As Infertility Increases, So Does Progyny’s Stock.
Infertility is an increasingly common issue that makes Progyny’s stock a wise buy. According to the Centers for Disease Control and Prevention, about 19 percent of women aged 15 to 49 are impacted by infertility. The recent pattern of women deciding to have children later in life contributed to increased fertility problems; women aged 35 and up accounted for 19 percent of all births in the United States in 2019, up from 14 percent in 2000. As a result, more women are resorting to “assisted reproductive technology,” which has dramatically increased in availability. According to Barclays, the number of reproductive methods and treatments has increased at a projected annual rate of 26 percent each year since 2017 and is expected to continue through the end of the decade.
With coverage of fertility health care limited to standard health-insurance plans, Progyny’s business has exploded, with the number of agencies presently offering its services more than doubling in the past years. Progyny’s services, too, are rapidly developing. The $3.8 billion company buys services from clinics and sells low-cost plans to charities that want to help people with infertility. Employers are also turning to Progyny more, although they do not supply the company’s services out of a sense of altruism — better benefits are a crucial tool in maintaining employee satisfaction. According to a Barclays poll, many businesses have concluded that not providing such coverage may be considered discriminatory. Progyny, unlike most other health plan providers, offers effective solutions to this problem.
But Progyny hasn’t had it easy with Covid. Restricting the use of its products resulted in a profit of $500.6 million in 2021, $7.7 million short of expert projections. Progyny’s utilization charge — the proportion of clients who used a complete Smart Cycle, or one cycle of treatment — became 0.46 percent in the fourth quarter of 2021. According to Dev Weerasuriya, an economist at Berenberg, the moderate leave outweighed the revenue gap. What kept the stock back was the quarterly variations in utilization, he says.
Nonetheless, income increased by 45 percent from 2020, and analysts predict that growth will continue to be strong in 2022 and 2024, with respective 50 percent growth and 39 percent. Given the charge at which Progyny has been including users, this makes sense. Many analysts predict a usage charge of around 0.5 percent and a Smart Cycle average cost of around $20,000. Taken together, these figures suggest a total addressable market of little over $7 billion each year. Stephanie Davis of SVB Leerink uses similar numbers to estimate the market at $6.7 billion rapidly but acknowledges that this number could underestimate the true value.
Over time, Progyny plans to minimize sales and advertising expenses as a percentage of revenue. It may also increase customer capacity, after receiving requests to hire as many care coordinators as possible. As a result, EBITDA margins are expected to rise above 15 percent in 2025, up from around 13 percent in 2021. According to FactSet, earnings per share are expected to rise from $0.66 in 2021 to $2.49 in 2025.
“PGNY’s growth profile is unrivaled”, says Anne Samuel of J.P. Morgan. These expectations should aid in the development of the inventory’s valuation.