LifeStance Health Group, Inc. (NASDAQ:LFST) Q2 2023 Earnings Call Transcript

There are a number of levers and incentives that we can pull there that we are starting to discuss with our leadership teams and the clinicians themselves to understand what we could do. But it’s early enough in that in our kind of thought process there that we’ll come back later once we’ve made more of a — developed more of a concerted strategy around it. Things like our LTIP program was an initial path that starting to create long-term incentives around those clinicians that want to give us more of their capacity and more of their time and want to focus on filling that productively. And so, we’ll continue to evaluate other similar opportunities as we go forward and we’ll come back to you all when we have clarity there.

Jamie Perse: Okay. Thanks for that. And then maybe just a financial philosophy question. You’re increasing revenue guidance, EBITDA is being maintained. It sounds like there’s not specific investments you’re contemplating that are incremental. You mentioned just maintaining flexibility. So is the philosophy just that when you have stronger top line, you’ll reallocate that or invest incrementally in accelerating the operations or just or is there a potential to kind of let that flow through? Just any thoughts on how you think about that would be great. Thank you.

Dave Bourdon: Yes, Jamie, it’s Dave. I’ll take that one. Basically, it’s what you just described, which is for 2023, as we generate flexibility, we are investing. We have an investment list that we’re working through there. There’s not any new big initiative there, it’s more-smaller in investments in multiple areas. And I expect that to continue through 2023, if and when we generate financial flexibility. As we move into 2024, we will see operating leverage and margin improvement, but we still will be also making investments in ’24. As Ken has stated ’23 and ’24 are foundational and investment years.

Operator: And we do have our last question comes from Brian Tanquilut with Jefferies. Your line is open.

Brian Tanquilut: Good morning. Ken, maybe just a question on, how you are thinking about the Biden Administration push to force more in network coverage for behavioral health, I mean, how do you think that affects LifeStance whether it’s an opportunity, or does that open the door for increased competition?

Ken Burdick: Well, I’m entirely supportive. I think what, President Biden is doing. He is highlighting what we have all observed. It existed before the pandemic, but the pandemic sort of elevated it and exacerbated the disconnect between the demand for mental health treatment and the supply. So whether we are talking about fully realizing a parity or we’re talking about responding to the changing condition, frankly, of the American society. I think it will be positive as we sort of try to translate and navigate through a period where we’re seeing unprecedented demand. And there is no indication that demand is going to subside. So, if it brings on more competition and people continue to find better ways to expand access to mental health, that’s a positive. We don’t think we are a good company because we lack competition. We think we are a good company because of the model that we have built and the way that we execute.

Brian Tanquilut: Appreciate that. And then maybe as we think about the fact that, you are calling contracts and I think you called that 30% have been eliminated. Are you seeing any flow through to the other side of the remaining clients or contracts with payors, who are willing to give you the rate increases that you need to justify keeping them on the panel?