LifeStance Health Group, Inc. (Nasdaq: LFST), one of the nation’s
largest providers of outpatient mental healthcare, today announced
financial results for the first quarter ended March 31, 2023.
(All results compared to prior-year comparative period, unless
otherwise noted)Q1 2023 Highlights and FY 2023
Outlook
- Total revenue of $252.6 million
increased $49.5 million or 24% compared to revenue of $203.1
million
- Total clinicians of 5,961 up 19%, a sequential net increase of
330 in the first quarter
- Net loss of $34.2 million compared to net loss of $62.3
million, primarily driven by stock-based compensation
- Adjusted EBITDA of $10.1 million compared to Adjusted EBITDA of
$12.5 million
- Raising revenue and Center Margin
guidance: Now expecting full year 2023 revenue of $990 million to
$1.02 billion and Center Margin of $274 to $290 million;
reaffirming full year 2023 Adjusted EBITDA guidance of $50 to $62
million
“We kicked off the year with positive momentum, thanks to the
commitment and dedication of our employees, including nearly 6,000
clinicians,” said Ken Burdick, Chairman and CEO of LifeStance. “The
team remains focused on execution of our priorities of simplifying
administrative complexity and gaining operating leverage. At the
same time, we are making progress against our strategic initiatives
to improve operational performance, lay the foundation for
profitable and sustainable growth, and deliver on our mission of
expanding access to high-quality, affordable mental
healthcare.”
Financial
Highlights |
|
|
|
|
|
|
|
|
|
|
|
Q1 2023 |
|
|
Q1 2022 |
|
|
Y/Y |
|
(in millions) |
|
|
|
|
|
|
|
|
|
Total revenue |
|
$ |
252.6 |
|
|
$ |
203.1 |
|
|
|
24 |
% |
Loss from operations |
|
|
(34.1 |
) |
|
|
(64.9 |
) |
|
|
(47 |
%) |
Center Margin |
|
|
69.6 |
|
|
|
54.2 |
|
|
|
28 |
% |
Net loss |
|
|
(34.2 |
) |
|
|
(62.3 |
) |
|
|
(45 |
%) |
Adjusted EBITDA |
|
|
10.1 |
|
|
|
12.5 |
|
|
|
(19 |
%) |
As % of Total revenue: |
|
|
|
|
|
|
|
|
|
Loss from operations |
|
|
(13.5 |
%) |
|
|
(32.0 |
%) |
|
|
|
Center Margin |
|
|
27.6 |
% |
|
|
26.7 |
% |
|
|
|
Net loss |
|
|
(13.5 |
%) |
|
|
(30.7 |
%) |
|
|
|
Adjusted EBITDA |
|
|
4.0 |
% |
|
|
6.2 |
% |
|
|
|
(All results compared to prior-year period, unless otherwise
noted)
- Total revenue grew 24% to $252.6 million. Strong revenue growth
in the first quarter was driven primarily by net clinician growth
and increased visit volumes.
- Loss from operations was $34.1 million, primarily driven by
stock-based compensation expense of $23.9 million. Net loss was
$34.2 million.
- Center Margin grew 28% to $69.6 million, or 27.6% of total
revenue.
- Adjusted EBITDA declined 19% to
$10.1 million, or 4.0% 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
LifeStance used $7.9 million cash flow from operations during
the first quarter of 2023. The Company ended the first quarter with
cash of $68.3 million and net long-term debt of $224.8 million.
2023 Guidance
LifeStance is raising full year revenue and Center Margin
guidance, with the following outlook for 2023:
- The Company expects full year revenue of $990 million to $1.02
billion, Center Margin of $274 to $290 million, and Adjusted EBITDA
of $50 to $62 million.
- For the second quarter of 2023, the
Company expects total revenue of $250 to $260 million, Center
Margin of $69 to $76 million, and Adjusted EBITDA of $10 to $16
million.
Conference Call, Webcast Information, and
Presentations
LifeStance will hold a conference call today, May 10, 2023, at
8:30 a.m. Eastern Time to discuss the first 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 1854301 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 6,000 psychiatrists,
advanced practice nurses, psychologists and therapists and operates
across 34 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 full
year and second quarter guidance and management's related
assumptions, statements about the Company’s financial position;
business plans and objectives; general economic and industry
trends; operating results; and working capital and liquidity and
other statements contained in this presentation 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 second
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
second 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) |
|
|
|
|
|
March 31, 2023 |
|
|
December 31, 2022 |
|
CURRENT ASSETS |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
68,294 |
|
|
$ |
108,621 |
|
Patient accounts receivable, net |
|
|
118,382 |
|
|
|
100,868 |
|
Prepaid expenses and other current assets |
|
|
25,833 |
|
|
|
23,734 |
|
Total current assets |
|
|
212,509 |
|
|
|
233,223 |
|
NONCURRENT ASSETS |
|
|
|
|
|
|
Property and equipment, net |
|
|
193,511 |
|
|
|
194,189 |
|
Right-of-use assets |
|
|
196,193 |
|
|
|
199,431 |
|
Intangible assets, net |
|
|
253,964 |
|
|
|
263,294 |
|
Goodwill |
|
|
1,293,613 |
|
|
|
1,272,939 |
|
Other noncurrent assets |
|
|
8,772 |
|
|
|
10,795 |
|
Total noncurrent assets |
|
|
1,946,053 |
|
|
|
1,940,648 |
|
Total assets |
|
$ |
2,158,562 |
|
|
$ |
2,173,871 |
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
|
|
|
|
CURRENT LIABILITIES |
|
|
|
|
|
|
Accounts payable |
|
$ |
7,709 |
|
|
$ |
12,285 |
|
Accrued payroll expenses |
|
|
83,673 |
|
|
|
75,650 |
|
Other accrued expenses |
|
|
32,022 |
|
|
|
30,428 |
|
Current portion of contingent consideration |
|
|
13,257 |
|
|
|
15,876 |
|
Operating lease liabilities, current |
|
|
41,647 |
|
|
|
38,824 |
|
Other current liabilities |
|
|
2,833 |
|
|
|
2,936 |
|
Total current liabilities |
|
|
181,141 |
|
|
|
175,999 |
|
NONCURRENT LIABILITIES |
|
|
|
|
|
|
Long-term debt, net |
|
|
224,761 |
|
|
|
225,079 |
|
Operating lease liabilities, noncurrent |
|
|
207,903 |
|
|
|
212,586 |
|
Deferred tax liability, net |
|
|
37,569 |
|
|
|
38,701 |
|
Other noncurrent liabilities |
|
|
2,059 |
|
|
|
2,783 |
|
Total noncurrent liabilities |
|
|
472,292 |
|
|
|
479,149 |
|
Total liabilities |
|
$ |
653,433 |
|
|
$ |
655,148 |
|
COMMITMENTS AND
CONTINGENCIES |
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
Preferred stock – par value $0.01 per share; 25,000 shares
authorized as ofMarch 31, 2023 and December 31, 2022; 0
shares issued and outstanding asof March 31, 2023 and
December 31, 2022 |
|
|
— |
|
|
|
— |
|
Common stock – par value $0.01 per share; 800,000 shares authorized
as ofMarch 31, 2023 and December 31, 2022; 376,537 and
375,964 sharesissued and outstanding as of March 31, 2023 and
December 31, 2022,respectively |
|
|
3,767 |
|
|
|
3,761 |
|
Additional paid-in capital |
|
|
2,108,184 |
|
|
|
2,084,324 |
|
Accumulated other comprehensive income |
|
|
2,004 |
|
|
|
3,274 |
|
Accumulated deficit |
|
|
(608,826 |
) |
|
|
(572,636 |
) |
Total stockholders' equity |
|
|
1,505,129 |
|
|
|
1,518,723 |
|
Total liabilities and stockholders’ equity |
|
$ |
2,158,562 |
|
|
$ |
2,173,871 |
|
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS(unaudited)(In thousands, except for
Net Loss per Share) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
TOTAL REVENUE |
|
$ |
252,589 |
|
|
$ |
203,095 |
|
OPERATING EXPENSES |
|
|
|
|
|
|
Center costs, excluding depreciation and amortization shown
separately below |
|
|
182,987 |
|
|
|
148,893 |
|
General and administrative expenses |
|
|
84,626 |
|
|
|
103,369 |
|
Depreciation and amortization |
|
|
19,069 |
|
|
|
15,684 |
|
Total operating expenses |
|
$ |
286,682 |
|
|
$ |
267,946 |
|
LOSS FROM OPERATIONS |
|
$ |
(34,093 |
) |
|
$ |
(64,851 |
) |
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
Gain (loss) on remeasurement of contingent consideration |
|
|
1,037 |
|
|
|
(434 |
) |
Transaction costs |
|
|
(86 |
) |
|
|
(278 |
) |
Interest expense, net |
|
|
(5,092 |
) |
|
|
(3,441 |
) |
Other expense |
|
|
(45 |
) |
|
|
— |
|
Total other expense |
|
$ |
(4,186 |
) |
|
$ |
(4,153 |
) |
LOSS BEFORE INCOME TAXES |
|
|
(38,279 |
) |
|
|
(69,004 |
) |
INCOME TAX BENEFIT |
|
|
4,037 |
|
|
|
6,676 |
|
NET LOSS |
|
$ |
(34,242 |
) |
|
$ |
(62,328 |
) |
NET LOSS PER SHARE, BASIC AND
DILUTED |
|
|
(0.09 |
) |
|
|
(0.18 |
) |
Weighted-average shares used to
compute basic and diluted net loss per share |
|
|
360,902 |
|
|
|
350,849 |
|
|
|
|
|
|
|
|
NET LOSS |
|
$ |
(34,242 |
) |
|
$ |
(62,328 |
) |
OTHER COMPREHENSIVE LOSS |
|
|
|
|
|
|
Unrealized losses on cash flow hedge, net of tax |
|
|
(1,270 |
) |
|
|
— |
|
COMPREHENSIVE LOSS |
|
$ |
(35,512 |
) |
|
$ |
(62,328 |
) |
CONSOLIDATED STATEMENTS OF CASH
FLOWS(unaudited)(In thousands) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
CASH FLOWS FROM OPERATING
ACTIVITIES |
|
|
|
|
|
|
Net loss |
|
$ |
(34,242 |
) |
|
$ |
(62,328 |
) |
Adjustments to reconcile net loss
to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
19,069 |
|
|
|
15,684 |
|
Non-cash operating lease costs |
|
|
10,113 |
|
|
|
— |
|
Stock-based compensation |
|
|
23,866 |
|
|
|
59,855 |
|
Amortization of discount and debt issue costs |
|
|
549 |
|
|
|
295 |
|
(Gain) loss on remeasurement of contingent consideration |
|
|
(1,037 |
) |
|
|
434 |
|
Loss on disposal of assets |
|
|
45 |
|
|
|
— |
|
Change in operating assets and liabilities, net of businesses
acquired: |
|
|
|
|
|
|
Patient accounts receivable, net |
|
|
(17,138 |
) |
|
|
(18,121 |
) |
Prepaid expenses and other current assets |
|
|
(4,543 |
) |
|
|
(12,065 |
) |
Accounts payable |
|
|
(5,466 |
) |
|
|
1,852 |
|
Accrued payroll expenses |
|
|
7,663 |
|
|
|
12,759 |
|
Operating lease liabilities |
|
|
(8,736 |
) |
|
|
— |
|
Other accrued expenses |
|
|
1,967 |
|
|
|
4,943 |
|
Net cash (used in) provided by operating activities |
|
$ |
(7,890 |
) |
|
$ |
3,308 |
|
CASH FLOWS FROM INVESTING
ACTIVITIES |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(7,729 |
) |
|
|
(27,910 |
) |
Acquisitions of businesses, net of cash acquired |
|
|
(19,820 |
) |
|
|
(22,945 |
) |
Net cash used in investing activities |
|
$ |
(27,549 |
) |
|
$ |
(50,855 |
) |
CASH FLOWS FROM FINANCING
ACTIVITIES |
|
|
|
|
|
|
Proceeds from long-term debt |
|
|
— |
|
|
|
20,000 |
|
Payments of long-term debt |
|
|
(586 |
) |
|
|
(331 |
) |
Payments of contingent consideration |
|
|
(4,302 |
) |
|
|
(5,720 |
) |
Taxes related to net share settlement of equity awards |
|
|
— |
|
|
|
(441 |
) |
Net cash (used in) provided by financing activities |
|
$ |
(4,888 |
) |
|
$ |
13,508 |
|
NET DECREASE IN CASH AND CASH
EQUIVALENTS |
|
|
(40,327 |
) |
|
|
(34,039 |
) |
Cash and Cash Equivalents -
Beginning of period |
|
|
108,621 |
|
|
|
148,029 |
|
CASH AND CASH EQUIVALENTS – END
OF PERIOD |
|
$ |
68,294 |
|
|
$ |
113,990 |
|
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION |
|
|
|
|
|
|
Cash paid for interest |
|
$ |
5,059 |
|
|
$ |
3,091 |
|
Cash paid for taxes, net of refunds |
|
$ |
(13 |
) |
|
$ |
(60 |
) |
SUPPLEMENTAL DISCLOSURES OF NON
CASH INVESTING AND FINANCING ACTIVITIES |
|
|
|
|
|
|
Equipment financed through finance leases |
|
$ |
— |
|
|
$ |
57 |
|
Contingent consideration incurred in acquisitions of
businesses |
|
$ |
1,985 |
|
|
$ |
2,470 |
|
Acquisition of property and equipment included in liabilities |
|
$ |
8,297 |
|
|
$ |
12,320 |
|
RECONCILIATION OFLOSSFROM
OPERATIONS TO CENTER
MARGIN(unaudited) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
(in thousands) |
|
|
|
|
|
|
Loss from operations |
|
$ |
(34,093 |
) |
|
$ |
(64,851 |
) |
Adjusted for: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
19,069 |
|
|
|
15,684 |
|
General and administrative expenses(1) |
|
|
84,626 |
|
|
|
103,369 |
|
Center
Margin |
|
$ |
69,602 |
|
|
$ |
54,202 |
|
(1) Represents salaries, wages and
employee benefits for our executive leadership, finance, human
resources, marketing, billing and credentialing support and
technology infrastructure and stock-based compensation for all
employees.
|
|
RECONCILIATION OF NET LOSS
TO ADJUSTED
EBITDA(unaudited) |
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
|
2022 |
|
(in thousands) |
|
|
|
|
|
|
Net loss |
|
$ |
(34,242 |
) |
|
$ |
(62,328 |
) |
Adjusted for: |
|
|
|
|
|
|
Interest expense, net |
|
|
5,092 |
|
|
|
3,441 |
|
Depreciation and amortization |
|
|
19,069 |
|
|
|
15,684 |
|
Income tax benefit |
|
|
(4,037 |
) |
|
|
(6,676 |
) |
(Gain) loss on remeasurement of contingent consideration |
|
|
(1,037 |
) |
|
|
434 |
|
Stock-based compensation expense |
|
|
23,866 |
|
|
|
59,855 |
|
Loss on disposal of assets |
|
|
45 |
|
|
|
— |
|
Transaction costs(1) |
|
|
86 |
|
|
|
278 |
|
Executive transition costs |
|
|
160 |
|
|
|
— |
|
Litigation costs(2) |
|
|
403 |
|
|
|
— |
|
Strategic initiatives(3) |
|
|
407 |
|
|
|
— |
|
Other expenses(4) |
|
|
292 |
|
|
|
1,794 |
|
Adjusted
EBITDA |
|
$ |
10,104 |
|
|
$ |
12,482 |
|
(1) Primarily includes capital markets
advisory, consulting, accounting and legal expenses related to our
acquisitions. (2) Litigation costs include
only those costs which are considered non-recurring and outside of
the ordinary course of business based on the following
considerations, which we assess regularly: (i) the frequency of
similar cases that have been brought to date, or are expected to be
brought within two years, (ii) the complexity of the case, (iii)
the nature of the remedy(ies) sought, including the size of any
monetary damages sought, (iv) the counterparty involved, and (v)
our overall litigation
strategy.(3) Represents costs, such as
third-party consulting costs and one-time costs, that are not part
of our ongoing operations related to our systems strategic
initiatives.(4) Primarily includes costs
incurred to consummate or integrate acquired centers, certain of
which are wholly-owned and certain of which are affiliated
practices, in addition to the compensation paid to former owners of
acquired centers and related expenses that are not reflective of
the ongoing operating expenses of our centers. Acquired center
integration and other are components of general and administrative
expenses included in our unaudited consolidated statements of
operations and comprehensive loss. Former owner fees is a component
of center costs, excluding depreciation and amortization included
in our unaudited consolidated statements of operations and
comprehensive loss.
Investor Relations Contact
Monica Prokocki
VP of Investor Relations
602-767-2100
investor.relations@lifestance.com
LifeStance Health (NASDAQ:LFST)
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LifeStance Health (NASDAQ:LFST)
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