Earnings call transcript Q1 2023

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Operator

Good day, and welcome to the LifeStance Health First Quarter 2023 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks will be a question-and-answer session. [Operator Instructions] Finally, I would like to advise all participants that this call is being recorded. I’d now like to welcome Monica Prokocki to begin the conference, Monica, over to you.

Monica Prokocki

welcome Health’s and earnings quarter everyone call. conference morning, to first LifeStance XXXX Good Prokocki, of Vice Monica am I President Investor Relations.

Joining Executive Relations our Officer; morning. Both and Ken section presentation before Burdick, of Chief release available opened the are Operating Officer; this market issued Chief Danish me Financial Qureshi, on and website, We earnings are investor.lifestance.com. the Dave today Bourdon, Officer. Chief the Investor

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

noted management that statements results the for statements, model, attention filings. about and to strategy. materially. business prepared in release turning remarks, about our your could to over Before contain including filings differ the Those SEC direct as their to and our forward-looking the please with cause call performance risks, periodic forward-looking statements actual SEC, financial and remarks Today’s outlook, involve factors, statements uncertainties, earnings disclaimers the other included in press

non-GAAP report presentation performance. A prior release to In help noted, year’s in measures past included of and addition, the investors please prior the we results using and to otherwise facilitate press for we note the compared is comparison results reconciliation tables provide financial information which earnings appendix. that directly additional Unless GAAP comparable most believe all to measures, are period. comparative

Ken of LifeStance. CEO Burdick, Ken? I’ll to time, over this call At the turn

Ken Burdick

Thanks, Monica, and thank today. for you us all joining

on early executing improving are innings our the performance. progress in of operational and are strategy, on We making we

deliver affordable, mental mission provide we care. to clinicians now also X,XXX grow LifeStance’s continue our While to who base, we approaching trusted, health focus and operational clinician WX-employed access to personalized improvement, on on

to in our tremendous positions provides clinicians to flexibility the changes model respond and uniquely patients hybrid Our to and industry. us

this May eventually the For pleased we as months are share the been health tomorrow, ending XX, public sunset. knew PHE emergency, to example, would that preparing for PHE, we’ve now for or with we

operations May marketing in-person practice importance To all our with on not-one-face prescribed of have health substance an month. mental psychiatric of patients being also clinicians experiences controlled working staff with with a health, visit. real appropriate that anxiety. is to our iteration people a the mental newest for campaign focus Our launched LifeStance our sharing been promote their awareness ensure scheduled are

As in learned we health is mental mental leaders the care have space, non-discriminating. that health

tens associated may truth health Mental health Reimagining with one is do images, of mental faces. lives fulfilling live no be LifeStance. at more help have of the to literally the conditions at everything heart these healthier, of but stereotypical face. is There we conditions millions are people here

that team personalized as dieticians team that a with with and Gen committed announce a mental As are unified. offer has we’ve to that approach healthy vision, treatment XX doctors our and previously takes we In stated, for unified this healthcare providers closely in Gen where all utilizes are we a of that vision support LifeStance excited menopause. in a physical to provide of care menopause. to a F, plan health truly F work whole-person to clinicians care partnerships women with are care to alignment collaborative partnered comprehensive will states women’s society LifeStance subsidiary a

Regarding on making operational our progress improving execution, we performance. are

to on and with our do physical place detailed earnings call. through estate following we that or footprint have to centers remain so have XX XX last are we We strategy we example, operational the To streamlined to over consolidate announced our no For patients track plans on in XX the real to centers. disruption optimization of consolidation clinicians. and little on our date, with

our administrative complexity making on lower-volume are progress payer reducing also by We terminating contracts.

XX% of half approximately previously, plan discussed XXX termination process for earlier total the slightly approximately our of notifications contracts, impact credentialing, on our in revenue Consistent an will cycle management intake, contracts sent have the sending and these visit month. immaterial for This with we are greater volume teams. impact have initial the target. a Terminating we than payer notifications efficiency of XX% represents material nearly with this the on payer but contracts, will

two infrastructure will and Finally, a improves strategic our to a overdue for we’ll company credentialing we build technology implement enterprise-level with initiatives signed platform we launched clinical three years. agreements implement the front, system have information long resource On X,XXX the human employees, scalable other next few over this processes. One, that onboarding and a with vendors.

evaluating EHR begun a of initiative range discovery the of by have this goal options end We of an the with also year.

in Turning to adjusted center revenue exceeded quarter. all million, expectations. million, margin produced EBITDA $XX of of $XXX first our a $XX which the We results of of financial million, our

it well by is full-year for but outlook our the shortly, still more achieving up sets we Although are that first will commitments. the results. first our Dave early, performance quarter encouraged on color us quarter provide believe we

our for sustainable about the opportunity front the us. proud In streamline I operations taking XXXX. near for on confident of team remain I tremendous to for objectives remaining right actions to believe closing, business I long-term, In the are in key we the laser-focused the profitable, am term, of our position growth. and and of LifeStance improve that

work the my still with a fully recognize that team progress have made do. we we of deal great far, pleased and to this have While I

that, performance Dave will With turn to Dave? commentary I it and on financial outlook. provide to our additional over

Dave Bourdon

produced first $XXX increased team’s would echo $XX improvement. year, driven like million net results the to quarter, XX% year-over-year. our top-line driven by EBITDA on representing million driven growth Visit financial primarily rate million, Ken. outperformance solid our $XXX, X% of margin increased of year-over-year, operationally slightly you, volumes payer clinician was quarter expectations. of revenue both flowed visit the increased count. year-over-year. $XX outperformance productivity. so year-over-year above Thank XX% the Ken’s to higher-than-expected clinician XX% by margin, to center of the performance we revenue This in In Adjusted and in per primarily this was center primarily through far a by of The $X,XXX,XXX regarding higher strong comments I revenue with results. the Total by

Turning Both million, negative In to a $XX cash year-over-year, in cash activities improvement was were million. expectations. and flow $X free $X million quarter, first was line the operating liquidity. from our negative with

an in in temporarily expectations. year As as XX two, with quarter line was and we cash DSO first X bonus DSO costs stated patient increase payroll quarter, previously, payments driven impacted our the increased days in such as reset flow taxes one, by In in responsibility deductibles first days, by: and January. the compensation to every higher by sequentially higher

We $XX debt and the of quarter cash net with exited long-term million. million of $XXX

loan end of business million of additional we $XX had the get QX, as draw run revolving cash delayed flexibility XXXX. until the As of million a flow to as debt from a financial providing positive in the capacity $XX free we facility, us sufficient debt well with term

the million. terms In we lower to our our of to our to outlook range $X.XX $XXX million narrowing and revenue $XXX end and lower margin XXXX, billion to end range full-year million raising for full-year and $XXX center are narrowing raising the

of are to We range million. million our guidance $XX adjusted reiterating EBITDA $XX

assumptions strengthen performance the signs early to believe too that the are encouraged still year. fruit. We making bearing we revise for are have by the remainder early it’s improvements our of While our been we operational to

the but believe our productivity vacation higher QX it to prudent season. we assumptions summer the reflecting revenue original we in have are during full-year through we our result, that a support persist, for QX especially is more will evidence higher As QX to guidance, until maintain that

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

with turn to that, over for With operations. to additional it I’ll color Danish respect

Danish Qureshi

Dave. you, Thank

operational executing Dave, to we priorities: adds clinician teams by simplification administrative improvements clinician continue around and X to addition described Ken and on productivity. net the align growth our In and

in acquisitions of not growth, with bringing clinician we small first quarter, X the clinician XXX year at beginning an year-over-year. clinicians, net the towards for XX% of planning and terms delivered this We shift organic M&A adds X,XXX completed growth, are to we our total increase additional of our In year. consistent the

or slightly to see Regarding available clinician in positive we Clinician capacity compared both quarters. make saw the time last two trended clinicians to and capacity the utilization. productivity, patients higher trends clinician our

As to our time due capacity run the year in with periods. the half year vacation saw the taken reflected we the in seasonality last higher a of during moderating first of off This summer year, the full-year guidance. quarter reminder, is back holiday fourth half and

available appropriately the fill or terms make encouraging clinicians observed see time improvement. of signs In patients, to of we ability our to utilization

is early would continue However, year, assumptions. to before like updating go-forward our we these trends and see still the it productivity in

At funnel. and continue related new operational through line overall middle, these funnel, the are with top, discipline the the patient of of in their at driving utilization to and the top clinicians our We bottom growth we improvements patients attract the capacity. of in

to continue this also low paid minimal for cost an acquisition We do reliance extremely on marketing. with at

our are tremendous growth from a referral For primary continue has job example, seeing in we team as expand and investment relationships. solidify in local care care to teams boots-on-the-ground, benefits they done primary This referrals. delivering

has a roughly marketing sequentially. a the increasing resulting positive Additionally, of the traffic as in brand at organic awareness effect XX% in online top levels had well of organic as funnel, patient increase

the at funnel, scheduling improving middle of our we of Second, are the patients.

channel. prefer overall for their conversion to teams who through experience appointments phone Our are the enhancing intake and matching the schedule patients

to These funnel. states, of full OB at led end middle Additionally, capabilities QX, for we and remain via OB. our by online a of our the online live the leverage offline digital in matching and was midyear. we continue further efforts experience, patient optimize have pace on the to to rollout At progress national booking XX

our the XX% by to scheduled improved cancellation the down appointments to Finally, first in quarter. in completed visits at of bottom the of converting rates terms nearly X%, funnel,

the top, Our in stronger quarter. productivity the and to funnel execution at first better-than-expected middle contributed bottom

the I in improving am performance. In closing, operational proud team’s of efforts

our significant in the We for focus opportunity and on performance patients our clinicians, remains progress positive and are to shareholders. by we on our metrics, as further there delivering key signs commitments encouraged

his over With it I will turn that, back closing Ken to for remarks.

Ken Burdick

a is This Danish. you, Thank journey. multiyear

physical phase the early mental health mental muscle our commensurate and a in for of building and opportunity immense us. very The need aligning energizes greater, business accessible care everyday. vision society care in run never market affordable the the us our health in front been are has highly and effective with to of We of

We will questions. take now Operator? your

Operator

of Stanley. question Thank you, Craig, line ahead. speakers. Craig from go the first please Our of Instructions] comes [Operator Hettenbach Morgan

Craig Hettenbach

the you. Yes. to was seeing more year a about you’re talk what for ads? recruiting the in It Can marketplace and on efforts start Thank the clinician ads. broadly net good just organic you

Danish Qureshi

we a Yes, see continue recruiting team. clinician in-house sure. our to Danish. with From This recruiting momentum is perspective, great

we that currently continues Our both well a the to so the value environment to as the attract grow that presence feeling ability very in new as have scale proposition states to good our we strong, and in clinicians continue there. about remains marketplace resonate as overall throughout year the

Craig Hettenbach

on Got then interesting that health And value-based the a follow-up for Ken, just to announcement care, see it. this morning. women’s and

the Just on I health physical days. from Can more and other tight early you’re know just touch the integration you any anecdotes of broadly, marketplace? conversations having just it’s and in mental

Ken Burdick

Sure, Greg.

This is early the right. in You’re very days.

women as Gen needed. We’re think care reach exactly working million thrilled X with provide of F with collaboratively integrated kind and we what’s this menopause, that the Gen F can partnership we is annually

a is it relates still about you pilots, for what But be that the strategy say insights. this me value-based early I to can definitive descriptive it’s I or is would for tell us. As our core to too

I of be not partnership. And announced time so type we this this last the suspect will

Craig Hettenbach

it. you. Got Thank

Operator

comes go JPMorgan. line please next of Gill Lisa, from the Our from ahead. question Lisa

Lisa Gill

morning. Good Great.

with termination the wanted with XX% just XX% to start really versus I previous contract Ken, around your the First, call. comments

on as you’re anything as concentration any go-forward any of will you’re as secondly, regional two thinking And contracts those And be a look more aware today? concentration findings Just should far else basis? there single your through One, a about payer or will like things. there as percentage is we be it makes that that large payer of up post business going this? then what

Ken Burdick

just to say, I XX%, as is want number minimis of I it that contracts, a while patient to question. this in as relates terms the really is reiterate for thanks Lisa, big visits. de it approximately

with the and loading associated and administrative lot that the the consistent of And contracts I what these say from complexity derived just these value a maintaining guess, so is that was that particular was way etcetera, had and script, remarks payers. with would we out whack work them, of prepared with being I actual

payers, all. it’s can really as total we of To it of So concentration the and means of provides significant your some than all would drops impact it less represent still not do when total a national pretty a dozen percentage the this, the other has at off or And question, which might changing on color. visits, after X% they then you you our part first our substantially volume. so with that at suspect, we if look helpful

Lisa Gill

that’s as No, to that. a then follow-up really helpful. just And

they previously, we X%. side? of us So move year? Can first mean we the cadence the me think the if some about you the quarter, we help year. were the roughly look roughly this the in do your about of on of goals as to the cadence? about longer-term How margin remind at margin midpoint margin moves think the And throughout X.X% just maybe I for to maybe margin X%,

Dave Bourdon

Sure, Lisa. is Dave. This

me, from the revenue, was third when play out first be the low lowest were giving the year, guidance the and in well the after mostly discussed we like the out a it less the would then increases margin payroll So we the back payroll being margin taxes as then that some of would being well, as we higher far perspective, started throughout – as were will how it as as things rate first they the full-year as And ramp what to seasonality are throughout as that of our start item as which payer year increase of impactful quarter in, QX well year, up in the and kick quarter. year. will half our higher-margin services excuse

I about XXXX. how that’s So think

As far last exiting end we what by of as XXXX, quarter that the as double-digit margins. be to XXXX, we longer-term about talked was we’re guidance, expect at

Lisa Gill

Great. Thank you.

Operator

Brian, Brian Our Daniels of next William question go from comes Blair. from line ahead. the

Unidentified Analyst

Jack Daniel. quarter. on my question is Zenon congrats Ryan and This on the Thanks for for taking

top strictly guidance, when full-year appreciated? first-half I the line, specifically this know slowdown it’s second higher first, clinician the quarter than for we and the we for this? is the you’re this would that assume comes Any sure historically, more midpoint more mean should you if additional commentary but cadence think to half just would XX% Can on about would First talk maybe the believe conservatism year, on for planning than productivity. typically come not and at on if consistency I guidance, it second the that be revenue if in bit a a about the midpoint. the here more how

Dave Bourdon

is Dave. this take I’ll one. Jack, morning, Good Sure. this

is you what since doing the going this number looked when true and organic the of of we the seasonality is think not So in masked which we of to acquisitions underlying the business, the had first throughout see about revenue that more you’re of into of have and you you’ve on quarter, at the significant planning our account performance, to acquisitions seasonality take what year that any did more year. we’re three the remainder historical

we XX-XX from revenue about full-year result, talked when gave was So guidance, half. first half, a second perspective, what our a as we roughly

first while little half. to half Now roughly I is we’re – more XX-XX. the assume that more second of we’re clinicians than again, point a year, still big throughout that more would lot second lot bit half the But dynamic vacations. the a the you still has in year it’s And we a growing that

vacation the have summer season. You

season. You’ve the holiday vacation got

have vacations, a we year. clinicians build into and less result, capacity as And we the a of that revenue so how them result for taking as our bake from we

Unidentified Analyst

factor nicely a newer revenue visits Or heavier TAD. it’s stemming lift Perfect. it a increased sequentially, of of more as their Is a more patients visit quick per this beginning but the and clinician’s a onboarding follow-up. is total journey? like from And of then in looks more your total It just pretty decreased the side?

Dave Bourdon

wouldn’t those. to either I point of Yes.

visit it fourth did did I things TRPV the quarter quarter. from to. see So or point per Two first rate total the that would drop to you

higher the revenue, a and about of we’ve seasonality lot services, there. The that first talked this is higher-margin

reset are less year. of in And so ramp and deductible January, they so the the the then those kinds first in patient services throughout with quarter prevalent

that Medicare thing to also would a quarter. payer isn’t we throughout but specifically where rates, had percentage again, big increases cause And a other bit effect. did book, little first then in TRPV the the that TRPV down as first to into get modest other you we a build go rate year the that’s our expect which payer of increases, rate decrease. sequential So go some pressure, is – the to drives Then related pay-to-rate

Unidentified Analyst

Wonderful. Thanks, guys.

Operator

please next from Our line Caliendo ahead. of the go question Kevin Kevin, from UBS. comes

Kevin Caliendo

Thanks for taking question. my

about recruitment an bit talked retention lately, ago. to Those and about haven’t and we just so are wanted about really or little overhang a was and year also Just talk it churn. numbers a

how Is world that’s most wondering clinicians of Is resignation. I’m terms And the Just and your it as attracting lapping year changed in the just retaining lifestyle? important has of great new matured. we’re are you finding clinicians? is sort how wondering what of the compensation? it a

Danish Qureshi

Thanks the tackle that. Danish. Yes. Kevin. question, for This I’ll is

in So continue LifeStance. clinicians new our like team things, earlier, terms side ability the see we of strength I in of attract mentioned to organic to and recruiting to our recruiting

proposition marketplace. so about a continue It inside or investments the ability of for and other make as we to the that as digital build multiple all well the that’s each Our across It key about proposition really them, tools the in collegiality ability in with we within we the component. flexibility, office for etcetera. to subspecialties state, that both do that clinicians telemedicine, really work clinicians, here give same obviously the does is not that resonate value to in compensation we the the just overall in-person offer value is

in the to net that continue out numbers. and is clinicians new stand to there here our demonstrated to and clinician ad in is continues ability proposition attract So marketplace broader a value our

from our how performance of far are in the to we our year. deliver clinician retention focus our said, just is making consistent us, QX. attract on remainder value planning phenomenal how a As we that we retention proposition experience, not as but goes, sure throughout for have here. clinicians here, they in stable the being remained that we continue once a And expect perspective, That

to to support that we’re etcetera. teams, about attention staff, interact our around like additional how the our frontline clinicians, they so service and not but on administrative our before that spoken includes and And things just we’ve in with billing the patients providing,

do to at lot feel still but at there, a good So we’re today. we where

Kevin Caliendo

been with mix to to there the Has in bit going last any a I’m just months? the change X it’s higher anticipation months was think wondering or even mistaken. originally anticipated. level the know I I forward, not going always versus if maintains XX%, than what was was in-person just, if I’m just little And that it remote it X –

Danish Qureshi

Yes.

a return virtual the as quarter, we’ve versus see shift XX% was to QX, back approximately seen towards at rate in-person quarter. the about every in that as that’s was X mix. and to in-person We a our X-point to In continue it previous been slow XX% far to That in-person overall person. returning

continue. So we fully will expect that trend

in-person again, We for have more our person over time. clinicians increase returning as, demand patient in seen well as

Kevin Caliendo

guys. Thanks, Great.

Operator

please ahead. of from comes question from next Perse Our the Jamie go Sachs. Goldman line Jamie,

Jamie Perse

place some there versus year? remaining portion ahead Can been Good you. in remind already come estate, us center us how like expected. starting the this first performance than still of a it in is faster progression initiatives in morning. real on the you the there year? I you of of first those just have level through has quarter much around margin Thank the margin, think the to Question the bit seems are

Dave Bourdon

real quarter, the would and additional driven performance And center this is throughout James, certainly, I benefit. Dave. The being beat helps. margins scale margin modestly expect revenue do first center think by to estate some consolidation just getting we benefit the in of the the of largely Yes. the And improve year.

run of you, of rate $X about size $X for million those would into year the million about from that benefit expect consolidation a this that estate – year. to savings Just next we real roughly and

Jamie Perse

just tie That’s helpful. or and you. landscape, preparations Can changes to you that. even the guys changes mentioned the that you the of expiry where think then the you’re up any in more the you. emergency from broader Thank And changes that? about for Thank emergency public competitive how health competitively short-term you broadly, Okay. of you’re health expiration thinking of public making clinicians terms in the you’re anything end the or if making

Ken Burdick

Yes. This Ken. take that. I’ll is

So public about that an health very the or recently, emergency announcement there of extension X-month some there going PHE be accommodations. a to essentially is flexibility and was

to longer-term. So I’ll the speak

a I both and in-person think advantage an visit. the model in patients choice longer-term, hybrid either a is offers clinicians the that remote having flexibility there an clearly of and visit of the or

it receiving have relates a patients there substances controlled of will they on in clinician but the to once as a is person. has controlled So to prescribing go-forward expired, no one extension basis, substances these these are that choice, visit with

Operator

Hello, Jamie, are there? you still

Jamie Perse

Yes. That me. was for Thank you enough that. for

Operator

Brian question Tanquilut line of comes the next from from Brian, please go ahead. Jefferies. Our

Brian Tanquilut

guys. on a couple quarter. good morning, I Congrats of guess questions. just quick Hey, the

improvement, think about forward? payer runway guys see I to how that much drive going you do As rate

Ken Burdick

continue the the created. a integrated that think physical of there reimbursement our not the We that health. mental provide follows value think of It’s critical with importance of the understanding increased going sort of we clinicians of absolutely the be is health to But the as services that’s we with it’s great and demonstrate a flip-the-switch. runway. to being value deal Well, that

and data to of are limited Now life short-term, terms of quality terms etcetera. in means of what the in able value the in absenteeism, we provide some

can the that a way quality also more intent at total inpatient it’s resources. meaningful cost of me, to But in in Some a the will room right ways pilots care. excuse said of still utilize that referenced, in-person, health is efficient database of that of the that I hope, statistically from or and life, improvements, are visits goal, care and the those are but that we demonstrate we’ve reduction emergency demonstrate as true a build Q&A, a that. we the valid we outset obviously, away that’s there But can that’s visits

Brian Tanquilut

And then much revenue raise, of Dave, of don’t the but much that the guidance that from No, how clinician acquired addition it. clinicians just maybe, this, I that makes know if versus I just in on quick of was a How your Got question, missed organic? just ads? sense.

Dave Bourdon

didn’t ads We of But organic XX% the parse XX% that quarter. from Brian. clinician acquisition the out, being roughly think the first and in

Brian Tanquilut

Thank Alright. you, guys. Got it. Awesome.

Operator

at time. are further to our I There no questions this turn the call presenters. back over

Ken Burdick

I And say appreciate thank done be really that’s Well, to tremendous didn’t want I across you opportunity the have this employees the we LifeStance. X,XXX of X,XXX if I’d hard remiss the Danish for questions. and and take report results, that being these by every to collaboration, the I individuals created each demonstrate day. and work, but the passion and the the by Dave, to they being these are that able privilege work

will our executive and to each of one Danish for behalf Dave, on thank conclude team leadership opportunity the and And my every call that of them. So quarter. this

Operator

This concludes call. conference today’s

now may disconnect. You

LifeStance Health (LFST) 10 May 232023 Q1 Earnings call transcript