Fertility services provider Progyny Inc (NASDAQ: PGNY) slid by over 43 per cent at one point on the Nasdaq Thursday after news of a major client loss broke in a regulatory filing.
Progyny provides fertility care insurance for employers. It offers services such as in vitro fertilization and intrauterine insemination to boost the likelihood of pregnancy. Progyny recently made Fortune’s list of best work places in healthcare.
The unnamed client will be parting ways with Progyny as of Jan. 1, 2025. This will result in the company losing about 13 per cent of its revenue. That was the percentage the client provided during the 2023 calendar year. As of Jun. 30, this client represented about 670,000 members.
One analyst from Truist Financial Corp (NYSE: TFC), Jailendra Singh, said he strongly suspects that the client is Amazon.com Inc (NASDAQ: AMZN). Another from JPMorgan Chase & Co (NYSE: JPM) said the same thing based on the number of members being lost.
Regardless of whether their assessments are correct, it is the largest client for Progyny based on the percentage of revenue it generates. “No other existing client comprises more than a single digit percentage of revenue,” the company said in the filing.
Progyny $PGNY just lost its largest client.
They didn't mention who it is. But it's most likely Amazon $AMZN.
This client has accounted for around 13% this year's revenue. It will terminate its services agreement on Jan 1, 2025.
Before this, Progyny's fertility benefit… pic.twitter.com/PEx3yXkNl5
— Simon Erickson (@7Innovator) September 19, 2024
Read more: Breath Diagnostics takes aim at lung cancer with One Breath
Read more: Breath Diagnostics pioneers novel lung cancer breath test
Some analysts maintain bullish outlook regardless
Despite the significant loss, Singh has maintained his Buy rating for the stock saying that Progyny is “still early in their growth potential in the family building space, which is still large and underpenetrated.”
However, he did cut his share target down from US$33 to US$26.
Jefferies analyst Glen Santangelo also maintains a Buy rating for the stock but lowered his share target from US$31 to $24 because of the news.
About 65 per cent of all analysts tracking the stock currently give it a Buy rating, according to Barron’s. The major financial news publication says it was 100 per cent in April though.
As of last year, the global fertility market was worth approximately US$35.5 billion. It is expected to expand with a compound annual growth rate of about 7 per cent in the coming years.
Global fertility rates have been declining for decades, thereby propelling market growth.
Progyny is the only major public operator in the industry. Other private companies involved with providing fertility solutions include Inception Fertility Ventures LLC, Kindbody and IntegraMed America.
rowan@mugglehead.com
