LFST - Earnings call transcript Q2 2024 | LifeStance Health Group, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Thank you for standing by. My name is Jermanie, and I will be your conference operator today. At this time, I would like to welcome everyone to LifeStance Health's Second Quarter 2024 Earnings Call. [Operator Instructions]

I would now like to turn the call over to Monica Prokocki, please go ahead.

Monica Prokocki

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

are Financial Joining Dave today Ken Executive Chief me Officer; Gordon, Chief Officer. Burdick, and

and We issued morning. are our on available before of market Investor section investor.lifestance.com. opened Both Relations presentation the website, the this the release earnings

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

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

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

Ken?

Kenneth Burdick

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

quarter, adjusted once XX% $XX financial team second $XXX our in year are Based growth This EBITDA and meeting revenue seventh plan We now execute of the exceeding quarter guidance strength million. the quarter. raising or delivered our continue of or all the on metrics. The on to we of million again full of for consecutive is expectations. our

see care value with to in-person demand resonate our and patients hybrid virtual and continue differentiated model both proposition clinicians as increasing in-person and for we of Our services.

adds in XX% growth the now clinician XXX clinicians quarter. with and X,XXX net employee We year-over-year approaching of are

For growth has quarters, this XXX% X been the past organic.

reflected of in and reviews X excellent clinicians continue out provide our XX Promoter Additionally, across Net to at Google our our as LifeStance X.X centers stars. Score patients of care to average

Regarding performance. and three with to share continue on tangible the our you. improve we operational initiatives make business I'll streamline examples to execution, progress

finalizing our of improving digital booking customer First, we are experience our phone, user tool new for for specialists. rollout and the matching care by the efficiency patients

Second, to continue digital check-in out we roll new our patient tool.

have and additional We in implemented implementing X are successfully the states states. X the tool first actively

satisfaction, efficiencies still patient early operational While the in are in has deployed. been and collections where improvements stages, this higher patient tool seeing we

Third, the the redesign experience of staffing was of the XX in states. improved model patient clinician clinicians. across standardizing focused launched the and office support clinical dedicated This front on enhancing increasing X. investment coaching an leadership operational levels our and operating our This on includes model supporting July the represents by and

quarter is performance, including free The stronger-than-expected cash flow. straightforward solid with

continue for the expect cash the remain Change cyberattack. disruption We generation strong Healthcare the of recover the of this from we year as remainder to to

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

David Bourdon

of of increased by I'm Thanks, growth. total driven $XXX pleased higher volumes revenue in visit with by produced was results with volume. top-line We driven Ken. team's visit year-over-year, operational XX, XX% million primarily Visit representing X second revenue the Slide and quarter. financial increased million, performance strong growth per clinician outperformance year-over-year. and the of The XX%

our expectations. net year-over-year. base This X,XXX the second clinicians, which a total brings clinicians, quarter, our we In representing met XX% added growth clinician at XXX of

X% quarter. to third expectations Total of seasonally $XXX, step payer slightly the increased net productivity, in our primarily ahead year-over-year up in last our addition, quarter. With regard to similar visit was clinician rate driven In to year, clinician second to the expect it revenue we increases. by per growth

and quarter total flowed XX% to better-than-expected $XX profitability. to Center margin. center was the million primarily real quarter in was margin of Regarding leverage driven total estate in visit due mainly through favorable year-over-year. in per top-line and center the higher Outperformance by The by revenue costs, optimization. by spending increased The results year-over-year revenue visit. operating primarily improvement per higher driven

strong X.X%. in of the the $XX improvement quarter Adjusted EBITDA expectations, in revenue million is the points a attributable percentage margin. EBITDA grew of to XXX% increasing our nearly in as The was quarter outperformance and Adjusted year-over-year. X to center outperformed year-over-year

of and we net million flow $XX to free of a long-term million. generated quarter, the strong In Turning with exited $XXX debt the We cash quarter $XX liquidity. second cash in million.

XXXX disciplined to pleased we free of third from of cash flow the that cash finish impact full cash quarter, XXX(k) year-over-year payment results, payers. will positive match. approximately finished $XX We are the the with flow capital the collection In have issues resolution we see and stronger million deployment half confident remain of will operating of first the year a due to with positive. We free

financial equity. we have of have raising no intention flexibility As additional sufficient result, to a continue and debt or

days to quarter. days XX DSO in sequentially the X improved

end We the resolved are timing the impact work continuing collections the to that disruption. We by a believe from be issue year. still through this of Healthcare Change the is will

sequentially in over leverage improving improvement to basis leverage our see to X.Xx. with points continue net We XX ratio

continue current our with pleased year. improve the net remainder leverage the are ratio of and expect We to over it to

our of terms for outlook XXXX. In

the full range $X.XXX year revenue raising midpoint are billion. $X.X We at by to to billion million $X our

in first position outperformance the achieve additional giving the investments year at $XXX are to million Based the at year full of to the the XXXX are also the million. $XXX flexibility million $XXX to range to center raising margin in million, of EBITDA by We full $X objectives. to adjusted $XX the year to better adjusted the on $XX we midpoint to half our back million EBITDA year, by half us through our ourselves range midpoint million make

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

of end our with $XX originally year. land million of guided Additionally, XXXX we million $XX last compared the in stock-based towards now range approximately million expect compensation $XX lower to to

with fewer expectations to deployment. With back original our we now XX of profitable expect by capital his year-end. it Ken emphasis than than remarks. growth for open XXXX, de no updates opening turn our in XX more on to and closing compared novos disciplined As increased that, I'll These reflect

Kenneth Burdick

operational year, with operating cash strong made pleased I'm organic for closing, are free processes revenue for of flow the positive year. another greater quarter beat raised In been improvements We to the guided the The and and over clinicians first Dave. on the X achieved visibility we've of our also the progress this quarter. years for team making and and and consistency the improving financial in into systems us while performance experience give members. delivered past of metrics starting and the of patients, leverage investments business, half growth each people, that the Thanks, and

Operator, we're questions. for ready now

Operator

your Instructions] question Craig [Operator from Hettenbach first Stanley. And comes with the of Morgan line

Craig Hettenbach

that. rate can also, broadly? share at rates, instances you're you're can on increases seeing you seeing you if anecdotes then any touch what update provide Ken, in can on you And large where payers payer an

Kenneth Burdick

Sure.

results of with We are negotiations. our pleased payer very the

arrangements. early a a trying they last tremendous are before, just said half with meaningful build year, of terms payers also we about that conversations, discussions to so partnership administrative to doing ultimately, ongoing team value-based our we're in but just the put delegated we've credentialing. about about As not have And having rates, the We're job. hope about the but and place this mindset in we

quite one the had was of substantial reimbursement at I a terms contracting exception, that say single volume. single is well. exception is time, and in the level of payer spoke about that Other out than and length payer and our would last there So rates payer we was of that that market going

Craig Hettenbach

And could follow-up it. guys you that mix on capacity And as a year? trying out? working in what QX. for shift just are clinicians, to growth. how full-time on then Dave, plans -- Got those know strength expected next that's you mean more clinician Any seasonal I update the mentioned into towards just

Kenneth Burdick

growth take Craig. I'll pipeline continues The be Sure, as for clinician to that robust. well.

proposition resonates. value Our

second in with clinicians And as story. that are did I part mentioned, while an needed refined from on new skewing school, clinician like employment Even as to we making be specific share the doing growth quarter growth quarter, watermark of with sort it when sure to that you toward be we and graduating clinicians approach, be As based the more things, of expect are part. market. will geographic ongoing in continues but that an our tends we component say, low a full-time license-type last are we important recruiting

a fantastic doing our recruiting is extremely and engine strong, team is Our job.

Operator

question of with Your JPMorgan. Gill next from the line comes Lisa

Lisa Gill

adds, follow Ken, the I the on a you just about or up what perspective the last Is things because anything from clinicians anything the standpoint to different on were think you Congratulations the clinician Has where marketplace? the flowed in there when ebbed looking talked talked competitive value were about I and and from more a we proposition. materially from changed results. be over from know several market? years, competitive standpoint working about there times want just that's to your virtual locations. clinician changed with

Kenneth Burdick

to And toward the And has continue for in-person a to this competitive toward and than X.X% slightly the movement but demand work great trying was on saw clinicians in been, we door there's not versus the better mental bringing but back both, virtual. clinicians, it the we where the our a a bump door. about on through where obviously, environment, in that back health to terms competitive last want it's of there's year, front think I in-person mitigate from stabilized. to standpoint, some It's point, visits. outflow it right be. retention quarter We still will

on So we that. work continue to will

Lisa Gill

And on in versus in-person? virtual where were the you quarter

Kenneth Burdick

then during to see. And virtual, as that, with XX% X.X about of trend say, only in-person. it X quarters, XX% I'm interestingly, had say, about stabilized. a be Let's to It's 'XX, And quarter-over-quarter going Roughly, this continuing saw seems we bump change. point that quarter-over-quarter. kind that quarter for past I

Lisa Gill

And then us Dave, XXXX? you're idea a half of follow-up. some the the you that you investments year. give just back an for Can in making as quick investments helpful. of That's mentioned of are what the

David Bourdon

Dave. it's Lisa,

to Really the on ourselves position in based to additional and better the performance some through half giving for the investments first flexibility intent are XXXX the we back year strong make ourselves of in even So the is success some beyond. half.

we're some year, community. sources referral new doing that for of for been that things some the go local medical next street, have the with sign development boots us business hiring example, up like, individuals accelerating on we and would So accelerating in the

I'd things but as list, So an growth where strategic those the targets that say, kinds the of working but it as we're still of XXXX nonrecurring success like well our around ourselves initiatives achieving emphasis and we're things, positioning spend delivery that. sure on through and for makes

Operator

Your comes Ryan the next question of Blair. Daniels with William from line

Jack Senft

This midpoint is last at margins look they're Jack for we basis if similar But like guidance, third to Senft the is about points look quarter question sequentially. EBITDA Daniel. Lisa's XXX contracting This Ryan there. by the of

the So to investments anything to related on -- the of call is this there additional really is mentioned? decrease contraction? kind in margin you Or margins out largely just increased

David Bourdon

Jack, that Dave. it's take one. I'll

few going quarter. a the on things there's third in So

will start visits. million and quarter-over-quarter, is approximately that's the all, at driven $XX of revenue down I midpoint by things: first two So lower with

the we productivity beginning that more model, our -- as little have with at introduces of bit the a well aware, and impacts vacation we're variability. you're as season As

So calendar the talked what the down around we was in calendar thing second then in and other the going about quarter step the visits to then performance in year. QX of the the And QX. lower you of TRPV the have is half -- versus last it

step-down driving would are So revenue for And half-half, I things those mention that half roughly million quarter-over-quarter. visits. you two the at half TRPV, $XX

step you with to the take So down investments, G&A the adjusted in you increase EBITDA then that get how quarter-over-quarter. combined related that's to

Jack Senft

states mentioned think you just operating July, to And I if far. In staffing and in I early of redesign that the levels few front the and prepared remarks, your included Perfect. said one can And only the a more. Okay. out of rolled model the launched this that enhancing too you was too, was so office ask it support.

growth or the So we kind impacting cadence about the of think operating general this expenses the year, remainder look to the going how OpEx maybe as forward? to just we maybe should of of just impact

Kenneth Burdick

take I'll This Sure. Ken. one. that is

out, And this that call to some it as accomplish. call think a large in were was will we and initiative. be phasing, national this So stance really operating part, it our of one but model, rolled several There there July we intended things X.

So one, we're months pretty of we state, a than and a much spent going planning had digital was felt sort unlike or by within check-in state it period it of XX-day for to more where our do tool burden this it. XX- X

standardized we're it the we're our in of markets speak certainly across is a half contributor accomplishing it the a of But versus the the half excited description, level the of here is year what people back increased same So of processes. let staffing, because so standardization to that about same -- year. job me expenses all the to there are of first have there's level

we clinicians. resources some impacts the very we local put addition, support market already in starting In And see change. to to our move our made from a more to that positive both conscious and are patients intentional

Operator

Your line with next the of from comes Kevin Caliendo question UBS.

Dylan Finley

is on for Finley the Kevin. Congrats This on quarter. Dylan

look your there on you end do have think of footprint Do you think center XXXX footprint on? up? as do need in add is feel capacity you how that you you'll you leeway? still relative your you lot a guys today, at to As grow Or something to that about

David Bourdon

Dave. I'll one. that take is This

that So we feel first all, footprint good of we right the now. about have

As did prepared as centers. I of less year. you're to de that rightsizing last XX novos consolidation year some my than this with aware, in And remarks, mentioned going of only we're add the we

across footprint. there we'll lot stable local where have areas the recruiting -- are de higher to you with is where to we've we're a that our geographies novos. those this in So -- country, utilization, as continue There capacity look pretty been successful When patient need footprint well year. grow are still as the of where in-person

we have de will more to we'll our same of grow So novo of continue modest amount where that next while footprint. be expect I would year, the it into a adds

Dylan Finley

That's helpful. then And just follow-up. for a

as be bit those the with explanation You why back to in might EBITDA margin talked half investments. to the depressing a discrete

to any achievable? As knowing we keep has changed at to provided outlook into that that there. of the you XXXX, the 'XX end towards anything business today with we look of Or kind haven't you think rate you investments do double-digit put today? Should look at margin that want exit maybe regards the still and as

Kenneth Burdick

we year cash from XXXX. about that that that now the Dave, mid-teens point. on that on to, a that. a flow we as cash positive moved are Ken. At really entire cash we which XXXX know want the to maintain which third myself you full emphasize to free the is those that goals have I would year in was growth last the committing quarter, positive full we would jump time, trajectory; flow. that and was 'XX for for exit our we one and to committed one this positive prior of up, committed to and Yes, in want It's at are important I double-digit behalf was year, three we absolutely of organization, we set of margins;

Operator

Your next Tanquilut line Brian with from comes of question Jefferies. the

Unknown Analyst

And the I get on Jack guess, is sort towards that at given building on appreciate point the current you of here the about ask it about how goals, XXXX This the look how I think from maybe for the blocks especially back in a and on margin? to half margin to differently margins. the bridge the it, but contracts, little the maybe standpoint, rate half question, Similar level? on some The starting color far XXXX moves exit investments, the Brian. bit to to on we of right think those back is step-down to so quarter. do Congrats has the been as think, that helpful, regards but

David Bourdon

Dave. I'll it's that. take Yes,

for investments, So of year, that's have the around initial just we back the half our adjusted would XXXX. margin. for X% guide if numbers consistent been that round with EBITDA not And

now in we year margin some and good about And back, take the and if you very our So our we more remember, the we the see we're we're we when would of to XXXX even investments from expansion 'XX. talk said of all expansion. able guide -- would year-over-year, of of step And feeling where XXXX, realize XXX we were right making margin margin we're finishing is XXXX, that bps see margin a expansion in midpoint that where the about perspective. benefits a XXXX, in and 'XX but .

in our -- multiyear where double-digit So we in with the year to wanted journey we're margins. exiting the to multiyear XXXX finishing

blocks enhanced, XXXX, in leverage. building into little same expansion more bit step XXXX, us the a around margin you just If the that operating getting are it's especially but

strong to the length, So payer is that at We'll increase the things that the grow see one And our profiles. we TRPV next testing with continue operating like third even to leverage outlier in you'll we've year. margin single-digit achieve then neuropsych low services, XXXX. in higher specialty have situation expect discussed

some as So expansion margin we'll rates from well. get

will margins. get we've us to those for blocks double-digit what from all So out plan next laid with journey. to you a X-year according exiting the building year basically Again,

Operator

Your Barclays. last line from with Stephanie question Davis comes of the

Stephanie Davis

clinician ramp And little is hoping into a it your there thinking should recredentialing And credentialing to blocking processes, process I a then with platform. just the often timeline? in was that platform thinking how about about to process? credentialing your Is dig timeline? that the bit you're we and any new factor clinician and tackling by

Kenneth Burdick

new We're made certainly we platform. Stephanie, a So migrating to improvements. have

the that can credentialing progress increase come to if the now payers, base. we're of that with they them You're clinician the about can we of speed persuading see quite delegate dramatically our clinicians our continued our online that which us, things right, a lot of the we've existing feeling right had our with And recredentialing one patients. credentialing is and is positive

So has development haven't probably we enough positive spoken been about. a that perhaps very that

So thanks for the question.

Stephanie Davis

side competitive seeing fee-for-service we're just product. of And a solutions some question, evolve insurance more to of landscape the mental health the a follow-up, other of the DDC ] [

you're maybe uptick, thinking your are you for or a bit about how advertising that little patients how Given them go-to-market differently? to

David Bourdon

Yes.

very, of model. patient of minimis terms We have spent amount We a in acquisition. de very marketing a different

a continuing expand the talk on served that we when and to reliant of of health from primary and the primary looking mission development, come bring And care heavily We're is care body nurture really that's specialists, the our sort of to enormous. a care overall and are have has is system We and value treatment, that the especially us with And heart and team well. we we conditions of that vision. think going business and unify specialists. kind to about those that, that's mind to because relationships referrals chronic

do having consistent with primarily being it's strategy, but have patient overall of we does than the to less acquisition the by significant of that So our far because pay expensive ones. for money amounts benefit it

Operator

now That CEO, closing back Q&A the for Ken concludes turn today's session. remarks. Burdick, over I will conference to

Kenneth Burdick

operator. Thank you,

few with first tremendous employees and Just it the the entire make of that get are the great our that's deserve and Obviously, comments. was rallying is nearly hard, takes report confidence sure being work and beat that a sight and done they foremost, our for team the yet appreciation the quarter, seventh and but X,XXX across I need. who's the another I across But company. LifeStance and quarter the numbers, village, that care patients It's who doing to a associates and really this work, by we clients they have working solid it's and don't a brief lose and our Dave and raise.

about like great to So able deal and morning. great I their future, love just an of put work for excitement opportunity and quarters the we've this a up to done being thank them

for everyone hope time I interest your And day. a LifeStance, you your thank have this for great So morning. in that, with

Operator

This concludes today's conference call.

You may now disconnect.

LifeStance Health (LFST) 8 Aug 242024 Q2 Earnings call transcript