Q1 2024 Progyny Inc Earnings Call

Operator: Good day, everyone, and welcome to the Progyny, Inc. First Quarter 2024 Earnings Call. At this time, all participants have been placed in a listen-only mode, and we will open the floor for your questions and comments after the presentation.

Good day, everyone and welcome to the project, Inc. First quarter 2024 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.

Operator: It's now my pleasure to turn the floor over to your host James Hart James the floor is yours.

Speaker Change: Thank you Tom and good afternoon, everyone welcome to our first quarter conference call with me today are <unk> CEO of property, Michael <unk>, our president and Mark <unk> CFO, we will begin with some prepared remarks before we open the call for your questions before we begin I would like to remind you that our comments and responses to your questions today reflect matters.

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

Speaker: We will begin with some prepared remarks before we open the call for your questions. Before we begin, I would like to remind you that our comments and responses to your questions today reflect management's views as of today only, and will include statements related to our financial outlook for both the second quarter and full year 2024, and the assumptions and drivers underlying such guidance. The demand for our solutions, our expectations for our selling season for 2025 launches, anticipated employment levels of our clients in the industries that we serve, the timing of client decisions, our expected 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.

Speaker: 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 found on our investor relations website. Any 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 the call, we will also refer to non-GAAP financial measures, such as adjusted EBITDA, adjusted EBITDA margin on incremental revenue, and adjusted earnings per share. More information about these non-GAAP financial measures, including...

Speaker: Its views as of today only and will include statements related to our financial outlook for both the second quarter and full year 2024, and the assumptions and drivers underlying such guidance the demand for our solutions our expectations for our selling season for 2025 launches anticipated levels of our clients in the industries that we serve.

Peter Anevski: Thanks, Jamie. Thanks, everyone, for joining us. We had a strong first quarter overall, making meaningful progress in the areas that are most impactful to our long-term growth. This includes a strong start to our most recent selling season and the advancement of new strategic partnerships, both of which I'll address in a few moments. In the first quarter, our continued focus on operational excellence allowed us to expand our adjusted EBITDA margins as compared to the first quarter a year ago, and we also produced our best first quarter operating cash. Despite these results, you've likely seen from the press release that the quarter unfolded differently than we had expected on the top line, as utilization for the first quarter came in modestly lower than we had expected.

Peter Anevski: This coincided with the national conversations about fertility treatment and access to maternal health care that were sparked by the Alabama Supreme Court decision in February. I'll spend a few minutes walking you through this dynamic to help you appreciate why this doesn't alter our view of the long-term trajectory of the business, particularly since we're seeing Q2 utilization that is consistent with or better than prior years, although not quite as strong as it was in 2023. As a quick refresher on what informed our first quarter expectations,

Peter Anevski: The timing of client decisions are expected 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.

Peter Anevski: A year ago, utilization started strong in January and then continued to climb to record levels that persisted for much of 2023. This year, at the time of our February call, utilization for Q1 was pacing on virtually identical tracks as it had been in the prior year. However, unlike last year, we began to see the ramp in member activity leveling off slightly in March, coinciding with the national conversations about women's access to reproductive health care sparked by the Alabama Supreme Court ruling.

Peter Anevski: And even so, utilization remained quite healthy at 0.46%, in fact, higher than our utilization from the first quarter two years ago but modestly lower than the 0.48 it was a year ago, which had formed the basis for our expectations. As our guidance has always been informed by what we were seeing at the time, with the unexpected leveling off and the ramp of activity, revenue this quarter was less than what we had expected.

Peter Anevski: Well, we can't be certain why members don't take action, as no one contacts us to say why they're not doing anything. We examine the QN activity by client, by industry, by region, and by clinical partners, and only one noticeable pattern emerged.

Peter Anevski: We're 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 other factors for a discussion of the material risks uncertainties assumptions and other important factors that could impact our actual.

Peter Anevski: Please refer to our SEC filings and today's press release, both of which can be found on our Investor Relations website any 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 the call. We will also refer to non-GAAP financial measures such as adjusted EBITDA.

Peter Anevski: Adjusted EBITDA margin on incremental revenue and adjusted earnings per share 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 property Dot Com I would now like to turn the call over to Pete.

Speaker Change: Thanks, Jamie and thanks, everyone for joining us.

Peter Anevski: We had a strong first quarter overall, making meaningful progress in the areas that are most impactful to our long term growth. This includes a strong start to our most recent selling season and the advancement of new strategic partnerships, both of which I'll address in a few moments.

Peter Anevski: In the first quarter, our continued focus on operational excellence allowed us to expand our adjusted EBITDA margins as compared to the first quarter a year ago and we also produced our best first quarter operating cash flow.

Peter Anevski: Despite these results you've likely seen from the press release that the quarter unfolded differently than we had expected on the top line as utilization for the first quarter came in modestly lower than we had expected.

Peter Anevski: This coincided with the national conversations about facility treatment and access to maternal health care that was sparked by the Alabama Supreme Court decision in February.

Peter Anevski: I'll spend a few minutes walking you through this dynamic to help you. Appreciate why this doesn't alter our view of the long term trajectory of the business, particularly since we're seeing.

Peter Anevski: Q2 utilization that is consistent with or better than prior years, although not quite as strong as it was in 2023.

Peter Anevski: As a quick refresher on what informed our first quarter expectations a year ago utilization started strong in January and then continued decline of record levels have persisted for much of 2023. This year at the time of our February call utilization for Q1 was pacing on virtually identical track as it had been in the prior year period.

Peter Anevski: However, unlike last year, we get we began to see the ramp in member activity leveling off slightly in March coinciding with the national conversation about women's access to reproductive health care sparked by the Alabama Supreme Court ruling and even sell utilization remained quite healthy at four 6% in fact higher than.

Peter Anevski: Our utilization from the first quarter, two years ago, but modestly lower than the four eight it was a year ago, which had form the basis for our expectations.

Peter Anevski: Our guidance has always been informed by what were seeing at that time with the unexpected leveling off and the ramp of activity revenue. This quarter was less than what we had expected.

Peter Anevski: While we can't be certain why members don't take action as no one contact us to say why they're not doing something we examine the Q1 activity by client by industry by region and by clinical partner and only one noticeable pattern emerged the modest dip in activity that we saw across the country was more pronounced in the states where the most.

Peter Anevski: The modest dip in activity that we saw across the country was more pronounced in the states where the most restrictive laws for Women's Reproductive Health Care were, suggesting that a relatively small number of members were proceeding with a greater degree of caution before commencing their fertility journey. As the second quarter begins, utilization has remained healthy at levels that remain above 2022 and below 2023, which further reinforces the confidence we have about all the long-term trends remaining intact. The market data reveals how the macro trends remain highly supportive of our continued long-term growth. The incidence and prevalence of infertility continue to rise as people increasingly defer family building until later in life.

Peter Anevski: Restrictive laws.

Peter Anevski: For women's reproductive health care, suggesting that a relatively small number of members we're proceeding with a greater degree of caution before commencing their fertility journey.

Peter Anevski: As the second quarter begins utilization has remained healthy at levels that remain above 2022, and below 2023, which further reinforces the confidence we have about all of the long term trends remain intact.

Peter Anevski: The market data reveals how to macro trends remain highly supportive for our continued long term growth.

Peter Anevski: The incidence and prevalence of infertility continues to rise as people increasingly deferred family building till later in life and family building continues to be a high priority, particularly amongst people over 30, who are medically most likely to need utility care as natural conception becomes more challenging as we age.

Peter Anevski: And family building continues to be a high priority, particularly amongst people over 30, who are medically most likely to need fertility care as natural conception becomes more challenging as we age. And while overall birth rates are declining in the US, that's really being driven by women under 34, who, in making the decision to defer family building, are actually reinforcing the longer-term tailwind for the fertility industry, as they will be the ones expanding the cohort of patients needing care once they approach their mid-30s.

Peter Anevski: And while overall birth rates are declining in the U S. That's really being driven by women under 34, who in making the decision to defer family building are actually reinforcing the longer term tailwind for the utility industry is they will be the ones expanding the cohort patients needing care once they approach their mid thirty's.

Peter Anevski: With the macro trends remained very favorable the modest variations, we can see in utilization from period to period, where it's sometimes a bit higher sometimes they are lower are far less indicative to our long term success than the overall trend line is and.

Peter Anevski: With the macro trends remaining very favorable, the modest variations we can see in utilization from period to period, where it's sometimes a bit higher, sometimes a hair lower, are far less indicative of our long-term success than the overall trend line. And like any company, there are many drivers of our business in areas that are within our control, which span everything from member experience to clinical outcomes to client satisfaction and more. We set rigorous goals that we continue to meet or exceed, and we're extremely pleased with how 2024 has begun in each of these areas as well.

Peter Anevski: And like any company there are many drivers to our business of the areas that are within our control, which spans everything from member experience to clinical outcomes to client satisfaction and more we set rigorous goals that we continue to meet or exceed and we're extremely pleased with how 2024 has begun in each of these areas as well.

Peter Anevski: And also, in any year, the most impactful driver of growth is our go-to-market success, which includes new sales, renewals, and upsells. So let's turn to the progress we're making in the current sales. Though this season is just getting underway, we're extremely pleased with our active pipeline, which is favorable to what it was this time last year. And in November, we told you about the robust pipeline of not-now opportunities that we're carrying over into 2024. As with every year, there are certain prospects who, for a variety of reasons, weren't in a position at the time to add a fertility benefit or change their existing provider. We begin each season by re-engaging with the not-nows, as they may now be in a better position to make a decision.

Peter Anevski: Also in any year. The most impactful driver to growth is our go to market success, which includes new sales renewals and upsells. So, let's turn to the progress, we're making and the current selling season.

Peter Anevski: So the season is just getting underway, we're extremely pleased with our active pipeline, which is favorable to what it was this time last year and in November. We told you about the robust pipeline of not now opportunities that we're carrying over into 2024 and every year there are certain prospects who for a variety of reasons. We're in a position at the time.

Peter Anevski: To add a fertility benefit or change their existing provider.

Peter Anevski: We begin each season by re engaging with <unk> as they may now be in a better position to make a decision traditionally did not represent the majority of the early commitments. We received in 2024 is proving to be no different with strong early commitments from leading brands and healthcare auto manufacturing travel.

Peter Anevski: Traditionally, the not-nows represent the majority of the early commitments we receive, and 2024 is proving to be no different. With strong early commitments from leading brands in healthcare, auto manufacturing, travel and leisure, and media, as well as multiple state and local government populations. This is a further demonstration of the flywheel effect, where our presence in an industry deepens once we win an initial account, and we see others in that industry looking to maintain benefits parity by adding or improving their coverage.

Peter Anevski: Leisure and media as well as multiple state and local government populations.

Peter Anevski: This is a further demonstration of the flywheel effect, where our presence in an industry deepens. Once we win an initial account and we see others in that industry, you look to maintain benefits parity by adding our improving their coverage.

Peter Anevski: The season is also off to a strong start in terms of new pipelines built, including the average size of opportunities versus the prior year. We're generating additional pipeline through all the typical channels, including through our partnerships, conferences, targeted events, inbounds, introductions from the benefit zones, and direct outreach. Now turning to up cells, the activity thus far is also very positive.

Peter Anevski: Season is also off to a strong start in terms of new pipeline bill, including the average size of opportunities versus the prior year.

Peter Anevski: We are generating additional pipeline through all the typical channels, including through our partnerships conferences targeted events inbound introductions from the benefit.

Peter Anevski: And direct outreach.

Peter Anevski: Now turning to upsell activity. Thus far is also very positive there is a number of pathways to expand our relationship we've seen historically.

Peter Anevski: There are a number of pathways to expand our relationship we've seen historically, seen 20 to 25% of the base take additional services each year. This year, our upsell cadence includes our newest services in menopause, maternity, and postpartum care, and we're pleased with the response we've seen thus far. We expect these new services to represent a smaller contribution to our results than our fertility offering as they are case rates, not medical costs, but they will increase the diversity in our portfolio and broaden our reach to more members.

Peter Anevski: Seem to 20%, 25% of the base take additional services each year and this year. Our upsell cadence includes our newest services in menopause maternity and post part of care and we're pleased with the response, we've seen thus far.

Peter Anevski: We expect these new services to represent a smaller contribution to our results and our fertility offering as they are case rates not medical claims, but will increase the diversity in our portfolio and broaden our reach to more members.

Peter Anevski: And, as usual, clients may also look to expand by adding to their existing fertility coverage with more smart cycles or other services such as preservation. In November, we told you about our first federal government population, which represents about 300,000 covered lives.

Peter Anevski: And as usual clients may also look to expand by adding to their existing facility coverage with more smart cycles or other services such as preservation.

Peter Anevski: And in November we told you about our first federal government population, which represents about 300000 covered lives, although that benefit is narrower than our usual offering and its contribution to our financial results is nominal we continue to look at this as a beachhead opportunity as conversations of expanding coverage are encouraging at this point.

Mark S. Livingston: Although that benefit is narrower than our usual offering and its contribution to our financial results is nominal, we continue to look at this as a beachhead opportunity as conversations of expanding coverage are encouraging at this point. We're also advancing several new channel partner relationships, including some of the most prominent health plans in the U.S., which, upon completion, would add to our existing agreements with CVS Health, Ever North, and Vistia Health and further expand our go-to-market reach.

Mark S. Livingston: We're also advancing several new channel partner relationships, including some of the most prominent health plans in the U S, which upon completion would add to our existing agreements with Cvs health ever North <unk> health and further expand our go to market reach.

Mark S. Livingston: These partnerships will help lay the groundwork to both accelerate our current market focus and offer opportunities in new settings. To conclude, we believe the engagement we're seeing in our current selling season demonstrates both the strong demand in the market as well as our position as the provider of choice for fertility and family building solutions. In every sales year, we look to grow the incremental number of covered lives as compared to the prior year.

Mark S. Livingston: These partnerships will help lay the groundwork to both accelerate our current market focus and offer opportunities into new segments.

Mark S. Livingston: To conclude we believe the engagement we're seeing in our current selling season demonstrates both the strong demand in the market as well as our position as the provider of choice for fertility and family building solutions.

Mark S. Livingston: Every sales year, we look to grow the incremental covered lives as compared to the prior year. Although it's very early given the strength, we're seeing in the sales season. Thus far we believe we are on track to meet that objective.

Mark S. Livingston: Although it's very early, given the strength we're seeing in the sales season thus far, we believe we're on track to meet that objective. We believe the momentum we're seeing across many areas of our business demonstrates that our market opportunity remains vast, and we are in our strongest ever competitive position relative to other solutions in the market. I now turn the call over to Mark.

Mark: We believe the.

Mark: Momentum, we're seeing across many areas of our business demonstrates that our market opportunity remains vast and we are in our strongest ever competitive position relative to other solutions in the market.

Mark: Let me now turn the call over to Martin.

Mark S. Livingston: Thank you, Pete, and good afternoon, everyone. I'll begin with our first quarter results and then provide our expectations for the second quarter and the full year. First quarter revenue was $278.1 million, reflecting growth of approximately 8 percent, primarily due to an increase in the number of clients and covered lives as compared to a year ago. I'll remind you that first quarter revenue was negatively impacted by a $15 million treatment mix shift that we discussed with you on our February call. As expected, this shift was short-lasting, as mix returned to what we would typically expect to see for the balance of Q1 and is trending normally as the second quarter gets underway.

Mark: Thank you Pete and good afternoon, everyone I'll begin with our first quarter results and then provide our expectations for the second quarter and the full year.

Mark S. Livingston: First quarter revenue was $278 1 million, reflecting growth of approximately 8% primarily due to an increase in the number of clients in covered lives as compared to a year ago.

Mark S. Livingston: I'll remind you that first quarter revenue was negatively impacted by a $15 million treatment mix shift that we discussed with you on our February call as expected. The shift was short lasting as mix returned to what we would typically expect to see for the balance of Q1 and is trending normally as the second quarter gets underway.

Mark S. Livingston: However, as Pete discussed, first quarter growth was also impacted by a slightly lower level of utilization as compared to the year-ago period. Female utilization in the first quarter was 0.46%, which compared to 0.48% in the first quarter a year ago. I'll remind you that the 0.48% was the highest quarterly utilization rate we had ever reported at that time. I'll note that utilization does not include the 300,000 members in the federal population, given that their plan design, as it is today, doesn't include services that we measure in our utilization rate.

Mark S. Livingston: As Pete discussed first quarter growth was also impacted by a slightly lower level of utilization as compared to the year ago period.

Mark S. Livingston: Female utilization in the first quarter was <unk>, 46%, which compared to four 8% in the first quarter a year ago I'll remind you that the <unk> four 8% was the highest quarterly utilization rate, we had ever reported at that time I'll note that utilization does not include the 300000 members in the federal population given that their plan.

Mark S. Livingston: <unk> design as it is today doesn't include services that we measure in our utilization rate.

Mark S. Livingston: In a comparative sense, the utilization rate for the first quarter of 2024 is just 4% below that peak, while also comparing favorably to the 0.45% reported in the first quarter of 2022. In fact, we believe the relative consistency in utilization over these past few years, where utilization has persisted within a relatively narrow range in each period, reflects both the prevalence of infertility as a medical condition as well as the importance of family building medical care for our members.

Mark S. Livingston: In a comparative sense utilization rate for the first quarter of 2024 is just 4% below that peak, while also comparing favorably to the four 5% reported in the first quarter of 2022.

Mark S. Livingston: In fact, we believe the relative consistency in utilization over these past few years, where utilization has persisted within a relatively narrow range in each period reflects both the prevalence of infertility is a medical condition as well as the importance of family building medical care for our members.

Mark S. Livingston: The visibility we have thus far into 2Q activity reveals that engagement has persisted at a similar level, namely lower than the record level that we saw in 2023 but higher than what we saw in 2022, which suggests that we aren't seeing the emergence of a new underlying trend. Turning now to our other business metrics for the quarter, approximately 14,800 art cycles were performed in Q1, reflecting a 12% increase over the first quarter last year. As of March 31st, we had 451 clients with at least 1,000 lives, representing an average of 6.4 million covered lives.

Mark S. Livingston: The visibility we have thus far into <unk> activity reveals that engagement has persisted at a similar level, namely lower than the record level that we saw in 2023, but higher than what we saw in 2022 would suggest that we arent seeing the emergence of a new underlying trend.

Mark S. Livingston: Turning now to our other business metrics in the quarter approximately 14800 art cycles were performed in Q1, reflecting a 12% increase over the first quarter last year.

Mark S. Livingston: As of March 31, we had 451 clients with at least 1000 lives representing an average of $6 4 million covered lives. This compared to 379 clients in an average of $5 3 million covered lives a year ago, reflecting approximately 20% growth in lives.

Mark S. Livingston: This compared to 379 clients and an average of 5.3 million covered lives a year ago, reflecting approximately 20% growth in lives. As we told you last quarter, a number of our newest clients are scheduled to go live in Q2 and Q3. Taking into account the clients who have already launched in the second quarter, we have over 460 clients today who represent approximately 6.5 million covered lives. With the launches scheduled between now and early Q3, as well as a limited amount of organic growth that we expect to see from the existing base, we anticipate an additional 200,000 covered lives this year. This will take us to 6.7 million lives overall, and we have reflected that in the progression of our guidance for the balance of 2024.

Mark S. Livingston: As we told you last quarter a number of our newest clients are scheduled to go live in Q2 and Q3, taking into account the clients who have already launched in the second quarter. We have over 460 clients today, who represent approximately $6 5 million covered lives with.

Mark S. Livingston: With the launches scheduled between now until early Q3 as well as a limited amount of organic growth that we expect to see from the existing base. We anticipate an additional 200000 covered lives. This year. This will take us to $6 7 million lives overall, and we've reflected that in the progression of our guidance over the balance of 2024.

Mark S. Livingston: Taking a deeper look at our financial results, medical revenue increased 8% in the quarter to $169.8 million, while pharmacy revenue over the same period increased 7% to $108.3 million. The lower rate of pharmacy growth versus medical primarily reflects the impact of the previously disclosed treatment mix shift, which disproportionately impacts pharmacy revenue given that the more extensive fertility treatments involve a higher level of medication. Turning now to our margins and operating expenses, gross profit increased 6% from the first quarter of last year to $62.4 million, yielding a 22.4% gross margin, comparable to the margin in the first quarter of 2023.

Mark S. Livingston: Taking a deeper look at our financial results medical revenue increased 8% in the quarter to $169 8 million, while pharmacy revenue over the same period increased 7% to $108 3 million.

Mark S. Livingston: The lower rate of pharmacy growth versus medical primarily reflects the impact of the previously disclosed treatment mix shift, which disproportionately impacts pharmacy revenue given that the more extensive fertility treatments involve a higher level of medication.

Mark S. Livingston: Turning now to our margins and operating expenses gross profit increased 6% from the first quarter last year to $62 4 million, yielding a 22, 4% gross margin comparable to the margin from the first quarter of 2023.

Mark S. Livingston: Sales and marketing expense was 5.6 percent of revenue in the first quarter, consistent with the year-ago period. Our model affords us the flexibility to continue to meaningfully expand our go-to-market resources given the inherent leverage we gain through the success in new client acquisition and from our high rate of client retention. G&A was 10.2% of revenue as compared to 11.4% in the first quarter a year ago. The 120 basis point improvement is primarily due to efficiencies that we continue to realize in our back office operations and reflect our expanding margins on G&A even as we grow revenue.

Mark S. Livingston: Sales and marketing expense was five 6% of revenue in the first quarter consistent with the year ago period, our model affords us the flexibility to continue to meaningfully expand our go to market resources, given the inherent leverage regain through the success of new client acquisition and from our high rate of client retention.

Mark S. Livingston: G&A was 10, 2% of revenue as compared to 11, 4% in the first quarter a year ago. The 120 basis point improvement is primarily due to efficiencies that we continue to realize in our back office operations and reflecting our expanding margins on G&A, even as we grow revenue.

Mark S. Livingston: Adjusted EBITDA grew in line with revenue this quarter to $50.3 million, within our guidance despite the lower than expected revenue. Adjusted EBITDA margin was 18.1% in the quarter as compared to 17.9% in the year-ago period. Because of our continued revenue growth and the operating efficiencies we continue to realize, adjusted EBITDA margin on incremental revenue, which most clearly highlights the rate of margin capture as we realize as we grow, was 20% in the first quarter. This demonstrates the leverage that we continue to achieve in our business.

Mark S. Livingston: Adjusted EBITDA grew in line with revenue this quarter to $50 3 million within our guidance. Despite the lower than expected revenue adjusted EBITDA margin was 18, 1% in the quarter as compared to 17, 9% in the year ago period.

Mark S. Livingston: Because of our continued revenue growth and the operating efficiencies. We continue to realize adjusted EBITDA margin on incremental revenue, which most clearly highlights the rate of margin capture capture as we we realized as we grow was 20% in the first quarter. This demonstrates the leverage that we continue to realize in our business model.

Mark S. Livingston: Net income was $16.9 million in the quarter, or $0.17 per diluted share. This compared to net income of $17.7 million, or $0.18 per share, in the year-ago period. The decline was primarily due to a provision for income taxes in the current period, as compared to a small benefit for taxes in the prior period, which more than offset the 38% increase in income before taxes.

Mark S. Livingston: Net income was $16 9 million in the quarter or <unk> 17 per diluted share this compared to net income of $17 $7 million or <unk> 18 per share in the year ago period.

Mark S. Livingston: The decline was primarily due to a provision for income taxes in the current period as compared to a small benefit for taxes in the prior period, which more than offset the 38% increase in income before taxes.

Mark S. Livingston: Adjusted earnings for diluted share, or earnings excluding the impact of stock-based compensation, taking into account any associated tax impacts, was $0.39 in the period. This compared to $0.34 in the first quarter a year ago and exceeded the high end of our guidance. Turning now to our cash flow and balance sheet, operating cash flow in the first quarter was $25.7 million, as compared to $21 million generated in the year-ago period.

Mark S. Livingston: Adjusted earnings per diluted share our earnings excluding the impact of stock based compensation taking into account any associated tax impacts was 39 and the period this compared to 34 and the FERC in the first quarter, a year ago and exceeded the high end of our guidance.

Mark S. Livingston: Turning now to our cash flow and balance sheet operating cash flow in the first quarter was $25 7 million as compared to $21 million generated in the year ago period. The improvement was due primarily to our higher profitability as well as normal timing timing items that can impact any given quarter.

Mark S. Livingston: The improvement was due primarily to higher profitability, as well as normal timing items that can impact any given quarter. The modest increase in DSO from year end is due primarily to seasonality and cash flow that we typically see at the beginning of each year as we work to establish carrier integrations and payment flows with our newest clients. With the expertise we've gained in managing this process across hundreds of clients, we generally see flows for these new clients operating normally by the second quarter following their launch.

Mark S. Livingston: The modest increase in DSO from year end is due primarily to the seasonality in cash flow that we typically see at the beginning of each year as we work to establish carrier integrations and payment flows with our newest clients.

Mark S. Livingston: With the expertise we have gained in managing this process across hundreds of clients. We generally see the flows for these new clients operating normally by the second quarter following their launch.

Mark S. Livingston: DSO as of March 31st also reflects an increase in working capital due to the situation at Change Healthcare. Although we haven't been notified that any of our member data was exposed, for those providers who submit their claims through Change, claims processing and, therefore, payment and collection cycles were elongated because of the manual processes that were implemented as a workaround solution.

Mark S. Livingston: DSO as of March 31, also reflects an increase in working capital due to the situation of change healthcare, although we havent been notified that any of our member data was exposed for those providers, who submit their claims through change claims processing and therefore, a payment and collection cycles, where elongated because of the manual process.

Mark S. Livingston: Is that were implemented as a work around solution as those systems slowly returned to normal those cycles are improving.

Mark S. Livingston: As those systems slowly return to normal, those cycles are improving. Looking across the remainder of the year, we continue to expect that we will convert approximately 75% of our full-year adjusted EBITDA into operating cash flow in 2024. As of March 31st, we had total working capital of approximately $476 million, reflecting $372 million of cash, cash equivalents, and marketable securities, and no debt. In late February, our board authorized a 100 million share repurchase program. As of March 31st, we'd repurchased more than 720,000 shares for approximately $26 million. With the activity thus far in Q2, nearly 2 million shares have been repurchased, and approximately 32 million remain under the existing authorization.

Mark S. Livingston: Looking across the remainder of the year, we continue to expect that we will convert approximately 75% of our full year adjusted EBITDA into operating cash flow in 2024.

Mark S. Livingston: As of March 31, we had total working capital of approximately $476 million, reflecting $372 million of cash cash equivalents in marketable securities and no debt.

Mark S. Livingston: In late February our board authorized a $100 million share repurchase program as of March 31, we repurchased more than 720000 shares for approximately $26 million.

Mark S. Livingston: With the activity thus far in Q2, nearly 2 million shares have been repurchased approximately $32 million remains under the existing authorization.

Mark S. Livingston: Turning now to our expectations for the second quarter and the rest of the year. Throughout our history as a public company, our approach has always been to set ranges that are informed by both historical trends and also what we're currently seeing. This is the same approach we followed last year when we were in a position to raise guidance multiple times as utilization continued to trend upward for most of the year. For the second quarter, we are assuming that the utilization rate will be steady, which is what we saw in April and continue to see as compared to the 4.46 rate in Q1, resulting in revenue of $300 million to $310 million. I'll remind you that our utilization in the second quarter a year ago was the highest quarterly rate we've ever reported.

Mark S. Livingston: Turning now to our expectations for the second quarter and the rest of the year.

Mark S. Livingston: Throughout our history as a public company. Our approach has always been to set ranges that are informed by both historical trends and also what we're currently seeing this is the same approach. We followed last year. When we were in a position to raise guidance multiple times as utilization continued to trend upward for most of the year.

Mark S. Livingston: For the second quarter, we are assuming that the utilization rate will be steady, which is what we saw in April and continue to see as compared to the 4.46 rate in Q1, resulting in revenue of $300 million to $310 million.

Mark S. Livingston: I'll remind you that our utilization in the second quarter, a year ago was the highest quarterly rate we've ever reported therefore, the 9% revenue growth we're expecting at the midpoint of this range reflects this challenging comparison.

Peter Anevski: Therefore, the 9% revenue growth we're expecting at the midpoint of this range reflects this challenging comparison. For the full year, we now expect revenue of between $1.23 to $1.27 billion, reflecting growth of 15% at the midterm. Our range assumes that utilization in the second half of the year will be nearer to what we saw in 2022 at the low end and closer to what we saw in 2023 at the high end.

Peter Anevski: For the full year, we now expect revenue of between one to three to $1 $2 7 billion, reflecting growth of 15% at the midpoint of our range assumes that utilization in the second half of the year will be near to what we saw in 'twenty to 2022 at the low end and closer to what we saw in 2023.

Peter Anevski: At the high end.

Peter Anevski: Turning to our profitability, we expect adjusted EBITDA of $52 million to $55 million in the second quarter and net income of $15, 7% to $17 8 million. This equates to 16 and 18 cents earnings per diluted share or <unk> 39, and 41 of adjusted EPS on the basis of approximately.

Peter Anevski: Turning to our profitability, we expect adjusted EBITDA of $52 to $55 million in the second quarter and net income of $15.7 to $17.8 million. This equates to $0.16 and $0.18 earnings per diluted share or $0.39 and $0.41 of adjusted EPS on the basis of approximately 99 million fully diluted shares. For the year, we now expect adjusted EBITDA of $216 million to $226 million, along with net income of $68.4 million to $75.4 million, with the revisions incorporating the drop-through impacts of the change in revenue, albeit reflecting the higher level of profitability we're already seeing.

Peter Anevski: 99 million fully diluted shares.

Peter Anevski: For the year, we now expect adjusted EBITDA of 216% to $226 million, along with net income of 68, 4% to $75 4 million with the revisions incorporating the drop through impact of the change in revenue, albeit reflecting the higher level of profitability, we're already seeing.

Peter Anevski: This equates to $0.68 and $0.75 earnings per diluted share, or $1.61 and $1.68 of adjusted EPS on the basis of approximately 100 million fully diluted shares. I'll remind you that our net income projections do not contemplate any discrete income tax item. At the midpoints of this guidance, we are expecting to see continued expansion of our margins in 2024, with an adjusted EBITDA margin on incremental revenue of over 20%. With that, I'll turn the call back over to Pete for some closing remarks.

Peter Anevski: This equates to 68% and 75 cents earnings per diluted share or $1 61, and $1 68 to $1 68 of.

Pete: Adjusted EPS on the basis of approximately 100 million fully diluted shares.

Pete: I'll remind you that our net income projections do not contemplate any discrete income tax items.

Peter Anevski: Yes.

Pete: The midpoint at the midpoint of this guidance, we are expecting to see the continued expansion of our margins in 2024 with adjusted EBITDA margin on incremental revenue of over 20%.

Peter Anevski: With that I'll turn the call back over to Pete for some closing remarks.

Pete: Thanks Mark.

Peter Anevski: As we look into the future, we believe we're well positioned to continue expanding the top line at a strong rate, driven by several factors. First, we remain in the earliest days of penetrating a very significant and growing core market opportunity with large self-insured employers. Second, our expanding roster of channel partners, which enhance our market presence and broaden our reach. Third, our expansion into additional verticals, including federal and state governments, where we've already had initial success, and eventually, the middle market adds meaningfully to our addressable market.

Pete: As we look into the future. We believe we are well positioned to continue expanding the top line at a strong rate driven by several factors first we remain in the earliest days penetrating a very significant and growing core market opportunity with large self insured employers second our expanding roster of channel partners.

Peter Anevski: <unk>, which enhanced our market presence and broaden our reach.

Peter Anevski: Third our expansion into additional verticals, including federal and state governments, where we've already had initial success and eventually the middle markets adds meaningfully to our addressable market and fourth our new products and services to address life's other milestones beyond fertility and family building, which are expected to contribute.

Peter Anevski: A higher gross margin as we leverage our existing infrastructure and the delivery of those services.

Peter Anevski: Taking all of those components into account, we believe will continue to take market share for the foreseeable future.

Peter Anevski: We look forward to discussing these drivers to our business in greater detail during our first ever analyst day, which we expect to hold shortly after the release of our second quarter earnings in August.

Peter Anevski: Sales will be released later this summer and we hope youll be able to join us with.

Peter Anevski: And fourth, our new products and services to address life's other milestones beyond fertility and family building, which are expected to contribute a higher gross margin as we leverage our existing infrastructure in the delivery of those services. Taking all of those components into account, we believe we'll continue to gain market share for the foreseeable future. We look forward to discussing these drivers of our business in greater detail during our first ever Analyst Day, which we expect to hold shortly after the release of our second quarter earnings in August. Details will be released later this summer, and we hope you'll be able to join us. With that, I'd like to open up the call for questions. Operator, can you please provide the instructions?

Speaker Change: With that I'd like to open up the call for questions. Operator can you. Please provide the instructions.

Operator: Certainly. The floor is now open for questions. If you wish to join the queue to ask a question at this time, please press star one on your telephone keypad. We do ask, if you are listening on speakerphone today, that you pick up your handset while asking your question to provide optimal sound quality. Once again, that will be star one on your telephone keypad at this time. If you wish to join the queue to ask a question, please hold a moment while we pull for questions. And the first question today is coming from Anne Samuel from J.P. Morgan. Anne, your line is live. Please go ahead.

Speaker Change: Certainly the floor is now open for questions. If you wish to join the queue to ask a question at this time. Please press star one on your telephone keypad.

Operator: We do ask us listing on speakerphone today that you pick up your handset while asking your question to provide optimal sound quality once again that'll be star one on your telephone keypad at this time, if you wish to join the queue to ask a question. Please hold a moment, while we poll for questions.

Operator: And the first question today is coming from Anne Samuel from Jpmorgan and your line is live. Please go ahead.

Anne Elizabeth Samuel: Hi guys, thanks for taking the question and thanks for all the color. Maybe just one on some of the issues that you're seeing around utilization, you know, given patients are proceeding with caution in some of these states that are affected by more restrictive reproductive regulations. Are you seeing employers in their states being more hesitant to add the benefit as well, or is it really just, you know, kind of limited to utilization at this point?

Anne Elizabeth Samuel: Hey, guys. Thanks for taking the question and thanks for all the color.

Anne Elizabeth Samuel: <unk>.

Anne Elizabeth Samuel: Maybe just one on some of the issues that youre seeing around utilization given patients are proceeding with caution in some of these states that are affected by a more restrictive reproductive regulations.

Anne Elizabeth Samuel: Are you seeing employers in their states.

Anne Elizabeth Samuel: Being more hesitant to add the benefit of as well or is it really just kind of limited to utilization at this point.

Anne Elizabeth Samuel: Yes, Hi, this is Michael yes.

Michael Sturmer: Yeah, hey, this is Michael, and limited to utilization at this point. We're not we haven't heard or seen any sort of hesitation from an employer.

Michael Sturmer: Limited to utilization at this point, we're not where we haven't heard or seen any sort of.

Michael Sturmer: Hesitation from.

Michael Sturmer: From an employer perspective.

Anne Elizabeth Samuel: That's great to hear. And then maybe just, you know, as we look into the back half of the year, just curious if you could talk about your expectations around utilization and maybe just, you know, what's giving you confidence in that recovery trajectory?

Speaker Change: That's great to hear.

Anne Elizabeth Samuel: And then maybe just you know as we look into the back half of the year. Just curious if you could talk about what your expectations are around utilization and maybe just what's kind of giving you confidence.

Anne Elizabeth Samuel: In that recovery trajectory.

Peter Anevski: Yeah, hi Andy, thanks for the question. So I'll actually take the second part first. So we've seen as we entered into the second quarter, utilization improved back from the activity that we were seeing in March, so that we're, you know, back at a level that's between what we were seeing in 22 and 23. Again, based on my prepared comments, albeit not as high as what we saw, certainly in Q2 for 2023. So we are seeing that improvement already. So the range contemplates, especially for the back half. So Q2 contemplates what we're seeing today and a continuation of that.

Speaker Change: Yeah, Hi, Andy Thanks for the question so.

Peter Anevski: Actually take the second part first so we've seen as we've entered into the second quarter.

Peter Anevski: Utilization improve back from the activity that we were seeing in March.

Peter Anevski: So that we're back in a level that's between what we were seeing in 'twenty, two and 'twenty three again based on my prepared comments, albeit not as high as what we saw certainly in Q2 for.

Peter Anevski: For 2023, so we are seeing that improvement already.

Peter Anevski: So.

Peter Anevski: The range contemplates, especially for the back half.

Peter Anevski: Q2 contemplates what we're seeing today.

Peter Anevski: For the back half of the year, the range basically reflects, you know, a modest increase in utilization versus what we saw in Q1 and what we're now seeing in Q2. A few percentage points, which brings us not quite to the same levels that we saw at the end of the second half of 2023, but closer to that. And then conversely, the low end of the range contemplates a slight reduction in the level of utilization that we're seeing today, which actually brings us slightly below what we see from our utilization rate for 2022. So we've framed it around, again, what our history has been for these last couple of years.

Peter Anevski: In a continuation of that for the back half of the year the range basically reflects.

Peter Anevski: A modest increase in utilization versus what we saw in Q1, and we're now seeing in Q2.

Peter Anevski: Two percentage points, which brings us not quite to the same levels that we saw at the second half of 2023, but closer to that and then Conversely, the low end of the range contemplates a slight reduction in the level of utilization that we're seeing today.

Peter Anevski: Which actually brings us slightly below what we saw from a utilization rate.

Peter Anevski: For 2022, so we framed it around again, what our history has been for these last couple of years.

Anne Elizabeth Samuel: That's very helpful. Thank you.

Speaker Change: That's very helpful. Thank you.

Michael Aaron Cherny: Thank you. Your next question is coming from Michael Cherny from Lyrinc. Michael, your line is live. Please go ahead.

Anne Elizabeth Samuel: Thank you. Your next question is coming from Michael Cherny from Leerink. Michael Your line is live. Please go ahead.

Michael Aaron Cherny: Good afternoon. Thank you for taking the questions. I guess I have one question, but it covers two different areas. And that's basically diving in a bit more into some of the utilization dynamics you're seeing. Obviously, I know this is a hot topic, but if you can give us a little more cohort information, first on some of the new member base and what you're seeing in utilization in terms of the lives you've added this year versus previous years.

Michael Aaron Cherny: Good afternoon. Thank you for taking the questions I guess I have one question, but covering two different areas and this basically diving in a bit more into some of the utilization dynamics Youre seeing obviously you know what.

Michael Aaron Cherny: A hot topic, but if you can give us a little more cohort information first on some of the new member base, and where you're seeing utilization in terms of the lives you added this year versus previous years.

Michael Aaron Cherny: And then second, if you can give us any trending dynamics on what you're seeing on the utilization side in the less restrictive states post the Alabama decision, and how that factors in to the underlying utilization views for the business.

Michael Aaron Cherny: And then second if you can give us any training dynamics on what you're seeing on the utilization side and the less restrictive states.

Michael Aaron Cherny: Post the Alabama decision, how that factors in to the underlying utilization views for the business as a whole.

Peter Anevski: Yep. Thanks, Mike.

Speaker Change: Yes, Thanks, Mike.

Peter Anevski: As it relates to the first question, first year utilization for the cohort that launched this year is similar to other cohorts in prior years. The second part of your question, part of the improvement that Mark's referring to off of what we saw in March that we're now seeing in April are some of those red states, if you will, that are improving off of the trough in March that we saw with them. And so that is part of the improvement already.

Peter Anevski: As it relates to the first question first year utilization first year utilization for the cohort that launched this year similar to other cohorts in prior years.

Peter Anevski: The second part of your question part of the improvement in March referring to off of what we saw in March that we're now seeing in April is some of those.

Peter Anevski: Red States, if you will.

Peter Anevski: Our improving off of the trough in March that we saw with them.

Peter Anevski: So that is part of the improvement already.

Speaker Change: I'll hop back in the queue. Thanks.

Speaker Change: Thank you your.

Glen Joseph Santangelo: Your next question is coming from Glen Santangelo on behalf of Jeffrey. Glen, your line is live, please go ahead. Yeah, thanks for taking my questions. Just two quick ones for me.

Peter Anevski: Your next question is coming from Glenn Santana Hello from Jefferies.

Glen Joseph Santangelo: Glenn you are allowed to get launched please go ahead.

Glen Joseph Santangelo: You know, I also want to follow up on this utilization question in the back half because, you know, Mark, if you look at the guidance, you're calling for 8.5% revenue growth in the first half, and then to get to the midpoint of your guidance, you're going to need 21% growth in the second half. And you said you're sort of modeling utilization off of somewhere between 22 and 23, based on what we saw in those two years.

Glen Joseph Santangelo: Yes, Thanks for taking my questions. Just two quick ones for me I also want to follow up on this utilization question in the back half because mark if you look at the guidance you're calling for.

Glen Joseph Santangelo: Eight 5% revenue growth in the first half and then to get to the midpoint of your guidance, you're going to need 21% growth in the second half and you said, you're sort of modeling utilization off of somewhere between 22 and 'twenty three what we saw in those two years, but isn't the consumer in a different place today versus a year or two years ago and I guess what gives you.

Glen Joseph Santangelo: But isn't the consumer in a different place today versus a year or two years ago? And I guess, what gives you confidence, you know, that we're going to see those historical utilization trends? And then I just had a quick follow-up on the selling.

Glen Joseph Santangelo: Confidence.

Glen Joseph Santangelo: That we're going to see those historical utilization trends and then I just had a quick follow up on the selling season.

Mark S. Livingston: Yeah, so if you try to look at first half and second half, you have to remember there's a couple of key pieces that are contributing to the second half. So first, we've already called out the mix issue in Q1, which is, you know, clearly behind us. That was 15 million right there.

Glen Joseph Santangelo: Yes.

Mark S. Livingston: If you try to look at first half second half you have to remember there is a couple of key pieces that are contributing into the second half. So first we've already called out the mix issue in Q1, which is clearly behind us that was $15 million.

Mark S. Livingston: Right there so obviously, that's not going to be.

Mark S. Livingston: So obviously that's not going to be a, that's a, you have to normalize for that. We also mentioned that we've got a couple of hundred thousand new lives that are starting through the, you know, end through the back half of the second quarter into Q3, which will contribute as we go forward. And as I said, you know, we're already seeing that utilization move back to that level. And again, as we said in our prepared remarks, the first couple of months of activity for this year are tracking identically to last year, which was our record year.

Mark S. Livingston: You have to normalize for that we also mentioned that we've got a couple of hundred thousand new lives that are starting.

Mark S. Livingston: Through the end through the back half of second quarter into Q3, which will contribute as we go forward and as I said, we're already seeing that utilization move back to that level and again as we said in our prepared remarks. The first couple of months of activity for this year, we're tracking identically to laugh.

Mark S. Livingston: Year, which was our which was a record year. So.

Mark S. Livingston: So, you know, intuitively, that cohort of members and patients does have the capability of driving that utilization at some stage. And I think part of the question is, is, if, you know, member sentiment, if you will, has, you know, completely shifted since February. We saw some, you know, decline in activity in March. Of course, we don't know for sure, but it certainly coincides pretty, pretty clearly with the Alabama decision and people's reflection on when they would want to move forward.

Mark S. Livingston: Suicidally that cohort of members and patients does have the capability of driving that utilization.

Mark S. Livingston: At some stage and I think part of the question is so I don't know if member sentiment. If you will has completely shifted since since February we.

Mark S. Livingston: We saw some decline in activity in March and of course, we don't know for sure, but certainly coincides pretty.

Mark S. Livingston: Pretty clearly with the Alabama decision in People's reflection on when they would want to move forward.

Mark S. Livingston: And to the extent that it's already improving here in April, I mean, that gives us some confidence that we will, you know, likely, and that's why our guidance reflects it, land between 2022, which was measurably lower, and 2023, which was, you know, our record.

Mark S. Livingston: And to the extent that its already improving here in April I mean that gives us some confidence that we will.

Mark S. Livingston: Likely and Thats why our guidance reflects it land between 2022, which was measurably lower and 2023, which was our record year.

Speaker Change: Okay perfect I appreciate the details.

Glen Joseph Santangelo: Perfect. I appreciate the details.

Speaker Change: I can just follow up on the selling season. It feels like every year you tell us roughly about this time that you're trending ahead of where you were in the year prior.

Peter Anevski: Hey, Pete, if I could just follow up on the selling season. It feels like, you know, every year, you tell us roughly about this time that you're trending ahead of where you were in the year prior. And, you know, that's always been the case, which is great, except last year, which probably came in maybe a little bit lighter than what we were expecting. And, you know, I think you go into these years with the goal of adding at least as many lives as last year.

Peter Anevski: It's always been the case, which is great except for last year. It probably came in maybe a little bit lighter than than what we were expecting and I think you can go into these years with the goal of adding at least as many lives as last year. So is the goal. This year $1 3 million lives and I guess, how are you measuring your progress thus far is it.

Peter Anevski: So, is the goal this year 1.3 million lives? And, I guess, how are you measuring your progress thus far? Is it conversations you're having? Is it commitments to date? Do you measure it by lives, clients? Any sort of color on how you measure the selling season at this point would be helpful. Thanks.

Peter Anevski: Is it conversations youre, having as a commitment to date you measured by lives clients any sort of color on how you measure the selling season at this point would be helpful. Thanks sure to go to your first part of your question yes.

Peter Anevski: Sure. To go to the first part of your question, yes, it's the 1.3 million lives that we're looking to meet or exceed. The second part of your question is the active pipeline. For us, when we talk about it, it has very strict definitions in terms of sales activities, not just conversations. It's different types of milestones relative to progress with those prospective clients. And so, when we talk about the active pipeline being ahead of last year, that's what we're referring to. We talk about the average deal size being larger than last year. That's what we're referring to versus this point last year. Pipeline builds, the sales pipeline builds throughout the sales season.

Peter Anevski: The $1 3 million lives that we're looking to meet or exceed.

Peter Anevski: The second part of your question is.

Peter Anevski: The active pipeline for us when we talk about it has has very strict definitions in terms of of sales activities not just conversations it's different types of milestones relative to progress with with those prospective clients and so when we talk about active pipeline being ahead of last year, that's what we're referring to when we talk about the app.

Peter Anevski: Average.

Peter Anevski: Deal size being larger than the last year, that's what we're referring to versus this point last year pipeline builds sales pipeline builds throughout the sales season and.

Peter Anevski: And all we can do is look at and always do look at where we're at relative to.

Peter Anevski: And all we can do is look at, and we always do look at where we're at relative to the prior year. Now, last year, you know, if you recall, was a slightly more difficult year where you had macroeconomic conditions. And, you know, for the majority of the year, a looming recession. And it wasn't just, you know, our benefit; overall benefit decisions, you know, were not as robust as they were in prior years.

Peter Anevski: Prior year now last year.

Peter Anevski: If you recall was a.

Peter Anevski: Slightly more difficult year, where you had macroeconomic conditions and.

Peter Anevski: For the majority of the looming recession and it wasn't just our benefit was overall benefit decisions.

Peter Anevski: Were not as robust as they were in prior years.

Peter Anevski: And so, that's what we believe impacted last year a little bit. And despite that, we were really pleased with the season. And we talk about, you know, early commitments. Yeah, definitely early commitments are also what we look at. Again, period to date versus a year ago when we make these comments. Okay, thanks for all the details.

Peter Anevski: So that's what we believe impacted last year, a little bit and despite that we were really pleased with the season.

Peter Anevski: But and when you talk about early commitments yet definitely early commitments are also what we look at again period to date versus a year ago. When we make these comments.

Speaker Change: Okay. Thanks for all the details.

Jailendra P. Singh: Thank you. Your next question is coming from Jailendra Singh from Truist. Jailendra, your line is live. Please go ahead.

Speaker Change: Thank you. Your next question is coming from Joe Andhra Singh from Truest Chilean draw. Your line is live. Please go ahead.

Jailendra P. Singh: Thank you, and thanks for taking my question. My first question is around business visibility. So utilization shortfall this quarter, combined with the issue of utilization makes shift, that does raise the question of visibility in the business. And I understand there could always be some variability in the business, but can you spend some time on how much forward visibility you generally have in your business, considering that the company gets involved very early in a patient's journey?

Jailendra P. Singh: Thank you and thanks for taking my question. My first question is around the business visibility so utilization shortfall this quarter combined with the issue of capitulation mix shift that does raise the question of visibility in that business and I understand it could be August some variability in the business, but can you just spend some time on how much forward visibility generally you have in your biz.

Jailendra P. Singh: <unk>.

Jailendra P. Singh: The thing that the company gets involved in very early in a patient's journey. The gist of my question actually is that you called out multiple times 2020 as it was a record year, but are you still assume that those utilization levels stay at those levels and you should guidance for you.

Jailendra P. Singh: The gist of my question actually is that you called out multiple times that 2020 was a record year, but you still assume that those utilization levels stay at those levels, and you gave guidance a few months back only to lower the guidance a quarter later. So help us better understand how we should get comfortable around the visibility of this.

Jailendra P. Singh: Few months back only to lower the guidance a quarter later, so help us better understand how we should get comfortable around the visibility business.

Mark S. Livingston: So, you know, the way that our business works is that members, you know, call and engage with us to use their benefits. And they will do that and schedule appointments with providers. And there'll be a window of time when those appointments will be authorized, and that period generally gives us four to perhaps six weeks, four to some degree, six weeks to a lesser degree, visibility into the volume of appointments that are being scheduled.

Jailendra P. Singh: So.

Jailendra P. Singh: The way that our business works is that members call and engaged with us to use their benefit and they will do that and schedule appointments with providers and there'll be a window of time, where.

Mark S. Livingston: Those appointments will be authorized for and that period generally gives us four to perhaps six weeks four to some degree six weeks to a lesser degree visibility to the volume of appointments and and that are being scheduled. So for example.

Mark S. Livingston: So, for example, when I'm sitting at the end of February, I'm looking at a series of appointments that were scheduled for February for which we have not received claims or have a formal confirmation that an appointment has actually happened. And I'm looking forward into the month of March for appointments that have been scheduled, which may move, they may cancel, they may change, they may be renewed from another period of time. So, you know, to get to your point or to get to the point, we're looking at four to six weeks forward and also looking backwards for four weeks or so to confirm the appointments that we believe have been scheduled and have happened.

Mark S. Livingston: When I'm sitting at the end of February.

Mark S. Livingston: Im looking at a series of appointments that were scheduled for February for which we have not received claims or have a formal confirmation that an appointment has actually happened and I'm looking forward into the month of March for appointments that had been scheduled.

Mark S. Livingston: Which may move they may cancel they may change they may they renewed from another period of time so.

Mark S. Livingston: With that being said to get to your point or get to the point, where we're looking at four to six weeks forward and also looking backwards for four weeks or so to confirm the appointments that we believe and scheduled and it happened.

Mark S. Livingston: So when you issued it.

Mark S. Livingston: So when you issued your report, you reported Q4, you did not have much visibility in March that this was happening? It's important to make sure I understand that.

Mark S. Livingston: Our reported Q4, you did not have much visibility on March <unk>.

Mark S. Livingston: What's happening.

Mark S. Livingston: Make sure I understand that.

Mark S. Livingston: did not And although we have visibility to the next month and up to six weeks, I think the important point to understand is appointments are being scheduled throughout the month of March, not just at the end of February. So I think that's the nuance I think in that data point, right? So what we do and what we always do, sort of no different than the conversation we had about sales activity, is we look at that, what's scheduled at that point versus what was scheduled again a year ago, what's been happening already in January, February versus a year ago, and those are the comments we made and those are, and that's what the basis for the guidance was.

Speaker Change: Did did not and although we have visibility into the next month and up to six weeks I think the important point to understand is appointments are being scheduled throughout the month of March not just at the end of February and all scheduled already in March So I think thats the nuance I think in that in that.

Mark S. Livingston: Data point right. So so what we do and what we always do so no different than the conversation we had about sales activity as we look at that what scheduled at that point versus what was scheduled again a year ago, what's been happening already in January and February versus a year ago and those are the comments, we made in those and that's what the base.

Mark S. Livingston: <unk> for the guidance was we're literally to the 100 basis point, we were on point to a year ago through the end of February at the time that we reported in terms of what was scheduled and then although there's decent visibility into March is not complete visibility by far more activity has to be booked and thats. The leveling off we're referring.

Mark S. Livingston: We're literally to the hundredth basis point, we were on point to a year ago through the end of February at the time that we reported in terms of what was scheduled, and then although there's decent visibility into March, it's not complete visibility by far, more activity has to be booked and that's the leveling off we're referring to that in the prior year we didn't see in March and we saw a little bit more leveling off this year, that although impacting the guidance was a four percent Delta, right? And if you think about the last couple years, including last year, where we reported, where we guided the year, it ended up being favorable but was still roughly four or five percent better, not worse, better, so better is always better, but it could go either way, which is sort of our point, and so it's plus or minus three, four, five percent for a given period, month, or quarter, or a year, it's not material and that was sort of, you know, in our written remarks, the comments we were making, and that's been the level of visibility and accuracy that the system that we've been utilizing to forecast on has been.

Mark S. Livingston: To that in the prior year, we didn't see in March and we saw a little bit more of a leveling off this year that although impacting the guidance was 4% Delta right and if you think about the last couple of years, including last year, where we reported where we guided the year. It ended up being favorable but were still roughly four to five.

Mark S. Livingston: Better not worse, better so better is always better but it could go either way, which is sort of our point and so it's plus or minus 345% for a given period month or quarter over a year, it's not material and that was sort of.

Mark S. Livingston: Our written remarks, the comments were making and thats been the level of visibility and accuracy that the system that we've been utilizing too.

Mark S. Livingston: <unk> forecast on has been and just to make it just a big a simple example of this so somebody that called up in the middle of February to book an appointment in the first half of March.

Mark S. Livingston: And just to make a simple example of this, somebody that called up in the middle of February to book an appointment in the first half of March and had that settled, that doesn't mean they're locked into going into March. So as the latter part of February occurred, people began to think more reflectively about what the Alabama decision meant, and what have you, they would call up and move that appointment out into April or cancel it altogether.

Mark S. Livingston: And had that settled that doesn't mean, they are locked into going into March. So as the latter part of February occurred people begin to think more reflective Lee about what the Alabama decision meant and what have you would call up and move that appointment out into April or canceled altogether and so that's part of that activity in March where people are are either changing there.

Mark S. Livingston: And so that's part of that activity in March where people are either changing their minds, or they're just not coming as quickly as we would have anticipated. And that's the activity that we're talking about that happened again, as we got into March and even towards the middle of March, honestly.

Mark S. Livingston: Mind or Theyre, just not coming as quickly as as we would've anticipated and thats. The activity that we're talking about that happened again as we got into March and even towards the middle of March honestly.

Jailendra P. Singh: My quick follow-up on, you know, Progyny Rx revenue was up 7%, which was actually slower than your Fertility Benefit Service revenue up 8%. I can't recall a quarter where that actually happened. Anything to highlight there? Well, you've got it.

Speaker Change: Okay. That's helpful color My quick follow up on.

Jailendra P. Singh: <unk> revenue was up 7%.

Jailendra P. Singh: Which was actually slower than sort of the benefit side of his update listen I can't recall, a quarter, where that actually happened anything to highlight there.

Mark S. Livingston: Well, you've got, again, right now we're getting to a point where our, the installed base of both medical and Rx are, you know, very close together, but I think in our prepared comments we mentioned that the mix issue that that was apparent in the early part of the quarter, which again is fully resolved itself, is this, it hits Rx disproportionately because the more extensive treatments that we did not have in the first quarter tend to carry a much heavier proportion of medication than the overall, so that also served to mute the growth of Rx as it compares to medical.

Jailendra P. Singh: Well, you've got again right now we're getting to a point, where our installed base of both medical and Rx are very close together, but I think in our prepared comments, we mentioned that the mix issue that that was apparent in the early part of the quarter, which again is fully resolved itself is this.

Mark S. Livingston: Rx disproportionately because.

Mark S. Livingston: <unk>.

Mark S. Livingston: More extensive treatments that we did not have.

Mark S. Livingston: In the first quarter tend to carry a much heavier proportion of medication than the overall. So that also served to mute the growth of our <unk> as it compares to medical in the quarter.

Speaker Change: Got it thank you.

Mark S. Livingston: Yes.

Sarah Elizabeth James: Thank you. Your next question is coming from Sarah James from Cantor Fitzgerald. Sarah, your line is live. You may go ahead.

Mark S. Livingston: Thank you. Your next question is coming from Sarah James from Cantor Fitzgerald.

Sarah Elizabeth James: Your line is life you May go ahead.

Peter Anevski: Thank you. It sounded like you guys were seeing some differences between red and blue states, so, hoping you can clarify, were you guys also seeing weakness in March in the blue states after the Alabama decision, or was it more isolated to the red states? And then, how do you get confidence that it was political and psychological as opposed to the number of, like, weekdays in the quarter? Because a lot of the providers had a weak March given the way that Easter and spring break fell. So, what gives you confidence that it's more on the political and psychological side versus just the calendar?

Sarah Elizabeth James: Thank you.

Sarah Elizabeth James: Sounded like you guys are seeing some difference between red and Blue States, hoping.

Peter Anevski: You can clarify were you guys also seeing weakness in March in the Blue States. After the Alabama decision or was it more isolated to the Red States and then how do you get confidence that it was a political and psychological as opposed to the number.

Peter Anevski: Like week days in the quarter, because a lot of the providers had a weak march given the way that Easter and spring break fell.

Peter Anevski: So what gives you confidence that it's more on the political psychological side versus just the calendar.

Sarah Elizabeth James: Well, in our modeling, we take into account the number of days of treatment possibilities in each period, so we're always adjusting for that, so our comments reflect that sort of universally. In terms of the red-slash-purple-slash-blue states, we did see some modest slowing of utilization even in some blue states, or ones you would consider traditionally blue states. It just wasn't nearly as pronounced as we saw from states that are red, and that's just sort of the sum of it.

Speaker Change: Well in our modeling we take into account the number of days.

Sarah Elizabeth James: Treatment possibilities in each period, so we're always adjusting for that and so our comments reflect that sort of universally.

Sarah Elizabeth James: In terms of the Red Slash Purple Flash Blue States we.

Sarah Elizabeth James: We did see some modest.

Sarah Elizabeth James: The slowing of utilization even in some blue states or ones you would consider traditionally blue states. It just wasn't nearly as pronounced as you would as we saw from.

Sarah Elizabeth James: States that are.

Sarah Elizabeth James: Brett.

Sarah Elizabeth James: That's just sort of the the sum of it.

Sarah Elizabeth James: And then as far as the, and again, we've mentioned this a few times, we are seeing recovery of that. So, you know, again, we don't, you know, we can't know for sure what it is, but again, you know, putting those different circumstances together and knowing that those issues, I'm not sure you could say that they're necessarily fully resolved in terms of the political component of it, but people have now had an opportunity, obviously legislatively there's been some resolutions in particular in Alabama, but people have also had an opportunity to sort of assess what it means for them personally, and then to make their decisions, which is why we believe we're seeing, you know, April begin to pick back up again.

Sarah Elizabeth James: And then as far as the as far as the and again we've mentioned this a few times, we are seeing recovery of that so.

Sarah Elizabeth James: Again, we don't we can't know for sure what it is but again.

Sarah Elizabeth James: Putting those those different circumstances, together and knowing that those those issues I'm not sure you could say that they are necessarily fully resolved in terms of the the political component of it but people have now had an opportunity obviously legislatively theres been some resolutions and particularly in Alabama.

Sarah Elizabeth James: But people are also had an opportunity to sort of assess what it means for them personally and then to to make their decisions, which is why we believe we're seeing April begins to pick back up again.

Mark S. Livingston: Thank you. And also, I was wondering if you could give us a little color on the receivable bills for the quarter? So, we...

Speaker Change: Thank you and also wondering could you give us a little color on the receivable build in the quarter.

Mark S. Livingston: So, we do typically see a receivable build in Q1 and, you know, as we onboard new clients, there's a little bit longer cycle before cash is ultimately received from the new clients, and in some cases, existing clients, if they happen to change their plans, there's sort of a similar dynamic there. The impact of change was also, you know, a factor. There was, you know, much slower processing of claims, particularly in the latter part of the quarter, as our providers and others sought other means of submitting their claims, including, literally, manually on paper. So, this is a little bit of that, but nothing that we would consider of concern.

Speaker Change: So we do we do typically see a receivable build in Q1.

Mark S. Livingston: And as we onboard new clients there is a little bit longer cycle before cash is ultimately received.

Mark S. Livingston: From the new clients and in some cases.

Mark S. Livingston: Listing clients if they happen to change their plan is sort of a similar.

Mark S. Livingston: A similar dynamic there the impact of change was also.

Mark S. Livingston: Factor there was much slower processing of claims, particularly the latter part of the quarter.

Mark S. Livingston: As our providers and others saw other means of submitting their claims including literally manually on paper. So so this is a little bit of that but nothing that we.

Mark S. Livingston: Would consider of concern.

Speaker Change: Thank you.

Speaker Change: Thank you.

Scott Anthony Schoenhaus: Your next question is coming from Scott Schoenhaus from KeyBank. Scott, your line is live; please go ahead.

Mark S. Livingston: Your next question is coming from Scott Schonhaus from Keybanc.

Scott Anthony Schoenhaus: Your line is live please go ahead.

Peter Anevski: Hey team, thanks for taking my question. So I want to go back to the utilization red-blue state dynamic. How are we sure that this was really related to the Alabama regulatory environment? You know, my understanding is that during the selling season, you had more broad swaths of probably states represented, diluting the kind of blue states into more red states. Is it just lower structural utilization trends that you witnessed that could be persistent? Like, how are we, how are you absolutely sure that this is a regulatory issue?

Scott Anthony Schoenhaus: Hey team. Thanks for taking my question, so I want to go back to the utilization.

Peter Anevski: Thanks.

Peter Anevski: Red Blue state dynamic.

Peter Anevski: How are we sure that this was really related to the Alabama regulatory environment now my understanding is the selling season, you had more broad swath of probably states represented diluting kind of the blue states into more Red States, if they're just lower structural utilization trends that you witnessed that could be persistent like how.

Peter Anevski: Are you absolutely sure that this is a regulatory issue.

Peter Anevski: Yeah, it's Pete. Thanks, Scott. We never said we were absolutely sure, but it's a coincidence, but hard to ignore the coincidence of the timing of the decision versus the... (inaudible) And it's the same trend reversing now. We're seeing more reversal because there was more of a trough in March for those states. But so do we know for sure? Absolutely not. Are we assuming it based on the data and the date? We are. And so we don't know.

Speaker Change: Thanks, Scott we never said, we're absolutely sure we said, it's coincidence, but hard to ignore the coincidence of the timing of the decision versus the significantly more pronounced impact around right. After that decision in those red states versus Blue States and it's the <unk>.

Peter Anevski: AME.

Peter Anevski: Trend reversing now we're seeing or reversal because it was more of a trough in March for those states. So do we know for sure absolutely not our we surmised it based on.

Peter Anevski: The data and the date.

Peter Anevski: And so we don't know regarding I'm not sure I understand your question regarding the sales season, we're referring to overall activity for the all of the covered lives not just the sales season lives. So if I'm not getting that question you can feel free to ask.

Peter Anevski: Regarding, I'm not sure I understand your question regarding the sales season. We're referring to overall activity for all of the covered lives, not just the sales season lives. So if I'm not understanding that question, you could feel free to repeat it.

Scott Anthony Schoenhaus: I'd say just from a structural standpoint, it sounded like your question was, is it possible that there's just a general reduction overall? And I guess we come back to, again, what we were seeing from all of the activity from January and February, which was, again, tracking virtually identical to the same pacing we saw last year, which was our record year. So again, I think the base, including the new clients, has the capability of delivering at a higher level. But there's been some other factor that's obviously changed that direction here for a short period of time.

Peter Anevski: Just from a structural standpoint it sounds like your question is isn't is it possible that there is just a general reduction overall and I guess, we come back to again, what we were seeing from all of the activity from January and February which was again tracking virtually identical to the same pacing we saw last year, which was our record year.

Scott Anthony Schoenhaus: So again, I think the base, including our new clients.

Scott Anthony Schoenhaus: Have the capability of delivering it at a higher level there has been some other factor that's obviously.

Scott Anthony Schoenhaus: Change that direction here for a short period of time.

Peter Anevski: And just for clarification, did you say that the new cohort in April has seen sort of, you know, elevated utilization levels comparable to your legacy cohort? We're, we're, we're not.

Speaker Change: And just for clarification did you say that the new cohort in April has seen sort of.

Peter Anevski: Elevated utilization levels comparable to your legacy cohort.

Peter Anevski: We're making comments around, again, the entire covered lives, not just the new cohort, and where the members are in those states from a utilization perspective, and what's happening within the states, and surmising that the impact relative to March was more pronounced, from a data standpoint, where the trough was deeper in the red states versus the blue states and where that is turning back in April.

Peter Anevski: We're not we're making comments around again the entire covered lives not just the new cohort and where the members are in those states from a utilization perspective, and what's happening within the states and surmised that that the impact relative to March that was more pronounced.

Peter Anevski: From a data standpoint.

Peter Anevski: Where the trough was deeper in the Red states versus the Blue States and where that that is turning back.

Peter Anevski: In April.

Speaker Change: Thank you.

Peter Anevski: Yes.

Stephanie July Davis: Thank you. Your next question is coming from Stephanie Davis of Barclays. Stephanie, your line is live. Please go ahead.

Peter Anevski: Thank you. Your next question is coming from Stephanie Davis of Barclays. Stephanie. Your line is live. Please go ahead.

Peter Anevski: Hey guys, thank you for taking my questions. I was hoping we could dig in a little bit on a backwards-looking metric and talk about utilization from last year. Is there any analysis you've done around if there was maybe a benefit from some post-pandemic dynamics or if they benefited from the prior year's broad-based extension fertility benefits that would make that more of a peak utilization rate versus something you should think of going forward?

Stephanie July Davis: Hey, guys. Thanks for taking my question.

Peter Anevski: I was hoping we could dig in a little bit backwards metric and talk about utilization from last year is there.

Peter Anevski: And.

Peter Anevski: Don around it that would maybe benefit from some post pandemic dynamics or if they've been it's been from prior years by base extension fertility benefits that will make that more of that peak utilization rate versus something we should think of going forward.

Peter Anevski: Oh.

Peter Anevski: [inaudible] If you think about all of our comments when the pandemic happened, it was, you know, utilization levels returning back to normal through 20, and by 21, they were effectively back to normal. So I don't know that there's a, in 23, sort of a pandemic overhang or any way for us to know that. But we don't believe that was the, What was the second part of your question? Sorry.

Peter Anevski: If you think about all of our comments when the pandemic happened.

Peter Anevski: It was utilization levels, returning back to normal through the through 'twenty and by 'twenty. One they were effectively back to normal. So I don't know that theres a in 'twenty three sort of a pandemic overhang or any way for us to know that.

Peter Anevski: But we don't believe that was the case.

Peter Anevski: What was the second part of your questions are.

Stephanie July Davis: Trust, if not just the pandemic but maybe the expansion of fertility benefits in the prior year, if that cohort could have maybe had a higher level of utilization, they were most likely to use it during the pandemic.

Peter Anevski: Josh It's also not just the pandemic, but maybe if the expansion of that facility benefits in the prior year at that cohort, but it may be had a higher level of utilization.

Peter Anevski: Well, the expansion of the benefits that occurred every year... remain there in the, you know, at each employer. That's the upsells that we refer to. It's not like they expanded and retracted. We talk about it all the time that we have an upsell activity and no clients that are reducing the benefits. So those expansions have existed, if they existed in 2023 and we had, you know, a nearly 100% client retention rate, they're here also in 2024.

Stephanie July Davis: Well.

Stephanie July Davis: One of the benefits that occurred in every year.

Peter Anevski: Remain there.

Peter Anevski: In the.

Peter Anevski: At each employer, that's the Upsells that we referred to it's not like they expanded and retracted we talked about it all the time that we upsell activity and no clients that are reducing the benefits. So those expansions have existed if they existed in 2023 and we have a <unk>.

Peter Anevski: Nearly 100% client retention rate there here also in 'twenty four.

Speaker Change: Okay, that's somewhat helpful.

Peter Anevski: Okay, that's somewhat helpful.

Stephanie July Davis: Thinking about the Rx benefit, I know we're going to see less of a... (inaudible)

Peter Anevski: Thinking about the benefit I know, we're going to see less of a.

Speaker Change: Sorry, if that growth clip just given you've seen a very high pace yet better.

Stephanie July Davis: Capture rates, but when we think about the go forward growth rate is it more in line with the single digit that we saw in this quarter or was there any one off that would be impacting that.

Stephanie July Davis: Yes.

Stephanie July Davis: After Q1 as Mark referenced there was outsized impact related to the shipments that we had talked about early in the quarter.

Peter Anevski: For Q1, as Mark referenced, there was an outsized impact related to the shipment that we had talked about early in the quarter for pharmacy because those treatments that we saw less of are much more, a much higher level of medication utilized during the treatment, and therefore, there was a larger impact, if you will, on the growth rate in Q1 relative to pharmacy. I don't know, Mark, if you want to comment in terms of... We would help, but yeah, we don't.

Peter Anevski: For pharmacy, because those treatments that we saw a lessor of.

Peter Anevski: Are much more a much higher level of a medication utilized during the treatment and therefore, there was a larger impact if you on the growth rate in Q1 relative to pharmacy.

Mark: For the out quarters.

Peter Anevski: Mark do you want to comment in terms of.

Mark: But yes, we don't we don't typically comment looking forward I think again I would just maybe I'd stick with what I said earlier, which is <unk>.

Mark S. Livingston: Yeah, we don't we don't typically comment looking forward. I think, again, I'd maybe I'd stick with what I said earlier, which is, you know, over time, you're going to see those growth rates, you know, begin to continue to sort of diverge or converge with medical.

Mark S. Livingston: Over time, Youre going to see those growth rates.

Mark S. Livingston: Sure.

Mark S. Livingston: Begin to.

Mark S. Livingston: <unk> sort of diver our converge.

Mark S. Livingston: With medical.

Peter Anevski: Okay, just give a quick can you expand on that a little bit how there's going to be the mix impacting the level of utilization for the Rx just given I believe for a fresh transfer, for an egg freeze, you're still doing the same amount of drug for it.

Speaker Change: Okay, just give a quick can you expand on that a little bit how he is going to be.

Peter Anevski: Mix impacting.

Peter Anevski: The level of utilization for the Rx just given.

Peter Anevski: I believe for a fresh transfer anchor and headframe Youre still doing the same amount of drag alright.

Stephanie July Davis: If you're doing a transfer, there are way fewer drugs in the transfer than there is in a retrieval, right? If you're doing a retrieval only, as opposed to a full cycle, which is a retrieval and transfer, again, there are fewer drugs. So that whole waterfall... Yeah, I mean, you use drugs when you transfer, you use drugs when you retrieve, right? There's a full suite of drugs that you're using throughout the whole thing. The point is, overall, to the extent that the mix was impacted and, you know, the transfer alone would be the best example, it's significantly fewer drugs than a retrieval, any retrieval.

Peter Anevski: If you're doing a.

Stephanie July Davis: If you do a transfer is way less drugs and the transfer than there is in a retrieval right. If you're doing a retrieval only as opposed to a full cycle, which is a retrieval and transfer again theres less drugs.

Peter Anevski: Okay, thank you.

Peter Anevski: So that whole waterfall.

Speaker Change: Yes, yes.

Peter Anevski: Used drugs when you transfer used drugs when you retrieve right. There's a fault is a full suite of drugs are using throughout the whole thing the point as overall to the extent that the mix was impacted and and the transfer alone would be the best example is significantly less.

Peter Anevski: Drugs than a retrieval endometrial.

Peter Anevski: Okay.

Peter Anevski: You.

Richard Collamer Close: Thank you. Your next question is coming from Richard Close from Canaccord Genuity. Richard, your line is live. Please go ahead. Great.

Peter Anevski: Thank you. Your next question is coming from Richard close from Canaccord Genuity. Richard Your line is live. Please go ahead.

Peter Anevski: Great, thanks for the question. You know, I'm interested in how you think about potential reactions related to the upcoming federal election. Do you factor that all into your, one, utilization guidance that you just provided for the rest of the year, and two, how do you think it could potentially affect the selling season?

Richard Collamer Close: Great. Thanks for the question.

Peter Anevski: Yes.

Peter Anevski: I'm interested in how youre thinking about potential reaction.

Peter Anevski: Related to the upcoming federal election, do you factor that all into your one utilization guidance that you just provided for the rest of the year and two how do you think it could potentially affect the selling season.

Richard Collamer Close: Um, it's not really factored in because, uh, there does appear to be bipartisan support, including from the presumptive nominee, um, on the Republican side, relative to supporting reproductive health. And so I don't, I don't. We're not predicting sort of a reaction one way or another relative to the federal election coming up. Everything that we talked about that we contemplated in our guidance, I would refer back to Mark's comments, but there wasn't anything that we had contemplated around the election.

Peter Anevski: It's not really factored in because.

Richard Collamer Close: Does appear to be bipartisan support including from the presumptive nominee.

Richard Collamer Close: On the Republican side.

Richard Collamer Close: Relative to supporting reproductive health and so I don't I don't.

Richard Collamer Close: We're not predicting sort of a reaction one way or another relative to the federal election coming up.

Richard Collamer Close: Everything that we talked about that we contemplated in our guidance I would refer back to Mark's comments, but but there wasn't anything that we had contemplated around the election.

Peter Anevski: Okay. And then, you know, as a follow-up, I think I saw an industry survey recently that was taken after, you know, everything that happened in Alabama. And it seemed to insinuate that there was an uptick in interest in either beginning to offer fertility benefits or, if I already had fertility benefits, expanding them from the employer perspective. Did you see any impact, I guess, in March and here through April of higher interest? [inaudible]

Speaker Change: Okay and then.

Peter Anevski: As a follow up I think I saw an industry survey recently that was taken after.

Peter Anevski: Everything that happened in Alabama, and his team to insinuate that there.

Peter Anevski: There was an uptick in interest either.

Peter Anevski: Beginning to offer fertility benefits or if I.

Peter Anevski: I already had fertility benefits expand.

Peter Anevski: From the employer's perspective did you see any impact I guess in March and here through April.

Peter Anevski: Higher interest.

Peter Anevski: From a market and sales perspective, I would point back to the active pipeline that Pete referenced and that we are in a positive position versus last year and the continued interest around covering and expanding fertility benefits, as well as services in our other products around pregnancy, menopause, and postpartum. So we do continue to see that interest and see that interest from a pipeline perspective and closed deals perspective as compared to last year.

Speaker Change: From a from a marketing and sales perspective, I would point back to.

Peter Anevski: Are the active pipeline that that Pete referenced.

Peter Anevski: And that being in a positive position.

Peter Anevski: <unk> last year and the continued interest around <unk>.

Peter Anevski: Around covering and expanding fertility benefits as well as as well as services.

Peter Anevski: And our and our other products around pregnancy and met a pause in postpartum so.

Peter Anevski: We do continue to see that interest and see that interest.

Peter Anevski: A pipeline perspective.

Peter Anevski: And closed deals perspective, as we relative to last year.

Speaker Change: Thank you.

David Michael Larsen: Your next question is coming from David Larsen from BTIG. David, your line is live. Please go ahead.

Peter Anevski: Your next question is coming from David Larsen from BTG. David Your line is live. Please go ahead.

Peter Anevski: Hi, can you please give a little more detail on how we're defining mix? So for example, like last year, just as an example, like creating a healthy embryo and then freezing it. Maybe that was 60% of volume. Then with the Supreme Court sort of decision in Alabama, that declined maybe to 40% or 30%, and simply freezing eggs and or perhaps sperma increased. And then I think what you're saying now is that the mix has returned to normal.

David Michael Larsen: Hi can you please give a little more detail on how we're defining mix. So for example, like last year like just as an example, like creating a healthy embryo.

Peter Anevski: And then freezing maybe that was 60% of volume than with the Supreme Court decision in Alabama that decline, maybe at a 40% or 30%.

Peter Anevski: And simply freezing eggs and or perhaps sperm increased.

Peter Anevski: And then I think what you are saying now is the mix has returned to normal so like freezing of healthy embryo would be back up to 60%.

Peter Anevski: So like freezing a healthy embryo would be back up to 60%. So people may have been worried about actually creating a healthy embryo and then freezing it, that resulted in a decline in that mix, and it's now back up. Can you just confirm, like, am I thinking about this correctly? Any more detail on what you mean by mix would be very helpful. Thank you.

Peter Anevski: So people may have been worried about actually creating healthy embryo and then freezing it.

Speaker Change: Got you.

Peter Anevski: Resulted in a decline of that mix and it's now back up so can you just confirm.

Peter Anevski: Thinking about this correctly any more detail on what you mean by mix would be very helpful. Thank you.

Mark S. Livingston: Yeah, your example is right that the order of magnitude is not as extreme as you're describing it, but your example is right relative to the number of people who utilize the benefit. We count the utilizers, if you will, which are, we count them as uniques for the whole quarter, and what they did, and the percent of them that did one treatment versus another was different and, you know, pronounced enough that we called it out in the first Your example is correct. The order of magnitude in terms of the shift wasn't that dramatic, but it was dramatic enough that it impacted what you would expect for revenue in the quarter when you look at the utilizers.

Speaker Change: Yes. Youre example is right that the order of magnitude is not as extreme as you're describing it.

Mark S. Livingston: But your example is right relative to the number of people who utilize the benefit.

Mark S. Livingston: The utilization if you will which are we count them as unique for the whole quarter.

Mark S. Livingston: And what they did and the percent of them that did one treatment versus another.

Mark S. Livingston: It was different.

Mark S. Livingston: Pronounced enough that we called it out in the first half of Q1.

Mark S. Livingston: And has returned as we had predicted when we reported our.

Mark S. Livingston: Earnings.

Mark S. Livingston: And as we sit here now even for Q2 has returned back to normal. Your example is correct. The order of magnitude in terms of the shift wasn't that dramatic but it was dramatic enough that it impacted the what you would expect for revenue in the quarter. When you look at the utilizes but just to be clear the mix issue that we called out on our last call in Q.

David Michael Larsen: But just to be clear, the mix issue that we called out on our last call on Q1, that predated the Alabama decision. And so it was already changing by the time the Alabama decision had come out. So I wouldn't conflate the utilization decline in March with the rate shift, which was before that. Yeah.

David Michael Larsen: One that predated the Alabama decision and so it was already modifying by the time, the Alabama decision had come out so I wouldn't conflate the utilization declined in March with the rate shift which was predated that.

David Michael Larsen: The mix shift.

Peter Anevski: Okay, have there been any changes in coverage that could be impacting that mixed shift? So if that mixed shift occurred before this Alabama Supreme Court activity, like were it coverage decisions on the part of health plans where maybe they would cover freezing eggs and sperm more so than a healthy embryo or anything like that? I mean all the decisions related to coverage... Again, that we talked about, you know, not only on our November third quarter call but also reiterated, you know, those decisions are already made when the planning year starts on 1-1.

David Michael Larsen: Okay.

Peter Anevski: Has there been any changes in coverage that could be impacting that mix shift if that mix shift occurred before this Alabama Supreme Court activity.

Peter Anevski: Was it coverage decisions on the part of health plans, where maybe they would cover freezing eggs and sperm more so than <unk>.

Peter Anevski: Healthy embryo or anything like that I mean.

Speaker Change: All right.

Peter Anevski: All the decisions related to coverage.

Peter Anevski: Again, we talked about.

Peter Anevski: Not only on our on our November.

Peter Anevski: Our third quarter call, but also reiterated though.

Peter Anevski: Decisions are already made when the plan year starts on one one if it was a so the answer is no but I'll give you some more color. If it was a function of coverage then it wouldn't just had been a short term mix shift that's returned already because it would keep affecting us as we continue and that's not the case.

Peter Anevski: If it was a, so the answer is no, but I'll give you some more color. If it was a function of coverage, then it wouldn't just have been a short-term mixed shift that's returned already because it would keep affecting us as we continue, and that's Okay.

David Michael Larsen: And then just any thoughts on sort of other areas of growth in the business, like there's menopause. What other services could you sort of add to your portfolio? Like, how about adoption services, or postpartum counseling services?

Speaker Change: Okay, and then just any thoughts on sort of other areas of growth in the business like Theres menopause, what other services could you sort of add to your portfolio like how about adoption services postpartum counseling services, just any more color there would be very helpful. Thank you.

Peter Anevski: Just any more color there would be very helpful. Thank you.

Peter Anevski: Yes.

David Michael Larsen: Right now, surrogacy and adoption programs are already part of our services. We are working on other products, and we'll have announcements around them shortly, but there's none that we're in a position to talk about right now. But there are other areas of women's health where we believe that there is an overabundance, that are underserved and overlooked, that we believe we can make a difference.

Peter Anevski: Right now.

David Michael Larsen: <unk> seen adoption programs are already part of our services.

David Michael Larsen: We are working on other products.

David Michael Larsen: And we'll have announcements around them shortly but theres, none that we're in a position to talk about right now, but there's other areas of women's health, where we believe that are over.

David Michael Larsen: That are underserved and overlooked that we believe we can make a difference.

Speaker Change: Thank you art.

Allen Charles Lutz: Thank you. Our last question today comes from Allen Lutz from Bank of America. Allen, your line is live. Please go ahead. Good afternoon, and thanks for taking the question.

Allen Charles Lutz: Thank you. Our last question today comes from Allen Lutz from Bank of America. Allen, your line is live, please go ahead. Good afternoon, and thanks for taking the question.

David Michael Larsen: Our last question today comes from Allen Lutz from Bank of America Allen. Your line is live. Please go ahead.

Allen Charles Lutz: Good afternoon, and thanks for taking the questions Pete I have a question on the selling season in the Q&A you talked about a goal to meet or exceed $1 3 million lives I know, it's early in the selling season, but is there anything different about the employer conversation. This year I know that managing GOP, one spend is a big focus for employers.

Allen Charles Lutz: So how do we think about your confidence given some of the other things that are impacting the way that employers are thinking about where they are focusing in 2024 and 2025.

Michael Sturmer: Yeah, hey, this is Michael. So first off, you're, you're, you're right around the GLP-1s is, is one of the topics. Each year, there's always, you know, a handful of topics that are top of mind for employers. Family building benefits and women's health continue to be one of those topics. And sort of, as we've referenced a couple of times, the sort of, you know, best indicator at, you know, at this point during the year is, you know, how, you know, how it is, what's the active pipeline look, what's the strength of that pipeline, and sort of what the early or early decisions look like.

Allen Charles Lutz: Yes, Hi, this is Michael.

Michael Sturmer: So first off you're right around certainly GOP ones is.

Michael Sturmer: One of the topics.

Michael Sturmer: Each year there is always.

Michael Sturmer: Handful of topics that are top of mind for employers.

Michael Sturmer: Family building.

Michael Sturmer: Benefits and women's health <unk>.

Michael Sturmer: Continues to be one of those topics.

Michael Sturmer: And sort of as we've referenced a couple of times the sort of <unk>.

Michael Sturmer: Indicator at this point during the year is.

Michael Sturmer: How what's the has our active pipeline look what's the strength of that pipeline.

Michael Sturmer: And sort of what is the early or early decisions look like in <unk>.

Michael Sturmer: And, you know, as we've pointed out in the prepared remarks, the pipeline is healthy relative to last year, and sort of the early decisions are also, you know, healthy relative to last year.

Michael Sturmer: As we've pointed out in the prepared remarks.

Michael Sturmer: Again that pipeline is healthy relative to.

Michael Sturmer: Relative to last year.

Michael Sturmer: Sort of the early decisions are also healthy relative to last year.

Speaker Change: Great. Thank you.

Michael Sturmer: Okay.

James Hart: Thank you. This does conclude today's question and answer session. I would now like to turn the floor back to James Hart for closing remarks.

Michael Sturmer: Thank you. This does conclude today's question and answer session I would now like to turn the floor back to James Hart for closing remarks.

James Hart: Well, thank you everybody for joining us this afternoon. Please feel free to reach out if you have any additional questions. I'm available as needed. And, of course, please look for further details on our Analyst Day meeting that we'll hold in August. Details will be forthcoming sometime later this summer.

James Hart: Well. Thank you everybody for joining us. This afternoon. Please feel free to reach out if you have any additional questions I'm available as needed and of course. Please look for further details on our analyst day meeting that will hold in August details forthcoming sometimes over time.

Speaker Change: Thank you. 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.

Operator: Thank you. 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.