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Earnings call: LifeStance Health outperforms in Q1; raises full-year guidance

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LifeStance Health, a leading provider of outpatient mental health services, has reported a robust first quarter for 2024, surpassing market expectations for the sixth consecutive time. The company announced a significant 19% increase in revenue, reaching $300 million, and a notable 174% rise in adjusted EBITDA to $28 million.

Moreover, LifeStance Health has raised its full-year adjusted EBITDA outlook, reflecting confidence in its continued growth. Despite the departure of COO Danish Qureshi and a temporary setback due to a cyber attack on Change Healthcare (NASDAQ:), the company maintains a positive outlook with strong patient satisfaction scores and clinician growth.

Key Takeaways

  • LifeStance Health reports a 19% revenue increase to $300 million and a 174% adjusted EBITDA increase to $28 million.
  • The company raised its full-year adjusted EBITDA guidance, reflecting strong performance and confidence in future growth.
  • 221 net new clinicians were added, marking a 15% organic growth.
  • Patient satisfaction remains high with a Net Promoter Score of 84 and an average Google (NASDAQ:) review of 4.5.
  • COO Danish Qureshi has decided to leave after seven years of service.
  • Despite a cyber attack impacting cash collections, LifeStance expects to resolve the issue by the second quarter and deliver positive free cash flow in 2024.
  • The company anticipates a revenue outlook for 2024 to remain steady at $1.190 billion to $1.240 billion and has increased its center margin and adjusted EBITDA projections.
  • LifeStance aims to achieve double-digit margins by the end of 2025.

Company Outlook

  • LifeStance maintains its full-year revenue range of $1.190 billion to $1.240 billion.
  • The center margin range has been raised by $8 million at the midpoint to $353 million to $373 million.
  • Adjusted EBITDA range increased by $8 million at the midpoint to $88 million to $98 million.
  • The company expects total revenue per visit to grow by low single digits throughout the year.
  • LifeStance anticipates a different earnings progression in 2024 compared to 2023, with the second half of the year potentially impacted by a rate decrease from one payer.
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Bearish Highlights

  • LifeStance reported a negative free cash flow of $27 million in the first quarter.
  • The cyber attack on Change Healthcare led to a disruption in cash collections, with a net impact of approximately $18 million.

Bullish Highlights

  • The company has successfully absorbed the impact of reimbursement delays and remains confident in its financial health.
  • LifeStance has additional debt capacity and does not plan to raise additional debt or equity.
  • Plans to finish the year with net leverage below 2.5x.
  • Expects to exit 2025 with double-digit margins.

Misses

  • Despite overall positive performance, the negative free cash flow in the first quarter reflects challenges in cash collections due to external factors.

Q&A Highlights

  • CEO Ken Burdick discussed the ongoing payer contract renegotiations, emphasizing comprehensive and strategic discussions rather than set timelines.
  • Burdick highlighted the company’s strong net clinician adds in Q1, stable retention, and robust recruiting engine.
  • The CEO expressed confidence in the company’s ability to navigate challenges, improve back-end operations, and increase access to affordable mental health care.

LifeStance Health (ticker: LFST) remains focused on its mission to provide accessible and affordable mental health care services. Despite the temporary cash collection issues and the change in COO leadership, the company is poised for continued growth and positive financial performance in the coming year.

InvestingPro Insights

LifeStance Health (ticker: LFST) has demonstrated a strong start to 2024 with impressive revenue and adjusted EBITDA figures. For investors considering this stock, InvestingPro offers additional insights to aid in making an informed decision.

InvestingPro Data shows a market capitalization of $2.62 billion, which reflects the company’s scale in the outpatient mental health service sector. Despite the positive revenue growth of 21.39% over the last twelve months as of Q1 2024, analysts have concerns about profitability. The company’s P/E ratio stands at -14.71, indicating that it is not currently generating net earnings positive to its share price. Additionally, LFST did not pay a dividend to shareholders, which is a consideration for income-focused investors.

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From a performance standpoint, LFST has seen a strong return over the last month, with a 13.39% price total return. This suggests that the market is responding well to the company’s recent developments and growth prospects.

InvestingPro Tips highlight that analysts do not expect LFST to be profitable this year, and it has not been profitable over the last twelve months. However, the recent surge in the company’s stock price could be indicative of investor confidence in its growth trajectory and strategic initiatives.

For those interested in further analysis and additional InvestingPro Tips, consider exploring the full suite of insights available at https://www.investing.com/pro/LFST. Currently, there are 3 more tips listed, which could offer a deeper understanding of LFST’s potential and risks. Remember to use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

Full transcript – Lifestance Health Group Inc (LFST) Q1 2024:

Operator: Thank you for standing by. My name is Alex, and I will be your conference operator today. At this time, I would like to welcome everyone to the LifeStance Health First Quarter 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Monica Prokocki, Vice President of Investor Relations. Please go ahead.

Monica Prokocki: Thank you, operator. Good morning, everyone, and welcome to LifeStance Health’s First Quarter 2024 Earnings Conference Call. I’m Monica Prokocki, Vice President of Investor Relations. Joining me today are: Ken Burdick, Chief Executive Officer; Dave Bourdon, Chief Financial Officer; and Danish Qureshi, Chief Operating Officer. We issued the earnings release and presentation before the market opened this morning. Those are available on the Investor Relations section of our website, investor.lifestance.com. In addition, a replay of this conference call will be available following the call. Before turning the call over to management for their prepared remarks, please direct your attention to the disclaimers about forward-looking statements included in the earnings press release and SEC filings. Today’s remarks contain forward-looking statements, including statements about our financial performance outlook, business model and strategy. Those statements involve risks, uncertainties and other factors as noted in our periodic filings with the SEC that could cause actual results to differ materially. In addition, please note that we report results using non-GAAP financial measures, which we believe provide additional information for investors to help facilitate comparison of current and past performance. A reconciliation to the most directly comparable GAAP measures is included in the earnings press release tables and presentation appendix. Unless otherwise noted, all results are compared to the comparable period in the prior year. At this time, I’ll turn the call over to Ken Burdick, CEO of LifeStance. Ken?

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Ken Burdick: Thanks, Monica. And thank you all for joining us today. In the first quarter, we once again beat on all of our guided metrics, making this the sixth consecutive quarter that LifeStance has met or exceeded expectations. We delivered strong financial performance with revenue growth of 19% to $300 million and adjusted EBITDA up 174% to $28 million. We are also raising full year adjusted EBITDA guidance based on the strength of the quarter. Our clinician value proposition continues to resonate with 221 net clinician adds in the quarter, representing 15% entirely organic growth in our clinician base. Our patient experience continues to receive outstanding scores with a patient Net Promoter Score of 84 and average Google reviews across LifeStance centers at 4.5 out of 5 stars. Before covering our strategic and operational highlights, I would like to share the news that Danish has reached the difficult decision to leave LifeStance. Knowing this was not an easy decision, I’d like to give Danish the opportunity to directly share his thoughts with all of you.

Danish Qureshi: Thank you, Ken. In March, we celebrated the 7-year anniversary of the founding of LifeStance. That’s given me the chance to reflect on all that we have achieved over the years in service of our mission of increasing access to affordable mental health care. As one of the founders of LifeStance, it’s been a remarkable journey as we’ve grown the company from our first practice group of approximately 100 clinicians in Ohio to almost 7,000 clinicians across 33 states, touching the lives of millions of patients for the better all along the way. It’s been one of the great joys of my life to have contributed to those achievements. Two years ago, it became clear that we needed to make the shift from a high-growth startup to a scaled public company. At that time, I stepped into the role of President and COO with a goal of solidifying the foundation of the business, rebuilding and upskilling our operations leadership team and moving us to a performance-driven organization. I am so proud of all that we’ve accomplished since then. And I’m particularly proud of the strength of the operations leadership team we’ve built, no better demonstrated than by our delivering 6 sequential quarters of meeting and exceeding our financial commitments. Having enjoyed the privilege of building LifeStance since its founding and having spent the last 2 years turning LifeStance into a high-performing and stable public company, for me, now is the right time to step away and take on my next challenge. As an entrepreneur and builder at heart, I have the desire and drive to make a similar impact on other parts of the health care ecosystem as I’ve had the privilege of doing so here at LifeStance. This has not been an easy decision, and I want to thank all of those who have helped me as I thought this through over the previous months. I will continue to operate in my current role through the end of June. However, many of the changes needed to ensure a smooth transition have been put into place over the course of the last 2 years as we have built out our leadership bench strength and worked together to solidify our foundation. While I’m excited about my next chapter, I have never felt more confident in the future of LifeStance, and I look forward to seeing all that the team achieves over the coming years. With that, I’ll pass it back to Ken.

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Ken Burdick: Thank you, Danish. I’ve appreciated Danish’s contributions and have enjoyed the partnership that we’ve developed. He has made an extraordinary impact on the organization over the past 7 years. I am grateful that he has engaged in these conversations with myself and the Board to ensure a smooth transition through his final day. I know that I speak for the entire leadership team when I express profound appreciation for his contribution to LifeStance and a genuine desire for his continued success in the next chapter of his career. As Danish referenced, LifeStance is well positioned to continue our exciting journey of expanding access to high-quality, affordable mental health care. We have made strong progress on improving our operations and strengthening our team. To ensure a smooth transition, several of our leaders have already stepped into increased responsibility for which they are well prepared and most deserving. My conviction is stronger than ever regarding the ability of LifeStance’s unique business model to address the challenges that have long existed within the industry. We see the benefits of our model play out through an exceptional patient experience, continued clinician growth and our ability to navigate industry challenges in ways that positively differentiate us from other mental health companies. The recent cyber attack on Change Healthcare offers a tangible proof point of LifeStance’s differentiation and resilience. While Change Healthcare’s systems were down, many mental health provider groups experienced unprecedented financial distress due to their inability to process claims and receive reimbursement, which, in many cases, affected their ability to pay their clinicians for the services they provided. Our clinicians are W-2 employed and paid on a fee-for-service basis with guaranteed rate schedules. Thanks to our scale and flexibility, we have been able to absorb 100% of the impact of reimbursement delays without financial disruption to our clinicians. Additionally, we have been able to achieve this without the need to raise debt or equity capital. And as Dave will touch on shortly, we remain on track to be free cash flow positive for the full year of 2024. Shifting to payer strategy. We have previously stated that we are becoming more assertive in demanding appropriate reimbursement and terms for our services. Overall, we’ve been successful in these efforts as evidenced by the 4% year-over-year increase we saw in total revenue per visit in the first quarter. This was driven by the positive outcomes of several contract negotiations in late 2023 and early 2024. Our increased engagement has translated into improved reimbursement from payers. However, we had a single outlier with historically above-market rates who negotiated reimbursement that will now bring them in line with our overall book of business. This will create short-term downward pressure on total revenue per visit for the back half of 2024 and the first part of 2025. Importantly, this both derisks our overall portfolio and has already been contemplated in our 2024 guidance raise. This is another demonstration of our resilience and ability to deliver on our commitments. We continue to expect total revenue per visit to increase by low single digits for the year. And in the medium and longer term, we continue to see meaningful upside opportunity to increase the level of reimbursement with payers. With our unique outpatient and in-network business model, we provide both patients and our payer partners with an affordable option for increasing access to much-needed mental health care services. Before closing, I am pleased to announce that we welcomed Dr. Teresa DeLuca to our Board of Directors. She is a psychiatrist and accomplished physician executive with over 20 years of leadership experience in health care operations and clinical management. I am confident that Teresa will be a great addition to the LifeStance Board. With that, I’ll turn it over to Dave to provide additional commentary on our financial performance and outlook. Dave?

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Dave Bourdon: Thanks, Ken. Like Ken, I’m pleased with the team’s operational and financial performance in the first quarter. We delivered solid top line results with revenue of $300 million, representing growth of 19% year-over-year. The outperformance was primarily driven by higher total revenue per visit and increased visit volumes. Both were modestly above our expectations. Visit volumes of 1.9 million increased 15% year-over-year, primarily driven by higher organic clinician growth. In the first quarter, we added 221 net clinicians, which was above our expectations. This brings our total clinician base to 6,866 clinicians, representing growth of 15% year-over-year. While we do not guide on clinician count, I want to highlight that we expect net clinician adds in the second quarter to be meaningfully lower than the first quarter, which is similar to the dynamic we saw last year with the trend reversing later in the year. Clinician productivity was in line with our expectations in the first quarter with the timing of holidays and spring breaks impacting clinician capacity. Total revenue per visit increased by 4% year-over-year to $157, primarily driven by payer rate increases. Regarding profitability, the better-than-expected top line results flowed through to center margin. Center margin of $95 million in the quarter increased by 36% year-over-year. And center margin as a percentage of revenue grew nearly 4 points to 31.5%. The year-over-year improvement was primarily due to higher total revenue per visit and operating leverage and center costs, mainly driven by real estate optimization. Outperformance in the quarter was driven by favorable spending and, to a lesser extent, higher total revenue per visit. Adjusted EBITDA of $28 million in the quarter was very strong and outperformed our expectations, increasing 174% year-over-year. Adjusted EBITDA as a percentage of revenue grew over 5 points to 9.2%. The outperformance in adjusted EBITDA is attributable to the improvement in center margin. Turning to liquidity. In the first quarter, free cash flow was negative $27 million. We exited the quarter with $49 million in cash and net long-term debt of $280 million. As Ken touched on, we did see a temporary disruption to our cash collections from the cyber attack on Change Healthcare. This resulted in a net impact of approximately $18 million comprised of delayed cash collections, partially offset by stronger cash management. DSO increased to 53 days in the quarter with the impact from Change being approximately 9 days. The impact from Change is expected to be a timing issue that will largely resolve itself in the second quarter. We are already seeing progress with improved DSO in April and anticipate that DSO will revert back to normal later this year. As a result of this, we remain confident in our commitment to deliver positive free cash flow in 2024. We also have additional debt capacity from a delayed draw term loan of $8 million as well as a $50 million revolving debt facility, providing us with sufficient financial flexibility and have no intention of raising additional debt or equity. We continue to see improvement in our leverage ratios with net leverage improving sequentially over 40 basis points to 3.1x. We remain confident that we will finish the year with net leverage below 2.5x. In terms of our outlook for 2024, we are maintaining our full year revenue range of $1.190 billion to $1.240 billion. We feel good about the improved margin performance of the business and are raising the center margin range by $8 million at the midpoint to $353 million to $373 million and the adjusted EBITDA range by $8 million at the midpoint to $88 million to $98 million. We continue to expect earnings to have a different quarterly progression compared to 2023, which was more weighted to the back half, whereas this year, we will be more weighted to the front half of the year. As Ken noted, we will see a negative impact on total revenue per visit in the second half as a result of a rate decrease from one payer, partially offset by increases from others. We continue to expect total revenue per visit to increase by low single digits for the year. In the medium and longer term, we continue to see meaningful upside opportunity to increase the level of reimbursement with payers and remain confident in our commitment to exit 2025 at double-digit margins. For the second quarter, we expect revenue of $297 million to $315 million; center margin of $85 million to $97 million; and adjusted EBITDA of $20 million to $26 million. With that, I’ll turn it back to Ken for his closing remarks.

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Ken Burdick: Thank you, Dave. In closing, I am proud of the results achieved by our clinicians and team members this quarter. We delivered strong organic revenue growth while executing on our commitment to deliver year-over-year operating leverage and margin expansion. I’d like to once again thank Danish for his contributions to LifeStance, and wish him well on his career journey. While we are sad to see him go, we are well positioned to continue delivering on our mission of expanding access to high-quality, affordable mental health care. While I recognize that we still have a great deal of work ahead in 2024 and beyond, I am encouraged by the momentum we are building toward our stated commitments of positive free cash flow in 2024, growing revenue at mid-teens through 2025 and exiting 2025 with double-digit margins. As a country, we have underfunded mental health care and underserved millions of individuals for far too long. Our team at LifeStance will continue to work tirelessly to address these challenges until mental health parity is a reality. Operator, we’re now ready for questions.

Operator: [Operator Instructions] And your first question comes from the line of Craig Hettenbach with Morgan Stanley.

Craig Hettenbach: I wanted to touch on the better-than-expected center margin EBITDA. Ken, when you joined, there was a focus, an increased emphasis on kind of building a foundation, increased investments in the business. And it looks like that’s starting to translate. So would love to get your take on just operating leverage in the model as you see it and kind of how you see that path to 10% margins exiting next year.

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Ken Burdick: Sure. Thanks for the question, Craig. You’re right. I think we are encouraged by the operating leverage that we’re beginning to experience. I would also highlight that we had some delayed expense that contributed to an outperformance and also that, as I’ve shared before, this is sort of a 2-year journey of rebuilding and strengthening the foundation, improving the processes. So I would view this as initial progress and some demonstration of the benefit. But my view is we’re sort of 5 quarters into what’s likely going to be an 8 or 9 quarter improvement in our operating efficiency and, therefore, operating leverage.

Craig Hettenbach: Got it. And then just as a follow-up, I wanted to touch on just capacity and just any update. There’s efforts to improve capacity by moving clinicians more towards full-time arrangements. So kind of where things stand there and what that could mean over the next 12 to 18 months?

Danish Qureshi: Craig, this is Danish. I can answer that. So like we discussed on last quarter’s earnings call, because of all the work that we put into — on the utilization side of the productivity equation, we have begun our shift towards the capacity side. A lot of those plans have just started to get underway in Q1, so it’s early days. And we’re hoping that, that will start to play out in a more meaningful way throughout the course of the year. But as a reminder, we have not, in our guidance, included any assumptions around improvements in productivity. So again, early days around capacity, and we’ll continue to provide updates as they make sense.

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Operator: [Operator Instructions] Your next question comes from the line of Lisa Gill with JPMorgan.

Lisa Gill: First off, Danish, I wanted to say I wish you the best in your next endeavor. It was nice getting to know you. And for my question, Ken, I want to understand, when we think about the payer strategy, you talked about the single outlier that’s now in line. Can you maybe just talk about was that a really unusual contract that was signed? Like I just want to better understand why it was an outlier. And then secondly, when we think about the new contracts that are being signed, is there anything that’s changing in the contracting? I agree with you how important mental health is and the lack of mental health providers we have. So I was just a little surprised to hear that there is this one outlier. I just want to better understand that.

Ken Burdick: Sure. Thanks for the question. It really was. It was a historic outlier and meaningfully higher than sort of the portfolio of contracts that we had. And it goes back several years. We would have loved for it to continue. But we always knew that there was a possibility that through negotiations, it would come back to sort of where the overall market is for us. So it truly was unique. And we are being paid, as I say, consistent with the rest of our payer community. We will continue to look for upgrades because it’s not identical. One of the things that we feel is that everyone should pay their fair share. And so we continue to work on that. As it relates to sort of the demand/supply, what’s really important to remember is that employers are really demanding better access for their employees and their employees’ dependents. And because of that fact, we have constructive discussions and negotiations with payers. And while I would love to see us move into more value-based contracting, I would say right now, we’re in the very, very early stages of that. And you’ll see and hear more about that in the years to come. But there’s really no major change other than the drumbeat from employers for greater access.

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Operator: Next question comes from the line of Ryan Daniels with William Blair.

Jack Senft: This is Jack Senft on for Ryan Daniels. Congrats on the quarter. I just want to go back to basically the same line of questions. For the payer outlier that had the above-market rate, can you just talk just a little bit more about it? I’m assuming that this is the payer that had significant volume, given the near-term impact. So is there any way to kind of quantify the impact or, I guess, how we should think about the impact? I understand the downward pressure, but just curious if you can dive a little bit deeper into that.

Ken Burdick: Yes. We’re going to resist the temptation to get very specific about any one single payer negotiation. As you can appreciate, whether it’s, in this case, going down or in many — in most other cases, going up, it doesn’t behoove us to get into the specific details of any one single negotiation. So I can confirm that, yes, it’s a national payer with significant volume, which is why we thought it was important in this call to share that while we had an outstanding first quarter, we want to be sure people, as they do their modeling, don’t just extrapolate from the first quarter, multiply it by 4 and say, “Okay, you’re on your way to an unbelievable beat.” We had a great beat in the first quarter. And what we’re trying to project in both our prepared remarks and during the Q&A is we expect that the rest of the year will play out and consistent with our original commitments and the budget that we have committed to.

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Jack Senft: Okay, understood. And just a quick follow-up, too, I think it was an answer to a previous question. But you mentioned the delayed expense that led to an outperformance this quarter. So can you just talk a little bit more about this as well? Maybe I missed it in the prepared remarks. But what exactly was that and maybe how much? And then two, will this be delayed then to kind of feeding into the second quarter? Or kind of how we should think about that?

Dave Bourdon: Jack, it’s Dave. I’ll take that one. So the beat in the first quarter primarily came through performance in center margin. And it was spend within that center margin bucket. And a lot of that was — it’s delayed in the sense of we expected it to happen in the first quarter and a lot of it is pushing into the second quarter. And it’s things like the investment we’re making in the patient — the digital patient check-in tool as well as investments that we’re making in our front office of our centers. We’ve talked about it in our last earnings call. So those were all investments that we are planning on making throughout the year. They’re just getting off the ramp a little bit slower than we thought. And that’s what primarily contributed to the Q1 beat and why that’s not flowing through to the remaining quarters.

Operator: Your next question comes from the line of Kevin Caliendo with UBS.

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Kevin Caliendo: Danish, congrats on all your achievements at LifeStance, and best of luck going forward. It was a pleasure getting to know you. I just want to go back to the payer stuff again. I just want to understand that a little bit better. Does this — does the new sort of rates kick in on July 1? Is that why the cadence is — in the second half is not as great or not the normal seasonality? And two, maybe just to provide a little bit of comfort around this more, how often are these payer rates negotiated? And can you talk about any negotiations that would have started 1/1 on a same-store basis? Like typically, what do you normally see when you redo or renew a payer relationship?

Ken Burdick: Yes. It’s not quite as structured and organized as January 1 of every year, we renegotiate all of our contracts. This is really as we engage in a much more wholesome comprehensive fashion, we’re talking about rates. We’re talking about sort of the terms. We’re talking about delegated credentialing, et cetera. So these are pretty comprehensive discussions. Historically, it’s been sort of a nonevent that maybe there was a 1% add-on for future years, and we’ve changed that. So now we’re having these deeper, more strategic discussions about what the relationship is going to look like. And in some cases, they are multiyear contracts. And in others, they are annual. But they happen throughout the year. And so it’s — I would describe it as lumpy. Even this particular contract renegotiation, there’s different lines of business that come into effect at different times. So I can’t even tell you that everything happens on July 1. There’s sort of a phase in. And it’s a little bit more nuanced than just sort of one single change in rate on one given date.

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Dave Bourdon: And maybe just, Kevin, just to pile on to Ken’s comments. For your — from a modeling perspective, if you’re thinking about TRPV, what you’re saying is generally accurate, which is we would expect TRPV in the first half of the year to be higher than the back half of the year so that — so to answer that specific question.

Operator: Next question comes from the line of Brian Tanquilut with Jefferies.

Taji Phillips: You have Taji Phillips on for Brian. So first off, Danish, I want to say congratulations to you. It was wonderful working with you. And so my first question is going to be on clinician adds in the quarter. I know that you guys have mentioned that they had exceeded your expectations. So maybe if you can just provide an update on several different KPIs, retention, recruitment, turnover, right, within your clinician base. And then I have a follow-up from there.

Danish Qureshi: Yes. Taji, this is Danish. Thanks for the comments. And I can address the question around net clinician adds and some of the drivers. So yes, we’re very pleased with our net clinician adds in Q1. That exceeded our expectations. Again, that was 100% organic, which is something that we remain very proud of. Retention continues to remain stable. Our recruiting engine continues to be what we characterize as best-in-class. Our value proposition to our clinicians, both those that are here as well as new ones that we’re trying to attract, continues to remain strong. And so we feel good about our ability to continue to deliver strong net clinician adds throughout the year. Dave did mention in the prepared remarks, the dynamic that we see around Q2, where you typically see a lower number that reverses later in the year just due to seasonality and the fact that because we are delivering this on a 100% organic basis now, the seasonality is more visible than in previous years, where we had M&A as a component on top of organic. So hopefully, that provides some additional color on what we’re seeing there.

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Taji Phillips: That was great. And then another follow-up there, I know this is more recent news and obviously still preliminary, and there’s been some pushback on this. But thinking about the FTC’s potential noncompete ban, how are you thinking about the impact to your business, right, and just the general recruiting environment for clinicians in behavioral health space?

Danish Qureshi: Yes, I can take that as well. So for us, we do in states that, at least today, allow for noncompetes have that in our contracts. But not all states even today allow for it. And in those states, we do not. Though we have included that in contracts, we have never built the value proposition around noncompetes. For us, it’s about what are we providing to our clinicians to both not subtract but retain them and making sure that we’re constantly solidifying and bolstering that value proposition. So for us, this is not something where it’s a particular worry. If anything, we’d be hopeful that it creates more movement on the recruiting side and our ability to attract clinicians from other practice groups, where they currently may feel restricted to explore other opportunities.

Operator: Your next question comes from the line of Stephanie Davis with Barclays.

Stephanie Davis: Congrats on the quarter. And Danish, congrats on the accomplishments to date, best of luck in your next thing. I want to ask a little bit about the COO transition. Is there any sort of succession plan? Is this the role you’re expecting to keep? And then I guess, the follow-up related to that would be, is there a read-through, considering there’s been a bit of a turnaround in the back end for the past year that maybe a lot of this is already accomplished?

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Ken Burdick: I’ll speak to the first part. You might have to elaborate on the second part. I wasn’t sure about the second half of the year comment. But one of the things that Danish has done so well over the past couple of years is recruit great talent to the organization. And so I do not have an immediate plan to replace Danish. As he mentioned in his prepared remarks, we’ve already elevated our leader of shared services and our leader of practice ops to the executive team. And my initial thinking is that they are ready to step up. And the rest of us on the ELT will step up. So at this juncture, I’m not in a position to communicate that we’re going to do an external search or we’re going to promote somebody from within to replace Danish in kind. And I think it really is a tribute to the strength of the team that we’ve all built over the last couple of years. We’re in a dramatically different place. And one of the things that encourages me that I didn’t say in my prepared remarks, I think whether we’re talking about Change Healthcare, we’re talking about the departure of a founder, this hard work, which I’ve told you before, is not sexy and it doesn’t show up immediately. It’s created a resilience, a stability and a predictability that we simply didn’t have a couple of years ago. And so while I know we will have other surprises thrown at us from time to time, I continue to gain more and more conviction that we are more than prepared to navigate through it. Do you want to elaborate the second part of your question?

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Stephanie Davis: Exactly. As I think about how much back-end turnaround has been going on and how that’s probably often in the COO’s purview, so is the readthrough that a lot of the groundwork has already been laid for the back-end operations update and there’s less going forward? Or is it more just that you feel that there’s a lot of talent that can handle it and deliver the needs?

Ken Burdick: Yes, no, thank you. Now I get it. And I’m happy to speak to that. There is a lot of talent, but the — one of the things that we have done, and I would say Danish leading the way, we’ve created a great deal of clarity around expectations and KPIs and building a culture of accountability. So both the processes and the culture are very different now than they were a couple of years ago. And so that’s part of what I consider Danish’s legacy as a COO. And so I’m just so appreciative that he hung in. Many founders would depart when the company went public. And this will be Danish’s second very successful startup. So I look at this as, thank goodness, he hung with us for a couple of years because the work that he did as he transitioned from Head of Business Development and Chief Growth Officer to COO, has been incredibly powerful and sets us up for success. To your point, while there’s still way more work to be done, we have made a major pivot. And I think I won’t speak for Danish, but based on all of our one-on-one conversations, it is a big part of the reason why he feels like now is the right time.

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Operator: That concludes our Q&A session. I will now turn the conference back over to Ken Burdick, Chief Executive Officer, for closing remarks.

Ken Burdick: Thank you, operator. I want to thank everybody for participating on today’s call. I want to also thank our approximately 9,500 employees, who have such a deep sense of purpose and commitment to what we are doing, which is trying to increase access to high-quality, affordable mental health care. And you’ve heard me say multiple times that this is an underserved population. And I just want to put a couple of statistics around that. Mental health clinicians currently are reimbursed 22% less than their counterparts on the med-surg side of the business. And patients go out of network 3.5 times more often. So in addition to the struggles that folks have even developing and coming up with the courage to seek care, there is a financial burden when they have to go out of network and incur those out-of-pocket costs, which I just don’t think is the country that we want to live in. So we have tens of millions of individuals across this country who do not have access to services that they need. And as I said in my closing, I couldn’t be more proud and more committed to the mission of LifeStance, which is to address that. And because of our size and scale, we think we can have a meaningful impact on the trajectory for years to come. So I want to thank all of our employees, and I want to thank all of you for your interest in LifeStance.

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Operator: Gentlemen, that concludes today’s call. Thank you all for joining. You may now disconnect.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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Comet fragment lights up sky over Spain and Portugal ‘like a movie’

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By Catarina Demony and Ana Cantero

LISBON (Reuters) – A bright comet fragment lit up the skies over parts of Spain and Portugal late on Saturday, according to the European Space Agency (ESA), with one Lisbon resident saying the dazzling display “felt like a movie”.

On Sunday morning, the ESA shared on X a video captured by its “fireball camera” of what it described as a “stunning meteor” over the skies of the western Spanish city of Caceres, near the Portuguese border.

But it later said it appeared to be a “small piece of a comet” and not a meteor, estimating it flew over Spain and Portugal at a speed of 45 km (28 miles) per second before burning up over the Atlantic.

“The likelihood of any meteorites being found is very low,” the ESA said.

In both countries, videos shot in several cities and towns went viral on social media, showing the object crossing the night sky at high speed and illuminating it in bright tones of blue and green.

The Spanish Calar Alto astronomical observatory also said a preliminary analysis by Andalusia’s Institute of Astrophysics revealed the object had a “cometary origin”.

During a concert in the Portuguese city of Barcelos, the object was filmed streaking across the sky as the singer performed. Another video showed the skies of Porto, Portugal’s second biggest city, turning bright for a few seconds.

Many contacted emergency services to report what happened. A spokesperson for the Spanish Emergency service 112, in Madrid, told Europa Press news agency it had received several calls.

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Lisbon resident Bernardo Taborda, 31, told Reuters he was walking around the city with friends when the sky suddenly turned bright green: “It almost looked like daylight … we all looked back and saw it.”

“It felt like a movie, we all looked at each other and we were stunned,” Taborda said. “It was amazing.”

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Helicopter carrying Iran’s President Raisi crashes in mountains, official says

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By Parisa Hafezi and Elwely Elwelly

DUBAI (Reuters) -A helicopter carrying Iranian President Ebrahim Raisi and his foreign minister crashed on Sunday as it was crossing mountain terrain in heavy fog, an Iranian official told Reuters, and rescuers were making their way to the site of the incident.

The official said the lives of Raisi and Foreign Minister Hossein Amirabdollahian were “at risk following the helicopter crash”, which happened on the way back from a visit to Iran’s border with Azerbaijan.

“We are still hopeful but information coming from the crash site is very concerning,” said the official, speaking on condition of anonymity.

The bad weather was complicating rescue efforts, the state news agency IRNA reported. The chief of staff of Iran’s army ordered all the resources of the army and the elite Revolutionary Guard to be put to use in the search and rescue operations.

State TV stopped all its regular programming to show prayers being held for Raisi across the country and, in a corner of the screen, live coverage of rescue teams deployed on foot in the mountainous area in heavy fog.

The rescue teams were expected to reach the site of the crash later on Sunday evening, state TV reported.

Raisi, 63, was elected president in 2021, and since taking office has ordered a tightening of morality laws, overseen a bloody crackdown on anti-government protests and pushed hard in nuclear talks with world powers.

In Iran’s dual political system, split between the clerical establishment and the government, it is the supreme leader rather than the president who has the final say on all major policies.

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But many have seen Raisi as a strong contender to succeed his 85-year-old mentor, Supreme Leader Ayatollah Ali Khamenei, who has strongly endorsed Raisi’s main policies.

Raisi’s victory in a closely managed election in 2021 brought all branches of power under the control of hardliners, after eight years when the presidency had been held by pragmatist Hassan Rouhani, who negotiated a nuclear deal with Washington.

However, Raisi’s standing may have been dented by widespread protests against clerical rule and a failure to turn around Iran’s economy, hamstrung by Western sanctions.

Raisi had been at the Azerbaijani border to inaugurate the Qiz-Qalaisi Dam, a joint project.

Interior Minister Ahmed Vahidi told state TV only that one of the helicopters in a group of three had come down in the incident, and that authorities were awaiting further details.

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Sean ‘Diddy’ Combs apologizes after video depicting attack on ex-girlfriend

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By Katharine Jackson

(Reuters) – Music mogul Sean “Diddy” Combs posted an apology to social media on Sunday, two days after the release of hotel surveillance video that appeared to show him attacking his ex-girlfriend.

“I’m truly sorry,” Combs said in a video post on his Instagram page. “My behavior on that video is inexcusable. I take full responsibility for my actions in that video. I’m disgusted. I was disgusted then when I did it. I’m disgusted now.”

Addressing the camera directly, Combs said he had sought therapy and gone into rehab.

In the surveillance video from 2016, which was released by CNN on Friday, the rapper appears to grab R&B vocalist Casandra Ventura as she waits by an elevator in a California hotel. Clad only in a towel, he throws her to the floor, kicking her repeatedly before dragging her toward a hallway, the video shows.

A representative for Combs could not be immediately reached for further comment.

Ventura, who performs under the stage name Cassie, sued Combs in 2023, accusing him of serial physical abuse, sexual slavery and rape during a 10-year professional and romantic relationship in which he controlled her through intimidation, drugs and alcohol. The parties settled the matter the following day for undisclosed terms. Representatives for Combs said at the time the settlement was “in no way an admission of wrongdoing.”

The lawsuit was one of at least four civil complaints in recent months that leveled sexual assault allegations against Combs.

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The U.S. Department of Homeland Security said in March it had opened an investigation into the hip-hop star and searched his homes in the Miami area and in Los Angeles; it provided no details of the nature of the investigation.

Local television images of the search showed an armored vehicle and officers carrying rifles outside Combs’ Los Angeles home. Authorities detained some people at the property with their hands bound by zip ties.

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