UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): |
(Exact name of Registrant as Specified in Its Charter)
(State or Other Jurisdiction |
(Commission File Number) |
(IRS Employer |
||
|
|
|
|
|
|
||||
|
||||
(Address of Principal Executive Offices) |
|
(Zip Code) |
||
Registrant’s Telephone Number, Including Area Code: |
|
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
|
|
Trading |
|
|
|
|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Item 1.01 Entry into a Material Definitive Agreement.
On May 4, 2022, LifeStance Health Holdings, Inc. (the “Borrower”), a subsidiary of LifeStance Health Group, Inc. ("LifeStance Health Group" or the "Company") entered into a credit agreement (the “2022 Credit Agreement”) among the Borrower, Lynnwood Intermediate Holdings, Inc., one of our subsidiaries (“Holdings”), the other guarantors party thereto, Capital One, National Association as administrative agent, collateral agent, issuing bank and swing line lender, and the lenders party thereto. The 2022 Credit Agreement establishes commitments in respect of a senior secured term loan facility of $200.0 million (the “Term Loan Facility”), a senior secured revolving loan facility of up to $50.0 million (the “Revolving Facility”) and a senior secured delayed draw term loan facility of up to $100.0 million (the “Delayed Draw Term Loan Facility”). The commitments under the Term Loan Facility and the Revolving Facility will be available to be drawn on any date (the “Funding Date”) on or prior to May 23, 2022, subject to certain customary funding conditions as further set forth in the 2022 Credit Agreement.
The proceeds of the Term Loan Facility are expected to be used, in whole or in part, to repay on the Funding Date all outstanding loans and commitments under the credit agreement, originally dated as of May 14, 2020, among the Borrower, Holdings, Capital One, National Association, as administrative agent, and the lenders party thereto.
The Term Loan Facility and any funded amounts under the Delayed Draw Term Loan Facility are scheduled to mature on the sixth anniversary of the Funding Date. The commitments under the Revolving Facility are scheduled to mature on the fifth anniversary of the Funding Date, and the commitments under the Delayed Draw Term Loan Facility are scheduled to terminate on the second anniversary of the Funding Date.
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%. In addition, the Borrower is required to pay a quarterly undrawn commitment fee of (i) until the first anniversary of the Funding Date, 0.50% per annum on the undrawn commitments under the Delayed Draw Term Loan Facility, (ii) from the first anniversary of the Funding Date until and including the second anniversary of the Funding Date, 1.00% per annum on the undrawn commitments under the Delayed Draw Term Loan Facility and (iii) 0.50% per annum on the daily amount of the undrawn commitments under the Revolving Facility. The obligations under the 2022 Credit Agreement are guaranteed by Holdings and certain of our wholly-owned subsidiaries and will be secured by substantially all of the assets of the Borrower, Holdings and the subsidiary guarantors, subject to customary limitations and exceptions. The 2022 Credit Agreement contains certain customary representations and warranties, certain affirmative, negative and financial covenants, and events of default.
The foregoing description of the 2022 Credit Agreement is qualified in its entirety by reference to the 2022 Credit Agreement, a copy of which the Company intends to file as an exhibit to its Quarterly Report on Form 10-Q for the quarter ending June 30, 2022.
Forward-Looking Statements
This Current Report on Form 8-K contains certain forward-looking statements within the meaning of the federal securities laws, which involve risks and uncertainties. Forward-looking statements include availability of commitments under the 2022 Credit Agreement on the Funding Date and the Company’s expected use of proceeds. Words such as “may,” “will,” “should,” “could,” “intend,” “potential,” “continue,” “anticipate,” “believe,” “estimate,” “expect,” “plan,” “target,” “predict,” “project,” “seek” and similar expressions as they relate to us are intended to identify forward-looking statements. They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to, those related to market conditions; funding conditions related to the 2022 Credit Agreement; that the Company’s existing indebtedness could adversely affect its business and growth prospects; and other risks and uncertainties set forth under “Risk Factors” included in the reports the Company has filed or will file with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2021. LifeStance does not undertake to update any forward-looking statements made in this Form 8-K to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based, except as otherwise required by law.
Item 2.02 Results of Operations and Financial Condition.
On May 9, 2022, LifeStance Health Group issued a press release announcing its results of operations for the first quarter ended March 31, 2022. A copy of the press release is furnished as Exhibit 99.1.
The information furnished under Item 2.02 of this Current Report on Form 8-K, including the exhibit, shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), nor shall it be deemed incorporated by reference into LifeStance Health Group's filings with the Securities and Exchange Commission (the "SEC") under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant
The information set forth above under Item 1.01 of this Current Report on Form 8-K relating to the 2022 Credit Agreement is incorporated by reference into this Item 2.03.
Item 7.01 Regulation FD Disclosure.
A slide presentation, which includes supplemental information related to LifeStance Health Group, is furnished as Exhibit 99.2. The information furnished under Item 7.01 of this Current Report on Form 8-K, including the exhibit, shall not be deemed "filed" for purposes of Section 18 of the Exchange Act, nor shall it be deemed incorporated by reference into LifeStance Health Group's filings with the SEC under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit |
|
Description |
99.1 |
|
|
99.2 |
|
|
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
LifeStance Health Group, Inc. |
|
|
|
|
Date: |
May 9, 2022 |
By: |
/s/ J. Michael Bruff |
|
|
|
J. Michael Bruff |
Exhibit 99.1
Investor Relations Contact
Monica Prokocki
VP of Investor Relations
602-767-2100
investor.relations@lifestance.com
LifeStance Reports First Quarter 2022 Results
SCOTTSDALE, Ariz. – May 9, 2022 – LifeStance Health Group, Inc. (NASDAQ: LFST), one of the nation’s largest providers of outpatient mental health care, today announced financial results for the quarter ended March 31, 2022.
(All results compared to prior-year comparative period, unless otherwise noted)
Q1 2022 Highlights and FY 2022 Outlook
"We are pleased with the team’s disciplined execution of our strategy, which drove solid results in the first quarter, even through the recent pandemic surge and current labor market dynamics,” said Michael Lester, Chairman and CEO of LifeStance. “We believe that our first quarter performance positions us well for the balance of the year, and that our differentiated hybrid model will continue to drive our growth regardless of how patient care shifts between in-person and virtual visits. Additionally, patient demand for our services has never been stronger and our patient acquisition costs remain very low, as the vast majority of our patients come directly from sticky primary care referrals, in-network payor relationships, and organic online self-referrals. Most importantly, we are confident in our ability to continue expanding access to affordable, best-in-class outpatient mental healthcare to help people lead healthier, more fulfilling lives."
Financial Highlights |
|
|
|
|
|
|
|
|
|
|||
|
|
Q1 2022 |
|
|
Q1 2021 |
|
|
Y/Y |
|
|||
(in millions) |
|
|
|
|
|
|
|
|
|
|||
Total revenue |
|
$ |
203.1 |
|
|
$ |
143.1 |
|
|
|
42 |
% |
Loss from operations |
|
|
(64.9 |
) |
|
|
(0.9 |
) |
|
|
7,111 |
% |
Center Margin |
|
|
54.2 |
|
|
|
44.0 |
|
|
|
23 |
% |
Net loss |
|
|
(62.3 |
) |
|
|
(8.7 |
) |
|
|
616 |
% |
Adjusted EBITDA |
|
|
12.5 |
|
|
|
12.6 |
|
|
|
(1 |
%) |
As % of Total Revenue: |
|
|
|
|
|
|
|
|
|
|||
Loss from operations |
|
|
(32.0 |
%) |
|
|
(0.6 |
%) |
|
|
|
|
Center Margin |
|
|
26.7 |
% |
|
|
30.7 |
% |
|
|
|
|
Net loss |
|
|
(30.7 |
%) |
|
|
(6.1 |
%) |
|
|
|
|
Adjusted EBITDA |
|
|
6.2 |
% |
|
|
8.8 |
% |
|
|
|
|
(All results compared to prior-year period, unless otherwise noted)
Strategy and Key Developments
During the first quarter, LifeStance took several actions to support the company’s strategy to expand into new markets, build market density and offer a technology-enabled experience for patients and clinicians, including:
Balance Sheet, Cash Flow and Capital Allocation
LifeStance provided $3.3 million cash flow from operations during the first quarter of 2022. The company ended the first quarter with cash of $114.0 million and net long-term debt of $177.4 million.
2022 Guidance1
LifeStance is reiterating its guidance for 2022 revenue of $865 million to $885 million, Center Margin of $240 million to $255 million, and Adjusted EBITDA of $63 million to $67 million.
For the second quarter of 2022, the company expects revenue of $209 million to $214 million, Center Margin of $57 million to $61 million, and Adjusted EBITDA of $12 million to $15 million.
Footnotes:
Conference Call, Webcast Information, and Presentation
LifeStance will hold a conference call today, May 9, at 4:30 p.m. Eastern Time to discuss first quarter 2022 results. Investors who wish to participate in the call should dial 1-888-660-0230, domestically, or 1-409-217-8218, internationally, approximately 10 minutes before the call begins and provide conference ID number 1191785 or ask to be joined into the LifeStance call. A real-time audio webcast can be accessed via the Events and Presentations section of the LifeStance Investor Relations website (https://investor.lifestance.com), where related materials will be posted prior to the conference call.
About LifeStance Health Group, Inc.
Founded in 2017, LifeStance (NASDAQ: LFST) is reimagining mental health. We are one of the nation’s largest providers of virtual and in-person outpatient mental health care for children, adolescents and adults experiencing a variety of mental health conditions. Our mission is to help people lead healthier, more fulfilling lives by improving access to trusted, affordable, and personalized mental healthcare. LifeStance employs approximately 5,000 psychiatrists, advanced practice nurses, psychologists and therapists and operates across 32 states and more than 500 centers. To learn more, please visit www.LifeStance.com.
We routinely post information that may be important to investors on the “Investor Relations” section of our website at investor.lifestance.com. We encourage investors and potential investors to consult our website regularly for important information about us.
Forward-Looking Statements
Statements in this press release and on the related teleconference that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements. These statements include, but are not limited to full-year and second-quarter guidance, statements about the company’s financial position; business plans and objectives; general economic and industry trends; operating results; and working capital and liquidity and other statements contained in this presentation that are not historical facts. When used in this press release and on the related teleconference, words such as “may,” “will,” “should,” “could,” “intend,” “potential,” “continue,” “anticipate,” “believe,” “estimate,” “expect,” “plan,” “target,” “predict,” “project,” “seek” and similar expressions as they relate to us are intended to identify forward-looking statements. They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: we may not grow at the rates we historically have achieved or at all, even if our key metrics may imply future growth, including if we are unable to successfully execute on our growth initiatives and business strategies; if we fail to manage our growth effectively, our expenses could increase more than expected, our revenue may not increase proportionally or at all, and we may be unable to execute on our business strategy; our ability to recruit new clinicians and retain existing clinicians; if reimbursement rates paid by third-party payors are reduced or if third-party payors otherwise restrain our ability to obtain or deliver care to patients, our business could be harmed; we conduct business in a heavily regulated industry and if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes to our operations or experience adverse publicity, which could have a material adverse effect on our business, results of operations and financial condition; we are dependent on our relationships with affiliated practices, which we do not own, to provide health care services, and our business would be harmed if those relationships were disrupted or if our arrangements with these entities became subject to legal challenges; we operate in a competitive industry, and if we are not able to compete effectively, our business, results of operations and financial condition would be harmed; the impact of health care reform legislation and other changes in the healthcare industry and in health care spending on us is currently unknown, but may harm our business; if our or our vendors’ security measures fail or are breached and unauthorized access to our employees’, patients’ or partners’ data is obtained, our systems may be perceived as insecure, we may incur significant liabilities, including through private litigation or regulatory action, our reputation may be harmed, and we could lose patients and partners; our business depends on our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems; our existing indebtedness could adversely affect our business and growth prospects; and other risks and uncertainties set forth under “Risk Factors” included in the reports we have filed or will file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2021. LifeStance does not undertake to update any forward-looking statements made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based, except as otherwise required by law.
Non-GAAP Financial Information
This press release contains certain non-GAAP financial measures, including Center Margin, Adjusted EBITDA, and Adjusted EBITDA margin. Tables showing the reconciliation of these non-GAAP financial measures to the comparable GAAP measures are included at the end of this release. Management believes these non-GAAP financial measures are useful in evaluating the company’s operating performance, and may be helpful to securities analysts, institutional investors and other interested parties in understanding the company’s operating performance and prospects. These non-GAAP financial measures, as calculated, may not be comparable to companies in other industries or within the same industry with similarly titled measures of performance. Therefore, the company’s non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP, such as net loss or loss from operations.
Center Margin and Adjusted EBITDA anticipated for the second quarter of 2022 and full year 2022 are calculated in a manner consistent with the historical presentation of these measures at the end of this release. Reconciliation for the forward-looking second quarter of 2022 and full year 2022 Center Margin and Adjusted EBITDA guidance is not being provided, as LifeStance does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliation. As such, LifeStance management cannot estimate on a forward-looking basis without unreasonable effort the impact these variables and individual adjustments will have on its reported results.
Management acknowledges that there are many items that impact a company’s reported results and the adjustments reflected in these non-GAAP measures are not intended to present all items that may have impacted these results.
# # # #
Consolidated Financial Information and Reconciliations
CONSOLIDATED BALANCE SHEETS
(unaudited)
(In thousands, except for par value)
|
|
March 31, 2022 |
|
|
December 31, 2021 |
|
||
CURRENT ASSETS |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
113,990 |
|
|
$ |
148,029 |
|
Patient accounts receivable, net |
|
|
94,991 |
|
|
|
76,078 |
|
Prepaid expenses and other current assets |
|
|
54,316 |
|
|
|
42,413 |
|
Total current assets |
|
|
263,297 |
|
|
|
266,520 |
|
NONCURRENT ASSETS |
|
|
|
|
|
|
||
Property and equipment, net |
|
|
170,927 |
|
|
|
152,242 |
|
Intangible assets, net |
|
|
291,180 |
|
|
|
300,355 |
|
Goodwill |
|
|
1,229,303 |
|
|
|
1,204,544 |
|
Deposits |
|
|
3,679 |
|
|
|
3,448 |
|
Total noncurrent assets |
|
|
1,695,089 |
|
|
|
1,660,589 |
|
Total assets |
|
$ |
1,958,386 |
|
|
$ |
1,927,109 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
||
CURRENT LIABILITIES |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
15,136 |
|
|
$ |
14,152 |
|
Accrued payroll expenses |
|
|
73,207 |
|
|
|
60,002 |
|
Other accrued expenses |
|
|
21,807 |
|
|
|
26,510 |
|
Current portion of contingent consideration |
|
|
13,491 |
|
|
|
14,123 |
|
Other current liabilities |
|
|
1,956 |
|
|
|
1,965 |
|
Total current liabilities |
|
|
125,597 |
|
|
|
116,752 |
|
NONCURRENT LIABILITIES |
|
|
|
|
|
|
||
Long-term debt, net |
|
|
177,380 |
|
|
|
157,416 |
|
Other noncurrent liabilities |
|
|
57,487 |
|
|
|
50,325 |
|
Contingent consideration, net of current portion |
|
|
1,123 |
|
|
|
3,307 |
|
Deferred tax liability, net |
|
|
54,281 |
|
|
|
54,281 |
|
Total noncurrent liabilities |
|
|
290,271 |
|
|
|
265,329 |
|
Total liabilities |
|
$ |
415,868 |
|
|
$ |
382,081 |
|
COMMITMENT AND CONTINGENCIES |
|
|
|
|
|
|
||
STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
||
Preferred stock – par value $0.01 per share; 25,000 shares authorized as of |
|
|
— |
|
|
|
— |
|
Common stock – par value $0.01 per share; 800,000 shares authorized as of |
|
|
3,744 |
|
|
|
3,743 |
|
Additional paid-in capital |
|
|
1,958,174 |
|
|
|
1,898,357 |
|
Accumulated deficit |
|
|
(419,400 |
) |
|
|
(357,072 |
) |
Total stockholders' equity |
|
|
1,542,518 |
|
|
|
1,545,028 |
|
Total liabilities and stockholders’ equity |
|
$ |
1,958,386 |
|
|
$ |
1,927,109 |
|
consolidated statements of operations
(unaudited)
(In thousands, except for Net Loss per Share)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
TOTAL REVENUE |
|
$ |
203,095 |
|
|
$ |
143,132 |
|
OPERATING EXPENSES |
|
|
|
|
|
|
||
Center costs, excluding depreciation and amortization shown |
|
|
148,893 |
|
|
|
99,134 |
|
General and administrative expenses |
|
|
103,369 |
|
|
|
32,651 |
|
Depreciation and amortization |
|
|
15,684 |
|
|
|
12,228 |
|
Total operating expenses |
|
$ |
267,946 |
|
|
$ |
144,013 |
|
LOSS FROM OPERATIONS |
|
$ |
(64,851 |
) |
|
$ |
(881 |
) |
OTHER INCOME (EXPENSE) |
|
|
|
|
|
|
||
Loss on remeasurement of contingent consideration |
|
|
(434 |
) |
|
|
(307 |
) |
Transaction costs |
|
|
(278 |
) |
|
|
(1,534 |
) |
Interest expense |
|
|
(3,441 |
) |
|
|
(8,632 |
) |
Other expense |
|
|
— |
|
|
|
(89 |
) |
Total other expense |
|
$ |
(4,153 |
) |
|
$ |
(10,562 |
) |
LOSS BEFORE INCOME TAXES |
|
|
(69,004 |
) |
|
|
(11,443 |
) |
INCOME TAX BENEFIT |
|
|
6,676 |
|
|
|
2,761 |
|
NET LOSS |
|
$ |
(62,328 |
) |
|
$ |
(8,682 |
) |
Accretion of Redeemable Class A units |
|
|
— |
|
|
|
(36,750 |
) |
NET LOSS AVAILABLE TO COMMON |
|
$ |
(62,328 |
) |
|
$ |
(45,432 |
) |
NET LOSS PER SHARE, BASIC AND DILUTED |
|
|
(0.18 |
) |
|
|
(0.15 |
) |
Weighted-average shares used to compute basic and diluted |
|
|
350,849 |
|
|
|
305,538 |
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(In thousands)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
||
Net loss |
|
$ |
(62,328 |
) |
|
$ |
(8,682 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
15,684 |
|
|
|
12,228 |
|
Stock and unit-based compensation |
|
|
59,855 |
|
|
|
605 |
|
Amortization of debt issue costs |
|
|
295 |
|
|
|
403 |
|
Loss on remeasurement of contingent consideration |
|
|
434 |
|
|
|
307 |
|
Change in operating assets and liabilities, net of businesses acquired: |
|
|
|
|
|
|
||
Patient accounts receivable, net |
|
|
(18,121 |
) |
|
|
(3,116 |
) |
Prepaid expenses and other current assets |
|
|
(12,065 |
) |
|
|
(8,042 |
) |
Accounts payable |
|
|
1,852 |
|
|
|
3,014 |
|
Accrued payroll expenses |
|
|
12,759 |
|
|
|
7,314 |
|
Other accrued expenses |
|
|
4,943 |
|
|
|
5,878 |
|
Net cash provided by operating activities |
|
|
3,308 |
|
|
|
9,909 |
|
CASH FLOWS FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
||
Purchases of property and equipment |
|
|
(27,910 |
) |
|
|
(11,081 |
) |
Acquisitions of businesses, net of cash acquired |
|
|
(22,945 |
) |
|
|
(754 |
) |
Net cash used in investing activities |
|
|
(50,855 |
) |
|
|
(11,835 |
) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
||
Payments of deferred offering costs |
|
|
— |
|
|
|
(323 |
) |
Proceeds from long-term debt |
|
|
20,000 |
|
|
|
26,200 |
|
Payments of debt issue costs |
|
|
— |
|
|
|
(955 |
) |
Payments of long-term debt |
|
|
(331 |
) |
|
|
(785 |
) |
Payments of contingent consideration |
|
|
(5,720 |
) |
|
|
(1,546 |
) |
Taxes related to net share settlement of equity awards |
|
|
(441 |
) |
|
|
— |
|
Net cash provided by financing activities |
|
|
13,508 |
|
|
|
22,591 |
|
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS |
|
|
(34,039 |
) |
|
|
20,665 |
|
Cash and Cash Equivalents - Beginning of period |
|
|
148,029 |
|
|
|
18,829 |
|
CASH AND CASH EQUIVALENTS – END OF PERIOD |
|
$ |
113,990 |
|
|
$ |
39,494 |
|
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION |
|
|
|
|
|
|
||
Cash paid for interest |
|
$ |
3,091 |
|
|
$ |
6,806 |
|
Cash paid for taxes, net of refunds |
|
$ |
(60 |
) |
|
$ |
3 |
|
SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND |
|
|
|
|
|
|
||
Unpaid deferred offering costs included in accounts payable and |
|
$ |
— |
|
|
$ |
1,871 |
|
Equipment financed through capital leases |
|
$ |
57 |
|
|
$ |
14 |
|
Contingent consideration incurred in acquisitions of businesses |
|
$ |
2,470 |
|
|
$ |
808 |
|
Acquisition of property and equipment included in liabilities |
|
$ |
12,320 |
|
|
$ |
7,498 |
|
RECONCILIATION OF loss FROM OPERATIONS TO CENTER MARGIN
(unaudited)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Loss from operations |
|
$ |
(64,851 |
) |
|
$ |
(881 |
) |
Adjusted for: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
15,684 |
|
|
|
12,228 |
|
General and administrative expenses (1) |
|
|
103,369 |
|
|
|
32,651 |
|
Center Margin |
|
$ |
54,202 |
|
|
$ |
43,998 |
|
RECONCILIATION OF NET loss TO ADJUSTED EBITDA
(unaudited)
|
|
Three Months Ended March 31, |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
(in thousands) |
|
|
|
|
|
|
||
Net loss |
|
$ |
(62,328 |
) |
|
$ |
(8,682 |
) |
Adjusted for: |
|
|
|
|
|
|
||
Interest expense |
|
|
3,441 |
|
|
|
8,632 |
|
Depreciation and amortization |
|
|
15,684 |
|
|
|
12,228 |
|
Income tax benefit |
|
|
(6,676 |
) |
|
|
(2,761 |
) |
Loss on remeasurement of contingent consideration |
|
|
434 |
|
|
|
307 |
|
Stock and unit-based compensation expense |
|
|
59,855 |
|
|
|
605 |
|
Management fees (1) |
|
|
— |
|
|
|
89 |
|
Transaction costs (2) |
|
|
278 |
|
|
|
1,534 |
|
Other expenses (3) |
|
|
1,794 |
|
|
|
632 |
|
Adjusted EBITDA |
|
$ |
12,482 |
|
|
$ |
12,584 |
|
Q1 2022 Earnings Presentation May 9, 2022 Exhibit 99.2
Forward-Looking Statements DISCLAIMERS Cautionary Note Regarding Forward-Looking Statements This presentation and related oral statements contain forward-looking statements about LifeStance Health Group, Inc. and its subsidiaries (“LifeStance”) and the industry in which LifeStance operates, including statements regarding full-year and second quarter guidance, future results of operations and financial position of LifeStance, which are subject to known and unknown uncertainties and contingencies outside of LifeStance's control and which are largely based on our current expectations and projections about future events and financial trends that we believe may affect LifeStance's financial condition, results of operations, business strategy, and prospects. LifeStance's actual results, events, or circumstances may differ materially from these statements. Forward-looking statements include all statements that are not historical facts. Words such as “anticipate,” “believe,” “envision,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “target,” “potential,” “will,” “would,” “could,” “should,” “continue,” “contemplate” and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to a number of risks, uncertainties, factors and assumptions, including, among other things: we may not grow at the rates we historically have achieved or at all, even if our key metrics may imply future growth, including if we are unable to successfully execute on our growth initiatives and business strategies; if we fail to manage our growth effectively, our expenses could increase more than expected, our revenue may not increase proportionally or at all, and we may be unable to execute on our business strategy; our ability to recruit new clinicians and retain existing clinicians; if reimbursement rates paid by third-party payors are reduced or if third-party payors otherwise restrain our ability to obtain or deliver care to patients, our business could be harmed; we conduct business in a heavily regulated industry and if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes to our operations or experience adverse publicity, which could have a material adverse effect on our business, results of operations and financial condition; we are dependent on our relationships with affiliated practices, which we do not own, to provide health care services, and our business would be harmed if those relationships were disrupted or if our arrangements with these entities became subject to legal challenges; we operate in a competitive industry, and if we are not able to compete effectively, our business, results of operations and financial condition would be harmed; the impact of health care reform legislation and other changes in the healthcare industry and in health care spending on us is currently unknown, but may harm our business; if our or our vendors' security measures fail or are breached and unauthorized access to our employees' patients' or partners' data is obtained, our systems may be perceived as insecure, we may incur significant liabilities, including through private litigation or regulatory action, our reputation may be harmed, and we could lose patients and partners; our business depends on our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems; our existing indebtedness could adversely affect our business and growth prospects; and the other factors set forth in our filings with the Securities and Exchange Commission. The forward-looking statements, together with statements relating to our past performance, should not be regarded as a reliable indicator of our future performance. We undertake no obligation to update any forward-looking statements made in this presentation to reflect events or circumstances after the date of this presentation or to reflect new information or the occurrence of unanticipated events, except as may be required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future mergers, dispositions, joint ventures, or investments. Use of Non-GAAP Financial Measures In addition to financial measures presented in accordance with U.S. generally accepted accounting principles (“GAAP”), this presentation includes certain non-GAAP financial measures, including Center Margin and Adjusted EBITDA. These non-GAAP measures are in addition to, and not a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. The non-GAAP financial measures used by LifeStance may differ from the non-GAAP financial measures used by other companies. A reconciliation of these measures to the most directly comparable U.S. GAAP measure is included in the Appendix to these slides or as otherwise described in these slides. Market and Industry Data This presentation also contains information regarding our market and industry that is derived from third-party research and publications. This information involves a number of assumptions and limitations. Forecasts, assumptions, expectations, beliefs, estimates and projections involve risk and uncertainties and are subject to change based on various factors.
Mission-driven Increasing access to personalized, trusted and affordable mental healthcare LifeStance at a Glance* Hybrid Virtual and in-person care model 10+ Integrated care programs 32 States 500+ Centers 4,989 Clinicians $727M TTM revenues1 Building the Nation’s Leading Outpatient Mental Health Platform *Note: Unless otherwise stated, data is as of March 31, 2021; 1Trailing twelve months
Q1 Financial Highlights Q1 Revenue of $203.1 million increased 42% year-over-year Q1 Center Margin of $54.2 million, or 26.7% as a percentage of revenue Q1 Adjusted EBITDA of $12.5 million, or 6.2% as a percentage of revenue Ended Q1 with a cash position of $114.0 million Note: See reconciliation of GAAP to non-GAAP measures in the Appendix to this presentation.
Q1 2022 Strategy & Key Developments Total clinicians of 4,989, +51% Y/Y; 199 net clinician adds in Q1 Completed 2 acquisitions in Q1, bringing the total since inception to 79 Opened 41 de novo centers in Q1 to support the company’s differentiated hybrid model offering both in-person and virtual care Continued to deploy proprietary online booking and intake experience (“OBIE”) across the country, which is now live in 7 states Entered into a new credit facility in early May, which will repay our existing net long-term debt at a more favorable cost of debt than the existing credit facility and provide access to incremental debt capital to fund growth through up to $100 million in delayed draw loans and $50 million in revolving loans at close (undrawn at close) Awarded grants through the LifeStance Health Foundation to non-profits that directly serve youth and adolescent populations, including the American Foundation for Suicide Prevention, to improve access for youth and further support the destigmatization of mental health
Adjusted EBITDA (in $M) Center Margin (in $M) Clinicians Revenue (in $M) Q1 2022 Results Note: See reconciliation of GAAP to non-GAAP measures in the Appendix to this presentation. 8.8% 6.2% Adj. EBITDA (% of total revenue) 30.7% 26.7% Center Margin (% of total revenue) +23% +42% +51% -1%
Clinicians Adjusted EBITDA (in $M) 8.8% 9.1% 6.2% 6.0% 6.2% Adj. EBITDA (% of total revenue) Center Margin (in $M) Revenue (in $M) Quarterly Trends Note: See reconciliation of GAAP to non-GAAP measures in the Appendix to this presentation. 30.7% 31.9% 29.9% 28.5% 26.7% Center Margin (% of total revenue)
Balance Sheet, Cash Flow & Capital Allocation Percentage description with ctetur ad ipisc ing elite 75% Cash and Cash Equivalents $114M Percentage description with ctetur ad ipisc ing elite 75% Net Long-term Debt $177M Percentage description with ctetur ad ipisc ing elite 75% Operating Cash Flow (Q1) $3M Percentage description with ctetur ad ipisc ing elite 75% Capital Expenditures (Q1) $28M Continue to deploy capital in a disciplined manner to grow our clinician base and expand our footprint De Novos Highly efficient model with predictable profitability 267 de novos opened since inception, including 41 in Q1 Capital Allocation Acquisitions Disciplined investments to drive growth 79 acquisitions since inception, including 2 in Q1 Balance Sheet & Cash Flow
2022 Guidance (All $ in M) FY 2022 Q2 2022 Revenue $865 – $885 Unchanged $209 – $214 Center Margin $240 – $255 Unchanged $57 – $61 Adj. EBITDA $63 – $67 Unchanged $12 – $15 Note: Center Margin and Adjusted EBITDA anticipated for second quarter of 2022 and full year 2022 are calculated in a manner consistent with the historical presentation of these measures in the Appendix to this presentation. Reconciliation for the forward-looking second quarter of 2022 and full year 2022 Center Margin and Adjusted EBITDA guidance is not being provided, as LifeStance does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliation. LifeStance management cannot estimate on a forward-looking basis without unreasonable effort the impact these variables and individual adjustments will have on its reported results. Planning Assumptions Assumes 80 to 90 de novo center openings, weighted heavily toward the first half of the year Assumes M&A spend of $50M to $70M Assumes no further COVID-related impacts or changes in the labor market environment
Appendix
Quarterly Statements of Operations 2022 2021 ($M) Q1 Q4 Q3 Q2 Q1 Total Revenues $203.1 $190.1 $173.8 $160.5 $143.1 Operating expenses Center costs, excluding depreciation and amortization 148.9 135.8 121.8 109.3 99.1 General and administrative 103.4 152.7 162.9 85.5 32.7 Depreciation and amortization 15.7 15.4 13.8 12.8 12.2 Loss from operations (64.9) (113.8) (124.7) (47.0) (0.9) Other income (expense) Loss on remeasurement of contingent consideration (0.4) (1.1) (0.9) (0.3) (0.3) Transaction costs (0.3) (0.1) (0.1) (2.0) (1.5) Interest expense (3.4) (3.6) (3.5) (23.2) (8.6) Other expense - (0.0) - (1.4) (0.1) Total other expense (4.2) (4.9) (4.5) (26.8) (10.6) Loss before taxes (69.0) (118.6) (129.2) (73.8) (11.4) Income tax benefit 6.7 10.6 8.8 3.8 2.8 Net loss ($62.3) ($108.0) ($120.5) ($70.0) ($8.7) Subtotals in the schedule above may not foot due to rounding. Amounts are unaudited.
GAAP to Non-GAAP Reconciliations – Center Margin 2022 2021 2021 ($M) Q1 Q4 Q3 Q2 Q1 Loss from operations ($64.9) ($113.8) ($124.7) ($47.0) ($0.9) Adjusted for: Depreciation and amortization 15.7 15.4 13.8 12.8 12.2 General and administrative (1) 103.4 152.7 162.9 85.5 32.7 Center Margin $54.2 $54.2 $52.1 $51.2 $44.0 Subtotals in the schedule above may not foot due to rounding. Amounts are unaudited. 1 - Represents salaries, wages and employee benefits for our executive leadership, finance, human resources, marketing, billing and credentialing support and technology infrastructure and stock and unit-based compensation for all employees.
GAAP to Non-GAAP Reconciliations – Adjusted EBITDA 2022 2021 2021 ($M) Q1 Q4 Q3 Q2 Q1 Net loss ($62.3) ($108.0) ($120.5) ($70.0) ($8.7) Adjusted for: Interest expense 3.4 3.6 3.5 23.2 8.6 Depreciation and amortization 15.7 15.4 13.8 12.8 12.2 Income tax benefit (6.7) (10.6) (8.8) (3.8) (2.8) Loss on remeasurement of contingent consideration 0.4 1.1 0.9 0.3 0.3 Stock and unit-based compensation 59.9 108.6 120.7 29.5 0.6 Management fees (1) - - - 1.4 0.1 Loss on disposal of assets - 0.0 - - - Transaction costs (2) 0.3 0.1 0.1 2.0 1.5 Offering related costs (3) - - - 8.7 - Endowment to the LifeStance Health Foundation - - - 10.0 - Other expenses (4) 1.8 1.1 0.9 0.5 0.6 Adjusted EBITDA $12.5 $11.4 $10.7 $14.5 $12.6 Subtotals in the schedule above may not foot due to rounding. Amounts are unaudited. 1 - Represents management fees paid to certain of our executive officers and affiliates of our principal stockholders pursuant to the management services agreement entered into in connection with the acquisition of LifeStance by affiliates of TPG Inc.( the “TPG Acquisition”). During the year ended December 31, 2021, the management services agreement terminated in connection with the IPO and we were required to pay a one-time fee of $1.2 million to such parties. 2 - Primarily includes capital markets advisory, consulting, accounting and legal expenses related to our acquisitions. 3 - Primarily includes non-recurring incremental professional services, such as accounting and legal, and directors' and officers' insurance incurred in connection with the IPO. 4 - Primarily includes costs incurred to consummate or integrate acquired centers, certain of which are wholly-owned and certain of which are affiliated practices, in addition to the compensation paid to former owners of acquired centers and related expenses that are not reflective of the ongoing operating expenses of our centers. Acquired center integration and other are components of general and administrative expenses included in our consolidated statements operations. Former owner fees are components of center costs, excluding depreciation and amortization included in our consolidated statements of operations.
Quarterly Non-GAAP Financial Metrics 2022 2021 2021 ($M) Q1 Q4 Q3 Q2 Q1 Key Metrics Clinicians 4,989 4,790 4,375 3,975 3,301 Total Revenues $203.1 $190.1 $173.8 $160.5 $143.1 Center costs 148.9 135.8 121.8 109.3 99.1 Center Margin (Non-GAAP) $54.2 $54.2 $52.1 $51.2 $44.0 % Margin 26.7% 28.5% 29.9% 31.9% 30.7% General and administrative 103.4 152.7 162.9 85.5 32.7 Depreciation and amortization 15.7 15.4 13.8 12.8 12.2 Loss from operations (64.9) (113.8) (124.7) (47.0) (0.9) Other income (expenses) Other income (expenses) 2.5 5.7 4.2 (23.0) (7.8) Net loss ($62.3) ($108.0) ($120.5) ($70.0) ($8.7) Adjusted EBITDA build Net loss (62.3) (108.0) (120.5) (70.0) (8.7) Interest expense 3.4 3.6 3.5 23.2 8.6 Depreciation and amortization 15.7 15.4 13.8 12.8 12.2 Income tax benefit (6.7) (10.6) (8.8) (3.8) (2.8) Loss on remeasurement of contingent consideration 0.4 1.1 0.9 0.3 0.3 Stock and unit-based compensation 59.9 108.6 120.7 29.5 0.6 Management fees - - - 1.4 0.1 Loss on disposal of assets - 0.0 - - - Transaction costs 0.3 0.1 0.1 2.0 1.5 Offering related costs - - - 8.7 - Endowment to the LifeStance Health Foundation - - - 10.0 - Other expenses 1.8 1.1 0.9 0.5 0.6 Adjusted EBITDA (Non-GAAP) $12.5 $11.4 $10.7 $14.5 $12.6 % Margin 6.2% 6.0% 6.2% 9.1% 8.8% Subtotals in the schedule above may not foot due to rounding. Amounts are unaudited.
Quarterly Balance Sheets 2022 2021 2021 ($M) Q1 Q4 Q3 Q2 Q1 Cash and cash equivalents 114.0 148.0 212.1 276.2 39.5 Patient accounts receivable 95.0 76.1 70.1 60.1 47.8 Prepaid expenses and other current assets 54.3 42.4 46.1 27.8 22.3 Total current assets 263.3 266.5 328.3 364.1 109.6 Property and equipment, net 170.9 152.2 115.1 91.8 70.8 Intangible assets, net 291.2 300.4 308.0 316.5 323.3 Goodwill 1,229.3 1,204.5 1,160.0 1,138.7 1,099.7 Deposits 3.7 3.5 3.4 3.3 2.9 Total noncurrent assets 1,695.1 1,660.6 1,586.4 1,550.4 1,496.7 Total assets $1,958.4 $1,927.1 $1,914.8 $1,914.4 $1,606.3 Accounts payable 15.1 14.2 3.1 10.0 5.9 Accrued payroll expenses 73.2 60.0 57.6 50.4 45.4 Other accrued expenses 21.8 26.5 28.3 38.8 25.7 Current portion of contingent consideration 13.5 14.1 14.0 10.9 14.9 Other current liabilities 2.0 2.0 2.2 2.6 4.9 Total current liabilities 125.6 116.8 105.2 112.6 96.8 Long-term debt, net 177.4 157.4 157.5 157.1 387.3 Other noncurrent liabilities 57.5 50.3 22.9 15.7 14.2 Contingent consideration, net of current portion 1.1 3.3 3.1 3.2 1.1 Deferred tax liability, net 54.3 54.3 81.2 81.2 81.2 Total noncurrent liabilities 290.3 265.3 264.7 257.2 483.8 Total liabilities $415.9 $382.1 $369.9 $369.8 $580.5 Redeemable units - - - - 71.8 Common stock/units 3.7 3.7 3.7 3.7 1,010.5 Additional paid-in capital 1,958.2 1,898.4 1,790.2 1,669.5 2.1 Accumulated deficit (419.4) (357.1) (249.0) (128.6) (58.6) Total stockholders'/members’ equity 1,542.5 1,545.0 1,544.9 1,544.6 954.0 Total liabilities, redeemable units and stockholders’/members’ equity $1,958.4 $1,927.1 $1,914.8 $1,914.4 $1,606.3 Subtotals in the schedule above may not foot due to rounding. Amounts are unaudited.
($M) 1Q’22 1Q’21 2021 FY CASH FLOWS FROM OPERATING ACTIVITIES Net loss (62.3) (8.7) (307.2) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 15.7 12.2 54.1 Stock and unit-based compensation 59.9 0.6 259.4 Deferred income taxes - - (26.9) Loss on debt extinguishment - - 14.4 Amortization of debt issue costs 0.3 0.4 1.8 Loss on remeasurement of contingent consideration 0.4 0.3 2.6 Endowment of shares to LifeStance Health Foundation - - 9.0 Change in operating assets and liabilities, net of businesses acquired: Patient accounts receivable (18.1) (3.1) (24.2) Prepaid expenses and other current assets (12.1) (8.0) (29.1) Accounts payable 1.9 3.0 0.6 Accrued payroll expenses 12.8 7.3 15.3 Other accrued expenses 4.9 5.9 39.6 Net cash provided by operating activities $3.3 $9.9 $9.4 CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment (27.9) (11.1) (94.5) Acquisitions of businesses, net of cash acquired (22.9) (0.8) (99.6) Net cash used in investing activities ($50.9) ($11.8) ($194.1) CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from initial public offering, net of underwriters discounts and commissions and deferred offering costs - - 548.9 Payments of deferred offering costs - (0.3) - Issuance of common units to new investors - - 1.0 Proceeds from long-term debt 20.0 26.2 98.8 Payments of debt issue costs - (1.0) (2.4) Payments of long-term debt (0.3) (0.8) (311.4) Prepayment for debt paydown - - (8.8) Payments of contingent consideration (5.7) (1.5) (12.3) Taxes related to net share settlement of equity awards (0.4) - - Net cash provided by financing activities $13.5 $22.6 $313.9 NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ($34.0) $20.7 $129.2 Cash and Cash Equivalents - Beginning of period 148.0 18.8 18.8 CASH AND CASH EQUIVALENTS – END OF PERIOD $114.0 $39.5 $148.0 Statements of Cash Flows Subtotals in the schedule above may not foot due to rounding. Amounts are unaudited.