Grand News Network | November 8, 2023

LifeStance Reports Third Quarter 2023 Results

SCOTTSDALE, Ariz., Nov. 08, 2023 (GLOBE NEWSWIRE) -- LifeStance Health Group, Inc. (NASDAQ:LFST), one of the nation's largest providers of outpatient mental healthcare, today announced financial results for the third quarter ended September 30, 2023.

(All results compared to prior-year comparative period, unless otherwise noted)
Q3 2023 Highlights and FY 2023 Outlook

  • Total revenue of $262.9 million increased $45.3 million or 21% compared to total revenue of $217.6 million
  • Total clinicians of 6,418 up 18%, a sequential net increase of 286 in the third quarter
  • Net loss of $61.6 million compared to net loss of $37.9 million, primarily driven by the preliminarily approved settlement of our shareholder class action lawsuit and stock-based compensation expenses
  • Adjusted EBITDA of $14.6 million compared to Adjusted EBITDA of $15.4 million
  • Raising the midpoints of Revenue, Center Margin, and Adjusted EBITDA guidance ranges: Now expecting full year 2023 revenue of $1.03 to $1.04 billion, Center Margin of $292 to $300 million and Adjusted EBITDA of $56 to $60 million

"We delivered another strong quarter," said Ken Burdick, Chairman and CEO of LifeStance. "In addition to solid financial results, we continued to attract high-quality clinical talent with a record quarter of organic recruiting, growing the team by nearly 300 clinicians. As we approach the end of the year, we will continue our commitment to improving the patient and clinician experience while continuing to fortify the company's foundation to build long-term, scalable operations."

Financial Highlights                
  Q3 2023     Q3 2022     Y/Y  
(in millions)                
Total revenue $ 262.9     $ 217.6       21 %
Loss from operations   (74.4 )     (38.8 )     92 %
Center Margin   76.2       60.3       26 %
Net loss   (61.6 )     (37.9 )     63 %
Adjusted EBITDA   14.6       15.4       (5 %)
As % of Total revenue:                
Loss from operations   (28.3 %)     (17.8 %)      
Center Margin   29.0 %     27.7 %      
Net loss   (23.4 %)     (17.4 %)      
Adjusted EBITDA   5.6 %     7.1 %      


(All results compared to prior-year period, unless otherwise noted)

  • Total revenue grew 21% to $262.9 million. Strong revenue growth in the third quarter was driven primarily by net clinician growth and increased visit volumes.
  • Loss from operations was $74.4 million, primarily driven by stock-based compensation expense of $21.5 million and the preliminarily approved settlement of our shareholder class action lawsuit. Net loss was $61.6 million.
  • Center Margin grew 26% to $76.2 million, or 29% of total revenue.
  • Adjusted EBITDA declined 5% to $14.6 million, or 5.6% of total revenue. Adjusted EBITDA as a percentage of revenue decreased as a result of higher G&A expenses from investments in the business.

Balance Sheet, Cash Flow and Capital Allocation

For the nine months ended September 30, 2023, LifeStance used $33.7 million cash flow from operations, including $25.4 million during the third quarter of 2023. The Company ended the third quarter with cash of $42.6 million and net long-term debt of $248.4 million.

2023 Guidance

LifeStance is raising the midpoints of full year Revenue, Center Margin, and Adjusted EBITDA guidance ranges, with the following outlook for 2023:

  • The Company expects full year revenue of $1.03 to $1.04 billion, Center Margin of $292 to $300 million, and Adjusted EBITDA of $56 to $60 million.
  • For the fourth quarter of 2023, the Company expects total revenue of $255 to $265 million, Center Margin of $73 to $81 million, and Adjusted EBITDA of $17 to $21 million.

Conference Call, Webcast Information, and Presentations

LifeStance will hold a conference call today, November 8, 2023, at 8:30 a.m. Eastern Time to discuss the third quarter 2023 results. Investors who wish to participate in the call should dial 1-800-715-9871, domestically, or 1-646-307-1963, internationally, approximately 10 minutes before the call begins and provide conference ID number 3827662 or ask to be joined into the LifeStance call. A real-time audio webcast can be accessed via the Events and Presentations section of the LifeStance Investor Relations website (https://investor.lifestance.com), where related materials will be posted prior to the conference call.

About LifeStance Health Group, Inc.

Founded in 2017, LifeStance (NASDAQ:LFST) is reimagining mental health. We are one of the nation's largest providers of virtual and in-person outpatient mental health care for children, adolescents and adults experiencing a variety of mental health conditions. Our mission is to help people lead healthier, more fulfilling lives by improving access to trusted, affordable, and personalized mental healthcare. LifeStance employs approximately 6,400 psychiatrists, advanced practice nurses, psychologists and therapists and operates across 33 states and approximately 600 centers. To learn more, please visit www.LifeStance.com.

We routinely post information that may be important to investors on the "Investor Relations" section of our website at investor.lifestance.com. We encourage investors and potential investors to consult our website regularly for important information about us.

Forward-Looking Statements

Statements in this press release and on the related teleconference that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements. These statements include, but are not limited to, statements with respect to: full year and fourth quarter guidance and management's related assumptions; the Company's financial position; business plans and objectives; operating results; working capital and liquidity; and other statements contained in this press release that are not historical facts. When used in this press release and on the related teleconference, words such as "may," "will," "should," "could," "intend," "potential," "continue," "anticipate," "believe," "estimate," "expect," "plan," "target," "predict," "project," "seek" and similar expressions as they relate to us are intended to identify forward-looking statements. They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: we may not grow at the rates we historically have achieved or at all, even if our key metrics may imply future growth, including if we are unable to successfully execute on our growth initiatives and business strategies; if we fail to manage our growth effectively, our expenses could increase more than expected, our revenue may not increase proportionally or at all, and we may be unable to execute on our business strategy; our ability to recruit new clinicians and retain existing clinicians; if reimbursement rates paid by third-party payors are reduced or if third-party payors otherwise restrain our ability to obtain or deliver care to patients, our business could be harmed; we conduct business in a heavily regulated industry and if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes to our operations or experience adverse publicity, which could have a material adverse effect on our business, results of operations and financial condition; we are dependent on our relationships with affiliated practices, which we do not own, to provide health care services, and our business would be harmed if those relationships were disrupted or if our arrangements with these entities became subject to legal challenges; we operate in a competitive industry, and if we are not able to compete effectively, our business, results of operations and financial condition would be harmed; the impact of health care reform legislation and other changes in the healthcare industry and in health care spending on us is currently unknown, but may harm our business; if our or our vendors' security measures fail or are breached and unauthorized access to our employees', patients' or partners' data is obtained, our systems may be perceived as insecure, we may incur significant liabilities, including through private litigation or regulatory action, our reputation may be harmed, and we could lose patients and partners; our business depends on our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems; actual or anticipated changes or fluctuations in our results of operations; our existing indebtedness could adversely affect our business and growth prospects; and other risks and uncertainties set forth under "Risk Factors" included in the reports we have filed or will file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022 and subsequent filings made with the Securities and Exchange Commission. LifeStance does not undertake to update any forward-looking statements made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based, except as otherwise required by law.

Non-GAAP Financial Information

This press release contains certain non-GAAP financial measures, including Center Margin, Adjusted EBITDA, and Adjusted EBITDA margin. Tables showing the reconciliation of these non-GAAP financial measures to the comparable GAAP measures are included at the end of this release. Management believes these non-GAAP financial measures are useful in evaluating the Company's operating performance, and may be helpful to securities analysts, institutional investors and other interested parties in understanding the Company's operating performance and prospects. These non-GAAP financial measures, as calculated, may not be comparable to companies in other industries or within the same industry with similarly titled measures of performance. Therefore, the Company's non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP, such as net loss or loss from operations.

Center Margin and Adjusted EBITDA anticipated for the fourth quarter of 2023 and full year 2023 are calculated in a manner consistent with the historical presentation of these measures at the end of this release. Reconciliation for the forward-looking fourth quarter of 2023 and full year 2023 Center Margin and Adjusted EBITDA guidance is not being provided, as LifeStance does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliation. As such, LifeStance management cannot estimate on a forward-looking basis without unreasonable effort the impact these variables and individual adjustments will have on its reported results.

Management acknowledges that there are many items that impact a company's reported results and the adjustments reflected in these non-GAAP measures are not intended to present all items that may have impacted these results. 

Consolidated Financial Information and Reconciliations


CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except for par value)

  September 30, 2023     December 31, 2022  
CURRENT ASSETS          
Cash and cash equivalents $ 42,605     $ 108,621  
Patient accounts receivable, net   149,716       100,868  
Prepaid expenses and other current assets   71,929       23,734  
Total current assets   264,250       233,223  
NONCURRENT ASSETS          
Property and equipment, net   190,067       194,189  
Right-of-use assets   180,685       199,431  
Intangible assets, net   233,615       263,294  
Goodwill   1,293,426       1,272,939  
Other noncurrent assets   13,023       10,795  
Total noncurrent assets   1,910,816       1,940,648  
Total assets $ 2,175,066     $ 2,173,871  
LIABILITIES AND STOCKHOLDERS' EQUITY          
CURRENT LIABILITIES          
Accounts payable $ 10,400     $ 12,285  
Accrued payroll expenses   83,618       75,650  
Other accrued expenses   91,030       30,428  
Current portion of contingent consideration   8,964       15,876  
Operating lease liabilities, current   43,604       38,824  
Other current liabilities   3,258       2,936  
Total current liabilities   240,874       175,999  
NONCURRENT LIABILITIES          
Long-term debt, net   248,371       225,079  
Operating lease liabilities, noncurrent   191,515       212,586  
Deferred tax liability, net   38,403       38,701  
Other noncurrent liabilities   855       2,783  
Total noncurrent liabilities   479,144       479,149  
Total liabilities $ 720,018     $ 655,148  
COMMITMENTS AND CONTINGENCIES          
STOCKHOLDERS' EQUITY          
Preferred stock – par value $0.01 per share; 25,000 shares authorized as of
   September 30, 2023 and December 31, 2022; 0 shares issued and outstanding as
   of September 30, 2023 and December 31, 2022
         
Common stock – par value $0.01 per share; 800,000 shares authorized as of
   September 30, 2023 and December 31, 2022; 378,607 and 375,964 shares
   issued and outstanding as of September 30, 2023 and December 31, 2022,
   respectively
  3,788       3,761  
Additional paid-in capital   2,162,766       2,084,324  

Full story available on Benzinga.com


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