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| Statement |
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| Second, we are making solid progress on our three strategic investments |
| In the fourth quarter, we achieved strong top-line results with revenue of $281 million, representing growth of 22% year over year, with outperformance in the quarter driven primarily by positive visit volumes as our clinicians delivered more visits during the holiday season than expected |
| As I've shared previously, the founders of LifeStance designed a great model to achieve an exceptional growth and have given newcomers like myself and Dave an opportunity to evolve and scale a great business |
| We have been able to demonstrate not just patient acquisition in terms of volume above the pace of growth of our clinician base, but we've also been able to deliver that while bringing down the cost of acquisition for each new visit over time |
| These actions delivered improvements in attracting new patients above the growth of our clinician base demonstrated by our growing waitlist for services |
| Finally, at the bottom of the funnel in terms of scheduled appointments converting to completed visits, our cancellation and no-show rates have now stabilized in the 9% to 10% range, which is a significant improvement from the previous 15% level when we set this as the focus area for improvement |
| We continue to feel strong conviction around our estimates around mid-teen organic growth and then obviously, when we go back to pursuing acquisitions that will drive it beyond the mid-teens |
| In addition to improving clinician productivity we made notable strides in other areas during the past year |
| And we're really pleased that as compared to our sort of long-term comments where we were projecting and committing to free cash flow for full year 2025 |
| The primary drivers of a TRPV improvement in the fourth quarter were driven by the higher -- increase in the higher margin, higher revenue services |
| So we feel really good about the margin expansion that we're seeing both in the bottom line as well as incentive margin for 2024 |
| So all in all, we feel great about where we're at today |
| Our 2024 guidance reflects the strong positive momentum of the organization, and we look forward to continuing to invest in the patient and clinician experience while at the same time delivering margin expansion |
| Our clinician value proposition remains strong and we are proud of our clinician recruiting and operations team's great work in delivering clinician growth in 2023 |
| While it is still early, we have seen encouraging results in our initial launch |
| We are doing all three of these things while also meeting our commitments to margin expansion in 2024, demonstrating that delivering improved patient and clinician experiences while also delivering improved operating leverage can be accomplished simultaneously |
| But as indicated by our net clinician adds of over 1,000, which we're very proud of, our ability to both attract and retain clinicians remains strong |
| One example of the improvements we are making is a digital patient check-in tool that we believe will enhance the patient, clinician and front office staff experience while reducing our administrative costs |
| I'm also particularly proud of the strength of the leadership bench that we have built, which delivered on our commitments for the full year 2023 and will be instrumental in leading the long-term profitable growth of the business |
| We have wins throughout 2023 and feel really good about what we've been able to accomplish there |
| Adjusted EBITDA of $20 million in the quarter was strong and consistent with our expectations |
| I'm proud of what our teams have accomplished over the past year and am equally excited about the opportunities in front of us in 2024 and beyond |
| Importantly, our growth in Q4 remains 100% organic for the third consecutive quarter |
| In particular, I am thrilled that we expect to achieve the important milestone of positive free cash flow for 2024 |
| Like Ken, I'm pleased with the team's operational and financial performance in 2023 exceeding our expectations for the full year |
| This quarter represents the fifth consecutive quarter that LifeStance has met or exceeded expectations across all financial metrics |
| Regarding profitability, the better than expected top-line results flowed through to center margin |
| This will further enhance the patient-matching experience while significantly reducing complexity and increasing the speed of scheduling over the phone for our intake team |
| It is due to their collective efforts that we have made significant strides toward realizing LifeStance's potential |
| Visit volumes of 1.8 million increased 20% year over year, primarily driven by organic clinician growth and modest productivity improvements |
| Statement |
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| Free cash flow and cash from operating activities were negatively impacted in the quarter due to the shareholder litigation settlement |
| And as you noted, we did release those claims, and you saw DSO come down significantly in the fourth quarter as we expected |
| Since the start of the pandemic, the country has experienced an alarming increase in the rates of anxiety and depression and as well as deaths resulting from overdose and suicide |
| For the full year 2023, free cash flow was negative $57 million, which includes shareholder litigation expenses of approximately $50 million |
| You were cutting out pretty bad |
| We expect leverage to come down significantly this year, anticipate net leverage to be below 2.5 times by the end of the year |
| But over the last year and what we would view at least for 2024 and be likely beyond is patient demand will continue to outstrip supply |
| Tens of millions of Americans are unable to access mental health care treatment, with devastating effects on families and communities |
| Ken, despite the comments of improved track record that you've seen in the last five quarters, there's still some noise out there in terms of clinician turnover and growth |
| We reduced that by about 30% last year |
| I will note that our cost per new patient acquisition continued to decline year over year and we spend a de minimis amount on paid advertising as part of our top of funnel strategy |
| So that impacted our cash |
| Our payer strategy really is going to continue the work that we started in 2023, which is I was very surprised to see the number of payer contracts we had |
| Recognizing that there's more work to do, I do want to be sure to call out that I could not be more proud of my teammates across LifeStance |
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