프로지니(PGNY) 2026년 3분기 실적 발표 콘퍼런스 콜: 역대 최대 영업 시즌 및 가이던스 상향

핵심 요약

• 프로지니는 3분기 사상 최대 매출과 수익성을 기록했다. 매출은 전년 동기 대비 약 9% 증가해 경영진 가이던스 중간값을 웃돌았다.
• 2027년 영업 시즌에 사상 최대인 130만 명의 신규 보장 인원과 85개 이상의 신규 고객사를 확보했다. 서비스 도입이 완료되면 프로지니의 고객사는 660개 이상, 보장 인원은 830만 명에 이를 것으로 경영진은 예상했다.
• 고객 유지율은 100%에 근접한 수준을 유지했으며, 기존 고객사의 약 20%가 2027년에 프로지니 서비스를 확대하기로 약정했다.
• 3분기 매출총이익률은 주식 기준 보상 비용 감소와 케어 관리 효율화에 힘입어 전년 동기 대비 130bp 확대됐다.
• 프로지니는 2026년 연간 가이던스 중간값을 상향 조정했다. 연간 매출은 13억 6,500만~13억 8,500만 달러, 조정 EBITDA는 2억 3,500만~2억 4,000만 달러에 달할 것으로 예상된다.
• 회사는 해당 분기에 5,600만 달러 이상의 영업현금흐름을 창출하고 약 8,300만 달러 규모의 자사주를 매입했으며, 9월 말을 무차입 상태로 마감했다.

주요 재무 데이터

사업 및 운영 실적

프로지니의 영업 시즌을 통해 85개 이상의 신규 고객사와 130만 명의 보장 인원을 확보했다. 신규 고객에는 주요 대학, 또 다른 '매그니피센트 7(Mag 7)' 빅테크 기업, 미국 최대 은행 중 하나, 미국 최대 공무원 건강복지 기금 등이 포함됐다. 고객사 규모는 보장 인원 기준 약 1,000명에서 10만 명 이상에 이르렀다.

신규 고객사는 평균 2~3개의 스마트 사이클(Smart Cycles)을 적용해 서비스를 시작하고 있다. 프로지니는 신규 고객사 군에서 100%에 가까운 프로지니 Rx(Progyny Rx) 부착률을 달성했다. 경영진은 2027년에 전체 고객사의 약 95%~96%가 프로지니 Rx를 이용할 것으로 예상하고 있다.

2027년에는 300만 명 이상의 보장 인원이 프로지니의 확장된 제품군을 이용할 수 있을 것으로 예상된다. 기존 고객사의 약 20%가 서비스 추가를 약정했으며, 여기에는 다른 여성 건강 관리 서비스를 프로지니로 통합하는 고객사들도 포함됐다.

신규 사업 비중은 난임 혜택을 처음 도입하는 고객사(그린필드)와 기존에 유사한 형태의 난임 혜택을 제공하던 고용주 사이에 비교적 균형을 이뤘으며, 기존 서비스를 전환하는 기회(브라운필드) 비중이 약간 더 높았다. 경영진은 이러한 구성이 해당 집단의 이용률에 중대한 차이를 초래하지는 않을 것으로 보고 있다.

회원 참여도는 기존 범위 내에서 유지됐으며, 이번 분기 이용률은 상단 부근을 기록했다. 경영진은 여름철의 두드러진 계절성이 일시적이었으며 가을 들어 활동이 정상 패턴으로 복귀했다고 밝혔다. 10월과 11월에 대한 가시성은 회사의 4분기 전망 가정을 뒷받침했다.

프로지니 셀렉트(Progyny Select)가 이번 영업 시즌에 기여한 바는 미미했다. 경영진은 전액 보험 적용(fully insured) 상품을 점진적으로 확대하는 데 필요한 협력 관계와 인프라 구축에 계속 주력하고 있다.

경영진 가이던스

새로 유치한 고객사와 보장 인원 대부분은 2027년 1분기에 서비스를 개시할 것으로 예상된다. 경영진은 수십만 명의 인원이 연중 중반에 보장을 시작할 수 있으며, 일부 소수 신규 고객사는 이미 2026년에 서비스를 시작했다고 밝혔다.

회사는 고조된 투자 사이클이 2027년 중에 둔화될 것이라는 전망을 유지하고 있다. 다만 경영진은 연간 실적과 함께 공식 2027년 가이던스를 제시할 예정이며, 대외적인 장기 조정 EBITDA 마진율 목표는 설정하지 않았다.

리스크 및 주시 요인

• 매출은 보조생식술(ART) 사이클을 포함한 회원 참여도, 치료 시기, 이용률 및 서비스 구성에 여전히 민감하다.
• 새로 계약된 보장 인원 중 수십만 명이 2027년 초가 아닌 연중에 서비스를 개시할 것으로 예상되어, 실적 기여 시점에 영향을 미칠 것으로 보인다.
• 의료비 인플레이션은 여전히 높은 수준이다. 프로지니는 규모와 케어 관리 효율화가 프로그램 비용을 억제하는 데 도움이 되었으나, 인플레이션이 의료 시장 전반에 지속적으로 압박을 가하고 있다고 밝혔다.
• 매출총이익률 확대에는 과거 부여된 주식 기준 보상의 만료에 따른 비용 감소가 부분적으로 반영됐다. 이 효과를 제외하면 기저의 개선세는 보다 완만했다.
• 프로지니는 시장 진출(GTM) 역량, 플랫폼 확장, 인수 기업 통합, 신제품에 대한 투자를 지속하고 있어 단기적으로 영업 레버리지가 제한될 수 있다.

애널리스트 Q&A 주요 내용

• 대형 공공 부문 고객사의 수익성: 경영진은 마진 프로필이 사업 전반과 일치할 것으로 예상한다. 언더라이팅 데이터를 기준으로 볼 때 이용률은 프로지니의 일반적인 기존 계약 포트폴리오보다 약간 낮을 것으로 예상된다.
• 2027년 영업 파이프라인: 프로지니는 현재 활성 파이프라인이 전년 동기 대비 더 크며 몇몇 초대형(점보) 계약이 포함되어 있다고 밝혔다. 경영진은 특정 단일 기회에 의존하는 것을 경계했다.
• 경쟁사 고객 전환: 회사는 경쟁사로부터 고객을 유치했으나, 경영진은 경쟁사 고객 탈환이 사상 최대 영업 시즌을 이끈 가장 큰 요인은 아니었다고 밝혔다.
• 시그나(Cigna) 파트너십: 프로지니는 시그나의 고객 관리 책임자들과의 협력 및 운영 통합 덕분에 긍정적인 성과가 있었다고 설명했으나, 경영진은 실질적으로 새로운 영업 동력이 확인된 것은 아니라고 언급했다.
• 자격 데이터: 프로지니는 2026년 말까지 전체 보장 인원의 절반 이상을 포괄하는 전체 자격 파일을 수령할 것으로 예상한다.
• 마진 추이: 경영진은 최근의 투자와 통합 작업이 점차 축소됨에 따라 증분 마진이 회복될 것으로 예상했으나, 공식적인 장기 조정 EBITDA 마진율 목표를 제시하지는 않았다.

실적 발표 컨퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Good afternoon, and welcome to the Progyny, Inc. Third Quarter Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn the floor over to your host, James Hart. The floor is yours.

James Hart

Thank you, Sylvie, and good afternoon, everyone. Welcome to our third quarter conference call. With me today are Pete Anevski, CEO of Progyny, and Mark Livingston, CFO.

We will begin with some prepared remarks before we open the call for your questions. Before we begin, I'd like to remind you that our comments and responses to your questions today reflects management's views as of today only and will include statements related to our financial outlook for both the fourth quarter and full year 2026 and the assumptions and drivers underlying such guidance, the demand for our solutions, our expectations for our selling season for 2027 launches, anticipated employment levels of our clients and the industries we serve, the timing of client decisions, our expected utilization rates and mix, 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. 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.

Peter Anevski

Thanks, Jamie, and thanks, everyone, for joining us this afternoon. I'm pleased to report that Progyny had a strong quarter, resulting in record revenue and profitability for the third quarter as well as the continued generation of significant cash flow, which we're using both to invest in the business for future growth and return value to our shareholders through a meaningful share repurchase activity.

As, the fourth quarter begins, member engagement remains healthy. Given that as well as our strong performance over the first 9 months of the year, we're pleased to be in a position to raise the midpoint of our full year guidance. Mark will take you through those details shortly as well as the highlights from the quarter. I'll spend my time this afternoon walking you through the results of our most recent selling and renewal season, as those are the areas that contribute the most to our longer-term growth trajectory

We're exceptionally pleased with our results this selling season, which yielded a record 1.3 million new covered lives and over 85 new clients. These outstanding results begin with the continued macro demand by plan sponsors for this critical benefit and driven by across-the-board execution from all of our go-to-market strategies and teams. This year's season once again highlights our meaningfully differentiated solutions from alternatives in the market.

Let me spend the rest of my time today unpacking this headline. We enter every selling season with multiple priorities, acquiring new logos and lives, retaining our existing base and deepening our relationships with existing accounts through the expansion of their services with Progyny. Across all 3 aspects of this year's season, we once again achieved or exceeded our targets.

Starting with new client acquisition. Throughout the year, we discussed the favorable activity we were seeing in new client acquisition. We attribute this momentum to a few areas that we see continuing beyond this selling season. The first is that family building and women's health are a key priority for employers. We're addressing very real, very prevalent medical needs, ones that can be costly and even harmful to the workforce when they're not well managed. In fact, this has been featured by a number of analysts in recent research reports as market surveys and key opinion leader calls continue to validate that these programs are top of mind for HR leaders. It's also no secret that employers and members are dealing with some of the highest costs and trends in decades. Employers are demanding more from their partners, looking to drive costs down and control trends, all while expecting the highest quality outcomes and member experience. Companies continue to employ rigorous processes to determine the right solutions that fit this criteria, and Progyny's ability to demonstrate its proficiency in delivering on these promises backed by a proven track record across all key areas differentiated our solution versus other competitors for these discerning buyers again and again.

The emphasis on value, cost control, outcomes and member experience is what drove this momentum throughout the season from its earliest stages, while the pipeline built through the summer and fall and even extended into the season's latest stages as reflected by the incremental 100,000 lives just since the last update of our expectations that we put out a month ago. The activity this season wasn't isolated to 1 geography, 1 industry or 1 type of client. Rather our wins this year represent yet another diverse cross-section of the economy, no different than what we've seen for many years now. Our newest clients include several of the most prestigious universities in the country. Another of the Mag 7 technology leaders, one of the largest banks in the U.S. and the nation's largest health benefit fund for public employees. The cohort is also broadly distributed by client size, where the newest logos are contributing anywhere from 1,000 to well in excess of 100,000 lives, further highlighting the universal relevance and appeal of our services.

Accordingly, we are entering 2027 with our most diverse client base ever with no one area of the economy and no single client making an outsized contribution to our book. This newest cohort is also launching with the typical coverage levels that we've seen for many years now with an average of 2 to 3 Smart Cycles. And amongst these new clients, we've achieved a near 100% attach rate for our pharmacy program, emphasizing once again the value and differentiation of Progyny Rx to both the patient and the plan sponsor when measured against the alternatives.

Regarding market alternatives, while the competitive environment remains active, we continue to see signs of some rationalization occurring in the market. The models that perhaps may not be profitable, that perhaps may not be operating at scale or haven't been successful in controlling cost trend, we've seen one of those companies exit altogether a year ago, and we now see another significantly scaling back.

These are signs of a well-functioning market, where capital flows to the models that have been proven to work like ours, and our results this season clearly speak to the robust appetite for a proven solution from employers. To be clear, while takeaways from competitors provided a nice contribution to our results, this was not an outsized driver to this season success. Instead, the season reflects the confluence of several of our strategies, including the furtherance of our channel partners, particularly our relationship with Cigna as our national partner as well as the largest regional plans, the disciplined management of our go-to-market strategies and resource allocation, and our ability to successfully respond to where the market is by continuing to invest in our solution so that there is no question on the value we deliver when we discuss our solution in detail with these prospects.

As expected and consistent with our prior commitments, Progyny Select, our newest offering in the fully insured market, was an immaterial contributor to this season's results. As this is our first year with that program, our focus has been on building the relationships and the infrastructure that will allow us to meaningfully scale it over time. And based on our progress in both areas this year, as well as the feedback we're hearing in the market, we continue to expect Select will become a key part of our longer-term growth.

Turning to the other areas of focus in the selling season, retention and expansions. As highlighted earlier this year, we had derisked our retention by securing early decisions with the largest accounts in a renewal year. And we saw this favorable activity continue over the balance of the season leading to yet another year of near 100% retention of the existing base. In addition, approximately 20% of the base has chosen to add to their solution in some way for 2027. This includes those clients who have decided to consolidate with Progyny the other aspects of women's health services that competitors were previously addressing for them.

As we start to look into next year's season, we believe we're exceptionally well positioned to extend the momentum we experienced this year into 2027. We're exiting the year with our strongest ever setup for the upcoming season ahead, both in terms of our number of opportunities as well as the overall size and quality of the pipeline, indicating that this year's market momentum is contributing not only to this year's selling season, but to next year's as well.

In conclusion, on top of everything else, we're excited and entering the upcoming 2027 season with our strongest sales momentum ever.

Let me now turn the call over to Mark to review the results in more detail.

Mark Livingston

Thank you, Pete, and good afternoon, everyone. Before I begin, please note that the 8-K we filed this afternoon includes the customary slide summarizing our results for the quarter. This material has also been posted to our website. Rather than repeating the content of those slides, my remarks today will focus on the longer-term trends that we believe are the most important in understanding the health and direction of the business. So let's begin.

Member engagement has remained consistent with our long-established ranges with utilization trending to the higher end of those ranges this quarter. The slightly more pronounced seasonality we discussed last quarter was, as expected, short-lasting and has reverted back to what we would expect to see as the fall began. We believe this demonstrates once again that members pursue the care and services they need, doing so at a time that is right for them. As a result, revenue this quarter was above the midpoint of our guidance, reflecting a nearly 9% increase over 2025. Over the first 9 months of the year, revenue has increased 11% when excluding the contribution from a large [ former ] client who was under a transition of care agreement through the first half of 2025. In tandem with this good growth, we've maintained our healthy margins overall, even as we continue to invest to expand our product platform, to enhance the member experience through new features and to lay the foundation for future growth.

Gross margin expanded by 130 basis points from the third quarter last year due to a reduction in stock compensation expense as well as the efficiencies we've continued to realize in the delivery of our care management services. It's worth taking a moment to emphasize those efficiencies. For years, we've been leveraging the growing scale of our volumes to mitigate the pressures of broader medical cost inflation on program rates. While we may retain a portion of those savings for margin expansion, we may also share those with our clients, enhancing the value that we already provide for them through disciplined program management and our superior clinical outcomes.

Adjusted EBITDA margin was modestly lower than a year ago. However, when measured on a trailing 12-month basis, adjusted EBITDA margin was 17.1%, consistent with where it's trended throughout this period of increased investment, demonstrating our ability to invest for growth without having to reset our overall levels of profitability. And as it relates to those investments, CapEx year-to-date is approximately $9 million ahead of our spend for the first 3 quarters of 2025, but remains at a relatively modest level of approximately 2% of revenue. Through disciplined and prudent management of our business, we've also continued to achieve a high conversion of adjusted EBITDA to operating cash flow and we continue to meet and even exceed our 75% conversion target both in the third quarter and year-to-date.

This quarter, we generated more than $56 million in operating cash flow yielding $207 million on a trailing 12-month basis. Given this result, we've now exceeded $200 million in last 12-month operating cash flow for 7 consecutive quarters, demonstrating both the consistency of our performance as well as the strength and adaptability of our business model. We also continue to drive an improvement in our DSO through our ongoing focus on revenue to cash processes. DSO ended the third quarter nearly 7 days lower than the year ago period, though, at just under 66 days. While we always -- we will always pursue further improvements, we do believe we're nearing a level of maximum yield given our interdependence on health plan claim process.

As of September 30, we had $224 million in total working capital, which includes $196 million in cash, cash equivalents and marketable securities. There were no borrowings against our $200 million revolving credit facility and no debt of any kind, and we have no planned use for the facility at this time.

The decline in our cash balances from June reflects the meaningful share repurchase activity conducted through the quarter. Under our most recent $200 million authorization, we purchased nearly 3 million shares during the third quarter for approximately $83 million. Since the authorization began in May and including the activity that's happened subsequent to September 30, we purchased nearly a cumulative 5.5 million shares under the most recent program and approximately $51 million remains available for future activity. On an aggregate basis, combining this current program as well as our prior $200 million program, which concluded earlier this year, we have now purchased more than 14 million shares overall since last November. This has reduced our overall shares outstanding by nearly 15% over the past year.

Turning now to our expectations for the fourth quarter and the remainder of 2026. The majority of the over 85 clients and 1.3 million lives added in the most recent selling season are expected to go live in the first quarter of 2027, though a meaningful number of lives, several hundred thousand, give or take, are expected to launch midyear. In addition, a small number of the newest clients have already launched their benefit in 2026. Once all the new clients are live in 2027, we anticipate having more than 660 clients, representing 8.3 million covered lives.

As, the fourth quarter begins, member engagement remains healthy and consistent with past patterns. Accordingly, our expectations for engagement metrics remain consistent with our previous assumptions. The table at the back of today's press release outlines those assumptions at both ends of the full year guidance ranges.

Given the consistency we've seen in engagement and the strength of our results over the first 3 quarters, we're pleased to raise the midpoint of our guidance for the year. We're now projecting full year revenue of between $1.365 billion to $1.385 billion, reflecting growth of 5.9% to 7.5%. If we exclude the $48.5 million in revenue from the client who is under a transition of care agreement over the first half of 2025, our full year revenue growth is projected to be 10.1% to 11.7%.

With respect to profitability, we expect adjusted EBITDA of $235 million to $240 million, with net income of $107 million to $110.6 million. This equates to $1.30 and $1.35 in earnings per diluted share and $2.09 and $2.13 of adjusted EPS on the basis of approximately 82 million fully diluted shares.

For the fourth quarter, we expect $344.7 million to $364.7 million in revenue for growth of 8.3% to 14.6%, reflecting our expectations on engagement in the fourth quarter. On profitability, we expect between $57.9 million to $62.9 million in adjusted EBITDA in the quarter, along with net income of between $28.5 million to $32.1 million. This equates to $0.36 and $0.41 of earnings per diluted share, or $0.53 and $0.58 of adjusted EPS on the basis of 79 million fully diluted shares. At the midpoint of ranges for both the quarter and the year, you can see that we expect to maintain a consistent adjusted EBITDA margin even with the investment to grow the business.

And with that, we'd like to open the call for questions. Operator, can you please provide the instructions?

Operator

[Operator Instructions] And your first question will be from Jailendra Singh with Truist.

질의응답

Jailendra Singh

Congratulations on a very strong selling season. Thanks for the color on the breakdown between 1/1 and midyear rollout. I'm assuming the midyear rollout probably does attribute to the CalPERS contract, which has got a lot of focus. But just based on your prior experience, is it fair to say that the economics or expected utilization of a large public sector client would be any different from your average client in the new cohort? Just trying to understand the economics there for this new contract.

Peter Anevski

Sure. Thanks, Jailendra. So the economics that -- from a margin profile perspective, we expect to be consistent with our business. I'll start with that. As it relates to utilization rate of that population. We had a -- we've got a tremendous amount of data from them and based on our underwriting process, we expect slightly lower utilization than our normal book of business for that population. But consistent with that expectation, that's how we underwrote it. And that's how we expect the overall margin profile to be as it relates to that client.

Jailendra Singh

Okay. And my follow-up, more broadly and staying on the same margin topic. You've previously talked about elevated investment cycle should begin to moderate in 2027. At the same time, you're seeing continued efficiencies in care management delivery and now you have a record selling season coming online. How should we think about the balance between reinvestment and allowing more of that incremental gross profit to flow through EBITDA? Just trying to understand if 2027 should be a year of margin expansion for you guys?

Peter Anevski

Yes. So we will set expectations around full year guidance for 2027, when we report year-end results. But we are -- the expectation that we have put out there already around us tapering back investments throughout 2027 still is the expectation.

Operator

Next question comes from Scott Schoenhaus at KeyBanc.

Scott Schoenhaus

Congrats on the 100,000 additional lives since the last announcement. Pete, you mentioned your differentiation in the market versus other competitors. We keep hearing that this year versus prior years. Maybe can you talk about the competitive conversations or the conversions you saw the selling season, what's out there in the market remaining and that you're having active conversations with? Specifically, we all know of the large employer -- in fact, the largest employer, I think you mentioned in your comments has seen some challenges with their fertility benefit partner. Are these large employers still up for play? Are you seeing them come to you? Just to get a sense of these prospects on your platform versus what's out there in the market.

Peter Anevski

Yes. I'll try to hit on all your points and if I miss any, please follow up. So as it relates to the sales process and our differentiation in the market, what's really key is two things. One, as you do a deep dive into all the solutions, there's significant differentiation in every part of what we do vis-a-vis other alternatives in the market. That -- the process that large employers and all employers, the large ones generally go deeper, go through highlight that differentiation and it's appreciated. The second part of that, that's key is our track record of delivering consistent performance both around outcomes as well as cost containment over time, especially in a world where medical cost inflation is an issue is another key factor. So when you're making a selection of a very important benefit and you're either adding it and/or replacing what you have today, you're doing it in an environment where costs are rising significantly around the rest of health care. And it's a feel good decision when you select Progyny, where you're selecting, in our opinion, the best solution for many different reasons, but also selecting a solution that has demonstrated year-after-year effective cost containment.

There was a second...

Scott Schoenhaus

Yes. Well, I guess on the competitive side, right, you talked a lot about the competitive environment. I'm assuming you've seen a lot of competitive conversion this selling season. Maybe talk about that and what's remaining out there. We all know the largest employer out there that's had a fertility benefit provider that has seen some challenges. I'm wondering if you're having conversations with these very large employers that are in the market here?

Peter Anevski

Yes. We -- so the answer is, yes, we had conversations with clients that were our competitors. Yes, we saw conversion from those clients across our competitors. The important part of that though is that, that's not the biggest driver of our overall sales year. Our overall sales year was a contributor to based on us hitting all of our different strategies and go-to-market and the team is executing very effectively. Now as it relates to that large employer that you're talking about, we do have the opportunity from time to time to talk to them. There are other large opportunities that are active in our pipeline that I referred to for setting us up for the 2027 sales season as well. I would never hang our hat on any one opportunity. I think the more important point that you should hear in terms of my comments is how we're set up overall in our overall active pipeline for next year with many large opportunities already.

Operator

Your next question comes from Scott Berenshteyn (sic) [ Stanislav Berenshteyn ] at Wells Fargo.

Stanislav Berenshteyn

It's Stan. I think Scott was on before me. But yes, I appreciate the questions. Maybe first on the guidance. Our cycles were pretty flat sequentially. It seems that 4Q requires a bit of a bump on a sequential basis. I guess, can you just comment on your visibility here as we stand in maybe a third into the quarter?

Mark Livingston

Yes. Look, I think part of this is just a factor of a bit of the slowing that we saw in the third quarter, which is now -- as we said, we typically see that begin to turn in September and then on into October. So the visibility that we have sitting here is very good for October as well as into November. And so we're seeing that renewed to sort of normal healthy patterns as we get into Q4. And that's really what our guidance is based on.

Stanislav Berenshteyn

Got it. And then just a follow-up on the sales pipeline. Obviously, strong season that you had this year. Can you maybe comment on the composition of your sales pipeline as we think about next year, top of funnel? Anything changed in terms of what you anticipate next year's sales season to look like?

Peter Anevski

As we always do and as we're doing now, we'll give you commentary, not only now, but also at our year-end earnings call, and we'll have more visibility into the overall pipeline and how the sales season is setting up. However, as we sit here now, as I said in my prepared remarks, our active pipeline, which again, as I always talk about pipeline, is defined based on specific activities relative to sale progression on these accounts is bigger than it's ever been at this point in time, including over last year. So that's why I say, we are very well set up overall in active pipeline, including with a number of jumbo accounts that we have in that active pipeline for next year. Beyond that, I can't give you any more color commentary, really -- that will be constructive really until the year-end call in February.

Operator

Next question comes from Constantine Davides at Citizens.

Constantine Davides

A couple of questions, if I can. Pete, I think you said 20% of the base is expecting to add to their benefits in '27. Can you expand on what that expansion trend looks like relative to the last couple of years? And then second, I think you commented that you saw 100% attach rate on the new business for next year with respect to pharmacy. Can you talk about what that looks like in terms of some of your newer solutions that you've rolled out in recent years and what that attach rate looks like on that 1.3 million lives?

Peter Anevski

Yes. Regarding the first part of your question, the 20%, and those are sales commitments relative to upsells with the existing clients, is generally in line with what we've experienced in the last couple of years. The second part of that question around the Rx. The attach rate with the Rx is very positive, consistent with what's happened over the last couple of sales seasons where the significant majority of all new clients are adding Rx. I think, we now expect about 96% of clients next year to have Rx, overall, 95%, 96%. And then the last part of your question, is that the attach rate of the expanded products beyond Rx was positive again this year. And now we're -- we'll have over 3 million lives with the expanded products starting in -- during 2027.

Operator

Next question comes from Michael Cherny at Leerink.

Michael Cherny

Congrats on the strong selling season. Maybe coming back to the summer seasonality from last quarter. Can you talk a little bit more about how these have progressed back to normal levels? And was that simply a return to more typical activity? Or did you see some of the treatments deferred over the summer coming back on?

Mark Livingston

I'm sorry, it cut off a little bit in the beginning, if you don't mind.

Peter Anevski

The question, I think, is, the seasonality that we saw in Q3, did it return in normal levels or more basically? Just comment on that on returning to normal levels.

Mark Livingston

Yes. So we saw -- as the quarter completed, we saw a bit heavier utilization, people not yet progressing towards ART cycle treatment. So we had a little bit higher utilization as the quarter exited and then into Q4. And typically, October is a very strong month for us overall. So we've seen that the progress that we expected. But as far as mix and whatnot, it's -- again, as we would typically see. And as I think I said in my comments a few minutes ago, good visibility throughout October and into November, and that's what's factored into our guide.

Operator

Next question will be from Brian Tanquilut at Jefferies.

Cameron Harbilas

This is Cameron Harbilas on for Brian Tanquilut. Congrats on the quarter. Can you tell us a little bit about what you've learned in your first selling season with Cigna as a partner? I know you called out that, that drove a lot of growth but not an outsized amount, is there anything new you learned here? And then just remind us on what the selling process is like between a partner-led deal and a competitive takeaway?

Peter Anevski

I'm not sure that we learned anything significantly new, but the same type of activity that you would do when you work with your consulting partners that are advising their clients is the same type of activity that help sales activity through Cigna's clients when we work with their account executives as a simple example. I think that plus where there are opportunities on the operations side to help with integration of these clients with our systems and Cigna systems are all factors that drove positive activity across the Cigna organization.

Cameron Harbilas

Awesome. And then as a quick follow-up, could you provide an update on where you guys are at with receiving the full eligibility files from your client base? I know that was a goal you set earlier in the year to have a significant majority of these by year-end.

Peter Anevski

Yes. By year-end, we should have eligibility files for more than half of our lives.

Operator

Next question comes from Allen Lutz at Bank of America.

Unknown Analyst

This is [ Dev ] on for Allen. A lot of on the selling season. I think that turned out great. Pete, I guess, as we think about utilization and the ART cycle intensity, this year, ART cycle intensity may be a little bit lower than what was expected heading into the year. Utilization seems kind of within expectations. As we look ahead to next year, I know you guys usually take the historical base and do some forecasting, but is kind of the utilization rate and ART cycle intensity that we saw this year a good starting point? Or is there anything that suggests that, that could be better or worse?

Peter Anevski

Well, I'll remind you that utilization has slight variations from time to time. So I'm not sure that I would read totally, again and it's happening so far this year, and the year is not over in terms of what's going to happen next year. We don't get visibility that far out in terms of actual utilization. We do comment when we report year-end and talk about guidance for 2027 on our February call, what we're seeing at that point on utilization, that's the best time that we could give you any real color in terms of what we're seeing so far for utilization versus sort of guessing at it now. But again, utilization looks good, as Mark said, overall utilization came in a little stronger than what we expected for Q3. As it relates to [ ART ] that was utilized, they were pretty much in line with what we expected. And more importantly, as we talked about beginning here in the fall for Q4, it's what we would expect.

Unknown Analyst

Got it. And then just a quick maybe administrative question here. I saw like the member base is down just slightly quarter-over-quarter. I know that [ these ] administrative true-up once a while. Was that the case in 3Q as well? Anything else you want to comment on that?

Peter Anevski

I haven't heard that whole question.

Mark Livingston

Yes. [indiscernible] I mean, look, I think the membership is essentially at the same level that it was. It's -- we're talking a tiny percentages at this point. Nothing to read into that from a trend perspective.

Operator

Next question comes from Sarah James at Cantor.

Sarah James

You talked about the care management savings potentially being retained as a tailwind for gross margins or shared with clients, what determines that split? And has the share going to clients risen as employers are facing increasing cost pressures?

Mark Livingston

So Sarah, this is a practice that we've been doing, frankly, since inception. And I was really just calling out that over the long term, as we've grown scale, we've been able to hold costs in line and in some cases, reduce it over many years. And the point is, is that in addition to the favorable outcomes and the other savings that we generate for our clients, we're quite cautious around cost and pricing for them as well. Now you will see that our gross margins over time have improved slightly, but part of that is really because, obviously, we want to balance returns for our shareholders at the same time. And look, we're mindful of where our clients are and the types of cost increases they're getting from their other plans. But as you can see, even in that environment, we continue to expand our margins a bit. So there's nothing I'd call out there.

Pete, I don't know if you want to add anything?

Peter Anevski

Yes. I think the important point around that, and we had put out, I don't remember, James, which conference that was at JPMorgan over a 3-year period, costs were only up 1% to 2% a year. And that's a function of our continued leverage as we continue to grow across the network to be able to contain costs even despite other challenges, as I've said before, and we all see in the country, medical cost inflation being what it is. So I think the clients and our retention rate speaks volumes around it, the clients appreciate that reality significantly, while we're also continuing to deliver real value in terms of outcomes and overall savings due to our outcomes and a positive member experience that we continue to deliver on.

Sarah James

That's great. And one more, if I could. You guys had a really strong selling season, obviously, 1.3 million new lives. How much of that is brownfield versus greenfield? And does that impact what first year utilization typically looks like?

Peter Anevski

Yes. They're relatively balanced, slightly brownfield and greenfield, but relatively balanced. And no, it doesn't impact utilization. What impacts utilization more is industry. But we don't expect anything significantly different in terms of utilization for that overall population of 1.3 million.

Mark Livingston

And just remember, our definition of brownfield was having some form of fertility benefit at all. But again, our -- we believe that most of the other plans are not comprehensive coverage. And so it isn't really a situation where somebody is going from comprehensive coverage to comprehensive coverage. It is a step-up when they join us.

Operator

Next question comes from Peter Warendorf at Barclays.

Peter Warendorf

I just wanted to ask about fiscal '27 now that you guys have the selling season pretty much in the rearview membership looks like it's going to be up kind of mid-teens next year. It sounds like a few hundred thousand of those lives maybe starting midyear, and you could have some offset from upsell with the current membership base. I guess, is membership growth kind of a reasonable baseline as we start to think about next year? And are there any other major puts and takes that we should think about?

Peter Anevski

None that I would call out now. I think the big variable is the lives. And obviously, our expectations are what I just said relative to this cohort. But we always wait to see early utilization looks like in the year when we set the stage for guidance for 2027. So I think we'll -- if there's anything else to call out, then will. But other than that, no real other big puts and takes relative to what might be a big driver in next year.

Operator

The final question comes from David Larsen at BTIG.

David Larsen

It looks like your gross margin has expanded nicely, up more than 100 basis points year-over-year. We're modeling around 25% gross margin. Where could that get to over time? And then also your SG&A, we're modeling a 15% year-over-year decline from year-to-year, what -- like that's great. Where are those cost savings coming from? And what are your longer-term expectations for your EBITDA margin?

Mark Livingston

So both lines or both the questions relate to some degree, to stock comp expense. We've been projecting for some years now that grants that we had made in a number of years in the past from an expense accounting prospective, roll off, some late in '25 and more here in '26. So if you look at -- and we provided in our -- the release, if you look at it on a non -- excluding comps basis, it's a little bit more moderated in terms of the growth in the gross margin as well as the changes in the OpEx lines. And actually, when you see the OpEx lines, you'll see if there's actually been some investments year-over-year in SG&A, both for our go-to-market resources as well as the platform expansion that we've talked about over the last several quarters.

David Larsen

And what's your long-term EBITDA margin goal?

Mark Livingston

We don't have a goal that we've put out to the marketplace. We've commented about growth in the different areas of the business, whether it's from our new products or from Progyny Select. And what we've said is that the margins, we expect those to be comparable. Now as we begin to taper the investments that we've been making these last couple of years and some of the integrations of our new -- some of the companies we purchased as well as our platform, we do expect to return to incremental margins as we grow, but we haven't put out a formal number on that yet.

David Larsen

And just one last quick one. Can you just talk about the broader macro trends and how that's affecting demand? I mean it looks like demand is great, but we still have relatively high inflation, medical trend is really high. You still have like a fairly high prevalence or increasing prevalence of users of GLP-1s, which are not cheap, those are driving up medical costs. So it seems to me like there would be sort of a lot of competing costs to your clients yet you still see great growth. Just any thoughts around that would be very helpful.

Peter Anevski

Sure. In an environment where medical cost inflation is exactly what you said, continues projected to be high still next year, juxtaposed against the reality that there's an incidence and prevalence for infertility, that's still 1 in 5 per the CDC. So very, very prevalent in terms of an area of health care that has to be covered. You do have to make a decision to cover this benefit at some point, whether you're already covering it and is not comprehensive enough or whether you're looking for a new solution that's doing a better job or whether they're not covering it at all. And that, we believe, is what drove our sales, right? At the end of the day, when you have to make that decision, add that expense and/or manage that expense, you want to do it in a way that you can do it most effectively from a cost perspective with the best member experience and outcome and savings, that resonated in the market. So although you're right, mind share out there is being shared relative to these other drivers that are out there. The conversation is still very robust relative to needing this benefit, especially when you consider that it addresses the millennial population, which is the largest population of your workforce today.

David Larsen

Congrats on the good quarter.

Operator

This does conclude our question-and-answer period for today. And I would like to turn the conference over to James Hart.

James Hart

Thank you, Sylvie, and thank you, everyone, for joining us this afternoon. We hope this call was informative for you. As always, please feel free to reach out to me should you need any further assistance, we're happy to engage. Otherwise, we look forward to seeing you at the upcoming conferences.

Operator

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