Behavioral health provider LifeStance (Nasdaq: LFST) is cutting organizational fat and doubling down on its modernization efforts.
Specifically, the provider continues to slim down its payer contracts by terminating agreements with 30% of its existing payers while also consolidating its brick-and-mortar facilities. Instead, the company is putting its efforts toward an EHR discovery initiative with the goal of evaluating a range of options by the end of this year and growing its online booking system.
This comes as LifeStance reported a net loss of $34.2 million in its first quarter, which exceeded Wall Street expectations, according to Zacks Investment Research. Overall, the company reported Q1 revenue of $252.5 million, a 24% year-over-year increase. It projects being cash-flow positive by 2025.
As part of its reduction efforts, LifeStance is sending termination notifications to payers, ending 140 contracts in total, a slightly larger percentage of contracts than was previously reported.
“Terminating these contracts will have an immaterial impact on visit volume,” Kenneth Burdick, LifeStance CEO, said Wednesday during the company’s Q1 earnings call. “But it will have a material impact on efficiency for our credentialing, intake and revenue cycle management teams.”
National payers represent a significant percentage of LifeStance’s patient volume, Burdick noted. But after the first dozen or so, that drops substantially.
The contracts that LifeStance is terminating have less than a 1% impact on total visits, the CEO said.
Likewise, the provider plans to consolidate 30 to 40 centers. This, too, will have little or no disruption on patients and clients, according to Burdick.
In previous earnings calls, Burdick said LifeStance will slow its M&A efforts and opt for more organic growth. Still, in Q1, the company appeared to have an even breakdown, with three de novo openings and three acquisitions.
LifeStance is focusing its efforts on investing in several operation updates.
It has signed agreements with two vendors to implement a human resources information system to help manage the company’s more than 8,000 employees. It is also beginning an EHR discovery initiative.
LifeStance has continued to modernize through its online booking and intake experience (OBIE) system. Patients can now use the OBIE in 26 states.
“We remain on pace for a full national rollout by mid-year,” Danish J. Qureshi, president and COO at LifeStance, said on the call. “These online and offline efforts have led to further progress at the middle of the [patient] funnel.”
Integration of care
LifeStance also appears to be increasing its focus on integrated health.
During the earnings call, Burdick announced a new partnership focused on caring for patients experiencing menopause, for instance.
“We are committed to partnerships that support our vision of a truly healthy society where mental and physical health care are unified,” Burdick said. “In alignment with this vision, we are excited to announce that LifeStance has partnered with Gennev, a Unified Women’s Health Care subsidiary, that utilizes a team of doctors and dietitians in all 50 states to offer a personalized care plan for women in menopause.”
Gennev providers and LifeStance clinicians will work closely as a collaborative care team to help provide care for patients using a whole-person approach to menopause, Burdick said.
While he solidified that integrated care is a part of LifeStance’s future, he said it’s too early to tell how this partnership relates to its value-based pilots.