LifeStance Reports Third Quarter 2024 Results
LifeStance Health Group reported strong Q3 2024 results with revenue increasing 19% to $312.7 million. The company's clinician base grew 13% to 7,269, with visit volumes up 15% to 2.0 million. Net loss improved significantly to $6.0 million from $61.6 million in Q3 2023. Adjusted EBITDA more than doubled to $30.7 million. The company raised its full-year 2024 guidance, now expecting revenue between $1.228-1.248 billion and Adjusted EBITDA of $105-115 million. Cash flow from operations reached $44.9 million for the first nine months of 2024.
LifeStance Health Group ha riportato risultati solidi per il terzo trimestre del 2024, con un aumento del fatturato del 19% a 312,7 milioni di dollari. La base di clinici dell'azienda è cresciuta del 13%, raggiungendo 7.269, con volumi di visite aumentati del 15% a 2,0 milioni. La perdita netta è migliorata significativamente, passando da 61,6 milioni di dollari nel terzo trimestre del 2023 a 6,0 milioni di dollari. EBITDA rettificato è più che raddoppiato, arrivando a 30,7 milioni di dollari. L'azienda ha rivisto al rialzo le previsioni per l'intero anno 2024, ora prevedendo un fatturato compreso tra 1,228 e 1,248 miliardi di dollari e un EBITDA rettificato tra 105 e 115 milioni di dollari. Il flusso di cassa dalle operazioni ha raggiunto 44,9 milioni di dollari nei primi nove mesi del 2024.
LifeStance Health Group informó resultados sólidos para el tercer trimestre de 2024, con un aumento del 19% en los ingresos a 312,7 millones de dólares. La base de clínicos de la empresa creció un 13% hasta 7.269, con un aumento del 15% en el volumen de visitas hasta 2,0 millones. La pérdida neta mejoró significativamente a 6,0 millones de dólares desde 61,6 millones de dólares en el tercer trimestre de 2023. EBITDA ajustado se más que duplicó hasta 30,7 millones de dólares. La empresa elevó su guía de ingresos para todo el año 2024, ahora esperando ingresos entre 1.228 y 1.248 millones de dólares y un EBITDA ajustado de entre 105 y 115 millones de dólares. El flujo de efectivo de las operaciones alcanzó los 44,9 millones de dólares en los primeros nueve meses de 2024.
LifeStance Health Group는 2024년 3분기 실적이 강하다고 보고하며, 매출이 19% 증가하여 3억 1,270만 달러에 달했다고 발표했습니다. 회사의 임상가는 13% 증가하여 7,269명이 되었으며, 방문량도 15% 증가하여 200만 회를 기록했습니다. 순손실은 2023년 3분기 6,160만 달러에서 600만 달러로 크게 개선되었습니다. 조정된 EBITDA는 3,070만 달러로 두 배 이상 증가했습니다. 회사는 2024년 전체 연도 가이드를 상향 조정하여 매출을 12억 2,800만에서 12억 4,800만 달러, 조정된 EBITDA를 1억 5백만에서 1억 1,500만 달러로 예상하고 있습니다. 운영에서의 현금 흐름은 2024년 첫 9개월 동안 4,490만 달러에 달했습니다.
LifeStance Health Group a rapporté de solides résultats pour le troisième trimestre 2024, avec une augmentation du chiffre d'affaires de 19% à 312,7 millions de dollars. La base de cliniciens de l'entreprise a augmenté de 13% pour atteindre 7.269, avec des volumes de visites en hausse de 15% à 2,0 millions. La perte nette s'est considérablement améliorée, passant de 61,6 millions de dollars au troisième trimestre 2023 à 6,0 millions de dollars. EBITDA ajusté a plus que doublé pour atteindre 30,7 millions de dollars. L'entreprise a rehaussé ses prévisions pour l'année 2024, s'attendant désormais à un chiffre d'affaires compris entre 1,228 et 1,248 milliard de dollars et à un EBITDA ajusté de 105 à 115 millions de dollars. Le flux de trésorerie provenant des opérations a atteint 44,9 millions de dollars au cours des neuf premiers mois de 2024.
LifeStance Health Group hat starke Ergebnisse für das 3. Quartal 2024 gemeldet, mit einem Umsatzanstieg von 19% auf 312,7 Millionen Dollar. Die Anzahl der Kliniker im Unternehmen wuchs um 13% auf 7.269, während die Besuchszahlen um 15% auf 2,0 Millionen stiegen. Der Nettverlust verbesserte sich signifikant auf 6,0 Millionen Dollar von 61,6 Millionen Dollar im 3. Quartal 2023. Bereinigtes EBITDA mehr als verdoppelte sich auf 30,7 Millionen Dollar. Das Unternehmen hob seine Prognose für das Gesamtjahr 2024 an und erwartet nun einen Umsatz zwischen 1,228 und 1,248 Milliarden Dollar sowie ein bereinigtes EBITDA von 105 bis 115 Millionen Dollar. Der Cashflow aus dem operativen Geschäft erreichte in den ersten neun Monaten 2024 44,9 Millionen Dollar.
- Revenue growth of 19% year-over-year to $312.7 million
- Clinician base increased 13% with 285 net additions in Q3
- Visit volumes up 15% to 2.0 million
- 90% reduction in net loss from $61.6M to $6.0M
- Adjusted EBITDA grew 110% to $30.7 million
- Positive cash flow from operations of $44.9 million YTD
- Raised full-year guidance for revenue and Adjusted EBITDA
- Still operating at a net loss of $6.0 million
- Net long-term debt of $279.1 million
Insights
LifeStance's Q3 2024 results demonstrate substantial operational improvements with
Key performance metrics show strong fundamentals:
The company's improving cash position (
The robust growth in LifeStance's clinician network and visit volumes reflects strong market demand for mental healthcare services. The addition of 285 clinicians in Q3 alone demonstrates effective recruitment and retention strategies in a competitive healthcare labor market.
The improved revenue per visit metrics suggest successful pricing strategies and potentially a favorable payor mix. With 7,269 clinicians now in their network, LifeStance is solidifying its position as a major player in outpatient mental healthcare, leveraging scale for operational efficiencies.
The company's ability to mitigate anticipated rate pressures while maintaining growth trajectory indicates strong market positioning and effective management of payor relationships.
SCOTTSDALE, Ariz., Nov. 07, 2024 (GLOBE NEWSWIRE) -- LifeStance Health Group, Inc. (Nasdaq: LFST), one of the nation’s largest providers of outpatient mental healthcare, today announced financial results for the third quarter ended September 30, 2024.
(All results compared to prior-year comparative period, unless otherwise noted)
Q3 2024 Highlights and FY 2024 Outlook
- Revenue of
$312.7 million increased19% compared to revenue of$262.9 million - Clinician base increased
13% to 7,269 clinicians, a sequential net increase of 285 in the third quarter - Third quarter visit volumes increased
15% to 2.0 million - Net loss of
$6.0 million compared to net loss of$61.6 million - Adjusted EBITDA of positive
$30.7 million compared to Adjusted EBITDA of positive$14.6 million - For full year 2024, raising revenue expectations to
$1.22 8 billion to$1.24 8 billion; raising Center Margin expectations to$382 million to$398 million ; raising Adjusted EBITDA expectations to$105 million to$115 million ; and reiterating expectations for positive Free Cash Flow
“Thanks to the great work and resilience of the LifeStance team, we mitigated much of the rate pressure that was expected in the third quarter. This enabled us to surpass our expectations for the quarter and raise guidance for the full year,” said Ken Burdick, Chairman and CEO of LifeStance. “We are pleased with the performance thus far in 2024 and, as we look to 2025, will continue striving to meet our commitments as we have done for the past eight consecutive quarters.”
| Financial Highlights | ||||||||||||
| Q3 2024 | Q3 2023 | Y/Y | ||||||||||
| (in millions) | ||||||||||||
| Total revenue | $ | 312.7 | $ | 262.9 | 19 | % | ||||||
| Income (loss) from operations | 0.0 | (74.4 | ) | (100 | %) | |||||||
| Center Margin | 100.4 | 76.2 | 32 | % | ||||||||
| Net loss | (6.0 | ) | (61.6 | ) | (90 | %) | ||||||
| Adjusted EBITDA | 30.7 | 14.6 | 110 | % | ||||||||
| As % of Total revenue: | ||||||||||||
| Income (loss) from operations | 0.0 | % | (28.3 | %) | ||||||||
| Center Margin | 32.1 | % | 29.0 | % | ||||||||
| Net loss | (1.9 | %) | (23.4 | %) | ||||||||
| Adjusted EBITDA | 9.8 | % | 5.6 | % | ||||||||
(All results compared to prior-year period, unless otherwise noted)
- Revenue grew
19% to$312.7 million . Strong revenue growth in the third quarter was driven primarily by improvements in total revenue per visit and higher visit volumes from net clinician growth. - Income from operations was
$47 thousand . Net loss was$6.0 million . - Center Margin grew
32% to$100.4 million , or32.1% of total revenue. - Adjusted EBITDA increased
110% to$30.7 million , or9.8% of total revenue. Adjusted EBITDA as a percentage of revenue increased in the third quarter as a result of higher total revenue per visit, lower center costs as a percentage of revenue, and improved operating leverage from revenue growing faster than general and administrative expenses.
Balance Sheet, Cash Flow and Capital Allocation
For the nine months ended September 30, 2024, LifeStance provided
2024 Guidance
LifeStance is providing the following outlook for 2024:
- The Company is raising full year revenue to
$1.22 8 billion to$1.24 8 billion; raising Center Margin to$382 million to$398 million ; and raising Adjusted EBITDA to$105 million to$115 million . Additionally, the Company continues to expect to generate positive Free Cash Flow for the full year. - For the fourth quarter of 2024, the Company expects total revenue of
$302.5 million to$322.5 million , Center Margin of$89 million to$105 million , and Adjusted EBITDA of$18 million to$28 million .
Conference Call, Webcast Information, and Presentations
LifeStance will hold a conference call today, November 7, 2024 at 8:30 a.m. Eastern Time to discuss the third quarter 2024 results. Investors who wish to participate in the call should dial 1-800-715-9871, domestically, or 1-646-307-1963, internationally, approximately 10 minutes before the call begins and provide conference ID number 2787723 or ask to be joined into the LifeStance call. A real-time audio webcast can be accessed via the Events and Presentations section of the LifeStance Investor Relations website (https://investor.lifestance.com), where related materials will be posted prior to the conference call.
About LifeStance Health Group, Inc.
Founded in 2017, LifeStance (Nasdaq: LFST) is reimagining mental health. We are one of the nation’s largest providers of virtual and in-person outpatient mental healthcare for children, adolescents and adults experiencing a variety of mental health conditions. Our mission is to help people lead healthier, more fulfilling lives by improving access to trusted, affordable, and personalized mental healthcare. LifeStance and its supported practices employ approximately 7,200 psychiatrists, advanced practice nurses, psychologists and therapists and operates across 33 states and more than 550 centers. To learn more, please visit www.LifeStance.com.
We routinely post information that may be important to investors on the “Investor Relations” section of our website at investor.lifestance.com. We encourage investors and potential investors to consult our website regularly for important information about us.
Forward-Looking Statements
Statements in this press release and on the related teleconference that express a belief, expectation or intention, as well as those that are not historical fact, are forward-looking statements. These statements include, but are not limited to, statements with respect to: full year and fourth quarter guidance and management's related assumptions; the Company’s financial position; business plans and objectives; operating results; working capital and liquidity; and other statements contained in this press release that are not historical facts. When used in this press release and on the related teleconference, words such as “may,” “will,” “should,” “could,” “intend,” “potential,” “continue,” “anticipate,” “believe,” “estimate,” “expect,” “plan,” “target,” “predict,” “project,” “seek” and similar expressions as they relate to us are intended to identify forward-looking statements. They involve a number of risks and uncertainties that may cause actual events and results to differ materially from such forward-looking statements. These risks and uncertainties include, but are not limited to: we may not grow at the rates we historically have achieved or at all, even if our key metrics may imply future growth, including if we are unable to successfully execute on our growth initiatives and business strategies; if we fail to manage our growth effectively, our expenses could increase more than expected, our revenue may not increase proportionally or at all, and we may be unable to execute on our business strategy; our ability to recruit new clinicians and retain existing clinicians; if reimbursement rates paid by third-party payors are reduced or if third-party payors otherwise restrain our ability to obtain or deliver care to patients, our business could be harmed; we conduct business in a heavily regulated industry and if we fail to comply with these laws and government regulations, we could incur penalties or be required to make significant changes to our operations or experience adverse publicity, which could have a material adverse effect on our business, results of operations and financial condition; we are dependent on our relationships with supported practices, which we do not own, to provide healthcare services, and our business would be harmed if those relationships were disrupted or if our arrangements with these entities became subject to legal challenges; we operate in a competitive industry, and if we are not able to compete effectively, our business, results of operations and financial condition would be harmed; the impact of health care reform legislation and other changes in the healthcare industry and in health care spending on us is currently unknown, but may harm our business; if our or our vendors’ security measures fail or are breached and unauthorized access to our employees’, patients’ or partners’ data is obtained, our systems may be perceived as insecure, we may incur significant liabilities, including through private litigation or regulatory action, our reputation may be harmed, and we could lose patients and partners; our business depends on our ability to effectively invest in, implement improvements to and properly maintain the uninterrupted operation and data integrity of our information technology and other business systems; actual or anticipated changes or fluctuations in our results of operations; our existing indebtedness could adversely affect our business and growth prospects; and other risks and uncertainties set forth under “Risk Factors” included in the reports we have filed or will file with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent filings made with the Securities and Exchange Commission. LifeStance does not undertake to update any forward-looking statements made in this press release to reflect any change in management's expectations or any change in the assumptions or circumstances on which such statements are based, except as otherwise required by law.
Non-GAAP Financial Information
This press release contains certain non-GAAP financial measures, including Center Margin, Adjusted EBITDA, and Adjusted EBITDA margin. Tables showing the reconciliation of these non-GAAP financial measures to the comparable GAAP measures are included at the end of this release. Management believes these non-GAAP financial measures are useful in evaluating the Company’s operating performance, and may be helpful to securities analysts, institutional investors and other interested parties in understanding the Company’s operating performance and prospects. This press release also refers to Free Cash Flow, which is calculated as net cash provided by (used in) operating activities less purchases of property and equipment. Management believes Free Cash Flow is a useful indicator of liquidity that provides information to management and investors about the amount of cash generated from our operations that, after investments in property and equipment, can be used for future growth. These non-GAAP financial measures, as calculated, may not be comparable to companies in other industries or within the same industry with similarly titled measures of performance. Therefore, the Company’s non-GAAP financial measures should be considered in addition to, not as a substitute for, or in isolation from, measures prepared in accordance with GAAP, such as net loss or income (loss) from operations.
Center Margin and Adjusted EBITDA anticipated for the fourth quarter of 2024 and full year 2024 are calculated in a manner consistent with the historical presentation of these measures at the end of this release. Reconciliation for the forward-looking fourth quarter of 2024 and full year 2024 Center Margin, Adjusted EBITDA guidance and Free Cash Flow is not being provided, as LifeStance does not currently have sufficient data to accurately estimate the variables and individual adjustments for such reconciliation. As such, LifeStance management cannot estimate on a forward-looking basis without unreasonable effort the impact these variables and individual adjustments will have on its reported results.
Management acknowledges that there are many items that impact a company’s reported results and the adjustments reflected in these non-GAAP measures are not intended to present all items that may have impacted these results.
| Consolidated Financial Information and Reconciliations |
| CONSOLIDATED BALANCE SHEETS (unaudited) (In thousands, except for par value) | ||||||||
| September 30, 2024 | December 31, 2023 | |||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | 102,615 | $ | 78,824 | ||||
| Patient accounts receivable, net | 158,161 | 125,405 | ||||||
| Prepaid expenses and other current assets | 26,244 | 21,502 | ||||||
| Total current assets | 287,020 | 225,731 | ||||||
| NONCURRENT ASSETS | ||||||||
| Property and equipment, net | 169,974 | 188,222 | ||||||
| Right-of-use assets | 154,835 | 170,703 | ||||||
| Intangible assets, net | 195,352 | 221,072 | ||||||
| Goodwill | 1,293,346 | 1,293,346 | ||||||
| Other noncurrent assets | 7,414 | 10,895 | ||||||
| Total noncurrent assets | 1,820,921 | 1,884,238 | ||||||
| Total assets | $ | 2,107,941 | $ | 2,109,969 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| CURRENT LIABILITIES | ||||||||
| Accounts payable | $ | 7,282 | $ | 7,051 | ||||
| Accrued payroll expenses | 111,858 | 102,478 | ||||||
| Other accrued expenses | 43,291 | 35,012 | ||||||
| Contingent consideration | 2,500 | 8,169 | ||||||
| Operating lease liabilities, current | 48,959 | 46,475 | ||||||
| Other current liabilities | 3,624 | 3,688 | ||||||
| Total current liabilities | 217,514 | 202,873 | ||||||
| NONCURRENT LIABILITIES | ||||||||
| Long-term debt, net | 279,055 | 280,285 | ||||||
| Operating lease liabilities, noncurrent | 158,679 | 181,357 | ||||||
| Deferred tax liability, net | 15,219 | 15,572 | ||||||
| Other noncurrent liabilities | 381 | 952 | ||||||
| Total noncurrent liabilities | 453,334 | 478,166 | ||||||
| Total liabilities | $ | 670,848 | $ | 681,039 | ||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| STOCKHOLDERS’ EQUITY | ||||||||
| Preferred stock – par value September 30, 2024 and December 31, 2023; 0 shares issued and outstanding as of September 30, 2024 and December 31, 2023 | — | — | ||||||
| Common stock – par value September 30, 2024 and December 31, 2023; 382,640 and 378,725 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | 3,826 | 3,789 | ||||||
| Additional paid-in capital | 2,243,673 | 2,183,684 | ||||||
| Accumulated other comprehensive income | 771 | 2,303 | ||||||
| Accumulated deficit | (811,177 | ) | (760,846 | ) | ||||
| Total stockholders' equity | 1,437,093 | 1,428,930 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,107,941 | $ | 2,109,969 | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited) (In thousands, except for Net Loss per Share) | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| TOTAL REVENUE | $ | 312,722 | $ | 262,895 | $ | 925,490 | $ | 775,062 | ||||||||
| OPERATING EXPENSES | ||||||||||||||||
| Center costs, excluding depreciation and amortization shown separately below | 212,291 | 186,686 | 632,527 | 556,280 | ||||||||||||
| General and administrative expenses | 85,269 | 130,945 | 269,356 | 317,425 | ||||||||||||
| Depreciation and amortization | 15,115 | 19,621 | 56,279 | 58,220 | ||||||||||||
| Total operating expenses | $ | 312,675 | $ | 337,252 | $ | 958,162 | $ | 931,925 | ||||||||
| INCOME (LOSS) FROM OPERATIONS | $ | 47 | $ | (74,357 | ) | $ | (32,672 | ) | $ | (156,863 | ) | |||||
| OTHER EXPENSE | ||||||||||||||||
| Gain on remeasurement of contingent consideration | 15 | 1,867 | 1,975 | 4,443 | ||||||||||||
| Transaction costs | (29 | ) | — | (821 | ) | (89 | ) | |||||||||
| Interest expense, net | (5,413 | ) | (5,477 | ) | (17,139 | ) | (15,688 | ) | ||||||||
| Other expense | (2 | ) | (1 | ) | (80 | ) | (70 | ) | ||||||||
| Total other expense | $ | (5,429 | ) | $ | (3,611 | ) | $ | (16,065 | ) | $ | (11,404 | ) | ||||
| LOSS BEFORE INCOME TAXES | (5,382 | ) | (77,968 | ) | (48,737 | ) | (168,267 | ) | ||||||||
| INCOME TAX (PROVISION) BENEFIT | (575 | ) | 16,385 | (1,594 | ) | 26,964 | ||||||||||
| NET LOSS | $ | (5,957 | ) | $ | (61,583 | ) | $ | (50,331 | ) | $ | (141,303 | ) | ||||
| NET LOSS PER SHARE, BASIC AND DILUTED | (0.02 | ) | (0.17 | ) | (0.13 | ) | (0.39 | ) | ||||||||
| Weighted-average shares used to compute basic and diluted net loss per share | 380,359 | 372,476 | 378,713 | 365,556 | ||||||||||||
| NET LOSS | $ | (5,957 | ) | $ | (61,583 | ) | $ | (50,331 | ) | $ | (141,303 | ) | ||||
| OTHER COMPREHENSIVE (LOSS) INCOME | ||||||||||||||||
| Unrealized (losses) gains on cash flow hedge, net of tax | (1,872 | ) | 230 | (1,532 | ) | 1,107 | ||||||||||
| COMPREHENSIVE LOSS | $ | (7,829 | ) | $ | (61,353 | ) | $ | (51,863 | ) | $ | (140,196 | ) | ||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (In thousands) | ||||||||
| Nine Months Ended September 30, | ||||||||
| 2024 | 2023 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss | $ | (50,331 | ) | $ | (141,303 | ) | ||
| Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 56,279 | 58,220 | ||||||
| Non-cash operating lease costs | 29,431 | 30,225 | ||||||
| Stock-based compensation | 60,026 | 78,469 | ||||||
| Amortization of discount and debt issue costs | 1,264 | 1,592 | ||||||
| Gain on remeasurement of contingent consideration | (1,975 | ) | (4,443 | ) | ||||
| Other, net | 998 | 5,105 | ||||||
| Change in operating assets and liabilities, net of businesses acquired: | ||||||||
| Patient accounts receivable, net | (32,757 | ) | (48,484 | ) | ||||
| Prepaid expenses and other current assets | (3,924 | ) | (52,293 | ) | ||||
| Accounts payable | 620 | (3,848 | ) | |||||
| Accrued payroll expenses | 9,381 | 7,622 | ||||||
| Operating lease liabilities | (34,300 | ) | (30,109 | ) | ||||
| Other accrued expenses | 10,232 | 65,568 | ||||||
| Net cash provided by (used in) operating activities | $ | 44,944 | $ | (33,679 | ) | |||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Purchases of property and equipment | (15,265 | ) | (29,106 | ) | ||||
| Acquisitions of businesses, net of cash acquired | — | (19,820 | ) | |||||
| Net cash used in investing activities | $ | (15,265 | ) | $ | (48,926 | ) | ||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from long-term debt | — | 25,000 | ||||||
| Payments of debt issue costs | — | (188 | ) | |||||
| Payments of long-term debt | (2,194 | ) | (1,821 | ) | ||||
| Payments of contingent consideration | (3,694 | ) | (6,402 | ) | ||||
| Net cash (used in) provided by financing activities | $ | (5,888 | ) | $ | 16,589 | |||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 23,791 | (66,016 | ) | |||||
| Cash and Cash Equivalents - Beginning of period | 78,824 | 108,621 | ||||||
| CASH AND CASH EQUIVALENTS – END OF PERIOD | $ | 102,615 | $ | 42,605 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||||||||
| Cash paid for interest, net | $ | 19,023 | $ | 15,424 | ||||
| Cash paid for taxes, net of refunds | $ | 59 | $ | 416 | ||||
| SUPPLEMENTAL DISCLOSURES OF NON CASH INVESTING AND FINANCING ACTIVITIES | ||||||||
| Contingent consideration incurred in acquisitions of businesses | $ | — | $ | 1,985 | ||||
| Acquisition of property and equipment included in liabilities | $ | 1,203 | $ | 5,303 | ||||
| RECONCILIATION OF INCOME (LOSS) FROM OPERATIONS TO CENTER MARGIN | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Income (loss) from operations | $ | 47 | $ | (74,357 | ) | $ | (32,672 | ) | $ | (156,863 | ) | |||||
| Adjusted for: | ||||||||||||||||
| Depreciation and amortization | 15,115 | 19,621 | 56,279 | 58,220 | ||||||||||||
| General and administrative expenses (1) | 85,269 | 130,945 | 269,356 | 317,425 | ||||||||||||
| Center Margin | $ | 100,431 | $ | 76,209 | $ | 292,963 | $ | 218,782 | ||||||||
(1) Represents salaries, wages and employee benefits for our executive leadership, finance, human resources, marketing, billing and credentialing support and technology infrastructure and stock-based compensation for all employees.
| RECONCILIATION OF NET LOSS TO ADJUSTED EBITDA | ||||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
| 2024 | 2023 | 2024 | 2023 | |||||||||||||
| (in thousands) | ||||||||||||||||
| Net loss | $ | (5,957 | ) | $ | (61,583 | ) | $ | (50,331 | ) | $ | (141,303 | ) | ||||
| Adjusted for: | ||||||||||||||||
| Interest expense, net | 5,413 | 5,477 | 17,139 | 15,688 | ||||||||||||
| Depreciation and amortization | 15,115 | 19,621 | 56,279 | 58,220 | ||||||||||||
| Income tax provision (benefit) | 575 | (16,385 | ) | 1,594 | (26,964 | ) | ||||||||||
| Gain on remeasurement of contingent consideration | (15 | ) | (1,867 | ) | (1,975 | ) | (4,443 | ) | ||||||||
| Stock-based compensation expense | 14,895 | 21,525 | 60,026 | 78,469 | ||||||||||||
| Loss on disposal of assets | 2 | 1 | 80 | 70 | ||||||||||||
| Transaction costs (1) | 29 | — | 821 | 89 | ||||||||||||
| Executive transition costs | — | 114 | 591 | 636 | ||||||||||||
| Litigation costs (2) | 224 | 45,418 | 1,053 | 49,267 | ||||||||||||
| Strategic initiatives (3) | 134 | 790 | 1,292 | 3,242 | ||||||||||||
| Real estate optimization and restructuring charges (4) | — | 1,257 | (250 | ) | 4,977 | |||||||||||
| Amortization of cloud-based software implementation costs (5) | 298 | — | 478 | — | ||||||||||||
| Other expenses (6) | — | 214 | 172 | 803 | ||||||||||||
| Adjusted EBITDA | $ | 30,713 | $ | 14,582 | $ | 86,969 | $ | 38,751 | ||||||||
(1) Primarily includes capital markets advisory, consulting, accounting and legal expenses related to our acquisitions and to the secondary offering completed in the second quarter of 2024.
(2) Litigation costs include only those costs which are considered non-recurring and outside of the ordinary course of business based on the following considerations, which we assess regularly: (i) the frequency of similar cases that have been brought to date, or are expected to be brought within two years, (ii) the complexity of the case (e.g., complex class action litigation), (iii) the nature of the remedy(ies) sought, including the size of any monetary damages sought, (iv) the counterparty involved, and (v) our overall litigation strategy. During the three and nine months ended September 30, 2024 and 2023, litigation costs included cash expenses related to three distinct litigation matters, including (x) a securities class action litigation, (y) a privacy class action litigation and (z) a compensation model class action litigation.
(3) Strategic initiatives consist of expenses directly related to a multi-phase system upgrade in connection with our recent and significant expansion. During each of the three and nine months ended September 30, 2024 and 2023, we continued a process of evaluating and adopting critical enterprise-wide systems for (i) human resources management, (ii) clinician credentialing and onboarding process, and for the three and nine months ended September 30, 2023, (iii) a scalable electronic health resources system. Strategic initiatives represents costs, such as third-party consulting costs and one-time costs, that are not part of our ongoing operations related to these enterprise-wide systems. We considered the frequency and scale of this multi-part enterprise upgrade when determining that the expenses were not normal, recurring operating expenses.
(4) Real estate optimization and restructuring charges consist of cash expenses and non-cash charges related to our real estate optimization initiative, which include certain asset impairment and disposal costs, certain gains and losses related to early lease terminations, and exit and disposal costs related to our real estate optimization initiative to consolidate our physical footprint during the three and nine months ended September 30, 2023. As the decision to close these centers was part of a significant strategic project driven by a historic shift in behavior, the magnitude of center closures has been and is expected to be greater than what would be expected as part of ordinary business operations and do not constitute normal recurring operating activities. During the nine months ended September 30, 2024, real estate optimization and restructuring charges consisted of certain gains and losses related to early lease terminations of previously abandoned real estate leases in 2023.
(5) Represents amortization of capitalized implementation costs related to cloud-based software arrangements that are included within general and administrative expenses included in our unaudited consolidated statements of operations and comprehensive loss.
(6) Primarily includes costs incurred to consummate or integrate acquired centers, certain of which are wholly-owned and certain of which are supported practices, in addition to the compensation paid to former owners of acquired centers and related expenses that are not reflective of the ongoing operating expenses of our centers. Acquired center integration and other are components of general and administrative expenses included in our unaudited consolidated statements of operations and comprehensive loss. Former owner fees is a component of center costs, excluding depreciation and amortization included in our unaudited consolidated statements of operations and comprehensive loss.
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