LifeStance Health Group, Inc.

From a planning perspective, we continue to expect consistent performance throughout the remainder of the year. That being said, for us, our focus is making sure that we have a phenomenal clinician experience, not just in how we attract our clinicians here, but how we deliver on that value proposition once they are here. That includes things like we've spoken about before. around frontline support in our administrative staff, additional attention on billing and the service that we're providing, not just to our clinicians, but to the patients and how they interact with our teams, et cetera. So, you know, a lot to still do there, but, you know, we feel good at where we're at today.

Has there been any change to the mix with in-person versus remote, just even in the last three months or six months. I know it was always a little bit higher than what was originally anticipated, and I'm wondering if it's just going to, the anticipation just maintains that level going forward. I think it was 75%, if I'm not mistaken.

Yeah, we continue to see a slow return to in-person as far as our overall mix. In Q1, it was 75% virtual, 25% in-person. That was about a two- to three-point shift back towards in-person versus the previous quarter, and that's been approximately the rate that we've seen it returning to in-person every quarter. So, you know, we fully expect that that trend will continue to We have seen patient demand for in-person increase, as well as, again, our clinicians returning more in-person over time.

Thanks, Ben.

Our next question comes from the line of Jamie Purge from Goldman Sachs. Jamie, please go ahead.

Hey, thank you. Good morning. question first on the center level margin. It seems like margin progression there has been a bit faster than expected. Can you just remind us the initiatives you have in place this year? I think there's some around real estate. How much of those are already starting to come through in the first quarter performance versus still ahead of us in the remaining portion of the year?

Yeah, good morning. Good morning, James. This is Dave. The center margin performance in the first quarter, I would think of being largely driven by the revenue beat and just getting some additional scale benefit. And we do expect center margins to improve modestly throughout the year. And certainly, the benefit of the real estate consolidation helps. Just to size that for you, we expect about roughly a million dollars of benefit from the real estate consolidation this year and about a $2 million run rate of those savings in the next year.

Okay, thanks. That's helpful. And then you guys mentioned the expiry of the public health emergency and the changes you're making or preparations you're making for that. Can you tie that to the broader landscape, if you think, the expiration of the public health emergency changes anything competitively, even in the short term in terms of where clinicians end up or just more broadly how you're thinking about any competitive changes from that? Thanks.

Yeah, this is Ken. I'll take that. So very recently there was an announcement that there's going to be some flexibility and essentially about a six-month extension of the PHE or public health emergency program accommodations. So I'll speak to the longer term. I think in the longer term, there's clearly an advantage of having a hybrid model that offers both patients and clinicians the choice and the flexibility of either a in-person visit or remote visit. So as it relates to patients that are receiving these controlled substances, On a go-forward basis, once the extension has expired, there's no choice, but they will have to visit with a clinician prescribing one of these controlled substances in person.

Hello, Jamie, are you still there?

Yeah, that was it for me. Thank you for the question.

Our next question comes from the line of Brian from Jefferies.

Brian, please go ahead.

Hey, good morning, guys. Congrats on the quarter. I guess just a couple of quick questions. As I think about payer rate improvement, how much runway do you guys see to drive that going forward?

Well, we think that there's a great deal of runway.

It's not going to be sort of a flip the switch, but as we continue to demonstrate the value of the services that our clinicians provide and with the increased understanding of the importance of mental health integrated with physical health, we think it's absolutely critical that the reimbursement follows the the value that's that's being being created now in the short term we are able to provide some limited data in terms of what the value means in terms of quality of life and absenteeism etc and Some of those pilots that we've referenced we hope will build a database that is statistically valid that can demonstrate a true reduction in inpatient visits and emergency room visits and total cost of care. But as I said right at the outset of the Q&A, we are still a ways away from that. But that's the goal. That's the intent, that we can demonstrate that there are meaningful improvements, obviously, in the quality of life, but it's also a more efficient way to utilize healthcare resources.

Gotcha. No, that makes sense. And then maybe, Dave, just a quick question. I don't know if I dismissed this, but in your revenue guidance, Ray, How much of that on the clinician ads, how much of that was from the addition of acquired clinicians versus just organic?

We didn't parse that out, Brian, but think of the clinician ads being roughly 80% organic, 20% from acquisition in the first quarter.

All right, got it. Awesome. Thank you, guys.

There are no further questions at this time. I turn the call back over to our presenters.

Well, I want to thank you for the questions, and I'd be remiss if I didn't take this opportunity to say that we really appreciate the tremendous work that's being done by the 8,000 employees across LifeStance. Danish and Dave and I have the privilege of being able to report these results, but they're created by the hard work, the collaboration, and the passion that these 8,000 individuals demonstrate each and every day. So my opportunity on behalf of Dave Donish and the executive leadership team to thank each and every one of them.

And that will conclude our call for this quarter.

This concludes today's conference call. You may now disconnect. Thank you. you Thank you. Thank you. Thank you. music music

Good day and welcome to the first quarter 2023 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. I'd now like to welcome Monica Prokofsky to begin the conference. Monica, over to you.

Good morning, everyone, and welcome to LifeStance Health's first quarter 2023 earnings conference call. I'm Monica Prokofsky, Vice President of Investor Relations. Joining me today are Ken Burdick, Chief Executive Officer, Dave Borden, Chief Financial Officer, and Danish Qureshi, Chief Operating Officer. We issued the earnings release and presentation before the market opened this morning. Both are available on the Investor Relations section of our website, investor.livestance.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 filings. Today's remarks contain forward-looking statements, including statements about our financial performance outlook, business model, and strategy. Those statements involve risks, uncertainties, and other factors as noted in our periodic filings with the SEC 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. Unless otherwise noted, all results are compared to the prior year comparative period. At this time, I'll turn the call over to Ken Burdick, CEO of LifeStamps.

Ken? Thanks, Monica, and thank you all for joining us today. We are in the early innings of executing on our strategy, and we are making progress on improving operational performance. While we focus on operational improvement, we also continue to grow our clinician base, now approaching 6,000 W2-employed clinicians who deliver on LifeStance's mission to provide access to trusted, affordable, and personalized mental health care. Our hybrid model provides tremendous flexibility to our patients and clinicians, and uniquely positions us to respond to changes in the industry. For example, with the Public Health Emergency, or PHE, ending tomorrow, May 11th, we are pleased to share that we've been preparing for this for months now, as we knew the PHE would eventually sunset. Our psychiatric clinicians have been working with our practice operations staff to ensure that all appropriate patients being prescribed a controlled substance are scheduled for an in-person visit. May is also Mental Health Awareness Month. To promote the importance of mental health, LifeStance launched our newest iteration of our Not One Face marketing campaign with a focus on real people sharing their experiences with anxiety. As leaders in the mental health care space, we have learned that mental health is non-discriminating. Mental health conditions may be associated with stereotypical images, but the truth is these conditions have no one face. There are literally tens of millions of faces. Reimagining mental health to help people lead healthier, more fulfilling lives is at the heart of everything we do here at LifeStance. As we've previously stated, we are committed to partnerships that support our vision of a truly healthy society where mental and physical health care are unified. In alignment with this vision, we are excited to announce that LifeStance has partnered with Genev, a unified women's healthcare subsidiary that utilizes a team of doctors and dieticians in all 50 states to offer a personalized care plan for women in menopause. Genev providers will work closely with LifeStance clinicians as a collaborative care team to provide comprehensive treatment

that takes a whole person approach to menopause.

Regarding operational execution, we're making progress on improving our performance. For example, we are following through on the real estate optimization strategy that we announced on our last earnings call. We remain on track to consolidate 30 to 40 centers and have detailed operational plans in place to do so with little or no disruption to our patients and clinicians. To date, we have streamlined our physical footprint with the consolidation of over 20 centers. We are also making progress on reducing administrative complexity by terminating our lower volume payer contracts. Consistent with the plan we discussed previously, we are in the process of sending termination notifications for approximately 140 payer contracts, with nearly half of the notifications sent earlier this month. This represents approximately 30% of our total payer contracts, slightly greater than the initial 25% target. Terminating these contracts will have an immaterial impact on visit volume, but will have a material impact on efficiency for our credentialing, intake, and revenue cycle management teams. Finally, we launched three strategic initiatives to build enterprise-level scalable infrastructure over the next few years. On this front, we have signed agreements with two vendors. One will implement a human resource information system, long overdue for a company with 8,000 employees. And the other will implement a technology platform that improves our credentialing and clinical onboarding processes. We have also begun an EHR discovery initiative with the goal of evaluating a range of options by the end of this year. Turning to our financial results in the first quarter, we produced revenue of $253 million, center margin of $70 million, adjusted EBITDA of $10 million, all of which exceeded our expectations. Although it is still early, we are encouraged by the first quarter results. Dave will provide more color on the outlook shortly, but we believe that our first quarter performance sets us up well for achieving our full year commitments. In closing, I remain confident about the tremendous opportunity in front of us. In the near term, I am proud of the team for remaining laser focused on our key objectives for 2023. I believe that we are taking the right actions to streamline and improve the operations of our business, to position LifeStance for long-term profitable and sustainable growth. While pleased with the progress we have made thus far, my team and I fully recognize that we still have a great deal of work to do. With that, I will turn it over to Dave to provide additional commentary on our financial performance and outlook. Dave?

Thank you, Ken. I would like to echo Ken's comments regarding the team's solid performance so far this year, both operationally and in our financial results. In the first quarter, we produced strong top-line results with revenue of $253 million, representing growth of 24% year over year. This outperformance was primarily driven by higher-than-expected clinician productivity. Visit volumes of 1,665,000 increased 20% year-over-year, primarily driven by higher net clinician count. Total revenue per visit increased 4% year-over-year to $152, primarily driven by payer rate improvements. the outperformance on revenue flowed through to center margin. Center margin of $70 million in the quarter increased by 28% year-over-year.

Adjusted EBITDA of $10 million was slightly above our expectations.

Turning to liquidity, in the first quarter, free cash flow was negative $16 million, a $9 million improvement year-over-year. and cash from operating activities was negative $8 million. Both were in line with our expectations. As we stated previously, cash flow in the first quarter was impacted by one, compensation costs such as higher payroll taxes and bonus payments, and two, temporarily higher DSO driven by an increase in patient responsibility as deductibles reset every year in January.

In the first quarter, DSO increased by two days sequentially to 42 days, in line with our expectations. We exited the quarter with cash of $68 million and net long-term debt of $225 million.

As of the end of Q1, we had additional debt capacity from a delayed draw term loan of $66 million, as well as a $50 million revolving debt facility, providing us with sufficient financial flexibility to run the business until we get to positive free cash flow in 2025. In terms of our outlook for 2023, we are raising the lower end and narrowing our full year revenue range to $990 million to $1,020,000,000. and raising the lower end and narrowing our full year center margin range to $274 to $290 million. We are reiterating our adjusted EBITDA guidance range of $50 to $62 million. While we are encouraged by early signs that the operational improvements we have been making to strengthen our performance are bearing fruit, we believe it's still too early to revise our assumptions for the remainder of the year. As a result, we are reflecting the higher Q1 revenue in our full-year guidance, but we believe that it is prudent to maintain our original assumptions for Q2 through Q4 until we have more evidence to support that higher productivity will persist, especially during the summer vacation season. For the second quarter, We expect revenue of $250 to $260 million, center margin of $69 to $76 million, and adjusted EBITDA of $10 to $16 million.

With that, I'll turn it over to Dhanush for additional color with respect to operations. Thank you, Dave.

In addition to executing on the operational improvements, and administrative simplification described by Ken and Dave, we continue to align our teams around two growth priorities, net clinician ads and clinician productivity. In terms of clinician growth, we delivered 330 net clinician ads in the first quarter, bringing our total to 5,961 clinicians, an increase of 19% year over year. We completed three small acquisitions at the beginning of the year, and consistent with our shift towards organic growth, we are not planning for additional M&A this year. Regarding clinician productivity, we saw positive trends in both clinician capacity and utilization. Clinician capacity, or the time our clinicians make available to see patients, trended slightly higher compared to the last two quarters. As a reminder, last year we saw capacity in the first half of the year run higher, with the back half of the year moderating due to time off taken during the summer vacation and fourth quarter holiday periods. This seasonality is reflected in our full year guidance. In terms of utilization, or our ability to appropriately fill the time clinicians make available to see patients, we observed encouraging signs of improvement. However, it is still early in the year, and we would like to see these productivity trends continue before updating our go-forward assumptions. We are driving these improvements in utilization through operational discipline at the top, middle, and bottom of the patient funnel. At the top of the funnel, we continue to attract new patients in line with the overall growth of our clinicians and their related capacity. We also continue to do this at an extremely low cost per acquisition with minimal reliance on paid marketing. For example, we are seeing benefits from our investment in boots on the ground primary care referral teams as they continue to expand and solidify local relationships. This team has done a tremendous job delivering growth in primary care referrals. Additionally, Organic online marketing, as well as increasing levels of brand awareness, has had a positive effect at the top of the funnel, resulting in a roughly 50% increase in organic patient traffic sequentially. Second, at the middle of the funnel, we're improving our scheduling of patients. Our intake teams are enhancing the overall conversion and matching experience for patients who prefer to schedule their appointments through the phone channel. Additionally, we continue to leverage our digital capabilities to optimize patient matching via our online booking experience, OBE. At the end of Q1, OBE was live in 26 states, and we remain on pace for a full national rollout by mid-year. These online and offline efforts have led to further progress at the middle of the funnel. Finally, at the bottom of the funnel, In terms of scheduled appointments converting to completed visits, our cancellation rates improved by nearly 2%, down to 12% in the first quarter. Our stronger execution at the top, middle, and bottom funnel contributed to better than expected productivity in the first quarter. In closing, I am proud of the team's efforts in improving operational performance. We are encouraged by the positive signs and our key performance metrics, and there remains significant opportunity for further progress as we focus on delivering on our commitments to our clinicians, patients, and shareholders.

With that, I'll turn it back over to Ken for his closing remarks. Thank you, Danish. This is a multi-year journey.

We are in the very early phase of building the muscle to run a highly effective business commensurate with the immense market opportunity in front of us. The need for accessible and affordable mental health care in our society has never been greater. And our vision of aligning mental and physical health care energizes us every day.

We will now take your questions. Operator?

Thank you, speakers. At this time, I would like to remind everyone in order to ask a question, please press star then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. Our first question comes from the line of Craig Hettenbach of Morgan Stanley. Craig, please go ahead.

Yes, thank you. It was good to start the year on net clinician ads. Can you just talk about the organic recruiting efforts and what you're seeing in the marketplace more broadly for ads?

Yeah, sure. This is Dhanush. From a recruiting perspective, we continue to see great momentum with our in-house clinician recruiting team. Our value proposition in the marketplace continues to resonate, and our ability to both attract customers New clinicians in the states that we currently have a presence as well as continue to scale that as we grow throughout the year remain strong. So feeling very good about the overall environment there.

Got it. And then a follow-up for Ken on just value-based care and interesting to see that the woman's health announcement this morning. Just more broadly, and I know it's early days, can you just touch on the tighter integration of physical and mental health and just any other anecdotes from conversations you're having in the marketplace?

Sure, Greg. You're right. This is in the very early days. We're thrilled with this Genev partnership as 2 million women annually reach menopause. And the kind of integrated care that we can provide, working collaboratively with Genev, we think is exactly what's needed. As it relates to our value-based pilots, I would say it's still too early for me to be descriptive or definitive about the insights. But what I can tell you is that this is a core strategy for us. And so I suspect this will not be the last time we announce this type of partnership.

Got it. Thank you.

Our next question comes from the line of Lisa Gillett from JPMorgan.

Lisa, please go ahead.

Great. Good morning. First, I just really wanted to start with, Ken, your comments around the contract termination 30% versus 25% with the previous goal. So just two things. One, will there be more payer concentration post this? And is there any single payer that makes up a large percentage of your business today? And then secondly, you know, any findings as you're going through those contracts as far as, you know, regional concentration or anything else that we should be aware of as you're thinking about what it'll look like on a go forward basis?

Lisa, thanks for the question. I want to just reiterate that while this is a big number in terms of contracts, as I say, approximately 30%, it really is de minimis as it relates to patient visits. And so I guess consistent with the prepared remarks and the script, what I would say is we had a lot of administrative issues complexity and work associated with maintaining these contracts and loading them, etc., that was just way out of whack with the actual value that was being derived from these particular payers. So we can do all of this, and it still has less than a 1% impact on our total visits, which means it's really not changing the concentration at all. To the other part of your question, as you might suspect, when we look at national payers, they would represent a significant percentage of our total volume. And then it drops off pretty substantially after the first dozen or so, if that provides you with some helpful color.

No, that's really helpful. And then just as a follow-up to that, so if we look at the margin in the first quarter, roughly 4%, midpoint, moves the margin to about 5.1% for the year. Can you maybe just help me to think about cadence? I mean, previously they were roughly 7%. How do we think about the cadence of the margin as we move throughout this year? And maybe remind us of some of your longer-term goals on the margin side.

Sure, Lisa. Good morning. This is Dave. So as far as the margin and how it will play out throughout the year, what we discussed when we were given our full-year guidance was that We would start out Q1 being the lowest margin of the year, and then it would increase as payroll taxes were less impactful after the first quarter, as well as things like payroll, excuse me, as payer rate increases started to kick in, which will be mostly in the back half of the year, as well as the third item being some of our higher revenue, higher margin services, that are low in the first quarter, and then from a seasonality perspective, they ramp up throughout the year. So that's how I think about 2023. As far as longer-term guidance, what we talked about last quarter was that by the end of 2025, as we're exiting 2025, we expect to be at double-digit margins.

Great. Thank you.

Our next question comes from the line of Ryan Daniels from William Blair. Ryan, go ahead.

Hey, everyone. This is Jack Senston for Ryan Daniels. Thanks for taking my question and congrats on the quarter. First on the guidance, specifically on the top line, if we assume the midpoint for the second quarter guidance, that would mean that first half revenue would come in at more than 50% for the full year midpoint. Can you maybe talk about this a bit more and how we should think about this? I know historically, I believe second half was typically higher than first, but Not sure if we're planning a slowdown for this year, if it's just strictly conservatism and more consistency when it comes to clinician productivity. Any additional commentary on the cadence here would be appreciated.

Sure. Good morning, Jack. This is Dave. I'll take this one. So when you think about the seasonality of revenue and you've looked at our historical performance, what you have to take into account is that the significant number of acquisitions that we did masked the underlying organic performance. you know, true seasonality of the business, which is what you're going to see more of this year since we had three acquisitions in the first quarter and we're not planning on doing any more throughout the remainder of the year. So as a result, when we gave our full year guidance, what we talked about was, you know, roughly 50-50 from a revenue perspective, first half, second half, Now it's a little bit more first half than second half. But again, we're still in that roughly 50-50. And the big dynamic that I would point you to is that while we're still growing clinicians throughout the year, the second half of the year has a lot more, we assume a lot more vacations. You have the summer vacation season. You've got the holiday vacation season. And so as a result, we have less capacity from our clinicians as a result of them taking vacations, and we bake that into how we build revenue for the year.

Perfect. Thanks. And then just as a quick follow-up, it looks like your total visits increased pretty nicely sequentially, but total revenue per visits decreased a tad. Is this more a factor of onboarding newer patients and it's more of a heavier lift in the beginning of their journey, or is it stemming more from the clinician side?

Yeah, I wouldn't point to either of those. So TRPV or total rate per visit did drop from the fourth quarter to the first quarter. Two things that I would point you to. The first is that We've talked about a lot of these higher revenue, higher margin services and the seasonality there. And so with the patient deductible reset in January, so those kinds of services are less prevalent in the first quarter, and then they ramp throughout the year. So that's the first thing where you get that drives a sequential decrease. Then the other is we had some modest payer rate pressure drop. specifically related to Medicare rates, which isn't a big percentage of our book, but that did also cause TRPV to go down a little bit in the first quarter. And again, we would then expect TRPV to build throughout the year as payer rate increases, other payer rate increases go into effect.

Wonderful. Thanks, guys.

Our next question comes from the line of Kevin Caliendo from UBS. Kevin, please go ahead.

Thanks. Thanks for taking my question. I just want to talk a little bit about recruitment and also just about retention and churn. Those are numbers we haven't really talked about lately, and it was an overhang a year or so ago. Just wondering how that's matured, and what are you finding is most important in terms of retaining your clinicians and attracting new clinicians? Is it compensation? Is it lifestyle? I'm just wondering how the world has changed as we're sort of a, you know, lap the year of the great resignation.

Yeah, thanks for the question, Kevin. This is Donish. I'll tackle that. So in terms of the recruiting side of things, like I mentioned earlier, we continue to see strength in our organic recruiting team and our ability to attract new clinicians to life stands, Our value proposition really does continue to resonate in the marketplace. It is not just about compensation for clinicians, though that's obviously a key component. It really is about the overall value proposition that we offer in flexibility, both in the ability to do in-person as well as telemedicine, the collegiality that we build here within the ability for clinicians to work with each other across multiple subspecialties inside the same office or state, all of the digital investments that we make and the tools that we give them, et cetera. So, you know, there's a broader value proposition that continues to stand out in the marketplace and is demonstrated in ability to continue to attract new clinicians here and our net clinician add numbers. As far as retention goes, our retention remains stable in Q1 and from a planning perspective, we continue to expect consistent performance throughout the remainder of the year. That being said, for us, Our focus is making sure that we have a phenomenal clinician experience, not just in how we attract our clinicians here, but how we deliver on that value proposition once they are here. And so that includes things like we've spoken about before around frontline support in our administrative staff. Um, additional attention on, uh, billing and the service that we're providing, not just to our clinicians, but to the patients and how they, uh, interact with our teams, et cetera. So, you know, a lot to still do there. Um, but you know, we feel good at where we're at today.

Has there been any change to the, uh, mix with, with in person versus remote, just even in the last three months or six months? I know it was always a little bit higher than what was originally anticipated. I'm wondering if it's just going to, the anticipation just maintains that level going forward. I think it was 75%, if I'm not mistaken.

Yeah, we continue to see a slow return to in-person as far as our overall mix. In Q1, it was 75% virtual, 25% in-person. That was about a two to three point shift back towards in-person versus the previous quarter, and that's been approximately the rate that we've seen it returning to in-person every quarter. So, you know, we fully expect that that trend will continue. We have seen patient demand for in-person increase, as well as, again, our clinicians returning more in person over time.

Thanks, guys.

Our next question comes from the line of Jamie Purge from Goldman Sachs. Jamie, please go ahead.

Hey, thank you. Good morning. Question first on the center level margin. It seems like margin progression there has been a bit faster than expected. Can you just remind us the initiatives you have in place this year? I think there's some around real estate, how much of those are already starting to come through in the first quarter performance versus still ahead of us in the remaining portion of the year.

Yeah, good morning. Good morning, James. This is Dave. The center margin performance in the first quarter, I would think of being largely driven by the revenue beat and just getting some additional scale benefit. And we do expect center margins to improve, you know, modestly throughout the year. And certainly, you know, the benefit of the real estate consolidation helps. Just to size that for you, that would, you know, we expect about roughly a million dollars of benefit from the real estate consolidation this year and about a two million run rate of those savings in the next year.

Okay, thanks. That's helpful. And then you guys mentioned the expiry of the public health emergency and the changes you're making or preparations you're making for that. Can you tie that to the broader landscape if you think the expiration of the public health emergency changes anything competitively, even in the short term in terms of where clinicians end up or just more broadly how you're thinking about any competitive changes from that? Thanks.

Yeah, this is Ken. I'll take that. So very recently, there was an announcement that there's going to be some flexibility and essentially about a six month extension of the PHE or public health emergency accommodations. So I'll speak to the longer term. I think in the longer term, there's clearly an advantage of having a hybrid model that offers both patients and clinicians the choice and the flexibility of either a in-person visit or remote visit. So as it relates to patients that are receiving these controlled substances, on a go-forward basis, once the extension has expired, there's no choice, but they will have to visit with a clinician prescribing one of these controlled substances in person.

Hello, Jamie, are you still there?

Yeah, that was it for me. Thank you for that question.

Our next question comes from the line of Brian from Jefferies. Brian, please go ahead.

Hey, good morning, guys. Congrats on the quarter. I guess just a couple of quick questions. As I think about payer rate improvement, how much runway do you guys see to drive that going forward?

Well, we think that there's a great deal of runway. It's not going to be sort of a flip the switch, but as we continue to demonstrate the value of the services that our clinicians provide and with the increased understanding of the importance of mental health integrated with physical health, We think it's absolutely critical that the reimbursement follows the value that's being created. Now, in the short term, we are able to provide some limited data in terms of what the value means in terms of quality of life and absenteeism, etc., Some of those pilots that we've referenced we hope will build a database that is statistically valid that can demonstrate a true reduction in inpatient visits and emergency room visits and total cost of care. But as I said right at the outset of the Q&A, we are still a ways away from that. But that's the goal. That's the intent, that we can demonstrate that there are meaningful improvements, obviously, in the quality of life, but it's also a more efficient way to utilize healthcare resources.

Gotcha. No, that makes sense. And then maybe, Dave, just a quick question. I don't know if I dismissed this, but in your revenue guidance, Ray, How much of that on the clinician ads, how much of that was from the addition of acquired clinicians versus just organic?

We didn't parse that out, Brian, but think of the clinician ads being roughly 80% organic, 20% from acquisition in the first quarter.

All right, got it. Awesome. Thank you, guys.

There are no further questions at this time. I turn the call back over to our presenters.

Well, I want to thank you for the questions, and I'd be remiss if I didn't take this opportunity to say that we really appreciate the tremendous work that's being done by the 8,000 employees across LifeStance. Danish and Dave and I have the privilege of being able to report these results, but they're created by the hard work, the collaboration, and the passion that these 8,000 individuals demonstrate each and every day. So my opportunity on behalf of Dave Donish and the executive leadership team to thank each and every one of them.

And that will conclude our call for this quarter.

This concludes today's conference call. You may now disconnect.