Prepared remarks
Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to LifeStance Health Second Quarter 2026 Earnings Call. Operator Instructions. I would now like to turn the conference over to Monica Prokocki. You may begin.
Thank you, operator. Good morning, everyone, and welcome to LifeStance Health's second quarter 2026 earnings conference call. I'm Monica Prokocki, Vice President of Finance and Investor Relations. Joining me today are Dave Bourdon, Chief Executive Officer; and Ryan McGroarty, Chief Financial Officer. We issued the earnings release and presentation before the market open this morning. Both are available on the Investor Relations section of our website, investor.lifestance.com. In addition, a replay will be available following the call. Before turning over to management for their prepared remarks, please direct your attention to the disclaimers about forward-looking statements included in the earnings press release and SEC filings. Today's remarks contain forward-looking statements, including statements about our financial performance outlook, business model and strategy. Those statements involve risks, uncertainties and other factors, as noted in our periodic filings with the SEC that could cause actual results to differ materially. Please note that we report results using non-GAAP financial measures, which we believe provide additional information for investors to help facilitate comparison of current and past performance. A reconciliation to the most directly comparable GAAP measures is included in the earnings press release tables and presentation appendix. Unless otherwise noted, all results are compared to the comparable period in the prior year. At this time, I'll turn the call over to Dave Bourdon, CEO of LifeStance. Dave?
Thanks, Monica, and thank you all for joining us today. This was another exceptional quarter for LifeStance. We exceeded each of our guided metrics for the quarter, delivering remarkable revenue growth of over 26% and adjusted EBITDA margins that exceeded 15%. Given the outperformance in the quarter, we are again raising our full year guidance across all metrics. Ryan will provide the details on our improved view of 2026 later. Regarding operational execution, we continue to grow our clinician base now at over 8,500 clinicians as our value proposition continues to resonate. Clinician productivity also remained strong in the quarter, reflecting the power of our operating model and discipline. As for specialty services, we continue to expand our reach as we launched TMS and Spravato in additional centers to support patients with treatment-resistant depression and to drive clinically meaningful improvements in outcomes. Turning to technology. We continue to deploy digital, AI-enabled and workflow automation tools that improve patient access, enhance the clinician experience and drive operational efficiency across the organization. Regarding our new EHR, we have begun our preparations for the transition to a new vendor planned for 2027. This investment is expected to be a critical enabler of our long-term strategy, helping us streamline front and back-office operations through more intelligent workflows, deliver a better patient and clinician experience that supports engagement and retention and equip clinicians with better tools to provide high-quality care and drive improved clinical outcomes. Turning to geographic expansion. We have a significant opportunity to increase density within our existing markets and expand our footprint into new geographies as we only have a presence in roughly half of the 150 largest U.S. markets. In addition, there is substantial room to expand in smaller markets as well. Tuck-in acquisitions remain our preferred approach for entering new geographies, and we have a strong pipeline of opportunities that support our disciplined growth strategy. During the second quarter, we successfully completed another small tuck-in acquisition that expands our therapy and psychiatry presence in Arizona. Where compelling acquisition opportunities are not available, we will pursue expansion through our proven de novo approach. Finally, I'd like to highlight our ongoing commitment to clinical excellence, delivering high-quality care and improving patient outcomes is central to our mission and remains a key differentiator for LifeStance. During our first quarter call, we discussed outcomes data we published in April from nearly 180,000 LifeStance patients with moderate to severe anxiety and depression, which showed that roughly three quarters experienced clinically significant improvements in their symptoms. More recently, we took that analysis a step further by examining outcomes from nearly 140,000 LifeStance patients across different generations and geographic regions. What we found was remarkably consistent. At least 75% of patients experienced clinically meaningful improvement regardless of generation or region where they receive care. We believe these findings are important because they demonstrate that our strong outcomes are consistent across the diverse populations we serve. More broadly, we believe mental health care is entering its next phase where differentiation will increasingly be driven by outcomes, not just access. While we're pleased to have delivered another quarter of exceptional growth and outstanding margin expansion, we believe the larger opportunity lies ahead. The combination of our scale, clinical outcomes and geographic expansion opportunities positions LifeStance to lead the evolution of outpatient mental health care and supports our confidence in the significant growth runway still in front of us. With that, I'll turn it over to Ryan to provide additional commentary on our financial performance and outlook.
Thanks, Dave. I am pleased with the team's tremendous operational and financial performance in the second quarter, which exceeded our expectations. For the quarter, revenue grew 26% to $435 million. Revenue surpassed our expectations from both better-than-expected visit volumes and total revenue per visit. Visit volumes of 2.6 million increased 19%. The outperformance was driven by a combination of better-than-expected clinician productivity and net clinician adds. Total revenue per visit of $167 increased 6% and was ahead of our expectations. Our visits per average clinician were very strong once again, increasing 7% year-over-year for the third consecutive quarter. This was achieved while at the same time adding 193 clinicians in the second quarter, bringing our total clinician base to 8,542, representing growth of 11%. Turning to profitability. Center Margin of $153 million in the quarter increased 41% and was 35.2% as a percentage of revenue. This came in ahead of our expectations, primarily due to the revenue beat. Adjusted EBITDA increased 94% to $66 million in the quarter, which was very strong and exceeded our expectations with the outperformance driven by favorable Center Margin. This resulted in a margin as a percentage of revenue of 15.2%, which is an impressive improvement of over 500 basis points from the second quarter of last year. We also finished with positive net income of $24 million in the quarter, which was an improvement of $27 million from the second quarter of last year. Turning to liquidity. We generated robust free cash flow of $88 million in the quarter as compared to $57 million in the second quarter of last year. Free cash flow was driven by strong performance in collections in the quarter and also benefited from the favorable timing of payroll. These payments, along with our annual 401(k) match, represent roughly $60 million and will impact free cash flow in the third quarter. We exited the quarter with a strong balance sheet, including a cash position of $226 million and net long-term debt of $259 million. Importantly, that cash balance is post the $49 million deployment towards share repurchases during the quarter. As a result, our net leverage is currently 0.2x and gross leverage is 1.3x. Additionally, this morning, we announced that our Board of Directors approved a $100 million share repurchase authorization. Since launching our initial $100 million program earlier this year, we deployed $97 million of the previously authorized capacity. We believe we are well positioned with significant financial flexibility to support the business and execute on our strategic priorities. In terms of our outlook for the full year, we are raising our revenue range by $45 million at the midpoint to $1.685 billion to $1.725 billion. The midpoint of the revenue guidance range implies a growth rate of 20% for the full year. We are also raising our Center Margin range by $23 million at the midpoint to $570 million to $594 million and raising our adjusted EBITDA range by $15 million at the midpoint to $215 million to $235 million. The midpoint of the adjusted EBITDA guidance range implies a margin as a percentage of revenue of 13.2%, which is over 200 basis points of margin expansion year-over-year. Our updated annual guidance assumes year-over-year revenue growth driven primarily by higher visit volumes, combined with mid-single-digit increases to our total revenue per visit. Based on the adjusted EBITDA outperformance so far this year, we continue to give ourselves flexibility to make additional investments in the second half of this year to better position us to support our long-term growth objectives. We are investing across a number of strategic priorities, including: first, we are driving patient acquisition and expanding access to our services through marketing and further growing our business development team. Second, we are investing in our technology team to support current and future tech and AI enablement. Third, we are building out the teams that lead and support clinical excellence to drive improved patient outcomes. And finally, we enhanced total compensation and benefits for our clinicians and many of our center support staff. These investments are reflected in our updated outlook and support our continued focus on balancing growth, operational execution and profitability. Additionally, we continue to expect stock-based compensation of approximately $60 million to $70 million this year. For the third quarter, we expect revenue of $420 million to $440 million, Center Margin of $140 million to $152 million and adjusted EBITDA of $49 million to $59 million. Given our excellent performance in the first half of the year and the strong momentum in the business, I remain excited about our long-term growth potential. With that, I'll turn it back to Dave for his closing comments.
Thanks, Ryan. In closing, our performance in the second quarter underscores the substantial opportunity in front of us. As we go deeper in our existing markets, grow our geographic reach, broaden our specialty capabilities and strengthen our differentiation through clinical excellence and measurable patient outcomes, we are positioning LifeStance for sustained long-term growth. Operator, we will now take questions.
Questions and answers
Operator Instructions. Your first question comes from the line of Craig Hettenbach with Morgan Stanley.
Dave, understanding you're coming up on more difficult comps on productivity. What are some of the levers that remain to pull on that front as you go forward?
Craig, this is Dave. I appreciate the question around productivity. The first thing I would say is that this is our fourth quarter of really strong productivity levels with our clinicians. This is not just how we operate and manage the practice. We're continuing to evaluate and work on opportunities to improve that productivity level. From a productivity perspective, there are two angles. First, we have to increase the flow of new patients. We've talked in the past about actions like improving conversion of patients that are seeking care to a booked appointment and continue to work on activities like that. The other side of that is general practice management actions like optimizing clinician schedules so those schedules are more receptive to increased new patient flow. Then it's that deliberate balance between using more of the capacity that our clinicians are giving us versus adding new clinicians. We still have a lot of runway on this. We're utilizing right now about 70% of the time that clinicians give us.
Very helpful. And then just as a follow-up, psychedelics are getting more attention on the back of Lilly's recent acquisition in that space. How do you think about that market and the role LifeStance can play there?
It's Dave. I'll take that one as well. At a macro level, specialty services, which is where we would put psychedelics, is a tremendous opportunity for us in the coming years and it's going to drive better outcomes for our patients and it will contribute to both growth and margins. Specific to psychedelics, we're monitoring that and we think it is a great opportunity for us and we're set up really well if that were to be approved by the FDA and also from a payer reimbursement perspective. We'll be able to roll out those new services in a very efficient way, leveraging our center footprint and some of the foundational work we've done to roll out Spravato.
Your next question comes from the line of Lisa Gill with JPMorgan.
I was wondering if we could talk a bit about revenue per visit and the key drivers there. You talked about the specialty business. I'm just curious what the key drivers are? Is that the increase in the acuity level of the patient? Is it your contracting with managed care? What are some of the key drivers as we think about the revenue per visit?
Yes. Lisa, I appreciate the question. We're really pleased with the TRPV of 6% year-over-year. We delivered TRPV of $167 in the quarter, which grew sequentially by $3.1 overall. It really is one of the reasons between rate and volume why we raised our revenue by $45 million for the full year and also adjusted EBITDA by $15 million. Regarding what's driving it, it really is from a payer contracting perspective. We're midway through the year now, and we have good line of sight into the rate increases for the full year. As you recognized in our commentary, we updated our guidance to mid-single digits, and it is based on the visibility we have into our payer contracts. From an overall payer perspective, we continue to have good constructive dialogue with them to ensure they're providing access to the high-quality mental health care that we offer.
That's really helpful, Ryan. And then just secondly, on the EBITDA, really nice margin, 15.2% in the quarter, a little more than 13% for the year. Can you talk about what your long-term goals are as we think about the EBITDA margin?
Absolutely. When we think about EBITDA margins, we've gone out there saying long-term margins in the 15% to 20% range with 20% not being a ceiling. We further dimensioned that in our Q4 call around 2028 margins and having mid-teen margins by full year 2028. We're super happy with the progress we've made on the progression of margins, but at this point we're not going to refine any of our long-term targets. There's a ton of momentum in the business right now, and we're really pleased that we've been able to capture that.
Your next question comes from the line of Ryan Daniels with William Blair.
Congrats on the strong performance year-to-date. I wanted to dive a little bit more into your specialty services. Obviously, it seems like a big growth opportunity. I'm curious if you could talk about the rollout process there. You mentioned again, you expanded it in some markets. Given your density and the size of the markets you're in and what appears to be a pretty big need for treatment-resistant depression services, what are the gating factors there? Is it payer contracts? Is it just putting in the CapEx? Is it training? What are the rollout plans and hurdles to that?
Ryan, it's Dave. I'll take that. We view specialty services—right now that's neuropsych testing and the treatment-resistant depression services of TMS and Spravato—as a tremendous opportunity. For grounding, our specialty services comprised about $50 million of revenue last year. We said that's going to grow roughly 40% this year, and we expect for years to come that the growth rate of specialty will be higher than our core business. The majority of that growth this year is really coming from the TRD services because we're in the early stage of rollout and we're adding new chairs and Spravato sites each quarter. From a gating perspective, it's a few things. It's early stages for us, so we're refining that operating model and doing some test and learn. There can be nuances depending on state regulations and the payer environment. I'd view the gating as more us than anything in the macro environment, and we expect to be accelerating rollout in coming years.
Okay. Perfect. Very helpful. And then the other question I had, I thought you had a really insightful comment that payers are moving from just access to outcomes. Obviously, you're very well positioned given your scale in clinical studies and pending EHR to really prove that you can provide great services. That gives you an advantage with payers and referral sources. Maybe talk a little bit more about how you'll use that to your advantage longer term? And then also any movement towards more value-based or outcome-based contracts where you could have a unique advantage versus some peers?
So first, we're having constructive conversations with payers. It isn't all about reimbursement; we are trying to be a strong partner for payers, and that's differentiated for us versus many other players in the industry. The majority of payers are still focused on access for their employer clients and members. We have some value-based arrangements based on access, and a few leading payers are starting to shift towards quality and outcomes. We welcome that change. In my prepared remarks, I talked about our second white paper on clinical excellence with the quality outcomes we're delivering for depression and anxiety across different generations and geographies. There's a lot more to come. We're in the early days on clinical excellence, and it's a very exciting space for us. We believe this will further differentiate us from other players and strengthen our partnerships with payers.
Your next question comes from the line of Jack Slevin with Jefferies LLC.
Congrats on the quarter. Maybe to start, I know recently you've talked a little bit about plans on EHR rollout and how that can expand things. I wanted to just sort of check in on progress to do that implementation and maybe any updated thoughts on some of the benefits you think that's going to bring to the platform?
Jack, this is Dave. From an EHR perspective, it's foundational for us. It's going to enable future success for LifeStance. As we mentioned in our prepared remarks, this is a planning year for us and we expect to roll out the new EHR next year. The benefits are widespread across the organization: efficiency of front and back office, improved patient and clinician experience, better patient engagement, and empowering clinicians with better tools and data to deliver quality care and improved outcomes. This is a foundational improvement that will enable future success of the business, and we're very excited about it.
Awesome. Helpful color. And then just for my follow-up here, I wanted to think about the cadence of clinician adds going forward. This dovetails with earlier questions on productivity. With productivity so strong, it would seem you have room to continue adding on the clinician front. Can you talk a bit about the demand and what's right in front of you as far as the ability to bring new clinicians on while sustaining these metrics?
If you look at the last year, you've seen strong net clinician adds and improved productivity. You can expect that to continue. From a long-term growth perspective, our algorithm is low double-digit visit growth year-over-year, primarily driven by net clinician adds and complemented by improvements in productivity. That's what we expect to see into the back half of this year and in future years.
Your next question comes from the line of Kevin Caliendo with UBS.
I want to talk a little bit about M&A. You've done a couple of transactions now. Can you help us understand why this is happening now? Is it reflective of the balance sheet or the opportunity? Remind us strategically why M&A versus recruitment? Is it entering new markets? Is it better ROIC in certain cases? I want to understand if it becomes a bigger part of the story, how to think about the math and the rationale.
Kevin, the business reason for doing M&A is primarily to establish presence in new markets. We're in roughly 50% of the 150 largest U.S. markets and 33 of 50 states, so we have a lot of opportunity to plant flags in new geographies. Right now, M&A is primarily to open up new geographies. These small tuck-ins will not have a material impact on our 2026 financials; this is about foundational acquisitions that will enable future growth. We'll continue to be disciplined and focus on opportunities that are strategic and make financial sense.
When you say financial sense, does it make more sense from a real estate perspective to do M&A versus de novos? How should we think mathematically when adding real estate or entering a new market? I bring it up because historically M&A had issues and returns weren't as great. It doesn't seem like that's the strategy here. Is this more adjunctive?
It is adjunctive and strategic. We will use M&A to open up new geographies—it is a capital-efficient way to enter a new geography. If there's not an attractive acquisition target, we'll use de novo, but that can be a slower ramp. The de novo engine is more for opening new geographies; if we're growing an existing geography, the organic engine is the way to do that. Financially, it often makes more sense to use organic expansion to grow density in an existing geography, and we'll be disciplined in our approach.
Your next question comes from the line of Richard Close with Canaccord Genuity.
Congratulations on the results. Maybe diving down on the clinician adds, provide some more color on what's driving the strength there in terms of why you seem to be bringing more and more clinicians to LifeStance, what's the differentiation? Also, Ryan mentioned compensation changes—can you go into a little more detail there?
What you saw in the second quarter is what we've delivered consistently for multiple years regarding clinician growth and net clinician adds. Our value proposition to clinicians continues to resonate. That value proposition looks different across clinician cohorts: those seeking W-2 benefits and administrative support, salaried clinicians seeking flexibility, and new graduates who value the support we provide compared to small practices. Our value prop resonates across those cohorts, and we still have low to mid-single-digit market share of the total mental health clinician universe, so we have a lot of room to grow our clinician base.
Ryan, do you want to comment on the compensation that you mentioned?
Yes. We did mention compensation changes, and that is one of the reasons why Center Margin is moderating a bit in the back half of the year versus the second quarter. Specific to clinicians, we added some bereavement benefits that align well with the mission of the company.
Okay. That's helpful. And then my follow-up was on the AI front. You talked about the electronic health record and investments in the tech team. What are you using AI for today in operations, administrative, and clinical areas, and what's planned in the coming years?
First, on AI and digital, we're entering a new chapter of enabling the business with these tools. I think of it for both growth and efficiency. There's been a lot of emphasis on efficiency, but we've also leveraged it to improve growth. Last year we used AI tools in our contact center to improve conversion from patients seeking care to booked appointments. This year we're adding use cases across RCM, new patient scheduling, clinician documentation, and we're exploring additional applications for the back half of this year and 2027. We're piloting additional use cases, and there will be a meaningful unlock from a technology perspective once we roll out the new EHR next year. Very exciting times at LifeStance for technology enablement.
Your next question comes from the line of David Larsen with BTIG.
Congratulations on another very good quarter. It looks like revenue per visit increased around 6% year-over-year. Any sense for what's driving that? Is that reimbursement rates or mix? Also, can you comment on your revenue cycle and billing? Are you using AI there to create more accurate quoting?
I'd be happy to address TRPV. We grew TRPV 6% in the quarter year-over-year, and this is based on our updated outlook related to payer contracting. We're midway through the year and have good line of sight on contracting. We have very constructive dialogue with payers, and we feel good about the trajectory for TRPV. I'll turn it over to Dave for the revenue cycle question.
You're seeing the strength of our revenue cycle team's performance and DSO in the low 20s this quarter. That contributed to the strong free cash flow of $88 million. That's driven by improved processes and tools, and AI is part of that. We're leveraging RCM vendors with innovative tools and piloting new ones. We're also using RPA and digital tools, so there's a lot that goes into our improved RCM results.
It seems even if revenue per visit is increasing, payers might be happy to invest in ambulatory or outpatient mental health because it can reduce total claims costs in other areas. It sounds like your plan relationships are good.
That's well said. Payers want quality care for their members and to reduce total cost of care. Outpatient mental health is a lower cost setting and if you address problems early, you can avoid more costly medical interventions down the road.
One more quick one: are you exploring Medicare, Medicaid, or exchange coverage and do you intend to expand into those payer classes?
We do some Medicare Advantage and some exchange today, usually in conjunction with a large payer contract where we're taking all their lines of business. Our focus continues to be the commercial business. We do very little Medicaid and Medicare fee-for-service.
Your next question comes from the line of Sean Dodge with BMO Capital Markets.
On the Q3 guidance, it implies EBITDA would be down sequentially. Ryan, you mentioned some investments you're making to help support future growth. Can you frame for us what the incremental spend with these investments will be and whether it's all going to hit in the third quarter?
Sean, thanks. You're right that on a sequential view, EBITDA declines, and that reflects the investments we discussed. We're pleased to continue investing in the business to deliver strong growth. On a four-year basis, the revenue CAGR at the midpoint of our guide is about 19% and adjusted EBITDA CAGR around 44%, which demonstrates our track record of disciplined investments. The investments are not all coming in Q3; they are across the second half and include tech and AI enablement, practice operations, clinical support for clinical excellence and outcome measurement, and addressing higher patient volume needs. We feel good about our disciplined approach and our midpoint guide expands margins by over 200 basis points year-over-year.
Going back to M&A, Dave, you talked about why you're restarting it. Any update on the pipeline now? How should we be thinking about cadence of deals, size and composition? Is it mostly smaller practices? Any role for specialty in M&A specifically?
On M&A, today it's primarily focused on tuck-ins to open new geographies. We remain opportunistic about other parts of the ecosystem, including specialty or larger practices, but small tuck-ins are the most actionable and strategic for us now. We have a healthy and growing pipeline in that space and expect to continue executing small tuck-ins for years to come. Larger practices have been less compelling financially up to now; there's less value creation versus a small tuck-in where we can use it as a foundation to grow in a new geography. On specialty, there is opportunity for acquisitions in coming years, but we haven't seen anything that makes sense for us yet.
Your next question comes from the line of Scott Fidel with Goldman Sachs.
You have Valentin Glossiv on for Scott Fidel. How are newly hired clinicians ramping today relative to historical experience? Are there any changes in productivity ramp timelines?
This is Dave. That's part of the story of improved clinician productivity. Improving the ramp of new clinicians is an area of intense focus because they're going to be happier when they're more productive. That ramp has been improving and is part of the improved productivity story we've been talking about for the past year.
As productivity improves, how do you balance utilization of existing clinician capacity versus accelerating hiring?
We always prioritize using the capacity of our existing clinicians before hiring new clinicians. It's a win-win: filling clinician panels means clinicians see more patients and make higher income, while it's more efficient financially for LifeStance.
Your last question comes from the line of Scott Schoenhaus with KeyBanc.
Can you hear me? Another great quarter—congrats. Your Center Margins of 35% beat our estimate and were up nicely. I know you talked about a potential slowdown in the back half with some bereavement benefits and other compensation tools. Can you call out anything specific in the quarter that drove those great margins? After the compensation changes, should we expect operating margins to reaccelerate back to these levels?
I appreciate the question. The strength of Center Margin in the quarter is really a clean, high-quality result driven primarily by revenue growth from both rate and volume, which you can think of as roughly 60-40 between rate and volume. We feel really good about the quarter's performance. On a full year basis, Center Margin still grows year-over-year by about 175 basis points, so we're pleased with the progress across top line growth, Center Margin and adjusted EBITDA.
Great. One last follow-up: you talked about the EHR/EMR rollout next year. How should we think about the productivity ramp? I assume the rollout will be phased—should we expect productivity gains to be back half weighted rather than front half?
We're still in the planning phase on the EHR. Our working approach is to phase the rollout because of the size of LifeStance with over 8,500 clinicians. When you roll out a new EHR, there's often a short-term blip in clinician productivity as they move to the new platform. We're working to minimize that disruption as much as possible and will provide more specifics as we get closer to next year and can give more guidance.
That concludes our Q&A session. I will now turn the call back over to David Bourdon for closing remarks.
Thank you, operator. Before we close, I want to take a moment to speak directly to our nearly 11,000 mission-driven teammates. The work you do matters. Every day, you show up for our patients, often at some of the hardest moments when they may feel vulnerable, overwhelmed or unsure where to turn, and you do this with extraordinary compassion and professionalism. I'm deeply grateful for the dedication you bring to our patients and to your fellow teammates. Mental health care has never been more essential. We're proud of the difference LifeStance is making today, and we remain even more committed to expanding access so we can help millions more people get the high-quality care they deserve. Thank you for joining us today. Operator, that will conclude our call.
Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Everyone, have a great day.