Monica Prokocki, Vice President of Investor Relations, welcomed attendees and discussed LifeStance Health's financial performance, operational initiatives, and strategic focus.
Financial Performance
LifeStance Health reported a 19% revenue growth in the third quarter, reaching $313 million. The company's disciplined execution and operational efficiency yielded a 9.8% profit margin. This marks the eighth consecutive quarter where the company has exceeded its expectations.
Operational Execution
The company's operational initiatives, including the implementation of a new operating model and the rollout of a digital patient check-in tool, have shown promising results. The new operating model is expected to position the business for efficient scaling in 2025 and beyond. The digital patient check-in tool, which has been successfully implemented in 11 states, has led to higher patient satisfaction, operational efficiencies, and significant improvements in patient collections.
Payer Strategy
LifeStance Health's payer engagement team has made significant strides in securing improved rates. However, the company still faces challenges in achieving parity with physical health reimbursement. The company has seen a decrease in rates from a single outlier payer, but this was mitigated by negotiated rate increases with other payers, leading to an outperformance in total revenue per visit.
Impact of Hurricanes
CEO Ken Burdick acknowledged the impact of Hurricanes Helene and Milton on the company's operations. Despite the disruption, LifeStance Health's teams responded admirably, ensuring that all but two centers were back up and running within one week. The remaining centers resumed operations by mid-October.
Financial Outlook
David Bourdon, CFO, highlighted the team's operational and financial performance in the third quarter. The company's top line results were driven by higher total revenue per visit and increased visit volumes. Adjusted EBITDA grew by 110% year-over-year, marking the fourth consecutive quarter of doubling adjusted EBITDA. The company is expected to be free cash flow positive in the fourth quarter, with meaningful positive free cash flow for the full year due to stronger operating results and disciplined capital deployment.
Looking Ahead
LifeStance Health continues to focus on its mission of providing affordable and accessible mental health care. The company's operational and financial performance in the third quarter is a testament to its commitment to delivering high-quality patient care. With ongoing initiatives to streamline its business, improve performance, and secure improved rates, LifeStance Health is well-positioned for future growth and success.