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Where we share our weekly news debriefs and discussions with industry experts. These are lo-fi recordings aimed at giving our readers more opportunities to engage with our analysis and a view into some of the conversations that shape it.
Martin: For folks who are not familiar
with LifeStance, can you walk us through
the sort of LifeStance model, footprint,
you know, inpatient, outpatient?
Like, what is the, the LifeStance
business as it exists today?
Dan: Yeah, for sure.
First, uh, Kevin, I was looking
today, I think I joined the
community in 2018 maybe.
So, uh-
Martin: Let's go
... Dan: fun to be on here and,
uh- Yeah ... progress and all
that you guys are building.
Um, yeah, so LifeStance, we are the,
uh, largest provider of outpatient
mental health in the country.
Uh, and we are a very
mission-driven organization.
As, you know, all of us, we've
experienced mental health industry
as, as loved ones or as patients,
and it's just too hard today.
And so our goal as a company is really
just to make getting timely access to
high-quality mental health care easier.
Um, to give you a little sense
of scale, uh, we'll see over
a million patients this year.
We have, um, 600 clinics
all across the country.
We have 8,300 employed clinicians
as, as, as part of our company.
And our goal is to offer comprehensive
outpatient mental health.
So whether you're 5 or 95, whether you
have anxiety or treatment-resistant
depression, whether you wanna come, c-
uh, come get care in person or virtual,
we want patients to, when they think of
LifeStance, to think that we can help
them make the progress they want on,
uh, their mental health care journey.
Kevin: Dan, as I think
about growth in Q1, I...
it looked like revenue growth was up
solidly, EBITDA growth was up solidly.
Curious to hear how you think about
the growth algorithm organizationally,
combo of inorganic and organic growth.
I think in one of the Q&A responses,
you guys talked about how, um, you're,
after three years, you're back to
executing on this tuck-in M&A strategy.
You opened up two markets via
acquisitions of practices.
Can you talk about how you think
about that inorganic strategy, how
that relates to the organic strategy,
and, and where you're seeing growth?
Dan: Yeah.
Um, we continue to really feel confident
about, about our organic growth engine.
What's great about our business
is our busin- our business
and our mission are aligned.
Like, when we do what we're supposed
to do and deliver high quality care to
patients, then we attract more patients
and more clinicians, and that flywheel
just ki- kind of keeps happening.
And so we will continue to grow.
You know, we've, we've committed
m- mid-teens organic growth, and
we see no end in sight for that.
Um, but we do see, uh, M&A as
being a helpful lever for us.
And for us, we think about our
tuck-in acquisitions as helping us
enter more communities that need,
um, help and more, you know, high
quality access to mental health care.
And so today we have clinics in 33 states.
We're in most of the major cities,
but there are still, still communities
across the country that we are not in.
And so if there is a high quality practice
that has great reputations and referral
relationships o- on a community level,
um, then we think adding them to our
LifeStance family is, is good business and
good for our patients and the clinicians.
And so that's what, that's what when
we talk about tuck-ins, that's wh-
that's what we talk about, just is
identifying, uh, local clinics that
are delivering great care that we would
like to add to the LifeStance family.
Um, and that's, that's not in replace of
our organic growth, and we will continue
to enter new geographies ourselves just
by, you know, um, uh, doing what we do.
But we think M&A is a
nice complement to that.
Um, you know, there are larger scaled
practices that we continue to think
about and look at too, but just from a
valuation perspective and e- expectation
of those practices, we've had trouble,
more, more trouble making the math work
on those bigger sorts of deals so far.
Martin: On the venture capital side
of the house, it seems like one area
that's been getting a lot of attention
recently is interventional psychiatry.
I noticed that you have, uh, you talk
about this on the website a little bit.
Can you give us the, the LifeStance view
on where this market is going, how you're
sort of evaluating, evaluating that
and, and what, what role that plays in
your sort of your, your growth equation?
Dan: Yeah.
Um, first, when you look
at the outcomes of TMS and
Spravato, they're life changing.
Um, and the stories that we hear
from patients that are on these
th- these therapies is incredibly
motivating, energizing, and make
us wanna, us wanna expand access as
quickly as we can to these therapies.
And so we think it's good medicine.
Um, our clinicians want, want to
provide these therapies and, you
know, from a business standpoint,
we can do it sustainably.
So for us, it's a, it's kind of
a no-brainer on, on an expansion.
And our goal is to make sure that all of
the markets that we operate in, those...
our, our patients have
access to TMS and Spravato.
And so we're just on that path
to kind of our national rollout.
Um, we're a little further on TMS than
we are on Spravato, but, um, just because
we started earlier on, uh, on TMS.
And so, um- Uh, yeah, and, you
know, f- I think payers are
increasingly seeing the value, right?
Like, the, the patients that
qualify for TMS and Spravato, they
are patients that have typically
failed two or more antidepressants.
And so, uh, these are patients that
have had chronic, typically high
acuity, um, symptoms, and th- they
can be, these symptoms can be quite
debilitating to their day-to-day life.
And so the impact, um, of both TMS
and Spravato on, on these patients
is, um, I think a winner, a, a, a win
for all stakeholders in our industry.
Kevin: Dan, it looked like, uh, top line
revenue was up 70 million in the quarter.
GNA was up around 6 million
in the quarter year over year.
Uh, Martin and I, one of our ongoing
topics we are fascinated by is
the adoption of AI and when and
if we can see AI evidencing itself
in the income statement results.
Yeah.
Uh, you guys in the prepared remarks for
the earnings call gave some good examples
of how you're leveraging AI technology
from an operational perspective, but
I'd be curious your reflection on where
we're at in that journey in mental health
market in an organization like LifeStance.
How are you seeing the impact of AI?
Do you feel like it's showing up in
the P&L and that kind of performance?
Um, and where do you
see it going from here?
Dan: Yeah.
So I, I do, I, I do think you're,
you're s- starting to see it.
Um, I think as we all feel, like we're
in the early innings of this thing.
I think we're all trying to figure out
kind of where and how fast and how much
of an impact, um, you know, AI can make.
You know, w- we think about AI in kind of
four different parts of our business, how
we can use AI to, to help our corporate
employees be more efficient and better
at their jobs, how we, how AI too is
how AI can help our kind of our back
office scheduling, intake, revenue cycle,
insurance verification, you know, how,
how we can help that part of the business.
Three is clinicians, and then four,
how AI can help with our patients.
Kevin, you're really leading
into, I think, you know, kind of
one and two, and like f- from-
Yeah ... from that framework.
And I would say for us, the place where
we're seeing the most clear ROI is
around kind of the back office shared
service sort of things, things like
revenue cycle, intake, scheduling.
We are still learning, uh, and we
still, uh, are, are more people than
AI in, in those functions, but we're
definitely, like, on the journey and,
and we're very optimistic about, um,
how AI can help us do our job better
in those areas and do it at lower cost.
And so, um, you know, we've signed
up t- with Wall Street to continue
to expand margins and a, and a piece
of that is, um, how we think AI can
help us be more efficient long term.
Martin: Affordability has been
incredibly top of mind as part of
the general discourse, and I feel
like that's especially true when
it comes to behavioral health.
One of the things we heard on the
earnings call was conversations
about increasing desire for
insurance options versus cash pay.
Mirrors what we're hearing
elsewhere, but I'm curious about,
you know, if you can talk a little
bit about those dynamics in- Yeah
you know, for LifeStance around
cash pay versus in-network and,
and how those conversations
with payers are coming along.
Dan: Yeah.
It's a, it's a super interesting question,
Martin, 'cause if, if you have insurance,
you have mental health coverage.
And so there is a sub-segment of our
population that chooses to do cash
pay despite having insurance benefits.
And so the question is:
Why would you do that?
Why, why would you pay more?
And the answer is is 'cause there's
a belief that you can get a better
service, either you're gonna get
a better clinician or a better
patient experience by going cash pay.
It's no different than doing
a concierge PCP, right?
Like, that is, that is the belief that
you have if you choose to do cash pay.
And so our belief is that we wanna make
sure that your insurance benefit gives
you the experience that you would go
pay cash for, because everybody should
have access to a high-grade consumer
experience with a great clinician.
And so, um, our plan is to continue
to be a insurance-driven business.
Um, and we wanna make sure that
we're giving a kind of cash
pay experience to everybody.
Uh, and that if we can do that,
then nobody will choose to pay
cash because there's no reason to.
Um, and, and for us, you know, you do see,
I mean, Talkspace went on this journey a
couple years ago, BetterHelp is on this
journey now, of companies going back into
in-network, because that's where all the--
I think that's where the momentum is.
As a, as a patient, you'd prefer to use
your mental health benefit, especially
when times are tough and you, you know,
you don't have infinite spending power.
You wanna use your insurance benefits.
And so, uh, we think that's
a logical place to invest.
Um, and we just wanna keeping, keep
making the experience better and better
for our patients and the clinicians.
Kevin: Dan, I wanted to touch on
the provider growth, um, numbers.
You talked about, uh, I think
it was you have 80-- y- you had
8,000 going into the quarter.
You grew by 300 to get
to 8,300, uh, in total.
Um, a mental model I have is that, you
know, when, when care delivery orgs
are growing providers like that, it
is a good sign of the health of those
organizations that they're growing.
Um- Can you talk to me a little bit
about what the, the dynamics inside
the organization are like for bringing
on providers, um, how you think
about consistency of that provider
experience across, across the country
as an organization like yours and
growing that and scaling that up?
Dan: Yeah.
Um, you know, we are nothing
without our clinicians.
Our business starts and ends
with clinicians providing
high quality care, and so it's
something we think about often.
And for us, we want to deliver
a consistent experience, whether
you're in Maine or San Diego
or Florida or Washington.
And so for us, you know, a car- a
core component of that is we have a
dedicated employee W2 clinician team, um,
because we want them to be part of the
Lifesense ecosystem, part of our culture.
Um, you know, we've, we've, we do a lot
of training and care pathways and, you
know, we have a culture inside our offices
and our clinics in which we care for.
And so for us, it's how do we create
an environment that attracts and
retains high quality clinicians?
And for us, that means giving them the
tools that they need to focus on the job
and the thing that they love most and
kind of eliminate everything else, right?
Like, our goal is to fill up their
schedules with the patients they want
to serve, take care of all the back
office stuff that they don't want
to, uh, deal with, and just allow
them to focus on high quality care.
Um, you know, it's, you know,
it's things like even offering
TMS and Spravato, right?
Offering, offering options for, for our
clinicians to grow and to learn and to
get into new and different ways to care
for patients and more like the innovative
side of, uh, mental health we know is
also really motivating for clinicians.
And so, um, there, there's not a single
answer to that, Kevin, but we do think
a lot about how do we become a place to
work that our clinicians are proud to
be a part of, and that they feel like
they can grow in their career, um, and
that they can do what they want to do
the most, which is care for patients.
Martin: We're coming up on the end of
time, so I think my last question for
you, unless Kevin you want to jump
in quick, is as you think about, um,
there's been a, like value-based care
has largely ignored behavioral health.
It's like hard to measure,
hard to figure out.
Mm-hmm.
Are you hearing any appetite or seeing
any interest from ACOs or employer
plans on starting to put some sort of
value-based guidelines around any of this?
Or are we still, I guess, is the
measurement problem- Yeah ... still too
Dan: hard?
It's hard.
You know, I was at, uh, the Behavioral
Business Value Conference last year.
It was all about value-based care and
how do we bring value-based care to
be- behavioral health, and I spoke
at that conference too, and it's...
I, I left thinking that we
were still in the early days.
You know, we are, we're doing baby
steps with a lot of payers, uh, but it's
still around the stepping stones, right?
Access metrics, uh, PHQ and GAD metrics,
and I think we're, we're a few steps
away from being truly at the total cost
of care of where, of what we, you know,
all think is the holy grail, but...
And so we're doing all the things to
prepare for that step, but, uh, in our
experience, payers aren't really ready.
The place that I do see a, a little bit
coming to fruition is, one of the parts of
business that we don't talk about as much,
uh, Martin, is our referral partnerships
with kind of the broader ecosystem, and
we literally have thousands of partners
across the ecosystem where we partner
to provide mental health to the physical
health journey, whether that can be a
primary care office, that can be a health
system broadly, that could be a care
navigation company, a value-based care
company, um, at-risk primary care groups.
Like, we have thousands of these partners
that we provide mental health to and,
um, a lot of those partners are farther
along the value-based care journey than
we are in the mental healthcare space.
And by partnering with them to provide
timely access to high-quality mental
healthcare that is metrics-driven and
outcomes-driven, we help them achieve
the metrics that they're desiring.
And so even though we ourselves
aren't necessarily contractually
obligated to VBC, we are partnering
with other players who are, and that
combination can be really powerful.
Martin: We're at time.
Kevin, do you wanna sneak in anything
else, or should we ca- leave it there?
Let's leave it there.
Dan, appreciate the time.
Dan.
Kevin: Looking forward to
Dan: continuing- Thanks,
Martin: guys.
It
Kevin: was
Martin: fun ... the conversation.
Thanks