LifeStance Health Group, Inc.

Good afternoon, everyone, and welcome to the LifeStands Health second quarter 2021 conference call. The earnings press release and accompanying presentation can be accessed on the investor section on the company's website, as will be the recording of today's call, which will be available for replay. Before sending the call over to management for their prepared remarks, please direct your attention to the disclosure on slide two of the presentation as well as the disclaimers about forward-looking statements, including the earnings press release and SEC filings. Today's remarks contain forward-looking statements, including statements about our 2021 financial performance outlook and exclude the possible future impact of COVID-19 pandemic on our business. Those statements involve risks, uncertainties, and other factors that could cause actual results to differ materially. In addition, please note that we report results using non-GAAP financial measures, which we believe provide additional information for investors to help facilitate comparison of prior and present performance. A reconciliation to the most directly comparable GAAP measures is included in the earnings press release tables and presentation appendix. At this time, I'll turn the call over to Michael Lester, LifeStance Health CEO.

Thank you, Christian, and good afternoon, everyone. Please turn to slide three. Welcome to our inaugural earnings call to discuss our second quarter 2021 results. Before we begin, I want to thank all our 5,000 employees for helping Last Sense Health deliver our first quarter as a public company. Everyone is very proud of what we have built over the past four years and what we have achieved in being able to help people lead healthier, more fulfilling lives by improving access to trusted, affordable, and personalized mental health care. We're excited to have so many shareholders and analysts joining us today after our successful initial public offering. As you can see on slide four, we completed our IPO on June the 10th, offering 46 million shares on the NASDAQ Stock Exchange under the ticker LFST, with an upsized offering price of $18 per share, which resulted in net proceeds of approximately $550 million. Please turn to slide five. I'm joined today by Dhanush Qureshi, our Chief Growth Officer, and Mike Brough, our Chief Financial Officer, who together with other key leaders make up our highly experienced leadership team, a team that has deep knowledge in the healthcare and technology sectors as well as growth execution. Mike Brough will be providing a detailed review of Q2 results in a few minutes, but I wanted to provide some quick highlights on slide six. We delivered on strong growth in the quarter with revenue increasing over 90% year-over-year and adjusted EBITDA growing almost 40%. Our clinician base grew 94% year-over-year and was a key driver of our revenue performance. We ended the second quarter with a cash position of $276 million. Additionally, we also established the LifeStance Health Foundation with an additional endowment of $10 million. I'll touch more on the foundation's activities shortly. Please turn to slide seven. For those investors who may be less familiar with LifeStands, I'd like to provide some background on the company and the market we serve. Since our founding in 2017, our revenue and adjusted EBITDA have grown rapidly, driven by our strong hybrid business model and unique clinician value proposition, increase in demand for mental health care services, and the great care that our clinicians and team members provide to patients. Between 2018 and 2020, we grew revenue and adjusted EBITDA at categories of 94% and 179% respectively, doubling adjusted EBITDA margin rates to over 13% during that time. We also generated revenue of $524 million on a trading 12-month basis ending June 30, 2021. The market we serve is large, fragmented, and growing, and the demand for our services is robust. Today, we estimate that our addressable market is $116 billion, growing to $215 billion by 2025, representing a 14 percent CAGR. We built a platform of nearly 4,000 clinicians across 31 states, representing a formidable first mover advantage. A few other highlights about the company's differentiated approach. First, our platform is a hybrid model. Depending on the patient's needs and preferences, we can provide in-person care in over 450 of our centers nationally, or virtually via our telehealth platform as well as a combination of both. We support a consistent experience across channels with a unique and comprehensive suite of digital capabilities that allow clinicians to track outcomes and adjust treatment plans while freeing up administrative time to focus on patients. Second, we are improving patients' access by delivering services through an in-network, commercially insured model where we're partnered with over 200 commercial payers nationwide. Third, our clinicians are directly employed, not a network of independent contractors. This enables us to build a culture that centers around our clinicians. We have a six-point clinician value proposition which includes a mission-driven culture, a collegial work environment with cross-collaboration, a strong work-life balance, a heavy investment in digital tools, robust support services, and a competitive compensation package. And lastly, we recognize that primary care physician is the first line of help for patients seeking mental health care. It's difficult for patients to find a mental health clinician, let alone one that accepts their insurance and is within their local geography. This has led us to partner with over 2,000 primary care physicians, including co-locating some of our clinicians inside large primary care group practices. LifeStance Health provides the right mental health clinician in the right location with the right insurance platform, enabling greater accessibility to patients in need. In summary, our differentiated hybrid care model offers convenient, affordable, and high-quality care for patients and will continue to support our strong growth. I'm now on slide eight. LifeStance is a mission-driven company. Our mission is to help people lead healthier, more fulfilling lives by improving access to trusted, affordable, and personalized mental health. Turning to slide nine. Beyond being mission-driven, LifeStance is also committed to acting responsibly as a corporation. While the ESG framework is somewhat new to us, having been a private company up until recently, The concept of responsible environmental, social, and governance practices is not. As a healthcare company, the social component is highly relevant and a driver of our purpose. By expanding access to quality mental healthcare, we will deliver results to our investors. Looking at diversity and inclusion, nearly one-third of our board of directors and 50% of our executive leadership team is diverse by gender, race, or ethnicity. Additionally, the majority of our clinicians are female, and nearly a quarter of our employees identify as diverse by race or ethnicity. Our National Diversity, Equity, and Inclusion Committee is chaired by our chief medical officer and is organized with team members across the country in pursuit of our four pillars of DEI, representation, cultural intelligence, equity, and inclusion. Our commitment to diversity, equity, and inclusion supports our clinicians to build a strong therapeutic alliance with patients in addition to contributing to our workplace culture. As it relates to corporate stewardship and social responsibility, we recently established the LifeStance Health Foundation with a $10 million endowment funded by our shares and proceeds from our recent IPO. The foundation focuses on mental health in especially vulnerable populations, youth and adolescents, underrepresented minority communities, and the underemployed and uninsured. As you can see on slide 10, in July the LifeStance Health Foundation announced a partnership with the Mental Health Coalition to end the stigma around mental health conditions and support our shared vision of a truly healthy society. This partnership complements LifeStance's recently announced No Face campaign, which was developed to encourage candid conversations about mental health and reduce the stigma around seeking treatment. People can join the movement to destigmatize mental health by uploading a selfie on Instagram with the hashtag Not One Face. Additionally, after being inspired by multiple athletes bravely sharing their own personal struggles with mental health publicly, The foundation donated $30,000 to the U.S. Olympic and Paralympic Foundation in support of athletes demonstrated that mental health is physical health. I will now turn the call over to Danish to provide more on our growth strategy.

Thanks, Mike, and good afternoon, everyone. I also want to reiterate how proud we are of our over 5,000 mission-driven team members that helped build LifeSense Health over the last four years and who continue to reimagine how to improve access to quality mental health care and deliver on our unique value proposition. Please turn to slide 12, which highlights our growth strategy. Mike laid out our mission and the benefits of our hybrid business model. I'll spend some time in this section discussing our strategy to drive short and long-term sustainable growth. We take a disciplined approach to our strategy underpinned by three core pillars, each with its own ability to drive differentiated growth. The first pillar of our growth strategy continues to be geographic expansion into new markets, both organically and through acquisition. We take a focused approach to identifying attractive new markets based on patient demographics, care concentration, clinician coverage, and the prevalence of high-quality acquisition opportunities. In the second quarter, we expanded into five new states, bringing our total to 31 states with in-person clinics. I'll provide some additional detail on our footprint in a moment on the next slide. The second pillar of our growth strategy is to build out density in existing markets through, first, hiring new clinicians, second, opening de novo centers, and third, additional token acquisitions. As Mike discussed, clinicians are a critical part of our growth. Through our in-house recruiting team and acquisition efforts, which focused on attracting and retaining high quality clinicians, we added 674 clinicians in the second quarter, bringing our total clinician base to nearly 4,000, an increase of 94% year over year. Additionally, during the second quarter, we opened 35 de novos, a single quarter record, bringing our de novo total to 183 centers. Finally, We completed 10 acquisitions, bringing our total to 64 completed since company inception. The third pillar in our growth strategy is to deploy our digital services to reach the entire population of the states we operate in with a focus on speed, efficiency, and scale to profitably serve our clinicians and patients. Our unique hybrid model allows us to utilize digital tools for maximum engagement and efficiency for patients, clinicians, and life stance as an organization. The continued high utilization of our digital tools and our flexibility to deliver patient volume seamlessly between in-person and virtual care is a testament to not only the resilience of our business in the face of external environmental challenges, but also remains a key differentiator for life stance in the marketplace. We're proud of the rapid growth of our company using a very scalable process that is consistent, repeatable, and profitable, and we remain confident in our long-term growth prospects. Not only is our total addressable market expected to grow 14% through 2025, but we're also less than 1% penetrated as measured by both clinicians and patients, providing a long runway of opportunity. On slide 13, we provided a map which details our geographic presence by state. We currently operate in 31 states, cementing our position as the leading national provider of mental health services. Over the near term, we have a goal of expanding into 37 states, and longer term, we have a goal to be in all 50, providing either in-person or virtual care. In closing, let me provide an overview of the current market environment. We continue to experience strong patient demand, and LifeStamps remains the employer of choice for clinicians in our industry, as evidenced by the higher-than-expected growth of our clinician base year to date. In fact, our ongoing recruiting and acquisition momentum is projected to deliver higher-than-expected clinician growth for the full year. This is a testament to the value proposition LifeStamps delivers to our clinicians. However, as the COVID-19 pandemic continues to play out, there's been a recent increase in turnover across industries, and especially within healthcare. LifeStance is not immune to these industry dynamics, and we've experienced an increase in clinicians retiring or leaving for personal reasons. Regardless of these recent, broader industry developments, we expect the benefit of our higher clinician growth to offset the lower retention rates this year. and we remain focused on consistently executing against our core growth strategy to drive disciplined and differentiated growth. We're excited about the immense market opportunity in front of us and look forward to delivering both short and long-term value creations to all of our investors. With that, let me now turn it over to Mike Brock.