Q4 2019 Earnings Call
so we are pleased with how
20 has begun start to any year is particularly important to us because our model is somewhat unusual and that we don't grow ratably throughout the year instead. We experienced a step-function increase on each January 1st, which was which is when most of our newest clients go live with their programs, we our service business, which means we carefully plan and prepare for our growth so that our existing customers don't experience with a munition in the quality of their service while our new customers experience a seamless onboarding we identify the incremental resources that we need and hire and train those resources well in advance of the new calendar years or Patient Care Advocates, which we refer to as our pcas are a good example of this approach pca's are the dedicated first point of contact for our members and are integral to our concierge member expire.
Even though has come to progeny with extensive industry backgrounds often as fertility nurses or clinical workers knew as undergo an extensive months-long training Curriculum overseen by our in-house clinical staff. I'm very pleased to report that we have successfully launched 53 of the 57 new clients that we sold during the 2019 selling season and the remaining four are expected to launch beginning. In fact, we participated in over 300 open enrollment events with our clients educating members on their new benefits and answering their questions ahead of their go live date or new plan year. We added the phone lines while continuing to maintain or even improve our service levels. For example over the first eight weeks of the year. We improved our overall PCA call response time while also increasing our end Thursday or as compared to the same eight week period from 2019, we believe that our ability to achieve such high quality financial and operational results over a sustained period of time demonstrates wage.
Only our strengths is a company.
But also are competitive differentiation.
For the benefit of those of you joining us today who are somewhat newer to progeny. I'll spend a few moments describing our strengths and areas of differentiation first. We are a leader in a large growing and under-penetrated Market off the market for for fertility benefit Solutions is large because infertility is a common health condition recognized by the World Health Organization and the American Medical Association has a disease and fertility effects Monday couples, which means it's more prevalent than other common conditions such as diabetes or asthma based on the most recent data published by the CDC the market for assisted reproductive technology in the United States is at least six point seven billion dollars. However, we believe the actual Market may be more than twice as large because approximately half the people who require treatment don't get it because they can't afford it. The demands facility treatment in the u.s. Is growing at a double-digit rate driven not only by its prevalence, but also by certain societal trends
Couples are waiting longer than ever to have children, even though the biological clock is real and a woman's egg quality and quantity to climb of age.
There is also growth in non-traditional path to Parenthood such as lgbtq couples and single parents by choice who need fertility services in order to have their families progeny offers to self-insured employers a fully carved out fertility benefit solution for their employees and their spouses or Partners. There are approximately 8,000 large self-insured Employers in the US representing $69 million covered lives and we are in the very early stages of addressing this Market our clients and covered lives today reflect just a two to three percent penetration rate. And so we believe there's substantial room for us to continue to grow in just our core Market of these eight thousand employers. We also see opportunities to expand into other types of clients such as governmental employees unions universities small fully insured groups wage, which would provide us with additional Room to Grow beyond the 8,000 self-insured employers Beyond participating in a large and growing Market progenies is unique and that we have been consistently generated clinical outcomes.
That far exceed National averages. These outcomes have been essential and driving our growth. The pregnancy rate for our members is higher and our miscarriage rate is lower than National averages as a result. We had 26% higher live birth rate than that than the average results reported by all the fertility clinics in the country. We also have a much higher rate of single embryo transfers in the national average which helps with the 78% reduction in our rate of multiple births multiple births are the leading cause of preterm and preterm births drive drive higher NICU and maternity costs.
We've been able.
To produce these materially better results in part because unlike the traditional Health Plan model, which is focused on limiting the utilization of services or program design was built to create better outcomes and deliver value. She remembers doctors and clients for members. We provide an extraordinarily high level of support and guidance. Our members are educated about their treatment options and are given the emotional support. They need when making decisions about the best course of care or core belief is that an educated and supported patient makes better treatment decisions are Benefit Plan provides comprehensive access to the latest Technologies and procedures when fertility Specialists have all the necessary tools available and is supported patient also have coverage that also has coverage for a full treatment event without mandated treatment protocols or dollar based liquidations. That doctor is empowered to provide the best course of treatment given the unique needs of that patient and doesn't have to make compromises in care. We also engage in extensive data analysis and sharing with our Network off.
To optimize their performance for our employer clients are better outcomes mean they spend less to provide fertility coverage that our Workforce with a higher live. Birth rate employees are getting pregnant.
If you were treatment Cycles, this means employers fund fewer rounds of treatment with with less multiple births and employers spend significantly Less on the high cost of preterm births in the short term includes cost for C-sections and Nick you expenses in the longer-term. This includes the ongoing care costs for The Chronic health conditions that preterm babies often suffer from the unique benefits of our solution or reflected in our expanding base of Diversified clients leading Brands around the world are choosing to work with progeny because of better outcomes. We generate Superior member experience. We provide to them overall savings we create for them.
Increasingly employers are recognizing that their health benefits plan needs to cover infertility to be competitive because infertility is a common medical condition given how expensive infertility just to treat without coverage many of those affected by it won't be able to pursue treatment. And so employers are demanding coverage Millennial employees who are making up an increasingly larger percentage of the workforce frequently cite the availability of fertility coverage as a primary reason, they want to work for or stay with a company in addition from the employer's perspective providing fertility coverage is the wrong thing to do because fertility treatments are uniquely experienced by women and failing to provide coverage makes a statement to the female Workforce that somehow they matter less.
providing fertility coverage on the other hand makes a
Positive cultural statement that an employer values their female employees and diversity in general. Currently. We work with 132 of the world's best companies representing a broad cross-section of 25 different countries. There were early as cohort of customers came primarily from the tech sector the substantial majority of the clients added in our most recent selling season came from other areas of the economy, including media manufacturing food and beverage pharmaceutical consumer packaged Goods energy retail and financial services this increasing diversity in the customer base. Not only demonstrates that choice is a human health issue is a universal health issue, but that providing coverage is relevant to every employer in every industry.
2019 was the fourth straight year where we added more clients and more covered lives than we did in the prior-year this highlights the growing willingness by employers either to begin with provide coverage or to expand their existing coverage in all cases where the client had been providing subcover some coverage prior to progeny. They were working with their carrier and while the carrier remains our principal competition. We have established several distinct sustainable competitive advantages. The first element of our competitive mode is that we have focused exclusively on optimizing fertility benefit solutions for five years and have developed a substantial amount of insight and expertise during this time. We've also made significant investments in our platform and systems and we believe it would take either a new entrant or an existing compact or even one with substantial resources a considerable amount of time to catch up to where we are today. However, and that time progeny will continue to develop and move forward next. We are the only organization
this collecting and tracking
Comprehensive treatment data and clinical outcomes in real time this lets us uniquely demonstrate our value to clients by showing the tangible ways in which they're spending on fertility with progeny is more cost efficient with their Alternatives as well as the direct impact of it is having on their Workforce through the birth of Healthy Babies.
As I mentioned earlier, we also utilize our clinical data to help optimize our Network Physicians performance. We do this through the creation of quarterly Clinic specific scorecards that we share with our physicians and that helping us along here. It's the best practices and outcomes this process facilitates a collaborative relationship with the doctors and our Network. We monitor the approximately eight hundred doctors in our network using this data ensuring that our phone numbers are receiving the best care but the doctors also benefit from this data considerably our Clinic scorecards include hundreds of data points and compare each practices performance the progeny Network as a whole this Insight allows Physicians to identify ways to improve their practices this collaborative relationship. Another one of our unique advantages is one of the reasons why the prestigious practices the ones that page really want to be able to see our in our Network even if many of them won't work with the traditional carriers, in fact about 30% of the doctors in our Network either won't work with commercial carriers or only work with Jose.
other carrier additionally
In building our Network, we have benefited from our leadership position and extensive client relationships. In order in order to attract the best doctors to join your network. You need to be able to provide to them with them to provide them with patient volume. But in order to have patient volume by effectively selling new employer clients, you need to be able to provide access to the best Doctors Without a comprehensive Network startup competitor. I can't support a client who has employees located across the country and who expects to provide equal access to care for all of those employees as well as providing employees multiple choices in selecting their provider.
Another Advantage we have is that we are integrated with more than two dozen carriers, including all the National Carriers. This allows our benefits to be provided on a pre-tax basis. We've built these relationships and integration solution over the last four years through these Integrations. We are able to deploy our solution as part of the company's overall health plan. This means the expenses and member incurs for fertility Services as they roam the co-pays deductibles and annual out-of-pocket maximums aren't treated any differently than if that member went to the doctor for any other health issue back startups competing in this page are not integrated with the carriers without carrier Integrations, the fertility benefits provided by these vc-backed startups are not part of the health plan and the program essentially becomes and post tax reimbursement plan off the employees going to pay income tax on the amount of the reimbursement. This is obviously a very different type of benefit and one that unfortunately puts the calculator back into the hands of the employee when treatment decisions are being dead.
We believe a combination of all these strengths are large growing and underpenetrated Market are differentiated model that drives Superior outcomes or expanding base of diversity.
Clients and are sustainable competitive differentiators has driven our past performance and we'll continue to fuel our growth in the future as we look ahead to 2020 are selling season for our 20 21 Club is that it's very earliest stages at this time of year. HR managers are focused on ensuring that the benefits they just launched on January 1st are fully optimized and they won't be making decisions about new programs are a few months. Typically we've seen most new clients make decisions on new benefit programs at the end of the summer or or the early fall over the next few months. We are scheduled to participate in Industry events Health Care forums and workshops as well as in meetings with potential new clients introducing ourselves building awareness and surfacing the importance of providing coverage for infertility will provide you with updates on the selling season on future calls now, I'll turn the call over to Pete to walk you through the financials in Greater detail. Thanks David. I'll be by walking you through the drivers for our for Thursday.
Full-year results and then share our expectations for the first quarter and full-year 2020 revenue of 65.1 million in the fourth quarter increased 123% as compared to age twenty nine point two million in the fourth quarter last year and was in line with our guidance for the full year revenue of 229.7 million increased 118% from 2018, the components of Revenue fertility benefits Revenue increased 93% from 27.8 million in the fourth quarter last year 253.5 million in the current.
over the school year
EBenefits Revenue increased 90% to 189.6 million the growth infertility benefits Revenue in both periods was driven by the higher number of clients and covered lives Pharmacy Revenue increased from 1.4 million in the fourth quarter last year to 11.6 million in the current. Over the full-year pharmacy Revenue increased more than 7 x from the prior-year to 46.1 million our growth in Pharmacy Revenue in both periods was driven by the higher number of clients in private lives that growth outpaced fertility benefits Revenue due to the fact that the first time in the RX was available for the full selling season was 2018.
Our Revenue in both the quarter and year 2019 benefited from having RX available for the entire 2018 selling season as RX was sold into significantly more accounts both new and existing. Is it the end of the fourth quarter? We had 87 clients representing 1.5 million covered lives. This compares to thirty three clients and a $720,000 members as of the end of last year.
turns where you
Asian rates there were three thousand seven hundred eighty two are Cycles performed in the quarter, which is 85% higher than the psychos performed a year ago our porting of our Cycles reflect IVF treatments and embryo transfers an egg freezing and it's consistent with the CDC reporting methodology.
A female utilization rate which is the more relevant utilization rate metric because our revenues driven principally from our female members was 4% this quarter compared to 45% a year.
Utilization rates will vary from quarter-to-quarter due to a number of factors which include the timing of when new clients go live the time of the year and the demographic mix of the newest clients wage for the full year are female utilization rate was 1.09% which compared to 1.02% in 2018.
Turning out of our margins gross profit of 11.8 million in the fourth quarter increased 117% from the 5.4 million reported a year ago our gross margin of 18.1% this quarter reflect a decrease the fifty basis points from the fourth quarter last year due primarily to the timing of headcount that was added to support the record number of new clients that launched on one with David described earlier.
for the full year
Gross profit of 45.5 million increased 134% from 2018 a gross margin of 19.8% for the full year reflected an increase of 140 basis points from the 18.4% gross margin in 2018 few primarily to achieving economies of scale as we continue to expand our business.
Turning to our operating expenses sales and marketing was 5% of Revenue this quarter and Improvement of 230 basis points over the prior year for the year sales and marketing was 5.2% of Revenue off of 170 basis points from 2018.
Improvements in sales and marketing and just the fact that our customer acquisition costs are primarily incurred in the first year and to a lesser extent the second year of going live with a new client with our page one hundred percent client retention rate. We benefit from this leverage in sales and marketing G&A costs were 11.3% of Revenue in the fourth quarter and Improvement of 230 basis points from the wage order for the full-year GNA was 10.4% of Revenue and Improvement 480 basis points from 2018.
Reflect the leverage. We realize as we build out our back office and support functions and apply these efficiencies over a larger base of bread.
With our improve margins adjusted ebitda increase substantially from five million in the fourth quarter last year to three point nine million in the current quarter for the year adjusted ebitda increase from 1.5 million in 2018 to 18.3 million in 2019, while our adjusted ebitda margin for 2019 was 8% The adjusted ebitda margins on our incremental Revenue was 13.6% in 2019 demonstrating our ability to achieve economies of scale across our entire business.
That was attributable to Common stockholders was 4.4 million or 7 cents per share in the fourth quarter was compared to a net loss of 1.6 million or 31 cents per share in the prior-year.
2019 that was attributable to Common stockholders was eight point six million or $0.41 per share which compared to a net loss of 5.5 million or a dollar per share in 2018, Please lost in both the quarter and the year was attributable to the non-cash charges. We previously disclosed that are associated with the valuation of the outstanding convertible preferred stock warrants, which were required to be wrong. As previously disclosed those charges were 5.8 million in the fourth quarter and 18.2 million and 2019. According to our networking per share as adjusted was dead one penny in the quarter and $0.11 for the year and was consistent with our guidance.
It's important to note that.
With the conversion of these warrants in the IPL in the fourth quarter, we will no longer incur any additional charges for this remeasurement.
Turning now to our balance sheet and cash flow with the proceeds from the IPO. We close the year with a 2.4 million of cash and cash equivalents on the balance sheet cash used in operations was five point five million this quarter long as compared to cash provided by operations a four point 1 million a year ago. Cash used in operations. This quarter is primarily attributable to the payment of approximately 4 and 1/2 million for a New Jersey. Do you know insurance for the first time as a public company in Q4 additionally, the timing of payments to Providers developed a collection of our rebate receivable which came in after year-end negatively impact of cash flow in the quarter. We expect these timing items will favorably impact cash flow from operations in in the first quarter of 2020.
I close my remarks with the expectations for q1 and the full year twenty-twenty for the full year. We expect revenue of between 395 million and 415 million off road to between 72 and 81% We expect full-year adjusted ebitda between 41.7 million to 45.3 million reflecting the continued expansion of our margins month. We expect EPS to be between $30.34 on the basis of approximately $100 million shares.
For the first quarter, we are projecting revenue between $89 and $94 million reflecting growth in between 89 and 99% as well as adjusted ebitda between 8.4 to 9.5 million. We expect EPS between five and six cents per share again on the basis of approximately 100 million shares.
David said earlier these ranges are based on our historical utilization patterns and do not reflect any potential impact due to the coronavirus. We haven't seen any impact will continue to monitor the situation be prepared to take any update on our next quarter's call with that. We like to open up the call for your questions now operator. Thank you. We will now begin the question-and-answer session to ask a question. You may press * then one on your telephone keypad. If you're using a speaker phone, please pick up your handset before pressing the keys to withdraw your question, please press * then two at this time. We will pause momentarily to assemble our roster.
And the first question will be from in Samuel with JPMorgan, please go ahead.
Hi guys, congrats on the next quarter and thanks for taking the question. Thank you. Thanks an sure. I was hoping if you could speak to how utilization is trying to historically, you know, relative to the four whole months of the year and what level of visibility you have, you know kind of based on that into the guidance at this stage. If you looked at quarterly utilization year-over-year those patterns generally trans pretty close. If you look across the business in terms of seasonal quarters in terms of the patterns that we see and how they perform guidance. We not only use the what we're seeing early in the year. So for the first let's call it eight weeks of of twenty-twenty, but we also use historical utilization as it relates to our existing client base to inform our guidance from not only for the upcoming quarter, but for the full year
Great. Thanks. And then we'll lock expiring soon. Have you had any conversations or updates from your larger shareholders around the
Lance hi, Lance David. Yeah, so the lock-up expires on April 21st. So the first trading day will be on the 22nd or largest shareholders are Kleiner Perkins and faith in each firm has put in place a multi-year 10 B5 plan that contemplates a thoughtful approach to you know, reducing their, you know large Equity Holdings off.
With respect to you know with respect to management, you know and I are in discussions with our our tax and financial advisors and also anticipate putting a plan in place in a future that similar to our large holders would also contemplate a thoughtful long-term approach to are concentrated Equity Holdings, but you know, like a typical typical executive plan any plan that we would put in place would often contemplate smelly selling a relatively small portion of our Holdings in any given Year great. Thanks very much. The other thing I did and and is that you know, we do have a bunch of other long-term, you know shareholders that are smaller and with respect to those shareholders, you know, if the if market conditions allowed we would contemplate doing a follow on to help them get more orderly fashion, but I think we all see the Market's been a bit volatile so that will something that will monitor as time progresses.
Thank you.
The next question will be from Michael Cherney with Bank of America, please go ahead afternoon. And thanks so much for taking the question maybe start, you know, Dave you mentioned about the guidance and not have any any impact on coronavirus. You know, I think in the time that product has been around clearly has been no instance where anything of similarity but is there anything that with your provider's that your doctors have seen the past in terms of how you'll see any fluctuation volatility if there is some type of impact and I'm thinking on a much smaller scale, but any local dynamics of snow storm like that and and how long they could see some disruption in the event that things get a little Haywire. I know it might not be the best choral area, but at least if there's any type of timing related volatility and utilization that we have seen in the past if there's any corollary we can look at here.
Well, so the first thing I would tell you Mike is that we spoken to a number of doctors in our Network. And as of now, they're not seeing any any strange patterns with respect to cancellations or you know changes in scheduled appointment volumes et cetera. So they're seeing normal activity. And by the way, we're we're also seeing amongst our members normal activity. Obviously, if any particular, you know geography has uh, you know, the local Health authorities tell people to stay home. Obviously that could have a temporary impact with respect to people getting treatment, you know about geography in the past whether you know, when there's been other, you know issues like, you know, the SARS outbreak or something people in the you know, when the when the acute issue has has has resolved itself people continue to get treatment because obviously it was still the time for them to have a child then all their you know, personal financial a, New Jersey.
You know professional.
You know issues were you know were pointing to that being the right time to have a child? So so again, you know where you know, we we're not seeing anything. Now the doctors aren't seeing anything now home. And again, you know people people have a child when it's the right time for them. The other thing I would add is that you know, most fertility clinics are not located in hospitals. They are private clinics. So when our members are receiving treatment, they don't have to go to a hospital where they may have concerns about other sick people being there. Let me just add one more thing that might when we look back at when when the SARS, um, hit the wrong if it was 2012-2013, you know middle 2012 through early 2013 and you look at the CDC data and the number of Cycles oddly enough and those two years versus two prior years, you know cycle is actually grew in the US didn't decline. So if that's another indicator that that, you know, something like that, I don't know if that it's exactly similar to thrown a virus but something wage
Widespread didn't have it in.
Pack relatives just overall Cycles. That's the only other thing that we could we could point you to just sort of read tea leaves if you will in terms of what's happening or may not be happening.
You know appreciate that. I know this is a very fluid situation. So the color is definitely helpful and then shifting gears a little bit, you know as you wrap up, you know the end of the year you move forward with the 20 21 selling the one of the things I know that you've discussed in the past is the the viability and the strength of your sales force you maybe talk about how the sales message continues to evolve as you should have more and more customers are particularly customers coming from such a wider degree of various different sub-sectors how that changes or augments or expands the sales strategy and especially with some of the history of Iraq having progeny RX now for a more run rate period of time, I guess just thinking about how the sales force goes to Market and what's evolved over the last couple of years as your business has shot up, you know in growth rate pretty quiet. Well, look, I I think that, you know, given that a lot of our values based upon the outcomes we generate and as we've had as as we've had more and more companies more and more covered lives in
members and companies from
From varying Industries and geographies it it certainly reinforces the message and uh and provides, you know, additional evidence that our value proposition really applies across again all different types of Industries all different types of employers all different types of geographies. So again, it's you know, what we're seeing the growth of our business just reinforces all those messages, but it's largely the same value message that you know, we've been talking about and that, you know, you're you're you're certainly familiar with so again, um, you know, it's more validation for why or a program is better y provides employers and more cost-effective solution y employees continue to have a better experience and you know, and as we evolve as a company and have more experience, you know, we took we can actually improve the employee experience. So again, just more reinforcing of this of many of the same same same messages. Now, the other thing is, you know, when you go out and sell a large employers, they're always interested to know. Yep.
Also has the benefit and who else are you serving and the more companies that you work with the more quote unquote reference account?
You have so that they get more comfortable to benefit. They also, you know, they also are looking to remain competitive with each other and in their in their industry with respect to the you know, the real life of their benefits. So again, there is this kind of network effect that we've talked about before within an industry where you know, you sell a few a few Employers in those in those Industries other Employers in the same industry are looking to have similar benefits. Um, and you know, the the last thing I would say is that, you know, the, you know, the adoption of progeny RX continues to be strong and you know, and you know, I think we've we've watched as you know, 75% of new customers take take the benefit when they first sign up we've had, you know good success up selling those customers. And again, it's more validation of others doing what you may be considering doing as a potential as a potential buyer of our services.
Excellent. Thank so much.
The next question will be from Sarah James with Piper Sandler, please. Go ahead.
Thank you. And I apologize. If there's a little overlap. I have some technical difficulties in the beginning of the Q&A. But 20/20 guide is better than we expected and I'm hoping to understand a little more off of the assumptions going into Revenue guidance. So any change on utilization or client size there then I know some of your customers we had talked about putting off the off decision while they transitioned their core Healthcare PBM contracts. So any details on follow through with those specific accounts, if you've had any traction in on the RX benefit stinks, so so I'll take the second question first so upsells in the RX benefit. Yeah. We did have a good up-sell Birth season if you will relative to RX and we also had a uh, a favorable start date acceleration if you will with one of them and so one of the things that's contrived,
Higher guidance for the full year is it?
That one of our up-sell clients that took RX was originally planning to do a mid-year and ended up, um beginning in the beginning of the year. And so, uh that's favorable to us the second piece that's contributing to the the guidance is we are seeing slightly better utilization than we had planned wage, you know both from our new clients as well as our existing clients. It's real slight but the math adds up to you know has an impact relative to the full year. But but it was favorable relative to what we had planned. If you you know, we the way we do these things we used historical experience by industry, you know, adjusting Force, you know, known demographics at each new client and and and do our best guess in terms of expectations from new clients and and, you know, generally speaking they they fall out within a range, you know dead.
As overall cohort for new clients, but sometimes slightly favorable sometimes not so far. They're slightly favorable relatives what we planned.
We rolled up all those new expected lines for the year.
And to follow on that, you know, you talked about your 2020 Book Changing and mix with a lot of the the sales coming from the non-traditional sectors and I imagine it would continue even into Twenty-One. So how do you think about forecasting utilization under this mix shift Dynamic package? And would you anticipate utilization going up because of this mission?
I think the so the important point about the comment around are expanding Industries, you know across our client base wage applies not only to this past sales year, but but applies to the prior sales year for clients that went live in nineteen. I think that the point that we were trying to make is that the earliest years have the highest concentration of attack clients and we continue to see expansion into other Industries. It doesn't mean we're still not getting Tech clients. We're getting them overall. Let me just make that point first the second Point relative to engagement rates over on what to expect is because the tech companies generally have a younger employee demographics the larger household income utilization rates tend to be higher with them than with other Industries when you calculate it as a percentage of total overall covered members, so as a result what we're seeing dead
slight but on a blended basis slight drop and you
Asian rate year-over-year sometimes but mixed could impact that but the differential that we expect or slight increase it differential that we expect for the 2020 year. I you know could be a slight increase but the reality is that you know, it's a it's a you know it the the difference is so small, you know, as we get bigger and bigger and more and more clients more and more cut off lives. It should just be pretty close to what it's been plus or minus, you know a couple of basis Points each year based on actual utilization that happens. So there won't be big fluctuations relative to say you are adding clients across Industries and as we grow bigger and bigger, it'll just be more reflective of more similar to the overall base.
That's great. Thank you.
Henry's will make both make our benefit stickier and provide a better member experience but also provide, um, you know, you know opportunities for additional revenues. So um, uh, so certainly Thursday we're going to continue to we're going to continue to look at those things and and and do what we think will be accretive to the business, but we can continue to grow again at at at high rates given the solution we currently have in place.
Okay, turn off. Remember remember there are as we talked about before eight thousand eight thousand potential employers were two to three percent penetrated. This solution saves them real dollars. It provides a better member experience. There's all kinds of other benefits to the employers with respect to better employee productivity less absenteeism helps their diversity and inclusion programs. So dumb, there's a lot of reasons why employers bring us on and all those reasons continue to be very valid and there's a lot of employers still out there that can benefit from all those things. Yep. That makes sense. Thanks and then you'll just one question. I wanted to ask about the gross profit margin of the quarter, you know didn't show as much leverage on the short strong top-line and you know, it was down and looked like a contract a little bit year-over-year. I think you mentioned in your life march headcount. And so I just wanted to hopefully get you guys to just flushed out in terms of you know, the ads and sort of the The Leverage serve on that line as we think about not just twenty but yep.
Beyond sex I would I would encourage you to look at the full year and and and any quarter in particular the fourth quarter is going to have the most variability relative to timing of new hires preparedness.
For the following year in terms of how many people we add etcetera. So the full year gross margin is more indicative of our ability and the Improvement there is more indicative of our ability to improve gross margin over all the fourth quarter and sort of, you know, the fourth quarter result, you know, the the Delta between, you know, the margin versus whether you compare, you know, prior year off or any reason. Is small in absolute dollars relative to the reality of what we achieved overall for the full year. I would also encourage you to look at the the, you know, overall length is for next year and our ability to expand our our believe that we could expand margins again based on that guidance and embedded in there is is expanding gross margins again as in dog across the business including in in in gross profit, and so there's really, you know, Nuance within the corridor itself not a lot of to read into their so so that's why we sort of dead.
you know put the comment or prepared remarks, you know around around the impact of it because I know we look at the percentages and and and see a smaller percentage but in
$2, it's really small. It's the overall year. They usually look at.
Okay fair enough. Thank you. Ladies and gentlemen, this concludes our question-and-answer session and thus concludes today's call. We thank you for joining progenies fourth quarter 2019 conference call. You may now disconnect your lines. Have a nice evening.
Thank you.
Thursday