LifeStance Health Group Inc

Previous wording

We are reimagining mental health through a tech-enabled care delivery model built to expand access, address affordability, improve outcomes and lower overall healthcare costs. We are one of the nation’s largest outpatient mental health platforms based on the number of clinicians we employ through our subsidiaries and our supported practices and our geographic scale, employing 6,984 licensed mental health clinicians as of June 30, 2024. Our patient-focused platform combines a personalized, digitally-powered patient experience with differentiated clinical capabilities and in-network insurance relationships to fundamentally transform patient access and treatment. By revolutionizing the way mental healthcare is delivered, we believe we have an opportunity to improve the lives and health of millions of individuals.

Current wording

We are reimagining mental health through a tech-enabled care delivery model built to expand access, address affordability, improve outcomes and lower overall healthcare costs. We are one of the nation’s largest outpatient mental health platforms based on the number of clinicians we employ through our subsidiaries and our supported practices and our geographic scale, employing 7,269 licensed mental health clinicians as of September 30, 2024. Our patient-focused platform combines a personalized, digitally-powered patient experience with differentiated clinical capabilities and in-network insurance relationships to fundamentally transform patient access and treatment. By revolutionizing the way mental healthcare is delivered, we believe we have an opportunity to improve the lives and health of millions of individuals.

Previous wording

As of June 30, 2024, we employed 6,984 psychiatrists, advanced practice nurses, psychologists and therapists through our subsidiaries and supported practices. We generate revenue on a per visit basis (total revenue per visit ("TRPV")) as clinical services are rendered by our clinicians. We generate lower revenue and experience lower clinician productivity in periods that have fewer business days than other periods. We measure productivity by the number of visits that are performed by a clinician, which is driven by the time clinicians make available to see patients and our ability to fill clinician's schedules by attracting new patients, scheduling patients, and converting scheduled appointments to completed visits. Clinician productivity impacts our ability to generate revenue and also impacts clinician compensation, as clinician compensation is primarily driven by the number of visits provided by each clinician. Recruiting new clinicians and retaining existing clinicians enables us to see more patients by expanding our patient visit capacity.

Current wording

As of September 30, 2024, we employed 7,269 psychiatrists, advanced practice nurses, psychologists and therapists through our subsidiaries and supported practices. We generate revenue on a per visit basis (total revenue per visit ("TRPV")) as clinical services are rendered by our clinicians. We generate lower revenue and experience lower clinician productivity in periods that have fewer business days than other periods. We measure productivity by the number of visits that are performed by a clinician, which is driven by the time clinicians make available to see patients and our ability to fill clinician's schedules by attracting new patients, scheduling patients, and converting scheduled appointments to completed visits. Clinician productivity impacts our ability to generate revenue and also impacts clinician compensation, as clinician compensation is primarily driven by the number of visits provided by each clinician. Recruiting new clinicians and retaining existing clinicians enables us to see more patients by expanding our patient visit capacity.

Previous wording

We believe we have significant opportunity to grow our employed clinician base from our current base of 6,984 clinicians employed through our subsidiaries and supported practices, as of June 30, 2024. We have developed a rigorous and exclusive in-house national clinician recruiting model that works closely with our regional clinical teams to select the best candidates and expand capacity in a timely manner. As we grow our clinician base, we can grow our business, expand access for our patients and our payors and invest in our platform to further reinforce our differentiated offering to clinicians. We have available physical capacity to add clinicians to our existing centers, as well as an opportunity to add new clinicians with the targeted roll-out of de novo centers. Our virtual care offering also allows clinicians to see more patients without investments in incremental physical space, expanding our patient visit capacity beyond in-person only levels.

Current wording

We believe we have significant opportunity to grow our employed clinician base from our current base of 7,269 clinicians employed through our subsidiaries and supported practices, as of September 30, 2024. We have developed a rigorous and exclusive in-house national clinician recruiting model that works closely with our regional clinical teams to select the best candidates and expand capacity in a timely manner. As we grow our clinician base, we can grow our business, expand access for our patients and our payors and invest in our platform to further reinforce our differentiated offering to clinicians. We have available physical capacity to add clinicians to our existing centers, as well as an opportunity to add new clinicians with the targeted roll-out of de novo centers. Our virtual care offering also allows clinicians to see more patients without investments in incremental physical space, expanding our patient visit capacity beyond in-person only levels.

Previous wording

We believe our ability to attract and retain patients to drive growth in our visits and meet the availability of our clinician base will enable us to grow our revenue. We believe we have a significant opportunity to increase the number of patients we serve in our existing markets. Our clinicians treated patients through 2.0 million and 3.9 million visits in the three and six months ended June 30, 2024, respectively. We believe our ability to deliver more accessible, flexible, affordable and effective mental healthcare is a key driver of our patient growth. We believe we provide a superior and differentiated mental healthcare experience that integrates virtual and in-person care to deliver care in a convenient way for our patients, meeting our patients where they are. Our in-network payor relationships allow our patients to access affordable care without significant out-of-pocket cost or delays in receiving treatment. We treat mental health conditions across the outpatient spectrum through a clinical approach that focuses on improved patient outcomes. We support our patients throughout their care continuum with purpose-built technological capabilities, including online assessments, digital provider communication, and seamless internal referral and follow-up capabilities.

Current wording

We believe our ability to attract and retain patients to drive growth in our visits and meet the availability of our clinician base will enable us to grow our revenue. We believe we have a significant opportunity to increase the number of patients we serve in our existing markets. Our clinicians treated patients through 2.0 million and 5.9 million visits in the three and nine months ended September 30, 2024, respectively. We believe our ability to deliver more accessible, flexible, affordable and effective mental healthcare is a key driver of our patient growth. We believe we provide a superior and differentiated mental healthcare experience that integrates virtual and in-person care to deliver care in a convenient way for our patients, meeting our patients where they are. Our in-network payor relationships allow our patients to access affordable care without significant out-of-pocket cost or delays in receiving treatment. We treat mental health conditions across the outpatient spectrum through a clinical approach that focuses on improved patient outcomes. We support our patients throughout their care continuum with purpose-built technological capabilities, including online assessments, digital provider communication, and seamless internal referral and follow-up capabilities.

Previous wording

As we grow our platform, we seek to generate consistent returns on our investments. See “—Key Metrics and Non-GAAP Financial Measures—Center Margin” for our definition of Center Margin and reconciliation to loss from operations. We believe this metric best reflects the economics of our model as it includes all direct expenses associated with our patients’ care. We seek to grow our Center Margin through a combination of (i) growing revenue through clinician hiring and retention, patient growth and engagement, hybrid virtual and in-person care, existing office expansion, and in-network reimbursement levels, and (ii) leveraging on our fixed cost base at each center. For acquired centers, we also seek to realize operational, technology and reimbursement synergies to drive Center Margin growth.

Current wording

As we grow our platform, we seek to generate consistent returns on our investments. See “—Key Metrics and Non-GAAP Financial Measures—Center Margin” for our definition of Center Margin and reconciliation to income (loss) from operations. We believe this metric best reflects the economics of our model as it includes all direct expenses associated with our patients’ care. We seek to grow our Center Margin through a combination of (i) growing revenue through clinician hiring and retention, patient growth and engagement, hybrid virtual and in-person care, existing office expansion, and in-network reimbursement levels, and (ii) leveraging on our fixed cost base at each center. For acquired centers, we also seek to realize operational, technology and reimbursement synergies to drive Center Margin growth.

Previous wording

Center Margin and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles ("GAAP") and are not intended to be substitutes for any GAAP financial measures, including revenue, loss from operations or net loss, and, as calculated, may not be comparable to companies in other industries or within the same industry with similarly titled measures of performance. Therefore, non-GAAP measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP.

Current wording

Center Margin and Adjusted EBITDA are not measures of financial performance under generally accepted accounting principles ("GAAP") and are not intended to be substitutes for any GAAP financial measures, including revenue, income (loss) from operations or net loss, and, as calculated, may not be comparable to companies in other industries or within the same industry with similarly titled measures of performance. Therefore, non-GAAP measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP.

Previous wording

We define Center Margin as loss from operations excluding depreciation and amortization and general and administrative expenses. Therefore, Center Margin is computed by removing from loss from operations the costs that do not directly relate to the delivery of care and only including center costs, excluding depreciation and amortization. We consider Center Margin to be an important measure to monitor our performance relative to the direct costs of delivering care. We believe Center Margin is useful to investors to measure whether we are sufficiently controlling the direct costs of delivering care.

Current wording

We define Center Margin as income (loss) from operations excluding depreciation and amortization and general and administrative expenses. Therefore, Center Margin is computed by removing from income (loss) from operations the costs that do not directly relate to the delivery of care and only including center costs, excluding depreciation and amortization. We consider Center Margin to be an important measure to monitor our performance relative to the direct costs of delivering care. We believe Center Margin is useful to investors to measure whether we are sufficiently controlling the direct costs of delivering care.

Previous wording

Center Margin is not a financial measure of, nor does it imply, profitability. The relationship of loss from operations to center costs, excluding depreciation and amortization is not necessarily indicative of future profitability from operations. Center Margin excludes certain expenses, such as general and administrative expenses, and depreciation and amortization, which are considered normal, recurring operating expenses and are essential to support the operation and development of our centers. Therefore, this measure may not provide a complete understanding of the operating results of our Company as a whole, and Center Margin should be reviewed in conjunction with our GAAP financial results. Other companies that present Center Margin may calculate it differently and, therefore, similarly titled measures presented by other companies may not be directly comparable to ours. In addition, Center Margin has limitations as an analytical tool, including that it does not reflect depreciation and amortization or other overhead allocations.

Current wording

Center Margin is not a financial measure of, nor does it imply, profitability. The relationship of income (loss) from operations to center costs, excluding depreciation and amortization is not necessarily indicative of future profitability from operations. Center Margin excludes certain expenses, such as general and administrative expenses, and depreciation and amortization, which are considered normal, recurring operating expenses and are essential to support the operation and development of our centers. Therefore, this measure may not provide a complete understanding of the operating results of our Company as a whole, and Center Margin should be reviewed in conjunction with our GAAP financial results. Other companies that present Center Margin may calculate it differently and, therefore, similarly titled measures presented by other companies may not be directly comparable to ours. In addition, Center Margin has limitations as an analytical tool, including that it does not reflect depreciation and amortization or other overhead allocations.

Previous wording

The following table provides a reconciliation of loss from operations, the most closely comparable GAAP financial measure, to Center Margin:

Current wording

The following table provides a reconciliation of income (loss) from operations, the most closely comparable GAAP financial measure, to Center Margin:

Previous wording

We define Adjusted EBITDA as net loss excluding interest expense, depreciation and amortization, income tax provision (benefit), loss (gain) on remeasurement of contingent consideration, stock-based compensation, loss on disposal of assets, transaction costs, executive transition costs, litigation costs, strategic initiatives, real estate optimization and restructuring charges, amortization of cloud-based software implementation costs, and other expenses. We include Adjusted EBITDA in this Quarterly Report because it is an important measure upon which our management assesses, and believes investors should assess, our operating performance. We consider Adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis.

Current wording

We define Adjusted EBITDA as net loss excluding interest expense, depreciation and amortization, income tax provision (benefit), gain on remeasurement of contingent consideration, stock-based compensation, loss on disposal of assets, transaction costs, executive transition costs, litigation costs, strategic initiatives, real estate optimization and restructuring charges, amortization of cloud-based software implementation costs, and other expenses. We include Adjusted EBITDA in this Quarterly Report because it is an important measure upon which our management assesses, and believes investors should assess, our operating performance. We consider Adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis.

Previous wording

A reconciliation of net loss to Adjusted EBITDA is presented below for the three and six months ended June 30, 2024 and 2023. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view Adjusted EBITDA in conjunction with net loss.

Current wording

A reconciliation of net loss to Adjusted EBITDA is presented below for the three and nine months ended September 30, 2024 and 2023. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view Adjusted EBITDA in conjunction with net loss.

Previous wording

Litigation costs include only those costs which are considered non-recurring and outside of the ordinary course of business based on the following considerations, which we assess regularly: (i) the frequency of similar cases that have been brought to date, or are expected to be brought within two years, (ii) the complexity of the case (e.g., complex class action litigation), (iii) the nature of the remedy(ies) sought, including the size of any monetary damages sought, (iv) the counterparty involved, and (v) our overall litigation strategy. During the three and six months ended June 30, 2024 and 2023, litigation costs included cash expenses related to three distinct litigation matters, including (x) a securities class action litigation, (y) a privacy class action litigation and (z) a compensation model class action litigation. For a discussion of certain legal proceedings in which we are involved, please read Note 12, Commitments and Contingencies, to our unaudited consolidated financial statements in this report.

Current wording

Litigation costs include only those costs which are considered non-recurring and outside of the ordinary course of business based on the following considerations, which we assess regularly: (i) the frequency of similar cases that have been brought to date, or are expected to be brought within two years, (ii) the complexity of the case (e.g., complex class action litigation), (iii) the nature of the remedy(ies) sought, including the size of any monetary damages sought, (iv) the counterparty involved, and (v) our overall litigation strategy. During the three and nine months ended September 30, 2024 and 2023, litigation costs included cash expenses related to three distinct litigation matters, including (x) a securities class action litigation, (y) a privacy class action litigation and (z) a compensation model class action litigation. For a discussion of certain legal proceedings in which we are involved, please read Note 12, Commitments and Contingencies, to our unaudited consolidated financial statements in this report.

Previous wording

Strategic initiatives consist of expenses directly related to a multi-phase system upgrade in connection with our recent and significant expansion. During each of the three and six months ended June 30, 2024 and 2023, we continued a process of evaluating and adopting critical enterprise-wide systems for (i) human resources management, (ii) clinician credentialing and onboarding process, and for the three and six months ended June 30, 2023, (iii) a scalable electronic health resources system. Strategic initiatives represents costs, such as third-party consulting costs and one-time costs, that are not part of our ongoing operations related to these enterprise-wide systems. We considered the frequency and scale of this multi-part enterprise upgrade when determining that the expenses were not normal, recurring operating expenses.

Current wording

Strategic initiatives consist of expenses directly related to a multi-phase system upgrade in connection with our recent and significant expansion. During each of the three and nine months ended September 30, 2024 and 2023, we continued a process of evaluating and adopting critical enterprise-wide systems for (i) human resources management, (ii) clinician credentialing and onboarding process, and for the three and nine months ended September 30, 2023, (iii) a scalable electronic health resources system. Strategic initiatives represents costs, such as third-party consulting costs and one-time costs, that are not part of our ongoing operations related to these enterprise-wide systems. We considered the frequency and scale of this multi-part enterprise upgrade when determining that the expenses were not normal, recurring operating expenses.

Previous wording

Real estate optimization and restructuring charges consist of cash expenses and non-cash charges related to our real estate optimization initiative, which include certain asset impairment and disposal costs, certain gains and losses related to early lease terminations, and exit and disposal costs related to our real estate optimization initiative to consolidate our physical footprint during the three and six months ended June 30, 2023. As the decision to close these centers was part of a significant strategic project driven by a historic shift in behavior, the magnitude of center closures has been and is expected to be greater than what would be expected as part of ordinary business operations and do not constitute normal recurring operating activities. During the three and six months ended June 30, 2024, real estate optimization and restructuring charges consisted of certain gains and losses related to early lease terminations of previously abandoned real estate leases in 2023.

Current wording

Real estate optimization and restructuring charges consist of cash expenses and non-cash charges related to our real estate optimization initiative, which include certain asset impairment and disposal costs, certain gains and losses related to early lease terminations, and exit and disposal costs related to our real estate optimization initiative to consolidate our physical footprint during the three and nine months ended September 30, 2023. As the decision to close these centers was part of a significant strategic project driven by a historic shift in behavior, the magnitude of center closures has been and is expected to be greater than what would be expected as part of ordinary business operations and do not constitute normal recurring operating activities. During the nine months ended September 30, 2024, real estate optimization and restructuring charges consisted of certain gains and losses related to early lease terminations of previously abandoned real estate leases in 2023.

Previous wording

The following table sets forth a summary of our financial results for the three and six months ended June 30, 2024 and 2023:

Current wording

The following table sets forth a summary of our financial results for the three and nine months ended September 30, 2024 and 2023:

Previous wording

Total revenue increased $52.7 million, or 20%, to $312.3 million for the three months ended June 30, 2024 from $259.6 million for the three months ended June 30, 2023. This was primarily due to an increase of $52.5 million of patient service revenue and an increase of $0.2 million of nonpatient revenue. The increase in patient service revenue was mainly due to a net increase of 852 in total clinicians from organic hiring, resulting in an increase in patient visits of 0.3 million, or 15%. Additionally, TRPV increased year-over-year primarily driven by modest payor rate increases.

Current wording

Total revenue increased $49.8 million, or 19%, to $312.7 million for the three months ended September 30, 2024 from $262.9 million for the three months ended September 30, 2023. This was primarily due to an increase of $48.6 million of patient service revenue and an increase of $1.2 million of nonpatient revenue. The increase in patient service revenue was mainly due to a net increase of 851 in total clinicians from organic hiring, resulting in an increase in patient visits of 0.3 million, or 15%. Additionally, TRPV increased year-over-year primarily driven by modest payor rate increases.

Previous wording

Total revenue increased $100.6 million, or 20%, to $612.8 million for the six months ended June 30, 2024 from $512.2 million for the six months ended June 30, 2023. This was primarily due to an increase of $100.6 million of patient service revenue. The increase in patient service revenue was mainly due to a net increase of 852 in total clinicians from organic hiring, resulting in an increase in patient visits of 0.5 million, or 15%. Additionally, TRPV increased year-over-year primarily driven by modest payor rate increases.

Current wording

Total revenue increased $150.4 million, or 19%, to $925.5 million for the nine months ended September 30, 2024 from $775.1 million for the nine months ended September 30, 2023. This was primarily due to an increase of $149.2 million of patient service revenue and an increase of $1.2 million of nonpatient revenue. The increase in patient service revenue was mainly due to a net increase of 851 in total clinicians from organic hiring, resulting in an increase in patient visits of 0.8 million, or 15%. Additionally, TRPV increased year-over-year primarily driven by modest payor rate increases.

Previous wording

Center costs, excluding depreciation and amortization increased $27.9 million, or 15%, to $214.5 million for the three months ended June 30, 2024 from $186.6 million for the three months ended June 30, 2023. This was primarily due to a $26.9 million increase in center-based compensation due to the increase in patient visits of 0.3 million from the increase in the total number of clinicians from organic hiring. In addition, occupancy costs consisting of center rent and utilities and other center operating expenses consisting of office supplies and insurance contributed to the increase of $1.0 million.

Current wording

Center costs, excluding depreciation and amortization increased $25.6 million, or 14%, to $212.3 million for the three months ended September 30, 2024 from $186.7 million for the three months ended September 30, 2023. This was primarily due to a $24.0 million increase in center-based compensation due to the increase in patient visits of 0.3 million from the increase in the total number of clinicians from organic hiring. In addition, occupancy costs consisting of center rent and utilities and other center operating expenses consisting of office supplies and insurance contributed to the increase of $1.6 million.

Previous wording

Center costs, excluding depreciation and amortization increased $50.6 million, or 14%, to $420.2 million for the six months ended June 30, 2024 from $369.6 million for the six months ended June 30, 2023. This was primarily due to a $49.2 million increase in center-based compensation due to the increase in patient visits of 0.5 million from the increase in the total number of clinicians from organic hiring. In addition, occupancy costs consisting of center rent and utilities and other center operating expenses consisting of office supplies and insurance contributed to the increase of $1.4 million.

Current wording

Center costs, excluding depreciation and amortization increased $76.2 million, or 14%, to $632.5 million for the nine months ended September 30, 2024 from $556.3 million for the nine months ended September 30, 2023. This was primarily due to a $73.2 million increase in center-based compensation due to the increase in patient visits of 0.8 million from the increase in the total number of clinicians from organic hiring. In addition, occupancy costs consisting of center rent and utilities and other center operating expenses consisting of office supplies and insurance contributed to the increase of $3.0 million.

Previous wording

General and administrative expenses decreased $6.7 million, or 7%, to $95.2 million for the three months ended June 30, 2024 from $101.9 million for the three months ended June 30, 2023. This was primarily due to a decrease of $8.5 million in stock-based compensation expense primarily relating to the RSUs granted at the time of our initial public offering ("IPO") without a similar expense in 2024, which was slightly offset by an increase in salaries, wages and employee benefits of $7.2 million. The decrease is also partially attributable to a decrease of $1.6 million in third-party consulting costs and one-time costs associated with our strategic initiatives related to the multi-phase system upgrade in connection with our recent and significant expansion and a decrease of $3.1 million in occupancy costs. The remainder of the decrease is due to a decrease of $0.7 million in other operating expenses as a result of lower professional fees and legal expenses incurred during the period.

Current wording

General and administrative expenses decreased $45.6 million, or 35%, to $85.3 million for the three months ended September 30, 2024 from $130.9 million for the three months ended September 30, 2023. This was primarily due to a decrease of $41.6 million in other operating expenses as a result of professional fees and legal expenses preceding the settlement of our shareholder class action lawsuit during the third quarter of 2023 with no similar expense in the third quarter of 2024. In addition, there was a decrease of $6.6 million in stock-based compensation, which was slightly offset by an increase in salaries, wages and employee benefits of $3.8 million. Further, the decrease is also partially attributable to a decrease of $0.7 million in third-party consulting costs and one-time costs associated with our strategic initiatives related to the multi-phase system upgrade in connection with our recent and significant expansion and a decrease of $0.5 million in occupancy costs.

Previous wording

General and administrative expenses decreased $2.4 million, or 1%, to $184.1 million for the six months ended June 30, 2024 from $186.5 million for the six months ended June 30, 2023. This was primarily due to a decrease of $11.8 million in stock-based compensation expense primarily relating to the RSUs granted at the time of our IPO without a similar expense in 2024, which was offset by an increase in salaries, wages and employee benefits of $15.1 million. Other operating expenses decreased $1.5 million as a result of lower professional fees and legal expenses incurred during the period and occupancy costs decreased $2.9 million. Further, there was a decrease in third-party consulting costs and one-time costs associated with our strategic initiatives of $1.3 million related to the multi-phase system upgrade in connection with our recent and significant expansion.

Current wording

General and administrative expenses decreased $48.0 million, or 15%, to $269.4 million for the nine months ended September 30, 2024 from $317.4 million for the nine months ended September 30, 2023. This was primarily due to a decrease of $43.1 million as a result of professional fees and legal expenses preceding the settlement of our shareholder class action lawsuit during the third quarter of 2023 with no similar expense in the third quarter of 2024. In addition, there was a decrease of $18.4 million in stock-based compensation expense primarily relating to the RSUs granted at the time of our IPO without a similar expense in 2024, which was offset by an increase in salaries, wages and employee benefits of $18.8 million. Further, there was a decrease in third-party consulting costs and one-time costs associated with our strategic initiatives of $2.0 million related to the multi-phase system upgrade in connection with our recent and significant expansion and a decrease of $3.3 million in occupancy costs.

Previous wording

We will continue to focus on long-term growth through investments in our centers and technology. In addition, we expect our general and administrative expenses to increase in the foreseeable future due to our planned investments in growth initiatives including our strategic initiatives and public company infrastructure.

Current wording

We expect our general and administrative expenses to increase in the foreseeable future due to our planned investments to support company growth.

Previous wording

Depreciation and amortization expense decreased $0.9 million to $18.6 million for the three months ended June 30, 2024 from $19.5 million for the three months ended June 30, 2023. This was primarily due to the amortization of intangibles and depreciation during the periods.

Current wording

Depreciation and amortization expense decreased $4.5 million to $15.1 million for the three months ended September 30, 2024 from $19.6 million for the three months ended September 30, 2023. This was primarily due to the amortization of intangibles and depreciation during the periods.

Previous wording

Depreciation and amortization expense increased $2.6 million to $41.2 million for the six months ended June 30, 2024 from $38.6 million for the six months ended June 30, 2023. This was primarily due to the amortization of intangibles and depreciation during the periods.

Current wording

Depreciation and amortization expense decreased $1.9 million to $56.3 million for the nine months ended September 30, 2024 from $58.2 million for the nine months ended September 30, 2023. This was primarily due to the amortization of intangibles and depreciation during the periods.

Previous wording

Interest expense increased $0.7 million to $5.8 million for the three months ended June 30, 2024 from $5.1 million for the three months ended June 30, 2023. This increase was primarily due to higher borrowings outstanding during the period.

Current wording

Interest expense, net increased $1.4 million to $17.1 million for the nine months ended September 30, 2024 from $15.7 million for the nine months ended September 30, 2023. This increase was primarily due to higher borrowings outstanding during the period.

Previous wording

Income tax provision decreased $7.2 million to $0.7 million for the three months ended June 30, 2024 from a $6.5 million benefit for the three months ended June 30, 2023 primarily due to non-deductible equity awards for the three months ended June 30, 2024.

Current wording

Income tax (provision) benefit decreased $17.0 million to a provision of $0.6 million for the three months ended September 30, 2024 from a benefit of $16.4 million for the three months ended September 30, 2023 primarily due to taxable loss and non-deductible equity awards for the three months ended September 30, 2024.

Previous wording

Income tax provision decreased $11.6 million to $1.0 million for the six months ended June 30, 2024 from a $10.6 million benefit for the six months ended June 30, 2023 primarily due to taxable loss and non-deductible equity awards for the six months ended June 30, 2024.

Current wording

Income tax (provision) benefit decreased $28.6 million to a provision of $1.6 million for the nine months ended September 30, 2024 from a benefit of $27.0 million for the nine months ended September 30, 2023 primarily due to taxable loss and non-deductible equity awards for the nine months ended September 30, 2024.

Previous wording

We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital needs, capital expenditures, including to execute on our de novo strategy, contractual obligations, debt service, acquisitions, settlement of contingent considerations obligations, and other commitments with cash flows from operations and other sources of funding. Our principal sources of liquidity to date have included cash from operating activities, cash on hand and amounts available under that certain credit agreement entered into on May 4, 2022, as amended, by the Company, LifeStance Health Holdings, Inc., Lynnwood Intermediate Holdings, Inc., Capital One, National Association, and each lender party thereto (the "2022 Credit Agreement"). We had cash and cash equivalents of $87.0 million and $78.8 million as of June 30, 2024 and December 31, 2023, respectively.

Current wording

We measure liquidity in terms of our ability to fund the cash requirements of our business operations, including working capital needs, capital expenditures, including to execute on our de novo strategy, contractual obligations, debt service, acquisitions, settlement of contingent considerations obligations, and other commitments with cash flows from operations and other sources of funding. Our principal sources of liquidity to date have included cash from operating activities, cash on hand and amounts available under that certain credit agreement entered into on May 4, 2022, as amended, by the Company, LifeStance Health Holdings, Inc., Lynnwood Intermediate Holdings, Inc., Capital One, National Association, and each lender party thereto (the "2022 Credit Agreement"). We had cash and cash equivalents of $102.6 million and $78.8 million as of September 30, 2024 and December 31, 2023, respectively.

Previous wording

Our future obligations primarily consist of our debt and lease obligations. We expect our cash generation from operations and future ability to refinance or secure additional financing facilities to be sufficient to repay our outstanding debt obligations and lease payment obligations. As of June 30, 2024 and December 31, 2023, there was an aggregate principal amount of $288.0 million and $289.5 million outstanding under the 2022 Credit Agreement, respectively. As of June 30, 2024, our non-cancellable future minimum operating lease payments totaled $252.5 million.

Current wording

Our future obligations primarily consist of our debt and lease obligations. We expect our cash generation from operations and future ability to refinance or secure additional financing facilities to be sufficient to repay our outstanding debt obligations and lease payment obligations. As of September 30, 2024 and December 31, 2023, there was an aggregate principal amount of $287.3 million and $289.5 million outstanding under the 2022 Credit Agreement, respectively. As of September 30, 2024, our non-cancellable future minimum operating lease payments totaled $243.8 million.

Previous wording

The loans under the Term Loan Facility and the Delayed Draw Term Loan Facility bear interest at a rate per annum equal to (x) adjusted term SOFR (which adjusted term SOFR is subject to a minimum of 0.75%) plus an applicable margin of 4.50% or (y) an alternate base rate (which will be the highest of (i) the prime rate, (ii) 0.50% above the federal funds effective rate and (iii) one-month adjusted term SOFR (which adjusted term SOFR is subject to a minimum of 0.75%) plus 1.00%) plus an applicable margin of 3.50%. The loans under the Revolving Facility bear interest at a rate per annum equal to (x) adjusted term SOFR plus an applicable margin of 3.25% or (y) an alternate base rate (which will be the highest of (i) the prime rate, (ii) 0.50% above the federal funds effective rate and (iii) one-month adjusted term SOFR plus 1.00%) plus an applicable margin of 2.25%.

Current wording

The loans under the Term Loan Facility and the Delayed Draw Term Loan Facility bear interest at a rate per annum equal to (x) adjusted term SOFR (which adjusted term SOFR is subject to a minimum of 0.75%) plus an applicable margin of 3.75% or (y) an alternate base rate (which will be the highest of (i) the prime rate, (ii) 0.50% above the federal funds effective rate and (iii) one-month adjusted term SOFR (which adjusted term SOFR is subject to a minimum of 0.75%) plus 1.00%) plus an applicable margin of 2.75%. The loans under the Revolving Facility bear interest at a rate per annum equal to (x) adjusted term SOFR plus an applicable margin of 3.25% or (y) an alternate base rate (which will be the highest of (i) the prime rate, (ii) 0.50% above the federal funds effective rate and (iii) one-month adjusted term SOFR plus 1.00%) plus an applicable margin of 2.25%.

Previous wording

During the six months ended June 30, 2024, operating activities provided $22.2 million of cash, primarily impacted by our $44.4 million net loss and $104.8 million in non-cash charges. This was partially offset by changes in our operating assets and liabilities of $38.2 million. During the six months ended June 30, 2023, operating activities used $8.3 million of cash, primarily impacted by our $79.7 million net loss and $117.0 million in non-cash charges. This was partially offset by changes in our operating assets and liabilities of $45.6 million.

Current wording

During the nine months ended September 30, 2024, operating activities provided $44.9 million of cash, primarily impacted by our $50.3 million net loss and $146.0 million in non-cash charges. This was partially offset by changes in our operating assets and liabilities of $50.8 million. During the nine months ended September 30, 2023, operating activities used $33.7 million of cash, primarily impacted by our $141.3 million net loss and $169.2 million in non-cash charges. This was partially offset by changes in our operating assets and liabilities of $61.6 million.

Previous wording

During the six months ended June 30, 2024, investing activities used $10.2 million of cash resulting from our purchases of property and equipment. During the six months ended June 30, 2023, investing activities used $39.1 million of cash, primarily resulting from our business acquisitions of $19.8 million and purchases of property and equipment of $19.3 million.

Current wording

During the nine months ended September 30, 2024, investing activities used $15.3 million of cash resulting from our purchases of property and equipment. During the nine months ended September 30, 2023, investing activities used $48.9 million of cash, primarily resulting from our business acquisitions of $19.8 million and purchases of property and equipment of $29.1 million.

Previous wording

During the six months ended June 30, 2024, financing activities used $3.9 million of cash, resulting primarily from payments of loan obligations of $1.5 million and payments of contingent consideration of $2.4 million. During the six months ended June 30, 2023, financing activities provided $18.4 million of cash, resulting primarily from borrowings of $25.0 million under the 2022 Credit Agreement, partially offset by payments of loan obligations of $1.2 million, payments of debt issue costs of $0.2 million and payments of contingent consideration of $5.2 million.

Current wording

During the nine months ended September 30, 2024, financing activities used $5.9 million of cash, resulting primarily from payments of loan obligations of $2.2 million and payments of contingent consideration of $3.7 million. During the nine months ended September 30, 2023, financing activities provided $16.6 million of cash, resulting primarily from borrowings of $25.0 million under the 2022 Credit Agreement, partially offset by payments of loan obligations of $1.8 million, payments of debt issue costs of $0.2 million and payments of contingent consideration of $6.4 million.