LifeStance at Goldman Sachs Conference: Strategic Growth and Efficiency

On Tuesday, 10 June 2025, LifeStance Health Group (NASDAQ:LFST) participated in the Goldman Sachs 46th Annual Global Healthcare Conference. The company provided a comprehensive update on its strategic direction, emphasizing both its robust operational performance and areas of improvement. Under new leadership, LifeStance is committed to maintaining its leadership in outpatient mental health services while focusing on sustainable growth and operational efficiency.

Key Takeaways

• LifeStance Health Group operates with approximately 7,500 clinicians across 550 locations in 33 states.
• The company achieved over $85 million in positive free cash flow last year.
• New CEO Dave Borden and CFO Ryan McGordy are steering the company towards mid-teens revenue growth and 15-20% EBITDA margins.
• LifeStance is resuming mergers and acquisitions to expand its geographic presence.
• The company is evaluating a new electronic health record (EHR) system to enhance efficiency.

Financial Results

• LifeStance reported positive free cash flow exceeding $85 million in the previous year.
• Double-digit adjusted EBITDA margins were achieved in Q4, with positive net income reported in Q1.
• The company anticipates low to mid-single-digit rate increases from payer relationships.

Operational Updates

• LifeStance continues to focus on clinical and operational excellence, maintaining a hybrid model of virtual and in-person sessions.
• Key operational milestones include the rollout of a consistent operating model and the completion of a digital patient check-in tool.
• Improvements in cash collections have been noted, contributing to the company’s financial health.

Future Outlook

• The company plans to achieve low double-digit clinician growth annually to meet revenue targets.
• Gross margin performance is expected to improve further, potentially reaching mid-30s due to real estate optimization and efficiencies.
• LifeStance is investing in general and administrative areas to build a scalable platform, leveraging technology for streamlined operations.

Q&A Highlights

• Leadership addressed clinician growth, focusing on balancing new hires with optimizing existing clinicians’ schedules.
• The company is exploring a new EHR system, with a decision anticipated by the end of the year, to support its operational goals.
• Continued investment in technology and infrastructure is aimed at enhancing both clinician and patient experiences.

In conclusion, LifeStance Health Group is poised for strategic growth under its new leadership, with a strong focus on operational efficiency and sustainable expansion. Readers are encouraged to refer to the full conference call transcript for a more detailed understanding.

Full transcript - Goldman Sachs 46th Annual Global Healthcare Conference:

James, Interviewer: All right. Good morning, everyone. We’re gonna get started with our next session. We have LifeStanz and and Dave Borden, CEO and Ryan McGordy, CFO. I I I think both congratulations on the the new roles, and and thanks for joining.

Dave Borden, CEO, LifeStance: Thanks, James. Appreciate you having us.

James, Interviewer: I wanted to start just with the management transition with Ken having transitioned out of the CEO role. You’re taking over CEO. And Ryan, you’re now on board as CFO. Give us a sense of how this impacts FORGE strategy and and how you communicate that down to the business.

Dave Borden, CEO, LifeStance: Yeah. Sure. So there’s a few pieces there. Let me let me talk kind of at a macro level, and then we’ll get into the strategy and the transition. So so of all, for those of you that don’t know Lifestance, we’re the leader in outpatient mental health services, and we’re unique because of a combination of a few things.

The the is our scale. So we have about seven seven and a half thousand clinicians. And we and we do over 8,000,000 visits or sessions a year. The thing is is our hybrid model, and that’s both virtual and in person. And we can do the in person across over 550 locations in 33 states.

The other is is the breadth of our licenses. So we have everything from psychiatrists to therapists and their w two employees. They’re not they’re not ten ninety nine. And then the last thing I’d mention is that, we’re our primary focus is on taking insurance from the payers. So the commercial commercial payers, we do very little in of cash pay.

So we feel like that combination really sets us up to be durable and, and resilient in changing conditions, whether those are economic, changes in patient preferences, regulatory, things like that. So we feel good about that combination, which kinda then goes into our strategy. So the strategy is unchanged. So the the I had a big part in as CFO of setting the strategy for the company, and we’ll we’ll continue to be very focused on clinical excellence, operational excellence, the patient and the clinician experience. And we feel like if we keep that focus, that we will be able to deliver and create long term value for our shareholders.

And so that’s the the strategy. Now there’ll be some nuances, Jamie. Like, for example, as we’re doing that, we’ll we’ve mentioned we’ll start doing m and a. We wanna do that to enter into some new geographies, things like that. But that’s all part of the strategy.

We just paused on it for a little while. And then the the last piece of your your question around the transition, it’s really been seamless. Mentioned, I I’ve been here for two and a half years, and so, it was it was pretty seamless to be able to step from the CFO role into the CEO role. And then having the luxury of Ken Burdick, our previous CEO, stay on as exec chair for a year in in support of myself and the management team and the board. That’s been great.

And then also really fortunate to get this guy, Ryan Rogorti, on board within a couple of weeks after Ken and I announced the transition, and he’s really hit the ground running and has been with us for for a little over a couple of months.

James, Interviewer: Okay. I guess the strategy is stable, but the the life cycle of the company is is is evolving. The last Yeah. The the last two years has really been focused on kind of building this operational foundation. I I guess just what have been some of the key milestones and things that have been put in place and and and how you leverage that, you know, kind of building to the next two to three years going forward?

Dave Borden, CEO, LifeStance: Yeah. And and to your point, the last two and a half years, we shifted from a very much a focus on growth to a more balanced approach of profitable growth, disciplined capital deployment, things like that. And we stopped doing m and a two and a half years ago to really focus on that operational excellence, the simplification, the standardization of the business. And I think of some milestones for us would be we rolled out a consistent operating model across the whole country. So now our clinicians and our front office staff are getting much better support, and it’s consistent no matter which practice you go to.

That’s one. Another one is we completed the rollout of our digital patient check-in tool, which was essential for us as we do 70% of our visits virtually, and we really didn’t have the administrative tools we needed to be able to support those those virtual businesses. And then and then, like, last thing I would I would point out would be the well, I’d say related to that to that digital patient check-in tool is some of the operational processes related to that, like cash collections, and you’re seeing that in a dramatic improvement in our d our DSOs, and then it’s also helped us improve putting cash on the balance sheet. So those are some of the major milestones from an operational perspective. Obviously, those translated into financial milestones as well.

Last year, we saw positive free cash flow for the time with over $85,000,000 of positive free cash flow. In the fourth quarter, we hit double digit adjusted EBITDA margins for the time. And then stepping into this year in the first quarter, not only double digit adjusted EBITDA margins, but our time with positive net income in a quarter for the company. So we feel really good about the work that we’ve been doing. We believe it sets the foundation well for us as we come into the next few years.

There’s still some simplification and standardization that we’ll wanna do. There’s some tool enhancement that we want. And then I mentioned earlier, we are now geographic expansion again.

James, Interviewer: Okay. And and, Ryan, just to bring you in here, if you get introduced to the investor community. I mean, what what should investors understand about what you bring strategically, you know, to the to the role, and what do you have to fix from the, you know, prior CFOs? A lot. Yeah.

Ryan McGordy, CFO, LifeStance: Always tough taking a CFO role where the CFO moves into the CEO chair, so I appreciate you kinda referencing that. So good morning, and thanks for hosting us. So so I’ve been, as Dave mentioned, with the organization for a little over two months, so probably two and a half months. And so, Jamie, to your question in terms of what I bring to the bring to the organization, so starting with that is, and foremost, I have twenty five years of health care experience both on the payer and on the delivery side. So can think of that as fifteen plus in CFO roles.

And so I bring a profitable growth mindset to the organization plus a disciplined capital deployment approach. When you look at just in terms of some of the things that, you know, like, I’ll probably frame it just in terms of, like, things that you wanna I wanna leave my mark on. One would be continuation just in terms of the build that the team has prior to me joining around delivering on the commitments. And then also to as you think about the growth algorithm, we’ve got a lot in front of us just in terms of you know, we’ve stated mid teens, so if you think about long term growth, mid teens revenue growth, and then our EBITDA margins in the 15 to 20% range. And so, again, that’s the things I wanna build from from Dave’s tenure into my tenure in this role.

Okay. Hopefully, that was okay just in terms of how I shifted that. That’s great.

James, Interviewer: Maybe we can go to the the the growth algorithm. I I think in ’23, you grew the clinician base, like, 17%. It was 11% last year, right around 10% in the first quarter. You guys made some comments around reprioritizing filling schedules as opposed to organic hiring. I think there were questions in the market around you know, what you were trying to communicate there.

Maybe just, you know, provide a little more context in in terms of what you’re actually changing and and the degree to which, you know, organic hiring priority is is changing or not.

Ryan McGordy, CFO, LifeStance: Yes, so I’ll start off on that question, and then I’ll let Dave kinda jump in with anything he wants to add on top. So overall, and Jamie referenced this in the question, when you look at our net clinician growth in the first quarter, it was 10%, right? So we added over 150 net new clinicians kind of coming through. So organic clinician growth will continue to be the primary driver. What we’ve been talking about, what we introduced in the last call, was really talking about balancing both new clinician adds with scheduling of our existing clinicians.

And so this runs through the gamut of what you’d expect, like the runs through the practice management gamut. So a lot of things just in terms of that will improve quality, access, scheduling for the clinician. So it should drive a better experience both for the patient and then also for the clinician just in terms of being able to fill schedules overall. So we’ll always look at NET clinics clinician as as, like, primary. But, again, like, we’re introducing this productivity.

We feel feel really good about where we sit with some of the traction that we’re seeing across the initiatives. So, Dave, I don’t if there’s anything you wanna put on No.

James, Interviewer: It was well said. Is there a way to think about, like, on a quarterly basis, we can fill a 150, 200 new schedules per per quarter? Like, what what the, you know, from the demand that you get and and your ability to to match patients with clinicians, just what the right level of kinda quarterly, you know, new schedules you can you can fill. Yeah.

Dave Borden, CEO, LifeStance: I I think of that as it comes down to the balancing act that that we have, and we’ve talked about this in the sense of patient demand and clinician supply. And and and it’s at a very local level. So we’re always balancing that. And it’s tough on a quarterly basis, Jamie, to talk about. I think maybe more on a on an annual basis.

We believe that we’re going to need to grow our clinicians high low double digit on for years to come to be able to achieve our mid teens revenue growth that we that we talk about as a target. Because you you that’s always gonna be the primary growth driver. And then on top of that, you have a little bit of what Ryan was talking about with productivity, with rate, and then some of the growth in the specialty services that kinda gets you the rest of the way. But it’s it’s going to be that roughly year over year double you know, low double digit clinician growth.

James, Interviewer: Okay. So that’s, you know, roughly, I think I think of that as 10 to 12%, which is a little bit higher than, you know, not not much, but a little bit higher than you did in the first quarter. So is is that an organic number? Does that include m and a? And just what are the levers to

Dave Borden, CEO, LifeStance: Yeah. I think of that sustain. Over the long over the long run, it it’ll include m and a. But you’re we’re we have a little bit of a short term dynamic where where we’ve made the decision to focus some extra attention on our existing clinicians’ calendars. As we get those to a more appropriate for from in the lens of their eyes level, then we will get back to normal a kind of a normal cadence or growth level when it comes to the number of clinicians.

So I think of this as more of a we’ll be in the low double digits for years to come. But right now, you’re in a little bit of a short term temporary dislocation as we wanna focus on those existing clinicians. And I and I think that you gotta take a step back. Why are we doing this? And we’re doing this because we’re focused on retaining our existing clinicians.

Obviously, from an economics perspective, it benefits us to have less clinicians working more hours than more clinicians working less hours. That’s less clinicians that we have to give health benefits to and four zero one k match. And we have a lot of staffing models that are driven based on the number of clinicians that we have. So it benefits the clinician, but also benefits us. And the reason I say it benefits the clinician is, as we’re trying to improve the retention of our clinicians, they’re talking to us about their pain points.

And one of the pain points of the existing clinicians was in certain markets is that I’m not I’m not getting as much work as I’d like. And they while they’re w two, they’re fee for service. So they get paid based on the volume they do, and we give them a productivity bonus as well. And so they’re focused on, on getting increases to their patient panels. And so that’s that’s why we’re going through this.

But, again, once you get them to kind of that stabilized level, then they’re gonna want then we’re well, then they’re gonna be in a good spot, and then we’re gonna need to continue to start hiring more new clinicians to be able to drive growth.

James, Interviewer: And you guys have been pretty consistent that the retention, your turnover dynamic has not really changed in the past couple years. Yeah. You know, do do you expect some of these, you know, focusing on pain points to to drive any improvement in that? Have you seen any of it to to date? Just, you know Yeah.

Is there a way to quantify that?

Dave Borden, CEO, LifeStance: Yeah. So we we talk about retention as being stable, and and it has been. And that’s a little bit frustrating for us because we have been making improvements to the value prop with the clinicians, and we haven’t seen it play through yet in improved retention. We still believe that we will see that in the coming years, and, and we do believe there’s upside from from where we are today. And, you know, some of the initiatives that we’ve talked about last year, we moved from monthly payroll for our clinicians to biweekly.

And there was that was an investment for us from a timing perspective around cash because it it took some cash off the balance sheet to be able to accelerate compensation. This year, we rolled out the cash based productivity and quality bonus. That was something they were asking for. They’d some clinicians appreciated the stock productivity bonus. Many just didn’t understand it, and it was multiyear.

There were a lot of aspects to it that they didn’t like, and so they were asking for a different a a different program. And then as we were talking about, they also were asking for better utilization of their calendars. So those are some of the big pain points. As we’re dealing with those, you know, certainly, we hope that that will improve retention. What I always remind is there’s other variables in play, and we’ve done things to make our model more sustainable.

For example, we we are now requiring that a clinician give us what we view as full time hours to be able to get health benefits, matching four zero one k, things like that. There were part time clinicians that were getting those. That was not a satisfier for them. Right? So there’s some things that have been going the other way that have led to retention, you know, or or turnover going the other way.

So it it’s been a bit of a balancing act, but we do believe that with the things that we’re doing that that we will move the needle on retention eventually.

James, Interviewer: And you you talked about improving the value proposition to clinicians and but, you know, it hasn’t translated into to, you know, improved turnover metrics. I guess the other dynamic to bring in is the competitive environment. What what are you seeing? Has that changed at all? Just you know, what what’s the lay of the the the land out there competitively?

Dave Borden, CEO, LifeStance: Right. So, yeah, to your point, we haven’t moved the needle on retention, but we continue to do really well from a recruiting perspective. And that’s really what has powered the growth, from the net clinician adds perspective the last the last couple of years. And we our value prop continues to resonate with, say, three categories of clinicians. The is new hires.

So new licenses, they’re coming out of school. We do really well recruiting them. They like our support structure and and feel like, you know, LifeStance is a great place for them to practice and start their career. The other two would be a clinician who’s in private practice or a small mom and pop shop, typically ten ninety nine or a percent of collections type economic arrangement, and they want they want more w two benefits and more of the stability, and support that life stance offers. And then the category would be clinicians who are salaried today.

And while they like the stability and predictability of the compensation, they do not like the lack of flexibility. Probably have to be in person five days a week. They’ve got rigid hours, things like that. And what we offer them is, hey. You could come to us and work thirty thirty five, forty eight hours a week, but you can do that Monday through Saturday.

You can do that seven in the morning to eight at night. Just get your hours in wherever wherever you’d like. You can work some from home. You can work from the office in a hybrid schedule. And so our value prop continues to resonate with those three buckets.

And the one thing I I’ll close on is around this is that our market share of clinicians is low single digits. And so we we believe we have a lot of runway to be able to continue to grow our clinician base for for years and years to come. I mean, still a very highly fragmented industry with a lot of clinicians primarily cash pay or at least partially cash pay. And then they’re kinda like Uber Lyft drivers where they’re they’ve signed up with some of these practice enablement firms to fill out their marginal capacity. And we believe over time that those clinicians will come into more of our environment, for like the rest of health care.

So we feel really good about our value prop and that there’s still a lot of opportunity, in the hundreds of thousands of clinicians that are out there to be able to, to recruit them to life stands.

James, Interviewer: Okay. That’s helpful. And and just, you know, trying to piece the together the the mid teens top line growth algorithm. We we talked about the the biggest piece, you know, 10 to 12 ish percent coming from clinicians. You know?

So three to four maybe from from price. Just, you know, talk about what the contracting environment, the the demand from the the payer side looks like in terms of their needs to to, you know, create capacity in their networks for behavioral health and, you know, any color on the three to 4%, you know, how how sustainable that is?

Ryan McGordy, CFO, LifeStance: Yes. So overall, a dynamic perspective, I’d start off and say there has not been a lot of near term changes. So we’ve got really good support and relationships with our payer partners overall. You kinda referenced in your question, you know, our expectations once we get through this year is really around low to mid single digits just in terms of what the rate environment should and could look like. And, again, the reference to this year, as we’ve kinda stated on numerous calls, is just one unique payer just in terms of the rate decrease that we’ve taken on on 03/01 of this year is flattening out our total revenue per visit this year, but, again, expected to grow.

The the payers, you know, see an increasing, like, amount of demand, which is good from their employers, so their customers and the members, right, just to have access to high quality, affordable mental health. And that’s where we play a really big role with them. I don’t know, Dave, if there’s anything you wanna add to that.

Dave Borden, CEO, LifeStance: Yeah. I I mean, all that’s right. And there’s still a lot of opportunity for us to partner even more with payers as well. So we’re just scratching the surface on value based contracting. And think of that as you’d still have your normal rates, but getting bonuses for whether it’s access or quality, things like that.

We have some in place. They’re mostly around access. But I I do believe that we are setting the stage with our now with our ability to survey our patients to get updates on their health status and see how that’s moving over time and just a creative or unique payer partnership opportunities with payers because of our scale. So that so there’s more to come on that. But, again, to Ryan’s point, we feel we feel good about that low to mid single digits as, from a year over year rate increase for for years to come.

James, Interviewer: And then, Ryan, just on an underlying basis, are you seeing that low to mid single digits this year ex the the the one payer adjustment? And then just as we think about the cadence this year, can you remind us what that should look like sequentially in 2Q and in the back half of the year from a total revenue per visit

Ryan McGordy, CFO, LifeStance: Yes. So I appreciate the question. So half of the year, so I’ll take the one first. Like, overall, we do have rate assumptions kinda built into our guidance, overall, and we feel good about the assumptions that we’ve baked in. When you think about just how contracting works for us, it’s not like you have this heavy or two one or three one.

They’re kind of spread throughout the year, overall. And so we’ve got a very disciplined and focused approach to our payer contracting strategies and obviously a dedicated team around that overall. When you think about the book, like, in general, like, it’s fair to say when you get outside of the unique payer, we are seeing, like, those types of increases just in terms of the low to mid single digits depending on the geography and the contract and the payer that we’re we’re working with.

James, Interviewer: Okay. And maybe turning to the P and L, and I’ve I’ve asked you guys repeatedly about, you know, kinda your gross margin performance, which has been really strong. And I think there’s probably two big pieces here. One is just the real estate footprint being being a part of it, and then just clinician compensation. Are there any other you know, just the level set.

Are there any other big pieces that kinda factor in here just in terms of the center level cost? Is that

Ryan McGordy, CFO, LifeStance: Oh, yeah. Some yeah. Go ahead.

Dave Borden, CEO, LifeStance: Yes. I mean, from so you name you name the two big ones. Okay. Then the the piece would be our front office staff. So any staff that are dedicated to a specific center, they show up in the center cost.

If you’re a practice group manager, so the manager who sits over three to five centers, that’s now in GNA because they’re not tagged specifically to a center. But, like, you you name those are the Okay. So those are the big three components with, obviously, the clinician comp being the overwhelming majority.

James, Interviewer: Right. So let let’s start there. What what are you seeing in terms of just, you know, compensation expectations, compensation dynamics for for clinicians? Has that, you know, changed at all? And, you know, how should we be thinking about that as we model the forward?

Ryan McGordy, CFO, LifeStance: Yeah. So like, I mean, the dynamic, so it continues to be competitive, right? So competing for clinicians. You know, going back to what Dave referenced earlier, we feel and we’re getting some good traction just as it relates to the new cash based bonus structure in terms of interest in joining the LifeStance team. So it is a fragmented market, it’s competitive, but our value proposition continues to resonate with the clinicians to join the organization overall.

James, Interviewer: Okay. So so no real changes now, Mike?

Ryan McGordy, CFO, LifeStance: Nothing that’s, like, in my mind that is, like, meaningful from a change in expectations around comp expectations on the clinician side. And I think we continue to do external benchmarking. You know, we’ve got a lot of feet on the street, making sure we understand what the dynamics are at a local market everywhere, but nothing in my mind that’s meaningful.

James, Interviewer: Okay. Yeah.

Dave Borden, CEO, LifeStance: Yeah. Go ahead. I would say, yes. Similar so to your point, like, no change probably probably from a a cost expectation or a compensation expectation similar to the dynamics we saw on a year over year basis in ’23 and ’24 playing out in ’25, and we’re not seeing anything different in ’26. Because, again, comp that kind of base comp and then the benefits, that’s a piece of the value prop, but it’s only one.

It’s an important piece, but there’s a lot to the value prop.

James, Interviewer: So, yeah, how how would you decompose? I think you’ve had, like, 460 basis points of gross margin improve or, you know, center center margin improvement over the past two years. Is is that really driven by the real estate footprint optimization? And then, you know, where are we in in terms of that cycle? Is is there more consolidation opportunity?

Or or are you going more in offense in terms of expanding the the the in person side?

Ryan McGordy, CFO, LifeStance: Yeah. So so I’ll I’ll start off on this question. So so you got it right just in terms of that there has been some favorable center margin. Like, if you look at the, you know, last several years, center margin has improved. You have the real estate optimization, you got the rate environment, then you also have just efficiencies that we drive through where Dave went earlier just in terms of the support structure to drive consistency and efficiencies kinda in the business in totality.

So center margins kinda go up. This year, they’re more flat, and it really is because of the rate environment that we talked about. So we expect center margins to kinda increase when you think about ’26 and beyond. You know, that has the potential to go up to that, you know, mid thirties range overall. From a real estate optimization perspective, so that was mostly complete by the end of twenty twenty three.

Now we are always fine tuning our real estate footprint, but the big endeavor is kinda we’re behind that. But, you know, the intent would be and I mentioned this on the front end is to not only you’ve got leveraging opportunity as it relates to your center margin, but you also have it on G and A in totality based off of the infrastructure that we’ve been able to build for scalable growth here. 35% is

James, Interviewer: definitely higher than than than we model on gross margins. Can can can you add a little more in terms of just, you know, how you get there over the next couple of years? You’re at, like, 32% today. You know, is that what what kind of rate environment do you need to get there? Is that 5%?

What what what are some of the assumptions that, you know, would enable you getting to, you know, let’s say, 5%?

Ryan McGordy, CFO, LifeStance: Yeah. To to get to the mid thirties. Yeah. So overall, it’s, you know, kinda going on to low to mid single digit rate growth, which we’ve talked about overall. You’ve got the component of just kinda core leveraging that you have because you got the, you know, the three components that they went through are clinician comp, clinician support, and then your occupancy cost.

The occupancy, you’re able to leverage kinda going forward.

James, Interviewer: In in that cycle and the degree to which you need to kinda keep investing in in some of these support functions to sustain top line growth.

Ryan McGordy, CFO, LifeStance: Yeah. So I’ll start off here. So exactly right. So if you go back through the history, there really hasn’t been the the g and a leverage today and obviously a very deliberate strategy from both Ken and Dave just in terms of kind of building out the foundation to support profitable growth. So some of the investments that were made were around HRIS, you know, credentialing.

I can go through the list just in terms of, like, building block practice management type investments, which we feel really good about. So we we have a very disciplined approach as it relates to, like, investments that we will make. And so when you really think about the unlock is getting some leveraging out of your g and a line as you kinda move through this year. So ’25, you don’t really see it. But in ’26 and beyond, you’ll start to see the leveraging come through.

James, Interviewer: And and, Dave, thinking back, I mean, you you’re, you know, part of the the team making these investments. Would you characterize it as, like, stuff that just wasn’t invested in to sufficiently before? Or or was this more offensive and building, you know, kind of a a more scalable platform going forward?

Dave Borden, CEO, LifeStance: See, it’s a it’s a it’s a blend of both. So for on the on the stuff part of your of your comment, you know, we didn’t have a payer engagement team. And you’re like, well, jeez. Get know, engaging with the payers and getting rate increases is that’s just core to a pro a big provider practice. That’s just normal business.

And we we didn’t we didn’t have that. And, again, we were so focused on just growth and acquisitions that we just didn’t have those kinds of things. And then you get into the tools and investments like the digital patient check-in tool. That’s a game changer for us. And so those are you know, those were in those were new capabilities that we didn’t have any anything for, and it was just a gap.

Now the the other thing that I would point to when we think about G and A and leverage in the future is everything Ryan said spot on. And today, we’re incredibly inefficient. So we have very little use of technology, whether that’s AI or RPA or whatever the case may be. We do a very little of that. And so over the in recent years, we’ve thrown bodies at solving problems.

And so, sure, we’re gonna make other investments in the business in the future, but we’ll have that operating leverage. And we’re gonna have some opportunities to get a lot more efficient now that we’ve standardized, simplified, gotten on to the same EMR, things like that. And we had a new tech chief technology officer start yesterday, and that’s been a big part of his career is driving those kinds of kinda operational excellence initiatives.

James, Interviewer: Has he implemented an EHR yet? Many many times. Many many times. I I meant for you guys. And then no.

But but but in in all seriousness, so I where are you guys in sort of a valued in the EHR process? I mean, you guys described being in the discovery process here in the call. Obviously, this has the potential to be a very significant investment. How should we think about where you’re at and you know, how big that investment could potentially be?

Ryan McGordy, CFO, LifeStance: Yeah. So so appreciate this one too. So, look, we’re looking for a solution for the medium and long term. And so, you know, within the consideration set is staying with our existing vendor from a EHR perspective. And, again, we’re have a very good evaluation process that we put in place.

Really, it’s about clinician experience, patient experience, operational efficiencies, and kind of pulling those all through. We are really early in the, as you framed it, discovery process on that. So we expect to kind of pull through the decisioning by the end of this year, very deliberate process that we’re undertaking. And so it’s too easy too early, excuse me, to put a financial frame to it yet, but we’ll look forward to providing updates of this as we get later in the year.

James, Interviewer: Okay. And on EBITDA margin, I can’t remember when you laid out the target of 10% exiting 2025. You obviously hit that ahead of schedule. How should we think about puts and takes to EBITDA margin this year and the degree to which you can continue kind of sustainably growing EBITDA margin?

Ryan McGordy, CFO, LifeStance: Yes. So overall, like the puts and takes, obviously, we’re pleased with the the delivery of EBITDA in terms of what we’ve done q four, q one. If you kinda look at back half versus front half, you know, the the key kinda levers to delivering would be around new clinician adds, productivity, and then execution on the half of the year rate, all, you know, items where we feel we have line of sight to. But then, please, as you get it through ’25 and a ’26, as we’ve kinda referenced a couple times, being able to expand out those margins higher.

James, Interviewer: Okay. And and, you know, I get, trying to tie this all together here in the last minute or You talked about mid-30s gross margin, which would be roughly 300 basis points of margin expansion. I think you mentioned at the start, 15% to 20% EBITDA margin long longer term. So the balance, 200 to something higher from from a g and a perspective, is that the right long term framework? And then how would you kind of, from a timing perspective, set expectations around that 15 to 20?

Ryan McGordy, CFO, LifeStance: Yeah. So so the I mean, the aligned with the the way, you know, the the frame was pulled through. You know, in in regard to timing, like, we use this as kinda setting the direction for how the business, you know, will be performing, you know, like we we we expect in the future versus really laying out specific, like, milestones and dates at this point. I don’t know, Dave, if you wanna close with something.

Dave Borden, CEO, LifeStance: No. It’s well well said. And I I wouldn’t so I wouldn’t and I wouldn’t go 35% center. I would probably say it’s more in the mid thirties. Okay.

So there’s a little bit of flexibility there, but you’re doing your math right in regards to thinking about the bulk of the margin expansion as we get to that 15% to 20% will come from operating leverage on the G and A line. Okay.

James, Interviewer: Great. Well, with that, I think we can end there. And thank you both so much for joining.

Dave Borden, CEO, LifeStance: We really appreciate the time. Yeah.

Ryan McGordy, CFO, LifeStance: Thank you. Thanks very much.

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