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Progyny: In Its Third Trimester And Poised For Healthy Growth

Jun. 05, 2020 1:52 PM ETProgyny, Inc. (PGNY)10 Comments
John Reilly profile picture
John Reilly


  • Infertility impacts ~12% of women aged 15 to 44 years in the U.S.
  • Progyny beat first-quarter earnings estimates by 93% on a 72% YoY revenue increase.
  • Plenty of value for buy-and-hold investors and options traders alike.

Some things don't change. One of them is the desire to have children and start a family. - David Schlanger, Progyny CEO

Today we take a look at Progyny Inc. (NASDAQ:PGNY), a relatively new IPO as of last October in the fertility insurance benefits sector. Progyny offers a novel approach to traditional employer-based fertility insurance which we will examine below.

On March 31st, Progeny posted diluted earnings of four cents a share on a 72% revenue increase year over year (YoY) beating analysts' estimates by ~93% for the first quarter of 2020. This spurred a number of institutional investors to initiate new positions in the stock including Goldman Sachs (GS), Oppenheimer (OPY), and the California Public Employees Retirement System among others.

Progyny offers value for long-term, buy-and-hold value-seekers and an options play for those less risk averse.


Ask anyone who sought medical help starting a family and they will tell you; infertility is big business. According to the Centers for Disease Control and Prevention (CDC), "infertility is defined as not being able to get pregnant (conceive) after one year (or longer) of unprotected sex," a condition effecting "about 12% of women aged 15 to 44 years in the United States." Infertility, while sometimes thought of as only impacting women, can be caused by a host of different factors in both the male or female partners.

Source of infertility by sex

Source: EMD Serono, Inc.

One of the major contributing factors to fertility impediment is the decision to delay starting a family. The unfortunate reality, as potential parents age, is statistically their chances of experiencing fertility issues increase. In the past 14 years women across demographic categories have increasingly waited longer before having their first child.

Average age of women at birth of first child

Source: CDC/NCHS, National Vital Statistics System (PDF)

As this trend continues the potential market for products, services, and

This article was written by

John Reilly profile picture
I have a background in Engineering and Finance and I write about what interests me. I hope you find it helpful - comments and questions are welcome.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (10)

John Reilly profile picture
Looks like this one worked out pretty well!
Do you see a risk to their business model to traditional health insurance companies move towards covering these services?
John Reilly profile picture
@DRB Equities In researching the article I found most large insurance companies (UnitedHealth Group, Anthem, Cinga, etc.) provide fertility benefits already.

Additionally, there are laws in sixteen states requiring insurers to cover or offer coverage for fertility-related diagnosis and treatment. This is a non-trivial chunk of the US, that said, most coverage offers a lifetime spend cap (e.g $50K) which may or may not reimburse for specific services and medications potentially limiting patient procedure options.

This why Progyny is so innovative, if not disruptive, as they offer their proprietary SmartCycle-based plans that cover a full treatment course so employee-patients don't have to spend their own money mid-treatment, which if you look at fertilityIQ or other fertility-focused websites is a big frustration with traditional insurance.

Progyny also owns a number of strategic control points like the network of providers offering their services at pre-negotiated prices, analytics software to measure employee spend for client companies offering their insurance benefits, and a virtual pharmacy to distribute and train employee-patients on the required medication for their upcoming procedures. All of these would require additional capital for new entrants or existing entrants with different coverage models to recreate.

The only draw-back I see, Progyny is potentially leaving money on the table due to their cost-plus pricing structure. I think they could make a lot more money if they priced off willingness to pay instead.

Regardless, Progyny is either a nice long-term hold or a potential acquisition target which would garner an attractive premium once they gain enough market share.
Thanks for the response. Took advantage of today’s sell off on this name
John Reilly profile picture
@DRB Equities looking like a pretty good buy so far.
Looks like a cheap stock for a long term hold
I am a shareholder but not sure how much longer. A big shareholder is selling stock on a regular basis. I don’t recall off the top of my head but I want to say this seller is a 20% owner. Hard for the stock to go up appreciably when everyone knows the selling is coming.
John Reilly profile picture
I saw some recent selling activity when I was researching the article. I attributed it to some continued profit taking after the IPO. Time will tell but the fundamentals based on what I've seen seem very solid over the long run.
I don’t see $18 call options for December
John Reilly profile picture
Look for the December $25 dollar strike. The difference between buying the shares and the premium received from selling the call over the next 6 months will be the ~$18 number.

This link explains a little more about the strategy - www.investopedia.com/...
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