For coming to the 46th Annual Canaccord Genuity Growth Conference. I'm Richard Close in equity research covering digital and tech-enabled health. Excited to close my day of presentations with Progyny. We've covered them for three years now. I think it's a really interesting story. Really was unique in terms of carving out fertility benefits, addressing a significant problem for people. Carving that out from the health plan, and has been super successful. Glad to have CEO Pete Anevski Anevski. With us here today to tell the story. The growth opportunities going forward and coming off of a decent second quarter and some questions that have arisen out of that. We'll get those answered. Pete, thank you for coming, and James Hart of IR here as well. Pete, maybe just on the second quarter results to start. I think it's really more the third quarter and the second half of the year. You talked about a meaningful step up in seasonality, and I just want to go over that, better understand that. I think there was some decent amount of questions surrounding that and the utilization. Just walk us through what you're seeing on member activity and claims patterns. Sure. First of all, thanks for having us. We appreciate it. We just reported Q2 earnings, and we also talked about what we're seeing so far in engagement and utilization from members in the summer, which is sort of the visibility we have right now. We have visibility of about actual scheduled appointments over the next six weeks, and as the weeks go out further out, a little less visibility. Then we use models and algorithms to predict utilization for the balance of the year. Every year, we see seasonality in the summer relative to the heart of the summer months. Think back half of July and August. We see some seasonality. This year, it's more pronounced than what we've seen in a number of years. It's more akin to sort of what we saw in 2022, where we saw a sharper seasonality that came back. When I say came back, visibility for September is showing utilization and engagement at the levels that we saw in the first half of the year. The expectation is that'll continue through the balance of the year, not unlike what we've seen again in 22, when it was the sharpest sort of seasonality that we saw but also, excuse me, every year we see a little bit of seasonality. It comes back on that pattern because the reality is that the reason why there's seasonality is people choose to, even if they're ready to do treatment. Some portion of people choose to wait a little longer to start doing it because they have summer plans or weddings or whatever they have to go to, and they're not looking to get pregnant in that moment. They're going to wait a little longer, and that's the nature of the seasonality. So you're feeling pretty comfortable. I believe you said you thought this was temporary. You're feeling pretty comfortable on that? Yeah. We wouldn't put out guidance and expectations if we weren't. And again, it's based on what we're already seeing for September. Limited but still good. And again, what we're seeing already for September, consistent with what we saw in the first half of the year. Okay, great. You were pretty upbeat with respect to the sales pipeline and the selling season. Maybe go over those dynamics. Renewals, that was pretty positive so far and then the new business remains on track. You have a 1 million member goal that you're looking to add. So talk a little bit about the momentum you're seeing and early commitments and the pipeline as we enter the heavy closing season. Sure. Every year we give color on our sales season. There's a couple of important distinctions this year relative to that color. You started with the renewals, so I'll talk about that first. Each year, we go through a process. About a third of our clients are up for renewal every year. They're generally on three-year contracts. And they all renew in different ways, but nonetheless, they're up. Some of them renew, it's an easy renewal process. Some of them renew with an RFP process, market check, company policies, that kind of thing. The long and short of it is, the amount of commitments that we've gotten for renewal have essentially de-risked renewal rates for us going into next year way earlier than what we normally would see in a given year. Part of what we believe is driving that is medical cost trends that are out there are real and significant. A lot of these employers are dealing with other issues there. They're not seeing a problem with us. We give them a ton of transparency and reporting. They have no concerns. It's a good member experience, et cetera. Even of those that did RFPs, they did them earlier, came to their conclusions that they're going to continue with us, and we were able to get to a place where we can make the statement that we're making, which is we've essentially de-risked, from a renewal standpoint, our book of business, which is significant because it's a lot earlier. As it relates to new sales activity, we are also seeing meaningfully better commitments earlier, both in lives and in contribution from those lives than we did this time last year. When I say this time, as of when we reported earnings last week. That's important because obviously it takes a little bit of risk out of how much you have to predict remaining to close to hit your sales target. Our sales target is generally 1 million lives or more each year. We talked about that we have an expectation that we'll be able to hit that target this year given the activity we're seeing so far. We also still have a healthy pipeline for the remainder of the sales year. Also part of what's considered when we talk about that expectation of us hitting our target. Maybe as a follow-up on the renewals, how are you thinking about expansions? You've given data in the past in terms of upselling or clients expanding as they come up for renewal. Can you talk a little bit about that, how it's trending as compared to past years, and what exactly is in those expansions? Yeah. I'll take the second part first. When people take the benefit, whether it's the initial year or over the years as they adjust the benefit, they're generally going to add something to the benefit versus their first year. So maybe their first year. They took two Smart Cycles, and on top of it, pharmacy. For example, but they didn't take egg freezing, they didn't take adoption and surrogacy. They may have a global population, they didn't take it. Or there's also opportunities around our ancillary products, postpartum maternity, and menopause. All of these are opportunities for upsells, and the upsells take the form of oh, now I will add the egg freezing benefit. I'll go from a two-cycle benefits with three-cycle or an unlimited. I will add adoption and surrogacy, et cetera. That's the upsells that we talk about. That process is later in terms of the actual plan design for renewal, so it is early to say what that activity looks like right now, it is a little too early to say. It is positive. Every year we generally have something in the 20%-30% of clients adding something to the benefit. The good news is we are getting no indications of anybody reducing the benefit. That is not inconsistent with prior years, but with medical cost inflation, again, that is happening in the country, it is something that we get as a question regularly, so I like to say it out loud ahead of time. Okay. With respect to the new business, you have talked about this in the past, like greenfield opportunities versus competitive takeaways, and it seemed like maybe on the call last week there was more on competitive takeaways. Maybe I am misreading that. Talk about the difference between the greenfield opportunities and those takeaways. Sure. I want to define takeaways. The takeaways are everything from somebody may have this covered through their health plan or somebody may have this carved out with a VC-backed competitor in the space now trying to do what we do. This year, in terms of the early commitments, we are seeing a higher proportion of brownfield versus greenfield, and that is because, again, I think for the same reason. When you consider medical cost inflation and what is happening in the trends a lot of these employers are trying to manage their benefit. We have proven our ability to not only manage from a unit cost perspective, but also manage from a total program management perspective. Your average cost per utilizer over years has been relatively modest in terms of increases, especially as compared to what is happening, again, with medical cost inflation. Where it is in the high single, low double digit, and predicted to be the same for next year rate. If you are already spending money in this area and you can save money and actually have your money be spent more efficiently and actually help more people out that is what you are doing, and that is why you are getting a higher proportion of those decisions earlier in terms of our new client commitments. One of the questions we often received since covering the stock has been exposure to one industry. You were really successful in technology at first, but now I think you are in 45 different industries, also serving government in some cases. Talk about that evolution in terms of adding new industries, healthcare, health systems, hospitals has been an area of growth over the last couple of years. But really how you think about employment trends and the diversification of the client list now. Sure. It's a great question. I think the evidence that this is a benefit that's a human need and not specific to any industry is exactly that data point. When we first started out in our first year with the benefit, we just hit 10 years, we were four clients in tech and one client not in tech. We were in two industries. We've grown to over 45 different industries, and what generally has happened over the years is that you'll get one of the top one or two companies that'll take the benefit first in that industry where they haven't taken it before, and then everybody becomes a fast follower soon thereafter. Every year when we sell, generally sell to at least two-thirds of the industries that we have, another company will come in and buy. Now, it's not the same two-thirds every year, it's a different two-thirds but about two-thirds. So it's constantly penetrating each industry, each and every year that flywheel effect. It's really important if you think about it, because a lot of times these industries are competing for talent. When your leaders in that industry are adopting the benefit and you don't have it, even if you were putting it off, maybe you didn't focus on it, whatever the reason is you got to stare at it and say, "Okay, if I want to compete for talent, this is a one in five benefit that millennials are looking for." Millennials are the sweet spot of those who use our benefit. Average age of a woman going through IVF is 36 years old. So, 32 - 40 is sort of the range of those that are using the benefit. So it's a very important part of the population, and you have to make sure you are covering what is a very real need. The incidence and prevalence of infertility is one in five in the U.S. It's a huge need. More prevalent than diabetes, but nonetheless, still not broadly covered. Maybe pivoting back to renewals. One of the items that has come up on the last couple calls or that you've talked about, and you mentioned this a little bit earlier, with respect to the medical cost trends. The ROI that the company delivers, I'm just curious in terms of how big of a factor that is in the decision-making process on renewals or even in greenfield opportunities, someone new to it. As we take a step back and think about layoffs and unemployment and sometimes your stock has reacted to that when you've reported. I'm just curious, how do customers think about it in terms of, I think in the past, certain wellness benefit type of programs. It's like that's the first thing on the chopping block. Talk about the ROI that you deliver and why that may not be the case in terms of this is the first thing to get cut. It's such a great question. I'm formerly the CFO of WebMD. WebMD had a wellness business, and in particular during the financial crisis, that business got shredded. For the reasons that you say. In the wellness business, a lot of your measurement of ROI are soft measures, a lot of leaps of faith in terms of whether or not you are or aren't really sort of impacting in cost savings, et cetera. In our world, our savings are hard dollar savings that we report to our clients each quarter in terms of what they're saving. Literally the details of all the calculations that go with it. It's a really important component of the reporting because it says two things. One, we're managing this benefit at every level. Two, we're willing to show you all the detail, transparency, and our homework, if you will that goes with it so that your benefit consultants. Your actuaries, anybody else who sort of wants to go through it, we go through it regularly. This is regular reporting that we do for everybody. It's not just us making claims. It is, in my opinion, the reason that we have 99% retention for 10 years in a row, because that 99% retention comes from the fact that you're constantly reporting and showing your clients that you're not only delivering an unparalleled member experience, and outcomes that are second to none in terms of people getting pregnant faster with a live birth, and a healthier pregnancy, but you're also saving them money in the process, and you give them a no-brainer, in terms of whether or not they'll think about making a move. That's why even though they do market checks, some every renewal, some every other renewal, based again on company policy. Those market checks aren't just economics, they're also medical economics teams, their chief medical officer, and a whole bunch of folks that are part of the process. We continue to retain that level of clients. The proof is in the pudding, as they say. Okay. Maybe going back or going to the competitive landscape. If I go back two or three years in covering you, talking about competition, generally speaking, you said it's the health plans. I know our insurance, our fertility benefits are through our health plan. So we're a potential client for you, I guess. Talk about why health plans haven't done this well, and then are they making any changes, investing more and specializing in this at all? Do you see any difference in how they're acting? Well, the easiest part of that question first is the health plans don't make any more or less money if they cover the benefit for you or not, or if you cover that. They're an ASO model administrative services. They get a PEPM regardless of whether or not you click on or off the diagnostics of infertility, and then the network that they have that goes with that. Their plan design is one size fits all for everybody. They slap a dollar maximum on top of it, and away you go. There's no network management of any kind. There's no care advocates that help you through the journey. There's no attempt at even tracking, never mind impacting outcomes for the purposes of savings and better member experience. The reason why they haven't invested in it is because it's just not big enough for them to worry about. Because they do not make any more or less money, because their model is an ASO model, they have other fish to fry. Again, think about what is happening with medical cost inflation. They have way more areas to manage and deal with that this is not one of their focuses. What has been happening though, in terms of what they are doing is they have been partnering with us essentially, right? We have a number of health plan partnerships. The biggest one is Cigna. It is a really good partnership. It went into effect effectively September of last year. This is the first full sales season that we are having with it. That gives us the ability to work with Cigna, work with their account executives, and get to as many of their existing clients that have the benefit or any of their existing clients that do not and want to add the benefit. Now they get the best of both worlds. They get a partnership that has a great medical plan as well as the best fertility and family-building solution out there, right? That is really what they are doing. In the past, a few of them have sort of done a little bit of marketing spin, trying to create the perception that they are doing something. But the reality is they did not do anything different, and we won against them sort of every time. We do generally every year win against all competitors. We win the majority of our deals against all competitors collectively every year. Should I think of the mindset changing at health plans? That this might be the beginning of something that sort of snowballs in terms of knocking down additional health plans as clients? Yeah. We are having more conversations with other health plans for similar kind of partnerships like the ones we have already, like the one we have with Cigna. Yeah, there is an opportunity because at the end of the day, they could also uniquely have a partnership with the best solution out there. So they are open to it. There is a lot of other reasons why they should do it, but ultimately, it is that they are providing to their clients the best service that is out there. Okay. You've mentioned medical cost inflation several times. Look at your income statement. Your margins have been pretty healthy, and you've kept costs down. How have you been able to achieve that when all other medical cost inflation has skyrocketed? The biggest reason is our scale and our size. We have our network. It's a proprietary network. That network we've been able to contain costs with because of our growth. For them, we're a big part of their overall patient volume. Not only is it coverage, but it's also comprehensive coverage when it's Progyny, as opposed to limited coverage many times when it's through your health plan or other partners. So it's a more valuable patient every time because they're getting way more benefit coverage than they otherwise would see. So that's given us the ability to keep rates essentially flat to even down, depending on who the clinics are over the years, and be able to achieve that savings, given the environment that they're dealing with for all of our clients. That's a big part. The other part of it is we're constantly improving what we do and how we work with those providers, and our outcomes continue to get better and better. They've been way better than the industry already, but better and better incrementally over time, and that also adds to savings dollars for our clients. Okay. One of the things with respect to expansion has been additional services that you've rolled out over the last several years. I think at your Analyst Day, was that two years ago, James? You talked about like 8%-10% of revenue coming from these ancillary services. Any update there in terms of the magnitude of that and how is that ramped? Yeah. I will start with the ramp first. Across the expanded products that we have out there now, there is roughly 2.7 million of our 7 million covered lives have one or more of the expanded products. We had talked about that those products plus other products that are on the come at that point, Progyny Select is one of them, are going to be part of what gives us the ability to grow beyond our existing TAM and our existing products. So far the take rate is good relative to client adoption. Engagement continues to grow across those products, and Progyny Select is new in the market this year. We are signing up a lot of great partners in that ecosystem so that we can start to get pull-through next year and in the years to come. Okay. Last question here. Not surprising, I have run out of time. Progyny Select is, I guess, new model that you rolled out last year. This is the first full-year selling season, I believe. Can you talk a little bit about the differences in Progyny Select from the traditional model and how that is tracking here so far this first year? Yeah. The biggest difference is that this is a product designed for smaller employers down to 100 employees that generally buy on a fully insured premium basis. It gives them predictability in terms of cost. For us, it puts them in a larger pool so that even though we are taking risk, technically it is not significant risk. We have more data than anybody relative to underwriting the product. It is a really important aspect of what we do because at the end of the day, our goal is to help anybody who wants to have a baby to be able to do so. This population is no different than if you work at a large employer. It is again, a human need. The incidence and prevalence of infertility is the same, whether you work at a 100 employee company or whether you work at 100,000 employee company. So far, the progress from a sales perspective has been again, with the channel partners. The general agents, and the PEOs, and getting them signed up, and then beginning to work with them to evangelize across their broker networks, et cetera to have this supplemental plan included in their renewals out in the future. Just as a follow-up on that, since we're running out of time. Does that expand the TAM from what you previously talked about? Yeah, it's a great question. Our TAM before the announcement of Progyny Select was 105 million lives. That adds 50 million lives to the TAM overall. Okay. I had a couple more that we're not going to get to. Thanks for being with us today. Thank you again. I really appreciate it. Thank you.