LifeStance Health Group, Inc. (LFST) Earnings

Management highlights

### Clinical Excellence & Differentiation - Delivered consistent, high-quality clinical outcomes across patient populations: newly published analysis of ~140,000 patients found at least 75% experienced clinically meaningful symptom improvement, regardless of generation or geographic region - Management expects the outpatient mental health industry to increasingly differentiate based on measurable clinical outcomes, rather than just access, positioning LifeSense as a leader due to its scale and published outcome data ### Operational Execution & Workforce - Grew total clinician headcount to 8,542, a 11% year-over-year increase, adding 193 net new clinicians in Q2 - Clinician productivity grew 7% year-over-year for the third consecutive quarter, with current utilization of clinician time at ~70%, leaving room for further improvement - The firm's value proposition for clinicians (flexible work arrangements, administrative support, and robust benefits) resonates across new graduate, 1099, and salaried cohorts, supporting sustained clinician growth; low single-digit market share of the total U.S. mental health clinician universe leaves substantial room for expansion ### Service Expansion - Continued rolling out TMS and Spravato (treatment-resistant depression services) across additional centers; specialty services are a key growth driver expected to outperform core business growth for years to come - The firm is monitoring the psychedelic-assisted therapy space, and is well-positioned to roll out this service efficiently via its existing center footprint if it receives FDA approval and payer reimbursement ### Technology and Infrastructure - Began planning for a transition to a new EHR vendor, with full rollout expected in 2027; the new EHR is expected to streamline front/back office operations, improve patient and clinician experience, and equip clinicians with better tools to drive improved clinical outcomes - Deploying AI and automation tools across the business to improve patient access, clinician experience, and operational efficiency; current use cases include contact center conversion, revenue cycle management (RCM), scheduling, and clinician documentation, with additional pilots planned for late 2026 and 2027 ### Geographic Growth & M&A - LifeSense currently operates in only 50% of the 150 largest U.S. markets and 33 of 50 U.S. states, leaving substantial geographic expansion opportunity - Small tuck-in acquisitions are the preferred approach for entering new geographies; the firm completed a small tuck-in acquisition in Arizona in Q2 2026, and maintains a strong, growing pipeline of disciplined opportunities; de novo expansion is used when attractive acquisition targets are not available - Organic growth is prioritized for expanding density in existing markets

Guidance

- Management raised full year 2026 guidance across all metrics following better-than-expected Q2 performance driven by higher visit volumes and stronger total revenue per visit - Full year 2026 revenue guidance was revised upward to $1.685 - $1.725 billion, representing a $45 million increase at the midpoint and 20% year-over-year growth at the midpoint - Full year 2026 center margin guidance was raised to $570 - $594 billion, a $23 million increase at the midpoint - Full year 2026 adjusted EBITDA guidance was raised to $215 - $235 billion, a $15 million increase at the midpoint; the midpoint implies an adjusted EBITDA margin of 13.2%, representing over 200 basis points of year-over-year margin expansion - Long-term adjusted EBITDA margin target remains 15-20% (with 20% not a ceiling), and mid-teen margins are targeted by full year 2028; management did not update these long-term targets following Q2 outperformance - Q3 2026 guidance calls for revenue of $420 - $440 million, center margin of $140 - $152 million, and adjusted EBITDA of $49 - $59 million; the sequential decline in EBITDA versus Q2 reflects planned incremental strategic investments and timing of annual payroll/401(k) matching payments - The updated guidance assumes full year revenue growth driven by higher visit volumes and mid-single-digit total revenue per visit growth, an upward revision from prior guidance of low-to-mid single-digit revenue per visit growth - The board of directors approved a new $100 million share repurchase authorization; $97 million of the prior $100 million authorization had already been deployed as of Q2 end

Segment performance

LifeSense Health reports consolidated results and does not break out financial performance for separate product segments in this call. The only segment-level revenue detail provided is that total specialty services revenue (including TMS, Spravato, and neuropsych testing) was approximately $50 million in full year 2025, and is projected to grow roughly 40% in 2026, with a growth rate expected to outpace the firm's core business for the foreseeable future.

Risks & headwinds

- The planned 2027 EHR rollout is expected to cause a temporary short-term negative impact on clinician productivity during phased rollout, though management is working to minimize this disruption - Specialty service rollout is in early stages, with ongoing test and learn required to refine operating models to accommodate state and payer environment nuances, slowing near-term rollout pace - Forward-looking statements regarding future growth, clinical outcomes, and operational improvements are subject to risks and uncertainties that could cause actual results to differ materially, as detailed in the firm's periodic SEC filings

Analyst Q&A

• Q: What productivity improvement levers remain available as the company faces more difficult year-over-year comparables, and how do you balance capacity utilization with new clinician hiring?

  A: Management has delivered four consecutive quarters of strong productivity growth, and this strong performance is now part of core operating discipline. There are two core levers for further improvement: increasing conversion of patient inquiries to booked appointments to boost new patient flow, and optimizing clinician schedules to accommodate higher patient volume. Currently, only 70% of available clinician time is utilized, leaving significant runway for further improvement. The company prioritizes filling capacity of existing clinicians before hiring new clinicians, a model that benefits both clinician income and operational efficiency.

• Q: What is driving the recent stronger-than-expected growth in total revenue per visit, and what are your long-term EBITDA margin targets?

  A: The 6% year-over-year growth in total revenue per visit in Q2 is primarily driven by stronger-than-expected rate increases from updated payer contracts. Mid-year, management has clear visibility into full year rate outcomes, leading to the upward revision of full year revenue per visit guidance from low-to-mid to just mid-single-digit growth. Long-term, management maintains its target of 15-20% adjusted EBITDA margin (20% is not a ceiling), with a target of mid-teen margins by full year 2028, and chose not to update these targets despite Q2 outperformance.

• Q: What are the gating factors for accelerating specialty service rollout for treatment-resistant depression, and how will you leverage your clinical outcome leadership for value-based contracts with payers?

  A: Specialty services grew 50 million in revenue in 2025, and are on track to grow 40% in 2026, with growth expected to outpace the core business long-term. Currently, rollout is in early stages, and the main gating factor is internal refinement of the operating model to accommodate state and payer nuances, rather than external constraints like contracts or capital. Management expects rollout pace will accelerate in coming years. While most payers still prioritize patient access over outcomes, a small number of leading payers are beginning to shift to outcome-focused contracts. LifeSense's published data on consistent strong outcomes across patient populations positions it well to capture this shift, further differentiating the firm from competitors and strengthening payer partnerships.

• Q: What is the strategic rationale for the recent resumption of M&A activity, what types of deals is LifeSense targeting, and how does it compare to de novo expansion?

  A: The primary strategic goal of current M&A is entering new geographies, as LifeSense only operates in 50% of the top 150 U.S. markets, creating substantial expansion opportunity. Small tuck-in acquisitions are the most capital-efficient way to establish a foothold in new markets, providing a foundation for future growth. De novo expansion is used when attractive small tuck-in opportunities are not available, though it typically delivers slower growth. Larger acquisitions and specialty-focused acquisitions are only considered opportunistically, as they have not delivered attractive financial returns to date. Small tuck-ins will not have a material impact on 2026 financials, as the strategy focuses on long-term foundational growth.