively).

“Progyny had a strong fourth quarter, exceeding $100 million in quarterly revenue for the first time in our history and concluding a year in which we successfully managed the impacts of the COVID-19 pandemic on our business while achieving record levels of revenue, profitability and operating cash flow,” said David Schlanger, Chief Executive Officer of Progyny. “Our clients under contract represent more than 2.7 million covered lives, reflecting a substantial increase of 600,000 covered lives since the beginning of 2020. Even with this significant growth, our clients and covered lives today continue to represent a low single digit percent of our target market, and we believe that we remain in the very earliest stages of addressing our overall market opportunities.”

“In the fourth quarter, revenue grew 54%, gross margins expanded meaningfully and Adjusted EBITDA more than tripled,” said Mark Livingston, Progyny’s Chief Financial Officer. “These strong results were driven by multiple factors: the essential nature of fertility treatments and their time sensitivity for many patients; our members’ desire to pursue care, even against the backdrop of the pandemic; and the quality and breadth of our client base, many of whom are in industries that were spared from the worst effects of the pandemic.”

Fourth Quarter and Full Year 2020 Highlights:

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Financial Highlights

4^th Quarter

Revenue was $100.3 million, a 54% increase as compared to the $65.1 million reported in the fourth quarter of 2019.

Gross profit was $20.7 million, an increase of 76% from the $11.8 million reported in the fourth quarter of 2019, primarily due to higher revenue during the period. Gross margin was 20.6%, an increase of 250 basis points from the fourth quarter of 2019.

Net income was $39.1 million, or $0.39 income per diluted share, reflecting an improvement of $43.5 million from the $4.4 million net loss, or $0.07 loss per diluted share, reported in the fourth quarter of 2019. The higher net income was due primarily to a tax benefit recorded in the fourth quarter of 2020 in connection with the release of our valuation allowance on deferred tax assets, the absence in the current period of a convertible preferred stock warrant valuation adjustment expense, the higher gross profit and operating efficiencies realized throughout the business. Effective as of the company’s initial public offering in October 2019, all outstanding convertible preferred stock warrants were converted into warrants to purchase common stock, and therefore, the warrant valuation adjustment is no longer necessary.

Net income, as adjusted, was $7.2 million, or $0.07 income per diluted share, excluding the impact of $38.0 million in a tax benefit related to the release of the valuation allowance on deferred tax assets as well as $6.1 million in settlement cost and legal fees associated with a vendor arbitration. That compares to net income, as adjusted, of $1.7 million, or $0.02 income per diluted share in the fourth quarter of 2019, excluding the impact of the preferred stock warrant valuation adjustment and the legal fees associated with a vendor arbitration.

Adjusted EBITDA was $11.9 million, an increase of $8.0 million from the $3.9 million reported in the fourth quarter of 2019. Adjusted EBITDA margin was 11.8%, an increase of 580 basis points from the 6.0% Adjusted EBITDA margin in the fourth quarter of 2019. The increase in both Adjusted EBITDA and Adjusted EBITDA margin reflect the higher revenue during the period as well as improved operating leverage across the business.

Readers are encouraged to review Annex A for a reconciliation of Adjusted EBITDA to net income (loss) and the calculation of net income, as adjusted, and net income per diluted share, as adjusted.

Full Year

Revenue was $344.9 million, a 50% increase as compared to the $229.7 million reported in the prior year period.

Gross profit was $70.1 million, an increase of 54% from the $45.5 million reported in the prior year period, primarily due to the higher revenue. Gross margin was 20.3%, an increase of 50 basis points from the prior year period, as higher revenues triggered favorable contractual terms with our pharmacy dispensing and manufacturing partners, and the impact

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of regular contract renewals with our providers along with continued efficiencies gained across our care management services.

Net income was $46.5 million, or $0.47 income per diluted share, reflecting an improvement of $55.0 million from the $8.6 million net loss, or $0.41 loss per diluted share, reported in the prior year period. The higher net income was due primarily to the same factors that affected the fourth quarter results.

Net income, as adjusted, was $17.8 million, or $0.18 income per diluted share, excluding the impact of $38.0 million in a tax benefit related to the release of the valuation allowance on deferred tax assets, as well as $9.3 million in settlement cost and legal fees associated with a vendor arbitration. That compares to net income, as adjusted, of $10.9 million, or $0.12 income per diluted share in 2019, excluding the impact of the preferred stock warrant valuation adjustment and the legal fees associated with a vendor arbitration.

Adjusted EBITDA was $32.4 million, an increase of $14.1 million from the $18.3 million reported in the prior year period. Adjusted EBITDA margin was 9.4%, an increase of 140 basis points from the 8.0% margin in the prior year period. The increase in both Adjusted EBITDA and Adjusted EBITDA margin reflect the higher revenue as well as improved operating leverage across the business, partially offset by a one-time step-up of $5.2 million in incremental expenses in our first full year of being a public company. Adjusted EBITDA margin on incremental revenue, after giving effect to the one-time step-up in incremental expenses in our first full year of being a public company, was 16.7%.

Readers are encouraged to review Annex A for a reconciliation of Adjusted EBITDA to net income (loss), the calculation of Adjusted EBITDA margin on incremental revenue, and the calculation of net income, as adjusted, and net income per diluted share, as adjusted.

Cash Flow

Net cash provided by operating activities for the fourth quarter of 2020 was $6.5 million, compared to net cash used by operating activities of $5.5 million in the prior year period. For the full year, net cash provided by operating activities in 2020 was $36.2 million, compared to net cash used by operating activities of $1.5 million in 2019. The improvement in both the quarter and the full year was due primarily to the higher profitability, as well as the timing of billing and collections on quarterly cash flows.

Balance Sheet and Financial Position

As of December 31, 2020, the company had total working capital of approximately $112.4 million and no debt. This included cash and cash equivalents and marketable securities of $109.3 million, an increase of $4.3 million from the balances as of September 30, 2020, reflecting the strong cash flow generated in the quarter.

Key Metrics

The company had 135 clients as of December 31, 2020, compared to 87 clients as of December 31, 2019.

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the results reflect the number of unique members utilizing the benefit for that period. Individual periods cannot be combined as member treatments may span multiple periods.

Financial Outlook

“We believe that Progyny is in its strongest-ever competitive position. During 2020, we grew our number of clients and covered lives significantly, strengthened our relationships with our channel partners, and improved our already industry-leading satisfaction rates,” said Pete Anevski, Progyny’s President and Chief Operating Officer. “As we enter 2021, we feel well-positioned across every function in the organization. We believe this will allow us to capitalize on our significant opportunities and continue to expand our leadership position as the macro effects of the pandemic continue to be mitigated throughout the year.

“We are pleased to announce our guidance for 2021, reflecting both our ongoing significant topline growth and margin expansion.”

The company is providing the following financial guidance for both the year ended December 31, 2021 and the three-month period ending March 31, 2021.

Conference Call Information

Progyny will host a conference call at 4:45 P.M. Eastern Time (1:45 P.M. Pacific Time) today to discuss its financial results. Interested participants from the United States may join by calling 1.866.825.7331 and using conference ID 265484. Participants from international locations may join by calling 1.973.413.6106 and using the same conference ID. A replay of the call will be available until March 3, 2021 at 11:59 P.M. Eastern Time by dialing 1.800.332.6854 (U.S. participants) or 1.973.528.0005 (international) and entering passcode 265484. A live audio webcast of the call and subsequent replay will also be available through the Events & Presentations section of the Company’s Investor Relations website at investors.progyny.com.

About Progyny

Progyny (Nasdaq: PGNY) is a leading fertility benefits management company in the US. We are redefining fertility and family building benefits, proving that a comprehensive and inclusive fertility solution can simultaneously benefit employers, patients, and physicians. 

Our benefits solution empowers patients with education and guidance from a dedicated Patient Care Advocate (PCA), provides access to a premier network of fertility specialists using the latest science and technologies, reduces healthcare costs for the nation’s leading employers, and drives optimal clinical outcomes. We envision a world where anyone who wants to have a child can do so.

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Headquartered in New York City, Progyny has been recognized for its leadership and growth by CNBC Disruptor 50, Modern Healthcare’s Best Places to Work in Healthcare, Financial Times, INC. 5000, and Crain’s Fast 50 for NYC. For more information, visit www.progyny.com.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release includes forward-looking statements that are based on our management’s beliefs and assumptions and on information currently available to management. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statements regarding our positioning to successfully manage the ongoing impact of COVID-19 and the associated economic uncertainty on our business, our financial outlook for the first quarter and full year 2021, our ability to retain existing clients and acquire new clients, and our business strategy, plans, goals and expectations concerning our market position, future operations, and other financial and operating information, including our topline growth and margin expansion. The words “may,” “believes,” “intends,” “seeks,” “anticipates,” “plans,” “estimates,” “expects,” “should,” “assumes,” “continues,” “could,” “will,” “future,” “project,” and the negative of these or similar terms and phrases are intended to identify forward-looking statements.

Forward-looking statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, without limitation, risks related to the ongoing impact of the COVID-19 global pandemic, such as the scope and duration of the outbreak, government actions and restrictive measures implemented in response, material delays and cancellations of fertility procedures and other impacts to the business; failure to meet our publicly announced guidance or other expectations about our business; competition in the market in which we operate; our history of operating losses and ability to sustain profitability in the future; our limited operating history and the difficulty in predicting our future results of operations; our ability to attract and retain clients and increase the adoption of services within our client base; the loss of any of our largest client accounts; changes in the technology industry; changes in the health insurance market; negative publicity in the health benefits industry; lags, failures or security breaches in our computer systems or those of our vendors; a significant change in the utilization of our solutions; our ability to offer high-quality support; positive references from our existing clients; our ability to develop and expand our marketing and sales capabilities; the rate of growth of our future revenues; the accuracy of the estimates and assumptions we use to determine the size of target markets; our ability to successfully manage our growth; unfavorable conditions in our industry or the United States economy, such as conditions resulting from outbreaks of contagious diseases, including COVID-19; reductions in employee benefits spending; seasonal fluctuations in our sales; the adoption of new solutions and services by our clients or members; our ability to innovate and develop new offerings; our ability to adapt and respond to the medical landscape, regulations, client needs, requirements or preferences; our ability to maintain and enhance our brand; our ability to attract and retain members of our management team, key employees, or other qualified personnel; our ability to maintain our company culture; our ability to maintain our Center of Excellence network of healthcare providers; our strategic relationships with and monitoring of third parties; our ability to maintain or any disruption of our pharmacy distribution network; our relationship with key pharmaceutical manufacturers or any decline in rebates provided by them; our ability to maintain our relationships with benefits consultants; exposure to credit risk from our members; risks related to government regulation; risks related to potential sales to government entities; our ability to protect our intellectual property rights; risks related to any litigation against us; risks related to acquisitions, strategic investments, partnerships, or alliances; federal tax reform and changes to our effective tax rate; the imposition of state and local state taxes; our ability to utilize a significant portion of our net operating loss or research tax credit carryforwards; our ability to develop or maintain effective internal control over financial reporting and the increased costs of operating as a public company. For a detailed discussion of these and other risk factors, please refer to our filings with the Securities and Exchange Commission (the “SEC”), including in the section entitled “Risk Factors” in our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020, and subsequent reports that we file with the SEC which are available at http://investors.progyny.com and on the SEC’s website at https://www.sec.gov.

Forward-looking statements represent our management’s beliefs and assumptions only as of the date of this press release. Our actual future results could differ materially from what we expect. Except as required by law, we assume no obligation to update these forward-looking statements publicly, or to update the reasons.

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Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release and the accompanying tables include the non-GAAP financial measures Adjusted EBITDA, Adjusted EBITDA margin, net income, as adjusted and net income per diluted share, as adjusted.

Each of Adjusted EBITDA, Adjusted EBITDA margin, net income, as adjusted, and net income per diluted share, as adjusted, is a supplemental financial measure that is not required by, or presented in accordance with, GAAP. We believe that each of Adjusted EBITDA, Adjusted EBITDA margin, net income, as adjusted and net income per diluted share, as adjusted, when taken together with our GAAP financial results, provides meaningful supplemental information regarding our operating performance and facilitates internal comparisons of our historical operating performance on a more consistent basis by excluding certain items that may not be indicative of our business, results of operations or outlook. In particular, we believe that the use of Adjusted EBITDA, Adjusted EBITDA margin, net income, as adjusted, and net income per diluted share, as adjusted, are helpful to our investors as they are measures used by management in assessing the health of our business, determining incentive compensation, evaluating our operating performance, and for internal planning and forecasting purposes.

Adjusted EBITDA is presented for supplemental informational purposes only, has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. Some of the limitations of Adjusted EBITDA include: (1) it does not properly reflect capital commitments to be paid in the future; (2) although depreciation and amortization are non-cash charges, the underlying assets may need to be replaced and Adjusted EBITDA does not reflect these capital expenditures; (3) it does not consider the impact of stock-based compensation expense; (4) it does not reflect other non-operating income and expenses, including other income and interest (income) expense, net; (5) it does not consider the impact of any stock warrant valuation adjustment; (6) it does not reflect tax payments that may represent a reduction in cash available to us; (7) it does not include settlement cost and legal fees associated with a vendor arbitration; and (8) it does not include non-deferred costs associated with the IPO. In addition, our Adjusted EBITDA may not be comparable to similarly titled measures of other companies because they may not calculate Adjusted EBITDA in the same manner as we calculate the measure, limiting its usefulness as a comparative measure. Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial performance measures, including our net income from continuing operations and other GAAP results.

We calculate Adjusted EBITDA as net income, adjusted to exclude depreciation and amortization; stock-based compensation expense; other income; interest (income) expense, net; convertible preferred stock warrant valuation adjustment; provision for income taxes and settlement cost and legal fees associated with a vendor arbitration. We calculate Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. Please see Annex A: “Reconciliation of GAAP to Non-GAAP Financial Measures” elsewhere in this press release.

For Further Information, Please Contact:

Investors:

James Hart

investors@progyny.com

Media:

Selena Yang

media@progyny.com

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PROGYNY, INC.

Balance Sheets

(Unaudited)

(in thousands, except share and per share amounts)

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PROGYNY, INC.

Statements of Operations

(Unaudited)

(in thousands, except share and per share amounts)

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PROGYNY, INC.

Statements of Cash Flows

(Unaudited)

(in thousands)

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ANNEX A

PROGYNY, INC.

Reconciliation of GAAP to Non-GAAP Financial Measures

(unaudited)

(in thousands)

Adjusted EBITDA and Adjusted EBITDA Margin on Incremental Revenue Calculation

The following table provides a reconciliation of Net income (loss) to Adjusted EBITDA for each of the periods presented:

Net Income, As Adjusted, and Net Income Per Diluted Share, As Adjusted

Net income, as adjusted, and net income per diluted share, as adjusted, exclude the impact of a benefit for income taxes in connection with the release of the company’s valuation allowance on deferred tax assets, the settlement cost and legal fees

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associated with a vendor arbitration, and the convertible preferred stock warrant valuation adjustment expense. Net income per diluted share, as adjusted, is computed as follows (in thousands except share and per share data):

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Reconciliation of Non-GAAP Financial Guidance for the Three Months Ending March 31, 2021 and Year Ending December 31, 2021

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ANNEX B

PROGYNY, INC.

Reconciliation of Impact from Adoption of ASU 2016-13 to Previously Reported Quarters

(unaudited)

(in thousands)

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