Fertility benefits company Progyny (NASDAQ:PGNY) reported Q4 CY2024 results topping the market’s revenue expectations , with sales up 10.6% year on year to $298.4 million. On top of that, next quarter’s revenue guidance ($309 million at the midpoint) was surprisingly good and 10.3% above what analysts were expecting. Its non-GAAP profit of $0.42 per share was 13.5% above analysts’ consensus estimates.
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Progyny (PGNY) Q4 CY2024 Highlights:
“We're pleased to report that 2024 ended on a strong note, with continued improvement in the pacing of member engagement as compared to what we saw earlier in the year,” said Pete Anevski, Chief Executive Officer of Progyny.
Company Overview
Founded in 2008, Progyny (NASDAQ:PGNY) provides fertility and family-building benefits solutions, integrating technology and personalized care to support individuals and employers in managing reproductive healthcare.
Health Insurance Providers
Upfront premiums collected by health insurers lead to reliable revenue, but profitability ultimately depends on accurate risk assessments and the ability to control medical costs. Health insurers are also highly sensitive to regulatory changes and economic conditions such as unemployment. Going forward, the industry faces tailwinds from an aging population, increasing demand for personalized healthcare services, and advancements in data analytics to improve cost management. However, continued regulatory scrutiny on pricing practices, the potential for government-led reforms such as expanded public healthcare options, and inflation in medical costs could add volatility to margins. One big debate among investors is the long-term impact of AI and whether it will help underwriting, fraud detection, and claims processing or whether it may wade into ethical grey areas like reinforcing biases and widening disparities in medical care.
Sales Growth
A company’s long-term sales performance is one signal of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Progyny grew its sales at an incredible 38.4% compounded annual growth rate. Its growth beat the average healthcare company and shows its offerings resonate with customers.
Long-term growth is the most important, but within healthcare, a half-decade historical view may miss new innovations or demand cycles. Progyny’s annualized revenue growth of 21.8% over the last two years is below its five-year trend, but we still think the results were good and suggest demand was strong.
Progyny also reports its number of units sold, which reached 15,839 in the latest quarter. Over the last two years, Progyny’s units sold averaged 8.2% year-on-year growth. Because this number is lower than its revenue growth, we can see the company benefited from price increases.
This quarter, Progyny reported year-on-year revenue growth of 10.6%, and its $298.4 million of revenue exceeded Wall Street’s estimates by 7.6%. Company management is currently guiding for a 11.1% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months, a deceleration versus the last two years. This projection doesn't excite us and implies its products and services will see some demand headwinds.
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Operating Margin
Progyny was profitable over the last five years but held back by its large cost base. Its average operating margin of 5% was weak for a healthcare business.
On the plus side, Progyny’s operating margin rose by 3.4 percentage points over the last five years, as its sales growth gave it operating leverage. The company’s two-year trajectory shows its performance was mostly driven by its recent improvements.
This quarter, Progyny generated an operating profit margin of 5.3%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Progyny’s EPS grew at an astounding 82.1% compounded annual growth rate over the last five years, higher than its 38.4% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
Diving into Progyny’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Progyny’s operating margin was flat this quarter but expanded by 3.4 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its higher earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
In Q4, Progyny reported EPS at $0.42, up from $0.32 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Progyny’s full-year EPS of $1.64 to shrink by 1.2%.
Key Takeaways from Progyny’s Q4 Results
We were impressed by Progyny’s optimistic EBITDA guidance for next quarter, which blew past analysts’ expectations. We were also excited its EPS guidance for next quarter outperformed Wall Street’s estimates by a wide margin. On the other hand, its sales volume fell short of Wall Street’s estimates. Overall, we think this was still a good quarter with some key metrics above expectations. The stock traded up 14.7% to $26.20 immediately following the results.
Progyny had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free .