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Progyny: Robust Business With Strong Competitive Advantages

Dec. 14, 2022 9:03 AM ETProgyny, Inc. (PGNY)8 Comments
Marco Atzeni profile picture
Marco Atzeni


  • Progyny is the only fertility company to gather and publish data about treatment outcomes, which leads to better clinical results compared to the competition.
  • Progyny's superior solutions enable the company to develop a strong brand awareness as it is demonstrated by the company's industry leading NPSs.
  • Unlike the vast majority of its competitors, Progyny is free cash positive and has a robust and pristine balance sheet.

Young Couple with Doctor In A Consultation.

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Investment thesis

In the past two years, Progyny (NASDAQ:PGNY) has seen its multiple contract from 90 times earnings in 2020 to 75 in 2022 and its shares have declined by 53%. Despite Mr. Market reaction, Progyny is continuing

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Marco Atzeni profile picture
This is Investing Milestone. This represents a journey through which I want to share how I think about Value Investing and how I approach this investment philosophy. In my analysis there aren’t preconceived truths or fixed ideas. Instead, it’s for people who want to look at investing in a rational and critical way with a particular focus on trying to reduce the impact that biases could have on each of us. There are two main pillars that constitute the foundation for this initiative: focus and curiosity. Focus is about ignoring noise and everything that could distract us from what we want to achieve. It’s what enables us to get rid off of good ideas and concentrate exclusively on the one that could lead us toward success. On this, the Scottish philosopher and historian, Thomas Carlyle wrote: “The weakest living creature, by concentrating his powers on a single object, can accomplish something. The strongest, by dispensing his over many, may fail to accomplish anything. The drop, by continually falling, bores its passage through the hardest rock. The hasty torrent rushes over it with hideous uproar, and leaves no trace behind.” The second pillar is curiosity. Curiosity is what I regard to be the engine that incentivise us to create, share and build networks where people are more inclined to welcome different and multifaceted ideas. It’s how we challenge ourselves into being more eager toward expanding our “circle of competence” and as Buffett famously said: understanding “what we don’t know and not get enticed by it”.

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Comments (8)

Who are the (2) companies that make up 34% of Progyny's revenue?
Marco Atzeni profile picture
@red4sure Thank you for your reply! The company doesn't disclose this information, but Progyny's biggest clients are Amazon, Alphabet, Meta and Microsoft so I would guess two of them represents 34% of their revenue. Also, according to Progyny's latest 10Q, the two largest ones represents now 26% of total revenue during the first 9 months of 2022 compared to 33% during the first 9 months of 2021.
Could you address the recent short report?
Marco Atzeni profile picture
@rulevine6809 With regards to the change from expected gross margin to historical gross margin in relation to account payables, I believe that if Progyny wanted to use accounting gimmicks to boost its take rate and record lower costs owed to its clinic partners, we would have seen some reaction from them; however, up until this point no clinic has left Progyny's network. Also, Progyny reconciles accrued payables with account payables and there hasn't been a material change during the past years.
Another claim in the short report referred to Progyny having more bad debt expense compared than other companies. According To the company's 2021 annual report ,bad debt expenses accounted for less than 2% of total revenue, so I don't see any significant problem in that regard.
Overall, I think the short report shows a clear misunderstanding of Progyny's financial situation and business model.
@Marco Atzeni The report makes several claims of malfeasance with regard to financial reporting. The allegations should bring the company under closer financial scrutiny and it will be interesting to see how this plays out, especially when their next earnings report comes out.
Marco Atzeni profile picture
@rulevine6809 The management will definitely have the chance to address those claims, but as I said those claims only shows the authors poor understanding of the company's financials and business model.
PGNY - a one of its kind stock. The "first and the only" category stock
Marco Atzeni profile picture
@vetri-india I believe so. Progyny enjoys such a strong data advantage which can't be broken by throwing billions of dollars in some new initiative, but only with more data, which takes years and years to gather and to implement into new fertility cycles. I believe this time advantage is one of the strongest moat a company can possibly have.
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