Three-Quarters of LifeStance’s Business Is Virtual, Fueling Additional Office Closures

LifeStance Health Group Inc. (Nasdaq: LFST) is on track to close more offices than it previously announced as its business remains mostly virtual.

On Wednesday, Danish Qureshi, company president and chief operating officer, said that virtual visits accounted for 73% of all visits across LifeStance in the second quarter and 75% in the first quarter. LifeStance will further slow its new office expansion as it pushes for profitability.

“While we still have a lot of work to do and are just two quarters into a two-year transformation process, the energy and enthusiasm of the team are palpable and inspiring,” Qureshi said on the company’s second-quarter earnings call.


In the first half of the year, LifeStance closed 36 offices and consolidated its business in other locations. The company previously said it would close 30 to 40 offices by the end of 2023.

Qureshi said LifeStance had already identified the centers it would close late in the year and would provide more information by the quarterly earnings call; he didn’t say how many offices LifeStance will consider for closure.

The core determinant for the previous round of office closures and the upcoming round of closures will be the utilization of the offices for in-person visits. The now-concluded round of closures also considered the quality of the office space and its proximity to other offices. The coming round will focus more on in-person utilization, Qureshi said.


In terms of new offices, LifeStance will open no more than 36 new offices in 2023, down from its previous projections of 40 to 45. Qureshi said to also expect fewer new offices in 2024.

LifeStance is now two quarters into a two-year quest to streamline its business and push for profitability. It expects to have double-digit margin percentages by the end of 2025. 

LifeStance was previously a consolidation platform for several private equity firms. It was previously owned by TPG Capital, Summit Partners and Silversmith Capital Partners before it went public. The resulting operations have been cumbersome and included “100 phone systems” and “dozens of EHRs,” Qureshi said.

All of these operational quirks were the result of dozens of acquisitions with little integration while LifeStance grew to what it is today. At the end of 2022, the company had completed 90 acquisitions, according to its public filings.

In the second quarter, the company beat revenue expectations but missed profitability by hauling in $259.6 million and a net loss of $0.13 per share. Those financial measures are up 24% and down 34%, respectively, year over year. 

Incremental progress on optimizing the company’s operations includes getting all 600 or so centers on one electronic health record (EHR), phone system and email system.

The company has also completed a culling of payer contracts. On the first quarter call, Burdick said it would nix 30% of its payer contracts. That effort wrapped on July 1, Burdick said on Wednesday, adding that the move had an immaterial impact on patient access but lessened the company’s administrative burden.

What growth the company has and will experience will be organic and focused heavily on the net growth of its clinician group and clinician productivity. Year-over-year, LifeStance grew its clinician group by 17%, up to 6,132.

This provider group growth helped to boost the company’s revenue growth. Further, improved clinical efficiency led to higher-than-expected visit volume, CFO Dave Borden said.

Visit volumes totaled about 1.7 million in the second quarter, up about 21% year over year.

The company has also rolled out a care outcomes tracking initiative. LifeStance will send all new patients digital outcomes assessments and follow-up assessments as needed, CEO Ken Burdick said.

“Over time, this new capability will allow us to develop an unprecedented level of clinical efficacy data. This data will be invaluable for improving patient care,” Burdick said. “It will also support our continued advancement toward value-based care arrangements with our payer partners.”

While Burdick noted the unique combination of the company’s scale and outcomes measuring capabilities, LifeStance presently has few value-based care contracts; those contracts are focused on access and quality rather than capitation or risk models.

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