LifeStance Health Group, Inc.

Good afternoon, and thank you for standing by, and welcome to the LifeStance Health Third Quarter 2021 Earnings Conference Call. At this time, your participant lines are in a listen-only mode. After the speaker's presentation, we will have a question-and-answer session. To ask a question during that session, you will need to press star 1 on your telephone. Please be advised, today's conference call is being recorded. If you require operator assistance, press star 0. It's now my pleasure to hand today's conference over to Vice President of Investor Relations, Monica Prokoczki. Please go ahead, ma'am.

Thank you, Holly. Good afternoon, everyone, and welcome to LifeSense Health's third quarter 2021 earnings conference call. I'm Monica Prokoczki, Vice President of Investor Relations. Joining me today are Mike Lester, Chairman, President, and Chief Executive Officer, Mike Brough, Chief Financial Officer, and Dhanush Qureshi, Chief Growth Officer. While this is my first earnings call with LifeStance, I have been a corporate finance and IR professional for nearly a decade with public healthcare companies. I am excited to be a member of LifeStance and look forward to working with all of you as we continue our journey as a recent public company. We issued the earnings release and presentation after the market closed today. Both are available on the investor relations section of our website, investor.lifestance.com. In addition, a replay of this conference call will be available following the call. Before turning the call over to management for their prepared remarks, please direct your attention to the disclaimers about forward-looking statements included in the earnings press release and SEC filing. Today's remarks contain forward-looking statements, including statements about our financial performance outlook. Those statements involve risks, uncertainties, and other factors, including the possible future impact of the COVID-19 pandemic on our business, 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 past performance. A reconciliation to the most directly comparable GAAP measures is included in the earnings press release tables and presentation appendix. Also, unless otherwise noted, all results are compared to the prior year comparative period. At this time, I'll turn the call over to Mike Lester, Chairman and CEO of LifeStance. Mike?

Thank you, Monica. Welcome back from maternity leave and congratulations on the birth of your son. Good afternoon, everyone. Thank you for joining us today to discuss our third quarter 2021 results. As society has navigated the pandemic over the past year and a half, we have seen demand for mental health care continue to grow. At the same time, we've continued to witness the challenges patients face as they try to get access to high-quality, affordable mental health care. The services we offer at LifeStance are needed more than ever. We're deeply committed to our mission to help people lead healthier, more fulfilling lives by improving access to trusted, affordable, and personalized mental health care. Our team combines a vision for the future of mental health care delivery with a sharp focus on execution and a growth mindset, evidenced by our strong operational and financial results. During the quarter, we added 400 net clinicians, stabilized clinician retention to 80% annualized, aligned with our expectations, opened 29 de novo centers, and completed six acquisitions. The team's solid execution brought our footprint to 4,375 clinicians and approximately 500 centers across 31 states, contributing to our strong growth and enabling us to deliver on our mission of increasing access. Financially, we also delivered at the high end of our expectations, including revenue of 173.8 million, up 70% year over year, adjusted EBITDA of 10.7 million, and adjusted EBITDA margin of 6.2%. We continue to maintain a strong capital position with $212 million of cash on our balance sheet. We've also added new talent to our organization, including the appointment of a new independent director, Seema Verma, to our board of directors. Seema is a leading national health policy expert with over two decades of experience in the healthcare industry, having most recently served as the longest running administrator for the Centers for Medicare and Medicaid Services. Seema brings to the team deep knowledge of healthcare policy, and we look forward to learning from her expertise. We continue to invest in management leadership throughout the company, such as business operations, people operations, and information security to strengthen our operating rhythms and the necessary infrastructure to support a growing company. At the end of the third quarter, we had approximately 6,000 employees. Investing in our talent and human capital is paramount. Under our employee equity incentive program, We will be making grants to eligible employees, including clinicians, beginning in 2022. For clinicians, eligibility for equity awards investing will be tied to productivity, directly serving our mission of expanding access to mental health care at this critical time for the country. We believe our equity program will boost our value proposition in a highly competitive labor market, help attract and retain the talent needed for our outpatient-centric business model, and establish an ownership mindset among our employees, including our clinicians. Just as critically, it aligns with our values and purpose and builds on a history of investment in our team by providing meaningful rewards for furthering our mission of enhancing access to mental health care in a sustainable manner over the long term. Turning to the market environment, we believe that patient demand for mental health services has never been greater. From 2019 to 2020 alone, the number of adults seeking psychotherapy increased 28% per recent McKinsey report. In October, the American Academy of Pediatrics declared a national state of emergency in child and adolescent mental health. At the same time that patient demand continues to grow, the healthcare industry is experiencing elevated resignations per the latest jobs reports driven by worker burnout, childcare cost, and pandemic fatigue. This has impacted the mental healthcare sector as well. According to a survey published by the National Council for Mental Wellbeing in September, 82% of mental healthcare provider organizations reported it has been difficult to retain employees and 97% said that it has been difficult to recruit employees. LifeSense is not immune to these broader labor market dynamics and their impact on the mental health care industry in particular, as we shared back in August. While these dynamics present a more difficult operating environment, growth in demand for our services continues, and we are focused on controlling what we can to drive strong results by being the employer of choice for clinicians. Over the past quarter, we have escalated focus on our clinician value proposition with special attention to engaging with our clinicians on a regular and systematic basis and leaning into our values of delivering compassion, building relationships, and celebrating difference. The culture and community we build with our clinicians is what really matters, especially in a high turnover labor market. We've made improvements by engaging clinicians more frequently to hear the stressors in their lives and taking actions to ensure that we continue to support them both within and outside of the professional setting. For example, we've implemented a systematic way of identifying at-risk clinicians and working to assess and address their needs. In cases where their compassion fatigue or burnout are identified, peer-to-peer support is offered through our national clinical team. Additionally, 100% of clinicians have been assigned champions who have initiated routine one-on-one communications to ensure that we are giving our clinicians opportunities to be heard. These initiatives are an important component of our value proposition to clinicians and core to delivering on our mission. Across our forums for engagement, one clear theme emerged most of all from our clinician feedback. Many are now feeling the impact of COVID fatigue and value the flexibility to deal with their own mental well-being. As a company focused on mental health, allowing for employees to have a flexible schedule is part of the strategy. To this end, many employees are planning to take more time off than usual during the holidays given the difficult year, and we've adjusted our projections accordingly. We now expect our full year 2021 revenue to land toward the lower end of the $668 to $678 million range, to which we previously guided, still representing a growth rate in excess of 75%. Clinicians value the flexibility afforded by their careers at LifeStance, and we believe that supporting them is the right move to prioritize the wellbeing of our approximately 4,400 clinicians providing care for patients across the country. Supporting the wellbeing of our clinicians will create greater opportunities to recruit and retain talent into the future, and ultimately lead to a happier, more productive workforce over the long term. Our efforts are paying off. We are pleased to report that even in the current labor market environment, we grew our net clinician base by 400, a 10% sequential increase in the third quarter and one of the best quarters in the company's history. And retention rates have stabilized at a level consistent with our expectations of approximately 80% annualized within the quarter. This was driven by our laser focus on our clinician value proposition. We've also seen sequential improvement in our clinician satisfaction scores from our internal quarterly surveys, including improvement in our communication scores as we collaborate more closely with our clinicians, demonstrating our ability to continue to build a best-in-class environment for the long term. We're taking the necessary actions now that we believe will position us well relative to the market as macro conditions improve. I'm proud of what we've achieved, but there is much more to do. LifeStance is a leading mental health care provider with a broad and unique set of assets and capabilities. I have great confidence that we will be entering 2022 with an extraordinary set of opportunities to help improve the mental health care system for all of those we can serve. And now we'll turn the call over to Danish to provide more detail on the initiatives that are driving growth across the organization.