LFST - Earnings call transcript Q1 2022 | LifeStance Health Group, Inc.

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Operator

Good day, and welcome to the LifeStance Health First Quarter 2022 Earnings call. At this time all participants are in listen-only mode. After the speakers presentation, there will be a question-and-answer session. [Operator Instructions]. We ask that you please limit yourself to one question and a follow-up. Instructions]. [Operator

this the recorded. Prokocki, call Investor reminder, like would Vice may Relations. turn to over call a I be now President As to Monica

begin. may You

Monica Prokocki

Quarter welcome Thank Vice Prokocki, Investor LifeStance you. everyone of Conference and Good Health I'm afternoon President First XXXX, Relations. Monica Earnings Call. to

are Mike closed and Chief on me We Growth investor. available Joining Officer, issued are today. presentation Officer, section Financial the website, Lester, Mike Chief today release after Officer. market the and Both Executive earnings Relations our Investor Chief Bruff, Danish the Qureshi, of lifestance.com.

this In addition, a call available replay of following the conference call. be will

release Before results call Those remarks contain SEC our statements, the our disclaimers statements prepared to and Filing. for COVID-XX their factors, including forward-looking about the including of remarks, press that possible performance please business pandemic about could forward-looking differ turning in other and to financial the your involve uncertainties, included impact attention actual over materially. Today's future to direct statements the on management risks, earnings statements outlook. cause our

to tables Mike over included comparative call period. year that prior presentation A note most in comparable time. all appendix. turn for facilitate the earnings investors compared GAAP press of is help results past the financial measures, to the and CEO using please the results which At additional we and the addition, In Lester, comparison and prior information reconciliation release non-GAAP Unless to are believe of otherwise noted, performance. I'll Mike provide this report measures directly LifeCam.

Michael Lester

to of and access mental To us you of of to trusted, our all care. begin, mission to joining improving thanks and importance Monica, I note like would the you, today. emphasize personalized affordable, Thank for

mental a know, may Health Month, we May of awareness when the importance time as raise you the about as our health. Awareness country society's As a Mental

in-person provider country's always to fulfilling LifeStance and helping committed the lead outpatient healthier, as health care. on largest virtual lives of more Now, mental is people

Turning performance of team's with we're surge through disciplined drove which solid the to dynamics. in quarter, labor pandemic pleased even execution results, market ongoing recent the first and our strategy, the

see Revenue in our first $XXX of strong the team, consistent quarter and reflected results. million, EBITDA our which million. the demand XX% to continue was for representing was We was services adjusted execution and positive $XX for growth by

with we've believe our total count. year In noted compared primarily prior positions grew that by the first we representing net XX% line for the of As the first X,XXX, quarter, balance revenue expectations, growth previously, quarter well our base year. clinician with driven our is our to performance of we growth in and clinician the us

adjusted are million, $XXX the As guidance additional million in positive of reaffirming to our Center financial range $XX for remarks. $XXX a EBITDA million million, Full-Year of result, detail and Margin Mike range about revenue the his of we section $XX prepared to $XXX provide million. $XXX will performance of in in to Bruff our

momentum support deliver LifeStance's competitive third-party market. sustainable and Compared differentiates key pure to business of the virtual companies, LifeStance, virtually, one X,XXX mental in-person, Telehealth health to Independent for of drivers continue to remind of a with services I turning surveys care advantage WX or would employee our the the source about approach in care. market. to Before LifeStance's companies able like nearly model to clinicians everyone healthcare our from play are what in execution,

services provide over flexible stronger. and care through has to hybrid on clinician attracted clinician when to also Cross both due uniquely Not both services, XX% Shield access are and deliver to affordable in-network or models. as in-person our and to see coverage access recent For and example, via for only our or the mental is same patients clear pay subscription-based nearly to positioned according of convenience, and to we the model, our how patients want choice, to online clinicians never It's Telehealth. provide a to and hybrid Furthermore, Blue been health but we're demand that want Blue patient survey, preferences with cash model. opposed patients insurers patient commercial control

majority referrals. online healthcare patients and Additionally, costs care have referrals, unique of directly to self as therapies, a covering patient from come acquisition each previously, organic the sticky and our personalized, payer diverse meet mix we remain patients low prescribers’ can as individual's noted access and comprehensive our care of And vast our primary network relationships, mental very needs.

marketing. been have never and pay not dependent direct-to-consumer on are We

I'm Turning strategy. first on growth to and able consistent are performance demonstrate the to execution. effectively been profitable our quarter, In pleased we've that executing

re-imagining expanding into are new markets, care. how affordable gross to goal, patients mental We to access and deploying services. focus of easy three continue tech-enabled that to our on we receive deliver on market core strategy health pillars our density, building

new we improving are six new and -- states, of into into states deepening access. president in XXXX markets, existing our in now our to presence In terms mission entered our expanding XX of contributing

current market remain primary net base clinician we bringing growth year-over-year. quarter, continue and our demonstrates XX% in is driver, quarter. resonating growth, building steady our each to growth our environment, in density, nationwide. strong our added We the for clinician increase This especially proposition market grew that the first X,XXX, labor As an of value quarter we total XXX as over net clinicians the first clinicians in

and the in indication population of and is clinicians largest our our also Our one within onboard an health new clinicians capability operational in employee the mental space. ramp clinician to of organization, care growth our [Indiscernible] groups

acquisition by centers our to In addition we XX de practice engine, Our as opened our recruiting our driven our bolster novo adding growth the organic to engine. over presence, as physical offerings, centers quarter, virtual XXX in first nationwide. well service was our clinician to

existing states new mission our and our access completed of in and base acquisitions platforms care. bringing XX. high-quality which quarter, Michigan mental were Growing total clinician to we the we tuck-ins inception first improving to operate, Additionally, two supports in to affordable, the health acquisitions Both Massachusetts. since

to digital to tools support opportunities terms we significant advantage patients’ services, mental In that implement our care of ability navigate deploying health a believe tech-enabled is LifeStance. experience for competitive their to our

previously better rolling short, visit. As are or OB our improved for for new first patients them out manage success to experience, booking announced, clinicians new, to intake a we up in online and that we set with and

invest of seven live significant rolled We because states, continue an take are by innovation seen continue well state our will the have satisfaction. state as booking and around for additional enhancement product ability our This intake In I continued these booking experience of execute as opportunities into great in have improvements the in early and online throughout out in and to and to levels XXXX across process strategy time to the continue cancellations have to confidence a the our reduction market of XXXX, and in number country considerable to increase over advantage deploy of we improvements patients. as in be the OB us. of now in receive we states. front patient in

to XX% were support youth of grant during Foundation already the mental mental nonprofits health, and access we quarter, results through the X,XXX Mental parents. Report, a learned of Prevention. seen pandemic of challenges significant Finally, that destigmatization parents looking have a of and for including that face of State for released solutions. Health children we American populations, American have adolescent their survey emotional you in the the LifeStance To further directly for including Foundation and We Health the several and first the improve serve Youth Suicide

and care, populations, vision and of that path momentum a struggling are to healthy closing, on lives unified of access among a their our our addressing on increase make with for health company. help strong We alarming to young to health. with organizations ability I'm future health. to truly continued as committed health at-risk confident growth with better first XXXX mental society better. for in public to starting expanding mental or profitable quarter our and We're directly honored people the to care we're the their share mental physical mental people partner In

performance Now I'll to Chief provide over on it detail turn Officer outlook. our Bruff, and Financial to financial Mike more Mike.

Michael Bruff

context my strategy, revenue start growth, with consider growth expectations includes February estimates. the relative in quarter our growth. to I which with having balancing of first me that XX% let deliver frame initial the $XXX primarily continue LifeStance Today due But our Thanks million liquidity issues. in will achieved March of going impact year-over-year. long-term Mike. an believe forward, and our solid profitability, first Omicron comments in We of and to revenue over at less to quarter

partially flat year, revenue year-over-year the driven quarter, Center Margin revenue $XX the or growth. profitability. EBITDA Margin increased $XX a expenses. remained of Adjusted relatively In in by percentage period decrease in first to as same X.X% million of G&A XX% strong EBITDA to a by Adjusted last of Turning revenue improved due the at offset Center average over revenue. million as declined percentage

favorability, First of quarter expenses, which to year the initial delayed across expectations the revenue utilized EBITDA and be adjusted investments. primarily expect flight on exceeded the G&A due we our will planned remainder

solid balance with positive We In million supported exited the $XXX liquidity, debt net operations. generated cash to LifeStance sheet. quarter the first to from and $X of $XXX by of a quarter, Turning continues be we of a million. million, cash

credit access and the both close, will new be loans, to $XXX credit entered close. facility our used through existing long-term to the fund repay at with capital incremental afternoon debt we to million our facility. of in at at And this facility in cost to announced delayed early in revolving up provide more favorable we As loans a This in a net draw existing million undrawn earnings $XX debt we'll May. release, into growth

reaffirming are for guidance, as mentioned, to the Mike Turning guidance Year. we our Full

EBITDA million Center $XX revenue quarter, to $XX million, $XX $XX For second $XXX million. million. of we million and of expect of margin million adjusted $XXX to the to

of profitability by To second and few noted growth we our focused strategy scale strategic to expect XXXX remain the in continued we quarter, last de our leverage balancing the we that, before considerations. through summarize, improvements of in words decision novo half second turn center in I'll back With Q&A. clinician the going in profitability, Mike for in on on growth, openings long-term Lester liquidity delivering a driven to to year, our and it on and G&A. base, half our our based moderate As

Michael Lester

Thank you Mike.

strategy goals. Our execution, XXXX, and create balance path for momentum to achieve of into going our strong differentiated performance, and the financial our

partner solidified health trusted delivery leadership the role behavioral as our have We a to patients. in

take care, of best-in-class As our what who've played contribution our during in we this We're and engagement are will of every meaningful role to colleagues pandemic But drive in proud of I Operator. will across improvements do the trust, Mike, cost continued also looking moment all and hybrid build of to like of forward the access, our at vital model. lives your flexible recognize day we a questions, build upon to now and continue to the our the to platform. now patients. a Danish continue take they LifeStance,

Operator

Stanley. Instructions] Goldwasser [Operator question from Our Ricky with first comes Morgan

Your open. line is

Ricky Goldwasser

Good Hi. evening.

sense, retention what retention is terms Just of -- inflation seeing wanted you a how get hiring? clinician in quarter are the and and to in wage

Michael Lester

that has I would quarters. of retention clinician our couple stable remained last say over the

feel about value clinicians that we we for proposition and So good change. that haven't we the seen have

Ricky Goldwasser

inflation then and in hiring? wage of And terms

Michael Lester

Sorry, Oh, again inflation? that I'm say could wage you Ricky?

Ricky Goldwasser

and just the inflation cost Wage inflation. Yeah. overall

Michael Lester

want to ahead Do that? you Go Danish. Sure. answer

Danish Qureshi

to. Happy Sure.

continue as have. year-over-year wage increase see we We always to

-- in our the over always assumptions. well high all clinicians. Those that has and build always time our within way clinicians, our been compensation all our for for they remain planning that type demand by structure, wage been received plan in always increases clinician we Our we and of and have recognized that and increases have

we and about we're in So feel good the at year work. where having

Ricky Goldwasser

Thank you.

Operator

Lisa next Gill question Morgan. comes JP Our from with

Your is open. line

Lisa Gill

quarter. about clinicians much, if we very it's for but Mike look And to question. a expectation, and year. XXX, the was you your back, that say in want XXX the line the I how think I averaging the with coming progression understand in thanks been heard just I like of think, I Thanks taking should at

So of know are of with that number the clinicians, as about bring to side? made. in I you acceleration think about you about you there the back half Can of the expect an technology the what think about year, as the some we bring us level and acquisitions? you in, more do also you the talked there? that, then talked you've have productivity on those and XX Did about that seen talk things and acquisitions there clinicians or opportunities you and productivity the clinicians you we of

Michael Lester

Thank Lisa. you

reminding everybody that. and by X% I of less start there the So, still would that in today, are I country guess off than XXX,XXX clinicians we're

count clinician continued resonate for that that we and guide of proposition [Indiscernible] don't So the clinician our continues reflects strong but And that growth the see again, think base. to a value I expect to market. in specific

Danish Qureshi

of the in Yeah point going clinician our QX fluctuation. with experienced quarter-to-quarter Sure. internal to We're terms our enjoy expectation.

As solid you ads, had pointed cadence also approximately out, hiring. last a we XXX year right where but we QX, in have from now, organic we stand on net

to M&A strong have that feel pipeline remains about and continue stabilized. a we good We retention

Lisa Gill

And so going of understand if trying think come much and the be just I half are based the the into do that looking acceleration half dynasty, just at about just drivers guidance think there, as as you and to the reported just second productivity for I'm first the model the the to clinician. back of quarter, that obviously we driving to key about we move? gave on first is expect you of gains so you I'm year, us what quarter the

quarter So year? Just will that see the half become of the clinicians an that if really Or you acceleration the going second to us be in that incremental in that can is we're in see much think productive you it anyway? through do of to think back help they productive? more

Michael Lester

timing guided variation into geo productivity. productivity, newer of There's any number until go many a with and a to in so days payers. we we There lower have the density as M&A, renegotiate rate generally period. of in We a on there's haven't that mix rates states, given business variables build are as expand our

to a example has days. days of we see becoming business half year of is like business being in sort reach our that of subject A alone. holidays less of to that we in due number scale As based we're today, the performance second just more on good QX the seasonality

feel hire to that? add good the recruit. way about we So Mike would we still to like and you

Michael Bruff

M&A, The when perspective, think our from clinician, said, assumptions, that expectations see base, want country individual cetera. our come dependent a I productivity Mike where or you quarter-to-quarter or made just a timing had, in you as the overall to we the look of on an the still at general certain the any fluctuation the of of if ramp about productivity made will haven't of the we higher on, we a we've things is perspective, within you et think but where there. changes clinician again, timing depending rates range onboarding,

well, within our You can certainly see at this in some they're of our clinician-based the range of expectations. history but the as individual

Operator

with Our next open. Chris question is comes from line Neamonitis Jefferies, your

Chris Neamonitis

everyone, Thanks nice quarter. a on and congrats Great.

will way KPIs, the we comes offering, at to going offering to count. So all it be the dispute the in-person model the merits the equal build recognized the the down provide of because be publicly, is always I you to the clinician with hybrid main least out, you

How current the if modify leverage should you Would change need your can modify more of out at estate? your long-term for real get So physical growth, point Margin? how think to need we footprint? does we And you about clinician the existing don't should centers? outlook necessitating Center think maybe to what you that footprint, about

Michael Lester

rate of Does backed and vast as we less virtual. believe, contracts. a up XXs quite of going point down. spend is XX% It's has guidance parity our stalled XX-XX? mental in space, November, novo take to then were the a we moderation have take really to to bit little don't we've of and XX-XX. to in that actually. well assumes Omicron a because But high take to payers because And January a would continued majority negotiated past. really in down Does as years? So were say we've we April the to into out we talking amount. know. shake our tended we're We're that payers about with the of a get in agnostic We our –COVID-XX, bit That's time the again, intentional out in about very believe -- it's December, take of I health -- Pre and year that visits talked X% this about and the X this openings, it around de and

very, to capital So XX% with be prudent we're going those to were go to today, trying our very costs just all even we XX-XX.

footprint If answer, you believe the is at XX-XX right the mathematically number today that we our expand double of physical clinicians can have not and we all.

good about leverage us about really that, that gives So feel we in good market. we the the feel

Chris Neamonitis

the offerings but talk is patient Got how Telehealth, model those bit and different about the it. pure-play appreciate you terms acquisition versus I And your can on of commentary a prescribing then differentiation in practices? you of of off the Thanks. in think their you referral,s that referral terms terms of preferences, from redirect what about visits where to? And your are in they base when driven hearing are patients versus

Michael Lester

that. I handle can

service terms of demand acquisition, in So, patient patient has our been stronger. never for

Our believe hybrid diverse we is very the [Indiscernible] of prescribers model continue therapists to in and comprehensive and mix and marketplace.

low, remain one acquisition three our patient organic primary being sticky Our very costs agents from the directly come majority care levers, referrals. because of

So healthy. these the are remain that very PCP across established networks relationships country with

online that Our in-network pair membership as as way, relationship well would self organic referrals. our drug

marketing. if X%. spent -- we're This X% we're totality last of we've So through of year, it spend, less terms look trending year, of at less in the than revenue you on than

key are that an non-sustainable we patterns. on on words, -- or based not model is again, not this heavily is acquisition So referral bidding

Operator

Caliendo Kevin UBS. with from comes question next Our

line open. Your is

way. to to it but want going this I this, Thanks. -- ask just to I'm you alluded

business we how the Just the adds. Interest context want a in higher, steady-state. in the business. number I'm are rates Is organic the certain net inflation's like steadier one certain the feels forward, businesses good or should higher, is this a now is to of a ago think it just job sort this planning for data frame of XXX net little going people's year long-term a asking frame was broadly the about terms relative, now fairway high as it as market's net-worth than or is point? it this opportunity of bit was your income least not probably at right before, speaking, to

Michael Lester

here. Danish -- let Well, in it's think jump I'm I'll

I going sit paying perverted when ability chose think that a work to to a point, and mean, feel data I retain work, a think and hire as be while go viewed you anything a back kind have clinicians. people to guided counts clinician our that I out market gasoline. Danish good one our for are to of to about it's of for and from they friend, a to in sense dynamics do a inflation milk could go kind to add? have $X we the are We a But still gallon year. two historically for have labor

Danish Qureshi

continue I towards skew overall to of No, our organic add net and that just overtime. ads heavier clinician mix heavier

those quarter-to-quarter number However, have pipeline of in to M&A And net the fluctuations we remained continue going the well that to is also adds. robust. we're see -- between

I ads M&A to XXX ability our data single the -- and organic what on contributor to ads into number meaningful engine very increase points won't of a I confident Again, So well. be won't much feel continue as of the read too for again, that to and we in recruiting indicates.

matter that low-end either to If targets, range? of the your of are what can What can range? a for terms one margin pulls ask take most through the in and get Center follow-up, or pushes side you I the you me would of high-end at your Margin the

Michael Lester

that main Year, nothing assume. on be growth. going got Full on revenue we The Kevin is driver to I

those the our And low that there. of gets in will planned fixed so centers, already really with growth. those staff high number the driving administrative of -- economics therein the top-line of in to the important adds on-site, who's that economic and this fixed costs, end of be unit drive very and our growth. de about have novo those the can the and clinician over growth admin, driving top-line It's really fixed there, -- down economics cost we costs So were with terms

Operator

Our next Jamie Perse comes Sachs. from with question Goldman

open. is line Your

Jamie Perse

clinicians afternoon clinician how just any productivity fully in of you fully good percent the wanted ramped are Obviously, I question Hey, dilutive margins the follow-up a there and to on what earlier. Are are in your clinicians how productivity, about that so of trying guys. for can provide stats the to think terms rest impact new gross are from get sense productive? of might clinicians ramping we to of year? you just that, where to and

Danish Qureshi

Sure, in cover can the Danish. of at individual plays terms I out clinician how level. this this is that

a the of we've in talked period or we So, clinicians through they're recruiting M&A. for there's regardless call, through ramp whether ramp about endured coming in previous period organic

full And platform to is side, organic typically ramp to benefits revenue's point also step-function, there's month the maturity, when start caseload. our but get to we six full on from essentially start more of for M&A the to our afforded month have four a from contracts and at is and you six it's uplift On period it of then from time the being them that. which they launch enjoy a the

You period of you on quarters, same level there. stabilized kind of the same obviously play we see then time net that retentions through the can previous that the witnessed And effect kind as in fact both. remain the

Jamie Perse

maybe follow-up growth M&A. just from to a Okay then on the contribution And thanks.

expect about contribution or Any you good guys of so million so to previously the $XX number. if you chunk in of year. million Should quarter for or You down the from a guided change the year? Looks year, this come million did in first right the M&A M&A to $XX to the cadence already is $XX $XX rest of like to expect still the throughout done. that we $XX that

Michael Lester

comfortable moderate in that with XX. and we have very the bit decide guidance year. pipeline how but feel are little robust we've be controlling, not to very be feel really it's we given are just that XX That XX our ads linear, -- the XX It's No. throughout control out But comfortable we will that -- the there. will that? just we to to We with harder think on closed

Operator

Ryan comes question next Our of William Blair. from Daniels

Your line is open.

wondering for that Spiekhout payers? inflationary able we Hey guys. is what's And typically guess taking front, the work things with I'm Thanks questions. going time I a Nick just -- wage inflation there how that guys you off my Ryan. to pass take the for amount onto through are the contracts? on that like of

Michael Lester

I'll let Danish inflation I'll call the up talk by begin given off us one to inflation start the but from with, permission phone every about of to wage saying pick has single and standpoint clinician the payers.

And There so be the that -- doing on you lot assured inflation Danish discussions. an of we can rest and we're from have have that. everybody market we you pressure is do using have that a anything standpoint, to will those power

Danish Qureshi

But exactly account in for this, we receptive a clinicians, expected in and this something we're keep to That's this engage been savings again, appropriate our be very and that side. consistent coming pipeline we've that about on. all always to to and we've appropriate the acknowlede needs any launch planned that this No. network and of increases focused them of healthcare fact topic. prepped, in passed exact we comfortable year, increases with feel the conversations with wage we've from payers good in that everyone very we right, They're continue payers planning is to our that assumptions that an have and inflation,

LifeStance or trying that we're where in? a back year providers now people workforce at any and I we you wondering in seen to that if will appreciate, just just might getting already LifeStance. back back former actually those can workforce, ago, you clinicians reassessing getting the that couple made push guys which in to pressures going they're comment be Regarding think have I'm of definitely left the so Basically to back a LifeStance coming or now, it specifically clinicians, are are

Michael Lester

there, seen haven't seen little are that there any significant way anecdotes haven't recently out lots of in yet. but we that, I

Operator

comes Taylor with from your Cowen, open. Gary Our line is last question

Gary Taylor

row Good see four evening. was down. driving which a what up you've just be, does midpoint point been what million to about get would thought a that for back if you're which about guidance, to quarters $XX bring DSO, guidance, $XX ask in little to the then $XX your look to million And just almost do that, secondly, that going creeping a just wanted help the is in for means in has drivers fair finer the second question, a and in put the up EBITDA Lisa's EBITDA really you margin million doing first to half that what and on half. half revenue, got of bit towards to estimates the to to quarterly have it understand amount a of second were to of higher but like has expectations move quarter, be or the better Wanted

Michael Bruff

this Gary, Mike Bruff. Hey is

around observation question DSO, For the first there. accurate

that then through we of M&A integration don't the we If lot that, has mostly with the crept Our a pace at through we to until rates. that often DSO reprocessing our do onto has and we might clinics and clinicians the this saw we toward last bring move in of And sort that of claims. up and so increase year. process, will hold be end immediately integrations, we in when the of we quarter, first M&A times work claims work intentionally those and and do

So this receivable of of some driver the a the has the little a actually to quarter. do large with bit bit to A in increase our in acquisitions. here quite first of do, timing accounts

year. deploy a bit XX, to $XX more So this tempered our relative or this $XX to the last million expect to be to expectations this this million acquisitions little about of in to is would year, XX we timing for and is and do acquisitions, and capital year, more acquire between

quarter, significantly half-over-half pardon ramp, the And slowing two the we that me. I prepared things. not decreasing question the second and G&A a of will pace had One we of The growth the year, in of Slowing with profitability it in already -- half-over-half, by our ramp the points to respect were center of or first quarter boost year terms first mentioned lower in get revenue. the in back really terms last basis XXX about a statements, of we the de expectation a But EBITDA which as than or expenses increasing is the as in adjusted half said, percentage in novo revenue. doing our leverage openings. in

two costs, over driving that's believe to then fixed expenses. Full-Year and revenue And maniacally fixed our continuing our those driving center and So operating be increasing we'll on guidance in center get costs, things, what range. leverage focused we to slowing

you. Thank helpful. That's

Operator

now concludes great you This today's disconnect. day. Thank a you. Everyone have Thank conference call. may for you participating,

LifeStance Health (LFST) 10 May 222022 Q1 Earnings call transcript