Progyny (PGNY) 4 Nov 222022 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Progyny, Inc.

Third Quarter 2022 Earnings Call. At this time, all participants have been placed on a listen-only mode and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, James Hart. Sir, the floor is yours.

good and Matthew, you, afternoon, everyone. Thank our to third quarter call. conference Welcome today With and CEO of Mark Peter Progyny; Anevski, CFO. me are Michael Livingston, Sturmer President;

We we remarks your some will call questions. the for before begin with open prepared

and activity both we supply markets statements sales full from statements strategy, contained important factors. impact industry of performance, materially Actual by our to and assumptions that outlook, in as financial business chain number other forward-looking clients the of and and impact related client the pharmacy the our new our lives which expected business, of expansion may or as our the the view risks including with to are responses or market results our clients; statements and plans remind our upsell shortages in only existing variants, growth year of today our for and on any forward-looking those comments member opportunity, utilization offered, as other questions our and our business, acquire under these differ objectives, on begin, clients our condition, and of long-term and of our medication into underlying for I'd due for the future your and to in industry retain content and anticipated and drivers investments, season, well plans our Before operations, laws. expectation ability including the our and federal services associated expansion implied launches impact business size business including financial the securities our such to management's COVID-XX mix, the you and XXXX third like disruptions quarter to will and XXXX, covered rate outlook include guidance, on of clients,

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

During the to call, operating non-GAAP measures, excluding stock-based margin, refer and margin, EBITDA, we as adjusted financial will expenses, More adjusted compensation. also including gross such about stock-based these compensation information EBITDA to in Pete. including would GAAP press measures, I non-GAAP reconciliations are available at release, investors.progyny.com. comparable now measures turn financial like most with call the the over is available the to which

thanks, We're Thanks, strong quarter $XXX million Jamie report of to joining record very third reflecting over today. everyone, with a the that quarterly and revenue quarter for XXXX. Progyny growth had third of us XX% pleased

third to adjusted to doubled XX%. won EBITDA in our on of to addition, quarter to as because driven activity, not a quarter levels year these number XX/XX. of who are who chose the In prior the over revenue launch the large the There launched third quarter. until the client who of was by has with expect the record as starts their client during also health new of more clients start wanted Positive were and momentum $XX in their year Most plan their current possible the a adjusted wait as for returned to of to benefit year a were primarily million, plan season. yielding fully both we than as that what launches Progyny healthy in make early well available sales member margin by which consistent during see accounts was EBITDA that workforce

overall early starts is and our clients. smaller sales launches launching of benefit usually in non-January enthusiasm and happen clients. We've clients the early season, those our that fertility competitive benefits with one included both both are employers some this market these solutions for of as increasingly year, typically had uncertainty. with as that even some well this leadership view validation We be high has their backdrop as larger the need every While as to the recognize of more macroeconomic equitable family-building and confirmation and the demand

X.X are satisfaction extremely of labor fertility aware market our availability as unfilled of unemployment companies at significant happen and XXX in we Quarterly, client secured employers lives. whether million selling benefits representing the new predictions continued for during the to while recession prospective as the expect season, remains covered long or well record remain bar are And choosing an continue enter additional XX-year quality their momentum year, varying that is to outcomes. of employees X.X The a spend factor XXXX, of in affected strong a largely the efficiently those for in for last, patient category, there At record deciding market in still actually from as simultaneously productivity are will carryover clinical with labor positioned favorably which healthcare there commitments reflecting more a be we tight and point and new some and becoming is set provider been client today, and are clients seen high million by relying up manage where through a increasingly success force, what's of growth XXX the given their XXXX as approximately they're the start covered lives continues to it'll when company. or The our complete. as a renewal family-building with how happening another these and extent at surplus to grow season, While a low. a or in near lives, XXXX. to year of of clients all macro a the in experience superior double of to forces year COVID and solution we've while their on track had covered providing success last number from whether impacted The significant season that record-setting fertility benefits our the XXXX, Progyny join this sales the increasingly our demand share enhancing as companies sales use of year's sales tailwind jobs. is helping

Before existing I activities our first into discuss the selling season, base. employment our a then of growth go give greater renewal detail briefly let about recap within me customer and

to expect For nearly consecutive we clients. XXX% seventh the year, our of retain

quarter see the relationship Canadian handful clients of also who coverage clients healthy existing expand are to are aspects than appetite our clients XXXX. of increasing our adding extraordinarily our are benefit their population. rate some most upsells underappreciated way more for of including retention a continue in the We through business. project a of one Altogether, to among high is their in very looking We who believe

the through the value demonstrates large the achieved strength both high our clients the a expanding and believe term delivering record analytical to clients, satisfaction opposed each Our include this our to the value both create in portion success workforce outcomes five-year three-year which of our companies point, recognition continue our those the client year driven world. the way some we more one illustrating a addition project we in of client to year We levels data-driven most to renewing in renewals as and largest at by of renewal chose track those deepen for of both member substantial relationships, superior is relationships and in that to the as sustained usual clients. of year relationship of we clinical better base of this to By its our with our the experience. of include after year well as

growth activity been a existing clients historically, contributor predominant the been to Although new our as well. sales has growth has driver at employment

with to that us levels to the to existing or this public they're organic we consistent indicated in Looking within that some our to any relates base, growth employment keep of some hiring, at ones, Accordingly, our to of about reductions or in comments revenue be publicly expectations from pace have planning the of currently our our little of employment or their with including have XXXX for point. clients no anticipate XXXX, following their while as conversations their XXXX. made headcount versus flat, it to of workforce largest relatively none our clients, large-scale clients growth contribution

last history managed cohort [Indiscernible] energy, defense, our the more. of market Turning represent services solution university sports unions, believe and number most the broadest even competitive been cybersecurity, solution most and that largest fully that no discussed the now opportunities in And remains telecommunications, new in systems received also delivers in to able first won believe and companies remain high-quality we're and agriculture, and given show successful including we've and and Progyny aerospace airlines, of labor very for demonstrates our substantially we best team. also our results adding remains that has choice we continue industries a record are clients a the and as food clients number that outcomes. benefit diverse other including financial and the strongest initial that underpenetrated, we world of build position to quarter, hotels, provider a our our commitments professional We and beverage, these sales. healthcare, large new in We be that significant underpenetrated. to

as the of essential year, of of to fertility of first they're and to the benefit in with half broad our range of regardless newest X,XXX half relevance diversity enhance the see clients that of health of newest in other their clients XXXX who from size Consistent We previous demonstrates size approximately newest more cohort XX before benefits as the the participate we clients excess We Similar industry and clients this for base already well the employer into in the XXXX. adding type had to exists than in of a our expect prior believe fertility the an last this span the different time lives. further any our seasons, clients a their in for lives of industries. XXX,XXX continue or benefit in fertility operations. to progeny, newest within strength will moving are

Given groups opportunities underscores half at our half overall that the all, large employers we coverage both with of not the believe any growth roughly benefit type employers. divided and our market providing other with with evenly some year this larger success is of fertility providing

their of which historical Progyny our its PBMs also have clients traditional choosing as of Of rate the today. As of to cycles, by are as other pleased member coverage our continued the for We're is clients, evidence robust year. amongst strongest our we this or the that the our and have over clients our treatment adoption achieved smart environment, the newest superior XX% with for our three to healthy well driven also that, select resilience consistent levels eliminates for we Rx anticipate most to Active fertility two cohort macro appetite benefit, overall in advantages, further this pharmacy average. will risk savings with newest newest provide the XX% workforce have benefits up experience from solution of integrated XX% the delays. deliver launches, ever taking

Before aware were affecting our I that's any the evidence drugs indicates temporarily has [Indiscernible] medication, development made the their formulary, chain process process one want in indicating that review turn for that and the FDA of delivery paused perspective notify commonly in that remains in to changes changes efficacy unaltered, to of to-date recent one have wait the the to I and safety creating by as data they suppliers. Mark, of largest of the provide that thereby a us product to supply Menopur, over indicated facility the they the [Indiscernible] the patients. manufacturer shortage of call in that the medication, their a of approve not pose firing supply any prescribed of has on the with they're of risk manufacturing a manufacturing

this It's able by to Lastly, possible informed. resolve medications alternative situation administration meantime, for more to that [Indiscernible] previous have keep medication drugs, be and us authorities, to this us quickly. one, these similarities it's the of also though only as and situation kind the they're and us working been FDA, widely the for that with of the market. replicate doses employ stress U.S. use can [Indiscernible] resolved will clinicians of a had the distributed that that we and already administration is effect believe has that FDA to quickly combination relatively through used in including these In drugs to drug as approved for for patients been reasonable recalled noting of noted has the years. the drug to looking are with to this health that's any the anticipate the [Indiscernible] nor patient. quarterly, at complicated the successfully of It's the the many the situations important its is of worth neither that

impact alternate While today economics we of already of do unit to the issuing will more With the these year. drugs, discuss in and slight we're we more that, shortly. trials to Mark given have balance don't guidance as as on pursue a me disruption anticipate call expectations members' financial which treatment, quarter ability an for using the now discuss the detail provide contemplates, let detail Mark in the temporary for our over turn the impact result the expect to different the a to

and walking through the year. results provide expectations our for quarter for you, good the by third afternoon our Thank and the remainder begin I'll of then everyone. Pete

revenue that's quarter $XXX quarter prior To this five it's in million. rapidly ability year this revenue. We it our million in to next our reached add perspective, XXXX, momentum before taken our our believe years this the our over underscores but two been exceed to into we business also Since then, put grew first was to launched solution only years quarter. million, than to we making $XXX scale not the Third $XXX.X and successfully $XXX XX% million first after driving operations. less that the

of the one season, points their increase compared primarily a of to in lives quarter. than January who at various due clients year handful Our Weighted an in clients every to in clients the launch as of XXX,XXX date. ago. there launch In want the increased growth than more quarter new covered by benefit by nine lives number driven during customary the typically covered sooner average the was selling are to a

to the earlier, was of plans There employers in validation of conviction the large while environment. the third also this is health current strong also we the their the won market launching how higher-than-usual fertility view Pete health As whose improve season in we benefit early this number that relevant discussed begins a quarter. as a have clients year the affirming in in plans client benefit

covered an during was to XXX year. date covered this million XXX the XX, year for them. lives X.X of ago period, So as growth over Accordingly, X.X quarter. and natural had the September average a XX% we representing compares reflecting clients million in in go-live of lives lives This past clients the

over components to than at XX% year the of $XX.X last the due quarter to clients lives Looking which revenue the the while in million, quarter revenue the doubled covered growth third in Medical $XXX.X pharmacy more to was topline. grew million. again, in

ago. the the higher number compared reflects Our increase pharmacy growth in with as in clients a of integrated to year an solution

utilization, ago to results, during rate financial Turning This were quarter, that to was now to year period. ago. most closely X.XX% to performed as year our compared Female the the cycles corresponds XX,XXX X.XX%. a utilization our metrics. is compared which a art reflecting XX% increase More the than

rates As a the have quarter-to-quarter time members as including vary to the of of number and launches the the new of due as to we see client year reminder, to newest utilization benefit. begin typically a access a from ramp-up our period timing factors,

from the realize by our we of partially primarily the of care the XX% last gross the decrease XX.X% to offset in management point period services. margins stock-based XX to efficiencies profit million, The that year yielding impact gross $XX year continue a margin from now third our in reflects operating Gross to noncash increased and ago basis expenses. Turning quarter margin. compensation delivery

third the our year see this reminder, what as quarter, we of revenue reflecting as Xst. quarter marketing to X.X% higher noncash XX.X% expand we are expect a we in lives fourth compared are that as well were costs our improvement year the reflects onboard was G&A period. step-up quarter go-to-market we ago the expense increase third margins the incremental period. resources. headcount typically in making continued significant of advance X.X% from January compensation support in investments a as The of successfully stock-based the the than Sales in in we revenue higher ago covered quarter slight to to that As need and

XX% on administrative and across more higher to from of current $XX offset XX.X% build impact strong to release than to With basis demonstrating ago adjusted quarter continue we've highest quarter. the our XXX continue operating the expansion our leverage the realized, functions, margin period EBITDA We we XX.X% Adjusted this ago a EBITDA stock was stock The achieve which million we realize sorry, expense year the expenses. impact efficiencies our point margins EBITDA reflecting efficiencies, than this from -- our issued in XX% reconciles quarter, in noncash is incremental doubled that the The topline this today the press more margin business. performance revenue and compensation adjusted ever, period. comp year of on as the margin the gross the we period.

the Third diluted to share compared compared or $XX.X as expense million The share. prior ago quarter lower reflects in period per net This $X.XX income higher in tax as as year year period. $XX.X the million the income period. per current was or ago $X.XX a a well stock benefit EPS net income in comp higher the year recorded to primarily of in

to in approximately Operating ago million. Turning cash was cash $XX This year our now balance during period. to generated compares generated $XX.X the the flow sheet. quarter and million

months nine cash the the million $XX.X to first $XX.X the year flow compares Over in of operating period. year, of ago million

as on quarters previous of in as year, year-over-year adjusted terms pharmacy lag at and impact this substantial from looking sequentially timing versus partner two certain growth of current The revenue, relates the reflect both a associated periods both items, the in rebate as working specifically well our creates a cash arrangements. with pharmacy EBITDA. flow to cash our it Our period the flow payment when basis capital

Additionally, last with reflects the can that short-term the or of given to clients efficiently. quarters, couple onboarded the negative it so integrations that also lives the new and a newest carriers clients quarter take as running we large of during cash flow get launches these with their new see and impact number typically

marketable cash, As of working $XXX million, September million XX, in $XXX debt. and we total of had and capital equivalents no cash reflecting securities

to year and the for now full XXXX. our fourth Turning quarter expectations

results Given guidance we of the new over consecutive clients number quarter. quarters gone first and the pleased achieved three we've have year sold position XXXX we're for the third the strong to already our raise live, the of in that a be to have

a $XX.X persists estimated of year over million the revenue shortage million, in XX%. projecting between $X.X an to number For the the Menopur the year, small quarter impact million, and as to low the the basis, growth $XXX that the count the fourth the are expect $XXX.X On shortage we QX, impact launched and ranges that for the reflecting of XX% million revenue QX This of the of full representing of end and that member quarter, from are to the to XX% Pete year. the balance reflect earlier, between million and growth expected fourth million clients of of raising for assuming discussed for as between in anticipates of fourth XX%. range also $X.X both launched high taking million. we well clients $XXX The now average both our quarter revenue that have $XXX.X in and quarter nine between full negative

the shortage being different of impact don't there combination during the are drugs are expect with to utilization, unit shortage. economics Although used that negatively we this member alternate

adjusted of are XXXX. profitability to expect between We our EBITDA raising on guidance We for $XXX million $XXX million. also now

between on approximately net million of fully income, million and to $X.XX or For $XX.X diluted we basis earnings now per XXX share $XX.X shares. expect million $X.XX the

and of of on in compensation the out diluted a expect to EBITDA, serve quarter expect the ago, to was reflects increase adjusted similar $XX.X Accordingly, highs. per approximately between a we at stock structure ranges. loss $X.X when we help our in retentive be ranging as million new and ensure $X.XX quarter earnings expense income the a $XXX,XXX to which continues issued did our year million equity all-time we million broad-based fully fourth or $XX.X of which, of which loss XXX will is of guidance issued from $X.XX shares. a the and net For we that market grant We turned our the million grant guidance based a between fourth share compensation This component tool. in a grant that to to income reflected hindsight, broad-based equity

related equity a occurs, income contemplate As ranges our remainder net to from continue activity not do will extent benefit To that of items activity. any the tax income we tax those reminder, including any the to over compensation discrete discrete items, income tax benefit XXXX.

me closing call Let remarks. the to for back Pete some turn now over

Thanks, Mark.

Progyny its to its we leadership. continue and market look to itself competitors As XXXX, distance from demonstrate

managing fertility companies in be scale for X.X XXX other far We million and greater any a point than XXXX, provider. solution people approximately expect to benefits

this results a we And was think for share, benefit. grow continuing even our accounts selling As of with them are record to number wasn't time our always this who exception. decide certain the season in there no selling season, the right the to recent take most market about

change prior for in accounts fertility choosing some or health those plans. prospects dialogue to momentum. they remains determined seasons, need have their January, positive which to right year's last than of ultimately year solution a pipeline and with us season a of wasn't indicated in at generally with us next positions As this their them healthier these start discussion us solution larger add very they to a rather eager competitive because and to sets revisiting time and we time they what address are number The other begin with have had them well up in with selling are their this the

relates penetrating continue at we we are the stage well of into live, believe newest Once progress market. clients this made of our to both our in our season and our the go With look a in that just which choice the that and target year, largest with execution to percentage we've core for our client world. success initiatives, selling Operator? conclude, will very retention, to have our it market. that many the strategic your like of low To As of as the successful our employers pleased a that, Progyny as as particularly of call we'd companies we're most for with provider the in still quarter continues early affirm next results be the single-digit we to we X,XXX open up questions.

the first Instructions] and open [Operator floor now Anne is Ladies Certainty. is coming Samuel for JPMorgan. from questions. from question gentlemen, Your

Your line is live.

the results on great terrific selling Congratulations the season. Hi. and

in you forward. that this normal that just the and expect wondering highlighted release And some if launches going I You new the what's be early was year. saw to should we that driving

have live number to would Yes. went the and ahead it I of new It's went that most clients a we their expect go live did plan live did which here, is X/X. never new of were -- -- normal of be although normal, them that

that most will never the how plan can't because be. or we you won't predict part, many for For there

their did a live calendar clients a plan One go went one of on live, not fiscal year, and is year, that the year. which the largest

a earlier. bigger it's earlier it. they obviously, indication thinking is where doesn't plan and for good always don't But live to of And clients so lives companies number went terms normal. that's That are want benefit than in why of why we that the happen, of and

the that on then wondering you think helpful. And also utilization just That's expect from And how to And from -- see -- if quickly impact to impact do talked the just it Rx when you about then disruption. is be can the side? issues, question Thanks. resolved? one just financial any just about Medicare you then that

be But on Yes. any there's historically, we from been are it. it any relatively into these certain resolved. comments, impact when my Rx have past, side. the condition approved treatment have That situations a when only further as insight resolved on We process, drugs the drug I there impact will said don't market where are is utilization in only in that of certain don't type expect And manufacturing in or the quickly. for in changes

And in hope insight this provided. but further we situation, so the our is what don't that's case than any we have

Helpful. Thank you.

Thank you.

from Cherny Michael from is question next America. Bank of coming Your

Your live. line is

on my is this question. [Indiscernible] the taking on quarter. Mike. for Congrats for Hi, Thanks

Now that trends that we with you season of any rates? have bit end selling your then And selling for it were as results the more to clients? about little talk relates XXXX, particularly can season, the a close the seeing not-now you

look Sure. It's not-nows are in you do much hard we the is or parts buy. distinguish and different those really we But why not are to those to sort of why at at season next year. because many and us set are up lost rates and of selling different didn't greater the for relative What exactly they close reasons look high. to rates know nicely never our won of close competitor, deals we a really now,

they're the other part, the not-nows. the just Sometimes But But for well most year don't. times really priorities. clarity we on Many house. positioned feel we next we get vis-à-vis not for

that Got it. little then That's And mentioned? And then you more a talk efficiencies you what EBITDA helpful. expansion? the on further the could just margin any just bit color was about driving

Yes.

some or able care kind of but revenue bring revenue through maybe need the So, benefit as people on terms expansion thing lives acquisition the that, on as management services. expenses, G&A. that but many did come a seen quite quarter far we been our special as I some out of don't we've minor here. we've grown, trend. Nothing across relatively a then been sales would QX, that both that we in on call We a and timing really each also little and to efficient growth of again, have. the the bit as from back of it's margin number And customer marketing we've expand in would mean, to as hire generates. I Same rate lines talking as that bit perspective and and amounts say of about all we've to of I'm costs has grown. period-over-period

Great. Thank you.

you. Thank

question next is Your coming from Truist Singh Jailendra Securities. from

Your line is live.

there understand from But XXXX to Thanks at late a of from button the might taking any particular start benefits I for thoughts your for in point and expansion XXXX, and Clearly, indications rollout and XXXX talk about environment macro locked questions. XXXX you beyond are in benefit that pause your little of my view. be conversation is selling might concerns. with fertility chance early or year wanted terms season. given to or press thanks a in employers I recession get employers X/X least getting XXXX a now But that it

haven't really to of. anybody about speak XXXX with conversations had We

prior that you whether with market in that of So it's the all this important to industries indicators All happened were the really of tell other we fact indications the half what XX% I this fact on we the the that. even to cetera. are had in look being action XXXX some we before believe never saying take that clients the season. for Progyny, had still XX continue macroeconomic whether And what number can't I it's really remarks, recently. that long et at what that, know, fact half in that form selling clients the And as out conserves benefit XXXX, year selling sold benefit I you people why comment we sold is continue season up on. of year, XX, acknowledge, could and it's the it's whether from a which and and to is even they've are benefit the some is in recognize there if for Swiss of look we been the from for, that's tight our will that expansion successful companies a because that labor prepared had of a that, headlines all with beyond the All

they're eliminating even from appear realize certainly about they So something be choices. be they're smart importers may this benefit but doesn't to do concerns, that their that those some to what of adding have doing, with

won And landscape. rate large if wins you not know was reasons. general guys season, spread -- mentioned you Great, were selective some wins, my of have win if focus specifically, some some been There that's just quick guys competitors. have you your being helpful. some which that you in competitive the did area. RFPs? But your pretty client Or what not by on kind a there fit then of grow not been has things in employee with follow-up selling your the good. -- of I were have the client -- you to Were in

Just in trying you different years understand clients. of those terms any the from reasons getting to prior not

be in Sure. that There's offer get a of us everything benefit the to maxes, say for everything dollar I right? geo of that medical restrictions So spend of various from we'll want et be treatment different cetera. of that in the lot is that networks, times, reason would any will a don't want would added, that the being a terms terms necessity in access, as from exclusions, everything way certain on reasons narrow common certain be from would most view why amount prospects comprehensive will limitations we benefit, to they money

make it cases, those as potentially benefit of comprehensive it right, And a that so an benefit, in things inequitable benefit not opinion. both well in our as a could make many all be

clients best them our to when and many it we convince the the view, times we to benefit to so benefit. do in way do that a from right asked to the way do And point way talk try believe is of different we're the and

sometimes, And we sometimes agree to don't. them and the time, we of get most

So, the common I most say that's would why. reason probably

lot. a Thanks Great.

Thank you.

from from coming Scott is question KeyBanc. Schoenhaus next Your

live. is line Your

the on new Congrats quarter and strong client wins. Thanks.

the launching members with would services? given fourth clients number forward rather a pull be utilization up tick with the quarter, levels Jan the abnormal which X, curious, as ramp we record Just early seasonally of in than see new should

growth impact is where of The see part been have topline, didn't revenue Menopur of would if sequential the we utilization seen level that's would overall on have bigger, wouldn't and levels, the it. tick why impact -- quantify the a you utilization that up we the have you in

of go and have going what moment, themselves that's the your to have in is management. But overall under certainly, So, lives as up, if function answers go volume management number percent question. utilization because if you as more you're under that utilization about up hope a a cycles that think of a you levels the lives asking. wouldn't you the I

Yes, then that does. And question. that takes me to my next

or your basis seasonality Menopur the rating there's towards from this alternative annual for realizing XX% moving in disruption quarter-to-quarter business an around run run rate moving and on So, distribution is the a annually EBITDA from an does perspective. forward margin medications. fair

like you mentioned to there impact Thanks. structure unit I additional cost these but any having procure the alternatives. think with pricing economics, is lower

is of will structure my cost I small last. gave again, view which point a how in There's why long-term I think to disruption. I don't terms be back you Yes. long will this But this impact. my remarks, go of think a if

what then wouldn't about I an this a of bump long-term is part so question. I And first don't a contribution. short-term about think think as margin let relative a And I on your -- the I'll -- issue basis. short-term, I wouldn't to Mark It ask would call

Yes.

being So, we've you this indicator to we're as last several point caution we generating maybe be but the the of of as margin, revenue also each a -- I margin careful. incremental that think the quarter sort in EBITDA of to quarter-to-quarter obviously, the of better well, would always on longer-term I sort quarters

sort what's of look at interpret and guidance, I year full think you our there. if

for sort You're and place this percentage upper year. better looking or probably to probably little that a area a bit mid is And maybe in be. so at XX of to that that's

you. Thank

Santangelo Jefferies. is coming question Glen from next from Your

live. line Your is

sort just made Hey overall to Pete, to of penetration. want Yes. respect comments on I Thanks. some follow-up with you

the you prepared great substantially I of I this season. think big sort of in sustainability clearly, you selling from your market of what's get had mean the growth. a type remarks, remains underpenetrated. is, investors we said But question a

those self-insured where wondering the represent And penetration put penetration? are that like how extent maybe that if to of think us? can like you lives could you How many that, out maybe there? around point comments so terms a on was statistics finer Any give in you many I of clients sort we you does are think

Sure.

there's an a we X.X of XX market X,XXX we addressable referenced buckets that the If that of there's of represent self-insured just roughly Then terms additional the U.S. that the covered one market in lives, is amongst XX from some self-insured of in companies labor are other next -- idea XXX year. whole sort labor across covered that million, that the penetrate the market, you and million there's talk year, -- roughly numbers started are million so we couple market right? look in the the clients sort this we -- And are roughly large to of all there's types million that about, additional that's a penetrated corporate of that an quoted, at XX most lives. We're U.S. different lives

benefit that the we And we covered their so years now, didn't a universe. last win cover with that form, is, we the as all. piece traditional talk in win benefit year, already primarily each of penetration, that covered two talk a when half current companies well some -- low we to significant number half about carrier almost we're and the last at referring about And as clients significant of number as

related or doing declining. the departments it's really the their the opinion, of benefit, and to for we And continue that it's millennials been reinforce our very early continued push will need and finally are is they the don't overall and combination believe at are or all this and the are have of which HR folks benefit and belief for the the the whether U.S., low the declining penetration get that and have I opinion all for their of of awareness demand continue. continues trend my why be in the around things about in That's terms not the have those covered success fertility benefit that they amongst that in and getting so it continue whether at to they still it grows. asking going to growth why is consider to reason our And market. And which we're

ability some day seeding and are coming ask the wins X,XXX That's lives one really wakes I are guess, these one those what large that already helpful. Because lives in managed have of from And some by investors these players. just those white statistics. care covered your I that stop employers, million space the on carriers. maybe some and idea some covered place? Any have clearly Maybe of from you type that lives. to said I concern major the follow-up XX percentage at pure-play up benefit of there's mean ultimately

trying market And so really like what's Thanks. really to people are understand just the opportunity.

Yes.

second first the hit easy. because I'll your it's it's part me the Let question of first. Well, part, do

relates let's any see their the to the So amongst the right? larger to in relates largest As the any in was first, So, around that plans, health was didn't right? only trying year of the one plans anything the situation. year based first there, benefit by it As on our part studies that question? offering what we with this change health interestingly enough, of do past competitive -- interacted start employers XX% that in the sons to cover form, this benefit are out

if So any of aware anything, weren't did it. we

or any space. fertility year solutions There first any the where -- of ASO be had is the the that, and some there competitively. give is financial didn't some didn't benefit, often doing or for new don't mean, for I have programs years, This to my them and from that certain are that of carriers activity see and try feature to things to not. changes the benefit this them out how but offer that doing. and sort in And the or they're when health this have reason see large together benefit carriers. years, name we marketing incentive to try we model in that together past, plans lot say carriers of solution the of to large around So some compete what In larger the down marketing been they're put that belief a already tried any create their doesn't prior some make to up I administering the to continues has of the put

focused much have seem on changing don't they overall landscape they this fish you and bigger benefit. their that will, in -- fry, the approach if so be And to around healthcare to that

Super helpful. Thanks lot. a

you. Thank

Your Barclays. James from next question is from Sarah coming

live. is line Your

could hoping out Thank in of I was pharmacy guys you rebate timing negotiations rolling touch the on you. the practice.

much So that's would the It did get impact some we annualized be any And or on color fully they or DSO? on having ramped. go-forward EBITDA EBITDA? helpful impact sequential an how it when margin if be have will XXXX could on

talking growing. as have we about will always impact the impact it to are you're an flows, If cash

So related year-over-year payment sense because the sequentially drag and that will XXX-day payment the to that cash we're flows continue are quarters, growing in to terms. terms

year Our current timing our start. agreement the the can't comment XXXX another has of there's negotiations of on I year it. through But when the end under will current another in arrangement.

the no associated ramp really part from the of our But will, if is guidance. effectively exist of and There's within getting and with our of it results of faithfully, way, operating flow just an we've standpoint, that arrangements EBITDA you no months. all delay receipt pretty money because the the couple between and quarters of six a this there's the been just And comes part impact later. It's earning of year. up, by cash

was favorable Yes, it. more worried wasn't I term to just the cash tied for-- it collection. was Got negotiation I thought about a

are effect going said, it's sequential the terms to there through full are in the end a arrangement the Mark of and year, XXXX. As no terms, X-year

then Okay. your sales guys as on high your leverageable. and really sales your it team I have unpack I retention. to And is the Good. strategy? wanted comments relates marketing expense go-to-market to You know

increased health strategic that should just men's think Is go-to-market like how should strategy? expansions Or middle that market? you're thinking for an indication how or funding read of that we change? So we about

standing few expansion. that upsells talked from existing our but I benefit, up the had A mean is about couple positive Canadian We our in of right? of market. things, Some small upsells, clients a

in it. of investing Canada part in the strategy is go-to-market So

go-to-market. effort. develop continuing And partners distribution partners, continue then is our to some sales the it capabilities going channel just need all perspective need function that's require Some clients terms marketing and all a marketing you take They you of different of grow, your support do your investment. it and as those across support is members all to for -- and things those to in the rest of bigger and and to things of to from a providers also

you. Thank

Securities. Thank Stephanie from you. [Operator Instructions] Your next question Davis from SVB is coming

Your line live. is

Hey an quarter. guys. Congrats awesome on

Thank you.

question have for I a you.

quarters. You drugs then and EBITDA you're putting Cetrotide keep talking about shortages in and formulary Menopur on up like record

a way margins? headwinds? as to could rate margins should Or all likely didn't there out these if have you is we So tie peak cite like that and think your look what of this

clarify of October. just literally timing the It Manipur Let the me happened so just of end shortage. now,

And relative so the third impact impact of it to it, didn't right? the results quarter

right? Cetrotide,

sorry? I'm

well. The there as Cetrotide was

negligible full think shortage. I quarter the -- Cetrotide, for

meaningful, the nothing okay. was to not So were a quarter, sort of There bit, of much little but for most part, the most quantify. we

It in was our anticipated guidance.

in Yes, our was it guidance. anticipated and

in the impact drugs They top formulary the drugs. So the way. in nature, and But the quantify shortages the that it the end material of the not the as time time. And impacting happen are really a line I to basis guidance, or majority they're on There is you these are the with aren't from in to terms to always of time is been of of bigger instructive a at spent, all is have some that short-term drugs think in impact that margins. obviously doing an but see it's is the replacement day, quarters. don't But the don't Menopur, on extent going it, short-term most Shortages of impact. on the because could of happen formulary. on significant most are I

think versus have about but then Understood. someone question what a cohort of point? now of not the more it this the way any benefit new there me. would And Is to the to housekeeping non, drive had at that pharma to mix

up ever. to highest our the is news of good the clients, pharma So XX% few. terms new very were of uptake in We're of there

I think last XX% or something.

XX%, XX%, yes.

taking been very close our to we is and the But as clients why to same be clients on, the usually whatever and going There that whatever take on are both existing side. always represents priorities at reason. new has That's included prior it don't side, represents don't entire perform two continue I times are decision-makers reason that to impact. both XX%, to the years, uptake there but common XXX%. one reason that other that continues grow. believe XX%, but the with certainly most the for on it buy clients because don't benefit benefit, and pharmacy. medical in and side the to there's at the as clients That's pharmacy show one relative take few why the that extent the pharmacy may aren't

opportunity of to we expand top? this of that? kind -- an Or should is So, this the as is still think into nearing there

an of to of win versus There's opportunity in upsells. Last the amount and growth positive to a expand always -- -- opportunity, lot it's in We them success impact present year, a always it continue a it. the evidenced was this a year. Rx little in the all. Medical significant significant We we There growth more more there's to program our bit and had hope this to by clients opportunity had going with project year. pharmacy our existing again. had the We'll

Awesome. Thank you guys.

Thank you.

you. Thank

from Berenberg. coming next from is Your Deb Weerasuriya

live. Your line is

flat pretty a QX question some One, my point kind just the selling which after force of looking to further accelerate taking season. client sales lives the together, about added memorized, indications Good guess, thing heading because kind so of year-over-year just years. from member season, early I the needed, there already. the selling penetration of penetration next still quarter were to is as relatively a at with of is there's live you if And at for things the I that someone kind market is all context terms expect this penetration, kind you of that's through I've it's the of couple thank little. year, given then last year further of into kind expansion in it's talked maybe to put or other the a of think ads would and all you mentioned Hey lives macro good here around that been some this sales I X.X want you few Do early. softness still line look to then if and million think, a sitting and is effort this just in drive member you for although slightly

bridge that gap. you. Just trying to Thank

Yes.

One Here's is a There's the is for how I reasons I some can't the macro would frame it, lives and impact. to environment year-over-year quantify it you. have has two perspective, why from flat.

think greater that. not now suggest I the

And thing thing, clients literally, of it. we that of to a of that and certainly that nobody is heard right? again, or had prospective But budgets sort because mentioned many, and a kind one that two so as we quantify else. concern, hard many from

anecdotally, view I not So as systematic. that

how COVID ever could although by any if muted workforce. year, were selling many and their of of The that, is by recall, during not dealing make to much season season they a companies impact their benefits you to we XXXX that because terms quantify the XXXX's reason chose the because year's selling take second changes with the benefit, for did last in from remote employees

So if just really -- me, you let my sort a look excuse the throat clear for second. me of at

XXXX and last year that considering from sales expected you maybe the of COVID, because XXXX benefited wait and as we would little view result low more as have you really some season. selling bit growth into average the at a look year's this two growth You years a that overhang

came So accounts still base they're success two. lives exiting the I year of base a of with. But would overall, combination lives say the it's the the relative the year with and we of to significant and into

acceleration from guess comfortable commercial Okay, competitive is kind being on I certainly you about some like to question low, terms the From looks it the putting growth thinking helpful. could that startups with you're you that's love are get beneficial? the I scale? market. into be in just your little just helpful. both do would of presence. on to more Again, with penetration engine the that next how of standpoint, of a commercial be a what get context following standpoint thoughts in up well-funded current market just Or would coming feel it's bit a

And year. investments. on the make Sure. year, sales Every we reflect year, we every

the how relative with Some to and sales specific organized, partners, including I street mentioned next be in et of our work our is including different. marketing them those selling we make strategy, invest it's no this to will feet for cetera. on to year force, go-to-market We'll both already This and relative different. the they no investments channel continue year and how season,

so And how et year, approach in the And the smarter so be get already to no that cetera. in we the year will year -- and that and changes every hiring market, for different. selling smarter of next investing prepared get market we're we anything process season. And at we're and this

questions. for taking my Thanks Great.

Hart ahead. Q&A Please concludes to go the session. That back remarks. you. Thank for James I will our now conference hand closing

everyone, thank and joining Matthew, this afternoon. you, for you, us Thank

out. any reach free have you to If feel questions,

all how Talk you next quarter. You us. so know to you to Thank reach much.

gentlemen. Thank you, does conclude event. and ladies This today's

a and for wonderful day. at have disconnect may participation. this you Thank You your time