LifeStance (LFST) Q4 2025 Earnings Call Transcript

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DATE

Feb. 25, 2026, 8:30 a.m. ET

CALL PARTICIPANTS

• Chief Executive Officer — David Bourdon
• Chief Financial Officer — Ryan McGroarty
• Executive Chairman — Ken Burdick
• Vice President, Finance & Investor Relations — Monica Prokocki

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TAKEAWAYS

• Revenue -- $382,000,000 for the quarter, representing 17% growth year over year, primarily driven by total revenue per visit and visit volumes.
• Visit Volumes -- 2,400,000 in the quarter, increasing 18% year over year, with visits per average clinician up 7% year over year.
• Clinician Base -- Net addition of 44 clinicians in the quarter and 657 for the year, totaling 8,040 clinicians, up 9% year over year.
• Revenue per Visit -- $160, approximately flat year over year, noted as modestly ahead of expectations.
• Adjusted EBITDA -- $49,000,000 for the quarter, up 49% year over year, with a margin of 12.8%, a company record as a public entity.
• Full-Year Free Cash Flow -- $110,000,000, up from $86,000,000 in the prior year, exceeding management expectations.
• Full-Year Net Income and EPS -- Positive for the first time as a public company, achieved one year ahead of prior internal targets.
• 2026 Guidance -- Projected revenue of $1.615 billion to $1.655 billion, center margin of $526,000,000 to $550,000,000, and adjusted EBITDA of $185,000,000 to $205,000,000.
• Share Repurchase Program -- Authorization to repurchase up to $100,000,000 of outstanding shares, to be funded with cash on hand.
• New Centers -- Plan to open 20 to 30 new centers in 2026, with ramp-up costs incorporated into existing financial guidance.
• Specialty Services Growth -- Targeting $70,000,000 in specialty revenue for 2026, a 40% increase over prior levels, predominantly from SPRAVATO and TMS services.
• EHR Implementation -- Transition to a best-in-class electronic health record system planned, with $20,000,000 to $30,000,000 of expected implementation costs across 2026 and 2027, largely capitalized or adjusted in EBITDA.
• Technological Initiatives -- AI and digital solutions have improved appointment conversion by 5%, reduced clinician administrative burden, and enabled higher productivity and patient retention.
• Clinician Incentive Structure -- The stock-based incentive for clinicians is being replaced by a cash bonus program, projected to lower stock-based compensation by roughly $10,000,000 per year beginning in 2026.

SUMMARY

LifeStance Health Group (NASDAQ:LFST) directly reported record quarterly financials, underpinned by increased clinician productivity and strategic technology integration. The company announced a $100,000,000 share repurchase authorization, reflecting financial flexibility and confidence in future cash generation. Management completed a thorough review and selection of a new electronic health record platform, targeting implementation over the next two years to support clinical and operational excellence.

• The company indicated a completed overhaul of payer contracts, cutting the total count by 50% for improved administrative efficiency and expressing "very constructive conversations" with payers on reimbursement.
• "Provider and partner referrals" were cited as a principal channel for patient acquisition, allowing LifeStance Health Group to keep patient acquisition costs at approximately 2% of revenue.
• AI-driven matching and online conversion pilots reportedly increased patient "stickiness" and are being scaled across all state practices.
• Ken Burdick stated, "I will be transitioning to the role of Non-Executive Chair of the LifeStance Health Group board next month," marking a governance transition with continuing board continuity.
• Guidance assumes low double-digit visit growth, complemented by improvements in productivity and expected low- to mid-single-digit increases in revenue per visit, driven by payer rate changes.
• M&A activity remains on the agenda, though 2026 outlook does not assume material impact, with focus on smaller, geographically strategic targets due to more attractive valuations.

INDUSTRY GLOSSARY

• SPRAVATO: An FDA-approved nasal spray for treatment-resistant depression, administered under medical supervision.
• TMS: Transcranial Magnetic Stimulation, a non-invasive procedure used to treat depression, typically for patients unresponsive to standard therapies.
• EHR: Electronic Health Record; a digital platform integrating clinical, administrative, and operational patient data for provider organizations.

Full Conference Call Transcript

Operator: Good morning, and thank you for standing by. My name is Tina and I will be your conference operator today. At this time, I would like to welcome everyone to the LifeStance Health Group, Inc. Fourth Quarter 2025 Earnings Call. At this time, all lines are in a listen-only mode to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Please limit questions to one and one follow-up. To withdraw your question, press star 1 on your touch tone phone. To ask a question, simply press star 1 on your touch tone phone, then press star 1 again. It is now my pleasure to turn today's call over to Monica Prokocki. Please go ahead.

Monica Prokocki: Thank you, operator. Good morning, everyone, and welcome to the LifeStance Health Group, Inc. Fourth Quarter 2025 Earnings Conference Call. I am Monica Prokocki, Vice President of Finance and Investor Relations. Joining me today are David Bourdon, Chief Executive Officer, and Ryan McGroarty, Chief Financial Officer. In addition, Ken Burdick, our Executive Chairman, is also with us. We issued the earnings release and presentation before the market opened this morning. Both are available on the Investor Relations section of our website at investors.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 the evaluation 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. I will now turn the call over to David Bourdon, CEO of LifeStance Health Group, Inc. David?

David Bourdon: Thanks, Monica. And thank you all for joining us today. 2025 was an exceptional year for LifeStance Health Group, Inc. We delivered robust organic revenue and visit growth, driven by continued expansion of our clinician base as well as noteworthy improvements in productivity, all of which translated to delivering on our mission of expanding much-needed access to outpatient mental health services. As a result, our team of 8,000 clinicians delivered care to over 1,000,000 patients and conducted nearly 9,000,000 visits during 2025. It starts and ends with the quality care delivered by our LifeStance Health Group, Inc. clinicians. Patients continue to provide great feedback on their experience.

In 2025, LifeStance Health Group, Inc. achieved a patient net promoter score of 84 and our over 570 centers consistently had high Google ratings averaging 4.7 stars. In terms of financial results, this was a year of outperformance, milestones, and records for LifeStance Health Group, Inc. For both the fourth quarter and the full year, we once again exceeded each of our guided metrics, capping a year of consistent outperformance. We generated mid-teens revenue growth for the full year through clinician growth of 9% as well as a remarkable 7% improvement in clinician productivity in the second half of the year.

We achieved double-digit adjusted EBITDA margins for the full year for the first time as a public company, a milestone that reflects both the operating leverage in our model and the consistency of our execution over the past three years. We delivered positive net income and earnings per share for the full year, reaching this key milestone as a public company one year ahead of our expectations. Finally, 2025 was a record year for free cash flow generation, demonstrating the strength of our operating model and our ability to invest in the business while creating long-term value. Ryan will provide more color on our financial performance.

Our results in 2025 bolster the confidence we have as we carry strong momentum into 2026. Turning to operational execution. We made great strides in 2025 to drive improvements in the performance of the business. Earlier in the year, we outlined several initiatives designed to better fill the time clinicians make available to see patients, and as these initiatives were implemented, their impact became increasingly evident in the back half of the year. For example, we implemented process improvements around clinician scheduling to better utilize available capacity. We also launched a cash incentive program that rewards clinicians for improving quality and productivity.

In addition, we expanded patient access through shortened booking lead times, which improved show rates, and made enhancements to conversion of phone calls to booked appointments by new patients. We also strengthened patient engagement with a new platform that enhances patient acquisition and retention. Importantly, these initiatives have now delivered consistently improved results since implementation in the back half of the year, reinforcing the durability of the improvements. Turning to technology. 2025 marked an important year of progress in how we use digital tools to support patient access, clinician experience, and operational efficiency. Throughout the year, we applied digital and AI solutions in targeted, practical ways to improve the experience for both patients and clinicians.

From a new patient phone booking perspective, we implemented a new AI technology solution to support our scheduling team, which facilitated stronger appointment conversion and operational efficiency. We are improving the clinician experience and enhancing the care our patients receive. An example of this is we piloted AI-assisted documentation for clinicians. The early results show reduced administrative burden, enabling clinicians to work more efficiently and spend more time on patient care, while also supporting improved satisfaction and retention. We are also using digital and AI tools that are benefiting operational excellence, including revenue cycle management. Examples of this are the digital patient check-in tool, AI, and robotic process automation that were instrumental in delivering strong cash collections.

Overall, our approach to technology in 2025 was intentional and disciplined, using digital and AI for business enablement and decision support to drive engagement, productivity, and scale while improving the satisfaction for patients, clinicians, and our non-clinician teammates. Turning to 2026 and beyond, we will continue building on our progress in advancing our operational and clinical excellence by focusing on several initiatives that support our long-term growth and scalability. First, we completed our EHR discovery process and made a decision to transition to a best-in-class vendor. This is an important step in advancing our long-term operating model for continued scale and positioning the business.

The new EHR will be instrumental in supporting clinicians and patients to improve both their experience and clinical outcomes. In addition, we expect the new EHR to improve interoperability, which will benefit growing health system partnerships. We will begin working through the implementation in 2026 and expect the transition to the new EHR during 2027. Second, technology will continue to be an important enabler to delivering on our commitments this year. With an emphasis on applying AI and digital tools, we expect to build on the progress we made in 2025 by expanding technology solutions that improve access, clinician productivity, and operating efficiency.

We are starting the year with additional use cases in customer service and revenue cycle management along with expansion of initiatives like AI clinical documentation and workflow management. Third, we remain focused on attracting new patients and better converting those inquiries to visits. An example of this is provider and partner referrals. We are making additional investments in this channel in 2026 through increased talent resources to support that opportunity with a new operating model that improves local market support, a core differentiator of our growth model. In addition, we have seen improved online conversion of new patients with our care matching pilot and expect to implement it across all of our state practices this year.

In closing, I am very proud of the progress we have made as a company this year. As we enter 2026, we do so from a position of momentum and confidence. Looking ahead, we are well positioned to meet the increasing demand for high-quality mental health services and patients moving to insurance from cash pay for affordability. We will continue to extend our leadership in outpatient mental health care by pairing continued innovation with disciplined execution. Before turning over to Ryan, I want to take a moment to acknowledge Ken Burdick. Ken has been and will remain an integral part of LifeStance Health Group, Inc.'s journey. In addition, I appreciate and value his continued mentorship.

I would like to turn it over to him to share a few words regarding a change in his role at LifeStance Health Group, Inc. Ken?

Ken Burdick: Thanks, Dave. I transitioned to the Executive Chair role in March 2025. During the past year, I have been incredibly impressed with the way in which Dave has stepped into the CEO role and Ryan has taken the reins as CFO. The performance of the business in 2025 speaks volumes of their leadership, and the quality and cohesion of the entire leadership team. In light of the confidence that I and the entire LifeStance Health Group, Inc. board have in the leadership and direction of the business, I will be transitioning to the role of Non-Executive Chair of the LifeStance Health Group, Inc. board next month.

I could not be more proud of Dave and his team, nor could I be more confident about the future for LifeStance Health Group, Inc. The financial and operational discipline that has been incorporated into the culture of purpose and passion that has always existed at LifeStance Health Group, Inc. is a powerful combination that will drive sustained success for years to come. With that, I will turn it back to the team. Ryan will now walk you through the financial results. Ryan?

Ryan McGroarty: Thanks, Ken. I am pleased with the team's operational and financial performance in the fourth quarter, which exceeded our expectations. We delivered solid growth across revenue and visit volumes, as well as a record adjusted EBITDA margin driven by operational execution. For the fourth quarter, revenue grew 17% year over year to $382,000,000. Revenue exceeded our expectations primarily due to better-than-expected total revenue per visit and, to a lesser extent, visit volumes. Visit volumes of 2,400,000 increased 18% year over year. The outperformance was primarily driven by better-than-expected clinician productivity. Our visits per average clinician increased 7% year over year.

We grew our net clinicians by 44 in the fourth quarter, and 657 for the full year, bringing our total clinician base to 8,040, representing growth of 9% year over year. The level of net clinician adds in the fourth quarter was based on an intentional effort to balance the existing capacity of our clinician base and new clinician hires. This strategy was effective as demonstrated by the strong visit and revenue performance in the quarter. It increases our confidence in this approach going forward. Total revenue per visit of $160 was roughly flat year over year and modestly ahead of our expectations.

For the full year, we delivered revenue of $1,424,000,000, up 14% year over year, driven entirely by visit volumes. Turning to profitability. Center margin of $126,000,000 in the quarter increased 15% year over year and was 33% as a percentage of revenue. This exceeded our expectations primarily due to the revenue beat as well as slightly lower spend. Full-year center margin of $461,000,000 grew 15%. Adjusted EBITDA of $49,000,000 in the quarter was very strong and exceeded our expectations. This 49% year-over-year increase resulted in our adjusted EBITDA as a percentage of revenue of 12.8%, the highest in our history as a public company.

The outperformance in the quarter was primarily attributable to favorable center margin and slightly lower G&A spending than expected. For the full year, adjusted EBITDA was $158,000,000, increasing 32% year over year, with margins increasing 150 basis points to 11.1%. We have continued to deliver on our commitment to drive operating leverage in G&A as we maintain a disciplined approach to expanding margins while supporting sustainable growth. As Dave mentioned earlier, we finished the full year with positive net income and earnings per share. This achievement was delivered a year earlier than we expected and is a key milestone in our journey as a public company. Turning to liquidity.

We generated robust free cash flow of $47,000,000 in the fourth quarter and $110,000,000 for the full year, exceeding our expectations due to better-than-expected earnings and the dedicated efforts of our collections team. We exited the quarter with a strong balance sheet, including a cash position of $249,000,000 and net long-term debt of $266,000,000. We have additional capacity from an undrawn revolver of $100,000,000. We are pleased with our leverage ratios, with net and gross leverage of 0.2x and 1.8x, respectively. We have significant financial flexibility to run the business and fully execute on our strategy.

Additionally, this morning, we announced that our board of directors has authorized a share repurchase program allowing us to repurchase up to $100,000,000 worth of our outstanding shares. We will fund this program with cash on hand. With a strong balance sheet, meaningful free cash flow generation, and leverage levels that provide ample financial flexibility, we believe this share repurchase program is an attractive and highly efficient way to deploy capital and create long-term shareholder value. At the same time, M&A continues to be a priority and we have resources dedicated to exploring opportunities in a disciplined manner.

In terms of our outlook for 2026, we expect full-year revenue of $1.615 billion to $1.655 billion, center margin of $526,000,000 to $550,000,000, and adjusted EBITDA of $185,000,000 to $205,000,000, with the midpoint representing an 11.9% margin, or almost a point of margin expansion. Our annual guidance assumes year-over-year revenue growth driven primarily by higher visit volumes combined with low- to mid-single-digit increases to total revenue per visit. As for phasing, our guidance contemplates a revenue split of roughly 50/50 in the first and second half of the year, with the second half slightly higher. For the first quarter, we expect revenue of $380,000,000 to $400,000,000, center margin of $118,000,000 to $132,000,000, and adjusted EBITDA of $39,000,000 to $45,000,000.

In terms of earnings, the first quarter is seasonally impacted by higher payroll taxes. Additionally, we expect stock-based compensation of approximately $60,000,000 to $70,000,000 in 2026. As a reminder, we announced in May that we would be sunsetting our stock-based incentive program for clinicians and replacing it with a cash bonus incentive program. The impact of this change was expected to result in a decrease in stock-based compensation of roughly $10,000,000 per year. We are seeing this benefit for the first time beginning in 2026 and will continue to see a reduction over the next four years as the existing tranches of clinicians vest.

Regarding free cash flow, we expect to once again generate meaningful positive free cash flow for the full year 2026. Additionally, we expect to open 20 to 30 new centers this year. As Dave mentioned, we recently completed our EHR discovery process, and are moving ahead with implementation this year. During 2026 and 2027, we expect this implementation to represent a use of cash of roughly $20,000,000 to $30,000,000. Much of this spend will be capitalized or adjusted in EBITDA as it is non-recurring. Any P&L impact associated with these activities has already been included in our 2026 guidance assumptions.

As we look beyond 2026, we continue to expect revenue growth in the mid-teens based on low- to mid-single-digit annual rate growth combined with low double-digit volume growth. We expect to continue to expand operating leverage through the G&A line and now expect to reach mid-teens adjusted EBITDA margins by fiscal year 2028. We believe this trajectory underscores the strength of our platform combined with favorable macro mental health trends, and gives us confidence in our ability to consistently deliver growth and expanding margins over the coming years. With that, I will turn it back to Dave for his closing comments.

David Bourdon: 2025 was an exceptional year for LifeStance Health Group, Inc. Our results demonstrate the dedication of each of our clinicians and team members and the resilience of our model. We enter 2026 with strong momentum to continue expanding access to high-quality, affordable mental health care. We will now open for questions.

Operator: To ask a question, simply press 1 on your telephone keypad. Please limit questions to one and one follow-up. Our first question comes from the line of Craig Hettenbach with Morgan Stanley. Please go ahead.

Craig Matthew Hettenbach: Yes, thanks. And just to start, Ken, echoing your comments, nice to see that the execution of the team kind of playing out and the strategy. Dave, maybe just building on that, the inflection in productivity in the back half of the year and your comments about durability, can you just talk about this year and as we play it forward, just how that is impacting the business?

David Bourdon: Yes. Good morning, Craig. Thanks for the question. In regards to the productivity initiatives, we talked about a number of them last year, and what you are seeing is the durability in those, whether it is the improvements that we have made in our phone scheduling team for new patients, the new cash incentive program that we have for clinicians that are tied to quality and productivity, all those kinds of initiatives that we put in, it was not just a Q3 lift. We actually saw it build into Q4. And so we are very happy with the productivity improvements and the durability that we have seen including as we have stepped into 2026.

Now having said that, just at a macro level, just a reminder is that we are guiding to about 15% revenue growth in 2026. And the growth algorithm of that is still we expect low double-digit visit growth, and that is going to come primarily from net clinician adds with some complementary benefit from productivity. And then in addition, we will see low- to mid-single-digit revenue per visit growth coming from the payer rate increases.

Craig Matthew Hettenbach: Got it. Then just as a follow-up, when you think about the path to 15% EBITDA margin and you spoke a lot about some of the technology investments, as a management team, how are you looking at the ROI kind of payback and the investments you are making, translating into the model.

Ryan McGroarty: Yes. Sure, Craig. This is Ryan. I will jump into that question. I appreciate you starting off highlighting what our long-term guide is overall. Again, I think we have been able to demonstrate a history of delivering on our results. As it relates to investment, we are very disciplined in our approach in other technological solutions, looking at whether it is an AI enablement solution, looking at the return profile of the investment, and making sure that it pencils out to be able to drive the leveraging we are looking for from an operating perspective. So, again, very disciplined and thoughtful process that we have in terms of looking at investments.

Operator: From JPMorgan, your next question comes from the line of Lisa Gill. Please go ahead.

Lisa Christine Gill: Thanks very much and good morning. I just really wanted to follow up on your comments around the visits per clinician being up 7%. You made some earlier comments around digital and AI. Can you talk about how that is playing into those visits per clinician?

David Bourdon: Yes, Lisa, good morning. It is Dave. I will take that one. So there are really two aspects to this. The first was that we worked with the clinicians to get more capacity on their calendars so that they gave us more availability to be able to see patients. And that has been a multiyear journey for us. And it is really nice to see the benefits of that. Now the converse of that is then the clinicians said, okay, we are giving you more capacity, now we want you to use it. We want to see more patients. And obviously if they see more patients, they also make more income.

And so they were asking for us to fill more of the time on their calendars. So we worked with them around schedule optimization, basic practice enablement, and practice management initiatives. That was one aspect of it. And then the other is then increasing the flow of new patients. We have talked about some of those things like improving the conversion of the phone calls that we get from people seeking care to booking an appointment, and some of the AI tools that we put in place there last year improved that conversion rate by 5%. We have a number of initiatives that are driving improved new patient conversion.

Then as we step into this year, one of the initiatives that I mentioned in my prepared remarks is our new care matching algorithm and tool, and we really believe by improving the matching, we improve the therapeutic alliance between the clinician and the patient. What we have seen from the early results of the pilot is improved conversion both not only from phone call but also from online scheduling, and as once we get that patient in the door, they are actually stickier and we believe we will see better health outcomes on the back end of that as well.

Lisa Christine Gill: That is great. Dave, just as a follow-up, in your first answer to the question, you talked about low- to mid-payer rates. I know one of the initiatives that Ken had was cleaning up some of the managed care relationships. Can you talk about where you are on that path? Is it where you want to be? And low- to mid-payer rate sounds like a positive. Do you have good line of sight to that over a multiyear period of time?

David Bourdon: We do. First of all, we are pretty much complete on the journey of cleaning up the payer contracts. Over the last three years, we have probably reduced the number of contracts by 50%. It is a meaningful improvement. The genesis of that, or the reason we did that, was really around administrative efficiency. We wanted our team to focus on the relationships that mattered, and so that was really the driver of that. We have largely completed that, Lisa. As far as the payer rate increases and the durability of that low- to mid-single-digit, we primarily use an approach of annual rate discussions with the payers.

We will from time to time, depending on the situation, lock in a multiyear arrangement similar to what a hospital system would do with a payer, but for the most part, we are more annual contracts with the payers, and we are having very constructive conversations with them. So, again, feel very good about that low- to mid-single digits and being able to achieve that in the coming years.

Lisa Christine Gill: Great. Congrats on the great results.

Operator: Next question comes from UBS from the line of Kevin Caliendo. Please go ahead.

Kevin Caliendo: Thanks. Good morning, guys. Thanks for taking my question. Just want to go into the comment about moderating the net adds in the quarter and the efficiency. Does that mean that you could have added and this is a more measured approach to making sure your efficiency and onboarding was in the best shape possible? Is there a backlog? And I guess the follow-up to that is how should we think about the adds organically versus M&A versus what is exciting in this new buyback that you announced, which I think will be very well received.

David Bourdon: Yes. I will take that one, Kevin. There are a few parts to that. First of all, as far as the Q4 clinician adds, I think where you were going with that is we are having an intentional balance between the adding of new clinicians versus taking advantage of the capacity that we have with our existing clinicians. Our priority is to take advantage of that capacity on the existing clinicians first, because of two reasons. The first is I actually believe by doing that, we will improve their satisfaction, and eventually, that will turn into better retention. The other is it is a win-win for both the clinician and the company.

It is just a more efficient way for us to be able to run the business. So that has been an intentional balancing act. Again, what I mentioned earlier is that we still believe for our growth algorithm as we step into 2026 and in the coming years, the primary driver of visits will continue to be clinician net adds, with improvements in productivity being complementary but not the major driver. As far as M&A goes, the first thing I want to make the point on is this: there is no material M&A included in our 2026 guidance. It does continue to be a priority and we do have an active pipeline.

At the same time, we are going to be very disciplined, and we are focused on opportunities that are both strategic and financially make sense. It is an interesting environment right now. We see this with the larger companies, revenue in the $75,000,000 to $250,000,000 range. They have valuation expectations that are dislocated from reality. At the same time, as we are going down market, those opportunities seem to have more appropriate valuations, and we are targeting those kinds of companies for geographic expansion. I would expect to see some of those smaller tuck-ins. But, again, that is not going to materially move the needle on the financials in 2026.

What it does is it positions us well for future-year growth.

Kevin Caliendo: Got it. Thank you.

Operator: And from Jefferies, next question comes from the line of Jack Slevin. Please go ahead.

Jack Slevin: Hey, thanks for taking the question. I wanted to ask about the 2026 guide and some of the commentary around the EHR implementation. Looking at the conservative approach and all the execution you all have been undertaking recently, how does some of the G&A stack in the initial guide—it looks like EBITDA drop-through is going to be a bit lower—so I was just curious if you could speak a little bit more to the process of implementing that EHR and if there is anything specific on the cost side we need to be thinking about there.

Ryan McGroarty: Yes. Sure. Jack, appreciate the question, and good morning. I will start off with the EHR, and then I will talk a little bit in terms of G&A in totality between 2025/2026 and the growth rates. First and foremost, as I mentioned in my prepared remarks, the overall EHR implementation—we wanted to put out the representation of the cash usage, and as I mentioned, it is $20,000,000 to $30,000,000. Most of these costs will be adjusted through EBITDA or capitalized. We are in the early stages of the journey to implementation of a new EHR, which we are all really excited about.

When you look at G&A in totality, in 2025 our growth rate was 7%, which is unnaturally low when you peg it against the growth rate of the business. If you recall and you go back to our original guide, our original guide was closer to 10%. When you look at our full-year guide from a G&A perspective, what it implies is we are at 13%, which stacks up well against the 15% overall growth rate. You are able to leverage your operating expenses, but at the same time, it provides us flexibility as it relates to being able to continue to make the investments in growth and capabilities where Craig went earlier, to ensure that ROI pencils out.

Overall, that is the cause of the step-up year over year.

Jack Slevin: Okay. Got it. Really helpful. And then maybe just as a follow-up, thinking about some of the M&A commentary, to take a step back a bit, can you maybe just level-set on any sort of KPIs or things you think about as you look at organic growth in the business versus M&A opportunities? I would think the hurdle rates are getting higher because of the broad network you have and your track record of being able to add on the organic side, but I was not sure if there is any way you can think about even return profiles or other things on growth via those two vectors, given where the portfolio stands right now. Thanks.

David Bourdon: We just talked a minute ago about M&A. I think, just to pile on with a few comments, certainly from the financial perspective, we have a profile around multiples on EBITDA and things like that, with hurdle rates which we are not going to publicly disclose, but we do have financial metrics that we are very disciplined on. The down-market opportunities are the ones that are currently the most attractive to us, and it is attractive primarily for geographic expansion. We do not see doing small tuck-ins in geographies where we already have a meaningful presence. The economics are actually much more attractive for us to just grow those organically.

Jack Slevin: Okay. Helpful. Appreciate the color.

Operator: Your next question is from the line of Richard Collamer Close with Canaccord Genuity. Please go ahead.

Richard Collamer Close: Yeah. Thanks for the question. Congratulations on a great year. Dave, in the past, you talked about differentiation and optimization phase. That included, I guess, several strategies like specialty services and expansion. I am interested in how that has progressed, and then also becoming the referral partner of choice—what you are doing there—maybe more details in terms of payer relationships and provider organizations with respect to referrals.

David Bourdon: Thanks for the question, Rich. There are a number of components there, so I will try to hit them all. So first of all, to your point around specialty services, that is an important part of our future growth story. We are doing that because what we want to be able to do is holistically treat the patient, treating the patient holistically and driving to a better health outcome. And the kind of those core services, or if they need additional services so specific to specialty—just to ground you—we had previously talked about it as about $50,000,000 of revenue.

We are targeting $70,000,000 of revenue for 2026, so about a 40% increase, and that is consistent with how we have talked about that business segment in the sense that it would grow at a rate larger than our core book of business. That growth is primarily coming from treatment-resistant depression services of SPRAVATO and TMS. Just a couple of things I would mention is this is low capital intensity. We are leveraging our existing centers, and we think this is a tremendous opportunity for us in the coming years, and it is going to contribute to both growth and margins. That was on the specialty.

In regards to being the partner of choice, I will stick primarily to the medical providers because we addressed that a little bit in our prepared remarks. We are continuing to invest in those resources, everything from a technology perspective in how we interface with them and the unique requests we get from, for example, a health system, as well as we are investing in additional feet on the street. We have implemented a new operating model to make those resources even more local to be able to support our state practices and drive increased referrals from the medical practices. We feel really good about that.

We also mentioned last year the Calm relationship, and I think that was more about the signal of a different kind of referral partner than our typical PCP or hospital system or those kinds of referral sources. I think it is just an exciting example of a different opportunity that we think we are uniquely positioned for because of our large scale, the focus on the patient experience and outcomes, as well as our hybrid model of both in-person and virtual. Those kinds of services and characteristics are very appealing to some of these national digital players.

Operator: And from William Blair, your next question comes from the line of Ryan Daniels. Please go ahead.

Matthew Mardula: Hello. This is Matthew Mardula on for Ryan. Thank you for taking the question. I just want to touch up on the answer to the last question. Can you provide an update on how the patient referral segments have been trending, and then how should we think about the momentum with patient referrals into 2026? I know demand outpaced supply in the industry, but I want to focus on those newer initiatives, like the partnership with Calm and then additional investments in the provider and partner referrals for 2026. The main point of my question is are you expecting to see maybe a newer or a different type of patient because of these patient referral segments? Thank you.

David Bourdon: This is Dave. I will take that. In regards to the referrals, this is a primary channel for us to get new patients. It is one of the things that differentiates LifeStance Health Group, Inc. versus many of our competitors in the outpatient mental health space, and we only spend about 2% of our revenue acquiring new patients. That is a very efficient model. The way we are able to do that is through these referral programs with the medical practices. That continues to grow commensurate with the business, so I would not point to anything that is unique there from a growth rate perspective. In regards to the update on Calm, it is still early days on that relationship.

I think both sides are still working together to optimize that partnership. We are getting new patient volume from the Calm relationship, but it is not at a level that is very meaningful at this point. We expect it will build in the coming months and years, but it is not something that is going to meaningfully move the needle for us in 2026. As far as the demographics go, one of the reasons that the partnerships with some of these large digital players like Calm are intriguing to us is because we do believe that will attract a younger, more digitally native type demographic than what we have historically had at LifeStance Health Group, Inc.

It is a completely different demographic.

Operator: Your next question comes from the line of David Michael Larsen with BTIG. Please go ahead.

David Michael Larsen: Hi. Can you please talk a bit about the EMR? Who are you using now, who are you going to be switching to, and then what capabilities do you expect to get from this new EMR? For example, will the workflow be easier? Will this contribute to even more physician productivity? And then any thoughts on reporting from the new EMR? What do you hope to get from that one that you do not get from your existing one? Thank you.

David Bourdon: Yes, all of the above, David. Thanks for the question. First of all, we have a practice. We do not mention other companies on our earnings call, so I am not going to talk about where we are today or where we are going from an EHR perspective. But to take it up a level, we put a lot of work in over the last year in regards to the discovery process, which we have now completed, and we have decided upon a new EHR vendor. A new one—it will be going away from our existing one. It is foundational for the future. At a high level, it is about unlocking advancements in both clinical and operational excellence.

From a clinical perspective, it is going to improve workflows. I think of things like care pathways and that next best action to support our clinicians, being able to tie in new AI point solutions, as well as a much better patient experience both from an administrative as well as a care perspective. There is a lot around the EHR that is core and foundational to where we want to take the company over the next five years. We are going to begin the planning now and throughout this year, and then we expect the rollout to be next year.

David Michael Larsen: Okay. That is great. That is very helpful. Thank you. And then with regards to the payer relationships, a lot of times health plans will view mental health providers as ancillary providers and will spend a lot of time with the large acute care medical centers and maybe some of the large physician groups. Based on my experience, mental health has been more of a price taker from the handful of large dominant commercial plans in each city. Can you maybe just talk about that? Are you a price taker where they are like, okay, here are the mental health rates, here is the fee schedule, that is what you get? Or is it much more of a collaborative approach?

Any discussion around the quality care you are providing to the patients, fewer ER admissions, improvements in cost of care? Thanks very much. Just want to make sure you are not a price taker. Thanks.

David Bourdon: As far as the payer relationships, what I said earlier is I think we are having constructive conversations with most payers. There is always going to be tension. There is tension in all providers across the entire healthcare ecosystem and payers, but that is a normal level of tension. The thing I would point you to in regards to outpatient mental health is that the payers are still getting a lot of pressure from their employer clients and their members for access to in-network outpatient mental health care. That is really the balance to the pricing conversation and what leads to those constructive dialogues.

For the more thought-leading payers, the ones that are now thinking about quality and outcomes in addition to access, those are the payers that I think have really gotten their head around the mind-body connection and that there is opportunity for even increased mental health utilization leading to a total cost of care reduction.

David Michael Larsen: Thanks very much. I am a big believer, obviously, in mental health and how we keep people productive and at work and improve the total health of the market. So thanks very much. Congrats on a good quarter.

Operator: And from Barclays, our next question comes from the line of Peter Warndorf. Please go ahead.

Peter Warndorf: Yes. Hey, thanks for the question. I just wanted to touch on the 20 to 30 new center adds that you guys are expecting this year. I know you said that the costs are accounted for in guidance, but is it right to assume that those come on with lower margins? Just trying to get a sense for the cadence of margins throughout the year. Thanks.

Ryan McGroarty: Yes, Peter. This is Ryan. Appreciate the question. You got it right. Overall, 20 to 30 new centers do come on with a lower margin profile, but that is fully contemplated in the guidance and what we put out to the market. Again, we look at it as a very nice accelerator in our overall growth strategy in terms of where we decide to plant a flag for a new center. The return profile is relatively quick on them too. You get the initial period where it is lower, but then it gets up to normal at a relatively fast pace.

Peter Warndorf: Got it. Thanks. Then maybe just one quick follow-up from a high level on the competitive landscape. Are you seeing anybody get more or less aggressive? Is there anything worth calling out on the competitive landscape early in the year?

David Bourdon: I would not point out anything in particular that is new in the competitive landscape. First of all, it is and remains a very competitive environment for attracting and retaining clinicians. They have lots of choices. That is not new. That is the environment we have been in now for years. When I think about the competitive dynamics, because it is such a fragmented industry, it is really a very local conversation. At the local level, we have competitors, but there is not anyone across the nation that I would flag for you.

Peter Warndorf: Great. Thank you.

Operator: And from KeyBanc, we have a question from Steven Dechert. Please go ahead.

Steven Dechert: Hey, thanks for the questions and congrats on a solid quarter. I just wanted to ask one around visits per clinician. Sequentially into 2026, how should we think about the move into 1Q from the level you were at in 4Q? Thanks.

Ryan McGroarty: Yes. I appreciate the question. This is Ryan. When you look into 1Q from an overall revenue perspective, the revenue step-up from Q4 to Q1 is approximately $8,000,000, which is 17% year over year, which I went through in the prepared comments earlier. When you think about the actual step-up in visit volume, you can think of that as net clinician adds, where Dave went earlier, being the driving force between the sequential growth and then supported by rate. Those are the key components that you build from Q4 into Q1.

As Dave mentioned, we have high confidence in the durability as it relates to productivity, in terms of what we are doing from a practice management perspective around productivity as an enabler.

Steven Dechert: Okay. Thanks. Then I want to ask one around free cash flow. I think previously you had guided to it being down in 2025, but it was actually up. Did any of those de novos in 2025 get bumped into 2026? And then are you expecting free cash flow to be up in 2026 versus 2025?

Ryan McGroarty: Yes. There is always timing and movement between new centers just in terms of being able to fully execute on the implementation. I would call that relatively minor. Think about the 20 or 30 centers as kind of consistent with what we have been doing here for a bit. About free cash flow, free cash flow did exceed our expectations in 2025 at $110,000,000 versus 2024 at $86,000,000. As we think ahead, and Dave went through this earlier, this is a super capital-efficient business. We expect to be positive again in 2026 as we continue to grow our adjusted EBITDA, consistent with the guidance that we put out there.

Again, this is a relatively new phenomenon for us, being in the last two years, being free cash flow positive, and we are pleased with the progression and happy that our expectation is we will again be free cash flow positive in 2026.

Operator: From BMO Capital, our final question comes from the line of Sean Dodge. Please go ahead.

Sean Dodge: Dave, your comments on technology and using that to drive savings—I would imagine a big chunk of your costs are related to the clinicians and occupancy costs, but if we add up the support costs, the things you mentioned like the scheduling, credentialing, the revenue cycle, the labor-intensive stuff—what proportion of your cost base is that? So things that are addressable or impactable with technology over time. And then maybe how much of that you think you can actually drop out over the coming years? Any thoughts on what inning we are in with all this?

Ryan McGroarty: Yes. Sean, this is Ryan. I appreciate the question there. I would handle this question by grounding you in our long-term growth algorithm. As it relates to mid-teens revenue growth, we expect center margin to expand out to the mid-thirties from the low-thirties where it sits today. Part of the center margin expansion is from leveraging things like your occupancy cost, plus the G&A line. In the G&A line, that is getting at the crux of your question—being able to drive efficiencies to be able to pull out costs and get the leverage.

That is part of the long-term guidance that we put out today, where with the new part of our algorithm you can think of that as both expansion of center margin plus the G&A line, and overall we expect to be in mid-teens EBITDA by 2028. We feel really confident in our ability to do that. We have proven our ability to implement technology to drive a lower expense base.

Sean Dodge: Okay. Understood. Thanks.

Operator: With no further questions in queue, I will now turn the call over to CEO, David Bourdon, for closing remarks.

David Bourdon: Thank you, operator. I would like to thank our nearly 11,000 mission-driven teammates who make sure that our patients get the quality care that they need and they deserve every day. I continue to be inspired by the passion and the resilience that you all bring. Our services are needed more than ever, and we look forward to furthering the positive impact that we can have on the millions of Americans whose lives can be improved by the high-quality mental health care services that LifeStance Health Group, Inc. provides. Thank you for joining us today. Operator, that will conclude our call. Thank you.

Operator: Thank you again for joining us today. This does conclude today's conference call. You may now disconnect.

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