Lifestance Health Looks to National Expansion, Execs Raise a Caution and Focus on Clinician Retention

LifeStance Health Group Inc. has more than doubled its provider count and geographic reach over the 18 months and is showing no signs of slowing down.

And the company’s leadership issued a bold prediction about the outcome of its growth efforts.

“We won’t stop until every person in the United States is one click or call away from a LifeStance Health clinician,” Danish Qureshi, co-founder and chief growth officer of LifeStance Health, said in the company’s third-quarter earnings conference call on Monday. 


As of the end of September, the Scottsdale, Arizona-based hybrid mental health care provider employed about 4,375 clinicians. In April 2020, it employed about 2,000.

During the same period, the company has seen its footprint grow from 200 locations in 15 states to about 500 locations in 31 states.

In total, the company employs about 6,000 people. Founded in 2017, LifeStance is one of the nation’s largest outpatient mental health providers, offering a combination of in-person and telehealth services to adults, adolescents and children.


However, the executives on the call also disclosed something that could trip up the company’s growth.

Citing several stats and facts about the impact of the coronavirus on the American workforce, CEO Michael Lester told analysts and investors that LifeStance ramped up engagement with clinicians to tamp down on clinician compassion fatigue and burnout and, as a possible result, turnover.

Pre-COVID, LifeStance’s clinician retention rate stood at over 87%. During COVID, retention has stabilized and stands at an annualized 80%. That’s where the company hopes it will stay as it moves to sandbag against the prevailing torrents in the workforce market.

How LifeStance has grown during the third quarter

The company was founded in 2017 and went public in June 2021, making Monday’s earnings call just its second as a publicly traded company.

Quarterly revenue came in at $174 million, a 70% annual increase, in the third quarter, according to a news release from the company. The revenue for the company has increased as it has added new clinicians.

During the same period, LifStance added, on net, about 400 new clinicians. Year over year, the company had about 72% more providers in the third quarter.

It also added 29 de novo health care centers and six “tuck in” acquisitions. While not mentioned specifically on the call, Behavioral Health Business reported that LifeStance acquired Seattle-based Acuity Counseling.

LifeStance expanded into five new states as well.

“Turning to the market environment we believe that patient demand for mental health services has never been greater,” Lester said. “As we’re looking at the market and our environment, we see so much opportunity and room for growth in front of us — in a market that is growing mid-double digits and a societal need for mental health care that continues to get more recognition and less stigmatization.”

The company continues to invest in its built-in-house technology platform. At the moment, the company is focused on improving its booking and intake process for both providers and patients. It’s also trying to streamline the clinician matching process.

“We believe in a future where patients receive a unified experience across all channels, regardless of how they choose to receive care with us, and a consistent experience for our clinicians as they flex back and forth between in-person and virtual care,” Qureshi said, adding that the company has bright hopes for its value-based care work and work in integrated care.

Qureshi said the company’s growth strategy has three major directives: expanding into new markets, building market density, and deploying its digital tools.

The company’s loss from operations was $124.7 million, primarily driven by stock and unit-based compensation of $120.7 million. Net loss was $120.5 million. On an adjusted basis, EBITDA came in at $10.7 million, down 29% from a year ago.

Lester touted the company’s $212 million in cash and equivalents on the company’s balance sheet. It also carries $157 million in long-term debt. 

At the end of trading on Tuesday, the company’s stock price dipped by 24% to $9.72.

Retaining clinicians a serious priority

LifeStance has not been immune to many of the pressures that have vexed the health care sector.

Lester noted that 2020 saw an incredible increase in demand for mental health services and that the health care sector has seen an elevated number of resignations. Federal jobs numbers show that total separations in health care were up by 9.4% in August compared to a year ago.

The National Council for Mental Wellbeing also found in September that 82% of mental health providers had a hard time retaining employees and 97% found it hard to recruit employees.

“Over the past quarter, we have escalated focus on our clinician value proposition, with special attention to engaging with our clinicians on a regular and systematic basis, and leaning into our values of delivering compassion, building relationships and celebrating difference,” Lester said. “The culture and community we build with our clinicians is what it really matters, especially in a high turnover labor market.”

This increased engagement has resulted in LifeStance identifying clinicians at-risk of turnover. To address compassion fatigue, the company engages clinicians through a national clinic team that provides peer-to-peer support. All clinicians have routine contact on a one-on-one basis with “champions” to give chances to be heard.

The company will also begin an equity incentive program for eligible employees, including clinicians, starting in 2022. For clinicians, the stock grants will be tied to productivity. The company will become more attractive to new clinicians and be seen as a positive by existing clinicians, Lester said.

Many clinicians have told the company that they appreciate the flexibility afforded by the company to help buoy their mental health, Lester said. More clinicians are expecting to take more time off than normal around the holidays — so much so that the company has advised that full-year revenue will be on the lower side of its annual guidance of $668 million to $678 million.

“Supporting the well-being of our clinicians will create greater opportunities to recruit and retain talent into the future and ultimately lead to a happier, more productive workforce over the long term,” Lester said.

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