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The government's $9 billion push to develop COVID-19 vaccines may be dominating headlines this year. But that doesn't mean the private sector has stopped pouring money into solving every other health problem under the sun.
While investors have sought after vaccine stocks hoping for a big pop, that same pop can come from smaller companies that can solve other problems.
Today, I want to show you one small company that's solving a problem for one in eight couples. A problem more prevalent than diabetes, asthma, and depression, and only outpaced by arthritis and chronic kidney disease, which make up over a $100 billion market.
This company came up on my radar as I am always on the hunt for companies that have a clear-cut mission, great management, and a history of revenue growth.
This company has it all.
Its CEO has been in healthcare for over 25 years and was previously the CEO of WebMD. Revenue growth was over 60% last quarter with a compound annual growth rate of 97% since 2016.
That was enough to get me interested.
Here's the biotech stock I'm so excited about and why it could be a moneymaker for you…
This Biotech Stock Is Solving a Major Problem
I'm talking about Progyny Inc. (NASDAQ: PGNY), a company envisioning a world where anyone who wants to have a child can do so by providing smarter fertility benefits.
With biological fertility decreasing with age and people across the United States starting families later, societal trends have created a significant tailwind for this $12 billion-plus market.
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Progyny is providing more than just simple benefits; it manages the entire process. This includes administrative work, individualized benefit plan design, and even aftercare services. On top of that, each member gets assigned a dedicated fertility counselor that is there every step of the way.
While fertility benefits are not a new service by any means, Progyny is a clear leader and rapidly taking share in a big market.
Insurance carriers have a very difficult task. They have to manage thousands of people, diseases, and conditions and have to do in an efficient and effective fashion in order to provide services for millions of customers and still stay in business. This works great for many situations, a standard sick visit, treatment for strep throat, or taking care of a broken arm. But fertility is far from that category. Treatments are expensive, outcomes can vary significantly across patients, and the emotional and physical impact of the pregnancy process can be taxing. This means a standard insurance process won't cut it.
This is where Progyny comes in. It works to optimize the fertility experience and create the best outcomes possible.
And it is showing incredible results…
Why Progyny Is a Stock to Buy Now
Versus the national average, Progyny has 14% better pregnancy rate per IVF transfer, 30% better miscarriage rate, 52% better single embryo transfer rate, and 80% better IVF multiples rate. This translates to greater pregnancy success, healthier pregnancies, and healthy babies.
There is a reason why 65% of its clients come from large carriers and it has almost 100% retention with its members: The process works.
This industry is still growing as well. As the Progyny CEO said earlier this year at a Bank of America conference, "It's a have to have because if you don't provide fertility coverage, you're really making a statement that you don't value family, you don't value your female workforce."
Employers from all industries are waking up to that fact.
So, if you look at the overall industry trend, only a few years ago, at best 25% of large employers cover fertility, and an even smaller number for smaller companies. It is now closer to 50%, and the industry estimates that it could be closer to 75% in the next few years. This will provide a lot of growth for the company as Progyny is taking customers from large insurance carriers and bringing on new customers that never had coverage.
Progyny also provides an integrated pharmacy experience which 70% of its clients have adopted. This service offers 24/7 support to help reduce anxiety of medication administration, single authorization, and same- or next-day medication delivery and specialty medication savings.
This is a really strong business, and last quarter it increased its coverage by 100,000 people up to 22 million individuals. This is really nice to see, especially during the pandemic, where unemployment has skyrocketed and benefits have been cut. Progyny has even pointed out that some of its largest customers have continued to expand coverage.
Progyny is going into next quarter with a robust balance sheet with $105 million in cash, up over 1,000% since last year and no debt.
Guidance is also bullish, projecting fourth-quarter revenue between $95.4 to $100.4 million, which would be growth of 47% to 54%.
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About the Author
Alex Kagin is the Director of Technology Investing Research at Money Map Press. He has spent the last decade working in equity research, most recently with Energy Capital Research Group (ECRG), where he led technology stock research along with working as part of a team developing a customizable financial data platform for securities analysis.
Prior to joining ECRG, Alex spent 8 years at DeMatteo Research, a boutique primary research firm and broker-dealer servicing the institutional investment community. He managed the Tech, Media, and Telecom vertical where he spent time connecting with hundreds of tech executives and hedge funds to get the pulse of the market.
Alex has a B.S. in Economics from American University and previously held Series 7 and 63 security licenses.