Progyny, Inc. Q4 FY2024 Earnings Call

Good day, ladies and gentlemen. Welcome to the Progyny, Inc. Fourth Quarter Earnings Conference Call. At this time all participants are in a listen-only mode. The floor will be opened for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, James Hart. The floor is yours.

Thank you, John, and good afternoon, everyone. Welcome to our fourth quarter conference call. With me today are Pete Anevski, CEO of Progyny; Michael Sturmer, our President; and Mark Livingston, CFO. We will begin with some prepared remarks before we open the call for your questions. Before we begin, I'll 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 first quarter and full year 2025 and the assumptions and drivers underlying such guidance, including the impact of our sales season and client launches and our expected utilization rates and mix, our anticipated number of clients and covered lives for 2025, the potential benefits of our solution, our ability to acquire new clients and retain and upsell existing clients, our market opportunity and our business strategy, plans, goals and expectations concerning our market position, future operations and other financial and operating information, which are forward-looking statements under the federal securities law. Actual results may differ materially from those contained in or implied by these forward-looking statements due to risks and uncertainties associated with our business as well as other important factors. For a discussion of the material risks, uncertainties, assumptions and other important factors that could impact our actual results, please refer to our SEC filings and today's press release, both of which can be 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, adjusted EBITDA margin on incremental revenue and non-GAAP earnings per diluted 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.progyny.com. I would now like to turn the call over to Pete.

Thanks, Jamie, and thanks, everyone for joining us. We're pleased to report that 2024 ended on a positive note, with revenue and adjusted EBITDA for the quarter, above the high end of our guidance ranges. From when we last spoke to you in November, as Q4 progressed, we continued to see an improvement in the pacing of member engagement relative to what we had seen in Q3. In addition, we concluded the year with yet another strong sales and product development season, yielding sales of an incremental 1.1 million new covered lives and adding more than 80 new logos. With 40% of those new logos, representing 1.5 million covered lives overall, adopting one or more of our newest services in maternity, postpartum and menopause. The retention of 99% of our clients, the execution of our partner expansion strategy, adding multiple health plan partners, including Cigna as our first-ever national health plan partner, further strengthening our go-to-market presence for the sales season ahead. And lastly, the advancement of our product strategy with the launch of our newest services in pregnancy, postpartum and menopause. As we look to the year ahead, we continue to invest in our digital assets in support of our existing products as well as positioning us for future expansion. All the tailwinds that have been fueling our past growth remain fully intact, setting us up for a strong year ahead. We continue to see how people all around the world are continuing to defer family building later in life, which increases the need, importance and impact of our solutions. Employers are increasingly recognizing the value to both their bottom lines and to their employees' health and well-being by addressing underserved areas in women's health. And we continue to raise the bar for what a solution can achieve for all the key constituents in the ecosystem, the patients, the providers and plan sponsors. To that last point, we're now entering our 10th year as a premier solution for family building. And though many solutions have claimed to be delivering on the promises of value-based care, we're actually achieving it through our unique approach to plan designs and benefit management. And how are we doing that? What starts by creating solutions that are flexible and customizable because we recognize that every member, every journey is unique. We engineered our plan design to be flexible to the individual patient, allowing us to ensure that the right care is being delivered at the right time for each person. We also pioneered an unparalleled level of collaboration across our network, empowering providers to deliver care more effectively, while also enabling us to perform active benefit management throughout the journey. And that's how we're reporting for the ninth straight year, clinical outcomes that are significantly better than the national averages. Now we're the only ones reporting those outcomes at scale, reporting results that include every member for every treatment as opposed to others who only report on a small sample. And by applying the same clinically-based collaborative high-touch care model that we pioneered in family building, we've successfully broadened our offerings to become a more comprehensive solution addressing women's health. Because the Progyny experience is so unique, once their Progyny journey concluded, we routinely heard from members who were disappointed when they had to return to their health plan or a point solution. At the same time, our clients were telling us of other gaps in women's and family health that they felt we could address. And to capitalize on these opportunities, a couple of years ago, we laid out a multi-year product roadmap that would allow us to thoughtfully and profitably expand our platform to solve for these gaps, while simultaneously enhancing our existing strengths as well. The first step was to invest in our product organization, both people and systems to be able to quickly add new features to existing services or to expand into new areas in ways that make sense for us and our clients. The second step was to launch our solutions in maternity postpartum and menopause. In just our first year of offering those services, we saw an incredible response with 20% of our existing clients and 40% of our newest adopting one or more of these programs affirming both the need in the market as well as the approach we've taken. And with approximately 6.7 million total covered lives in 2025, there remains a healthy runway ahead of us in further penetration of these services across the rest of our book of business. Turning to our recent acquisitions, we're investing in seamlessly integrating all aspects of our solution to enhance our existing high-touch concierge care delivery model with a comprehensive set of digital tools through a best-in-class experience. Our first acquisition from last summer complements our global capabilities, while the second adds a navigation solution where we can help employers amplify all aspects of their benefits ecosystem pertaining to parenting and women's health. The parental leave process is often extraordinarily complex, creating an administrative burden that strains both the employee and their employer and adds stress and anxiety to the new parent. And often, the employer is providing education and support services to ease the parenting journey and better position the employee for an eventual return to work. Unfortunately, due to the complexity and fragmentation within the benefits ecosystem, these services many times go unused because the employee isn't aware of what's available or how to access. This is yet another opportunity where we can leverage our existing strengths to both improve the member experience while delivering measurable results and ROI to clients. Where Progyny's model is deeply clinical, BenefitBump began by focusing on tying together all of an employee's family-friendly benefits, making it easier for the member to navigate the employer's entire offering, including the services we provide in family building. This is very complementary to both our existing solutions as well as our long-term product roadmap and fits into our stronger pearl strategy, where we identify opportunities that are attractive and valuable on their own, but ones that can also be linked together into a more coherent whole that is even more compelling. In 2025, we'll make additional investments to integrate these acquisitions to fully realize their value and create a linked platform across our high-touch care management services with personalized digital engagement for patients, providers and clients, all surrounded by what we believe will be a better front-end user experience than anyone else in the market. With the addition of these new components to our solution, Progyny is extending its lead in the three areas that matter most to employers: it's member experience, outcomes, and cost control. At this point, the selling season is only in its very early stages, but we're pleased with the activity we've seen so far, which includes our active pipeline, the engagement we're seeing with the not-nows that were carried over from last year and the early commitments we've already received, including in verticals where we've had past success. With what we're seeing in the market today, we feel well-positioned to maintain our track record of adding at least 1 million new lives in every selling season, consistent with the target we outlined for you at our Investor Day back in August. This demonstrates once again how our solution is the preferred choice amongst the most sophisticated and data-driven organizations in the world. Given the caliber of the companies we work with today, and progressing in our active pipeline, we believe Progyny is the provider of choice in women's health for the most successful companies in the world. With that, I'll now turn the call over to Mark to walk you through the results in more detail.

Thanks, Pete, and good afternoon, everyone. I'll begin with our results for the fourth quarter and full year and then provide our expectations for 2025. Revenue in the quarter grew 11% to $298.4 million. For the full year, revenue grew 7% to $1.17 billion, representing our ninth straight year of growth. The growth in both the quarter and the year was primarily due to an increase in the number of clients in covered lives compared to the year ago period. The lower growth rate for the year compared to Q4 was due to the periods of variability in consumption earlier in the year that we previously discussed with you. As of December 31, we had 473 clients with at least 1,000 lives, representing an average of 6.5 million covered lives in the quarter. This compares to 392 clients and an average of 5.4 million covered lives in the fourth quarter a year ago. As compared to the third quarter, average lives increased by nearly 30,000, reflecting early launches from a small number of clients that we won in the most recent selling season. As expected, the lives within our existing base were flat versus Q3. Recapping the progression of these metrics, at this time last year, we had 460 clients and 6.4 million covered lives under contract. Our most recent selling season produced 80 new clients and an incremental 1.1 million new lives. Now we've entered 2025 with over 530 clients and 6.7 million lives under contract. This affirms what we've previously stated that our member base has grown for 2025 despite the loss of a large client. The substantial majority of our newest clients and lives have already gone live and will be included in our accounts as of March 31st. Turning to the components of the top line for this quarter. Medical revenue increased 9.4% in the fourth quarter to $188 million and grew 7.9% in the year to $730 million. Pharmacy revenue increased 13% in the fourth quarter to $111 million and grew 6% in the full year to $438 million. The growth in both components was due to the same factors that impacted our overall revenue growth. Turning now to our member engagement metrics. Female utilization was 0.48% in the quarter, consistent with the fourth quarter a year ago and a slight increase from the 0.47% we reported in Q3. For the year, female utilization was 1.07%, slightly lower than the 1.09% we reported a year ago, although at the higher end of our multi-year range over the last several years. More than 15,800 ART cycles were performed during the fourth quarter, our highest quarterly total ever, yielding more than 61,000 for the full year, reflecting 5% growth in ART cycles in both the quarter and the year. Our press release today includes the usual table to report ART cycles per unique female utilizer which reflects an average of 0.54 in the fourth quarter, up from 0.52 in Q3. For the full year, ART cycles per unique utilizer were still lower than 2023, which was due mostly to the periods of lower consumption earlier in the year. We know that member activity can vary from period to period, reflecting the deeply personal nature of when it's the right time for members to pursue care in the areas we address. However, as we presented at the JPMorgan Conference last month, this short-term variability doesn't have any bearing on the long-term value we are creating for our investors. We believe that the overall consistency with the rate of utilization demonstrates that we aren't witnessing a macro shift with respect to the underlying medical need for our services or lessening in people's desire to pursue our services. Turning now to our margins and operating expenses. Gross profit increased 11% from the fourth quarter last year to $63.4 million. This yielded a 21.3% gross margin, a slight improvement from Q4 a year ago. For the full year, gross profit increased 6% to $253 million. The 21.7% gross margin in 2024 was a slight decrease from the prior year, reflecting the impact of the unanticipated decline in cycles per utilizer at earlier points in this year. Sales and marketing expense of 5.2% of revenue in Q4 reflected a modest improvement from the year-ago period. For the full year, sales and marketing was equal to the prior period at 5.5% of revenue as investments we've made to expand our go-to-market resources and channel partner relationships, such as our first-ever national health plan partnership with Cigna continue to be offset by the leverage we gained through our client acquisition and retention success. G&A was 10.7% of revenue this quarter, slightly higher than the fourth quarter a year ago. For the full year, G&A improved slightly to 10.4% of revenue. The improvement in the year is due to the efficiencies that we continue to realize in our back-office operations. With the top line growth and higher gross profit, the dollars of adjusted EBITDA increased in both the quarter and the year. In the fourth quarter, adjusted EBITDA increased 10% to $47.5 million, yielding a margin of 15.9%. For the full year, adjusted EBITDA increased 6% to $198.8 million, matching a margin of 17% comparable to the prior year period. Net income was $10.5 million or $0.11 per diluted share in the quarter. This compared to net income of $13.5 million or $0.13 per share in the year-ago period. On a full year basis, net income was $54.3 million or $0.57 per diluted share, which compared to $62 million or $0.62 per share in 2023. The decrease in both the quarter and year was primarily due to the higher provision for income taxes in both periods, which more than offset the higher operating profitability. Adjusted EPS was $0.42 the quarter, which compares to $0.32 in the year-ago period. For the year, adjusted EPS was $1.64 as compared to $1.40 in 2023. Turning now to our cash flow and balance sheet. Operating cash flow in the fourth quarter was $52.2 million, which compared to $37.7 million in the year-ago period. On a full year basis, we generated $179 million of operating cash flow, below the $189 million from the year-ago period as 2023 benefited from a previously disclosed amended agreement with our pharmacy partners. As a result, our DSO improved 10 days from 2023, reflecting our ongoing discipline with respect to revenue cycle management. We expect a mid-70% conversion of full year adjusted EBITDA to operating cash flow even as we expect to see an increase in cash taxes in 2025. As Pete discussed in 2025, we're planning to further invest in our digital solutions while also integrating and investing in our two recent acquisitions. As we want the member experience to fully reflect what these services have added to our solution. We anticipate the incremental CapEx for these multiple projects to cumulatively amount to approximately $15 million above our 2024 spend with a similar amount of incremental dollars also flowing through the full year OpEx which is reflected in guidance. As of December 31, we had total working capital of approximately $304 million, including $228 million of cash, cash equivalents and marketable securities and no debt. Turning now to our expectations for the first quarter and full year 2025. As you can see in the table at the back of today's press release, our range for the full year reflects utilization of 1.02% at the low end and 1.04% at the high end. In terms of consumption, we assume ART cycles per unique utilizer at 0.89 at the low end of the range and 0.91 at the high end. While we've continued to see improvement in first quarter member engagement on a seasonally adjusted basis as compared to historical patterns due to the unexpected variability we experienced at certain times in 2024. These assumptions reflect the possibility that we'll see further variability in member engagement in 2025. With those assumptions, we are projecting between $300 million to $318 million in revenue in the first quarter reflecting growth of 8% to 14%. For 2025, we project revenue of $1.175 billion to $1.225 billion reflecting growth of between 1% and 5%. These ranges include the expected contribution from the previously disclosed large client, who did not renew for 2025, but who is still providing for an extended transition period through Progyny for members who met certain criteria. For that program, we're estimating between $37 million to $40 million of revenue in the first half of the year only, which is when the transition period ends. Approximately three quarters of that is estimated in the first quarter with the balance in Q2. Turning to profitability. We expect between $53 million to $57 million in adjusted EBITDA in the first quarter, along with net income of between $15 million to $17.8 million. This equates to $0.17 and $0.20 earnings per diluted share or $0.44 and $0.47 of adjusted EPS on the basis of approximately 90 million fully diluted shares. For the full year, we expect adjusted EBITDA between $188 million to $201 million and for net income of between $45 million to $53.9 million. This equates to $0.49 and $0.59 earnings per diluted share and $1.52 and $1.62 of adjusted earnings per diluted share on the basis of approximately 92 million fully diluted shares for the full year.

Certainly. Ladies and gentlemen, the floor is now open for questions. The first question comes from Anne Samuel with JPMorgan. Please proceed.

Hi. Thanks so much for the question and congrats on a great quarter. I was hoping maybe you could just speak to the cadence of the year as we think about the Amazon lives rolling off? And then just how to think about the impact of that within the guidance range that you provided?

Yes. So yes, from my prepared remarks, so we're expecting about $37 million to $40 million in revenue over the first half of the year. And the way the program works, it will be over after the first half. About three quarters of that will be in Q1 with the balance in Q2. So you can do the math there on what the impact is. We won't be reflecting lives or utilization in our numbers just because it's a different base of employees that will be eligible for the benefit as they had to meet certain criteria in order to be able to participate in the transition of care program.

Great. Thank you. Pete, could you share your thoughts on the recent executive order to expand access to IVF? Additionally, how are you considering the changes within the government regarding your government lives contract? Thank you.

Sure. So the executive order, we believe, is in the right direction relative to IVF in the US, where it talks about recommendations, policy recommendations around both protecting access as well as affordability. There isn't really much more detail beyond that executive order and there's nothing else that's come out. But obviously, we believe it's positive relative to what it might do for the industry overall.

The next question comes from Michael Cherny with Leerink Partners. Please proceed.

Good evening and thanks for the color on the call. Obviously, a nice job, especially with the positive preannouncement as well. Maybe if I can just talk about some of the ancillary services. Nice, obviously, early adoption, both from the existing and new customer base. Can you give us a sense of what those should be contributing to revenue? And how exactly we should see them flow through in terms of the contribution rate, both from a revenue as well as op profit perspective?

Yes. They are new to the market. Part of our efforts involves member marketing in collaboration with our employer sponsors. Until those activities take place, I cannot provide further details about their potential contribution. Once we gather more insights and data on the success of those efforts, we will share additional information.

Okay, fair. I have one more modeling question since you've touched on it. Mark, you mentioned that Amazon-related revenue would be between $37 million and $40 million in the first half of the year. I'm curious if you can provide an estimate of the EBITDA contribution from that. Also, are there any trapped costs associated with such a large customer and dedicated assets that could potentially be shifted to other customers, or how do you view the profitability contribution?

Yes. No. As far as trapped costs go, no, there's nothing to speak of at all there. From a profitability standpoint, and we had said this when we first announced the departure that their contribution from an EBITDA perspective was lower than the book of business. And I guess, really, at this stage, what I would say is that all of that's factored into the guidance for the year. So, as you see between Q1 balance of the year, you can see just how that's reflected for us.

The next question comes from Richard Close with Canaccord Genuity. Please proceed.

Yes, John Pinney on for Richard Close. Thanks for the questions. I guess just to dig into the full year guidance a little bit more here. So, the female utilization rate like it's below 2021 to 2023 or then 2024. Is there anything to take away from like the large client leaving them having a higher utilization rate? Or is it just like literally just conservatism from the variability this past year. Any commentary there would be great.

Yes. Look, when you have a mature client and their utilization rate leave and they're being replaced by new clients who typically in their first year have a lower level of utilization as people begin their journeys through the course of the year, you're going to see sort of a dilutive effect. It doesn't mean that underlying all of the other clients, there's any kind of dilution there. It really is just sort of the trade-off from that mature client being replaced by newer clients. It's something that I had some data and covered back on the Investor Day in August. So, some of that dynamic, I think, is what we're seeing here.

All right. Great. Thanks. And I guess one follow-up. You mentioned investments to integrate BenefitBump and realize the value. Can you just give some further detail on what investments need to be made and what exactly you're expecting by the end of 2025?

Yes. All the investments that we talked about not only around BenefitBump but also around our global offering and including our existing platform are integrating the entire experience of all those assets for the member in terms of when the member engages with the overall benefit offering, the navigation services that BenefitBump provides the new products that will be offered globally as well as in terms of an expanded product offering, et cetera, are all the different areas of investment.

The next question comes from Scott Schoenhaus with KeyBanc. Scott, please proceed.

Thank you for the question and for the positive results. I would like to gain a clearer understanding of the full-year guidance. We have discussed the effects of Amazon and how it affects your business. Even when excluding the $40 million from Amazon, you are still guiding to low single-digit growth, but it appears that margins are tightening. Could you elaborate on this? I know you mentioned investments in your platform, but I'd like to hear your perspective on the margin outlook for low single-digit growth over the next few years. Thank you.

Yes. Look, I think as far as like revenue growth goes, obviously, the largest client that we now have, we've given you numbers around 2025. They represented 12% of revenues in 2024. So if you do the math, removing them and trying to understand what the growth is of the underlying business, including now the new clients we've brought on. That brings you back up into the teens from a growth perspective. So that’s part of how we're looking at it. And then as far as profitability goes, and we sort of alluded to it in our prepared remarks, some of the investments that we're making are capitalized investments. So you're going to see CapEx go up a bit. But some of them also just run through the P&L, and we said that they're in the similar scale as those $50 million of CapEx. If you remove those out and looked at things on sort of an apples-to-apples basis, our margins would be expanding in 2025.

That's really helpful. I just want to ask a follow-up question. As you consider the additional services you're planning to introduce in 2025 and beyond, are there any other services that might improve visibility into your business? Also, looking back at 2024, when you experienced some areas of reduced engagement, did you implement any significant changes to your business model that enhanced visibility? Thank you.

I'm not entirely clear on what specific services you have in mind for increasing visibility. We have outlined our current services and the expanded offerings from our acquisition of BenefitBump. I'm uncertain about what additional insights might be helpful. Regarding the variability we experienced in 2024, when we interact with our members, we focus on their care needs, their journey, and the personal and medical decisions they are making about when to seek care. However, we do not engage with them during periods when they are delaying or deferring treatment, which we observed in 2024. So, there isn’t really any further insight to provide.

Yes. I just meant more maybe engagement on the member portal app could drive better insight, but that's great. Thanks Pete.

Up next is Jailendra Singh with Truist Securities. Please proceed.

Yes. I actually wanted to stay on the same topic. Thanks for taking my question. So, as you look back and clearly, as you talked about last earnings call, spending some time to analyze call transcripts and member data and see maybe in track with potentially reengaging members. Like have you gained any more understanding of around like why consumption trends softened in Q3 and early Q4 and then trends improved since then? I can understand that there's quarterly welding trends, but I was wondering if there are any new learnings from your additional observations you can share, that would be really helpful.

The short answer is not really. As I mentioned, even when analyzing the data, the conversation and engagement typically focus on the journey individuals are experiencing. Detailed discussions about the timing of their decisions are uncommon. We noticed a temporary reduction in engagement, but we're now returning to more typical patterns. Ultimately, people decide to pursue their treatment and care when it feels appropriate for them. In one quarter, we observed a slight slowdown compared to normal seasonal trends, but aside from that, there isn't much additional insight.

Okay. My quick follow-up on that.

What I want to emphasize is important, and we discussed this at JPM along with a slide. If you examine average utilization across all the years and average it out against the yearly variability in utilization, there has only been a cumulative revenue variance of about $22 million over the entire period we've been in operation. So, while there will be variability in utilization from year to year, overall, in terms of growth and delivering value to our shareholders, that growth is occurring over time as we add new clients and lives each year. Any short-term variability is understandable and I appreciate your interest in it. However, the reality is that we continue to achieve that overall growth and deliver value.

Great. And a quick follow-up on the pharmacy benefit services business. It did outperform in Q4, so I’m wondering about any specific reasons for that. You often mention that growth should align with the fertility benefit business growth, but we saw outperformance in Q4.

Well, it grew a little better than medical revenue in Q4. Some of that is a function of the drugs that you order ahead of treatment for the next quarter. Some of that is a function of just timing. So, it's never perfectly correlated to the timing of the medical treatment in terms of when it's suspended.

The next question comes from Allen Lutz with Bank of America. Please proceed.

Good afternoon. Thank you for the questions. I have one for Pete. You mentioned that 20% of your existing clients are using new products, while 40% of new clients are adopting them. Can you explain that a bit more? Is this related to the current phase of meeting potential clients where you can discuss the new products? Is that the main reason for the difference? Additionally, does this suggest that as you renew existing client contracts, there are opportunities to introduce these new services? I'm trying to understand the 20% of existing clients better. Are most of them adopting new services primarily during contract renewals? Any insights you can provide would be appreciated. Thank you.

Yes. So a couple of things. You can add the service whenever you want, you don't have to add the service on renewal. 20% of the existing book of business is pretty significant considering the size of the book of business versus the 1.1 million lives that we added with the new clients. Yes, some of that may be what you said, which is you are in a buying decision at that point. And so it may have a slightly higher likelihood of taking on the full suite of products. But the overall 20%, we still think is hugely successful relative to first year-end market. Mike, I don't know if you have anything to add?

Yes. No, I think that's all right. And the only thing I would add is certainly on our existing client base, we meet with them frequently and discuss their strategy in the current year, their benefit strategy in the upcoming year. And that all factors into when they add services or where their priorities might be for that year. But to echo Pete's comments, we were pretty excited about the existing book adoption rate as well as those new clients, and we'll look for continued progress this year on that as well.

Thank you for that. Mark, regarding the guidance framework, the loss of our large customer makes it challenging to compare this year's guidance to previous years when considering factors like female utilization rate and cycles per unique female utilizer. As we review the guidance framework, could you share any changes you're seeing as you prepare guidance for 2025 compared to 2024? Thank you.

Yes. I would say that our approach for this year is similar to how we guided for Q4 during the November call. We have a decent amount of data and insights regarding Q1, though it’s not complete. However, we can see the trends of various KPIs. There is typically a natural decline from Q4 to Q1 as more people begin their journeys in the first quarter, along with new clients coming in. So we are operating at a slightly different level now. We have significant experience in projecting new clients versus existing clients and tracking those metrics. In short, we're analyzing the current data, which happens to be trending slightly better, but we have been cautious with our guidance ranges to ensure we account for the variability we observed last year.

Great. Thank you.

Next question comes from Sarah James with Cantor. Please proceed.

Thank you. We know that the Amazon employees are aware of their benefit change, are you seeing any pull forward of demand sort of a use it type of mentality? And do you assume any of that that happens in the first half of 2025?

For the client we lost, we did not see any pull forward in Q4. It is probably the easiest way I can answer it. Our growth rate was slightly higher, excluding that client in Q4 versus the overall book of business. So, there was no greater pull-through, if you will, as you're thinking about it the way you're thinking about it.

Okay. And then in 2025, do you assume any of that in the last couple quarters that, clients with you?

No. First, as we talked about in our prepared remarks, for 2025, it's way more limited relative to the number of employees at that client that are able to avail themselves of our benefit. There's a whole bunch of criteria relative to those that are already on a journey with us that could then continue, and that continuation ends at the end of Q2. And so market had called out the dollars relative to what we anticipated based on those criteria.

Great. And then as you're selling some of the additional services to your clients, how should we think about that flowing through to the model? So, how much of a tailwind is that? Is it noticeable in the revenue per cycle type of metric? Should we think about it impacting the cost of services ratio or margin? Or is that just too small to really be seeing the impact in the model?

Yes. Right now, it's too small for it to have a meaningful impact. And as I said before in one of the previous questions, as soon as we get more insight and are able to give more color on it, we will. But there is a level of activity that has to occur relative to creating awareness of those clients, and that's going to take a minute. And so in future quarters as we have more to share, we will.

And I'd just add to that, we're cognizant that some of the metrics. The consistency of metrics is helpful for really all the investors as well as you guys in terms of modeling and we'll take that into consideration when we're reporting them and guiding them in the future. Once they become significant enough.

The next question comes from Constantine Davides with Citizens JMP. Please proceed.

Thanks, Pete. For BenefitBump, is this primarily an untapped opportunity? I'm curious if you can discuss what types of customers this service is best suited for and provide some insight into the financial scale and current asset growth.

There's not any color I can give you around the financial scale around that asset. It's, as I described it relative to the buyers. The buyers are the buyers that buy our benefit and anybody that is focused on family building. And to the extent, as I described it, to the extent that employers obviously offer benefits to their employees many benefits around that touch family building and family in many ways, whether it's trying to get pregnant, whether it's once you're pregnant, whether it's postpartum, whether it's once you leave, whether it's parenting solutions, etc. It's all those things. And so when you're doing that, it is a really, really good service to amplify all of those types of services that you're offering and/or that might even be available from state programs, etc., that the employee could fully appreciate and navigate their journey of as they're thinking about building their family as it's happening and then everything to make life as easy as possible to return to work. And so it's effectively all employers.

Great. And then just one follow-up here on your efforts in building a network of channel partnerships over the last couple of years. Can you provide us with an update on how those partnerships are beginning to influence sales activity? Additionally, how are they informing some of the new initiatives you're launching this year, particularly with Cigna?

Partnerships have been highly beneficial and have significantly supported our sales season. While we don't disclose specific sales figures related to partnerships, they are essential to our market approach. These partnerships enhance our service's credibility, as the partnership process involves an in-depth evaluation of our services and their value. They also simplify the contracting process for employers. All our partnerships achieve this, and we anticipate that our new partnerships, including those with Cigna and other health plan partners, will continue this trend. Additionally, health plans hold a crucial position in influencing benefits, so we are particularly enthusiastic about our new health plan partnerships and the positive impact they could have on sales. However, we recognize that new partnerships require time to develop. While we expect to see some benefits from them this year, we view it more as a long-term investment as we integrate into these new health plan partnerships.

And our last question this evening comes from David Larsen with BTIG. Please proceed.

Hi. This is Jenny Shen on for Dave. Congrats on a good quarter. I was wondering if you could talk about the competitive environment and pricing. From our knowledge, there are several late-stage privates in the space, and we've heard that some of them are pricing very aggressively. Just any thoughts on that dynamic would be helpful. Thanks.

Certainly. We cannot control our competitors' pricing strategies. As we approach the market, whether it involves new opportunities or our current business, our focus is on showcasing our overall value. This encompasses pricing as well as the larger value we provide, particularly in our ability to predict and manage costs and trends for employers. We are dedicated to this aspect and the value we offer. Regarding aggressive pricing strategies in the market, we have observed these practices over time, and we have consistently noted that they are short-term tactics that will eventually impact competitors. Again, our emphasis remains on the comprehensive and long-term value we provide to our clients.

Yes. As we reported during our Q3 results, despite the competitive landscape and the challenges you may have heard about, we successfully secured every jumbo account, with all of the competitors participating in the RFP processes. Please consider this in your analysis.

Okay. And if I could sneak in a quick follow-up. Can you just talk about your international business and opportunity? I know you mentioned it a bit you talked about M&A in the prepared remarks, how is that progressing? And what other opportunities do you see?

Sure. We're excited about the acquisition in that area and the expansion of services within our global and international business. And again, it helps continue to round out our services. And as we work with very large employers to make sure that we're able to offer them a full complete view of services for their entire population. And again, that's where we're excited about that, our global solutions and our project and Global Solutions. And again, that sort of all factors into how we go to market and the broad solutions that we're able to bring to employers now.

There are no further questions in queue. I would now like to turn the floor back to James Hart for closing remarks.

Thank you, John, and thank you, everyone, for joining us this afternoon. If you have any questions, of course, please feel free to reach out. Otherwise, we look forward to seeing you at the conferences we're attending next month or in earnings in April or in May.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.