Shares of leading fertility benefits specialist Progyny (PGNY 0.17%) dropped 19% as of 1 p.m. EDT on Wednesday, according to data provided by S&P Global Market Intelligence.
While Progyny beat analysts' expectations for $0.40 in adjusted earnings per share (EPS) by $0.03, its revenue of $304 million was ever-so-slightly below the consensus of $305 for the second quarter. However, what really seemed to have worried the markets was the company's updated guidance for 2024 revenue growth between 7% and 10% -- a large drop from its projection of 13% to 17% three months ago.
NASDAQ: PGNY
Key Data Points
Progyny's decelerating growth but bright future
Providing assisted reproduction technology (ART) and fertility benefits, Progyny has grown its revenue nearly sevenfold since 2019 and is now 6.4 million members strong. However, after growing sales by more than 60% as recently as 2022, the company has seen growth slow for six consecutive quarters to its most recent increase of just 8% in Q2 2024.
As worrying as this trend is, investors would be wise to be patient with this promising business.
Unfortunately, the number of couples struggling with fertility has risen to 1 in 5 -- a figure that was just 1 in 8 a few years ago, according to CEO Peter Anevski. As the leader in its space, Progyny is well equipped to combat this shift, both with its ART cycles and any prescriptions needed.
As for the stock, Progyny now trades at just 11 times free cash flow (FCF), which could prove to be a bargain as management reins in stock-based compensation. Armed with $357 million in cash and no debt, Progyny signaled that it believes its shares may be discounted at today's prices, buying back $160 million worth of shares in Q2 and lowering its share count by 1%.
