On November 8, 2023, LifeStance Health Group Inc (LFST, Financial), a leading provider of outpatient mental healthcare, disclosed its financial results for the third quarter ending September 30, 2023. The company's total revenue saw a substantial increase of 21% year-over-year, amounting to $262.9 million. This growth was primarily attributed to the addition of 286 clinicians, marking an 18% increase in total clinicians to 6,418. Despite the revenue growth, LFST reported a net loss of $61.6 million, which was significantly higher than the $37.9 million loss in the same period last year. The net loss was primarily driven by a preliminarily approved settlement of a shareholder class action lawsuit and stock-based compensation expenses.
Financial Performance Overview
LFST's loss from operations for Q3 2023 was $74.4 million, a 92% increase from the $38.8 million loss reported in Q3 2022. The Center Margin, however, grew by 26% to $76.2 million, representing 29% of the total revenue. Adjusted EBITDA saw a slight decline of 5% to $14.6 million, or 5.6% of total revenue, compared to $15.4 million in the prior-year period. The decrease in Adjusted EBITDA as a percentage of revenue was due to higher General & Administrative (G&A) expenses from investments in the business.
Balance Sheet and Cash Flow
For the nine months ended September 30, 2023, LFST used $33.7 million in cash flow from operations, including $25.4 million during the third quarter. The company concluded the quarter with $42.6 million in cash and a net long-term debt of $248.4 million.
Outlook for 2023
LFST has raised the midpoints of its full-year 2023 guidance for Revenue, Center Margin, and Adjusted EBITDA. The company now expects full-year revenue to be between $1.03 and $1.04 billion, with a Center Margin of $292 to $300 million and Adjusted EBITDA of $56 to $60 million. For the fourth quarter of 2023, LFST anticipates total revenue of $255 to $265 million, Center Margin of $73 to $81 million, and Adjusted EBITDA of $17 to $21 million.
Management Commentary
Ken Burdick, Chairman and CEO of LifeStance, commented on the results, stating,
We delivered another strong quarter. In addition to solid financial results, we continued to attract high-quality clinical talent with a record quarter of organic recruiting, growing the team by nearly 300 clinicians. As we approach the end of the year, we will continue our commitment to improving the patient and clinician experience while continuing to fortify the company’s foundation to build long-term, scalable operations."
LFST's earnings report reflects a company in a growth phase, expanding its clinical workforce and raising revenue projections. However, the increased net loss and the impact of non-operational expenses such as litigation settlements and stock-based compensation highlight the challenges the company faces. Investors and potential investors are encouraged to review the detailed financial statements and management's discussion to gain a deeper understanding of LFST's performance and future prospects.
For more detailed information and analysis on LifeStance Health Group Inc's financial results, please visit LifeStance's Investor Relations website.
Explore the complete 8-K earnings release (here) from LifeStance Health Group Inc for further details.
