LifeStance Health Group, Inc. Q4 FY2024 earnings call

Leadership Changes

• Dave Bourdon appointed CEO effective March 3, Ken Burdick becomes Executive Chairman, and Ryan McGroarty is appointed CFO starting March 17.

Operational Execution in 2024

• Implemented a new operating model with practice groups for localized community approach.
• Rolled out a new digital patient check-in tool, implemented in 21 states with national rollout on track by midyear, improving patient satisfaction and operational efficiencies.
• Enhanced clinician satisfaction with biweekly payroll for clinicians previously paid monthly.

Financial Milestones in 2024

• First quarter as a public company with double-digit adjusted EBITDA margin.
• Full year adjusted EBITDA more than doubled.
• Achieved positive free cash flow a year ahead of original expectations.

In the fourth quarter, LifeStance Health had revenue of $325 million, representing a 16% year-over-year growth. For the full year 2024, revenue was $1.251 billion, up 19%. Adjusted EBITDA in the fourth quarter was $33 million, increasing 62% year-over-year. Full year adjusted EBITDA was $120 million, up 103%. Visit volumes in the fourth quarter were 2 million, up 14% year-over-year, with net clinicians growing by 155 in the quarter and 779 for the full year, totaling 7,424 clinicians.

2025 Guidance

• Full year revenue expected $1.400 billion to $1.440 billion, center margin $440 million to $464 million, adjusted EBITDA $130 million to $150 million.
• First quarter revenue expected $320 million to $340 million, center margin $100 million to $114 million, adjusted EBITDA $27 million to $33 million.
• Expect lower free cash flow in 2025 vs 2024 due to biweekly payroll for clinicians and higher capital expenditures for 25-30 de novos.

2026 Outlook

• Expect low to mid-single digit annual rate improvement, mid-teens revenue growth, expanding margins, and positive net income and earnings per share for the full year.

Risks related to forward-looking statements where actual results may differ from expectations, industry challenges such as the Change Healthcare cyberattack impact on reimbursement, and uncertainties in the payer rate environment affecting financial performance.

Q: Focus on margins and operating leverage long-term.

A: Dave mentions 2025 margin roughly flat due to rate pressure from a unique payer, but 2026 expected margin expansion to mid to high teens.

Q: Clinician growth and competitive backdrop.

A: Dave says it's a highly competitive market for recruiting clinicians, 12% clinician growth in 2024, expect similar in 2025.

Q: Contracting visibility for 2026, M&A environment.

A: Dave explains contracting done annually, M&A looking for capabilities, services, customer base, and notes a competitive M&A environment for mental health assets.

Q: Center-level costs breakdown, G&A spend.

A: Dave talks about cost per visit decline in 2024 not repeating, G&A spend dynamics with pull-forward of spend in 2024 and flat G&A expected in 2025.

Q: Clinician model trend, de novo openings.

A: Ken and Dave discuss clinician employed model vs independent, de novo openings driven by patient usage, center fit, and lease evaluations.

Q: 2026 EBITDA vs revenue growth, expense pushes.

A: Dave says EBITDA growth to outpace revenue due to center margin improvement and G&A leverage.