Progyny (PGNY)

Fertility benefits company Progyny (NASDAQ:PGNY) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 9.3% year on year to $313.3 million. Revenue guidance for the full year exceeded analysts’ estimates, but next quarter’s guidance of $300.2 million was less impressive, coming in 0.7% below expectations. Its non-GAAP profit of $0.45 per share was 15.4% above analysts’ consensus estimates.

Company Overview

Pioneering a data-driven approach to family building that has achieved an industry-leading patient satisfaction score of +80, Progyny (NASDAQ:PGNY) provides comprehensive fertility and family building benefits solutions to employers, helping employees access quality fertility treatments and support services.

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.

Progyny competes with traditional health insurance carriers that offer fertility coverage, specialized fertility benefit managers like Carrot Fertility and Maven Clinic, and general employee benefits platforms that have expanded into fertility services.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With just $1.27 billion in revenue over the past 12 months, Progyny is a small company in an industry where scale matters. This makes it difficult to build trust with customers because healthcare is heavily regulated, complex, and resource-intensive.

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Progyny’s 32.6% annualized revenue growth over the last five years was incredible. Its growth beat the average healthcare company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Progyny’s annualized revenue growth of 10.8% over the last two years is below its five-year trend, but we still think the results were respectable.

We can better understand the company’s revenue dynamics by analyzing its number of units sold, which reached 15,981 in the latest quarter. Over the last two years, Progyny’s units sold averaged 4.5% year-on-year declines. 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 9.3%, and its $313.3 million of revenue exceeded Wall Street’s estimates by 4.7%. Company management is currently guiding for flat sales next quarter.

Looking further ahead, sell-side analysts expect revenue to grow 5.5% over the next 12 months, a deceleration versus the last two years. Despite the slowdown, this projection is above average for the sector and implies the market sees some success for its newer products and services.

Progyny’s operating margin has been trending up over the last 12 months and averaged 5.6% over the last five years. The company’s higher efficiency is a breath of fresh air, but its suboptimal cost structure means it still sports paltry profitability for a healthcare business.

Analyzing the trend in its profitability, Progyny’s operating margin of 6.8% for the trailing 12 months may be around the same as five years ago, but it has increased by 1.8 percentage points over the last two years.

This quarter, Progyny generated an operating margin profit margin of 6.9%, up 2.5 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Progyny’s EPS grew at an astounding 64.1% compounded annual growth rate over the last five years, higher than its 32.6% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

Diving into the nuances of Progyny’s earnings can give us a better understanding of its performance. A five-year view shows that Progyny has repurchased its stock, shrinking its share count by 8.8%. This tells us its EPS outperformed its revenue not because of increased operational efficiency but financial engineering, as buybacks boost per share earnings.

In Q3, Progyny reported adjusted EPS of $0.45, up from $0.40 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 $1.83 to shrink by 1.5%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Progyny has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 13.2% over the last five years, better than the broader healthcare sector. The divergence from its underwhelming operating margin stems from the add-back of non-cash charges like depreciation and stock-based compensation. GAAP operating profit expenses these line items, but free cash flow does not.

Taking a step back, we can see that Progyny’s margin expanded by 10.6 percentage points during that time. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat.

Progyny’s free cash flow clocked in at $45.99 million in Q3, equivalent to a 14.7% margin. This cash profitability was in line with the comparable period last year and above its five-year average.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Progyny historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 2.6%, lower than the typical cost of capital (how much it costs to raise money) for healthcare companies.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Progyny’s ROIC has increased significantly over the last few years. This is a good sign, and if its returns keep rising, there’s a chance it could evolve into an investable business.

One of the best ways to mitigate bankruptcy risk is to hold more cash than debt.

Progyny is a profitable, well-capitalized company with $345.2 million of cash and $24.73 million of debt on its balance sheet. This $320.5 million net cash position is 19.7% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We enjoyed seeing Progyny beat analysts’ revenue expectations this quarter. We were also glad its full-year EPS guidance outperformed Wall Street’s estimates. On the other hand, its revenue guidance for next quarter slightly missed. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 5.5% to $19.01 immediately after reporting.

Updated: December 4, 2025 at 10:50 PM EST

Are you wondering whether to buy Progyny or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

Progyny isn’t a bad business, but we have other favorites. First off, its revenue growth was exceptional over the last five years. And while Progyny’s subscale operations give it fewer distribution channels than its larger rivals, its rising cash profitability gives it more optionality.

Progyny’s P/E ratio based on the next 12 months is 13.3x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $29.11 on the company (compared to the current share price of $24.03).