Dylan Finley: Thank you very much. This is actually Dylan Finley on for Kevin Caliendo. As you guys are approaching ’25 and your prior comments on exiting that year with double-digit margins, I guess, first of all, that’s still a reasonable objective as of today? And then secondly, based on the improvement indicated in ’24, it seems like ’25 might be a year with a little more of a heavier lift. I’m just wondering if you could break out the sources of that margin expansion. Does that contemplate further Center Margin improvement versus a reduction in certain operating expenses?
Ken Burdick: Yes, as we look at the guidance for ’24 and our previous comments relative to exiting ’25 at double-digit margins, I would describe this is right on track. We’ve said in the past, it wouldn’t necessarily be completely linear. And we’re really pleased that as compared to our sort of long-term comments where we were projecting and committing to free cash flow for full year 2025. In this call this morning, we’re announcing that a year early, such that 2024, we are now expecting a full year that we will generate free cash.
Dylan Finley: Great. Thank you. No follow-ups for me.
Operator: We’ll move to our next question from Brian Tanquilut at Jefferies.
Brian Tanquilut: Hey, good morning, guys. Maybe just to Danish’s point on increasing incentive offers to clinicians, how should we be thinking about the impact of that on SWB as you roll that out?
David Bourdon: SWB? We didn’t catch out the last part of your question.
Brian Tanquilut: Yes, Just on the impact of rolling out a new incentive program on the salaries, wages and benefits line.
Danish Qureshi: So this would be a new benefits program. This is just simply shaping the overall benefits program that we administer to help lean heavier towards incentivizing clinicians that are offering full-time hours versus those that remain part-time or very part time. So there’s not a growth in the overall cost structure as it relates to benefits, just again a shaping of how we are aligning that between part-time and full-time clinicians.
Brian Tanquilut: Got it. Okay. And then maybe, Ken, just any thoughts that you can share with us on your view on the fundamental trends within behavioral health in your patient population. Because as we look at your growth rate, right? I mean you’ve seen it in the high teens to low 20% range, just your thoughts on the sustainability of that level of volume growth, especially given the backdrop that we see in the mental health space. Thanks.
Ken Burdick: Yes, certainly, on a macro basis, the demand for outpatient mental health services has not subsided at all. So we have a very significant long-term tailwind there. Specifically to LifeStance, obviously as we continue to grow larger and larger, the days of 75% and 100% year-over-year growth are behind us. We continue to feel strong conviction around our estimates around mid-teen organic growth and then obviously, when we go back to pursuing acquisitions that will drive it beyond the mid-teens. So we think there’s plenty of opportunity for continued growth in the business even as we sort of double down and focus on margin expansion and profitability and efficient capital deployment.
Brian Tanquilut: Awesome. Thank you.
Operator: We’ll move next to Stephanie Davis at Barclays.
Stephanie Davis: Hey guys, Congrats on the quarter and thanks for taking my question. First, Danish, we’ve seen some pretty rapidly changing trends over the past few years around patient acquisition, efficiency and cost. I was hoping we could dig in a little more to that patient acquisition strategy you touched on your comments. Talk to me about top of funnel versus middle funnel versus bottom of the funnel and kind of how much mine share each is taking and maybe what areas you could be focusing less on versus some of the prior years?
Danish Qureshi: Sure, Stephanie, thanks for the question. So as I mentioned in our prepared remarks, we continue to be focused on all three top, middle and bottom of the funnel. However, as I think back to 2023, considerable amount of our effort went into improvements in the bottom of the funnel, which we talked about each quarter in the improvements we saw in our no show and cancellation rates by approximately five to six points over the kind of the year plus that we’ve been talking about that. And so though there remains some additional opportunity there over time, I largely view the work in optimizing the bottom of the funnel as complete and stable. And so we will continue to shift our attention towards — particularly the middle of the funnel where we are improving our matching capabilities, both online through the rollout of OBIE and through improving our phone intake and matching experience by leveraging a lot of the capabilities first developed for OBIE.
And then top of the funnel, that will always be a focus. We have been able to demonstrate not just patient acquisition in terms of volume above the pace of growth of our clinician base, but we’ve also been able to deliver that while bringing down the cost of acquisition for each new visit over time. And so it will, by the nature of the business require us to remain focused there. But over the last year and what we would view at least for 2024 and be likely beyond is patient demand will continue to outstrip supply. So an area of focus, but middle of the funnel between the three is going to be the most focus on area for 2024.
Stephanie Davis: And when I think about the forward for kind of your patient acquisition strategy, is this something where it’s being tweaked and you’re making some of these last year was bottom of funnel, and now you’re doing middle, top of funnel more. And then it’s kind of a more stable process in the out years? Or is this something that has to be continuingly improved up on?
Danish Qureshi: I mean I view anything as you continue to scale as a business that you are forever optimizing. And so whether there are significant — whether there’s significant room for improvement over a longer trajectory will remain to be seen. But I mean, we will always be optimizing around the edges for both top, middle and bottom of the funnel. But at least as it pertains to the bottom, the heavy lift is done. I think ’24 will be a middle of the funnel focus. And then at that point, just optimization as the business continues to scale over the coming years.
