LifeStance Health Group Inc. (Nasdaq: LFST) will continue to invest heavily into clinician recruitment and retention in the second half of 2022. Such efforts have already helped clinician retention stabilize, according to company leadership.
Specifically, the behavioral health operator will continue to fund recruitment teams in an effort to propel organic hiring momentum into 2023.
“This includes enhancing our teams with additional outbound-focused resources to increase our pipeline of candidates, further enhancements to our inbound funnel and more focus from our operations teams on time allocated to interviewing,” Danish Qureshi, chief operating officer of LifeStance, said during the company’s Q2 earnings call Tuesday.
Additionally, the Scottsdale, Arizona-based company will continue to prioritize clinician retention by addressing pain points such as patient billing and front-line team staffing.
“We’ve already begun addressing both by building out a call center dedicated to patient billing [and] customer care, and redeploying our plan practice operations investments to the front lines, our front office coordinators and medical services teams,” Qureshi said.
LifeStance reported $210 million in revenue in Q2 2022, a 31% increase, year over year. LifeStance CEO Mike Lester attributes the revenue growth to total clinician expansion. In Q2, LifeStance grew its net clinician base by 31%, to 5,226.
The behavioral health operator anticipates coming in towards the bottom of its full-year guidance. Lester attributes this to removing “slightly more than one business day” from June, July and August “as a result of the incremental clinician time off.”
Unlike other behavioral health providers, LifeStance did not report wage inflation for its clinical staff.
However, some analysts are skeptical about the company’s workforce strategy. National average hourly earnings have risen by 10% for workers in outpatient mental health centers, a Hedgeye Risk Management note explained.
“It’s a little surprising that even as they don’t see wage inflation, when [LifeStance] also announces they are adding more costs to recruit and retain staff,” Hedgeye wrote.
The note also pointed out that LifeStance is adding staff at a “2:1 ratio,” though the organization’s annualized attrition rate is over 20%.
Qureshi took over the COO role, effective July 1. A LifeStance co-founder, he previously served as chief growth officer, overseeing all growth initiatives for the company. That included clinician recruiting, de novo center openings, payer contracting, customer care and national marketing.
LifeStance looks to digital for the future
LifeStance plans to launch its online booking and intake experience platform across the country throughout 2022 and into early 2023. Currently, the tool is used in nine states. This could translate into better patient matching and fewer no shows.
“[We] have seen a substantial improvement in cancellation rates of online bookings in those markets, driven in part by better patient and clinician matching,” Qureshi said.
Further, online booking enables the company to send appointment reminders and improve customer services, according to Qureshi. This could help office staff pinpoint early signs of cancellations and no shows.
The provider also plans to continue its strategy of providing a hybrid care model.
“The hybrid tech-enabled patient-focused model is at the heart of what we do at LifeStance in the behavioral health space and continues to resonate with the market,” Lester said. “We often refer to LifeStance as primary care for your mind.”
Slowing de novo growth
The company opened 27 de novo centers in the second quarter, which brought its total year-to-date openings to 68. The company currently has more than 600 centers operating across the country.
However, LifeStance plans to slow the pace of its de novo growth in the second half of 2022. It anticipates opening 20 de novo centers over the next two quarters.
LifeStance has continued to use M&A as a growth strategy. In Q2, the company made four acquisitions, bringing its total number of acquisitions to 83 since its launch.
“We remain on pace to deploy $50 million to $70 million of capital for the full year against our M&A activities, and we continue to have a robust pipeline of acquisition opportunities,” Qureshi said.
Despite the lower-than-expected full-year projections, some analysts remain optimistic about the company’s prospects.
Investment firm Jefferies updated its estimates to assume 30% full-year revenue growth for the company.
“Should personnel initiatives take hold, we could see the directional trend reverse, with upside returning to the model and the stock appreciating in tandem,” Stephanie Wissink, managing director at Jefferies, wrote in a note.
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