Q1 2023 Progyny Inc Earnings Call
Okay.
Good day, ladies and gentlemen, and welcome to the progeny, Inc. First quarter 2023 earnings call. At this time all participants are in a listen only mode and the floor will be opened for your questions and comments after the presentation. It is now.
My pleasure to turn the floor over to your host James Hart the floor is yours.
Thank you John and good afternoon, everyone welcome to our first quarter Conference call with me today are Peter <unk> CEO of <unk>, Michael Schirmer, President and Mark Livingston CFO , we will begin with some prepared remarks before we open the call for your questions before we begin I'd like to remind you that our comments and responses to your questions today reflect management's view as of.
Today homemade.
Certain statements related to our financial outlook for both the second quarter and full year 2023, and the assumptions and drivers underlying such guidance the demand for our solutions our expectations for our selling season for 2024 launches anticipated employment levels of our clients in the industries that we serve the timing of our client decisions are.
<unk> utilization rates and mix the potential benefits of our solution, our ability to acquire new clients and retain and upsell existing clients, our market opportunity and our business strategy plans goals and expectations concerning our market position future operations and other financial and operating information, which are forward looking statements under the federal Securities law actual.
Results may differ materially from those contained in or implied by these forward looking statements due to risks and uncertainties associated with our business as well as other important factors for a discussion of the material risks uncertainties assumptions and other important factors that could impact our actual results. Please refer to our SEC filings and today's press release, both of which can be.
Bound on our Investor Relations website.
The forward looking statements that we make on this call are based on assumptions as of today and we undertake no obligation to update these statements as a result of new information or future events during.
During the call. We will also refer to non-GAAP financial measures such as adjusted EBITDA and adjusted EBITDA margin on incremental revenue more information about these non-GAAP financial measures, including reconciliations with the most comparable GAAP measures are available in the press release, which is available at investors that progeny dot com I would now like to turn the call over to Pete.
Thanks, Jamie and thanks, everyone for joining us today we're.
We're pleased to report that we've had a very solid start to the year as well as another strong quarter.
Achieved record quarterly revenue with growth of 50% over the first quarter of 2022.
This growth was driven once again by the housing demand, we continue to see perpetuity and family, though the care as our members look to start or expand their families as well as an increase in our clients and covered lives. Following a record sales season in 2022.
During the quarter, we also increased our margins as compared to the first quarter a year ago and our continued focus on operational excellence produced not only our highest ever quarterly gross profit and adjusted EBITDA. We also achieved our best first quarter cash flow as well.
We also successfully on boarded a record number of new clients during the quarter further demonstrating that even as we rapidly expand our member base, we're able to effectively scale the business, while continuing to provide industry leading service levels.
Simply said, we believe our year ahead, our year has begun with clear and positive momentum across all of the key areas that we look to and measuring our success, including sales momentum early in the 2023 selling season.
And we're particularly pleased to be executing against our strategic priorities at this time as we believe awareness of both the challenges of infertility and the need for equitable high quality coverage has never been more top of mind in fact, the most recent data released just last month from the World Health.
Nation revealed that the prevalence of <unk> is continuing to increase now affecting one out of every six people of reproductive age globally.
Put that in perspective less than four years ago. When we became a public company. The prevalence of infertility is reported as one in eight.
We believe this increase over.
Over such a short period of time, only underscores the powerful trends driving the growing need for utility services.
There are many factors driving this increase in prevalence the growing number of people who are choosing to defer our family building until later in life when natural conception becomes biologically more challenging is one of the most significant ones.
Despite the long recognition of infertility as a disease by all the relevant public health authorities and continues to be covered differently or not covered at all as compared to the other conditions recognized by those same authorities such as diabetes asthma cancer and others and once again employers our lead.
The way by adding this important coverage to their employees. This clear need coupled with advances in both technology as well as the models of care delivery for infertility have progressed to effectively meet the market's need for proven viable solutions and despite that the majority of those in need continue to face into.
Fishing coverage.
We continue to partner with an increasing number of employers across the country to make infertility treatment available to those that need it working closely with clients consultants and industry groups to make coverage firm utility an essential benefit.
While we know how impactful comprehensive care is to the individual needs. It it's equally true that society as a whole benefits as the challenges of global population decline become better understood and appreciated.
While national birth rates are declining in the U S. That's entirely driven by women under 34 birth rates for women over 35 are increasing more than 2% a year compounded supported by the greater access to care and advances in assisted reproduction.
The property solution has been making a profound impact as the prevalence of infertility has grown.
In just the past four years, we've helped improve access via a nearly five fold increase in our client base.
And while a lot of health care companies have aspired to deliver value based care, we're actually fulfilling its promise for our clients each and every day.
We're doing this through a combination of superior clinical outcomes, which produced an average of 25% to 30% savings, including controlling for unit cost inflation, where companies have grown accustomed to annual increases, but not with project over.
Over the past two years, we've more than doubled client and member base and are providing the clinics in our network with significantly more patient volume and.
By leveraging this growing scale, we've been able to negotiate more favorable rates passing it along to our clients are sharing percentage of unit price savings for 2023.
But beyond this greater economic value or impact is felt in other ways by employers who in choosing us as their fertility solution are ensuring that their workforce is getting access to the most supportive and comprehensive care available to them.
Impact is also felt by employees as well who are able to build their families through our solution that has shown through our comprehensive reporting to be the most effective at supporting successful family building through <unk> care with an increase in faster healthier pregnancies and healthier babies.
And it's because of this growing need in our proven impact that we continue to believe that our $5 4 million covered lives today represent a mere fraction of our true market opportunity.
Although the 2020, we selling season is just getting underway. We're very pleased with the level of activity. We've seen thus far which continues to confirm that there is still a significant unmet need in the market as well as a growing recognition of the importance of coverage across industries geographies and company sizes and that's.
Because even though companies are being more cost conscious during this macroeconomic time, adding family building remains a priority.
The activity were seeing across all of our sales channels is favorable when compared to the level of activity. We saw at this time last year, which became a record sales season for us.
We're also actively engaging with not now prospects from prior selling seasons as usual. These represent the majority of the early commitments. We've received for 2024, thus far and are just one indicator of the positive demand we're seeing in the market.
Although it's early in the season. These wins are from well known brands in such diverse areas as travel and hospitality manufacturing consumer packaged goods and a large University school system.
We're also seeing further success and early wins with Taft Hartley labor populations, which when added to our original addressable market of large self insured employers expands our overall Tam to approximately 100 million lives the majority of which continue to be uncovered an underserved.
Last year was our first year in market, where we directly targeted and invested in our solution for these labor populations and we're pleased to see our momentum there is continuing.
And then a further demonstration of what we call our flywheel effect, where after winning our initial client in an industry with what we see others in that same industry look to maintain health benefit parity by adding the benefit we had early wins from another hospitality client as well as one of the largest children's hospital systems in the <unk>.
Country, which continues our strong track record of recent success with that particular sub sector of healthcare.
On our last call with you we discussed how children's Hospital Association has selected project it to be the preferred solution to the more than 220 member hospitals and its coalition, representing two plus million covered lives collectively.
<unk> affiliated hospitals can choose whether or not to consider us CAH as approval of us along with all the work they did to that our solution and processes carried significant weight.
Last quarter, we told you C. J wasn't the only relationship we were pursuing and we recently announced that property has been chosen to be the preferred facility and antibody solution for the family past suite of services within ever North.
Every north which includes companies such as ESI Accredo and others was formed to help accelerate the delivery of innovative and flexible solutions across various aspects of health care, including fragility and under this focus family pass was created to be the <unk> solution within that portfolio of high performing growth services.
This partnership is particularly important because of the depth of experience <unk> has in the fertility space through both family path and freedom fertility and their focus in this space has allowed ever north to become familiar with properties differentiation and understand firsthand the impact we can have on their employer popular.
<unk>.
Accordingly, we couldnt be more pleased than ever North made the decision to enhance its family past suite of services.
By including progeny as the preferred facility and we don't think provider within their solution.
Similar to our other non traditional channel partners, most notably our partnership with Cvs point solutions their decision to work with projecting came out of a comprehensive review of prior to these clinical approach outcomes plan design security privacy standards and brand.
And while this relationship has the benefit of expanding our go to market activities. It also streamlines the contracting and onboarding process for our mutual clients, including those who are looking to add a fertility benefit for the first time.
Taken together, we believe these positive indicators, which include the size and health of our current active pipeline the active engagement and forward progress with they're not now and the number and diversity of the early commitments further demonstrates both the strong demand in the market as well as our leading position as a provider of choice for <unk>.
And family building solutions.
And every sales year, we aim to grow the absolute number of new clients and covered lives as compared to the prior year and this year is no different.
Although it remains very early given the strength we are seeing in the sales season. Thus far we believe we're on track to meet that objective.
To conclude we're very pleased with our results this quarter, which we believe demonstrate that we have continued to execute against all of our strategic initiatives and the early momentum we're seeing in our sales season supports our belief that progeny is in its strongest ever competitive position that our market opportunity remains largely untapped.
The trade it and that all of the macro factors that have contributed to our growth remain intact.
I'll turn the call over to Mark to walk you through the quarter Mark. Thank you Pete and good afternoon, everyone. I'll begin by taking you through the first quarter results and then provide our expectations for both the second quarter and the full year.
First quarter revenue was $258 4 million, reflecting growth of 50%.
The growth versus the prior year period was primarily due to an increase in the number of clients in covered lives as compared to a year ago, which was amplified by the number of non calendar year starts throughout 2022.
We had 379 clients with at least 1000 lives in the first quarter, representing an average of $5 3 million covered lives that client count includes a handful of relatively smaller clients that were won towards the end of the 2022 selling season.
This compared to 264 clients in an average of $3 9 million covered lives a year ago, reflecting 36% growth in lives over the prior year.
Taking into account the clients who launched after March 31 today, we have over 380, <unk> clients, who represent $5 4 million covered lives.
We've all seen the headlines were some high profile companies have publicly discussed the targeted layoffs 800 taken to varying degrees.
And some though not all of those companies are our clients.
While we did see an impact from those reductions from some of our clients. During the quarter. This was fully offset by other clients who have continued to expand their workforce through additional hiring which was consistent with what we had expected.
This dynamic mirrored the recent jobs reports from the Labor Department, including the one issued just last week, which have continued to show meaningful hiring within certain industries that are very well represented in our client base, including health care hospitality and professional services to name just a few.
And that the overall rate of unemployment continues to be at or near record lows.
Nevertheless, as it relates to membership growth within our base a key element of organic growth. We continue to anticipate that overall, our existing clients will hold relatively flat at $5 4 million lives over the balance of the year with any additions from existing clients netting against any reductions in 2023.
Turning now to the components of the topline medical revenue increased 42% over the first quarter last year to $157 1 million, which again was due to the growth in clients and covered lives while pharmacy revenue over the same period increased 65% to $101 2 million.
The growth in pharmacy revenue was primarily driven by an increase in the number of clients who have the integrated solution.
Year ago, 83% of our clients had projecting rx, whereas today, 90% of them do.
Our higher penetration for Rx not not one reflects not only the 97% take rate we saw among clients added in the most recent selling season, but also our continued success with upselling among existing clients given both the superior member experience from our pharmacy program as well as the meaningful savings pricing.
<unk> provides to both clients and members.
Turning now to our utilization metrics.
Approximately 13200 art cycles were performed during the quarter, our highest ever quarterly total, reflecting a 48% increase in cycles as compared to the first quarter of last year.
Our female utilization rate in the quarter, which is what firms principally drives our financial results was <unk>, 48% as compared to four 5% a year ago.
I'll remind you that utilization can vary from period to period due to a number of factors such as the timing of when new clients go live the time of the year and the demographic mix of the newest clients. This quarter's rate was in line with our historical ranges.
Turning now to our margins and operating expenses gross profit increased 78% from the first quarter last year to $58 6 million, yielding a 22, 7% gross margin.
The 360 basis point increase in margin from the year ago period, primarily reflects the efficiencies that we continue to realize and the delivery of our care management services as well as the impact of our renewals to providers in pharmacy program partners at more favorable terms.
In addition, as we discussed at the time first quarter gross margin a year ago was impacted by the Onboarding of care management resources in advance of the fairly significant client launches that we knew were coming in Q2 and Q3 last year.
In 2023, the significant majority of our newest clients. All went live by Q1, so that same dynamic didn't apply to our margins this year.
Sales and marketing expense of five 5% of revenue in the first quarter was five 5% of revenue in the first quarter of <unk>.
<unk> improvement from the five 8% in the year ago period as continued increased investments in our go to market resources.
Offset by the leverage we continue to benefit from as the majority of the expenses in sales and marketing relate to new client acquisition.
G&A was 11, 4% of revenue this quarter as compared to 13, 4% in the first quarter a year ago.
The 200 basis point improvement is primarily due to efficiencies in our back office operations, reflecting the inherent nature of our expanding margins on G&A as we grow revenue, which was more which more than offset higher noncash stock based comp compensation expense.
With our strong topline performance as well as the operating efficiencies realized throughout the business. Adjusted EBITDA grew 87% this quarter to $46 4 million, yielding a margin of 17, 9% this compared to 14, 4% in the year ago period.
Net income was $17 7 million in the quarter or <unk> 18 per share.
This compared to net income of $5 million or <unk> <unk> earnings.
Earnings per share in the year ago period.
The increase was due to our higher operating income, which more than offset an increase in noncash stock based compensation expense as well as lower as well as a lower benefit for income taxes.
Turning now to cash flow and our balance sheet for the first quarter net cash generated by operating activities was $21 million, which compares to an operating cash use of $11 3 million in the year ago period.
The more than $32 million improvement from the prior year was due primarily to our higher profitability.
Operating efficiencies that were implemented throughout the back half of 'twenty, two that continued to bear fruit as well as normal timing items that can impact any given quarter.
As of March 31, we had total working capital of approximately $320 million, reflecting $208 million of cash cash equivalence and marketable securities and no debt.
Turning now to our expectations moving forward.
Given our strong start to the year and the continuation of the strong utilization. We currently see as the second quarter begins we are pleased to be in a position to raise our guidance for 2023.
For the full year, we are raising the range and now expect revenue to be between 1.04 billion to 1.065 billion, reflecting growth of between 32% and 35% or 34% growth at the midpoint.
We are also raising our guidance on profitability. We now expect adjusted EBITDA of between $176 5 million to $184 million and for net income. We now expect between $43 6 million to $49 million or between 42, and 48 cents earnings per share on the basis of approximately.
103 million fully diluted shares.
I'll remind you that our net income projections do not contemplate any discrete income tax items, including the income tax benefit related to equity compensation activity to the extent the related activity occurs we will continue to benefit from those discrete tax items throughout 2023.
At the midpoint of this guidance, we are expected to see the continued expansion of our margins in 2023 with adjusted EBITDA margin on incremental revenue of over 20%.
For the second quarter of 2023, we are projecting revenue of between $260 million to $265 million, reflecting growth of between 33% and 36%.
For adjusted EBITDA, we expect between $44 million to $45 5 million along with net income of between $9 3 million to $10 4 million for between nine and 10 cents earnings per share on the basis of approximately 102 million fully diluted shares.
With that we'd like to open the call up for your questions. Operator can you. Please provide the instructions.
Absolutely. Thank you.
Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we ask that while posing your question per handset.
Listening on speaker phone to provide optimal sound quality. Please hold while we poll for questions.
First question is from Anne Samuel with Jpmorgan. Please proceed.
Hey, guys congrats on the terrific results Tonight.
I was hoping maybe we could just speak a little bit more about the partnership what the Genesis was behind that why they chose to partner with you because I remember maybe it was a few years ago. They were looking to enhance their benefit. So just kind of curious how that came about and if there may be more opportunities like this out there.
Oh Hi. This is this is Michael.
It's been us.
Growing relationship.
Over the years.
And as we continue to get more familiar with each other.
The relationship really on partnership really grew out of that.
We're really excited about it.
I think that we have a lot of potential ahead.
We do we are continuing to look for relationships.
Like that in partnerships that align with our values and mission and.
And can help bring fertility benefits too to the market and to employers that need them.
That's helpful color and great to hear maybe just one more you had really really strong incremental margins in the quarter and you spoke briefly about operating efficiencies.
Hoping maybe you could just explain a little bit more about those and it does this structurally enhance your longer term margin capture opportunity.
Sure I'll start and then I'll, let Michael Michael Roth Marc.
Add some color.
One of the things that's unique about this quarter versus a year ago quarter, and really last year, where we had a significant amount of of larger clients.
Adding the benefit.
Based on their timeline their fiscal years et cetera.
Was a lot of the investment that we had to make to support those clients. They weren't yet live in Q1 were in the first quarter, and therefore margins drag a little bit right.
Being the opposite now happen, which is to the extent that we have.
Overall our.
Clients, primarily life that we expect to be live for this year or at least we have visibility into the margin is starting out really strong.
And and overall for the full year based on our full year guidance, we do expect to see.
A better drop through rate.
Even despite all of the additional incremental investment that we're making in the business and continue to make in the business. We expect to see that overall margin drop through so when we talk about.
Margin expansion and the leverage in the business, it's really not only about Q1, but also about our expectations for the full year and being able to take advantage of of leverage that we have throughout the business.
Despite all of the additional incremental investments that we're going to be making.
Yes, I think the only thing that I'd add to that is again specific operating efficiencies, we're always looking for ways to improve.
How we deliver service and care.
We've talked about using AI, even in our service functions to improve the level of quality of the calls that we're doing so theres a number of initiatives that we're constantly working on it and those do bear fruit in terms of improved margins and I think the only thing else I would point out is.
Again with the clients that we're launching throughout last year, it's a little bit harder to see but like our sales and marketing efforts are not linear throughout the year. The selling season does amp up through Q2, and Q3 and some of our costs reflect that so theres some minor tweaks here and there as the year goes on around.
<unk> EBITDA, but overall again as we as you look to the full year, it's still a strong year that we're expecting based on the guidance we provided tonight.
That's really helpful color. Thanks, so much and congrats again on the great results. Thanks.
Thanks, Andy.
The next question is from Scott shown us with Keybanc Scott Your line is live.
Hi team congrats on these great results and strong start to the year. So I guess my first question is on utilization two parts here.
Onboarding a lot of new clients. So theoretically your utilization should be a little bit tempered, but we saw that.
Really strong start.
The year what drove this and then should we still expect.
Stair step function in utilization throughout the.
For the year.
Yeah.
As it relates to the impact of new clients remember, even though we added a record number of clients the percent of overall new lives to the total guests.
Diluted right as you as you continue to grow as a company now that impact is more tempered in back versus new and old.
The implication of what you're asking is although utilization from the new clients generally starts out slower and ramps up overall.
Overall that impact on a blended basis is it going to be as big.
As it relates to the strong utilization in Q1.
It was really across the board relative to.
The different industries that are client bases in.
So we didn't there wasn't anything noticeable in any geographic area or in any other.
Sure.
Or any other pattern to call out that we saw we always just overall stronger utilization for the benefit it is going to vary a little bit it's still within the tight range of what we normally see on a quarterly basis for utilization in a given quarter.
But yes, it was a little bit stronger than even we expected when we put our guidance out at the beginning of the year.
What were currently seeing is continued strong demand, which is why we were.
Confident in raising our full year guidance off of what we're seeing even now for Q2 and current utilization.
<unk> continue to remain strong.
We can never predict exactly sort of what quarterly utilization is going to be because there is timing items in and remember we calculate utilization on a on one unique patient.
Utilizing the benefit female utilizing utilizing the benefit at any point throughout the quarter and the amount of utilization batteries per member based on their individual needs. So so it's not a perfect measure it just a good kpis in terms of understanding the health of the business.
That's really helpful. Thanks, So much Peter and then I guess my my follow up question is on the pharmacy benefit clearly you saw a lot of nice revenue growth. This quarter can you kind of walk us through what's embedded in guidance for that segment of the revenue stream for the rest of the year.
Yes.
The guidance contemplates obviously the take rate that we already have in the installed base that's alive today.
And relative to what we're expecting in terms of what we see from a utilization perspective, what we're expecting throughout the year. We would then we then plan for the pharmacy piece of it.
Relative to what we expect on the medical side and the overall utilization with the benefit.
That's all the color I can give you we don't we don't guide and sort of quantify.
Medical and pharmacy separately, we guide on a combined basis.
It doesn't always perfectly work out in one line or the other but but overall, it's driven off of what we expect on the on the medical side from a utilization perspective, and therefore that drives of course corresponding pharma utilization.
Perfect. Thank you so much.
Yeah.
The next question is from Sarah James with Cantor Fitzgerald. Please proceed.
Thank you.
Can you give us a little bit more color about that ever north arrangement.
How the sales process and a great. So should we think about that says.
Sure Paul So Ken their sales.
Sales team be pushing or selling.
Any benefits or is it more.
If one of their clients is looking for a fatality.
Let them know that that project he has integrated.
Yes. Thanks for your question, Sarah and welcome back by the way.
Nice to have you back.
Mike will answer that question.
Hi, Sarah.
So it can be both.
And the.
Our experience has been with other.
Other partners like <unk>.
Our Cvs point solution partner.
Is that it is a blend of both and as the as the relationship matures.
A little bit more mix of that are both a a push from a.
Clients.
From the <unk> side, and making them aware of the family path benefits with.
With progeny is the preferred preferred provider.
Well as obviously, our sales team out in the market.
Pursuing.
And active and active opportunities and sort of pulling that in through and calling ever north back through from an ease of contracting perspective.
And an additional value perspective, so we would expect to see both we'll see sort of the pace that that materializes as all of these channel.
Channel partnerships materialize.
Pesos, but but that would be our expectation.
Great and one more if I could just.
The comments you made were really helpful thinking about seasonality and the timing of account starts that you experienced last year versus this year is there a way to break that out into the year over year margin differential like how much was just from a different timing of account starts and the startup costs related to that versus.
What was.
Where efficiency your fundamentals.
It's probably not a perfect way, but I would I would maybe suggest that you look at the rate of addition sequentially by quarter to give you some indication of how much extra contribution knows those later starch would give you in margin impact is probably the easiest way I would do it.
The only reason that is not.
Easy imperfect to do is because remember in every year. There is there is incremental investment that we're constantly spending on hiring throughout the year in anticipation of what we expect for the following year et cetera, and adding new capabilities et cetera. So all of that is is blended into.
What are you going to see relative to the contribution drop through from those new client starts.
But that's probably the best way I would I would suggest that you do that yes, I just would add I think the clearest example of that would be the.
The sequential growth from Q1 to Q2 last year.
Again, we had built our company around effectively what was going to be going live substantially in Q2, and so you see that improvement.
Sequentially quarter over quarter, particularly in the gross margin yeah that was probably the most pronounced.
Yes, theres other as Pete said Theres, a number of factors as you get into Q2 to Q3 et cetera, but thats probably the clearest example, you can look to.
Okay. Thank you guys.
The next question comes from Joel Andhra Singh with Truth Securities. Please proceed.
Tayo this is Eddie.
To run on for <unk>, Thanks for taking the question.
You guys had announced their partnership with parsley health to introduce products plus a physician led primary care service.
For the entire women's health spectrum.
You share more details on the arrangements such as who is providing what service.
And the revenue model.
Based on current pilots and what Youre hearing from existing clients what proportion of clients do you think would adopt project plus.
I'll start and then I'll, let Michael.
The color.
Relative to what portion of clients youre going to add it it is extremely early.
To give you any.
Indication of what that might look like as the year progresses, no different than than our commentary around new sales, we're happy to add some color in terms of what we're seeing in that space.
I'll take the first part yes, no I mean I think Pete.
Pete's point.
We recognize that there is a that there is certainly a broader need.
And that need requires.
Delivery of care.
In a different way and a physician led weigh in.
That's really what we saw in the.
The partially partnership.
<unk>.
We're really looking at this as well.
As a pilot and we'll see how and the speed of which that emerges and learnings that we have along the way but.
Fundamentally.
It aligns with our belief around the combination of <unk>.
Benefit coverage.
Coupled with.
Physician led model so.
And that's sort of what we're seeing from that from the broader.
Women's health space, and where some of these partnerships are coming from.
Okay. That's helpful. I guess, maybe I can sneak in another one I believe April to June as your core selling season now that we're in May I guess can you comment a little bit more in detail on the progress you've seen so far and just how that compares to last years selling season at this point.
Let me just add one comment to the way you asked the question April April to June is a very important part of the selling season, but by no means.
The most important.
<unk> par.
This is the time at the beginning of the year through June and July et cetera, and even throughout throughout <unk>.
Until September and October were still adding pipeline and some of that converts.
All of it is really important and obviously.
Closing sales whats happens middle of August through beginning of October is the most critical.
Time for us from a sales perspective, I wouldn't I wouldn't discount any of that that said I think the commentary that we gave we tried to give as much color as we can.
Important, Colorado, I would urge you to to pay.
Pay attention to is when we talk about where we're at beazley.
In terms of pipeline and sales activity early sales commitments et cetera, we talk about all of that relative to where we were a year ago. This time, it's really important for the reasons I just said.
While ago that we're constantly adding pipeline and converting pipeline throughout the sales year.
And so it's always important to understand given where you're at in the sales year, especially the way the cycle of a benefit decisions are made it's always important to understand point.
Point in time compared to point in time, a year ago, where youre at and so all of our comments relative to having positive sales momentum and continued demand for the benefit all lie in.
And that data.
That's helpful. Thank you.
Okay next we have Michael Cherny with Bank of America. Michael. Please proceed.
Hi, This is Charlie on for Mike. Thanks for taking my question and congrats on the great quarter and this was just another one around the 'twenty 'twenty four selling season update.
I was wondering if you could talk about if youre seeing any changes in the types of customers.
Our interest in the benefit and then also you mentioned the not now.
And then could you talk about how you're not now book is looking versus previous pipeline. Thank you.
Sure I'll take the second part first.
Now is this year similar to this time last year similar to the year before that this time are greater than they were in any other year.
In terms of overall opportunities and active pipeline that we're working.
Early commitments as I as I mentioned in my prepared comments are really positive relative to those not announced and so we're real pleased with with with where things are going relative to not now.
So far this year what was the first part of the question.
I'm sorry, what was the first part of your question again.
Yeah that was just around how it relates to any changes in the type of okay. So is there any change that yet so I'll, let Michael answer that.
So outside of <unk>.
We said in the prepared comments sort of seen that flywheel effect.
And a following sort of speak of new of new industries.
That that we opened last year.
Continuing to see.
Very diverse set of clients across industries, which which is similar to what we saw last year.
And again as we said in the prepared comments.
Continued momentum in and some of those industries that.
That we really started last year, whether thats Taft Hartley labor.
<unk> segment in the children's hospital in more broadly health care segment.
Or the hospitality area, so continuing to see good diversity there but.
I wouldn't say really at any any material changes in from last year that sort of that momentum started last year I'd say.
Okay, great. Thank you and congrats again on the quarter. Thank.
Thank you so much.
Once again, if you have a question or comment. Please press star one on your Touchtone phone. The next question is coming from Stephanie Davis with SBB Securities. Please proceed.
Hi, guys. This is Ian.
Okay.
Thank you.
Yes.
Thank you.
Industry. Thank you Stephanie.
If we can keep falling last headline attacked and professional services.
Was just hoping you could talk about walk a CCAR bank.
The ability of demand in industries like hospitality in the context of a fortune.
Sure I.
I think the first easy thing that gives us confidence is the early commitments that we've gotten in this industry. So so I've mentioned, our hospitality in particular, where last year. We won our first large hospitality client we won another large one this year.
Second is although there are.
No.
Although there are headlines around layoffs and they've been going on really for the last year 12 months 14 months, where collectively maybe there's 150000 not all our clients, but maybe 150000 announced layoffs.
They're more targeted reductions and certainly we're not seeing them in any meaningful way, referring back to Mark's comments on what we're seeing in terms of overall covered lives, although we see.
While reductions in certain areas, they are being more than offset by by the organic growth in lives in the existing base and so there is continued.
Employment and a tight labor market and all of those that you mentioned.
But in our industries overall.
And more importantly, we're continuing to see the demand through the different sales channels that we fared too whether it's the traditional benefit consultants, who are telling us that that family building.
And fertility benefits continue to remain in the AD column. If you will as employers are deciding what to do with their overall benefit packages or the individual clients across industries that were talking to there is no concentration in one industry. It's across industries last year, we expanded to.
40 industries, and and we continue to see the flywheel effect across those industries in the early activity, whether it's early sales commitments or new pipeline additions or existing not in our pipeline that continues to engage in the sales process. All of that is what gives us confidence.
In the upcoming sales here.
Okay. Thanks, and then if I could ask.
Uh huh.
Maybe you can talk more about how you're thinking about your partnership that you have.
Longer term and how you've been able to leverage that family.
Yes.
All right.
So.
We continue to evaluate.
All.
Relevant areas of partnerships.
First off and we'll continue to sort of explore that and be opportunistic around where there's alignment.
On the on the ever North and family pop side.
That is on the ever north side of the equation and so again that's that's.
That's unique to our health plan I Wouldnt call family path.
Aligned to the health plan.
But to your question how plans remained.
An interesting area and as the benefits.
Due to expanded demand continues to expand its an area that will stay open to and and explore opportunities with them.
Okay. The next question comes from Michael Weisberg with Crestwood capital. Please proceed.
Yes.
Congratulations on a couple of things.
Comments on that.
You've announced partnerships.
With children's hospitals.
Could you give us a sense the average one that you saw.
With 220 whats the average covered lives.
A typical hospital.
What do you do the math on a little over 2 million covered lives across all of them.
You can sort of thing as an average.
We greatly in terms of <unk>.
Size.
So I don't have the exact number in front of me in terms of how much over 2 million, but but you can do the math roughly.
Yes, roughly 10000 lives I would say something like that on average yes.
Okay and you cited one just at the time you made the announcement with the parent organization, but <unk> had success have you had success before could you give us a sense of how many.
Of those hospitals are actually clients are.
Back to become clients.
Well.
You're about to become im not going to comment on but but I think we have.
At least five not seven of them signed up already.
Some of which are already live most of which are already live some of which are new commitments.
That are happening in real time that that we're commenting on as we talk about the overall sale season, but but very early in terms of overall opportunity relative to that relationship.
Okay that concludes today's conference there are no further questions in queue do you have any closing comments you'd like to finish with.
We are real pleased with the the year so far in terms of how it started and look forward to reporting on future calls.
<unk> progress.
Sure.
Considering how well positioned we feel.
Thank you ladies and gentlemen, this does conclude today's conference call. You may disconnect. Your phone lines at this time and have a wonderful day. Thank you for your participation.
Yes.
Yeah.