Fertility benefits company Progyny lost 85% of its business at the start of the pandemic. Here's how its CEO is ramping up an aggressive growth strategy fueled by acquisitions.

  • Progyny, the fertility benefits provider, struggled in the first part of 2020 when many fertility clinics closed and business fell roughly 85%, CEO David Schlanger told Business Insider.
  • The company rebounded well towards the end of the year as clinics reopened and more patients resumed treatment.
  • Now, the company is dusting off its shelved growth strategy and is actively evaluating potential acquisition targets, Schlanger said.
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Like many Americans, fertility benefits provider Progyny is dusting off its 2020 goals, many of which were sidelined at the onset of the coronavirus pandemic, heading into the new year.

The company, which went public in September 2019, saw an 85% decrease in its business in the early months of the pandemic, CEO David Schlanger told Business Insider. Across the country, fertility clinics closed to comply with regional stay-at-home orders in an effort to stretch meager supplies of personal protective equipment, and many treatments were considered non-essential by state and local governments wary of potential hospital surges.

Progyny works directly with companies to offer fertility benefits to employees. Companies pay Progyny for access to fertility treatment and pharmacy benefits based on how many employees choose to use those benefits. If fewer employees opted into treatment, either because clinics were closed or they simply delayed treatment during widespread uncertainty, the company would pay Progyny less than it had before.

"The period of time through COVID was stressful for us, especially when our revenues dropped by 85%," Schlanger said.

Within four to six weeks, however, clinics started reopening and procedures picked back up, Schlanger said. He attributed that to the time-sensitive nature of fertility treatments that have improved odds of success the earlier in a person's life they begin.

"Fertility treatments are not emergency treatments, but there is an urgency factor to it," Schlanger said.

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Progyny is looking for acquisitions to expand Progyny's reach

In the final quarter of 2020, Progyny's revenue surpassed $98 million, exceeding expectations and growing nearly 62% year-over-year. The company lost most of its revenue in the second quarter of 2020, reporting just $64.61 million in revenue for the three-month period, a drop from the previous quarter's roughly $81 million in revenue. 

The V-shaped recovery has placed Progyny in a good position to start reevaluating growth plans the team had abandoned in March.

Instead of focusing on keeping the business alive, Schlanger is able to set his sights on acquiring other businesses that could expand Progyny's reach in the murky world of fertility healthcare. 

"The nice thing about being public is we can do strategic transactions with third parties to make ourselves better," Schlanger said. 

Although Schlanger declined to specify which areas or companies he has an eye on, he said Progyny's proximity to women's health presents enough of an opportunity to expand into different kinds of benefits it can then sell to employers. 

"There are a lot of things we can pursue, but like anything else we have to prioritize them," Schlanger said.

Schlanger said he doesn't foresee the reverse happening, in which a large healthcare company purchases Progyny, now that it's recovered from last year's decline. He is focused mainly on transactions that "move the needle" for the company in a material way and building up a base of paying companies that has remained fairly resilient to layoffs and cost-cutting to date.

Since the pandemic began, he said Progyny has added 45 new clients and covered an additional 400,000 people.

"We really didn't miss a beat," Schlanger said of the company's sales targets. "We really flourished. We got through it much better than other companies."

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