Progyny (PGNY) 2026年第三季法說會：創紀錄銷售旺季與調升財測指引

重點摘要

• Progyny 第三季營收與獲利創下歷史新高。營收年增近 9%，高於管理層財務預測的中位數。
• 2027 年銷售季帶來創紀錄的 130 萬名新增納保人數以及超過 85 家新客戶。在完成導入後，管理層預期 Progyny 將服務超過 660 家客戶和 830 萬名納保人數。
• 客戶留存率維持在接近 100%，同時約有 20% 的現有客戶承諾將在 2027 年擴大使用 Progyny 的服務。
• 在股權獎勵支出降低及照護管理效率提升的帶動下，第三季毛利率年增 130 個基點。
• Progyny 上調了 2026 年財測中位數。目前預期全年營收為 13.65 億至 13.85 億美元，調整後 EBITDA 為 2.35 億至 2.4 億美元。
• 該公司本季產生超過 5,600 萬美元的營業現金流，並買回約 8,300 萬美元的庫藏股，截至 9 月底無任何負債。

關鍵財務數據

業務與營運表現

Progyny 的銷售季新增了超過 85 家新客戶和 130 萬名納保人數。新客戶包括知名大學、另一家「科技七巨頭 (Mag 7)」公司、全美規模最大的銀行之一，以及全美最大的公職人員健康福利基金。客戶規模介於約 1,000 名至超過 100,000 名納保人數不等。

新客戶上線時平均採用兩到三個「智慧週期 (Smart Cycles)」。Progyny 在新客戶群中實現了接近 100% 的 Progyny Rx 搭配率。管理層預期 2027 年將有約 95% 至 96% 的全體客戶採用 Progyny Rx。

預計在 2027 年將有超過 300 萬名納保人數能夠使用 Progyny 的擴展產品。約有 20% 的現有客戶承諾增加服務項目，其中包括將其他女性健康服務整合至 Progyny 的客戶。

新業務組合在全新客戶 (greenfield) 與先前已提供某種形式生育福利的雇主 (brownfield) 之間相對均衡，後者佔比略高。管理層預期該組合不會對該客戶群的使用率產生重大差異。

會員參與度維持在既定區間內，本季使用率接近該區間的高標。管理層表示，夏季較為明顯的季節性效應屬暫時現象，相關活動已在秋季回歸正常型態。10 月與 11 月的能見度為該公司的第四季財測假設提供了支撐。

Progyny Select 對本次銷售季的貢獻微乎其微。管理層仍致力於建立長期擴大全面保險 (fully insured) 方案規模所需的合作關係與基礎設施。

管理層財務預測

大多數新爭取到的客戶與納保人數預計將於 2027 年第一季上線。管理層表示，有數十萬名受保人員可能會在年中左右開始納保，而少數新客戶已於 2026 年上線。

該公司仍預期其較高的投資週期將在 2027 年期間逐步趨緩。然而，管理層將在發布年報業績時提供正式的 2027 年財測，目前尚未設定公開的長期調整後 EBITDA 利潤率目標。

風險與觀察重點

• 營收對會員參與度、治療時機、使用率以及服務組合（包括人工輔助生殖技術週期）依然高度敏感。
• 數十萬名新簽約的受保人員預計將於年中而非 2027 年初上線，這將影響其營收貢獻的時間點。
• 醫療成本通膨依然居高不下。Progyny 表示，規模效應與照護管理效率有助於抑制方案成本，但通膨仍持續對整體醫療市場帶來壓力。
• 毛利率的擴張部分反映了早期發放的股權獎勵陸續到期，使股權獎勵支出減少。若排除該影響，底層業務的實質改善幅度相對溫和。
• Progyny 持續投資於市場推廣資源、平台擴展、併購公司整合以及新產品，這可能會限制近期的營業槓桿效益。

分析師問答重點

• 大型公部門客戶經濟效益：管理層預期利潤率結構將與整體業務保持一致。根據核保數據，預期使用率將略低於 Progyny 一般業務的正常水準。
• 2027 年銷售管道：Progyny 表示，其進行中的銷售管道規模大於去年同期，並涵蓋數個超大型客戶。管理層提醒不應過度依賴任何單一商機。
• 競爭對手客戶轉換：該公司成功自競爭對手手中奪得客戶，但管理層表示，從對手處爭取客戶並非本次創紀錄銷售季的最大推動力。
• Cigna 合作夥伴關係：Progyny 將正向的業務進展歸功於與 Cigna 客戶經理的協作及營運整合，但管理層並未發現顯著變化的全新銷售動能。
• 資格資料：Progyny 預計在 2026 年底前，將收到涵蓋其過半納保人數的完整資格檔案。
• 利潤率走勢：管理層預期，隨著近期的投資與整合逐步趨緩，增量利潤率將重拾動能，但尚未提供正式的長期調整後 EBITDA 利潤率目標。

完整財報電話會議逐字稿

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完整財報電話會議逐字稿

管理層陳述

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.

分析師問答

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.