Progyny (PGNY) Q4 2025 Earnings Call Transcript

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Date

Thursday, Feb. 26, 2026 at 4:45 p.m. ET

Call participants

• Chief Executive Officer — Pete Anevski
• Chief Financial Officer — Mark Livingston
• Vice President, Investor Relations — James Hart

Takeaways

• Revenue -- $1.3 billion for fiscal 2025, reflecting 10% growth as reported (20% excluding the impact of a large former client in both periods).
• Adjusted EBITDA -- $222 million for fiscal 2025, up double digits over fiscal 2024 and $28 million above the midpoint of original guidance.
• Operating cash flow -- $210 million for fiscal 2025, up 17%, with more than $50 million generated in each of the past three quarters.
• Gross margin expansion -- Nearly 200 basis points improvement for the year, attributed to efficiencies in care management and economies of scale.
• Adjusted EBITDA to cash conversion -- High conversion maintained, enabling continued investment and shareholder returns.
• Share repurchases -- Approximately six and a half million shares repurchased for $84 million in the quarter and more than $40 million remains available under the authorization begun in November.
• Client retention -- "Near 100% retention of our clients, including all of our largest employers," according to Anevski.
• Client base diversification -- No single client represented more than a single-digit percent of revenue, and no industry represented more than 15% of lives at year-end.
• Upsell and product expansion -- Thirty percent of the client base expanded benefits through upsells and enhancements for fiscal 2026; more than two million seven hundred thousand members will have access to new services in pregnancy, postpartum, and menopause.
• Fiscal 2026 guidance: covered lives -- Seven million two hundred thousand expected, reflecting a net reduction due to client-reported updates, which Livingston clarified are not attributed to workforce changes.
• Fiscal 2026 guidance: revenue -- $1.36 billion to $1.41 billion projected, representing 5.1%-9% growth as reported and 9.3%-13.3% growth excluding the transitioned client’s $48.5 million revenue.
• Fiscal 2026 guidance: adjusted EBITDA -- Range of $224 million to $239 million for the full year.
• Fiscal 2026 guidance: net income -- Projected at $95.4 million to $106.1 million on roughly 87 million fully diluted shares.
• Stock-based compensation -- An accelerated $7.7 million expense was incurred in the fourth quarter due to the President's departure, and fiscal 2026 expense is expected to decrease by 35%, to approximately 6% of revenue at midpoint.
• First quarter 2026 guidance -- Revenue expected between $319 million to $320 million; adjusted EBITDA projected at $51 million to $55 million; net income between $20.8 million to $23.7 million.
• Progyny Select launch -- Product aimed at small fully insured employers will not contribute to financial results until fiscal 2027, with program structure designed for predictable risk and cost control.
• Capital expenditures -- $18.4 million for fiscal 2025, up sharply from $5.4 million in fiscal 2024, largely due to platform and product expansion.
• Balance sheet -- As of Dec. 31, working capital stood at $350 million, including $310 million in cash, cash equivalents, and marketable securities, with no debt outstanding.

Risks

• Livingston reported, "Seven million two hundred thousand covered lives in 2026. This is lower than what we had originally estimated due to a net reduction in lives in the latest counts we have received," highlighting potential risk from administrative reporting variability.
• Incremental $7.7 million in stock-based compensation expense recognized in the fourth quarter and full-year fiscal 2025 due to an executive departure was "not contemplated at the time we issued our guidance for stock compensation or net income in November," impacting net income guidance accuracy.
• Livingston cautioned that "the assumptions we are making today, particularly at the low end of the ranges, reflect the potential that further variability in activity and treatments could occur," indicating potential revenue sensitivity to member utilization patterns.

Summary

Progyny (NASDAQ:PGNY) ended fiscal 2025 with record revenue and adjusted EBITDA, with both measures surpassing guidance midpoints by meaningful margins. The company’s diversified client base and nearly complete client retention were highlighted as supporting operational stability, while platform investments and cost control drove improved gross margins. Management expects continued growth in fiscal 2026, supported by client expansion and service enhancements, yet has proactively acknowledged possible member activity variability and a smaller-than-expected covered lives count, attributed to administrative updates from clients, not workforce reductions. Guidance for fiscal 2026 also details a pronounced reduction in stock-based compensation, and new product launches, particularly Progyny Select, are structured to limit risk but are not expected to impact results until fiscal 2027.

• The share repurchase program reduced the float by roughly six and a half million shares since November, with more than $40 million unused.
• Adjusted EBITDA margin expansion was attributed to operational efficiencies and increased leverage with partner networks.
• Capital expenditures grew significantly in fiscal 2025 to enable platform expansion, with fiscal 2026 expected to maintain elevated, though not doubled, levels versus prior years.
• Management reported no notable pushback from employers regarding pharmacy model changes or federal legislation affecting rebate structures, with Anevski asserting, "I do not expect the economics to change, but the structure of it is certainly possible in the future."
• Product adoption metrics: Over two million seven hundred thousand members will access enhanced maternal health solutions in fiscal 2026, reflecting upsell and expanded offerings within the existing client base.

Industry glossary

• ART cycles: Assisted reproductive technology treatments, such as in vitro fertilization (IVF), per unique program utilizer.
• DSOs: Days sales outstanding; measures how quickly receivables are converted to cash.
• Transition of care agreement: Contractual arrangement enabling continuity of services for clients exiting the platform during a defined period.
• PMPM model: Per member per month pricing approach used in benefits administration.
• ASO clients: Administrative services only; refers to self-insured clients for whom Progyny administers benefits but does not insure claims.
• CapEx: Capital expenditures, or funds used to acquire or upgrade physical assets such as technology platforms.

Full Conference Call Transcript

James Hart: Thank you, Paul, and good afternoon, everyone. Welcome to our fourth quarter conference call. With me today are Pete Anevski, CEO of Progyny, Inc., and Mark Livingston, CFO. We will begin with some prepared remarks before we open the call for your questions.

Before we begin, I would like to remind you that our comments and responses to your questions today reflect management's views as of today only and will include statements related to our financial outlook for both the first quarter and full year 2026 and the assumptions and drivers underlying such guidance, our anticipated number of clients and covered lives for 2026, the demand for our solutions, anticipated employment levels of our clients in the industries that we serve, our expected utilization rates and mix, the potential benefits of our solution, our ability to acquire new clients and retain and upsell existing clients, our market opportunity, and our business strategy, plans, goals, and expectations concerning our market position, future operations, and other financial and operating information, which are forward-looking statements under the federal securities law.

Actual results may differ materially from those in or implied by these forward-looking statements due to risks and uncertainties associated with our business as well as other important factors. For a discussion of the material risks, uncertainties, assumptions, and other important factors that could impact our actual results, please refer to our SEC filings and today's press release, both of which can be found on our Investor Relations website. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events.

During the call, we will also refer to non-GAAP financial measures, such as adjusted EBITDA and adjusted EBITDA margin on incremental revenue. More information about these non-GAAP financial measures, including reconciliations with the most comparable GAAP measures, is included in the press release, which is available at investors.progyny.com. I will now turn the call over to Pete.

Pete Anevski: Thank you, Jamie. Thanks, everyone, for joining us this afternoon. We are pleased to report that 2025 was an exceptionally strong year for Progyny, Inc., where we achieved record highs in revenue and adjusted EBITDA, with both metrics increasing double digits over 2024. We also generated a record $210,000,000 in operating cash flow, an increase of 17% over 2024. We are pleased at the strong finish to 2025, completing the fourth consecutive quarter where both revenue and adjusted EBITDA exceeded our expectations. Our $1,290,000,000 in revenue and $222,000,000 in adjusted EBITDA in 2025 were nearly $90,000,000 and $28,000,000, respectively, above the midpoint of our original guidance range for the year.

Additionally, the operational execution we achieved this past year sets us up for continued momentum in 2026. As always, this starts with our focus on member and client satisfaction, and this constant focus, along with the value we deliver to our plan sponsors, has once again yielded a near 100% retention of our clients, including all of our largest employers. Progyny, Inc.'s value proposition entails total program management in all the areas that are critical to the health of our members as well as to the employers that provide their benefits. This includes execution across member satisfaction, clinical quality and outcomes, and overall cost management.

We have been able to hold costs and trends far below what employers have experienced in health care over the last several years, even against the backdrop of record medical cost inflation in the U.S. over that same period. For quality and outcomes, we once again led the industry in clinical results, translating into successful family building, healthier pregnancies, and better support for menopause symptoms. Those outcomes also translate into the elimination of treatments, reducing the rate of high-risk pregnancies, eliminating waste with fewer medications dispensed, and fewer NICU events. These better outcomes not only lead to better health for our members, but equally important, lower costs for our employers.

This is enabled by our plan design and overall program management success, built off of our unparalleled partnership with our network clinics and supported by our growth and industry-leading scale. In fact, when you put all these aspects together across member satisfaction, critical outcomes, and cost and trend control, even in the face of challenging economic pressures, employers and members continue to turn to Progyny, Inc. for solutions for their family building and women's health benefit needs. It has also contributed to expanding relationships with many of our clients, with 30% of our base expanding their benefits with Progyny, Inc. for 2026 through upsells and service enhancements.

With these expansions, more than 2,700,000 members will now have access to one or more of our newest services in pregnancy, postpartum, and menopause in 2026. Lastly, our growth has also enabled a further diversification of our base, both in terms of client and industry concentration. With the addition of our newest cohort of clients and lives, we are also entering 2026 with no single client accounting for more than a single-digit percent of revenue, and no industry comprising more than 15% of lives. And to that, I would also add that our largest industry, health care, has proven to be amongst the most highly resilient to the macro uncertainties over the past five years.

In short, we are entering 2026 with considerable momentum, and general broad acknowledgment for the very real need of family building and women's health services remains stronger than ever. And while our selling season is only just getting underway, we are pleased with where we are starting off, with both closed deals and overall pipeline, including the size and quality of the opportunities from last season that are carrying over to this year.

And while we expect the self-insured market to continue to comprise the significant majority of new lives to be added in this upcoming sales season, we are excited about our opportunities to broaden our target market by making our industry-leading services available to smaller employers who previously have not had access to this type of benefit. When we launched our solution a decade ago, we focused exclusively on large self-insured employers. Over time, we expanded that to include universities and school systems, then labor populations and government, as those were compelling additions to our TAM.

In that same vein, we now see a highly compelling opportunity to profitably bring our solution to the 50,000,000 lives in the U.S. under fully insured plans. Progyny Select is our solution to address the needs of the smaller employer who is more sensitive to variability of costs and prefers a model that minimizes their financial risk.

Because Progyny, Inc. has access to the most comprehensive experience data for employers of all sizes, we believe we are exceptionally well positioned to deliver what this market needs but has never had access to: a fixed premium product that gives employers the cost predictability they need by becoming part of a larger pool while also allowing their employees access to the comprehensive coverage and support that the self-insured market has long enjoyed.

We already have the operational infrastructure in place to go to market for efficient distribution through brokers and other third-party distribution partners, as well as by structuring the program in a way that provides real benefits while containing its risk through simple structures like capped benefits and removing options for opt out at the individual member level. An additional mitigator is that the premium applies to the full population covered under the employer's plan. As 2026 will be our first year in market with Select, we are not anticipating any contribution to our financial results until 2027. Hopefully, my remarks today have helped you understand why we are pleased with our performance in 2025.

With our reputation in market, earned over a decade as a premier solution for family building and women's health, driving the best clinical outcomes, member experience, and total program management and cost containment for our clients; with the investments we have been making and will continue to make across our products, both in the U.S. and around the world; to enhance our platform and with our use of technology, including AI, to augment our capabilities to create a better member experience and provide even better service to our clients while driving even more efficiencies, we believe we could not be in a better position as we begin 2026 to continue our growth into this year and beyond.

I will now turn the call over to Mark.

Mark Livingston: Thank you, Pete, and good afternoon, everyone. Based on the positive feedback we received following the last quarter's call, we are continuing with the format we introduced in November. The 8-Ks we filed this evening include a set of summary slides providing highlights on the quarter and illustrating some of the longer-term trends we believe are important in understanding the health and direction of the business. Rather than repeating what is addressed in that material, I will use my time today to focus on the key takeaways coming out of the quarter, particularly with respect to the lasting trends that are impacting how we think about 2026 and beyond.

So first, we continue to see good revenue growth overall: 7% on an as-reported basis in the quarter, or 21% when excluding the impact of a large former client in 2024. As a reminder, the transition of care agreement pertaining to this large client ended as of 06/30/2025, so our results for the fourth quarter and 2025 do not include any contribution from this client. For the full year, revenue grew 10% on an as-reported basis or 20% when excluding the impact of the former client in both periods.

Second, member engagement, both in terms of utilization as well as consumption of ART cycles per unique utilizer, remained healthy, and overall member activity paced favorably versus what was assumed in our guidance. Accordingly, fourth quarter revenue exceeded the top end of our range by nearly $11,000,000. As Pete noted earlier, our results have exceeded our expectations throughout the past year, reflecting how members have continued to prioritize their pursuit of the care they need in order to realize their family building and overall health goals. Third, we continued to achieve healthy profitability and overall margin expansion in both the quarter and for the full year.

The nearly 200 basis point expansion in full-year gross margin versus 2024 reflects both the efficiencies we continue to realize in care management and service delivery, as well as the leverage we are creating with third-party partners through our economies of scale. Both dynamics have allowed us to continue delivering total cost containment for our clients. Going a bit deeper on what Pete described earlier, at the recent J.P. Morgan conference, we highlighted how U.S. employers have seen a 27% compounded increase in their overall medical costs since 2022, driven by inflation and high-cost disease categories. That 27% represents a greater than 5x differential versus the compounded change in Progyny, Inc. rates over that same time period.

We are extremely proud of this accomplishment as it provides us with yet another way of differentiating our solution, particularly against the traditional health plans. We also achieved a modest increase in our adjusted EBITDA margins in both the quarter and the year, even as we have continued to invest to expand our product platform and lay the foundation for future growth. We are pleased that the model we have built provides us with this type of flexibility. Because of those investments, our fourth quarter CapEx was approximately $5,500,000, reflecting a $3,500,000 increase over the prior-year period. For the year, CapEx was $18,400,000 as compared to $5,400,000 in 2024.

Fourth, through our disciplined, prudent management of the business, we continue to achieve a high conversion rate of adjusted EBITDA to cash, which gives us the flexibility to both invest in the business while also returning value to our shareholders. And for the third consecutive quarter, we generated more than $50,000,000 in operating cash flow. This contributed to a record $210,000,000 in operating cash flow in 2025, a $31,000,000 increase over fiscal 2024. As of December 31, we had total working capital of approximately $350,000,000, which includes $310,000,000 in cash, cash equivalents, and marketable securities.

There are no borrowings against our $200,000,000 revolving credit facility and no debt of any kind, and we have no planned use for that facility at this time. During the quarter, we repurchased more than 3,300,000 shares for nearly $84,000,000 under our most recent share repurchase program, which began in November and provides us with up to $200,000,000 overall. To date, including the activity that has taken place since January 1, we have now repurchased approximately 6,500,000 shares in total, with more than $40,000,000 remaining available under the authorization. Before discussing our outlook for the year ahead, I would like to highlight a couple of items that will be helpful to you in understanding our expectations for 2026.

First, as outlined in our guidance assumptions, we are expecting 7,200,000 covered lives in 2026. This is lower than what we had originally estimated due to a net reduction in lives in the latest counts we have received. We rely on our clients to provide member counts throughout the year and especially following open enrollment. These updates are typically driven by hiring, acquisitions, and dispositions, but also include true-ups to the previously submitted figures. When looking at the client-level detail of these updates, none of these coincided with the announcements of any workforce reduction, leading us to believe that these are more likely to be administrative-type updates.

As we said previously, our guidance for the coming year is based off the actual utilization that we were seeing as of the start of this year and does not rely on total population counts. As a result, we are not seeing or expecting a negative impact to the total number of utilizers for this year, as these updates came principally from clients who are at lower-than-average utilization rates. Second, as previously disclosed, Michael Sturmer departed his role as Progyny, Inc.'s President at the end of 2025. His departure accelerated the vesting of certain previously issued equity awards that were otherwise due to vest throughout 2026.

This resulted in an incremental $7,700,000 in stock-based compensation expense to our fourth quarter and full-year P&L, and this accelerated expense was not contemplated at the time we issued our guidance for stock compensation or net income in November. As indicated in our January press release ahead of the J.P. Morgan conference, but for the impacts of this stock compensation acceleration, our fourth quarter results for net income and earnings per diluted share would have also exceeded the high end of our guidance ranges. So, turning now to our expectations for 2026. With the first quarter well underway, we have continued to see that member engagement has been healthy, including that from our newest cohort that launched in Q1.

Although the unexpected variability we previously experienced has not recurred since 2024, the assumptions we are making today, particularly at the low end of the ranges, reflect the potential that further variability in activity and treatments could occur. To be clear, this is the same approach we have been following for more than a year when setting our guidance ranges. The table at the back of today's press release also outlines our assumptions at both ends of the ranges for member engagement. In terms of utilization, the low end of the range assumes 1.04%, which is at the lower end of our historical ranges, while the high is closer to the midpoint of that range.

In terms of consumption, we are assuming ART cycles per unique utilizer for the first quarter to be at 0.48 at the low end of the range and 0.49 at the high, which is a jumping-off point that is lower than what we have seen over the past three years. For the year, consumption at the midpoint is assumed to be consistent with what we have seen over the last two years, which itself is at the low end of the multiyear average. On the basis of these assumptions, we are projecting revenue of between $1,355,000,000 to $1,405,000,000, reflecting growth of between 5.1% to 9%.

If we exclude the $48,500,000 of revenue from the client who was under a transition of care agreement through February 2025, our full-year revenue growth is projected to be between 9.3% to 13.3%. With respect to profitability, I will highlight that, as previously committed, we expect to see a significant reduction in our stock-based compensation expense in 2026, down approximately 35% from 2025 as prior large grants have now fully vested. We now expect stock-based compensation to be approximately 6% of 2026 revenue at the midpoint, as compared to the 10-plus percent that it was in 2025. We expect $224,000,000 to $239,000,000 in full-year adjusted EBITDA, with net income of between $95,400,000 to $106,100,000.

This equates to $1.19 and $1.22 in earnings per diluted share and $1.83 and $1.95 of adjusted EPS on the basis of approximately 87,000,000 fully diluted shares. Please note that our assumptions do not consider the impacts of any further activity under the repurchase program beyond what has already occurred, given the unpredictability and the timing of any additional activity. As it relates to the first quarter, we expect between $319,000,000 to $320,000,000 in first quarter revenue, reflecting growth of negative 1.6% to positive 2.5%. If we exclude the $31,300,000 in revenue from the client under transition agreement in the year-ago quarter, our first quarter guidance reflects growth of 9% to 13.4%.

The supplemental materials we published today also include a chart showing the distribution of full-year revenue by quarter for the past three years, revealing that we typically see 23% to 24% of our full-year revenue in the first quarter of the year. Our first quarter guidance for 2026 is likewise consistent with that. We felt it was worth highlighting this dynamic, given that 2025, on a reported basis, unfolded somewhat differently due to the additional contribution in the first half of the year from the transitioned client. As that contribution does not reoccur, we would expect to revert to the more customary cadence at the start of the year.

On profitability, we expect between $51,000,000 to $55,000,000 in adjusted EBITDA in the quarter, along with net income of between $20,800,000 to $23,700,000. This equates to $0.24 and $0.27 of earnings per diluted share or $0.42 and $0.45 of adjusted EPS on the basis of 87,000,000 fully diluted shares. With that, we would like to now open the call for questions. Operator, can you please provide the instructions?

Operator: Certainly. At this time, we will be conducting a question-and-answer session. If you have any questions or comments, please press 1 on your phone at this time. We ask that while posing your question, you please pick up your handset, if listening on speakerphone, to provide optimum sound quality. Please hold while we poll for questions. And the first question today is coming from Jailendra Singh from Truist Securities. Jailendra, your line is live.

Jailendra Singh: Thank you, and thanks for taking my questions. I just want to go back to your explanation on this change in membership outlook for 2026. Were those mismatches you called out just at new clients or at existing clients? A 400,000 delta seems like a pretty big number to be explained by just administrative issues. And does that mean that 2025 membership figure might have been overstated as well? Help us clarify that.

Mark Livingston: Yeah. So it does relate to the previously existing clients. It is not related to the new cohort. Again, as I said in the prepared comments, we do receive updates throughout the year. That is the basis upon which we provide numbers for lives throughout the year. At the end of the year, it tends to be more significant in changes, given enrollment changes, etcetera. But this happened to be a bit more significant in terms of these administrative changes than we have seen in prior years. Although, again, as we get bigger, proportionally, you would expect those numbers to be out there.

The truth and the reality is that we are reliant on clients and their processes to give us these numbers, and they are not perfect. And so, again, I think what I tried to stress in the prepared comments is important: our models, our guidance, and how we run the business is not driven by those population counts. It is on the actual utilization that we are seeing from those clients.

Jailendra Singh: Got it. And then a quick follow-up around Progyny Rx. There has been some confusion among the investor community about the Progyny Rx model and economics given all the developments around a federal bill which requires 100% rebate pass-through and also some fertility medications at a much lower cash price on some products. Maybe talk about the value of Progyny Rx. Have you seen any employers bringing this up in terms of what is happening in the marketplace? Do you see any pushback from the employers? Do you see that model evolving in any way that economics do not change much for you, but you are still kind of checking the box on what your employer is looking for?

Pete Anevski: Sure. So we have not seen any pushback as you are describing it or employers raising concerns about what is out there. You know, whether or not the model, I will remind everybody, includes rebates at point of sale. We have been doing that since we introduced our pharmacy product back in, I think, 2018 it was.

And whether or not the model itself, in terms of how we charge fees, changes or not remains to be seen, but I think the net economics, based on the value that we deliver for both on the medical side as well as the pharmacy side, and the overall integrated program and how that is key to drive, you know, the member experience and the outcomes. And that value is important, and so I do not expect the economics to change, but the structure of it is certainly possible in the future.

Operator: The next question is coming from Brian Tanquilut from Jefferies. Brian, your line is live.

Brian Tanquilut: Good afternoon, guys. Maybe I will hit on Progyny Select first. How do we think about the strategy on pricing Progyny Select and how you are thinking through the risk, or whether or not there is risk associated with that strategy in terms of undertaking a PMPM model? And any other KPIs that you can share with us in terms of how you are thinking about, like, utilization per member base or anything along those lines? Thanks.

Pete Anevski: Sure. So I will start with the fact that although in our client count, when we talk about them, we talk about employers of a thousand lives or more, we have a number of clients, and the overall lives are included. These smaller clients, we have many, many smaller clients that we used to underwrite the product, and that experience is what we used as a starting point relative to pricing the product. As you might imagine, we manage our book of business on behalf of our clients that are ASO clients and self-insured clients. We could do the same thing for ourselves, and that is how we priced it.

We put in guardrails around some of that risk to ensure that there is not significant variability in terms of utilization versus our current book of business, and that is part of the structure of the product. Some of those guardrails include the offering not being able to be selected at the individual level, and so no opt-outs being allowed, but that even the smaller employer clients take the benefit, they take it for all of their lives. And then overall, there are other types of caps and guardrails, including caps for high-cost claimants, etcetera, that are within the product.

But overall, you know, the way we see it is as the pool grows, it is going to perform no different than what we see with a long tail of smaller clients that we have today that are not inconsistent with our overall utilization. Once the pool is big enough, our expectation is that there should not be a lot of variability, and therefore, we priced it that way. We did obviously put in a risk premium, and we priced it that way off of that experience.

Brian Tanquilut: Okay. That makes sense. And then my follow-up, just as I think about the guidance, and the commentary you made in Q1, just to clarify, I mean, first, should we think of this as there is ample conservatism just because we are early in the year? Or you pointing to kind of like the low end to midpoint of historical ranges, is that just basically factoring in what you are seeing quarter to date? And then maybe last part here in this question is when I think of the margin compression that is implied in the guide, I mean, what are the factors there other than, you know, kind of like the revenue outlook being what it is?

Mark Livingston: Yeah. So our guide is always based on the activity that we are seeing in any period. And for the benefit of the first quarter, because our call is a little bit later, we do get the benefit of being able to see a little bit more data as we set our guidance. Although, I will also add to that new clients who are just coming on board, they are ramping up. And so there is, you know, good news there and maybe a little bit less data as you are looking at the newer clients. But it is all based on what we are seeing; I will start with that.

And then as far as margin compression goes, we typically see, in the first quarter, as we have ramped up the entire business, there is a step up typically. Again, our revenue for this quarter is only just a little bit north of 23% for the full year. So we are prepared to handle the business throughout the year. There is a little bit of compression there. And I think there is also some timing around the platform investment and the product expansions that we talked about that ramped up through the course of the first part of last year and so it was not as much a contributor to expense in 2025.

Operator: And the next question will be from Michael Cherny from Leerink. Michael, your line is live.

Michael Cherny: Afternoon. Thanks for taking the question. Maybe to build on Brian's a little bit. If my math is correct versus the starting point of the midpoints for your initial 2025 guidance, you ended up coming in a little over 7% better than the initial midpoint on revenue, a little more than 14% on the initial midpoint on EBITDA. I fully respect the formulation you have on guidance and what you are seeing now. But as you think through what is embedded in the guidance, in the view, how do you think about the swing factors that get you to the bottom end of the range versus the top end of the range?

And then has anything changed relative to the visibility that you think you have into those different metrics?

Mark Livingston: So, you know, when you think about—and again, this has been the similar philosophy we have been using now for a good several quarters—what we are seeing and the data that we have to make our predictions for the quarter and the year, I would say are, and as you have seen, are closer to the higher end of the range than the lower. The low factors in incremental variability of various sorts, whether it is lower number of cycles per utilizer, lowered utilization rate, etcetera. Although, at this stage, that is not what we are seeing.

And I think as far as factors and drivers that can influence the year as we go forward: faster pace of treatments, improved mix of treatments in terms of revenue per overall cycle, improved utilization as we go through the year—those are all many of the key factors. We do not include revenue from any sales that we make that we have not already had full commitments to. And largely, all of the clients that we have sold have already launched. And so, to the extent that we have midyear starts or third quarter starts or fourth quarter starts, those are all potential contributors, as they have been in any year.

Michael Cherny: Helpful, Mark. If I can just touch on one other: How should we think about the contribution in the year from some of the other maternal health services, the menopause, etcetera? Is it material at this point in time, or is this still something that is more a value-add relationship builder? Just curious on the financial impact.

Pete Anevski: Yeah. It is growing, but it is not yet material. And it is definitely a value add, as you described it, relative to the overall services that we perform with our clients. When it becomes material enough to break it out, we will. But it is growing.

Operator: The next question will be from Scott Schoenhaus from KeyBanc. Scott, your line is live.

Scott Schoenhaus: Hi, team. Thanks for taking my questions. And my counterparts here. So we know that you have reduced your expectations. Your clients have reduced their expectations on lives, but you said that those were all from lower-yielding lives. So the implied utilization is actually better for this year based on the revenue ranges. I guess the revenue ranges in first quarter and the implied utilization there would suggest to me that from this new cohort, which we have backed into as high-utilizing cohort so far, maybe, you know, as you do IVF, you have your initial consult. The earliest you could ever do that would be January.

Take a month to get on your—depending on your cycle—to get on these fertility medications, and then another month earliest to do the retrieval. So my question here is that you have obviously seen this new whole cohort do the initial consults pretty nicely here. Should we assume that there is a nice tailwind here coming through the next several months of potential retrievals based on what you are seeing today and the new cohort of high-utilizing clients? Thanks.

Mark Livingston: Yeah. I think, look, the way that our guidance is laid out, especially again, you can just see it in the revenue mix—Q1 being less than a quarter of the year. So implied there is a step up as we go through the year. You know, we gave you a range around ART cycles per female utilizer, and if you sort of try to do the math of what is the balance of the year to get to the annual numbers that we have also provided, it does imply that there is a step up that we would normally see throughout the year.

So, again, it has been a good start to the year, and it would seem that the phasing and profiling of it is, you know, as we would normally expect.

Scott Schoenhaus: Great. And then, Pete, this is a follow-up for you. You have had some nice—I do not think you have ever given us early selling season commentary this early. But could we contemplate some of these wins coming in throughout the end of this year like we experienced—I do not know, was it two or three years ago? And are these large employers? Give us more color on that commentary? I thought it was interesting.

Pete Anevski: Sure, so they are not large employers in terms of an individual employer, but we have had a good number of wins that we are pleased about, especially this early in the selling season. A lot of times throughout the year, there are clients that we sell and then go live during the year. That is normal every year. As you recalled a couple of years back, I forgot if it was 2023 or 2024. I think it was 2023. There were really large clients that we sold and went live during the year. This is not the case yet. Who knows what we will see. We do not ever plan for that.

But nonetheless, you know, a small amount of activity does happen where we sell and they go live during the year. Last year, that was the case. And every year, that is the case, you know, but it is usually a longer tail of smaller clients that do that.

Operator: Thank you. The next question will be from Peter Wehrendorf from Barclays.

Peter Wehrendorf: Hey, yes. Thanks for the question. If I am doing my math right, it sounds like membership is probably up kind of in the mid- to high-single digits range this year, and revenue growth is maybe closer to low double digits, low teens. Can you just help us think about how to bridge that gap and maybe what is coming from utilization versus upsell versus any kind of contribution from the new products?

Mark Livingston: Yeah. Look, I think when you look at the midpoint for the year, again, excluding the impact of that other client, we are projecting like 11% growth at the midpoint. And so, with your lives growth—which is and ultimately the utilizers—if you do the math and even the ART cycles, all of those are contributing, you know, a significant part to that 11%. But we also do—again, we are proud of the cost control, you know, our level of cost control on behalf of our clients—but we do have an element of rate that is also included, which helps bridge that gap. So those are kind of the key pieces.

Pete Anevski: Yeah. If you think about Mark's comments before, think about it as lower-utilizing lives being replaced by higher-utilizing lives, which is part of that. So the straight math of just the increase in lives misses that little piece.

Peter Wehrendorf: Great. That is helpful. And then maybe with a little bit of macro uncertainty out there, is there anything on the treatment mix side that you might think is worth calling out here? Thanks.

Pete Anevski: No. Nothing unusual.

Operator: Thank you. The next question will be from Sarah James from Cantor Fitzgerald. Sarah, your line is live.

Sarah James: Thank you. You talked about Select group becoming more predictable as it scales. How do you think about what a critical mass is for predictability? Are you already there now, given your exposure to small group on the ASO product? Or how long could it take to hit that critical mass level?

Pete Anevski: Yep. Well, we are not there now. As I mentioned in my comments, right now what we are doing is going to market with the distributors and broker partners, etcetera, that will, through their sales force, be selling Select. For those, they will not go live until 2027. So there is nothing to refer to now in terms of what we are seeing today for that pool. The pool does not have to get that big to start to become predictable.

You are talking in the, you know, couple hundred thousand lives range or thereabouts is my prediction based on the data that we have until it starts to become predictable and act more closer to the book of business, assuming no weird anomaly in terms of one industry versus another being heavily weighted in that population, which we do not expect. And so until that happens, there may be a little bit of variability, but relative to the overall number of lives that we have, it will not actually have any noticeable impact, if you will, on margins overall or our EBITDA margin and/or our gross margins to speak of.

But once you get to enough of a pool across a long tail of smaller clients, it should become predictable and act like the book of business.

Mark Livingston: And just to put a fine point on it, so Pete mentioned a couple of minutes ago how we do have clients that are of that size now. So we obviously have that data, but we have also looked at our smaller-sized clients with a similar structure of benefit and whatnot. So we do have a tremendous amount—ten years plus—of data that we can use to help refine what we expect those pools to deliver when they get to some level of scale.

Sarah James: That makes sense. And just one follow-up if I can. When you talked about the high-cost guardrails, how are they structured? Are you talking about reinsurance or are you talking about claims reverting to the employer at a certain attachment point? And what is the average attachment point?

Pete Anevski: Well, there are a couple of guardrails. Again, we are not getting into all the details of the product. But the simplest guardrail is a maximum dollar amount for high-cost claimants—lifetime maximum. And then at that point, it is not going to revert back to the employer. It is just the employee then becomes effectively self-insured again, or cash pay is the simplest example of one of the guardrails that are out there.

Operator: Thank you. The next question will be from Constantine Davides from Citizens. Constantine, your line is live.

Constantine Davides: Thanks. Maybe first question for Mark. You obviously had a big step up in CapEx in 2025, and just wondering if you can give us a little flavor for your expectations for 2026—if we see another step up or maybe a drop-off—and then, I guess, color you can provide around operating cash flow conversion for 2026 as well.

Mark Livingston: Yeah. Sure. So, as I said a couple of minutes ago, a lot of the effort that we have put into improving and expanding our platform, as well as investments as we have been expanding the number of products and really getting them launched, that really ramped up over 2025. And so as we come into 2026 and sort of lap that, we do anticipate for the full year that there will be a step up, but not a doubling. I think if you think about it in terms of a full-year impact of those levels of increase is probably the right way to think about it.

And then from a cash flow conversion standpoint, and it is in our materials, you will note that we have made a significant reduction in our outstanding DSOs—credit to our teams and the work that they have done to make that happen—but there is a limit on how much we can continue to reduce that. There is a structure of how the cash will work. So I think, going forward, although we have been beating it for a couple of years now, the 75% conversion rate from adjusted EBITDA to cash flow is probably a better metric than what we have been able to achieve and beat over the last couple of years.

Constantine Davides: Got it. Excuse me. And, I guess, just one follow-up on the newer solutions. I know you said those will not really impact 2026, but I guess you talked about having 2,700,000 eligible members now with access to those programs. What are you kind of learning about targeting and marketing those programs to the members? And I guess, again, I know it is early, but where are you seeing the most success in terms of those newer solutions today? Thanks.

Pete Anevski: Yeah. It is not the traditional way we do it today where we are doing the individual marketing to the end clients; it is leveraging distribution partners and their sales force—i.e., brokers—that generally today sell to, sell overall—

James Hart: He was asking about menopause.

Pete Anevski: Oh, I am sorry. I apologize. The difference is in the selling motion for the expanded products with the fertility benefit. The sales force is generally trained to sell those products. We market to our clients relative to those overall solutions, and then we have subject matter experts, as you might imagine, that are brought in some of those areas. And we also, on top of it, then once they are live, market to the individual members in conjunction with our client partners.

Operator: Thank you. And the next question will be from Allen Lutz from Bank of America. Allen, your line is live.

Allen Lutz: Hey. This is Deb on for Allen. Thanks for taking the question. I appreciate the color on the member base and some of the drivers there. Just curious if there are any particular industries where you saw the elevated administrative changes? And then it sounds like you are pretty constructive on the pipeline, some of these higher-than-expected administrative churn. How have your conversations with clients over the last month or two changed, if at all, around the labor market? Just any additional color would be helpful. Thank you.

Pete Anevski: To the second part of your question, conversations have not really changed. The current pipeline and the early season wins that I referred to are generally coming from the carryover pipeline from 2025. And the selling season for 2026 and continuing to add to that pipeline is barely underway. But I would say, generally, no different conversations relative to the labor force than what we have been having.

Allen Lutz: Got it. And then any particular industries that, you know, you saw elevated administrative changes?

Mark Livingston: No. It is across a bunch of industries. I think the only common theme in it is, again, the apparent utilization rate that we were seeing from them were lower than the book.

Allen Lutz: Got it. Thank you.

Operator: There were no other questions from the lines at this time.

James Hart: Well, thank you, Paul. Thank you, everyone, for joining us this afternoon. Please, of course, as always, feel free to reach out to me on follow-up with any additional questions. Otherwise, we look forward to seeing you at some of the upcoming conferences or in the first quarter with our call in, I guess that would be May. Thank you all again.

Operator: Thank you. This does conclude today's conference. You may disconnect your lines at this time, and have a wonderful day. Thank you for your participation.

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